0000101594
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US ENERGY CORP
0000101594
2023-08-14
2023-08-14
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): August 14, 2023
U.S.
ENERGY CORP.
(Exact
name of registrant as specified in its charter)
| Delaware |
|
000-06814 |
|
83-0205516
|
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
| 1616
S. Voss, Suite 725, Houston, Texas |
|
77057 |
| (Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (303) 993-3200
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2 below):
| ☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of exchange on which registered |
| Common
Stock, $0.01 par value |
|
USEG |
|
The
NASDAQ Stock Market LLC
(Nasdaq
Capital Market) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
2.02 Results of Operations and Financial Condition.
On
August 14, 2023, U.S. Energy Corp. (“U.S. Energy” or the “Company”) issued a press release regarding
its financial results for the three months ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this
Form 8-K and incorporated into this item 2.02 by reference.
The
information contained in this Current Report and Exhibit 99.1 hereto shall not be deemed “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the
liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended
or the Exchange Act, except as expressly set forth by specific reference in such a filing.
The
Company is making reference to non-GAAP financial information in the press release, presentation and the conference call. A reconciliation
of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release and presentation.
This
Current Report on Form 8-K, including the press release attached as Exhibit 99.1 to this Current Report on Form 8-K, contains
forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act
of 1995, and, as such, may involve known and unknown risks, uncertainties and assumptions. You can identify these forward-looking statements
by words such as “may,” “should,” “expect,” “anticipate,”
“believe,” “estimate,” “intend,” “plan” and other similar
expressions. These forward-looking statements relate to the Company’s current expectations and are subject to the limitations and
qualifications set forth in the press release and presentation as well as in the Company’s other filings with the Securities and
Exchange Commission, including, without limitation, that actual events and/or results may differ materially from those projected in such
forward-looking statements. These statements also involve known and unknown risks, which may cause the results of the Company, its divisions
and concepts to be materially different than those expressed or implied in such statements, which include, without limitation, risks
associated with increased inflation, interest rates and possible recessions; the Company’s ability to comply with the terms of
its senior credit facilities; the ability of the Company to retain and hire key personnel; the business, economic and political conditions
in the markets in which the Company operates; 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; drilling, completions, workovers and other activities and the anticipated costs and results of such activities; the Company’s
anticipated operational results for 2023 including, but not limited to, estimated or anticipated production levels, capital expenditures
and drilling plans; acquisition risks; liquidity and capital requirements; the effects of governmental regulation; anticipated future
production and revenue; drilling plans including the timing of drilling, commissioning, and startup and the impact of delays thereon;
adverse changes in the market for the Company’s oil and natural gas production; dependence upon third-party vendors; risks associated
with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19
and the efforts to stop the spread of the virus, and COVID-19 in general; economic uncertainty relating to increased inflation and global
conflicts; the lack of capital available on acceptable terms to finance the Company’s continued growth; and other risk factors,
and others, including those referenced in the press release and the Company’s filings with the Securities and Exchange Commission.
Accordingly, readers should not place undue reliance on any forward-looking statements. Forward-looking statements may include comments
as to the Company’s beliefs and expectations as to future financial performance, events and trends affecting its business and are
necessarily subject to uncertainties, many of which are outside the Company’s control. More information on potential factors that
could affect the Company’s financial results is included from time to time in the “Cautionary Statement Regarding Forward-Looking
Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” sections of the Company’s periodic and current filings with the SEC, including the Form 10-Qs
and Form 10-Ks, filed with the SEC and available at www.sec.gov and in the “Investors” – “SEC
Filings” section of the Company’s website at https://usnrg.com. Forward-looking statements speak only as of the
date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise that occur after that date, except as otherwise provided by law.
Item
9.01 Financial Statements and Exhibits.
*
Furnished herewith.
The
inclusion of any website address in this Form 8-K, and any exhibit thereto, is intended to be an inactive textual reference only and
not an active hyperlink. The information contained in, or that can be accessed through, such website is not part of or incorporated into
this Form 8-K.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
| |
U.S.
ENERGY CORP. |
| |
|
|
| |
By: |
/s/
Ryan Smith |
| |
|
Ryan
Smith |
| |
|
Chief
Executive Officer |
Exhibit
99.1
U.S.
Energy Corp. Reports Financial and Operating Results for Second Quarter 2023
HOUSTON,
August 14, 2023 — U.S. Energy Corporation (NASDAQ: USEG, “U.S. Energy” or the “Company”), a growth-focused
energy company engaged in operating a portfolio of high-quality producing oil and natural gas assets, today reported financial and operating
results for the three months ended June 30, 2023.
SECOND
QUARTER 2023 HIGHLIGHTS
| ● |
Record
net daily production of 1,959 barrels of oil equivalent per day (“Boe/d”), a 10% increase over second quarter of 2022 |
| ● |
Oil
production of 114,900 barrels, or 64% of total production |
| ● |
Lease
Operating Expense of $3.9 million, or $21.75 per Boe, a 17% and 24% decrease, respectively, from second quarter of 2022 |
| ● |
Initiated
share repurchase program and repurchased 163,300 shares of common stock for $0.2 million (at a weighted price of $1.48 per share) |
MANAGEMENT
COMMENTARY
Ryan
Smith, U.S. Energy’s Chief Executive Officer, commented “We are pleased to report strong operational performance during the
second quarter of 2023, reflecting the dedication and hard work of the U.S. Energy team. Our focus on increased efficiency resulted in
solid production growth, demonstrating our commitment to delivering value to our shareholders. Sequentially, compared to first quarter
2023, oil volumes were up 26% and lease operating expenses per unit were down 24%, providing further evidence that the Company has successfully
integrated its previous acquisitions and is benefitting from earlier capital allocation decisions across its asset base.
“The
U.S. Energy platform continues to provide geographic and commodity price diversity, enabling us to navigate various market conditions.
Further, the low decline rates of our assets allow us to allocate capital flexibly, investing both in asset-level projects that offer
strong economic returns as well as expanded shareholder returns. We are pleased with the initial results of our newly implemented share
repurchase program and going forward see immediate value in allocating a higher portion of the Company’s free cash flow towards
accelerating the program. As we move forward, we maintain our commitment to prudent capital allocation and disciplined investment, both
in our day-to-day operations and potential M&A opportunities.”
PRODUCTION
UPDATE
During
the second quarter of 2023, the Company produced 178,303 Boe, or an average of 1,959 Boe/d, a 10% increase compared to 162,230 Boe, or
an average of 1,783 Boe/d, during the second quarter of 2022.
| | |
2Q 2023 | | |
2Q 2022 | |
| Sales Volume (Total) | |
| | | |
| | |
| Oil (Bbls) | |
| 114,900 | | |
| 107,845 | |
| Gas and liquids (Mcfe) | |
| 380,419 | | |
| 326,308 | |
| Sales volumes (Boe) | |
| 178,303 | | |
| 162,230 | |
| Average Daily Production (Boe/d) | |
| 1,959 | | |
| 1,783 | |
| Average Sales Prices | |
| | | |
| | |
| Oil (Bbl) | |
$ | 61.17 | | |
$ | 105.09 | |
| Gas and liquids (Mcfe) | |
$ | 2.50 | | |
$ | 6.58 | |
| Barrel of Oil Equivalent | |
$ | 44.74 | | |
$ | 83.09 | |
SECOND
QUARTER 2023 FINANCIAL RESULTS
Total
oil and gas sales during the second quarter of 2023 were approximately $8.0 million, compared to $13.5 million in the second quarter
of 2022. The decline in revenue was primarily due to a 46% decline in realized prices. Sales from oil production represented 88% of total
revenue during the quarter, up from 84% in the second quarter of 2022.
Lease
operating expense (“LOE”) for the second quarter of 2023 was approximately $3.9 million, or $21.75 per Boe, as compared to
$4.6 million, or $28.61 per Boe, in the seconds quarter of 2022. The decrease in LOE was due primarily to the successful integration
of acquired assets and the completion of necessary workover programs.
Severance
and Ad Valorem taxes in the second quarter of 2023 were approximately $0.5 million, as compared to approximately $0.9 million in the
second quarter of 2022.
Cash
general and administrative (“G&A”) expenses were approximately $2.8 million during the second quarter of 2023, as compared
to approximately $2.0 million during the prior period. The increase in G&A was due to professional fees incurred during the quarter
related to finalizing our annual audit.
Adjusted
EBITDA, excluding the impact of hedges, was $0.8 million in the second quarter of 2023, compared to adjusted EBITDA of $5.1 million in
the second quarter of 2022. The Company reported a net loss of $2.5 million, or a loss of $0.10 per diluted share, in the second quarter
of 2023, compared to net income of $0.1 million, or $0.00 per share, in the second quarter of 2022.
SHAREHOLDER
RETURNS UPDATE
Consistent
with the Company’s shareholder returns strategy, during the second quarter of 2023, the Company announced that its board of directors
authorized a share repurchase program under which the Company may purchase up to $5.0 million of its outstanding shares of common stock
in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange
Act of 1934.
During
the second quarter of 2023, U.S. Energy repurchased 163,300 shares of common stock at an average share price of $1.48 for a total cost
of approximately $0.2 million. U.S. Energy intends to purchase common stock under the common stock repurchase program opportunistically
with cash on hand, free cash flow from operations and proceeds from potential liquidity events such as the sale of assets. Any common
stock purchased as part of this program will be retired.
Additionally,
the Company’s board of directors paid a $0.0225 per share dividend to shareholders of record on May 19, 2023. Subsequently, the
Board of Directors has suspended the Company’s dividend payment policy, with the associated capital planned to go towards accelerating
the Company’s share repurchase program.
BALANCE
SHEET UPDATE
As
of June 30, 2023, the Company had debt outstanding of $12.0 million on its revolving credit facility with availability of $8.0 million
and a cash balance of approximately $1.2 million.
HEDGING
PROGRAM UPDATE
The
following table reflects the hedged volumes under U.S. Energy’s commodity derivative contracts and the average floor and ceiling
prices at which production is hedged for the remainder of 2023:
| | |
Collars |
| Period | |
Commodity | |
Volume (Bbls) | | |
Floor ($ / Bbl) | | |
Ceiling ($ / Bbl) | |
| Q3 2023 | |
Crude Oil | |
| 52,600 | | |
$ | 60.00 | | |
$ | 81.04 | |
| Q4 2023 | |
Crude Oil | |
| 51,200 | | |
$ | 60.00 | | |
$ | 81.04 | |
CONFERENCE
CALL AND WEBCAST
U.S.
Energy will host an investor conference call tomorrow, August 10, at 8:30 a.m. Eastern Time to discuss these operating and financial
results. Interested parties may join the call by dialing 1-888-886-7786 (U.S.), or 1-416-764-8658, or using the Call meTM
link at https://emportal.ink/46M12pX for instant telephone access to the event. A telephonic replay will be available for fourteen
days following the call by dialing 1-844-512-2921 or 1-412-317-6671 and providing the replay PIN number: 10278177.
A
webcast of the conference call will be available in the Investor Relations section of the Company’s website at www.usnrg.com.
To listen to the live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download
and install any necessary audio software.
ABOUT
U.S. ENERGY
We
are a growth company focused on consolidating high-quality producing assets in the United States with the potential to optimize production
and generate free cash flow through low-risk development while maintaining an attractive shareholder returns program. We are committed
to ESG stewardship and being a leader in reducing our carbon footprint in the areas in which we operate. More information about U.S.
Energy Corp. can be found at www.usnrg.com .
INVESTOR
RELATIONS CONTACT
Mason McGuire
IR@usnrg.com
(303)
993-3200
www.usnrg.com
FORWARD-LOOKING
STATEMENTS
Certain
of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within
the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of
risks and uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,”
“believes,” “would,” “will,” “estimates,” “intends,” “projects,”
“goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but
are not the exclusive means of identifying these statements.
Important
factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include,
without limitation, risks associated with the integration of the recently acquired assets; the Company’s ability to recognize the
expected benefits of the acquisitions and the risk that the expected benefits and synergies of the acquisition may not be fully achieved
in a timely manner, or at all; the amount of the costs, fees, expenses and charges related to the acquisitions; the Company’s ability
to comply with the terms of its senior credit facilities; the ability of the Company to retain and hire key personnel; the business,
economic and political conditions in the markets in which the Company operates; 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; risks associated
with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19
and the efforts to stop the spread of the virus, and COVID-19 in general; economic uncertainty relating to increased inflation and global
conflicts; the lack of capital available on acceptable terms to finance the Company’s continued growth; and other risk factors
included from time to time in documents U.S. Energy files with the Securities and Exchange Commission, including, but not limited to,
its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other important factors that may cause actual results and outcomes to differ materially from
those contained in the forward-looking statements included in this communication are described in the Company’s publicly filed
reports, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. These reports
and filings are available at www.sec.gov.
The
Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements
attributable to the Company or any person acting on behalf of any Sale Agreement Parties are expressly qualified in their entirety by
the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on U.S. Energy’s
future results. The forward-looking statements included in this press release are made only as of the date hereof. U.S. Energy cannot
guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these
forward-looking statements. Finally, U.S. Energy undertakes no obligation to update these statements after the date of this release,
except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by
U.S. Energy. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.
FINANCIAL
STATEMENTS
U.S.
ENERGY CORP. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share amounts)
| | |
June 30, 2023 | | |
December 31, 2022 | |
| | |
| | |
| |
| ASSETS | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and equivalents | |
$ | 1,175 | | |
$ | 4,411 | |
| Oil and natural gas sales receivable | |
| 2,714 | | |
| 3,193 | |
| Marketable equity securities | |
| 91 | | |
| 107 | |
| Other current assets | |
| 973 | | |
| 558 | |
| Commodity derivative asset-current | |
| 8 | | |
| - | |
| Real estate assets held for sale, net of selling costs | |
| 175 | | |
| 175 | |
| | |
| | | |
| | |
| Total current assets | |
| 5,136 | | |
| 8,444 | |
| | |
| | | |
| | |
| Oil and natural gas properties under full cost method: | |
| | | |
| | |
| Unevaluated properties | |
| 1,584 | | |
| 1,584 | |
| Evaluated properties | |
| 205,463 | | |
| 203,144 | |
| Less accumulated depreciation, depletion and amortization | |
| (101,391 | ) | |
| (96,725 | ) |
| | |
| | | |
| | |
| Net oil and natural gas properties | |
| 105,656 | | |
| 108,003 | |
| | |
| | | |
| | |
| Property and equipment, net | |
| 913 | | |
| 651 | |
| Right-of-use asset | |
| 773 | | |
| 868 | |
| Other assets | |
| 330 | | |
| 354 | |
| | |
| | | |
| | |
| Total assets | |
$ | 112,808 | | |
$ | 118,320 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
$ | 8,464 | | |
$ | 7,832 | |
| Accrued compensation and benefits | |
| 611 | | |
| 1,111 | |
| Commodity derivative liability-current | |
| - | | |
| 1,694 | |
| Asset retirement obligations-current | |
| 668 | | |
| 668 | |
| Current lease obligation | |
| 176 | | |
| 189 | |
| | |
| | | |
| | |
| Total current liabilities | |
| 9,919 | | |
| 11,494 | |
| | |
| | | |
| | |
| Credit facility | |
| 12,000 | | |
| 12,000 | |
| Asset retirement obligations- noncurrent | |
| 15,226 | | |
| 14,774 | |
| Long-term lease obligation, net of current portion | |
| 704 | | |
| 794 | |
| Deferred tax liability | |
| 610 | | |
| 898 | |
| Other noncurrent liabilities | |
| 6 | | |
| 6 | |
| | |
| | | |
| | |
| Total liabilities | |
| 38,465 | | |
| 39,966 | |
| | |
| | | |
| | |
| Commitments and contingencies (Note 8) | |
| | | |
| | |
| | |
| | | |
| | |
| Shareholders’ equity: | |
| | | |
| | |
| Common stock, $0.01 par value; 245,000,000 shares authorized; 25,071,372 and 25,023,812 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | |
| 251 | | |
| 250 | |
| Additional paid-in capital | |
| 217,632 | | |
| 216,690 | |
| Accumulated deficit | |
| (143,540 | ) | |
| (138,586 | ) |
| | |
| | | |
| | |
| Total shareholders’ equity | |
| 74,343 | | |
| 78,354 | |
| | |
| | | |
| | |
| Total liabilities and shareholders’ equity | |
$ | 112,808 | | |
$ | 118,320 | |
U.S.
ENERGY CORP. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(In
thousands, except share and per share amounts)
| | |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
| | |
| | |
| | |
| |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Oil | |
$ | 7,028 | | |
$ | 11,334 | | |
$ | 14,124 | | |
$ | 19,167 | |
| Natural gas and liquids | |
| 950 | | |
| 2,146 | | |
| 2,127 | | |
| 3,185 | |
| Total revenue | |
| 7,978 | | |
| 13,480 | | |
| 16,251 | | |
| 22,352 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Lease operating expenses | |
| 3,877 | | |
| 4,646 | | |
| 8,400 | | |
| 7,382 | |
| Production taxes | |
| 538 | | |
| 913 | | |
| 1,058 | | |
| 1,485 | |
| Depreciation, depletion, accretion and amortization | |
| 2,896 | | |
| 2,571 | | |
| 5,313 | | |
| 4,457 | |
| General and administrative expenses | |
| 3,368 | | |
| 2,642 | | |
| 6,140 | | |
| 5,588 | |
| Total operating expenses | |
| 10,679 | | |
| 10,772 | | |
| 20,911 | | |
| 18,912 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating income (loss) | |
| (2,701 | ) | |
| 2,708 | | |
| (4,660 | ) | |
| 3,440 | |
| | |
| | | |
| | | |
| | | |
| | |
| Other non-operating income (expense): | |
| | | |
| | | |
| | | |
| | |
| Commodity derivative gain (loss) | |
| 288 | | |
| (2,132 | ) | |
| 1,208 | | |
| (8,969 | ) |
| Marketable equity securities loss | |
| (16 | ) | |
| (121 | ) | |
| (16 | ) | |
| (40 | ) |
| Other expense, net | |
| (6 | ) | |
| (5 | ) | |
| (6 | ) | |
| (6 | ) |
| Interest expense, net | |
| (289 | ) | |
| (60 | ) | |
| (558 | ) | |
| (108 | ) |
| Total other non-operating income (expense) | |
| (23 | ) | |
| (2,318 | ) | |
| 628 | | |
| (9,123 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) before income taxes | |
$ | (2,724 | ) | |
$ | 390 | | |
$ | (4,032 | ) | |
$ | (5,683 | ) |
| Income tax (expense) benefit | |
| 209 | | |
| (268 | ) | |
| 270 | | |
| 2,421 | |
| Net income (loss) | |
$ | (2,515 | ) | |
$ | 122 | | |
$ | (3,762 | ) | |
$ | (3,262 | ) |
| Basic weighted shares outstanding | |
| 25,186,797 | | |
| 24,923,812 | | |
| 25,182,704 | | |
| 24,323,859 | |
| Diluted weighted shares outstanding | |
| 25,186,797 | | |
| 25,265,180 | | |
| 25,182,704 | | |
| 24,323,859 | |
| Basic earnings (loss) per share | |
$ | (0.10 | ) | |
$ | 0.00 | | |
$ | (0.15 | ) | |
$ | (0.13 | ) |
| Diluted earnings (loss) per share | |
$ | (0.10 | ) | |
$ | 0.00 | | |
$ | (0.15 | ) | |
$ | (0.13 | ) |
U.S.
ENERGY CORP. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(in
thousands)
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Cash flows from operating activities: | |
| | | |
| | |
| Net loss | |
$ | (3,762 | ) | |
$ | (3,262 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Depreciation, depletion, accretion, and amortization | |
| 5,313 | | |
| 4,457 | |
| Deferred income taxes | |
| (288 | ) | |
| (2,460 | ) |
| Total commodity derivative (gains) losses, net | |
| (1,208 | ) | |
| 8,969 | |
| Commodity derivative settlements paid | |
| (494 | ) | |
| (4,487 | ) |
| Loss on marketable equity securities | |
| 16 | | |
| 40 | |
| Amortization of debt issuance costs | |
| 24 | | |
| 20 | |
| Stock-based compensation | |
| 1,334 | | |
| 2,109 | |
| Right of use asset amortization | |
| 95 | | |
| 75 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Oil and natural gas sales receivable | |
| 479 | | |
| (5,198 | ) |
| Other assets | |
| 240 | | |
| (192 | ) |
| Accounts payable and accrued liabilities | |
| 314 | | |
| 4,315 | |
| Accrued compensation and benefits | |
| (500 | ) | |
| (675 | ) |
| Payments on operating lease liability | |
| (102 | ) | |
| (49 | ) |
| Payments on asset retirement obligations | |
| (52 | ) | |
| - | |
| | |
| | | |
| | |
| Net cash provided by operating activities | |
| 1,409 | | |
| 3,662 | |
| | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | |
| Acquisition of proved properties | |
| - | | |
| (4,383 | ) |
| Oil and natural gas capital expenditures | |
| (2,402 | ) | |
| (1,131 | ) |
| Expenditures for pending acquisitions | |
| - | | |
| (592 | ) |
| Property and equipment expenditures | |
| (373 | ) | |
| (295 | ) |
| Proceeds from sale of oil and gas properties | |
| - | | |
| 1,231 | |
| | |
| | | |
| | |
| Net cash used in investing activities | |
| (2,775 | ) | |
| (5,170 | ) |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Borrowings on credit facility | |
| - | | |
| 4,500 | |
| Repayment of debt | |
| - | | |
| (3,847 | ) |
| Payment of fees for credit facility | |
| - | | |
| (174 | ) |
| Repayments of insurance premium finance note payable | |
| (286 | ) | |
| (236 | ) |
| Exercise of warrant | |
| - | | |
| 195 | |
| Shares withheld to settle tax withholding obligations for restricted stock awards | |
| (151 | ) | |
| (307 | ) |
| Dividends paid | |
| (1,192 | ) | |
| (578 | ) |
| Repurchases of common stock | |
| (241 | ) | |
| - | |
| | |
| | | |
| | |
| Net cash used in financing activities | |
| (1,870 | ) | |
| (447 | ) |
| | |
| | | |
| | |
| Net decrease in cash and equivalents | |
| (3,236 | ) | |
| (1,955 | ) |
| | |
| | | |
| | |
| Cash and equivalents, beginning of period | |
| 4,411 | | |
| 4,422 | |
| | |
| | | |
| | |
| Cash and equivalents, end of period | |
$ | 1,175 | | |
$ | 2,467 | |
ADJUSTED
EBITDA RECONCILIATION
In
addition to our results calculated under generally accepted accounting principles in the United States (“GAAP”), in this
earnings release we also present Adjusted EBITDA. Adjusted EBITDA is a “non-GAAP financial measure” presented as supplemental
measures of the Company’s performance. It is not presented in accordance with accounting principles generally accepted in the United
States, or GAAP. The Company defines Adjusted EBITDA as net income (loss), plus net interest expense, net unrealized loss (gain) on change
in fair value of derivatives, income tax (benefit) expense, deferred income taxes, depreciation, depletion, accretion and amortization,
one-time costs associated with completed transactions and the associated assumed derivative contracts, non-cash share-based compensation,
transaction related expenses, transaction related acquired realized derivative loss (gain), and loss (gain) on marketable securities.
Company management believes this presentation is relevant and useful because it helps investors understand U.S. Energy’s operating
performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures.
Adjusted EBITDA is presented because we believe it provides additional useful information to investors due to the various noncash items
during the period. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute
for analysis of our operating results as reported under GAAP. Some of these limitations are: Adjusted EBITDA does not reflect cash expenditures,
or future requirements for capital expenditures, or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements
for, working capital needs; Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to
service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges,
the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash
requirements for such replacements; and other companies in this industry may calculate Adjusted EBITDA differently than the Company does,
limiting its usefulness as a comparative measure.
The
Company’s presentation of this measure should not be construed as an inference that future results will be unaffected by unusual
or nonrecurring items. We compensate for these limitations by providing a reconciliation of this non-GAAP measure to the most comparable
GAAP measure, below. We encourage investors and others to review our business, results of operations, and financial information in their
entirety, not to rely on any single financial measure, and to view this non-GAAP measure in conjunction with the most directly comparable
GAAP financial measure.
| | |
Three Months Ended | |
| | |
June 30, | | |
June 30, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Net Income | |
$ | (2,515 | ) | |
$ | 122 | |
| | |
| | | |
| | |
| Depreciation, depletion, accretion and amortization | |
| 2,896 | | |
| 2,571 | |
| Unrealized loss (gain) on commodity derivatives | |
| (377 | ) | |
| (699 | ) |
| Interest Expense, net | |
| 289 | | |
| 60 | |
| Deferred income taxes | |
| (209 | ) | |
| 268 | |
| Non-cash stock-based compensation | |
| 607 | | |
| 609 | |
| Transaction related expenses | |
| - | | |
| 306 | |
| Transaction related acquired realized derivative losses | |
| 89 | | |
| 1,715 | |
| Loss (gain) on marketable securities | |
| 16 | | |
| 121 | |
| Total Adjustments | |
| 3,311 | | |
| 4,951 | |
| | |
| | | |
| | |
| Total Adjusted EBITDA | |
$ | 796 | | |
$ | 5,073 | |
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