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Erin Energy Corporation - Announces Second Quarter 2016 Results And Provides Operational Update On Its West And East Africa Operations

Release Date: 10/08/2016 09:35:00      Code(s): ERN     
Provides Operational Update on its West and East Africa Operations

Erin Energy Corporation
 (Incorporated and registered in Delaware, United States of America)
Share code on the NYSE MKT: ERN
Share code on the JSE: ERN
ISIN: US1317452001
(?Erin Energy? or ?the Company?)

Erin Energy Announces Second Quarter 2016 Results
Provides Operational Update on its West and East Africa Operations

HOUSTON, August 8, 2016 - Erin Energy Corporation (?Erin Energy? or the ?Company?) (NYSE
MKT:ERN) (JSE:ERN) announced today financial and operational results for the quarter ended
June 30, 2016. The Company also provided an update on its upstream operations in Africa.

Second Quarter 2016 and Current Highlights:

          Successfully re-established production from the Oyo-8 well;

          Achieved net average daily production of 5,400 barrels of oil per day (bbls/d);

          Lifted and sold 508,000 barrels of oil;

          Realized revenues of $23.2 million;

          Successfully restructured Zenith term loan facility.

Segun Omidele, Chief Executive Officer commented: ?We continue to make progress with our
balance sheet restructuring and debt reduction initiatives, with our debt-to-equity conversion
strategy receiving positive responses from some of our vendors. Various cost reduction
measures that were initiated in the first-quarter 2016 are now becoming deeply embedded into
our operations, even as new ways of managing costs are continually being assessed for
implementation. In addition to these initiatives, management has made the tactical decision to
explore acquisition opportunities created by the current upstream environment and to look for
accretive, inorganic ways to grow our business.


During the quarter the Company successfully brought back on0line the Oyo-8 well using a
deepwater light intervention vessel and achieved net average daily oil production of 5,400
barrels per day compared to 1,800 barrels per day in Q1, 2016. Currently, Oyo-8 is producing
more than 7,000 barrels of oil per day. The Oyo-7 well could not come back on production
naturally, after an emergency shut down that occurred on July 1, 2016. This is due to high water
production from the well and this has resulted in a temporary production loss of about 1,400
barrels of oil per day.

Plans are currently being made to attempt to bring the Oyo-7 well back by introducing nitrogen
from the production facilities via subsea infrastructure to the well. The Company intends to
carry out this nitrogen lift after its next crude lifting scheduled for the week of August 15, 2016.

The Company continues to make progress in preparations for the next drilling campaign, which
is planned to commence in the fourth-quarter of this year. Both the identification of a drilling rig
and the procurement of long-lead well and subsea equipment are progressing well.
The Oyo-9 production well is planned as an additional development well within the central area
of the Oyo field in Oil Mining Lease 120 and will be tied into the existing production facilities to
increase the Company?s production by approximately 6,000 ? 7,000 barrels of oil per day.


The Ghana government has recently approved the extension of the Initial Exploration Period for
the Expanded Shallow Water Tano (ESWT) block operated by Erin Energy by 18 months, to
July 2018. The government also made some adjustments to the commercial terms of the
petroleum agreement to enable the early realization of the Tano development project when the
oil price recovers.

Geological and reservoir studies are ongoing with the existing 2-D and 3-D seismic datasets to
evaluate the various possible development options and the exploration potential of the block.
New 3-D marine seismic data acquisition over the entire block is in the execution planning
phase. The new seismic data will enable the high-grading of the exploration prospects as well
as firm-up the drilling candidates. Actual field operations await the resolution of the Ghana-Cote
d?Ivoire maritime border dispute arbitration in mid-2017.

The Gambia

The Company is currently awaiting the completion of the processing of the recently acquired 3-
D seismic data, expected to be completed in the third-quarter of 2016. Erin Energy expects to
resume talks with potential farm-out partners once the data is in-house. The Company?s A2 and
A5 blocks are located in the same prolific offshore geological basin as the recent world-class
discoveries by Cairn Energy in its offshore Senegal blocks.


Erin Energy is currently interpreting 2-D seismic data on its onshore blocks, L1B and L16.
Based on the interpretation of this 2-D data, the Company plans to design and acquire
additional seismic data in 2017 on blocks L1B and L16. The Company is actively marketing
both its onshore and offshore Kenya blocks to potential farm-out partners as part of our growth

Balance Sheet Strengthening and Cost Reduction Efforts

The Company has actively been working with its creditors and vendors to restructure its debt
facilities, finalize negotiations of payment agreements with vendors and to lower some of its
current outstanding accounts payable balance.

Erin Energy announced it has successfully completed the restructuring of its term loan facility
with Zenith Bank (Zenith). Under the new terms of the credit facility, the Company will only
make interest payments to Zenith until June 2017, with principal repayment beginning in June of
2017 on a sculpted basis to align with Company cash flows and allowing the facility to be fully
paid off at year-end 2021. The Company has received favorable response from some of its
vendors to convert outstanding payables to company equity.

In line with the Company?s stated goal of increasing production and reserves with a three-part
strategy of development, exploration and accretive production and reserves acquisitions, Erin
Energy has begun looking at strategic production asset acquisitions to help grow the Company?s
production and reserves. Erin Energy?s management team believes that focusing on potential
asset acquisitions in West Africa will allow the Company to leverage its strengths and focus to
increase revenue, corporate cash flows, and ultimately, shareholder value.
Financial Summary

For the second quarter 2016, Erin Energy reported revenues of $23.2 million, compared to nil
revenue during the second-quarter 2015. In the second-quarter, the Company lifted and sold
approximately 508,000 net barrels of oil at an average price of $45.58 per barrel, compared to
no liftings during the same period 2015. When compared to the first-quarter 2016, second-
quarter revenues were up 370% driven by increase in production from Oyo-8 being back online.

For the second quarter of 2016, the Company reported a net loss of $22.6 million, or $(0.11) per
basic and diluted share, compared to a net loss of $9.2 million, or $(0.04) per basic and diluted
share for the same period in 2015 and a first-quarter 2016 loss of $32.4 million, or $(0.15) per
basic and diluted share.

Average net daily production for the quarter was approximately 5,400 barrels of oil per day,
compared to 4,400 barrels oil per day for the same period 2015; and 1,800 barrels of oil per day
during the first-quarter 2016.

Erin Energy Corporation is an independent oil and gas exploration and production company
focused on energy resources in sub-Saharan Africa. Its asset portfolio consists of 9 licenses
across 4 countries covering an area of 40,000 square kilometres (10 million acres), including
current production and other exploration projects offshore Nigeria, as well as exploration
licenses offshore Ghana, Kenya and Gambia, and onshore Kenya. Erin Energy is
headquartered in Houston, Texas, and is listed on the New York and Johannesburg Stock
Exchanges under the ticker symbol ERN. More information about Erin Energy can be found at

Forward-Looking Statements

This news release contains ?forward-looking statements? within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All
statements, other than statements of historical fact, concerning activities, events or
developments that the Company expects, believes or anticipates will or may occur in the future
are forward-looking statements. Although the Company believes the expectations reflected in
these forward-looking statements are reasonable, they involve assumptions, risks and
uncertainties, and these expectations may prove to be incorrect.

The Company?s actual results could differ materially from those anticipated or implied in these
forward-looking statements due to a variety of factors, including the Company?s ability to
successfully finance, drill, produce and/or develop the wells and prospects identified in this
release, and risks and other risk factors discussed in the Company?s periodic reports filed with
the Securities and Exchange Commission. All forward-looking statements are expressly
qualified in their entirety by this cautionary statement. You should not place undue reliance on
forward-looking statements, which speak only as of their respective dates. The Company
undertakes no duty to update these forward-looking statements.

Source: Erin Energy Corporation

Lionel McBee, +1 713 797 2960

Chris du Toit, +27 11 593 7301

Sasfin Capital (a division of Sasfin Bank Limited)

10 August 2016

                                 ERIN ENERGY CORPORATION
                                 (In thousands, except per share amounts)

                                                           Three Months Ended June 30,         Six Months Ended June 30,
                                                             2016              2015             2016              2015
  Crude oil sales, net of royalties                    $       23,151 $                  ? $      28,080 $                  ?
Operating costs and expenses:
  Production costs                                             22,123              4,258          44,687             25,573
  Crude oil inventory (increase) decrease                         729             (9,874)           (102)            (9,861)
  Workover expenses                                             7,585                618           7,585                618
  Exploratory expenses                                          1,200              1,502           3,262              8,017
  Depreciation, depletion and amortization                     14,856                123          19,668                243
  Accretion of asset retirement obligations                       461                299             913                876
  Loss on settlement of asset retirement obligations               ?               3,454             205              3,454
  General and administrative expenses                           3,396              5,441           7,354              8,932
     Total operating costs and expenses                        50,350              5,821          83,572             37,852
Operating loss                                                (27,199)            (5,821)        (55,492)           (37,852)
Other income (expense):
  Currency transaction gain                                    10,465                555          11,328              1,991
  Interest expense                                             (5,954)            (4,224)        (11,379)            (6,835)
      Total other income (expense), net                         4,511             (3,669)            (51)            (4,844)
Loss before income taxes                                      (22,688)            (9,490)        (55,543)           (42,696)
Income tax expense                                                 ?                  ?               ?                  ?
Net loss before non-controlling interest                      (22,688)            (9,490)        (55,543)           (42,696)
   Net loss attributable to non-controlling interest                 116              328              560                 475
   Net loss attributable to Erin Energy Corporation    $      (22,572) $          (9,162) $      (54,983) $         (42,221)
Net loss attributable to Erin Energy Corporation per
common share:
  Basic                                                $            (0.11) $       (0.04) $         (0.26) $          (0.20)
  Diluted                                              $            (0.11) $       (0.04) $         (0.26) $          (0.20)
Weighted average common shares outstanding:
  Basic                                                       212,290           211,108          212,067           210,791
  Diluted                                                     212,290           211,108          212,067           210,791
                                             ERIN ENERGY CORPORATION
                                          CONSOLIDATED BALANCE SHEETS
                                   (In thousands, except for share and per share amounts)
                                                                                                                      June 30,         December 31,
                                                                                                                        2016               2015
Current assets:
   Cash and cash equivalents                                                                                      $          8,759 $            8,363
   Restricted cash                                                                                                              ?               8,661
   Accounts receivable - trade                                                                                                   3              1,029
   Accounts receivable - partners                                                                                              667                287
   Accounts receivable - related party                                                                                       1,732              1,186
   Accounts receivable - other                                                                                                  71                 28
   Crude oil inventory                                                                                                       5,895              4,789
   Prepaids and other current assets                                                                                         1,363                684
       Total current assets                                                                                                 18,490             25,027
Property, plant and equipment:
Oil and gas properties (successful efforts method of accounting), net                                                      329,371            348,331
Other property, plant and equipment, net                                                                                     1,023              1,174
       Total property, plant and equipment, net                                                                            330,394            349,505
Other non-current assets                                                                                                         76                   67
       Total assets                                                                                               $        348,960 $          374,599
Current liabilities:
   Accounts payable and accrued liabilities                                                                       $        242,033 $          213,120
   Accounts payable and accrued liabilities - related party                                                                 29,465             30,133
   Short-term note payable                                                                                                     357                 ?
   Current portion of long-term debt, net                                                                                    3,802             96,558
       Total current liabilities                                                                                           275,657            339,811
Long-term notes payable - related party, net                                                                               127,517            120,006
Term loan facility, net                                                                                                     83,441                 ?
Asset retirement obligations                                                                                                21,522             20,609
       Total liabilities                                                                                                   508,137            480,426
Commitments and contingencies (Note 10)
Capital deficiency:
    Preferred stock $0.001 par value - 50,000,000 shares authorized; none issued and outstanding as of June 30,
2016 and December 31, 2015, respectively                                                                                         ?                    ?
    Common stock $0.001 par value - 416,666,667 shares authorized; 212,517,199 and 211,615,773 shares
issued as of June 30, 2016 and December 31, 2015, respectively                                                                   213              212
    Additional paid-in capital                                                                                             791,453            789,615
    Accumulated deficit                                                                                                   (951,434)          (896,451)
    Treasury stock at cost, 84,185 and -0- shares as of June 30, 2016 and December 31, 2015, respectively                     (192)                ?
      Total deficit - Erin Energy Corporation                                                                             (159,960)          (106,624)
   Non-controlling interests                                                                                                   783                797
      Total capital deficiency                                                                                            (159,177)          (105,827)
      Total liabilities and capital deficiency                                                                    $        348,960 $          374,599
                                   ERIN ENERGY CORPORATION
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (In thousands)

                                                                                               Six Months Ended June 30,
                                                                                                2016              2015
Cash flows from operating activities
Net loss, including non-controlling interest                                               $     (55,543) $         (42,696)
Adjustments to reconcile net loss to cash used in operating activities:
  Depreciation, depletion and amortization                                                        19,668                243
  Accretion of asset retirement obligations                                                          913                876
  Amortization of debt discount and debt issuance costs                                            1,789              1,119
  Loss on settlement of asset retirement obligations                                                  ?               3,454
  Foreign currency transaction gain                                                              (11,328)            (1,991)
  Share-based compensation                                                                         1,619              3,434
  Payments to settle asset retirement obligations                                                     ?             (16,441)
  Change in operating assets and liabilities:
     Decrease in accounts receivable                                                                 603                470
     Increase in crude oil inventory                                                                (102)            (9,861)
     Increase in prepaids and other current assets                                                  (688)            (1,234)
     Increase in accounts payable and accrued liabilities                                         41,895             34,653
        Net cash used in operating activities                                                     (1,174)           (27,974)
Cash flows from investing activities
Capital expenditures                                                                               (9,667)          (56,741)
         Net cash used in investing activities                                                     (9,667)          (56,741)
Cash flows from financing activities
Proceeds from exercise of stock options and warrants                                                  167             1,855
Payments for treasury stock arising from withholding taxes upon restricted stock vesting             (192)               ?
Repayments of term loan facility                                                                   (5,981)               ?
Proceeds from short-term notes payable                                                                504                ?
Proceeds from notes payable - related party, net                                                    6,129            57,815
Debt issuance costs                                                                                  (693)               ?
Funds released from restricted cash                                                                 8,661                ?
Funding from non-controlling interest                                                                  ?                375
         Net cash provided by financing activities                                                  8,595            60,045
Effect of exchange rate changes on cash and cash equivalents                                       2,642                   568
Net decrease in cash and cash equivalents                                                            396            (24,102)
Cash and cash equivalents at beginning of period                                                   8,363             25,143
Cash and cash equivalents at end of period                                                 $       8,759 $            1,041
Supplemental disclosure of cash flow information
Cash paid for:
 Interest, net                                                                             $       5,680 $            4,927
Supplemental disclosure of non-cash investing and financing activities:
 Issuance of common shares for settlement of liabilities                                   $           ? $              125
 Discount on notes payable pursuant to issuance of warrants                                $           53 $           4,484
 Reduction in accounts payable from settlement of Northern Offshore contingency            $           ? $           24,307

Date: 10/08/2016 09:35:00 Supplied by www.sharenet.co.za                     
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