Wrap Text
Press release re quarterly report
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 2017 Results
Provides Operational Update on its West and East Africa Operations
HOUSTON, August 9, 2017 - 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, 2017.
Second Quarter Highlights:
Crude sales volumes of more than 309,000 net barrels of oil;
$14.6 million in revenue;
Average daily production of 5,100 net barrels of oil.
“During the second quarter, we produced more than 420,000 net barrels of oil and generated
revenues of approximately $15 million,” said Femi Ayoade, Chief Executive Officer.
“We closed on our farm-out with FAR in The Gambia and completed preparations for our drilling
campaign, which we plan to commence this week. We are excited to begin our drilling
campaign, increase Oyo production, and look to turn to the exploration of the Miocene in
Nigeria.”
Operational Update
Production volumes for the quarter were approximately 5,100 net barrels of oil compared to
approximately 5,400 net barrels in the comparative period 2016. The Company’s crude oil
inventory was approximately $8.9 million at June 30, 2017.
The Pacific Bora drilling rig arrived on the Oyo field on August 1 and will commence drilling of
the Oyo-9 well within the week. 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.
In The Gambia, the Company closed on its farm-out agreement with FAR Ltd. (FAR), an
Australian Securities Exchange listed oil and gas company. As part of the farm-out agreement,
FAR acquired an 80% interest and the operatorship of offshore A2 and A5 blocks, with the
Company retaining a 20% working interest in both blocks. Under the terms of the farm-out
agreement, FAR will carry $8.0 million of the Company’s share of costs in a planned exploration
well to be drilled in late 2018. In addition, if the Company’s share of the exploration well is less
than $8.0 million, the balance is to be paid in cash to the Company.
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.
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 during 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.
Financial Summary
Second-quarter 2017 revenues were $14.6 million compared to $23.2 million in the second-
quarter 2016.
For the second-quarter 2017, net daily production was approximately 5,100 bopd, compared
with 5,400 bopd for the comparative period in 2016. The Company lifted and sold approximately
309,000 net barrels of oil at an average price of $47.15 per barrel, compared to approximately
508,000 net barrels of oil at an average price of $45.58 per barrel during the comparative period
2016.
In the second-quarter 2017, the Company reported a net loss of $(98.6) million, or a loss of
$(0.46) per basic and diluted share, primarily as a result of a non-cash impairment of its oil and
gas properties of $78.7 million, compared to a net loss of $(22.6) million, or a loss of $(0.11) per
basic and diluted share for the comparative period 2016. When adjusted for certain items that
impact the comparability of results, the Company had an adjusted net loss(1) of $(7.6) million or
$(0.04) loss per basic and diluted share.
As of June 30, 2017, cash, cash equivalents and restricted cash were approximately $23.2
million.
(1) Non-GAAP financial measures. Please see attached Appendix A for the reconciliations of
adjusted net loss and adjusted net loss per share.
Conference Call and Webcast Information
The Company will host a conference call on Thursday, August 10, 2017 at 10:00 a.m. CT (11:00
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 August 17, 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 10111006.
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 7 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.
Non-GAAP Financial Measures
Adjusted net loss and adjusted net loss per share are supplemental non-GAAP financial
measures used by management and external users of the Company's consolidated financial
statements, such as industry analysts, investors, lenders and rating agencies. The Company
defines adjusted net loss as net loss excluding certain non-cash and non-recurring items,
including non-cash changes in the fair value of assets, non-cash and non-recurring charges.
The Company defines adjusted net loss per share as adjusted net loss per common share
attributable to Erin Energy Corporation. We believe adjusted net loss and adjusted net loss per
share are useful to investors because they provide investors with a more meaningful measure of
our profitability before recording certain items for which the timing or amount cannot be
reasonably determined. However, these measures are provided in addition to, not as an
alternative for, and should be read in conjunction with, the information contained in our financial
statements prepared in accordance with GAAP. Our computations of adjusted net loss and
adjusted net loss per share may not be comparable to other similarly titled measures of other
companies. The attached table presents a reconciliation of net loss and net loss per share, the
most directly comparable GAAP financial measures, to adjusted net loss and adjusted net loss
per share, respectively, for the periods indicated.
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
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Revenues:
Crude oil sales, net of royalties $ 14,588 $ 23,151 $ 45,866 $ 28,080
Operating costs and expenses:
Production costs 14,635 22,123 37,190 44,687
Crude oil inventory (increase) decrease (3,031) 729 (83) (102)
Workover expenses (713) 7,585 (713) 7,585
Exploratory expenses 802 1,200 2,398 3,262
Depreciation, depletion and amortization 11,759 14,856 37,170 19,668
Accretion of asset retirement obligations 478 461 945 913
Impairment of oil and gas properties 78,711 — 78,711 —
Loss on settlement of asset retirement obligations — — — 205
General and administrative expenses 3,278 3,396 6,672 7,354
Total operating costs and expenses 105,919 50,350 162,290 83,572
Operating loss (91,331) (27,199) (116,424) (55,492)
Other income (expense):
Currency transaction gain 1,350 10,465 3,485 11,328
Interest expense (10,908) (5,954) (14,874) (11,379)
Loss on disposal of other property and equipment (149) — (149) —
Gain on sale of oil and gas properties 2,348 — 2,348 —
Gain on fair value of derivative liability 37 — 37 —
Total other expense, net (7,322) 4,511 (9,153) (51)
Loss before income taxes (98,653) (22,688) (125,577) (55,543)
Income tax expense — — — —
Net loss before non-controlling interest (98,653) (22,688) (125,577) (55,543)
Net loss attributable to non-controlling interest 88 116 505 560
Net loss attributable to Erin Energy Corporation $ (98,565) $ (22,572) $ (125,072) $ (54,983)
Net loss attributable to Erin Energy Corporation per
common share:
Basic $ (0.46) $ (0.11) $ (0.59) $ (0.26)
Diluted $ (0.46) $ (0.11) $ (0.59) $ (0.26)
Weighted average common shares outstanding:
Basic 213,297 212,290 213,070 212,067
Diluted 213,297 212,290 213,070 212,067
ERIN ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except for share and per share amounts)
June 30, December 31,
2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 10,654 $ 7,177
Restricted cash 12,600 2,600
Accounts receivable - partners 5,279 674
Accounts receivable - related party 2,427 1,956
Accounts receivable - other 5 29
Crude oil inventory 8,879 9,398
Prepaids and other current assets 4,627 872
Total current assets 44,471 22,706
Property, plant and equipment:
Oil and gas properties (successful efforts method of accounting), net 145,944 265,713
Other property, plant and equipment, net 481 716
Total property, plant and equipment, net 146,425 266,429
Other non-current assets 35 66
Total assets $ 190,931 $ 289,201
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Accounts payable and accrued liabilities $ 249,846 $ 244,963
Accounts payable and accrued liabilities - related party 32,708 29,513
Current portion of long-term debt, net 41,937 12,627
Derivative liability 656 —
Total current liabilities 325,147 287,103
Long-term notes payable - related party, net 129,812 129,796
Long-term debt, net 61,778 74,446
Asset retirement obligations 23,421 22,476
Total liabilities 540,158 513,821
Commitments and contingencies (Note 9)
Capital deficiency:
Preferred stock $0.001 par value - 50,000,000 shares authorized; none issued and outstanding as of June 30,
2017 and December 31, 2016, respectively — —
Common stock $0.001 par value - 416,666,667 shares authorized; 213,564,393 and 212,622,218 shares
outstanding as of June 30, 2017 and December 31, 2016, respectively 214 213
Additional paid-in capital 794,179 792,972
Accumulated deficit (1,143,364) (1,018,292)
Treasury stock at cost, 304,481 and 99,932 shares as of June 30, 2017 and December 31, 2016, respectively (936) (228)
Total deficit - Erin Energy Corporation (349,907) (225,335)
Non-controlling interest 680 715
Total capital deficiency (349,227) (224,620)
Total liabilities and capital deficiency $ 190,931 $ 289,201
ERIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June 30,
2017 2016
Cash flows from operating activities
Net loss, including non-controlling interest $ (125,577) $ (55,543)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation, depletion and amortization 37,170 19,668
Accretion of asset retirement obligations 945 913
Impairment of oil and gas properties 78,711 —
Amortization of debt discount and debt issuance costs 2,142 1,789
Unrealized foreign currency transaction gain (1,014) (8,686)
Loss on disposal of other property and equipment 149 —
Gain on sale of oil and gas properties (2,348) —
Gain on fair value of derivative liability (37) —
Settlement of accounts payable and accrued expenses (6,166) —
Share-based compensation 1,207 1,619
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable (504) 603
Increase in crude oil inventory (83) (102)
Increase in prepaids and other current assets (3,724) (688)
Increase in accounts payable and accrued liabilities 23,508 41,895
Net cash provided by operating activities 4,379 1,468
Cash flows from investing activities
Capital expenditures (5,747) (9,667)
Net cash used in investing activities (5,747) (9,667)
Cash flows from financing activities
Proceeds from exercise of stock options and warrants — 167
Payments for treasury stock arising from withholding taxes upon restricted stock vesting and
exercise of stock options (708) (192)
Proceeds from MCB Finance Facility 24,443 —
Repayments of term loan facility (235) (5,981)
Proceeds from short-term notes payable — 504
Proceeds from notes payable - related party, net — 6,129
Debt issuance costs (8,655) (693)
Funds restricted for debt service (10,000) —
Funds released from restricted cash — 8,661
Net cash provided by financing activities 4,845 8,595
Net increase in cash and cash equivalents 3,477 396
Cash and cash equivalents at beginning of period 7,177 8,363
Cash and cash equivalents at end of period $ 10,654 $ 8,759
Supplemental disclosure of cash flow information
Cash paid for:
Interest, net of amounts capitalized $ 4,769 $ 5,680
Supplemental disclosure of non-cash investing and financing activities:
Discount on notes payable pursuant to issuance of warrants $ 693 $ 53
Reduction in oil and gas properties arising from settlements of accounts payable and
accrued liabilities $ 11,051 $ —
Appendix A
ERIN ENERGY CORPORATION
ADJUSTED NET LOSS AND ADJUSTED NET LOSS PER SHARE
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2017 2016 2017 2016
Net loss to Adjusted net loss reconciliation:
Net loss attributable to Erin Energy Corporation $(98,565) $(22,572) $(125,072) $ (54,983)
Add:
Depreciation, depletion and amortization 12,237 15,317 38,115 20,581
Impairment of oil and gas properties 78,711 - 78,711 -
Adjusted net loss $ (7,617) $ (7,255) $ (8,246) $ (34,402)
Net loss per share attributable to Erin Energy
Corporation - basic and diluted $ (0.46) $ (0.11) $ (0.59) $ (0.26)
Add: Impact of adjustments $ 0.43 $ 0.07 $ 0.55 $ 0.10
Adjusted net loss per common share attributable to Erin
Energy Corporation - Basic and diluted $ (0.03) $ (0.04) $ (0.04) $ (0.16)
Weighted-average common shares outstanding:
Basic 213,297 212,290 213,070 212,067
Diluted 213,297 212,290 213,070 212,067
10 August 2017
Houston
Sponsor: Sasfin Capital ( a member of the Sasfin Group)
Date: 10/08/2017 07:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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