Phillips 66 press release

Yuma Energy, Inc. Announces Third Quarter 2016 Financial Results

2016-11-14

NYSE - New York Stock Exchange · Oil · Natural Gas Liquids · Natural Gas · Sulfur · Graphite · Bitumen · United States

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HOUSTON, TX / ACCESSWIRE / November 14, 2016 / Yuma Energy, Inc. (NYSE MKT: YUMA) (the "Company" or "Yuma") today announced its financial results for the quarter ended September 30, 2016. These financial results only reflect Yuma Energy, Inc. as a stand-alone entity prior to the merger with Davis Petroleum Acquisition Corp., and do not reflect the combination of the two companies.

Financial Results

Sales and Other Operating Revenues

The following table presents the net quantities of oil, natural gas and natural gas liquids produced and sold by us for the three and nine months ended September 30, 2016 and 2015, and the average sales price per unit sold:

| | | Three Months Ended

September 30, | | | Nine Months Ended

September 30, | | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2016 | | | 2015 | | | | | | | Production volumes: | | | | | | | | | | | | | | | | | | Crude oil and condensate (Bbl) | | | 47,079 | | | | 61,938 | | | | 155,986 | | | | 186,531 | | | Natural gas (Mcf) | | | 340,189 | | | | 497,868 | | | | 1,148,587 | | | | 1,488,408 | | | Natural gas liquids (Bbl) | | | 12,613 | | | | 20,899 | | | | 41,771 | | | | 54,838 | | | Total (Boe)(1) | | | 116,390 | | | | 165,815 | | | | 389,188 | | | | 489,437 | | | | | | | | | | | | | | | | | | | | | Average prices realized: | | | | | | | | | | | | | | | | | | Excluding commodity derivatives: | | | | | | | | | | | | | | | | | | Crude oil and condensate (per Bbl) | | $ | 42.49 | | | $ | 46.10 | | | $ | 37.51 | | | $ | 50.52 | | | Natural gas (per Mcf) | | $ | 2.72 | | | $ | 2.72 | | | $ | 2.28 | | | $ | 2.77 | | | Natural gas liquids (per Bbl) | | $ | 17.94 | | | $ | 18.61 | | | $ | 17.71 | | | $ | 19.20 | | | Including commodity derivatives: | | | | | | | | | | | | | | | | | | Crude oil and condensate (per Bbl) | | $ | 53.46 | | | $ | 51.41 | | | $ | 49.24 | | | $ | 66.25 | | | Natural gas (per Mcf) | | $ | 2.64 | | | $ | 2.93 | | | $ | 2.61 | | | $ | 4.24 | | | Natural gas liquids (per Bbl) | | $ | 17.94 | | | $ | 18.61 | | | $ | 17.71 | | | $ | 19.20 | |

(1) Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).

The following table presents our revenues for the three and six months ended September 30, 2016 and 2015:

| | | Three Months Ended

September 30, | | | Nine Months Ended

September 30, | | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2016 | | | 2015 | | | | | | | Sales of natural gas and crude oil: | | | | | | | | | | | | | | | | | | Crude oil and condensate | | $ | 2,000,373 | | | $ | 2,855,530 | | | $ | 5,851,235 | | | $ | 9,423,519 | | | Natural gas | | | 924,994 | | | | 1,340,877 | | | | 2,616,440 | | | | 4,112,065 | | | Natural gas liquids | | | 226,259 | | | | 388,966 | | | | 739,961 | | | | 1,053,076 | | | Realized gain (loss) on commodity derivatives | | | 488,409 | | | | 432,824 | | | | 2,205,216 | | | | 5,114,609 | | | Unrealized loss on commodity derivatives | | | (40,473 | ) | | | 3,460,825 | | | | (2,613,044 | ) | | | (1,847,371 | ) | | Gas marketing sales | | | - | | | | 63,637 | | | | - | | | | 167,923 | | | | | | | | | | | | | | | | | | | | | Total revenues | | $ | 3,599,562 | | | $ | 8,542,659 | | | $ | 8,799,808 | | | $ | 18,023,821 | |

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

The following table reconciles reported net income to Adjusted EBITDA for the periods indicated:

| | | Three Months Ended

September 30, | | | Nine Months Ended

September 30, | | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2016 | | | 2015 | | | | | | | Net Loss | | $ | (2,115,444 | ) | | $ | (90,410 | ) | | $ | (20,863,218 | ) | | $ | (13,323,076 | ) | | Depreciation, depletion & amortization of property and equipment | | | 1,711,043 | | | | 3,123,812 | | | | 6,178,248 | | | | 11,020,278 | | | Interest expense, net of interest income and amounts capitalized | | | 245,343 | | | | 131,114 | | | | 974,248 | | | | 319,561 | | | Income tax benefit | | | (47,429 | ) | | | 329,653 | | | | (1,272,664 | ) | | | (3,605,839 | ) | | Impairment of oil and gas properties | | | - | | | | - | | | | 11,015,589 | | | | - | | | Impairment of goodwill | | | - | | | | - | | | | - | | | | 4,927,508 | | | Merger costs | | | 229,647 | | | | - | | | | 1,061,324 | | | | - | | | Stock-based compensation net of capitalized cost | | | 189,211 | | | | 338,619 | | | | 909,309 | | | | 2,210,950 | | | Unrealized (gains) losses on commodity derivatives | | | 40,473 | | | | (3,460,825 | ) | | | 2,613,044 | | | | 1,847,371 | | | Accretion of asset retirement obligation | | | 107,760 | | | | 170,209 | | | | 318,016 | | | | 499,766 | | | Adjusted EBITDA | | $ | 360,604 | | | $ | 542,172 | | | $ | 933,896 | | | $ | 3,896,519 | |

Adjusted EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance compared to that of other companies in our industry, without regard to financing methods, capital structure or historical costs basis. It is also used to assess our ability to incur and service debt and fund capital expenditures. Our Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flow provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner.

Yuma Energy, Inc. CONSOLIDATED BALANCE SHEETS (Unaudited)

| | | September 30, | | | December 31, | | | | | | | 2016 | | | 2015 | | | | | | | (Unaudited) | | | (As Restated) | | | | | ASSETS | | | | | | | | | | | | | | | | | | | | CURRENT ASSETS: | | | | | | | | | | Cash and cash equivalents | | $ | 1,831,928 | | | $ | 5,355,191 | | | Accounts receivable, net of allowance for doubtful accounts: | | | | | | | | | | Trade | | | 2,942,948 | | | | 2,829,266 | | | Officers and employees | | | 65,153 | | | | 75,404 | | | Other | | | 338,461 | | | | 633,573 | | | Commodity derivative instruments | | | 1,016,583 | | | | 2,658,047 | | | Prepayments | | | 321,237 | | | | 704,523 | | | Other deferred charges | | | 29,921 | | | | 415,740 | | | | | | | | | | | | | Total current assets | | | 6,546,231 | | | | 12,671,744 | | | | | | | | | | | | | OIL AND GAS PROPERTIES (full cost method): | | | | | | | | | | Not subject to amortization | | | 15,336,916 | | | | 14,288,716 | | | Subject to amortization | | | 205,331,835 | | | | 204,512,038 | | | | | | | | | | | | | | | | 220,668,751 | | | | 218,800,754 | | | Less: accumulated depreciation, depletion and amortization | | | (134,312,088 | ) | | | (117,304,945 | ) | | | | | | | | | | | | Net oil and gas properties | | | 86,356,663 | | | | 101,495,809 | | | | | | | | | | | | | OTHER PROPERTY AND EQUIPMENT: | | | | | | | | | | Land, buildings and improvements | | | 2,795,000 | | | | 2,795,000 | | | Other property and equipment | | | 3,497,948 | | | | 3,460,507 | | | | | | 6,292,948 | | | | 6,255,507 | | | Less: accumulated depreciation and amortization | | | (2,361,010 | ) | | | (2,174,316 | ) | | | | | | | | | | | | Net other property and equipment | | | 3,931,938 | | | | 4,081,191 | | | | | | | | | | | | | OTHER ASSETS AND DEFERRED CHARGES: | | | | | | | | | | Commodity derivative instruments | | | 177,724 | | | | 1,070,541 | | | Deposits | | | 414,064 | | | | 264,064 | | | Other noncurrent assets | | | - | | | | 38,104 | | | | | | | | | | | | | Total other assets and deferred charges | | | 591,788 | | | | 1,372,709 | | | | | | | | | | | | | TOTAL ASSETS | | $ | 97,426,620 | | | $ | 119,621,453 | |

Yuma Energy, Inc. CONSOLIDATED BALANCE SHEETS - CONTINUED (Unaudited)

| | | September 30, | | | December 31, | | | | | | | 2016 | | | 2015 | | | | | | | (Unaudited) | | | (As Restated) | | | | | LIABILITIES AND EQUITY | | | | | | | | | | | | | | | | | | | | CURRENT LIABILITIES: | | | | | | | | | | Current maturities of debt | | $ | 29,800,000 | | | $ | 30,063,635 | | | Accounts payable, principally trade | | | 6,378,942 | | | | 7,933,664 | | | Commodity derivative instruments | | | 74,331 | | | | - | | | Asset retirement obligations | | | 243,711 | | | | 70,000 | | | Other accrued liabilities | | | 2,593,813 | | | | 1,781,484 | | | | | | | | | | | | | Total current liabilities | | | 39,090,797 | | | | 39,848,783 | | | | | | | | | | | | | OTHER NONCURRENT LIABILITIES: | | | | | | | | | | Asset retirement obligations | | | 8,571,895 | | | | 8,720,498 | | | Commodity derivative instruments | | | 4,432 | | | | - | | | Deferred taxes | | | 144,700 | | | | 1,417,364 | | | Other liabilities | | | 7,467 | | | | 30,090 | | | | | | | | | | | | | Total other noncurrent liabilities | | | 8,728,494 | | | | 10,167,952 | | | | | | | | | | | | | EQUITY: | | | | | | | | | | Preferred stock | | | 10,828,603 | | | | 10,828,603 | | | Common stock, no par value (300 million shares authorized, 3,628,991 and 3,591,731 issued) | | | 142,724,775 | | | | 141,858,946 | | | Accumulated earnings (deficit) | | | (103,946,049 | ) | | | (83,082,831 | ) | | | | | | | | | | | | Total equity | | | 49,607,329 | | | | 69,604,718 | | | | | | | | | | | | | TOTAL LIABILITIES AND EQUITY | | $ | 97,426,620 | | | $ | 119,621,453 | |

Yuma Energy, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

| | | Three Months Ended

September 30, | | | Nine Months Ended

September 30, | | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2016 | | | 2015 | | | | | | | | | | | | (As Restated) | | | | | | (As Restated) | | | | | | | REVENUES: | | | | | | | | | | | | | | | | | | Sales of natural gas and crude oil | | $ | 3,151,626 | | | $ | 4,649,009 | | | $ | 9,207,636 | | | $ | 14,756,582 | | | Net gains (losses) from commodity derivatives | | | 447,936 | | | | 3,893,650 | | | | (407,828 | ) | | | 3,267,239 | | | Total revenues | | | 3,599,562 | | | | 8,542,659 | | | | 8,799,808 | | | | 18,023,821 | | | | | | | | | | | | | | | | | | | | | EXPENSES: | | | | | | | | | | | | | | | | | | Lease operating | | | 1,798,868 | | | | 2,718,919 | | | | 5,692,077 | | | | 9,168,260 | | | Re-engineering and workovers | | | 132,708 | | | | 1,136 | | | | 132,708 | | | | 555,628 | | | Marketing cost of sales | | | - | | | | 234,507 | | | | - | | | | 434,189 | | | General and administrative – stock-based compensation | | | 189,211 | | | | 338,619 | | | | 909,309 | | | | 2,210,950 | | | General and administrative – other | | | 1,581,619 | | | | 1,873,484 | | | | 5,742,824 | | | | 5,389,859 | | | Depreciation, depletion and amortization | | | 1,711,043 | | | | 3,123,812 | | | | 6,178,248 | | | | 11,020,278 | | | Asset retirement obligation accretion expense | | | 107,760 | | | | 170,209 | | | | 318,016 | | | | 499,766 | | | Impairments | | | - | | | | - | | | | 11,015,589 | | | | 4,927,508 | | | Other | | | 6,612 | | | | (274,329 | ) | | | (10,173 | ) | | | 444,320 | | | Total expenses | | | 5,527,821 | | | | 8,186,357 | | | | 29,978,598 | | | | 34,650,758 | | | | | | | | | | | | | | | | | | | | | INCOME (LOSS) FROM OPERATIONS | | | (1,928,259 | ) | | | 356,302 | | | | (21,178,790 | ) | | | (16,626,937 | ) | | | | | | | | | | | | | | | | | | | | OTHER INCOME (EXPENSE): | | | | | | | | | | | | | | | | | | Interest expense | | | (245,359 | ) | | | (131,114 | ) | | | (974,403 | ) | | | (337,499 | ) | | Other, net | | | 10,745 | | | | 14,055 | | | | 17,311 | | | | 35,521 | | | Total other income (expense) | | | (234,614 | ) | | | (117,059 | ) | | | (957,092 | ) | | | (301,978 | ) | | | | | | | | | | | | | | | | | | | | NET INCOME (LOSS) BEFORE INCOME TAXES | | | (2,162,873 | ) | | | 239,243 | | | | (22,135,882 | ) | | | (16,928,915 | ) | | | | | | | | | | | | | | | | | | | | Income tax expense (benefit) | | | (47,429 | ) | | | 329,653 | | | | (1,272,664 | ) | | | (3,605,839 | ) | | | | | | | | | | | | | | | | | | | | NET INCOME (LOSS) | | | (2,115,444 | ) | | | (90,410 | ) | | | (20,863,218 | ) | | | (13,323,076 | ) | | | | | | | | | | | | | | | | | | | | PREFERRED STOCK, PERPETUAL PREFERRED SERIES A: | | | | | | | | | | | | | | | | | | Dividends paid in cash | | | - | | | | 320,626 | | | | - | | | | 940,315 | | | Dividends in arrears | | | 320,625 | | | | - | | | | 961,877 | | | | - | | | | | | | | | | | | | | | | | | | | | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON | | | | | | | | | | | | | | | | | | STOCKHOLDERS | | $ | (2,436,069 | ) | | $ | (411,036 | ) | | $ | (21,825,095 | ) | | $ | (14,263,391 | ) | | | | | | | | | | | | | | | | | | | | EARNINGS (LOSS) PER COMMON SHARE ADJUSTED FOR | | | | | | | | | | | | | | | | | | OCTOBER 26, 2016 1-FOR-20 REVERSE STOCK SPLIT: | | | | | | | | | | | | | | | | | | Basic | | $ | (0.67 | ) | | $ | (0.11 | ) | | $ | (6.04 | ) | | $ | (4.03 | ) | | Diluted | | $ | (0.67 | ) | | $ | (0.11 | ) | | $ | (6.04 | ) | | $ | (4.03 | ) | | | | | | | | | | | | | | | | | | | | WEIGHTED AVERAGE NUMBER OF COMMON SHARES | | | | | | | | | | | | | | | | | | OUTSTANDING ADJUSTED FOR OCTOBER 26, 2016 1-FOR-20 | | | | | | | | | | | | | | | | | | REVERSE STOCK SPLIT: | | | | | | | | | | | | | | | | | | Basic | | | 3,628,683 | | | | 3,580,163 | | | | 3,611,241 | | | | 3,539,755 | | | Diluted | | | 3,628,683 | | | | 3,580,163 | | | | 3,611,241 | | | | 3,539,755 | | | | | | | | | | | | | | | | | | | |

Yuma Energy, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

| | | Nine Months Ended

September 30, | | | | | | | | | | 2016 | | | 2015 | | | | | | | | | | (As Restated) | | | | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | Reconciliation of net loss to net cash provided by (used in) operating activities | | | | | | | | | | Net loss | | $ | (20,863,218 | ) | | $ | (13,323,076 | ) | | Impairment of oil and gas properties | | | 11,015,589 | | | | - | | | Impairment of goodwill | | | - | | | | 4,927,508 | | | Depreciation, depletion and amortization of property and equipment | | | 6,178,248 | | | | 11,020,278 | | | Accretion of asset retirement obligation | | | 318,016 | | | | 499,766 | | | Stock-based compensation net of capitalized cost | | | 909,309 | | | | 2,210,950 | | | Amortization of other assets and liabilities | | | 518,478 | | | | 209,904 | | | Deferred tax expense (benefit) | | | (1,272,664 | ) | | | (3,608,239 | ) | | Bad debt expense increase (decrease) | | | (10,173 | ) | | | 787,264 | | | Unrealized losses on commodity derivatives | | | 2,613,044 | | | | 1,847,371 | | | Other | | | - | | | | (342,944 | ) | | Changes in current operating assets and liabilities: | | | | | | | | | | Accounts receivable | | | 201,854 | | | | 4,411,640 | | | Other current assets | | | 383,286 | | | | (77,453 | ) | | Accounts payable | | | (1,471,397 | ) | | | (13,938,649 | ) | | Other current liabilities | | | 783,551 | | | | 1,095,356 | | | Other noncurrent assets and liabilities | | | (108,618 | ) | | | - | | | NET CASH USED IN OPERATING ACTIVITIES | | | (804,695 | ) | | | (4,280,324 | ) | | | | | | | | | | | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | Capital expenditures on property and equipment | | | (2,588,455 | ) | | | (11,211,634 | ) | | Proceeds from sale of property | | | 340,603 | | | | 30,442 | | | Decrease in short-term investments | | | - | | | | 1,170,868 | | | NET CASH USED IN INVESTING ACTIVITIES | | | (2,247,852 | ) | | | (10,010,324 | ) | | | | | | | | | | | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | Change in borrowing on line of credit | | | - | | | $ | 6,800,000 | | | Proceeds from insurance note | | | - | | | | 813,562 | | | Payments on insurance note | | | (263,635 | ) | | | (579,005 | ) | | Line of credit financing costs | | | (132,659 | ) | | | (215,141 | ) | | Net proceeds from sale of common stock | | | - | | | | 1,363,160 | | | Net proceeds from sale of perpetual preferred stock | | | - | | | | 870,386 | | | Cash dividends to preferred shareholders | | | - | | | | (940,315 | ) | | Common stock purchased from employees | | | (74,422 | ) | | | (300,732 | ) | | Other | | | - | | | | (31,485 | ) | | NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | | (470,716 | ) | | | 7,780,430 | | | | | | | | | | | | | NET DECREASE IN CASH AND CASH EQUIVALENTS | | | (3,523,263 | ) | | | (6,510,218 | ) | | | | | | | | | | | | CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | | | 5,355,191 | | | | 11,558,322 | | | | | | | | | | | | | CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | 1,831,928 | | | $ | 5,048,104 | | | | | | | | | | | | | Supplemental disclosure of cash flow information: | | | | | | | | | | Interest payments (net of interest capitalized) | | $ | 354,344 | | | $ | 73,342 | | | Interest capitalized | | $ | 395,244 | | | $ | 750,107 | | | Supplemental disclosure of significant non-cash activity: | | | | | | | | | | (Increase) decrease in capital expenditures financed by accounts payable | | $ | 83,325 | | | $ | 2,979,301 | |

About Yuma Energy, Inc.

Yuma Energy, Inc. is an independent Houston-based exploration and production company. We are focused on the acquisition, development, and exploration for conventional and unconventional oil and natural gas resources, primarily in the U.S. Gulf Coast and California. We have employed a 3-D seismic-based strategy to build a multi-year inventory of development and exploration prospects. Our current operations are focused on onshore assets located in central and southern Louisiana, where we are targeting the Austin Chalk, Tuscaloosa, Wilcox, Frio, Marg Tex and Hackberry formations. We also have company-operated conventional fields located onshore in south Louisiana and the upper Texas Gulf Coast, and non-operated properties include Eagle Ford and Eaglebine properties in east Texas. In addition, we have a non-operated position in the Bakken Shale in North Dakota and operated positions in Kern and Santa Barbara Counties in California. Our common stock is traded on the NYSE MKT under the trading symbol “YUMA.” For more information about Yuma Energy, Inc., please visit our website at www.yumaenergyinc.com.

Agreement and Plan of Merger and Reorganization

On February 10, 2016, Yuma Energy, Inc., a California corporation ("Yuma California"), Yuma Energy, Inc., a Delaware corporation and wholly-owned subsidiary of Yuma California (the "Company"), Delaware Merger Subsidiary, Inc., a Delaware corporation and wholly-owned subsidiary of the Company ("Merger Subsidiary"), and Davis Petroleum Acquisition Corp. ("Davis") entered into an agreement and plan of merger and reorganization, as subsequently amended on September 2, 2016 (the "Merger Agreement"), providing for the merger of Yuma California with and into the Company (the "Reincorporation Merger") and the merger of Merger Subsidiary with and into Davis (the "Merger"). The Reincorporation Merger and the Merger were consummated on October 26, 2016. In connection with the Reincorporation Merger, Yuma California converted each outstanding share of its 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share (the "Series A Preferred Stock"), into 35 shares of its common stock, no par value per share (the "Yuma California Common Stock"), and then each share of Yuma California Common Stock was exchanged for one-twentieth of one share of common stock, $0.001 par value per share, of the Company (the "Common Stock"). In connection with the Merger, the Company issued approximately 7,455,000 shares of Common Stock to former holders of common stock of Davis and approximately 1,754,000 shares of Series D Convertible Preferred Stock, $0.001 par value per share (the "Series D Preferred Stock"), of the Company, to former holders of Davis preferred stock. After the Reincorporation Merger and the Merger, the Company had approximately 12,201,000 shares of Common Stock issued and outstanding.

In connection with the Davis merger, on October 26, 2016, we entered into a Credit Agreement providing for a $75.0 million 3-year revolving credit facility (the "Credit Agreement") with SG Americas Securities, LLC ("SG Americas") as Lead Arranger and Bookrunner, Société Générale S.A. as Administrative Agent and the lenders party thereto. The Credit Agreement replaces our existing credit agreement. The initial borrowing base of the Credit Agreement is $44.0 million, and is subject to redetermination as of January 1, 2017 as well as April 1st and October 1st of each year. As of October 26, 2016, we had approximately $39.5 million outstanding under the Credit Agreement. All of the obligations under the Credit Agreement, and the guarantee of those obligations, are secured by substantially all of our assets and customary financial covenants have been made.