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Erin Energy Ann Full Year & Fourth Quarter 2016 Results.Provides Operational Update on West & 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 Full Year and Fourth Quarter 2016 Results
Provides Operational Update on its West and East Africa Operations
HOUSTON, March 16, 2017 – Erin Energy Corporation (Erin Energy or the Company) (NYSE MKT:ERN)
(JSE:ERN) announced today financial and operational results for the year ended December 31, 2016.
The Company plans to file its Annual Report on Form 10-K for the year ended December 31, 2016 with
the Securities and Exchange Commission after close of market today.
2016 Highlights:
Crude sales volumes of more than 1.7 million net barrels of oil, an 18% increase over 2015;
$77.8 million in revenue, a 14% increase over 2015;
Total production of approximately 1.8 million net barrels of oil.
“During 2016, we produced approximately 1.8 million net barrels of oil and generated revenues of more
than $77 million,” said Jean-Michel Malek, Interim Chief Executive Officer. “2016 was a challenging year
for our industry, but Erin Energy’s perseverance allowed for good progress in our cost-cutting and
balance sheet restructuring efforts.”
Malek continued, “Our finance team worked diligently to raise the capital necessary for this year’s drilling
and looking ahead, 2017 promises to be an exciting year as we kick off our drilling campaign, increase
Oyo production, and look to drill some of west Africa’s most prospective exploration wells.”
Operational Update
Average net daily production for 2016 was approximately 4,800 bopd compared to approximately 4,300
bopd for 2015. For the fourth quarter 2016, net daily production was approximately 5,800 bopd compared
with 2,500 for the comparative period in 2015. The average price received for 2016 was $45.45 per barrel
compared to $47.24 in 2015.
Production volumes for the year were approximately 1.8 million net barrels of oil compared to
approximately 1.6 million net barrels in 2015. The Company’s crude oil inventory was approximately $9.4
million at December 31, 2016.
Erin Energy recently announced it has entered into a drilling services contract with Pacific Drilling and
secured a sixth generation drillship, the Pacific Bora. The company will drill the Oyo-9 (Oyo-9) well first.
The Oyo-9 is a development well, which will be drilled on the Oyo field and will be tied in to the field’s
current production facility. The well is expected to add an additional 6,000 to 7,000 barrels of oil per day
from the field.
The Company has the option to drill up to two additional wells with the Pacific Bora. Subject to capital
availability, the Company will use the Pacific Bora to drill one to two of its Miocene exploration prospects.
Erin Energy has four drill-ready prospects, which target P50 Prospective Resources of 2.4 billion barrels
of oil. The G Prospect would be the first Miocene exploration well drilled on the Company’s 120 block.
In The Gambia, the Company is currently interpreting the 3-D seismic data processed by an outside
contractor. The Company intends to pursue completion of the work program, and is also in talks with a
potential farm-in partner for a portion of its rights to both offshore blocks.
In Kenya, the Company continues to evaluate the prospectivity of identified leads on its onshore blocks
and is currently designing an additional, targeted 2-D seismic acquisition on the blocks. Erin Energy has
stated that the most prospective of its Kenya assets are its onshore blocks and has focused the majority
of its work on these blocks. The Company also announced it would not seek an additional extension of its
offshore L-27 and L-28 blocks due to the high costs and risks associated with frontier exploration in the
current price and market environments. Erin Energy stated that relinquishment of the two blocks was in
the Company’s long-term best interest.
In Ghana, Erin Energy continues to conduct geotechnical subsurface studies of existing 3-D seismic data
to further high-grade its prospect inventory on the Expanded Shallow Water Tano block. The Company is
also planning a new 3-D marine seismic acquisition survey. The Company expects to issue a formal
invitation to tender to marine seismic vendors in the second half of 2017. Actual field operations will take
place after the resolution of the Ghana-Cote d’Ivoire maritime border dispute arbitration later this year.
The Company’s year-end 2016 SEC proved oil reserves were 9.3 million barrels (MMbbls). The
Company’s reported reserves are prepared by DeGolyer and MacNaughton.
Financial Summary
Full year 2016 revenues were $77.8 million, up approximately 14% from $68.4 million in 2015. Fourth
quarter 2016 revenues were $21.1 million compared to $39.8 for the same period in 2015.
The Company had a non-cash impairment charge of $0.6 million, mostly due to the write-off of the
carrying value of its offshore Kenya leases and reported a net loss of $142.4 million or $0.67 per share for
full year 2016 compared with a net loss of $430.9 million or a $2.04 loss per share for full year 2015.
Exploration expenses totaled $39.3 million for the full year, primarily related to the write-off of the
Company's suspended exploratory well costs related to the Miocene and Pliocene exploration drilling. As
of December 31, 2016 cash, cash equivalents and restricted cash were approximately $9.8 million.
Conference Call and Webcast Information
The Company will host a conference call on Thursday, March 16, 2017 at 11:00 a.m. CT (Noon ET) to
discuss the results and update its current operations.
The dial-in number to access the conference call is 1-844-883-3907 in the United States or 1-412-317-
9253 internationally. Participants should ask the call operator to be placed on the "Erin Energy Results
Conference Call."
For those unable to participate in the Company’s conference call, a replay will be available for audio
playback until March 23, 2017. The number to access the conference call replay is 1-877-344-7529 or
outside the US 1-412-317-0088. The passcode for the replay is 10102749.
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 19,000 square kilometres (~5 million acres), including current production and other
exploration projects offshore Nigeria, as well as exploration licenses offshore Ghana and The 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.
For more information about Erin Energy or to request a hard copy of the Company’s most recent
complete audited financial statements free of charge, please call +1 713 797 2940 or visit
www.erinenergy.com.
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
Contact:
Lionel McBee, +1 713 797 2960
Director, Investor Relations and Corporate Communications
lionel.mcbee@erinenergy.com
ERIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
(Unaudited)
Years Ended December 31,
2016 2015 2014
Revenues:
Crude oil sales, net of royalties $ 77,815 $ 68,429 $ 53,844
Operating costs and expenses:
Production costs 94,607 90,079 80,296
Crude oil inventory (increase) decrease (1,469) (2,502) 14,512
Workover expenses 7,860 972 —
Exploratory expenses 39,269 16,437 14,283
Depreciation, depletion and amortization 58,051 97,179 21,590
Accretion of asset retirement obligations 1,867 1,931 2,166
Impairment of oil and gas properties 645 261,208 —
Loss on settlement of asset retirement obligations 205 3,653 —
General and administrative expenses 13,772 15,905 14,322
Total operating costs and expenses 214,807 484,862 147,169
Operating loss (136,992) (416,433) (93,325)
Other income (expense):
Currency transaction gain 15,674 2,520 1,758
Interest expense (21,924) (17,986) (4,383)
Other, net — — (358)
Total other expense (6,250) (15,466) (2,983)
Loss before income taxes (143,242) (431,899) (96,308)
Income tax expense — — —
Net loss before non-controlling interest (143,242) (431,899) (96,308)
Net loss attributable to non-controlling interest 841 962 246
Net loss attributable to Erin Energy Corporation $ (142,401) $ (430,937) $ (96,062)
Net loss attributable to Erin Energy Corporation per common
share:
Basic $ (0.67) $ (2.04) $ (0.49)
Diluted $ (0.67) $ (2.04) $ (0.49)
Weighted-average common shares outstanding:
Basic 212,318 211,616 194,745
Diluted 212,318 211,616 194,745
ERIN ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
As of December 31,
2016 2015
ASSETS
Current assets:
Cash and cash equivalents $ 7,177 $ 8,363
Restricted cash 2,600 8,661
Accounts receivable - trade — 1,029
Accounts receivable - partners 674 287
Accounts receivable - related party 1,956 1,186
Accounts receivable - other 29 28
Crude oil inventory 9,398 4,789
Prepaids and other current assets 872 684
Total current assets 22,706 25,027
Property, plant and equipment:
Oil and gas properties (successful efforts method of accounting), net 265,713 368,891
Other property, plant and equipment, net 716 1,174
Total property, plant and equipment, net 266,429 370,065
Other non-current assets
Other non-current assets 66 67
Other assets, net 66 67
Total assets $ 289,201 $ 395,159
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Accounts payable and accrued liabilities $ 244,963 $ 213,120
Accounts payable and accrued liabilities - related party 29,513 30,133
Current portion of long-term debt, net 12,627 96,558
Total current liabilities 287,103 339,811
Long-term notes payable - related party 129,796 120,006
Term loan facility 74,446 —
Asset retirement obligations 22,476 20,609
Total liabilities 513,821 480,426
Commitments and contingencies
Capital deficiency:
Preferred stock $0.001 par value - 50,000,000 shares authorized; none issued
and outstanding as of December 31, 2016 and 2015, respectively — —
Common stock $0.001 par value - 416,666,667 shares authorized;
213 212
212,622,218 and
211,615,773 capital
Additional paid-in shares outstanding as of December 31, 2016 and 2015, 792,972 789,615
respectively
Accumulated deficit (1,018,292) (875,891)
Treasury stock at cost, 99,932 and -0- shares as of December 31, 2016 and (228) —
respectively
2015, deficit - Erin Energy Corporation
Total (225,335) (86,064)
Non-controlling interests 715 797
Total capital deficiency (224,620) (85,267)
Total liabilities and capital deficiency $ 289,201 $ 395,159
ERIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Years Ended December 31, 2016
2016 2015 2014
Cash flows from operating activities
Net loss, including non-controlling interest $ (143,242) $ (431,899) $ (96,308)
Adjustments to reconcile net loss to cash (used in) provided by
operating activities:
Depreciation, depletion and amortization 58,051 97,179 21,590
Impairment of oil and gas properties 645 261,208 —
Write-off of suspended exploratory well costs 33,031 — —
Asset retirement obligation accretion 1,867 1,931 2,166
Amortization of debt issuance costs 3,615 2,766 147
Loss on settlement of asset retirement obligations — 3,653 —
Related party liability offset — — (32,880)
Unrealized currency transaction gain (15,674) (2,520) (1,572)
Share-based compensation 2,941 5,027 3,095
Payments to settle asset retirement obligations — (16,640) —
Other — — (17)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 630 (804) 562
(Increase) decrease in crude oil inventory (1,469) (2,502) 14,512
(Increase) decrease in prepaids and other current assets (187) 746 (1,672)
Increase in other non-current assets — — (15)
Increase in accounts payable and accrued liabilities 66,147 84,000 56,845
Net cash provided by (used in) operating activities 6,355 2,145 (33,547)
Cash flows from investing activities
Capital expenditures (19,293) (84,039) (128,510)
Allied transaction — — (170,000)
Net cash used in investing activities (19,293) (84,039) (298,510)
Cash flows from financing activities
Proceeds from the issuance of common stock — — 270,000
Proceeds from the exercise of stock options and warrants 364 1,855 415
Payments for treasury stock arising from withholding taxes upon (228) — —
Proceeds from vesting
restricted stock (repayments of) term loan facility (5,968) (337) 100,000
Proceeds from note payable - related party, net 6,829 61,815 10,649
Proceeds from short-term note payable 504 — —
Repayment of short-term note payable (449) — —
Debt issuance costs (1,040) (2,082)
Funds released from restricted cash, net 6,061 — —
Funds restricted for debt service — (10,405)
Allied Transaction adjustments — — (12,440)
Funding from non-controlling interest — 553 900
Net cash provided by financing activities 6,073 63,886 357,037
Effect of exchange rate on cash and cash equivalents 5,679 1,228 —
Net increase (decrease) in cash and cash equivalents (1,186) (16,780) 24,980
Cash and cash equivalents at beginning of year 8,363 25,143 163
Cash and cash equivalents at end of year $ 7,177 $ 8,363 $ 25,143
Supplemental disclosure of cash flow information
Cash paid for:
Interest, net of amounts capitalized $ 10,407 $ 11,114 $ 8
Supplemental disclosure of non-cash investing and financing
activities: of common shares for settlement of liabilities
Issuance $ — $ 125 $ —
Discount on notes payable pursuant to issuance of warrants $ 53 $ 4,911 $ —
Reduction in oil and gas properties arising from settlement of
$ 10,048 $ — $ —
accounts payable and accrued liabilities
Reduction in accounts payable from settlement of Northern $ — $ 24,307 $ —
Offshore contingency
Receivable from non-controlling interest $ — $ 552 $ —
Related party accounts payable, net, settled with related party $ — $ — $ (32,880)
notes payable retirement obligation estimate
Change in asset $ — $ (4,284) $ 3,766
Houston
16 March 2017
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Date: 16/03/2017 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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