HOUSTON, May 11, 2018 /PRNewswire/ -- Yuma Energy,
Inc. (NYSE American: YUMA) (the "Company" or "Yuma") today
announced that it is actively seeking strategic alternatives and
provided information related to its liquidity and operations. The
Company also reported its financial results for the quarter ended
March 31, 2018.
Strategic Alternatives
Yuma is currently exploring strategic alternatives in order to
enhance and maximize shareholder value. These strategic
alternatives may include, but are not limited to, a business
combination, a merger, sale of assets, and possible capital market
transactions. Yuma will thoroughly evaluate all opportunities
and third-party proposals, if any, and will aggressively pursue
options which are intended to add incremental shareholder value
relative to its continued standalone activities.
Liquidity
Due to operating losses the Company sustained during recent
quarters, which were partially a result of several events outside
the reasonable control of the Company, including the suspension of
production from several wells for a period of time and other
associated factors, at March 31,
2018, the Company was not in compliance with its total debt
to EBITDAX covenant for the trailing four quarter period under its
credit facility. In addition, due to this non-compliance and
the Company's anticipated non-compliance at June 30, 2018, the Company classified its bank
debt as a current liability in its consolidated financial
statements as of and for the three months ended March 31, 2018. On May 8, 2018, the Company received a waiver from
its lenders to its compliance with the fiscal period total debt to
EBITDAX for the trailing four quarter period financial ratio
covenant for the period ended March 31,
2018, as long as it does not exceed 3.75 to 1.00.
As of March 31, 2018, the Company
had outstanding borrowings of $27.05
million under its credit facility, and its total borrowing
base was $40.5 million, leaving
$13.45 million of undrawn borrowing
base. As of May 8, 2018, the
total borrowing base under the credit facility was reduced to
$35.0 million. Since
March 31, 2018, the Company has
borrowed an additional $7.2 million
for working capital, leaving $750,000
of undrawn borrowing base as of the date hereof.
A breach in the future of any of the terms and conditions of the
credit facility or a breach of the financial covenants thereunder
could result in acceleration of the Company's indebtedness, in
which case the debt would become immediately due and payable.
The Company currently anticipates non-compliance with various
financial covenants at June 30,
2018.
The Company has initiated several strategic alternatives to
remedy its limited liquidity, its debt covenant compliance issues,
and to provide it with additional working capital to develop its
existing assets. These may include, but are not limited to,
reducing or eliminating capital expenditures previously planned for
2018; entering into commodity derivatives for a significant portion
of its anticipated production for 2018; reducing general and
administrative expenses; selling non-core assets; seeking merger
and acquisition related opportunities; and potentially raising
proceeds from capital markets transactions, including the sale of
debt or equity securities. There can be no assurance that the
exploration of strategic alternatives will result in a
transaction.
The significant risks and uncertainties described above raise
substantial doubt about the Company's ability to continue as a
going concern. The Company has prepared its consolidated financial
statements for the three months ended March
31, 2018 on a going concern basis of accounting, which
contemplates continuity of operations, realization of assets, and
satisfaction of liabilities and commitments in the normal course of
business. The Company's consolidated financial statements for the
three months ended March 31, 2018 do
not include any adjustments that might result from the outcome of
the going concern uncertainty.
Operations Update
In 2017, the Company entered the Permian Basin through a joint
venture with two privately held energy companies and established an
Area of Mutual Interest ("AMI") covering approximately 33,280 acres
in Yoakum County, Texas, located
in the Northwest Shelf of the Permian Basin. The primary target
within the AMI is the San Andres formation, which has been one of
the largest producing formations in Texas to date. As of May 1, 2018, the Company held a 62.5% working
interest in approximately 4,823 gross acres (3,014 net acres)
within the AMI. In November, 2017, the Company spudded a salt
water disposal well, the Jameson SWD #1. Upon completion of the
salt water disposal well, the drilling rig was moved to the
Company's State 320 #1H horizontal San Andres well, which was
subsequently drilled and completed. The Company opened the
well on March 1, 2018 to begin the
dewatering process and establish production. As of
May 6, 2018, the well was producing
31 barrels of oil, 89 Mcf of natural gas, and 3,908 barrels of
water per day. While significant water production is typical and
was expected from the well, early production rates have not met
management's pre-drill expectations. The Company will continue to
evaluate well performance and the commerciality of the
prospect area, but given the well performance to date, the ability
to establish commercial production in the prospect area is
uncertain at this time. As of March
31, 2018, the salt water disposal well and the State 320 #1H
well were classified as unproved properties within the Company's
consolidated financial statements.
First Quarter 2018 Financial Results
Production
The following table presents the net quantities of oil, natural
gas and natural gas liquids produced and sold by the Company for
the three months ended March 31, 2018
and 2017, and the average sales price per unit sold.
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
Production
volumes:
|
|
|
|
Crude oil and
condensate (Bbls)
|
47,157
|
|
76,397
|
Natural gas
(Mcf)
|
633,440
|
|
899,427
|
Natural gas liquids
(Bbls)
|
25,243
|
|
33,474
|
Total (Boe) (1)
|
177,973
|
|
259,776
|
Average prices
realized:
|
|
|
|
Crude oil and
condensate (per Bbl)
|
$65.02
|
|
$49.95
|
Natural gas (per
Mcf)
|
$2.83
|
|
$2.84
|
Natural gas liquids
(per Bbl)
|
$31.22
|
|
$23.15
|
|
|
(1)
|
Barrels of oil
equivalent have been calculated on the basis of six thousand cubic
feet (Mcf) of natural gas equal to one barrel of oil equivalent
(Boe).
|
Revenues
The following table presents the Company's revenues for the
three months ended March 31, 2018 and
2017.
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
Sales of natural gas
and crude oil:
|
|
|
|
Crude oil and
condensate
|
$
3,066,258
|
|
$
3,815,932
|
Natural
gas
|
1,791,251
|
|
2,553,443
|
Natural gas
liquids
|
788,027
|
|
775,049
|
Total
revenues
|
$
5,645,536
|
|
$
7,144,424
|
Expenses
The Company's lease operating expenses ("LOE") and LOE per Boe
for the three months ended March 31,
2018 and 2017, are set forth below:
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
Lease operating
expenses
|
$
1,665,320
|
|
$
1,697,908
|
Severance, ad valorem
taxes and marketing
|
960,448
|
|
963,356
|
Total LOE
|
$
2,625,768
|
|
$
2,661,264
|
|
|
|
|
LOE per
Boe
|
$14.75
|
|
$10.24
|
LOE per Boe without
severance, ad valorem taxes and marketing
|
$9.36
|
|
$6.54
|
Commodity Derivative Instruments
Commodity derivative instruments open as of March 31, 2018 are provided below. Natural
gas prices are NYMEX Henry Hub prices, and crude oil prices are
NYMEX West Texas Intermediate.
|
|
2018
|
|
2019
|
|
|
Settlement
|
|
Settlement
(1)
|
NATURAL GAS
(MMBtu):
|
|
|
|
|
Swaps
|
|
|
|
|
Volume
|
|
1,245,893
|
|
373,906
|
Price
|
|
$3.00
|
|
$3.00
|
|
|
|
|
|
CRUDE OIL
(Bbls):
|
|
|
|
|
Swaps
|
|
|
|
|
Volume
|
|
140,818
|
|
156,320
|
Price
|
|
$53.17
|
|
$53.77
|
|
|
(1)
|
Represents volumes
through March 2019.
|
About Yuma Energy, Inc.
Yuma Energy, Inc., a Delaware
corporation, is an independent Houston-based exploration and production
company focused on acquiring, developing and exploring for
conventional and unconventional oil and natural gas
resources. Historically, the Company's operations have
focused on onshore properties located in central and southern
Louisiana and southeastern
Texas where it has a long history
of drilling, developing and producing both oil and natural gas
assets. More recently, the Company has begun acquiring
acreage in Yoakum County, Texas,
with plans to explore and develop oil and natural gas assets in the
Permian Basin. Finally, the Company has operated positions in
Kern County, California, and
non-operated positions in the East Texas Woodbine and the Bakken
Shale in North Dakota. Its common stock is listed on the NYSE
American under the trading symbol "YUMA."
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Statements that are
not strictly historical statements constitute forward-looking
statements and may often, but not always, be identified by the use
of such words such as "expects," "believes," "intends,"
"anticipates," "plans," "estimates," "potential," "possible," or
"probable" or statements that certain actions, events or results
"may," "will," "should," or "could" be taken, occur or be achieved.
The forward-looking statements include statements about future
operations, and estimates of reserve and production volumes.
Forward-looking statements are based on current expectations and
assumptions and analyses made by the Company in light of experience
and perception of historical trends, current conditions and
expected future developments, as well as other factors appropriate
under the circumstances. However, whether actual results and
developments will conform with expectations is subject to a number
of risks and uncertainties, including but not limited to: our
limited liquidity; the risks of the oil and natural gas industry
(for example, operational risks in exploring for, developing and
producing crude oil and natural gas); risks and uncertainties
involving geology of oil and natural gas deposits; the uncertainty
of reserve estimates; revisions to reserve estimates as a result of
changes in commodity prices; the uncertainty of estimates and
projections relating to future production, costs and expenses;
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; health, safety and
environmental risks and risks related to weather; declines in oil
and natural gas prices; inability of management to execute its
plans to meet its goals, shortages of drilling equipment, oil field
personnel and services, unavailability of gathering systems,
pipelines and processing facilities and the possibility that
government policies may change. The Company's annual
report on Form 10-K for the year ended December 31, 2017, quarterly reports on Form
10-Q, recent current reports on Form 8-K, and other SEC filings
discuss some of the important risk factors identified that may
affect its business, results of operations, and financial
condition. The Company undertakes no obligation to revise or update
publicly any forward-looking statements, except as required by
law.
Yuma Energy,
Inc.
|
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
101,850
|
|
$
137,363
|
Accounts receivable,
net of allowance for doubtful accounts:
|
|
|
|
Trade
|
3,569,760
|
|
4,496,316
|
Officer and
employees
|
-
|
|
53,979
|
Other
|
536,243
|
|
1,004,479
|
Prepayments
|
837,877
|
|
976,462
|
Other deferred
charges
|
406,881
|
|
347,490
|
|
|
|
|
Total current
assets
|
5,452,611
|
|
7,016,089
|
|
|
|
|
OIL AND GAS
PROPERTIES (full cost method):
|
|
|
|
Proved
properties
|
494,700,559
|
|
494,216,531
|
Unproved properties -
not subject to amortization
|
9,127,056
|
|
6,794,372
|
|
|
|
|
|
503,827,615
|
|
501,010,903
|
Less:
accumulated depreciation, depletion and amortization
|
(423,342,487)
|
|
(421,165,400)
|
|
|
|
|
Net oil and gas
properties
|
80,485,128
|
|
79,845,503
|
|
|
|
|
OTHER PROPERTY AND
EQUIPMENT:
|
|
|
|
Land, buildings and
improvements
|
1,600,000
|
|
1,600,000
|
Other property and
equipment
|
2,845,459
|
|
2,845,459
|
|
4,445,459
|
|
4,445,459
|
Less: accumulated
depreciation and amortization
|
(1,449,769)
|
|
(1,409,535)
|
|
|
|
|
Net other property
and equipment
|
2,995,690
|
|
3,035,924
|
|
|
|
|
OTHER ASSETS AND
DEFERRED CHARGES:
|
|
|
|
Deposits
|
467,592
|
|
467,592
|
Other noncurrent
assets
|
79,997
|
|
270,842
|
|
|
|
|
Total other assets
and deferred charges
|
547,589
|
|
738,434
|
|
|
|
|
TOTAL
ASSETS
|
$
89,481,018
|
|
$
90,635,950
|
Yuma Energy,
Inc.
|
|
CONSOLIDATED BALANCE
SHEETS – CONTINUED
|
(Unaudited)
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current maturities of
debt
|
$
27,424,499
|
|
$
651,124
|
Accounts payable,
principally trade
|
13,778,740
|
|
11,931,218
|
Commodity derivative
instruments
|
1,476,071
|
|
903,003
|
Asset retirement
obligations
|
88,721
|
|
277,355
|
Other accrued
liabilities
|
1,765,817
|
|
2,295,438
|
|
|
|
|
Total current
liabilities
|
44,533,848
|
|
16,058,138
|
|
|
|
|
LONG-TERM
DEBT
|
-
|
|
27,700,000
|
|
|
|
|
OTHER NONCURRENT
LIABILITIES:
|
|
|
|
Asset retirement
obligations
|
10,352,150
|
|
10,189,058
|
Commodity derivative
instruments
|
485,234
|
|
336,406
|
Deferred
rent
|
281,852
|
|
290,566
|
Employee stock
awards
|
239,095
|
|
191,110
|
|
|
|
|
Total other
noncurrent liabilities
|
11,358,331
|
|
11,007,140
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES (Notes 2 and 15)
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
Series D convertible
preferred stock
|
|
|
|
($0.001
par value, 7,000,000 authorized, 1,937,262 issued and
outstanding as of March 31,
2018, and 1,904,391 issued and outstanding as of
December 31, 2017)
|
1,937
|
|
1,904
|
Common
stock
|
|
|
|
($0.001
par value, 100 million shares authorized, 23,230,169 outstanding as
of March 31, 2018 and 22,661,758
outstanding as of December 31, 2017)
|
23,230
|
|
22,662
|
Additional paid-in
capital
|
56,728,467
|
|
55,064,685
|
Treasury stock at
cost (369,238 shares as of March 31, 2018 and 13,343 shares
as of December 31, 2017)
|
(434,557)
|
|
(25,278)
|
Accumulated earnings
(deficit)
|
(22,730,238)
|
|
(19,193,301)
|
|
|
|
|
Total
equity
|
33,588,839
|
|
35,870,672
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$
89,481,018
|
|
$
90,635,950
|
Yuma Energy,
Inc.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
|
|
|
REVENUES:
|
|
|
|
Sales of natural gas
and crude oil
|
$
5,645,536
|
|
$
7,144,424
|
|
|
|
|
EXPENSES:
|
|
|
|
Lease operating and
production costs
|
2,625,768
|
|
2,661,264
|
General and
administrative – stock-based compensation
|
296,293
|
|
51,735
|
General and
administrative – other
|
1,749,237
|
|
2,176,002
|
Depreciation,
depletion and amortization
|
2,217,321
|
|
3,140,940
|
Asset retirement
obligation accretion expense
|
142,940
|
|
138,569
|
Bad debt
expense
|
65,808
|
|
-
|
Total
expenses
|
7,097,367
|
|
8,168,510
|
|
|
|
|
LOSS FROM
OPERATIONS
|
(1,451,831)
|
|
(1,024,086)
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
Net gains (losses)
from commodity derivatives
|
(1,251,260)
|
|
3,556,783
|
Interest
expense
|
(466,292)
|
|
(496,091)
|
Gain on other
property and equipment
|
-
|
|
555,642
|
Other, net
|
(3,537)
|
|
36,408
|
Total other income
(expense)
|
(1,721,089)
|
|
3,652,742
|
|
|
|
|
INCOME (LOSS) BEFORE
INCOME TAXES
|
(3,172,920)
|
|
2,628,656
|
|
|
|
|
Income tax
expense
|
-
|
|
26,531
|
|
|
|
|
NET INCOME
(LOSS)
|
(3,172,920)
|
|
2,602,125
|
|
|
|
|
PREFERRED
STOCK:
|
|
|
|
Dividends paid in
kind
|
364,017
|
|
339,610
|
|
|
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$
(3,536,937)
|
|
$
2,262,515
|
|
|
|
|
INCOME (LOSS) PER
COMMON SHARE:
|
|
|
|
Basic
|
($0.16)
|
|
$0.19
|
Diluted
|
($0.16)
|
|
$0.16
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING:
|
|
|
|
Basic
|
22,813,130
|
|
12,211,256
|
Diluted
|
22,813,130
|
|
14,056,170
|
Yuma Energy,
Inc.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Reconciliation of net
income (loss) to net cash provided by (used
in) operating
activities:
|
|
|
|
Net income
(loss)
|
$
(3,172,920)
|
|
$
2,602,125
|
Depreciation,
depletion and amortization of property and equipment
|
2,217,321
|
|
3,140,940
|
Amortization of debt
issuance costs
|
184,733
|
|
81,843
|
Deferred rent
liability, net
|
33,117
|
|
-
|
Stock-based
compensation expense
|
296,293
|
|
51,735
|
Settlement of asset
retirement obligations
|
(147,122)
|
|
-
|
Asset retirement
obligation accretion expense
|
142,940
|
|
138,569
|
Bad debt
expense
|
65,808
|
|
-
|
Net (gains) losses
from commodity derivatives
|
1,251,260
|
|
(3,556,783)
|
Gain on sales of
fixed assets
|
-
|
|
(555,642)
|
Loss on write-off of
liabilities net of assets
|
3,631
|
|
-
|
Changes in assets and
liabilities:
|
|
|
|
(Increase) decrease
in accounts receivable
|
879,333
|
|
(795,740)
|
Decrease in prepaids,
deposits and other assets
|
138,585
|
|
306,021
|
(Decrease) increase
in accounts payable and other current and non-current liabilities
|
2,507,831
|
|
(461,542)
|
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
|
4,400,810
|
|
951,526
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Capital expenditures
for oil and gas properties
|
(3,507,005)
|
|
(2,053,826)
|
Proceeds from sale of
oil and gas properties
|
1,000,000
|
|
641,056
|
Derivative
settlements
|
(529,364)
|
|
98,700
|
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES
|
(3,036,369)
|
|
(1,314,070)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Proceeds from
borrowings on senior credit facility
|
6,350,000
|
|
-
|
Repayment of
borrowings on senior credit facility
|
(7,000,000)
|
|
-
|
Repayments of
borrowings - insurance financing
|
(276,625)
|
|
(255,026)
|
Debt issuance
costs
|
-
|
|
(76,452)
|
Shelf registration
costs
|
(64,050)
|
|
-
|
Treasury stock
repurchases
|
(409,279)
|
|
(4,170)
|
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES
|
(1,399,954)
|
|
(335,648)
|
|
|
|
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(35,513)
|
|
(698,192)
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
137,363
|
|
3,625,686
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
101,850
|
|
$
2,927,494
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Interest payments
(net of interest capitalized)
|
$
145,871
|
|
$
264,542
|
Interest
capitalized
|
$
115,541
|
|
$
44,550
|
Supplemental
disclosure of significant non-cash activity:
|
|
|
|
(Increase) decrease
in capital expenditures financed by accounts payable
|
$
168,934
|
|
$
(1,434,132)
|
View original
content:http://www.prnewswire.com/news-releases/yuma-energy-inc-announces-it-is-actively-seeking-strategic-alternatives-provides-an-update-to-its-liquidity-and-operations-and-reports-first-quarter-2018-financial-results-300647224.html
SOURCE Yuma Energy, Inc.