American Eagle Energy Corporation (NYSE MKT: AMZG) ("American Eagle" or the
"Company"), announces an operational update and discussion of its financial
results for the second quarter ended June 30, 2014, along with an update of its
mid-year 2014 estimated proved reserves. The Company intends to file its
Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission
today.
Highlights
-- American Eagle added 8 gross (4.0 net) operated wells to production
during the quarter;
-- Production of 182,522 barrels of oil equivalent ("BOE"), or an average
of 2,006 BOEPD:
-- year-over-year increase of 56% from the 1,288 BOEPD (117,164 BOE)
-- sequential quarterly increase of 22% from 1,645 BOEPD (148,048 BOE)
-- Second quarter 2014 oil and gas sales of $16.5 million:
-- a year-over-year increase of 59%
-- a sequential quarterly increase of 31%
-- Adjusted EBITDA* of $9.6 million;
-- Adjusted Cash Flow* of $6.7 million or $0.22 per diluted share;
-- Adjusted Net Income* of $2.3 million or $0.07 per diluted share; and
-- American Eagle's mid-year proved reserves engineered by Ryder Scott
Company, L.P. ("Ryder Scott") were estimated at 15.4 million barrels of
oil equivalent ("MMBoe") (89% oil) with an associated Pre-Tax PV-10 of
$336 million
* Non-GAAP financial measure. Please see Adjusted EBITDA, Adjusted Cash Flow and
Adjusted Net Income descriptions and tables later in this earnings release for a
reconciliation of these measures to their nearest comparable GAAP measure.
Management Comments
Brad Colby, President and CEO of American Eagle, said, "We are excited about the
opportunities in front of us as we prepare to complete and bring onto production
our 4-well pad that has an average working interest of 88% and is located in an
area where we have had very good recent well results, most notably from the
Murielle, Taylor and Bryce wells. The 4-well pad should add significant
production and showcase our potential to realize cost savings relating to
continued pad development. Continued drilling efficiency will allow us to drill
more wells without increasing rig count and improved weather conditions should
provide an opportunity to decrease well completion costs. We anticipate that our
current development program will allow us to add to our proved reserve base
during the second half of 2014 and position us for significant reserve growth in
2015."
Second Quarter 2014 Financial and Operational Results
For the quarter ended June 30, 2014, the Company had oil and gas sales of $16.5
million, which represented an increase of 59% over the $10.4 million reported
for the second quarter ended June 30, 2013 and an increase of 31% over the $12.5
million reported for the first quarter ended March 31, 2014. This increase in
sales on both an annual and sequential quarterly basis is primarily due to an
increase in production as 43 gross (24.0 net) operated wells were producing in
the Bakken and Three Forks formations during the second quarter 2014, compared
to production from 20 gross (6.4 net) operated wells at the end of June 30, 2013
and 35 gross (20.0 net) operated wells as of March 31, 2014. During the second
quarter 2014, oil production represented 99% of total oil and gas sales revenue
and 96% of total production.
American Eagle's second quarter 2014 realized oil price per barrel prior to the
effect of hedges was positively impacted by a lower differential discount of
approximately $10.87 relative to WTI due to an agreement that locks in a $10.75
discount to WTI for the Company's 2014 operated oil production and compares with
a differential discount of approximately $11.57 during the first quarter 2014.
Adjusted EBITDA for second quarter 2014 was $9.6 million, representing an
increase of 49% from $6.4 million reported for the second quarter ended June 30,
2013 and an increase of 29% from $7.4 million reported for the first quarter
ended March 31, 2014. Relative to the second quarter ending June 30, 2013, the
increase in Adjusted EBITDA is primarily due to higher oil and gas sales from
increased production, operating leverage realization in general and
administrative ("G&A") expenses (excluding stock-based compensation), and an
increase in realized oil prices before including the negative effect of hedges
realized during the quarter. However, the improvement in Adjusted EBITDA was
partially offset by a higher differential when comparing realized oil price to
benchmark oil prices such as West Texas Intermediate ("WTI") and higher lease
operating expenses. Similarly, in comparison to the quarter ending March 31,
2014, the 29% increase in Adjusted EBITDA is due primarily to an increase in
average daily oil equivalent production, higher realized oil prices and lower
relative G&A expenses, which were partially offset by lease operating expenses
and higher production taxes, for production volumes realized in the quarter.
Lease operating Expense ("LOE") for the quarter ended June 30, 2014 was $18.15
per BOE, which was higher than normal and resulted from challenging weather
conditions that required a significant increase in site and road maintenance
expenses that accounted for approximately $2.65 per BOE, as well as increased
workover expenses that accounted for approximately $2.37 per BOE. Higher
production levels helped to reduce per unit G&A expenses on both an annual and
sequential quarter comparison, as G&A, excluding stock-based compensation, was
$6.67 per BOE during the second quarter 2014 compared to $8.31 per BOE for the
prior year and $10.56 per BOE for the prior quarter. Adjusted EBITDA per BOE for
the quarter ended June 30, 2014 was $52.53, as compared to $54.99 per BOE for
the second quarter ended June 30, 2013 and $50.29 per BOE for the first quarter
ended March 31, 2014.
Three Months Ended
-----------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2014 2014 2013 2013 2013
--------- --------- --------- --------- ---------
Crude Oil Revenues
($000s) $ 16,225 $ 12,267 $ 13,272 $ 11,585 $ 10,366
Natural Gas Revenues
($000s) $ 106 $ 72 $ 114 $ 26 $ 4
Natural Gas Liquids
Revenues ($000s) $ 132 $ 206 $ 115 $ 28 $ 0
Net Production:
Crude Oil (Barrels) 175,509 140,841 164,923 123,343 117,001
Crude Oil Mix 96% 95% 95% 98% 100%
Natural Gas (Mcf) 16,977 11,370 20,055 6,333 980
Natural Gas Liquids
(Barrels) 4,183 5,312 4,563 944 0
Total Net Production
(BOE) 182,522 148,048 172,829 125,343 117,164
Quarter-Over-Quarter
Increase 23% -14% 38% 7% 34%
Average Daily
Production (BOEPD) 2,006 1,645 1,879 1,362 1,288
Quarter-Over-Quarter
Increase 22% -12% 38% 6% 32%
Average Sales Prices:
Crude Oil Per Barrel $ 92.45 $ 87.10 $ 80.48 $ 93.92 $ 88.60
Effect of Settled Oil
Derivatives Per
Barrel ($2.60) $ 0.82 $ 4.16 $ 0.94 $ 0.00
--------- --------- --------- --------- ---------
Crude Oil Net of
Settled Derivatives
Per Barrel $ 89.85 $ 87.92 $ 84.64 $ 94.86 $ 88.60
Natural Gas Per Mcf $ 6.25 $ 6.37 $ 5.67 $ 4.09 $ 4.40
Natural Gas Liquids
Per Barrel $ 31.44 $ 38.83 $ 25.27 $ 29.67 $ 0.00
Realized Price Per
BOE $ 87.69 $ 85.52 $ 82.10 $ 93.78 $ 88.51
Average Per BOE:
Lease Operating
Expenses $ 18.15 $ 15.36 $ 13.59 $ 14.09 $ 15.31
Production Taxes $ 10.34 $ 9.32 $ 9.28 $ 10.28 $ 9.90
G&A Expenses,
Excluding Stock-
Based Compensation $ 6.67 $ 10.56 $ 15.07 $ 12.04 $ 8.31
--------- --------- --------- --------- ---------
Total $ 35.16 $ 35.24 $ 37.94 $ 36.41 $ 33.52
--------- --------- --------- --------- ---------
Adjusted EBITDA per
BOE $ 52.53 $ 50.29 $ 44.16 $ 57.36 $ 54.99
Well Development Activity
Since the Company's July 16, 2014 operations update, it has continued to drill
and complete wells successfully. Concurrent with that update, American Eagle
released preliminary results on wells that had not yet produced for a full 30
days. The operated wells listed below have produced an average of 20 days and
are listed from the most westerly located well to the most easterly located
well:
----------------------------------------------------------------------------
20-Day Lateral
IP Rate Length Approximate Infill Number
Well Formation BOEPD(1) Feet DSU(2) Acres in DSU(2)
----------------------------------------------------------------------------
3rd well in
Murielle 16-1E- Three DSU, 2nd
163-101 (5 & 6)(3) Forks 389 9,950 1,280 Three Forks
----------------------------------------------------------------------------
5th well in
Richard 2-13N- Three DSU, 3rd
163-101 (1 & 12)(3) Forks 196 10,158 1,280 Three Forks
----------------------------------------------------------------------------
1 IP Rate BOEPD is calculated taking the cumulative production from each
well divided by the number of days each well has been on production.
2 Drill spacing unit ("DSU")
3 Based on first 20 days of production.
The Murielle 16-1E is a Three Forks infill well in the Stanley 8-1E spacing
unit. The initial well productivity and oil cut of the Murielle well essentially
mirrors the performance of the Stanley well which has recorded cumulative
production of approximately 77,000 BOE for the first year of operation. The
Richard 2-13N is the third Three Forks well completed in the Christianson 15-12
and Megan 13-12 spacing unit. The Richard 2-13N was put on pump following
completion and has been showing an increasing oil flow rate as well as oil cuts
approaching that of the offset wells, which are currently averaging between 50%
and 55%.
In addition, two more operated wells have also been recently put on production:
----------------------------------------------------------------------------
5-Day Lateral
IP Rate Length Approximate Infill Number
Well Formation BOEPD(1) Feet DSU(2) Acres in DSU(2)
----------------------------------------------------------------------------
Annie 15-32- 2nd well in
164-101 (29 & Three DSU, 2nd
32)(3) Forks 255 6,112 800 Three Forks
----------------------------------------------------------------------------
1st well in
James 15-20- DSU,
163-102 (17 & Three 1st Three
20)(3) Forks 341 9,492 1,280 Forks
----------------------------------------------------------------------------
1 IP Rate BOEPD is calculated taking the cumulative production from each
well divided by the number of days each well has been on production.
2 Drill spacing unit ("DSU")
3 Based on first 5 days of production.
The Annie 15-32, a Three Forks infill well, has shown similar initial
performance to its offset, the Lynda 15-32 that has produced over 40,000 BOE in
its first 5 months of production. The James 15-20 is a west offset to the DeWitt
State spacing unit and establishes production in a new DSU. Early performance
indications are encouraging with the well cleaning in accordance with
expectations, and averaging 341 BOEPD over the first 5 days on pump.
Operated Well Development Guidance
The Company currently has 6 gross (4.9 net) operated wells in the central
portion of the Spyglass acreage that are awaiting completion, of which 4 gross
(3.5 net) operated wells are on a 4-well pad and 2 gross (1.4 net) operated
wells that are infill wells on separate DSUs.
The four wells on the single drill pad are located between the Bryce (Three
Forks) well and the DSU with the Stanley (Three Forks), Taylor (Bakken) and
Murielle (Three Forks) wells, all of which have exhibited strong production
results. The wells on the 4-well pad are now expected to begin fracturing
operations in mid-August. The other two wells awaiting completion, the Rick
13-31 and Eli 8-1E, are infill wells to the Tangedal 13-31 and the Taylor 16-1E,
respectively. The Eli 8-1E is scheduled for stimulation in early August and the
Rick 13-31 is scheduled for stimulation later this month. American Eagle plans
to announce results of the wells once it has achieved approximately 30 days of
cumulative production. The Company anticipates releasing these well results in
an operations update near or after the end of September 2014, but prior to
announcing third quarter 2014 results in November.
Thus far during the third quarter, American Eagle has added 2 gross (1.0 net)
operated wells to production, has 6 gross (4.9 net) operated wells that are
awaiting completion and is currently drilling its 52nd operated well in its
Spyglass area. As discussed in the Company's prior operations update, American
Eagle has continued to improve drilling efficiencies and has been averaging
approximately 24 days per well from spud-to-spud for wells drilling on separate
drill pads. This has allowed the Company the ability to drill more wells than
originally forecast.
At the Company's current pace of development, American Eagle anticipates that it
will drill approximately 28 gross (18 net) operated wells in 2014, spending
approximately $113 million. The Company also plans to participate in the
development of select non-operated interests in its Spyglass area and has
allocated approximately $2 million to such development activities. American
Eagle's total well development budget for 2014 is approximately $115 million. At
the Company's current pace of development and assuming it maintains its existing
two rig drilling program, American Eagle anticipates drilling approximately 30
gross (20 net) operated wells for a total cost of approximately $120 million
during 2015 and participating in approximately 10 gross (0.3 net) non-operated
wells for approximately $2 million.
Production Volume Guidance
American Eagle has reaffirmed its production volume guidance to exit 2014 at
over 3,000 BOEPD. As discussed in the Company's prior operations update, second
quarter 2014 production was impacted by a number of road closures in Divide
County due to heavy rains that required wells to be shut in when storage tanks
were full. With improving weather in the basin, the Company estimates that its
current production is approximately 2,200 to 2,300 BOEPD. American Eagle
anticipates significant sequential quarterly production volume growth throughout
the remainder of 2014 as a number of high working interest wells are anticipated
to be brought onto production, including the 4-well pad that has an average
working interest of 88%.
June 30, 2014 Estimated Proved Reserves
American Eagle's estimated total proved reserves at June 30, 2014 were 15.4
MMBoe with an associated Pre-Tax PV-10 value of approximately $336.0 million.
This represents a 14% increase over the Company's estimated total proved
reserves of 13.6 MMBoe (associated Pre-Tax PV-10 value of $308.1 million) for
the period ending December 31, 2013. Proved developed reserves of 6.0 MMBoe
(associated Pre-Tax PV-10 of $195.4 MM), represented a 28% increase over the
period ending December 31, 2013, and reflect the focus of the 2014 drilling
program on accelerating development of PUD locations, primarily in the Spyglass
Area. Reserve estimates for both periods were engineered by Ryder Scott.
Proved Reserves and Pre-Tax PV-10 Value(1) as of June 30, 2014
Pre-Tax
PV-10
Crude Oil Natural Total Value
(MBbls) Gas (MMcf) (MBoe) ($000s)
---------- ---------- ---------- ----------
Proved Developed Properties(2) 5,370 3,965 6,031 $ 195,373
PUD Properties(3) 8,373 6,078 9,386 $ 140,663
---------- ---------- ---------- ----------
Total Estimated Proved
Properties 13,743 10,043 15,417 $ 336,036
1 Ryder Scott used SEC pricing for oil and natural gas in calculating Pre-
Tax PV-10. Pre-Tax PV-10 is a non-GAAP financial measure. See additional
disclosures at end of release.
2 Proved Developed Properties includes Proved Developed Producing ("PDP")
and Proved Developed Nonproducing ("PDNP").
3 Proved Undeveloped.
Liquidity and Shares Outstanding
As of June 30, 2014, American Eagle had approximately $22.2 million in cash,
$108.0 million total debt outstanding and 30.4 million shares of common stock
outstanding. Due to increased efficiencies in drilling and weather impacts
during the first half of 2014 that increased well completion costs and delayed
production, the Company ended the second quarter of 2014 with approximately
$20.8 million of negative working capital when classifying marketable securities
as current assets and excluding its debt and commodity derivative liabilities
from current liabilities. American Eagle's Credit Agreement was amended in part
to defer compliance with the covenant governing its current ratio until the
quarter ending September 30, 2014
Conference Call
American Eagle will host a conference call on Monday, August 4, 2014 at 8:00
a.m. Eastern Time (6:00 a.m. Mountain Time) to discuss financial and operational
results for the quarter.
----------------------------------------------------------------------------
American Eagle Energy Corporation 2Q 2014 Financial and Operational Results
Conference Call
----------------------------------------------------------------------------
Date: Monday, August 4, 2014
----------------------------------------------------------------------------
Time: 8:00 a.m. Eastern Time
7:00 a.m. Central Time
6:00 a.m. Mountain Time
5:00 a.m. Pacific Time
----------------------------------------------------------------------------
Webcast: Live and rebroadcast over the Internet at American Eagle website
----------------------------------------------------------------------------
Website: www.americaneagleenergy.com
----------------------------------------------------------------------------
Telephone
Dial-In: 877-407-9171 (toll-free) and 201-493-6757 (international)
----------------------------------------------------------------------------
Telephone Available through Friday, August 11, 2014
Replay: 877-660-6853 (toll-free) and 201-612-7415 (international)
Passcode: 13572777
----------------------------------------------------------------------------
Pre-Tax PV-10 Disclosures
Pre-Tax PV-10 values oil and natural gas reserve quantities and related
discounted future net cash flows as of June 30, 2014 assuming average constant
realized prices of $89.22 per Bbl of oil and $5.08 per Mcf for natural gas. The
average natural gas price reflects the value of processed natural gas sales and
natural gas liquids. Under SEC guidelines, these prices represent the average
prices per Bbl of oil and per Mcf of natural gas at the beginning of each month
in the 12-month period prior to the end of the reporting period, which averages
are then adjusted to reflect applicable transportation and quality
differentials. Boe are computed based on a conversion ratio of one Boe for each
barrel of oil and one Boe for every 6,000 cubic feet (6 Mcf) of natural gas.
The Company's Pre-Tax PV-10 assumes prices and costs discounted using an annual
discount rate of 10% without future escalation and without giving effect to
non-property related expenses such as general and administrative expenses, debt
service and depreciation, depletion and amortization. The Pre-Tax PV-10 values
of the Company's estimated proved reserves may be considered a non-GAAP
financial measure as defined by the SEC.
Uncertainties are inherent in estimating quantities of proved reserves,
including many risk factors beyond the Company's control. Reserve engineering is
a subjective process of estimating subsurface accumulations of oil and natural
gas that cannot be measured in an exact manner. As a result, estimates of proved
reserves may vary depending upon the engineer valuing the reserves. Further, the
Company's actual realized price for its oil and natural gas is not likely to
average the pricing parameters used to calculate its proved reserves. As such,
the oil and natural gas quantities and the value of those commodities ultimately
recovered from the Company's properties will vary from reserve estimates.
ABOUT AMERICAN EAGLE ENERGY CORPORATION
American Eagle Energy Corporation is an independent exploration and production
operator that is focused on acquiring acreage and developing wells in the
Williston Basin of North Dakota, targeting the Bakken and Three Forks shale oil
formations. The Company is based in Denver, CO. More information about American
Eagle can be found at www.americaneagleenergy.com or by contacting investor
relations at 303-798-5235 or ir@amzgcorp.com. Company filings with the
Securities and Exchange Commission can be obtained free of charge at the SEC's
website at www.sec.gov.
SAFE HARBOR
This press release may contain forward-looking statements regarding future
events and the Company's future results that are subject to the safe harbors
created under the Securities Act of 1933 (the "Securities Act") and the
Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than
statements of historical facts included in this press release regarding the
Company's financial position, business strategy, plans and objectives of
management for future operations, industry conditions, and indebtedness covenant
compliance are forward-looking statements. When used in this report,
forward-looking statements are generally accompanied by terms or phrases such as
"estimate," "project," "predict," "believe," "expect," "anticipate," "possible,"
"target," "plan," "intend," "seek," "goal," "will," "should," "may" or other
words and similar expressions that convey the uncertainty of future events or
outcomes. Items contemplating or making assumptions about, actual or potential
future sales, market size, collaborations, and trends or operating results also
constitute such forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties and
important factors (many of which are beyond the Company's control) that could
cause actual results to differ materially from those set forth in the
forward-looking statements, including the amount we may invest, the location,
and the scale of the drilling projects in which we intend to participate; our
beliefs with respect to the potential value of drilling projects; our beliefs
with regard to the impact of environmental and other regulations on our
business; our beliefs with respect to the strengths of our business model; our
assumptions, beliefs, and expectations with respect to future market conditions;
our plans for future capital expenditures; and our capital needs, the adequacy
of our capital resources, and potential sources of capital.
The Company has based these forward-looking statements on its current
expectations and assumptions about future events. While management considers
these expectations and assumptions to be reasonable, they are inherently subject
to significant business, economic, competitive, regulatory, and other risks,
contingencies, and uncertainties, most of which are difficult to predict and
many of which are beyond the Company's control. The Company does not assume any
obligations to update any of these forward-looking statements.
AMERICAN EAGLE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2014 2013
------------ ------------
Current assets:
Cash $ 22,187,502 $ 31,850,161
Trade receivables 21,054,292 17,919,518
Income tax receivable 25,000 -
Prepaid expenses 124,727 68,194
------------ ------------
Total current assets 43,391,521 49,837,873
Equipment and leasehold improvements, net of
accumulated depreciation and amortization of
$390,261 and $322,437, respectively 296,950 173,516
Oil and gas properties, full-cost method -
subject to amortization, net of accumulated
depletion of $22,236,408 and $12,849,063,
respectively 265,552,093 155,145,039
Oil and gas properties, full-cost method - not
subject to amortization 2,487,322 2,487,158
Marketable securities 1,418,446 1,049,944
Other assets 6,740,115 7,503,612
------------ ------------
Total assets $319,886,447 $216,197,142
============ ============
Current liabilities:
Accounts payable and accrued liabilities $ 65,573,253 $ 41,842,068
Derivative liability 3,959,643 64,737
Current portion of long-term debt 108,000,000 3,000,000
------------ ------------
Total current liabilities 177,532,896 44,906,805
Asset retirement obligation 1,405,488 1,059,689
Noncurrent portion of long-term debt - 105,000,000
Noncurrent derivative liability 4,878,187 749,872
Deferred taxes 2,650,619 5,385,954
------------ ------------
Total liabilities 186,467,190 157,102,320
Stockholders' equity:
Common stock, $.001 par value, 48,611,111
shares authorized, 30,436,766 and 17,712,151
shares outstanding 30,437 17,712
Additional paid-in capital 146,381,963 67,197,521
Accumulated other comprehensive loss 49,783 (5,747)
Accumulated deficit (13,042,926) (8,114,664)
------------ ------------
Total stockholders' equity 133,419,257 59,094,822
------------ ------------
Total liabilities and stockholders' equity $319,886,447 $216,197,142
============ ============
AMERICAN EAGLE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three-Month
Period For the Six-Month Period
Ended June 30, Ended June 30,
------------------------ ------------------------
2014 2013 2014 2013
----------- ----------- ----------- -----------
Oil and gas sales $16,462,664 $10,369,993 $29,008,143 $17,998,700
Operating expenses:
Oil and gas production
costs 5,200,481 2,953,522 8,853,357 4,602,056
General and
administrative 1,662,493 1,260,329 3,680,031 2,567,662
Depletion,
depreciation and
amortization expense 5,706,588 2,116,378 9,342,507 3,391,301
Impairment of oil and
gas properties,
subject to
amortization - - - 1,525,027
----------- ----------- ----------- -----------
Total operating
expenses 12,569,562 6,330,229 21,875,895 12,086,046
----------- ----------- ----------- -----------
Total operating income 3,893,102 4,039,764 7,132,248 5,912,654
Interest income - 1,472 642 4,628
Dividend income 11,685 16,982 27,481 34,222
Interest expense (3,250,568) (414,797) (6,465,520) (833,137)
Loss on settlement of
derivatives (457,008) - (341,360) -
Change in fair value of
derivatives (6,200,119) 186,754 (8,023,221) 159,247
----------- ----------- ----------- -----------
Income (loss) before
taxes (6,002,908) 3,830,175 (7,669,730) 5,277,614
Income tax expense
(benefit) (2,103,093) 1,192,691 (2,741,468) 2,284,783
----------- ----------- ----------- -----------
Net income (loss) $(3,899,815) $2,637,484 $(4,928,262) $2,992,831
=========== =========== =========== ===========
Net income (loss) per
common share:
Basic $ (0.13 ) $ 0.21 $ (0.20 ) $ 0.24
=========== =========== =========== ===========
Diluted $ (0.13 ) $ 0.20 $ (0.20 ) $ 0.23
=========== =========== =========== ===========
Weighted average number
of shares outstanding -
Basic 30,436,424 12,517,087 24,529,013 12,494,987
=========== =========== =========== ===========
Diluted 30,436,424 12,992,218 24,529,013 12,944,561
=========== =========== =========== ===========
AMERICAN EAGLE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the Three-Month Period For the Six-Month Period
Ended June 30, Ended June 30,
-------------------------- --------------------------
2014 2013 2014 2013
------------ ------------ ------------ ------------
Net income (loss) $ (3,899,815) $ 2,637,484 $ (4,928,262) $ 2,992,831
Other
comprehensive
income (loss),
net of tax:
Unrealized
foreign
exchange gains
(losses) (272,769) 42,220 (116,573) 12,783
Unrealized gains
(losses) on
securities 214,963 (32,999) 172,103 (33,817)
------------ ------------ ------------ ------------
Total other
comprehensive
income
(loss), net
of tax (57,806) 9,221 55,530 (21,034)
------------ ------------ ------------ ------------
Comprehensive
income (loss) $ (3,957,621) $ 2,646,705 $ (4,872,732) $ 2,971,797
============ ============ ============ ============
AMERICAN EAGLE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six-Month Periods
Ended June 30,
--------------------------
2014 2013
------------ ------------
Cash flows provided by operating activities:
Net income (loss) $ (4,928,262) $ 2,992,831
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Non-cash transactions:
Stock-based compensation 898,674 524,520
Depletion, depreciation and amortization 9,342,507 3,391,301
Accretion of discount on asset retirement
obligation 51,491 27,303
Amortization of deferred financing costs 763,497 112,175
Provision for deferred income tax expense
(benefit) (2,735,335) 2,278,509
Impairment of oil and gas properties - 1,525,027
Change in fair value of derivatives 8,023,221 (159,247)
Foreign currency transaction gains - 2,121
Changes in operating assets and liabilities:
Prepaid expense (56,484) (199,492)
Trade receivables (3,612,973) (1,255,617)
Income taxes receivable (25,000) -
Accounts payable and accrued liabilities 1,512,529 4,621,105
------------ ------------
Net cash provided by operating activities 9,233,865 13,860,536
------------ ------------
Cash flows used for investing activities:
Additions to oil and gas properties (96,784,537) (16,986,731)
Additions to equipment and leasehold
improvements (191,258) (10,318)
Decrease in amounts due to Carry Agreement
partner - (2,283,973)
Purchase of marketable securities (196,400) -
------------ ------------
Net cash used for investing activities (97,172,195) (19,281,022)
------------ ------------
Cash flows provided by financing activities:
Proceeds from issuance of stock 78,298,493 4,000,000
Proceeds from issuance of long-term debt - 2,000,000
Repayment of long-term debt - (2,611,463)
------------ ------------
Net cash provided by financing activities 78,298,493 3,388,537
------------ ------------
Effect of exchange rate changes on cash (22,822) 26,278
------------ ------------
Net change in cash (9,662,659) (2,005,671)
Cash - beginning of period 31,850,161 19,057,727
------------ ------------
Cash - end of period $ 22,187,502 $ 17,052,056
============ ============
Non-GAAP Financial Measures
Adjusted EBITDA
In addition to reporting net income (loss) as defined under GAAP, American Eagle
also presents net earnings before interest income, dividend income, interest
expense, income taxes, depletion, depreciation, and amortization, non-cash
expenses related to stock-based compensation, impairment of oil and gas
properties, loss on early extinguishment of debt, and change in value of
derivatives recognized under ASC Topic 718 ("Adjusted EBITDA"), which is a
non-GAAP performance measure. Adjusted EBITDA consists of net earnings after
adjustment for those items described in the table below. Adjusted EBITDA does
not represent, and should not be considered an alternative to GAAP measurements,
such as net income (loss) (its most directly comparable GAAP measure), and the
calculations thereof may not be comparable to similarly titled measures reported
by other companies. By eliminating the items described below, American Eagle
believes the measure is useful in evaluating its fundamental core operating
performance. The Company also believes that Adjusted EBITDA is useful to
investors because similar measures are frequently used by securities analysts,
investors, and other interested parties in their evaluation of companies in
similar industries. American Eagle's management uses Adjusted EBITDA to manage
its business, including in preparing its annual operating budget and financial
projections. Management does not view Adjusted EBITDA in isolation and also uses
other measurements, such as net income (loss) and revenues to measure operating
performance. The following table provides a reconciliation of net income (loss)
to Adjusted EBITDA for the periods presented:
Three Months Ended
--------------------------
June 30, March 31,
2014 2014
------------ ------------
Net income (loss) ($ 3,899,815) ($ 1,028,447)
Less: Interest income - (641)
Less: Dividend income (11,685) (15,797)
Add: Interest expense 3,250,568 3,214,952
Add: Income tax expense (benefit) (2,103,093) (638,375)
Add: Depletion, depreciation and
amortization 5,706,588 3,635,919
Add: Stock-based compensation 444,648 454,026
Add: Impairment of oil and gas
properties - -
Add: Loss on early extinguishment
of debt - -
Add: Change in value of
derivatives 6,200,119 1,823,102
------------ ------------
Adjusted EBITDA $ 9,587,330 $ 7,444,739
============ ============
Three Months Ended
------------------------------------------
December 31, September 30, June 30,
2013 2013 2013
------------- ------------- ------------
Net income (loss) ($ 462,160) ($ 936,237) $ 2,637,484
Less: Interest income (6,964) (1,700) (1,472)
Less: Dividend income (16,523) (16,697) (16,982)
Add: Interest expense 3,207,039 1,315,865 414,797
Add: Income tax expense (benefit) 130,056 (646,123) 1,192,691
Add: Depletion, depreciation and
amortization 4,158,124 2,524,039 2,116,378
Add: Stock-based compensation 375,756 302,842 287,172
Add: Impairment of oil and gas
properties 206,508 - -
Add: Loss on early extinguishment
of debt - 3,713,972 -
Add: Change in value of
derivatives 39,569 934,287 (186,754)
------------- ------------- ------------
Adjusted EBITDA $ 7,631,405 $ 7,190,248 $ 6,443,314
============= ============= ============
Adjusted Cash Flow
In addition to reporting net income (loss) as defined under GAAP, American Eagle
also presents cash flow after paying interest expense ("Adjusted Cash Flow"),
which is a non-GAAP performance measure. Adjusted Cash Flow consists of Adjusted
EBITDA after adjustment for those items described in the table below. Adjusted
EBITDA does not represent, and should not be considered an alternative to GAAP
measurements, such as net income (loss) (its most directly comparable GAAP
measure), and the calculations thereof may not be comparable to similarly titled
measures reported by other companies. By eliminating the items described below,
American Eagle believes the measure is useful in evaluating its fundamental core
operating performance. The Company also believes that Adjusted Cash Flow is
useful to investors because similar measures are frequently used by securities
analysts, investors, and other interested parties in their evaluation of
companies in similar industries. American Eagle's management uses Adjusted Cash
Flow to manage its business, including in preparing its annual operating budget
and financial projections. Management does not view Adjusted Cash Flow in
isolation and also uses other measurements, such as net income (loss) and
revenues to measure operating performance. The following table provides a
reconciliation of Adjusted EBITDA to Adjusted Cash Flow for the periods
presented:
Three Months Ended
------------------------
June 30, March 31,
2014 2014
----------- -----------
Adjusted EBITDA (1) $ 9,587,330 $ 7,444,739
Less: Interest expense (3,250,568) (3,214,952)
Add: Amortization of deferred
financing costs (non-cash) 383,857 379,640
----------- -----------
Adjusted Cash Flow $ 6,720,619 $ 4,609,427
=========== ===========
Adjusted Cash Flow per share -
basic $ 0.22 $ 0.25
Adjusted Cash Flow per share -
diluted $ 0.22 $ 0.24
Weighted average shares - basic 30,436,424 18,556,695
Weighted average shares -
diluted 31,017,574 19,205,118
Three Months Ended
-------------------------------------------
December 31, September 30, June 30,
2013 2013 2013
------------- ------------- -------------
Adjusted EBITDA (1) $ 7,631,405 $ 7,190,248 $ 6,443,314
Less: Interest expense (3,207,039) (1,315,865) (414,797)
Add: Amortization of deferred
financing costs (non-cash) 327,922 161,758 66,944
------------- ------------- -------------
Adjusted Cash Flow $ 4,752,288 $ 6,036,141 $ 6,095,461
============= ============= =============
Adjusted Cash Flow per share -
basic $ 0.34 $ 0.46 $ 0.49
Adjusted Cash Flow per share -
diluted $ 0.33 $ 0.44 $ 0.47
Weighted average shares - basic 13,961,688 13,223,608 12,517,087
Weighted average shares -
diluted 14,598,836 13,732,595 12,992,218
(1) See previous table for reconciliation of net income (loss) to Adjusted
EBITDA.
Adjusted Income
In addition to reporting net income (loss) as defined under GAAP, American Eagle
also presents net earnings before the impairment of oil and gas properties, loss
on early extinguishment of debt, and non-cash expenses related to the change in
fair value of derivatives ("adjusted income (loss)"), which is a non-GAAP
performance measure. Adjusted income (loss) consists of net earnings after
adjustment for those items described in the table below. Adjusted income (loss)
does not represent, and should not be considered an alternative to GAAP
measurements, such as net income (loss), and the calculations thereof may not be
comparable to similarly titled measures reported by other companies. By
eliminating the items described below, American Eagle believes the measure is
useful in evaluating its fundamental core operating performance. The Company
also believes that adjusted income (loss) is useful to investors because similar
measures are frequently used by securities analysts, investors, and other
interested parties in their evaluation of companies in similar industries.
American Eagle's management uses adjusted income (loss) to manage its business,
including in preparing its annual operating budget and financial projections.
Management does not view adjusted income (loss) in isolation and also uses other
measurements, such as net income (loss) and revenues to measure operating
performance. The following table provides a reconciliation of net income (loss),
to adjusted income (loss) for the periods presented:
Three Months Ended
-------------------------------
June 30, March 31,
2014 2014
------------- -------------
Net income (loss) ($ 3,899,815) ($ 1,028,447)
Add: Impairment of oil and gas
properties - -
Add: Loss on early
extinguishment of debt - -
Add: Change in fair value of
derivatives 6,200,119 1,823,102
------------- -------------
Adjusted Income / (Loss) $ 2,300,303 $ 794,655
============= =============
Adjusted Income (Loss) per share
- basic $ 0.08 $ 0.04
Adjusted Income (Loss) per share
- diluted $ 0.07 $ 0.04
Weighted average shares - basic 30,436,424 18,556,695
Weighted average shares -
diluted 31,017,574 19,205,118
Three Months Ended
-------------------------------------------
December 31, September 30, June 30,
2013 2013 2013
------------ -------------- -------------
Net income (loss) ( 462,160) ($ 936,237) $ 2,637,484
Add: Impairment of oil and gas
properties 206,508 - -
Add: Loss on early
extinguishment of debt - 3,713,972 -
Add: Change in fair value of
derivatives 39,569 934,287 ( 186,754)
------------ -------------- -------------
Adjusted Income / (Loss) ($ 216,083) $ 3,712,022 $ 2,450,730
============ ============== =============
Adjusted Income (Loss) per share
- basic $ (0.02) $ 0.28 $ 0.20
Adjusted Income (Loss) per share
- diluted $ (0.01) $ 0.27 $ 0.19
Weighted average shares - basic 13,961,688 13,223,608 12,517,087
Weighted average shares -
diluted 14,598,836 13,732,595 12,992,218
FOR FURTHER INFORMATION PLEASE CONTACT:
CORPORATE CONTACT:
Marty Beskow, CFA
Vice President of Capital Markets and Strategy
American Eagle Energy Corporation
720-330-8378
ir@amzgcorp.com
www.americaneagleenergy.com
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