Cross Border Announces First Quarter 2012 Financial Results

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May 16, 2012, 07:00 ET

SAN ANTONIO, May 16, 2012 /PRNewswire/ -- Cross Border Resources, Inc. (OTCQX: XBOR), ("Cross Border" or "the Company"), a San Antonio-based oil and gas exploration and production company, today announced its financial results for the first quarter ended March 31, 2012.

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First Quarter 2012 Financial and Operating Highlights

Oil and gas revenues increased by 128% year-over-year to $3.6 million, up from $1.6 million in the first quarter of 2011.
Production volume totaled 41,477 barrels of oil equivalent ("boe"), an increase of 91% compared to 21,772 boe in the first quarter of 2011.
Average daily production sold during the first quarter of 2012 was 456 barrels of oil equivalent per day ("boepd") compared to 242 boepd for the first quarter of 2011. The daily average sales rate for March 2012 was 750 boepd.
Adjusted EBITDA increased 277.4% year-over-year to $2.0 million, up from $0.5 million in the first quarter of 2011.

Results of Operations for the Quarter Ended March 31, 2012

Revenues

Oil and gas revenues for the quarter ended March 31, 2012 were $3.6 million as compared to $1.6 million for the quarter ended March 31, 2011. The increase of $2.0 million, or 128%, was primarily due to increased production from wells added year-over-year, and a year-over-year increase in the average prices for crude oil.

Sales volume totaled 41,477 boe for the quarter, an increase of 91% compared to 21,772 boe for the same period of 2011. The increase was primarily driven by increased production from wells added period-over-period. Average daily sales for the quarter were 456 boepd, compared to 242 boepd for the same period of 2011. Cross Border's definition of daily sales represents only what volumes were sold in each respective year and does not account for stored inventory.

During the first three months of 2012, we participated in seven gross (one net) new wells. As of April 30, 2012, three of the seven new wells had been placed on production, while four were awaiting completion. Additionally, three of the four wells that began during 2011 and were awaiting completion at year-end 2011 were successfully completed during the first quarter of 2012.

Cross Border's average realized crude oil sales price for the quarter ended March 31, 2012 was $98.46 per barrel, compared to $89.19 in the same period of 2011. The Company's average realized natural gas sales price for the first quarter of 2012 was $5.86 per 1,000 cubic feet ("mcf"), compared to $6.22 per mcf for the same period of 2011.

Income from Operations

Operating income for the quarter ended March 31, 2012 amounted to $1.4 million as compared to an operating loss of $143,079 for the prior-year quarter. Operating expenses for the quarter ended March 31, 2012 totaled $2.2 million, up 25.5% from $1.7 million in the quarter ended March 31, 2011. The increase, primarily a result of costs related to additional wells brought online year-over-year, was partially offset by a 23.0% decrease in general and administrative expenses.

Net Income

Net income for the quarter ended March 31, 2012 was $658,145 as compared to a net loss of $154,916 for the same period in 2011. Net income per diluted share was $0.04 for the first quarter of 2012.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled $2.0 million, or $0.13 per fully diluted share, an increase of 277.4% compared to adjusted EBITDA of $0.5 million in the first quarter of 2011.

Adjusted EBITDA, a non-GAAP performance measure, is defined as net earnings before interest, income taxes, depreciation, depletion, amortization, abandonment and mark-to-market gains/losses on derivatives. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, and Cross Border's calculations thereof may not be comparable to similarly titled measures reported by other companies. Cross Border's management does not view adjusted EBITDA in isolation and also uses other measurements, such as net earnings (loss) and revenues to measure operating performance. A complete reconciliation of EBITDA to GAAP accounting standards can be found in this press release under the financial table "Reconciliation to GAAP."

Liquidity and Capital Resources

As of March 31, 2012, the Company's current assets were $4.1 million and current liabilities were $3.3 million. Cash and cash equivalents totaled $70,412 as of March 31, 2012. The Company's shareholders' equity at March 31, 2012 was $18.2 million. The Company generated $2.1 million from operating activities for the three months ended March 31, 2012, compared to $3.3 million for the same period of 2011. The Company used $5.9 million for investing activities for the quarter ended March 31, 2012, compared to $4.4 million for the same period of 2011. The Company generated $3.3 million from financing activities for the quarter ended March 31, 2012, compared to $0.9 million for the same period of 2011.

About Cross Border Resources

Information about the Company is available on its website, www.xbres.com.

Forward-Looking Statements

This news release contains forward-looking statements that are not historical facts and are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined, and assumptions of management. Forward-looking statements are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "aims", "potential", "goal", "objective", "prospective", and similar expressions or that events or conditions "will", "would", "may", "can", "could" or "should" occur. Information concerning oil or natural gas reserve estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed.

Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company. It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include misinterpretation of data, inaccurate estimates of oil and natural gas reserves, the uncertainty of the requirements demanded by environmental agencies, the Company's ability to raise financing for operations, breach by parties with whom the Company has contracted, inability to maintain qualified employees or consultants because of compensation or other issues, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, the likelihood that no commercial quantities of oil or gas are found or recoverable, and our ability to participate in the exploration of, and successful completion of development programs on all aforementioned prospects and leases. Additional information risks for the Company can be found in the Company's filings with the U.S. Securities and Exchange Commission.

Contacts:

Investor Relations Contact:
Jon Cunningham
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 107
[email protected]
http://www.redchip.com

Company Contact:
Cross Border Resources, Inc.
Nancy Stephenson
[email protected]


Cross Border Resources, Inc. Condensed Balance Sheets

	March 31,		December 31,
	2012		2011
	(Unaudited)
ASSETS

Current Assets:
Cash and cash equivalents	$	70,412	$	472,967
Accounts receivable - production		2,905,931		1,184,544
Prepaid expenses and other current assets		1,061,393		1,808,944
Current tax asset		21,737		21,737
Total Current Assets		4,059,473		3,488,192

Property and Equipment
Oil and gas properties (successful efforts method)		36,288,899		30,540,978
Less accumulated depletion and depreciation		(10,415,884)		(9,870,830)
Net Property and Equipment		25,873,015		20,670,148

Other Assets:
Other property and equipment, net of accumulated depreciation of $134,408 and $ 126,473 in 2012 and 2011, respectively		88,053		95,988
Deferred bond costs, net of accumulated amortization of $503,854 and $344,300 in 2012 and 2011, respectively		-		159,554
Deferred bond discount, net of accumulated amortization of $186,560 and $127,483 in 2012 and 2011, respectively		-		59,077
Deferred financing costs, net of accumulated amortization of $39,739 and $26,355 in 2012 and 2011, respectively		174,887		64,746
Intangible assets, net of accumulated amortization of $247,020 and $197,616 in 2012 and 2011, respectively		1,729,137		1,778,541
Goodwill		1,395,807		1,395,807
Other		54,324		54,324
Total Other Assets		3,442,208		3,608,037

TOTAL ASSETS	$	33,374,696	$	27,766,377


Cross Border Resources, Inc. Condensed Balance Sheets

	March 31,		December 31,
	2012		2011
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable - trade	$	1,081,770	$	103,759
Accounts payable - revenue distribution		236,915		143,215
Interest payable		63,173		112,659
Accrued expenses		614,094		418,290
Deferred revenues		-		32,479
Notes payable - current		764,278		764,278
Bonds payable – current portion		-		570,000
Creditors payable – current portion		300,000		186,761
Derivative liability – current portion		248,816		56,908
Total Current Liabilities		3,309,046		2,388,349

Non-Current Liabilities:
Asset retirement obligations		1,191,149		1,186,260
Deferred income tax liability		21,737		21,737
Line of credit		9,300,000		2,381,000
Derivative liability, net of current portion		258,675		28,086
Bonds payable, net of current portion		-		2,825,000
Creditors payable, net of current portion		1,052,783		1,352,783
Total Non-Current Liabilities		11,824,344		7,794,866

TOTAL LIABILITIES		15,133,390		10,183,215

STOCKHOLDERS' EQUITY
Common stock , $0.001 par value, 36,363,637 shares authorized, 16,151,946 shares issued and outstanding at March 31, 2012 and December 31, 2011		16,152		16,152
Additional paid-in capital		32,617,689		32,617,690
Retained earnings (accumulated deficit)		(14,392,535)		(15,050,680)
TOTAL STOCKHOLDERS' EQUITY		18,241,306		17,583,162

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	33,374,696	$	27,766,377


Cross Border Resources, Inc. Condensed Statements of Operations For the years ended March 31, 2012 and 2011 (unaudited)

	2012		2011
REVENUES AND GAINS:
Oil and gas sales	$	3,573,746	$	1,566,813
Other		32,479		32,479
Total Revenues And Gains	$	3,606,225	$	1,599,292

OPERATING EXPENSES:
Operating costs		688,535		153,063
Production taxes		160,371		105,456
Depreciation, depletion, and amortization		661,469		584,290
Accretion expense		4,889		26,416
General and administrative		671,070		873,146
Total Operating Expenses		2,186,334		1,742,371

GAIN (LOSS) FROM OPERATIONS		1,419,891		(143,079)

OTHER INCOME (EXPENSE):
Bond issuance amortization		(159,553)		(4,664)
Gain (loss) on derivatives		(473,913)		30,266
Interest expense		(131,758)		(105,156)
Miscellaneous other income (expense)		3,478		42,019
Total Other Income (Expense)		(761,746)		(37,535)

GAIN (LOSS) BEFORE INCOME TAXES		658,145		(180,614)

Current tax benefit (expense)		(222,869)		30,868
Deferred tax benefit (expense)		222,869		(5,170)
Income tax benefit (expense)		-		25,698

NET INCOME (LOSS)	$	658,145	$	(154,916)

NET GAIN (LOSS) PER SHARE:
Basic and diluted	$	0.04	$	(0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted		16,151,946		12,476,945


Cross Border Resources, Inc. Condensed Statements of Cash Flows For the years ended March 31, 2012 and 2011 (unaudited)

	Three Months Ended March 31,
	2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	658,145	$	(154,916)
Adjustments to reconcile net income (loss) to cash used by operating activities:
Depreciation, depletion, amortization		661,469		571,694
Accretion		4,889		26,416
Share-based compensation		-		30,492
Amortization of debt discount and deferred financing costs		218,631		17,260
Changes in operating assets and liabilities:
Accounts receivable		(1,721,387)		(104,914)
Prepaid expenses and other current assets		698,382		3,492,054
Accounts payable		1,022,225		(321,381)
Derivative asset/liability		422,497		-
Accrued expenses		195,570		(201,175)
Deferred income tax		-		(25,698)
Deferred revenue		(32,479)		(32,479)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		2,127,942		3,297,353

CASH FLOWS FROM INVESTING ACTIVITIES
Cash impact of merger, net		-		(62,797)
Capital expenditures - oil and gas properties		(5,867,736)		(4,285,954)
Capital expenditures - other assets		-		(45,146)
NET CASH USED IN INVESTING ACTIVITIES		(5,867,736)		(4,393,897)

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on line of credit		6,919,000		1,212,500
Proceeds from renewing notes		-		128,037
Repayments of bonds		(3,395,000)		(190,000)
Repayments to creditors		(186,761)		(266,760)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		3,337,239		883,777

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(402,555)		(212,767)
Cash and cash equivalents, beginning of period		472,967		975,123
Cash and cash equivalents, end of period	$	70,412	$	762,356

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	101,154	$	174,341
Income taxes paid	$	-	$	-


Cross Border Resources, Inc. Summary Operating Statistics (Unaudited)

	Three Months
	Ended March 31,
	2012		2011

Revenues & Sales
Oil & Gas Sales	$	3,573,746	$	1,566,813
Gain on Sale of Oil & Gas Properties		-		-
Total revenue	$	3,606,225	$	1,599,292
Net Income (Loss)	$	658,145	$	(154,916)

Net Income Per Share
Basic & Diluted	$	0.04	$	(0.01)
Average Number of Shares Outstanding		16,151,946		12,476,945
Basic & Diluted

Production Volumes
Oil (Bbls)		32,415		13,287
Gas (mcf)		54,370		50,911
Total Barrels of Oil Equivalent (boe)		41,477		21,772

Average Barrels of Oil Equivalent per day (boepd)		456		242

Oil (Bbls)		78.2%		61.0%
Gas (mcf)		21.8%		39.0%
Total Barrels of Oil Equivalent (boe)		100.0%		100.0%

Average sales price:
Gas ($ per mcf)	$	5.86	$	6.22
Oil ($ per bbl)	$	98.46	$	89.19
Average cost of production:
Average production cost ($/boe)	$	15.62	$	7.25
Average production taxes ($/boe)	$	3.86	$	5.45

Depletion Expense	$	531,000	$	545,741
Depletion Expense ($/boe)	$	12.80	$	25.07

Non-GAAP Adjusted EBITDA	$	2,038,311	$	540,137
Non GAAP Adjusted EBITDA Per Share Basic & Diluted	$	0.13	$	0.04


Cross Border Resources, Inc. Reconciliation to GAAP (unaudited)

	Three Months
	Ended March 31,
	2012		2011
Net income (loss)	$	658,145	$	(154,916)
Interest expense and other		291,311		109,820
Income tax expense (benefit)		-		(25,698)
Accretion of asset retirement obligations		4,889		26,416
Depreciation, depletion, and amortization		661,469		584,290
Stock-based compensation		-		30,492
Mark-to-market loss on commodity swaps		422,497		(30,267)
				-
Adjusted EBITDA	$	2,038,311	$	540,137