U.S. Energy Corp. Announces Third Quarter 2018 Results and Provides Operational Update
November 13 2018 - 6:00AM
U.S. Energy Corp. (NASDAQCM: USEG) (“We” “U.S.
Energy” or the “Company”) today announced financial and operational
results for the third quarter ended September 30, 2018.
Highlights
- Production of 21,131 BOE, or daily production of 230
BOEPD;
- Oil and gas revenues of $1.2 million;
- Lease operating expenses of $0.4 million;
- Cash and cash equivalents of $3.0 million at 9/30/2018;
- Adjusted EBITDA of $0.2 million, and;
- Net income of $0.5 million.
Management Comment
David Veltri, U.S. Energy’s Chief Executive
Officer, stated, “The third quarter was a successful quarter for
U.S. Energy and we continue to build on the progress made
throughout 2018. Positive earnings combined with a
predictable and low-overhead cost structure have enabled the
Company to live within cash flow while being positioned to
participate in new, highly accretive development taking place on
our legacy acreage positions. As previously announced, we spud the
J. Beeler No. 1 well in October 2018 and expect further development
on the acreage during 2019. During the third quarter, our oil
production continued to track forecasted declines, specifically our
highly economic Beeler Ranch No. 1 well which was brought online in
January 2018. Our gas production decline was driven by the
Company’s sole natural gas well, located in Louisiana, experiencing
a maintenance related shut-in and returning online at a reduced
production rate. Lastly, our team continues to move forward
on the previously announced acquisition of properties located in
the Williston Basin. We expect to close in early 2019 after a
shareholder vote. We look forward to updating the market on
the acquisition as well as the results of the J. Beeler No. 1 well
when available.”
Operational Update
The J. Beeler No. 1 was spudded on October 18,
2018 and is expected to be drilled to total depth in approximately
three weeks. To date, drilling operations have been successfully
executed as forecasted. U.S. Energy holds a 30% working interest in
the well and has funded its approximately $1.0 million portion of
the drilling through existing cash on hand. Four additional wells
are anticipated to be drilled on the Company's existing Zavala
County acreage position during 2019.
Liquidity Overview
As of September 30, 2018, we had $3.0 million in
cash and $5.1 million of availability under our credit facility,
representing a total liquidity position of $8.1 million.
Financial Results
Revenues from sales of oil and natural gas
during the third quarter of 2018 were $1.2 million compared to $1.6
million during the second quarter of 2018. The decrease in
revenue was driven by both normal production declines on producing
wells and maintenance work performed on the Company’s sole natural
gas well located in Louisiana. Revenue from oil production
represented 92% of Company revenue during the third quarter of
2018.
Lease operating expenses for the third quarter
of 2018 were $0.4 million, or $16.89 per BOE, compared to $0.5
million, or $12.81 per BOE, during the second quarter of 2018. The
decrease in LOE on an absolute basis was the result of reduced
workover activity. The increase in lease operating expenses
on a per BOE basis was driven by lower produced volumes, primarily
as a result of maintenance-related downtime on the Company’s sole
natural gas well located in Louisiana.
G&A expenses totaled $0.6 million during the
third quarter of 2018 compared to $1.6 million during the second
quarter of 2018. The decrease was primarily attributable to a
reduction in non-cash employee compensation.
Adjusted EBITDAX was $0.2 million for the third
quarter of 2018 as compared to $(0.3) million for the second
quarter of 2018. Net income was $0.5 million for the third quarter
of 2018 compared to a net loss of $(1.2) million for the second
quarter of 2018. Adjusted EBITDAX is a non-GAAP financial
measure.
Hedging Update
U.S. Energy hedges portions of its expected
production volumes to increase the predictability of its cash flow
and to help maintain a strong financial position. The following
table summarizes U.S. Energy’s open crude oil and natural gas
derivative contracts scheduled to settle after September 30,
2018.
|
|
Begin |
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|
End |
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Quantity
(bbls/d) |
|
|
Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil price
swaps |
|
10/1/18 |
|
|
|
12/31/18 |
|
|
|
100 |
|
|
$ |
68.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Begin |
|
|
End |
|
|
Quantity(mcf/d) |
|
|
Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas price
swaps |
|
10/1/18 |
|
|
|
12/31/18 |
|
|
|
500 |
|
|
$ |
3.01 |
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
Credit Facility Update
As of September 30, 2018, the Company was in
compliance with all financial covenants and fully conforming with
all requirements under its credit facility.
Credit Facility
Covenants |
|
Required Covenant Ratio |
|
U.S.
Energy at 9/30/2018 |
Current
Ratio |
|
Greater
than 1.0 to 1.0 |
|
3.1 to
1.0 |
PDP to Secured
Debt |
|
Greater
than 1.2 to 1.0 |
|
12.1 to
1.0 |
|
|
|
|
|
About U.S. Energy Corp.
We are an independent energy company focused on
the lease acquisition and development of oil and gas producing
properties in the continental United States. Our business is
currently focused in the Williston Basin of North Dakota and South
Texas. We continue to focus on increasing production, reserves, and
cash flow from operations while pro-actively managing our debt
levels. More information about U.S. Energy Corp. can be found at
www.usnrg.com.
Forward-Looking Statements
This press release may include “forward-looking
statements” within the meaning of the securities laws. All
statements other than statements of historical facts included
herein may constitute forward-looking statements. Forward-looking
statements in this document may include statements regarding the
Company’s expectations regarding the Company’s operational,
exploration and development plans; expectations regarding the
nature and amount of the Company’s reserves; and expectations
regarding production, revenues, cash flows and recoveries. When
used in this press release, the words "will," "potential,"
"believe," "estimate," "intend," "expect," "may," "should,"
"anticipate," "could," "plan," "predict," "project," "profile,"
"model," or their negatives, other similar expressions or the
statements that include those words, are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words. Such statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond the control of the Company, which may cause
actual results to differ materially from those implied or expressed
by the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to,
fluctuations in oil and natural gas prices, uncertainties inherent
in estimating quantities of oil and natural gas reserves and
projecting future rates of production and timing of development
activities, competition, operating risks, acquisition risks,
liquidity and capital requirements, the effects of governmental
regulation, adverse changes in the market for the Company’s oil and
natural gas production, dependence upon third-party vendors, and
other risks detailed in the Company’s periodic report filings with
the Securities and Exchange Commission.
Corporate Contact:
U.S. Energy Corp.
Ryan Smith
Chief Financial Officer
(303) 993-3200
www.usnrg.com
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