Equus Announces Second Quarter Net Asset Value
August 19 2013 - 4:56PM
Marketwired
Equus Total Return, Inc. (NYSE: EQS) (the
"Fund" or "Equus") reports net assets as of June 30, 2013, of $30.2
million, a decrease of approximately $1.2 million since March 31,
2013. Net assets per share decreased to $2.86 as of June 30, 2013
from $2.97 as of March 31, 2013. Comparative data is summarized
below (in thousands, except per share amounts):
As of the Quarter
Ended 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
--------- --------- ---------- --------- ---------
Net assets $ 30,167 $ 31,416 $ 32,875 $ 31,664 $ 33,418
Shares outstanding 10,562 10,562 10,562 10,562 10,562
Net assets per share $ 2.86 $ 2.97 $ 3.11 $ 3.00 $ 3.16
The overall decline in net asset value during the second quarter
of 2013 was principally due to one-time settlement expenses, legal
fees, and operating expenses of the Fund. Changes in the fair
values of the Fund's portfolio holdings largely consisted of the
following:
- Equus Energy, LLC ("Equus Energy"). The
Fund established Equus Energy as a wholly-owned subsidiary in
November 2011, investing $250,000 in December 2011. Equus Energy
will be used as a platform for energy-related investments, with
particular emphasis on oil and gas properties. On December 27, 2012
the Fund invested an additional $6.8 million in Equus Energy,
primarily to fund the purchase of working interests in 150
producing and non-producing oil and gas wells, including associated
development rights of approximately 23,000 acres situated on 15
separate properties in Texas and Oklahoma. Equus Energy generated
revenue of $600,760 and $1,206,167 during the three and six months
ended June 30, 2013, respectively. Revenue exceeded direct
operating expenses by $276,894 and $554,083 for the three and six
months ended June 30, 2013, respectively. After depletion,
depreciation, and amortization costs as well as general and
administrative expenses, Equus Energy generated net income of
$102,108 for the three months ended June 30, 2013 and a net loss of
$130,296 for the six months ended June 30, 2013. Principally as a
result of improved operating performance during the second quarter,
the fair value of Equus Energy increased $102,106 during this
period. Since the effective date of the acquisition of the well
interests, Equus Energy has invested $509,036 in respect of three
projects which, based on a report developed for Equus Energy by Lee
Keeling & Associates, Inc., a Tulsa-based oil & gas
engineering firm, collectively resulted in an estimated 20,000
additional barrel of oil equivalents ("BOE") to Equus Energy's
proven developed reserves:
- Recompletion of the Mahaffey #1 Gas Well in the Conger Field
($363,589). The recompletion of the Mahaffey #1 gas well to the
Wolfcamp shale oil formation had been committed by the seller prior
to the closing date of the acquisition by Equus Energy, and came
on-line in January 2013. For the five-month period ended May 31,
2013 (the date of the latest revenue statement from the operator),
the Mahaffey well generated, net to Equus Energy, approximately
$104,000 and $75,000 in gross revenue and operating income,
respectively.
- Drilling of the Hurta #4 Oil Well in the Needville Field
($137,087). The Hurta #4 well was drilled in February 2013 and came
on-line in March 2013. Since being put into production until May
31, 2013 (the date of the latest revenue statement from the
operator), this well has generated $80,564 and $67,246 in gross
revenue and operating income, respectively. We expect that the
production of this well will decline according to standard
depletion curves applicable to similarly situated wells. In the
future, the well may be recompleted to an additional zone.
- Recompletion of the Hurta #3 Oil Well in the Needville Field
($8,360). The Hurta #3 well was recompleted in late July 2013 and
is presently producing an average of approximately 12 barrels of
oil per day net to Equus Energy. We expect that the production of
this well will decline according to standard depletion curves
applicable to similarly situated wells. In the future, the well may
be recompleted to an additional zone.
- Orco Property Group ("OPG"). The Fund
initially invested in the bonds of Orco Germany S.A., a controlled
subsidiary of OPG, in 2011, in exchange for 1,700,000 shares of the
Fund's common stock. In 2012, these bonds were converted into
1,573,666 ordinary shares of OPG and EUR 1.2 million of OPG notes.
1,500,000 of the OPG shares were sold in October 2012 for cash
proceeds of EUR 3.8 million ($4.9 million based on the USD-EUR
exchange rate on the date of settlement). This cash was in addition
to the $1.6 million of cash the Fund received in June 2011 (as a
result of the non-delivery of 2,518 of the Orco Germany bonds). As
of October 2012, the Fund had received a total of approximately
$6.5 million in cash as a result of this transaction ($4.9 million
from the OPG share sale in October 2012, and $1.6 million in June
2011). The fair value of the OPG notes ($1.4 million) and the
remaining 73,666 OPG shares ($0.2 million) increased by $29,779 to
approximately $1.6 million during the second quarter of 2013,
principally due to changes in the USD-EUR exchange rate.
Other significant events during the quarter included the
following:
- Sale of The Bradshaw Group, Inc.
("Bradshaw"). Equus invested in Series B preferred shares and
warrants of Bradshaw in May 2000, and the Fund's investment has
been valued at $0 since 2002. In June 2013, the Fund realized
capital losses of $1.8 million due to the sale by Bradshaw of all
of its assets. The structure and pricing of the transaction was
such that only senior security holders, which group did not include
Equus, received any proceeds of the sale.
About Equus
The Fund is a business development company that trades as a
closed-end fund on the New York Stock Exchange, under the symbol
"EQS." Additional information on the Fund may be obtained from the
Fund's website at www.equuscap.com.
This press release may contain certain forward-looking
statements regarding future circumstances. These forward-looking
statements are based upon the Fund's current expectations and
assumptions and are subject to various risks and uncertainties that
could cause actual results to differ materially from those
contemplated in such forward-looking statements including, in
particular, the risks and uncertainties described in the Fund's
filings with the SEC. Actual results, events, and performance may
differ. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as to the date hereof.
Except as required by law, the Fund undertakes no obligation to
release publicly any revisions to these forward-looking statements
that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. The
inclusion of any statement in this release does not constitute an
admission by the Fund or any other person that the events or
circumstances described in such statements are material.
Contact: Patricia Baronowski Pristine Advisers, LLC (631)
756-2486
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