Dune Energy Reports Second Quarter 2012 Financial And Operating Results

HOUSTON, Aug. 1, 2012 /PRNewswire/ -- Dune Energy, Inc. (OTCBB: DUNR) today announced results for the second quarter of calendar year 2012.

Revenue and Production

Revenue for the second quarter of 2012 totaled $13.1 million as compared with $15.9 million for the second quarter of 2011.  Production volumes in the second quarter were 105 Mbbls of oil and .75 Bcf of natural gas, or 1.38 Bcfe.  This compares with 114 Mbbls of oil and .72 Bcf of natural gas, or 1.40 Bcfe for the second quarter of 2011.  In the second quarter of 2012, the average sales price per barrel of oil was $105.62 and $2.69 per Mcf for natural gas, as compared with $108.25 per barrel and $4.92 per Mcf, respectively for the second quarter of 2011.  Production declined 2% in the second quarter of 2012 as compared to the second quarter of 2011.  Oil prices decreased 2% and gas prices decreased 45% from 2011 levels.  During the second quarter of 2012 oil accounted for 46% of the total production volumes on an equivalent basis; however, oil revenue accounted for 85% of the total revenue.

Costs and Expenses

Total lease operating expense was $6.7 million for the second quarter of 2012 as compared to $6.9 million for the second quarter of 2011, or $4.85 and $4.90 per Mcfe produced, respectively.  DD&A expense was $5.0 million for the second quarter of 2012, or $3.62 per Mcfe. G&A expense totaled $2.3 million for the second quarter of 2012 compared to $2.1 million in the second quarter of 2011, mainly reflecting the impact of additional stock-based compensation.  Interest and financing expense was $2.4 million in the second quarter compared to $10.1 million in the second quarter of 2011.  As part of the restructuring on December 22, 2011, a $40 million term loan was repaid and replaced with a $200 million revolving credit facility under which $36 million was borrowed at June 30, 2012 and $2.0 million in letters of credit were outstanding. The $300 million of Senior Secured Notes were reduced to $3.0 million at year-end 2011 and repaid during the second quarter of 2012.  New notes of $49.5 million with a maturity of 2016 were added as part of the restructuring.  This amount was increased to $52.3 million as of June 30, 2012.

Earnings

Net gain available to common stockholders totaled $0.9 million for the second quarter of 2012. This compares with an $18.9 million loss in 2011. Preferred stock dividends were $5.1 million in the second quarter of 2011. The preferred stock was eliminated as part of the December 22, 2011 restructuring and was converted into $4 million cash and 1.5% of the common shares outstanding on a restructured basis. Consequently, there were no preferred stock dividends in 2012.

Liquidity

At the end of the quarter we had $8.9 million in cash and $12 million available under our Credit Facility based on $50 million of availability.  The revolver is subject to a mid-year redetermination based on a new reserve report incorporating activity in the first half of the year.

2012 Operations Summary and Capital Program

Garden Island Bay Field

In the first half of the year we completed two drilling wells the SL214 #917 and the SL214 #915ST along with two new zone work overs.  Currently the field is capable of producing approximately 900 Boe/day up from an average of 350 Boe/day in December of 2011 prior to the investment.  Several behind pipe zones were identified in the two new wells drilled that we expect to be completed at a later date.  After hurricane season, we anticipate resuming a drilling and work over program in the field. 

Leeville Field

Dune owns 40% working interest in a joint venture within this field and a private party owns the remaining 60%.  This party has proposed initiating a one rig drilling program commencing in September and continuing through 2013 in order to drill several newly identified PUD locations based on reprocessed and depth migrated 3-D seismic data.  Our 40% interest in each of these PUD locations will cost approximately $1.7-$1.9 million and we expect to result in net oil production of 100-150 BO/day.  Each well takes approximately 30-40 days to drill and complete.  In addition, a 20,500 foot exploratory well has been proposed in which Dune would have a 20% working interest.  Our net dry hole exposure on this well would be approximately $3.8 million and reserve exposure would be approximately 800 Mboe. 

Capital Program

During the first half of the year we expended approximately $19.2 million for capital projects including the 4 wells at Garden Island Bay and numerous other projects throughout our field operations.  Depending on cash flow and availability under our revolver, we anticipate the capital budget for the full year to be between $32 and $35 million.  Primary areas of focus in the second half of the year will be Garden Island Bay Field and the Leeville Field. 

James A. Watt, President and CEO of the company stated, "Our investments in the first half of the year are showing positive production results that we expect will carry into the second half of the year.  New drilling should add further to our reserves and production growth strategy." 

Click here for more information: http://www.duneenergy.com/news.html?b=1683&1=1

FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of expected drilling and development wells and associated costs, statements relating to estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of Dune Energy, Inc.'s projects and other statements which are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements. Although Dune Energy, Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that the Company's projects will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, changes in product prices and other risks disclosed in Dune's Annual report on Form 10-K filed with the U.S. Securities and Exchange Commission.

 Dune Energy, Inc. 

 Consolidated Balance Sheets 

 (Unaudited) 









Successor


 ASSETS 


June 30, 2012


December 31, 2011

 Current assets: 





    Cash 


$      8,892,165


$            20,393,672

    Restricted cash 


-


17,184

    Accounts receivable 


6,560,961


8,107,009

    Current derivative asset 


1,411,646


-

    Prepayments and other current assets 


1,281,871


2,556,373

 Total current assets 


18,146,643


31,074,238






 Oil and gas properties, using successful efforts accounting - proved 


229,435,315


210,199,348

 Less accumulated depreciation, depletion and amortization 


(9,145,319)


-

 Net oil and gas properties 


220,289,996


210,199,348






 Property and equipment, net of accumulated depreciation of $126,664 and $- 


197,897


230,074

 Deferred financing costs, net of accumulated amortization of $383,603 and $19,449 


2,713,535


2,915,229

 Noncurrent derivative asset 


2,560,476


-

 Other assets 


2,691,595


3,006,564



8,163,503


6,151,867






 TOTAL ASSETS 


$ 246,600,142


$          247,425,453






 LIABILITIES AND STOCKHOLDERS' EQUITY 





 Current liabilities: 





    Accounts payable 


$    12,505,829


$              6,759,073

    Accrued liabilities 


9,890,341


10,042,683

    Current maturities on long-term debt 


224,265


4,557,857

 Total current liabilities 


22,620,435


21,359,613






 Long-term debt 


88,326,254


88,503,991

 Other long-term liabilities 


12,340,414


12,630,676

 Total liabilities 


123,287,103


122,494,280






 Commitments and contingencies 


-


-






 STOCKHOLDERS' EQUITY 





 Preferred stock, $.001 par value, 1,000,000 shares authorized, 250,000 shares undesignated, no shares issued and outstanding 


-


-

 Common stock, $.001 par value, 4,200,000,000 shares authorized, 39,391,430 and 38,579,630 shares issued 


39,391


38,580

 Treasury stock, at cost (235 and 235 shares) 


(552)


(552)

 Additional paid-in capital 


125,986,471


124,893,145

 Accumulated deficit 


(2,712,271)


-

 Total stockholders' equity 


123,313,039


124,931,173






 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 


$ 246,600,142


$          247,425,453

 

 

 Dune Energy, Inc. 

 Consolidated Statements of Operations 

 (Unaudited) 





















 Successor 


 Predecessor 


 Successor 


 Predecessor 



 Three months 


 Three months 


 Six months 


 Six months 



 ended 


 ended 


 ended 


 ended 



June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011

 Revenues 


$    13,106,809


$    15,889,731


$ 26,501,925


$  33,309,395










 Operating expenses: 









    Lease operating expense and production taxes 


6,699,881


6,886,170


12,858,666


13,954,363

    Accretion of asset retirement obligation 


365,439


329,379


730,878


658,758

    Depletion, depreciation and amortization 


4,986,322


5,245,062


9,271,983


11,545,033

    General and administrative expense 


2,322,537


2,026,228


5,423,594


4,165,119

    Loss on settlement of asset retirement obligation liability 

465,024


-


888,946


-

     Exploration expense 


-


5,183,830


-


5,183,830

 Total operating expense 


14,839,203


19,670,669


29,174,067


35,507,103










 Operating loss 


(1,732,394)


(3,780,938)


(2,672,142)


(2,197,708)










 Other income (expense): 









    Interest income 


2,405


16,299


13,702


36,449

    Interest expense 


(2,411,781)


(10,099,719)


(4,781,467)


(20,043,846)

    Gain on derivative instruments 


5,020,058


-


4,727,636


-

 Total other income (expense) 


2,610,682


(10,083,420)


(40,129)


(20,007,397)










 Net income (loss) 


878,288


(13,864,358)


(2,712,271)


(22,205,105)

 Preferred stock dividend 


-


(5,079,046)


-


(9,977,369)

 Net income (loss) available to common stockholders 


$          878,288


$  (18,943,404)


$  (2,712,271)


$ (32,182,474)










 Net income (loss) per share: 









    Basic and diluted 


$                 0.02


$          (388.67)


$            (0.07)


$         (673.74)

 Weighted average shares outstanding: 









    Basic and diluted 


39,402,243


48,739


39,114,285


47,767

 

 

 Dune Energy, Inc. 

 Consolidated Statements of Cash Flows 

 (Unaudited) 








 Successor 


 Predecessor 



 Six months ended 


 Six months ended 



June 30, 2012


June 30, 2011

 CASH FLOWS FROM OPERATING ACTIVITIES 





 Net loss 


$            (2,712,271)


$          (22,205,105)

 Adjustments to reconcile net loss to net cash provided by (used in) operating activities: 



    Depletion, depreciation and amortization 


9,271,983


11,545,033

    Amortization of deferred financing costs and debt discount 


364,154


1,855,729

    Stock-based compensation 


1,028,225


365,491

    Loss on settlement of asset retirement obligation liability 


888,946


-

    Accretion of asset retirement obligation 


730,878


658,758

    Gain on derivative instruments 


(3,972,122)


-

    Changes in: 





       Accounts receivable 


1,546,048


2,061,011

       Prepayments and other assets 


1,274,502


706,438

       Payments made to settle asset retirement obligations 


(1,910,086)


(523,941)

       Accounts payable and accrued liabilities 


6,902,054


(1,792,501)

 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 


13,412,311


(7,329,087)






 CASH FLOWS FROM INVESTING ACTIVITIES 





 Cash investment in proved and unproved properties 


(17,721,344)


(9,547,714)

 Decrease (increase) in restricted cash 


17,184


15,744,279

 Purchase of furniture and fixtures 


(94,487)


(81,283)

 Decrease in other assets 


314,969


595,077

 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 


(17,483,678)


6,710,359






 CASH FLOWS FROM FINANCING ACTIVITIES 





 Payments on short-term debt 


(4,333,592)


(1,221,598)

 Increase in long-term debt issuance costs 


(96,548)


-

 Payments on long-term debt 


(3,000,000)


-

 NET CASH USED IN FINANCING ACTIVITIES 


(7,430,140)


(1,221,598)






 NET CHANGE IN CASH BALANCE 


(11,501,507)


(1,840,326)

    Cash balance at beginning of period 


20,393,672


23,670,192

    Cash balance at end of period 


$              8,892,165


$           21,829,866






 SUPPLEMENTAL DISCLOSURES 





 Interest paid 


$              1,415,771


$           18,105,104

 Income taxes paid 


-


-






 NON-CASH INVESTING AND FINANCIAL DISCLOSURES 





 Accrued interest converted to long-term debt 


$              2,822,263


$                               -

 Non-cash investment in proved and unproved properties in accounts payable  

1,514,623


-

 Common stock issued for conversion of preferred stock 


-


62,288,000

 Redeemable convertible preferred stock dividends 


-


8,803,000

 Accretion of discount on preferred stock 


-


1,174,369

 

SOURCE Dune Energy, Inc.



RELATED LINKS
http://www.duneenergy.com

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