Provides Operational Update on its West and
East Africa Operations
Erin Energy Corporation (“Erin Energy” or the “Company”) (NYSE
MKT:ERN) (JSE:ERN) announced today financial and operational
results for the quarter ended September 30, 2016. The Company also
provided an update on its upstream operations in Africa.
Third Quarter 2016 Highlights:
- Realized revenues of $28.6
million;
- Achieved net average daily production
of 6,100 barrels of oil per day (bbls/d);
- Lifted and sold 583,000 net barrels of
oil.
Segun Omidele, Chief Executive Officer commented: “In the third
quarter, our strategy remained focused on how restructuring our
balance sheet and growing our production. We had success in
lowering some of our outstanding AP balances and our effort to
raise additional capital for our next drilling campaign is
progressing well with the expectation that drilling activities will
commence soon.”
Operations Summary
In Nigeria, the Company continues to make progress in
preparation for the next drilling campaign, which is planned to
commence later this quarter or early 2017 depending on rig
availability. Erin Energy has secured all required permits to drill
and the operational planning process is currently being
finalized.
A key part of the Company’s planned drilling campaign is the
drilling of an additional development well, the Oyo-9 well, located
within the central area of the Oyo field in Oil Mining Lease 120,
offshore Nigeria. Oyo-9 is planned to be tied-back to the Oyo field
production facility via planned new subsea infrastructure. This
phase of development, expected to be completed in the second
quarter of 2017, will increase field production by approximately
6,000 to 7,000 barrels of oil per day (bopd).
In July 2016, the Oyo-7 well was shut-in as a result of an
emergency shut-in of the Oyo field production facility (FPSO). The
well was unable to come back online naturally due to high water
production and resulted in a temporary loss of approximately 1,400
bopd. The Company attempted an intermittent nitrogen lift gas
injection from the facility to attempt to bring the well back on
production, which was not fully implemented due to some operational
constraints. Erin Energy is now looking at another nitrogen lift
attempt and other technical options that can provide continuous
lift assistance for well startup.
In Ghana, the Company is conducting geotechnical subsurface
studies of existing 2-D seismic data to further high-grade its
prospect inventory on the Expanded Shallow Water Tano block. The
key activity to high-grading the exploration prospects and firming
up drilling locations will be a new 3-D marine seismic acquisition
survey. The Company expects to issue a formal invitation to tender
to marine seismic vendors shortly. Actual field operations await
the resolution of the Ghana-Cote d’Ivoire maritime border dispute
arbitration in mid-2017.
In The Gambia, Erin Energy completed an intensive study of
existing 2-D data of its offshore A2 and A5 blocks and has
continued to mature existing leads whilst awaiting the depth
processing of 3-D seismic data recently acquired. The Company
expects to have the processed data by the end of 2016.
In Kenya, the Company completed the interpretation of 2-D
seismic data acquired on its onshore blocks L1B and L16, and
identified a number of potential leads to pursue. Erin Energy
continues to mature these leads and is currently designing
additional targeted 2-D seismic to be acquired in 2017 on the two
onshore blocks to provide a better understanding of the identified
leads.
While examining ways to rationalize its exploration assets in
Kenya, and focus on its most prospective of the Kenyan assets, Erin
Energy has intensified efforts to identify and farm in partners in
order to share exploration costs and risks in the ultra-deep water
offshore blocks, L-27 and L-28. The Initial Exploration Period for
the L-27 and L-28 blocks is set to expire in February 2017.
Financial Summary
Erin Energy reported revenue for the third quarter was $28.6
million, compared with $23.2 million for the previous quarter and
$28.7 million for the third quarter 2015. In the third quarter, the
Company lifted and sold 583,000 net barrels of oil at an average
price of $49.07 per barrel, compared to 571,000 net barrels at an
average price of $50.20 during the same period 2015.
For the third quarter of 2016, the Company reported a net loss
of $23.5 million, or $(0.11) per basic and diluted share, compared
to a net loss of $58.7 million, or $(0.28) per basic and diluted
share for the same period in 2015.
Average net daily production for the quarter was approximately
6,100 barrels of oil per day, compared to 10,200 net barrels of oil
per day for the same period 2015. The period-over-period decline in
production is due to a combination of the revised well management
policy to prevent excessive gas production, temporary loss of Oyo-7
production and natural production decline.
Erin Energy has continued its efforts to strengthen its balance
sheet. These efforts have thus far resulted in a successful
restructuring of its term loan facility, modest reductions in its
accounts payable balances and extensions to the maturity dates of
some of its related-party debt. The Company will continue these
efforts to make further progress on its outstanding accounts
payable balance using various methods including payment plans and
equity payments.
Conference Call and Webcast
The Company will host a conference call on Tuesday, November 15,
2016 at 10:00 a.m. CT (11:00 a.m. ET) to discuss the results and
update its current operations. The dial-in number to access the
conference call is 1-844-883-3907 in the United States or
1-412-317-9253 internationally. Participants should ask the
call operator to be placed on the “Erin Energy Third-Quarter
Results Conference Call.”
To access the live audio webcast, please visit the “Investors”
section of the Company’s website at www.erinenergy.com.
Erin Energy Corporation is an independent oil and gas
exploration and production company focused on energy resources in
sub-Saharan Africa. Its asset portfolio consists of 9 licenses
across 4 countries covering an area of 40,000 square kilometres (10
million acres), including current production and other exploration
projects offshore Nigeria, as well as exploration licenses offshore
Ghana, Kenya and Gambia, and onshore Kenya. Erin Energy is
headquartered in Houston, Texas, and is listed on the New York and
Johannesburg Stock Exchanges under the ticker symbol ERN. More
information about Erin Energy can be found at
www.erinenergy.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements,
other than statements of historical fact, concerning activities,
events or developments that the Company expects, believes or
anticipates will or may occur in the future are forward-looking
statements. Although the Company believes the expectations
reflected in these forward-looking statements are reasonable, they
involve assumptions, risks and uncertainties, and these
expectations may prove to be incorrect.
The Company’s actual results could differ materially from those
anticipated or implied in these forward-looking statements due to a
variety of factors, including the Company’s ability to successfully
finance, drill, produce and/or develop the wells and prospects
identified in this release, and risks and other risk factors
discussed in the Company’s periodic reports filed with the
Securities and Exchange Commission. All forward-looking statements
are expressly qualified in their entirety by this cautionary
statement. You should not place undue reliance on forward-looking
statements, which speak only as of their respective dates. The
Company undertakes no duty to update these forward-looking
statements.
ERIN ENERGY CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (In thousands, except per
share amounts) Three Months Ended September
30, Nine Months Ended September 30, 2016
2015 2016 2015 Revenues:
Crude oil sales, net of royalties $ 28,619 $ 28,667
$ 56,699 $ 28,667 Operating costs and
expenses: Production costs 24,928 27,651 69,615 53,224 Crude oil
inventory (increase) decrease 636 368 534 (9,493 ) Workover
expenses 207 354 7,792 972 Exploratory expenses 1,672 5,266 4,934
13,283 Depreciation, depletion and amortization 18,925 43,293
38,593 43,536 Accretion of asset retirement obligations 472 522
1,385 1,398 Loss on settlement of asset retirement obligations —
779 205 4,233 General and administrative expenses 3,596
3,857 10,950 12,789
Total operating costs and expenses 50,436
82,090 134,008 119,942
Operating loss (21,817 ) (53,423 ) (77,309 ) (91,275 )
Other income (expense): Currency transaction gain 3,282 176
14,610 2,167 Interest expense (5,038 ) (5,650 )
(16,417 ) (12,485 ) Total other expense, net
(1,756 ) (5,474 ) (1,807 ) (10,318 )
Loss before income taxes (23,573 ) (58,897 ) (79,116 ) (101,593 )
Income tax expense — — —
— Net loss before non-controlling interest (23,573 )
(58,897 ) (79,116 ) (101,593 ) Net loss attributable to
non-controlling interest 102 215
662 690 Net loss attributable to Erin
Energy Corporation $ (23,471 ) $ (58,682 ) $ (78,454 ) $ (100,903 )
Net loss attributable to Erin Energy Corporation per common
share: Basic $ (0.11 ) $ (0.28 ) $ (0.37 ) $ (0.48 ) Diluted $
(0.11 ) $ (0.28 ) $ (0.37 ) $ (0.48 ) Weighted average common
shares outstanding: Basic 212,524 211,517 212,220 211,036 Diluted
212,524 211,517 212,220 211,036
ERIN ENERGY
CORPORATION CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except for share and per share
amounts) September 30, December
31, 2016 2015 ASSETS Current
assets: Cash and cash equivalents $ 8,304 $ 8,363 Restricted cash
2,600 8,661 Accounts receivable - trade — 1,029 Accounts receivable
- partners 558 287 Accounts receivable - related party 1,844 1,186
Accounts receivable - other 44 28 Crude oil inventory 4,932 4,789
Prepaids and other current assets 1,128 684
Total current assets 19,410 25,027
Property, plant and equipment: Oil and gas properties
(successful efforts method of accounting), net 321,976 368,891
Other property, plant and equipment, net 892
1,174 Total property, plant and equipment, net
322,868 370,065 Other non-current
assets 90 67 Total assets $
342,368 $ 395,159
LIABILITIES AND CAPITAL
DEFICIENCY Current liabilities: Accounts payable and accrued
liabilities $ 239,173 $ 213,120 Accounts payable and accrued
liabilities - related party 27,236 30,133 Current portion of
long-term debt, net 8,141 96,558 Total
current liabilities 274,550 339,811
Long-term notes payable - related party, net 128,987 120,006
Term loan facility, net 78,075 — Asset retirement obligations
21,994 20,609 Total liabilities
503,606 480,426 Commitments and
contingencies (Note 10) Capital deficiency: Preferred stock
$0.001 par value - 50,000,000 shares authorized; none issued and
outstanding as of September 30, 2016 and December 31, 2015,
respectively — — Common stock $0.001 par value - 416,666,667 shares
authorized; 212,686,734 and 211,615,773 shares issued as of
September 30, 2016 and December 31, 2015, respectively 213 212
Additional paid-in capital 792,319 789,615 Accumulated deficit
(954,345 ) (875,891 ) Treasury stock at cost, 90,347 and -0- shares
as of September 30, 2016 and December 31, 2015, respectively
(206 ) — Total deficit - Erin Energy Corporation
(162,019 ) (86,064 ) Non-controlling interest 781
797 Total capital deficiency (161,238 )
(85,267 ) Total liabilities and capital deficiency $ 342,368
$ 395,159
ERIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands) Nine Months Ended September
30, 2016 2015 Cash flows from operating
activities Net loss, including non-controlling interest
$ (79,116 ) $ (101,593 ) Adjustments to reconcile net loss
to cash provided by (used in) operating activities: Depreciation,
depletion and amortization 38,593 43,536 Accretion of asset
retirement obligations 1,385 1,398 Amortization of debt discount
and debt issuance costs 2,640 1,920 Loss on settlement of asset
retirement obligations — 4,233 Foreign currency transaction gain
(14,610 ) (2,167 ) Share-based compensation 2,288 4,398 Payments to
settle asset retirement obligations — (17,220 ) Change in operating
assets and liabilities: Decrease in accounts receivable 730 390
Decrease (increase) in crude oil inventory 534 (9,493 ) Decrease
(increase) in prepaids and other current assets (467 ) 324 Increase
in accounts payable and accrued liabilities 54,700
58,126 Net cash provided by (used in) operating
activities 6,677 (16,148 )
Cash
flows from investing activities Capital expenditures
(16,475 ) (83,156 ) Net cash used in investing activities
(16,475 ) (83,156 )
Cash flows from financing
activities
Proceeds from exercise of stock options and warrants 364 1,855
Payments for treasury stock arising from withholding taxes upon
restricted stock vesting (206 ) — Repayments of term loan facility
(6,492 ) — Proceeds from short-term notes payable 504 — Proceeds
from notes payable - related party, net 6,829 63,815 Repayment of
short-term notes payable (449 ) — Proceeds from short-term
borrowings, net — 11,303 Debt issuance costs (1,040 ) — Funds
released from restricted cash, net 6,061 — Funding from
non-controlling interest — 553 Net cash
provided by financing activities 5,571 77,526
Effect of exchange rate changes on cash and cash
equivalents 4,168 836 Net decrease in cash and cash
equivalents (59 ) (20,942 ) Cash and cash equivalents at beginning
of period 8,363 25,143 Cash and cash
equivalents at end of period $ 8,304 $ 4,201
Supplemental disclosure of cash flow information Cash paid
for: Interest, net $ 10,090 $ 7,886
Supplemental disclosure of
non-cash investing and financing activities: Issuance of common
shares for settlement of liabilities $ — $ 125 Discount on notes
payable pursuant to issuance of warrants $ 53 $ 4,911 Reduction in
oil and gas properties arising from settlement of accounts payable
and accrued liabilities $ 9,540 $ — Reduction in accounts payable
from settlement of Northern Offshore contingency $ — $ 24,307
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version on businesswire.com: http://www.businesswire.com/news/home/20161114006662/en/
Erin Energy CorporationInvestors and media:Lionel C. McBee, +1
713-797-2960lionel.mcbee@erinenergy.com
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