HOUSTON, Aug. 4 /PRNewswire-FirstCall/ -- Dune Energy, Inc. (OTC Bulletin Board: DUNR) today announced results for the second quarter of 2010.
Revenue and Production
Revenue from continuing operations for the second quarter totaled $16.0 million as compared with $12.1 million for the second quarter of 2009. Production volumes in the second quarter were 147 Mbbls of oil and 1.0 Bcf of natural gas, or 1.9 Bcfe. This compares with 144 Mbbls of oil and 1.0 Bcf of natural gas, or 1.9 Bcfe for the second quarter of 2009. In the second quarter of 2010, the average sales price per barrel of oil was $76.59, and $4.74 per mcf for natural gas, as compared with $56.50 per barrel and $3.85 per mcf, respectively for the second quarter of 2009. The primary reason behind the increase in revenue was higher average sales prices in the second quarter of 2010 versus the second quarter of 2009. Average price received per Mcfe produced was $8.51 in the second quarter of 2010 versus $6.37 in the second quarter of 2009 or a 34% increase.
Costs and Expenses
Total lease operating expense from continuing operations for the second quarter totaled $6.6 million versus $7.2 million for the second quarter of 2009. Cash G&A expense totaled $2.6 million for the second quarter of 2010 versus $2.8 million for the second quarter of 2009. The $0.2 million decrease reflects a continued focus on cost controls. Interest financing expense was $9.2 million for the second quarter of 2010 versus $8.7 million for the second quarter of 2009, primarily associated with payment of 10.5% interest on the $300 million of Senior Secured Notes. We incurred a gain of $0.4 million on hedging during the second quarter of 2010 versus a $2.9 million loss in the second quarter of 2009.
Earnings
Net loss totaled $30.9 million for the second quarter of 2010 and $16.4 million for the second quarter of 2009. The second quarter of 2010 included a $4.6 million loss on discontinued operations in the South Florence field and an impairment of $16.1 million pertaining to expired leases in the Murphy Lake field and drilling costs on the Exxon Fee #5 which will not be completed. Preferred stock dividends were $6.5 million in the second quarter of 2010 versus $10.5 million in the second quarter of 2009. These dividends were paid in kind (PIK) and as such do not represent a cash payment. Net loss per share, both basic and fully diluted, for the quarter was $0.92, based on 40.4 million weighted average shares outstanding as compared with a loss of $1.07 per share in the second quarter of 2009 with 25.0 million weighted average shares outstanding. The increased outstanding common shares are associated with the conversion of Preferred shares into common shares and reflect a 1 for 5 reverse split completed in December of 2009.
Liquidity
At the end of the quarter cash was $12.9 million versus $15.0 million at year end 2009. Accounts payable were $2.6 million in the current quarter versus $11.8 million at year end 2009. Availability under the Wells Fargo Foothill Revolver was reduced to $20 million primarily due to the sale of the South Florence field at the end of the second quarter. The primary covenants that must be met within our Wells Fargo Foothill Revolver include minimum monthly EBITDA, production, capital, payables and reserves. Currently there are no borrowings against the Revolver and $8.5 million issued in standby letters of credit, thus total liquidity is approximately $25 million.
James A. Watt, President and Chief Executive Officer stated, "The improved liquidity from the sale of our South Florence field along with improvements in cash G&A and operating expenses will allow for increased investments in new drilling opportunities within our fields. This should result in increased production and reserves in the second half of 2010."
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FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements that are intended to be covered by "forward-looking statements" safe harbor provided by the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that Dune Energy expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of expected drilling and development wells and associated costs, statements relating to estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of Dune Energy, Inc.'s projects and other statements that are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements. Although Dune Energy, Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that the Company's projects will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, changes in product prices and other risks disclosed in Dune's Annual report on Form 10-K filed with the U.S. Securities and Exchange Commission.
Dune Energy, Inc. Consolidated Balance Sheets (Unaudited) December 31, ASSETS June 30, 2010 2009 ------------- ------------- Current assets: Cash $12,949,838 $15,053,571 Restricted cash 71,426 - Accounts receivable 10,910,581 15,026,945 Assets held for sale - 36,526,883 Prepayments and other current assets 480,075 2,724,666 Derivative asset 152,686 - Total current assets 24,564,606 69,332,065 ---------- ---------- Oil and gas properties, using successful efforts accounting -proved 544,059,111 541,705,920 Less accumulated depreciation, depletion, amortization and impairment (275,630,084) (245,531,157) Net oil and gas properties 268,429,027 296,174,763 ----------- ----------- Property and equipment, net of accumulated depreciation of $2,621,117 and $2,247,220 872,416 1,215,123 Deferred financing costs, net of accumulated amortization of $2,033,281 and $1,565,280 1,689,952 1,026,445 Other assets 4,325,197 4,427,826 6,887,565 6,669,394 --------- --------- TOTAL ASSETS $299,881,198 $372,176,222 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $2,561,361 $11,760,370 Accrued liabilities 21,264,648 21,656,922 Derivative liability - 1,596,545 Short-term debt 225,616 1,579,308 Preferred stock dividend payable 2,012,000 1,985,000 Total current liabilities 26,063,625 38,578,145 Long-term debt, net of discount of $6,363,702 and $7,737,553 293,636,298 316,262,447 Other long-term liabilities 18,207,384 17,640,000 Total liabilities 337,907,307 372,480,592 ----------- ----------- Commitments and contingencies - - Redeemable convertible preferred stock, net of discount of $6,062,075 and $7,205,812, liquidation preference of $1,000 per share, 750,000 shares designated, 201,225 and 192,050 shares issued and outstanding 195,162,925 184,844,188 STOCKHOLDERS' DEFICIT Preferred stock, $.001 par value, 1,000,000 shares authorized, 250,000 - - shares undesignated, no shares issued and outstanding Common stock, $.001 par value, 300,000,000 shares authorized, 40,377,043 40,377 39,802 and 39,801,796 shares issued and outstanding Treasury stock, at cost (68,720 and 68,089 shares) (48,749) (48,642) Additional paid-in capital 88,424,404 97,600,721 Accumulated deficit (321,605,066) (282,740,439) Total stockholders' deficit (233,189,034) (185,148,558) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $299,881,198 $372,176,222 ============ ============ Dune Energy, Inc. Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Three months ended June 30, -------- 2010 2009 ---- ---- Revenues $15,956,295 $12,135,452 ----------- ----------- Operating expenses: Lease operating expense and production taxes 6,635,354 7,242,955 Accretion of asset retirement obligation 459,421 399,933 Depletion, depreciation and amortization 7,407,283 6,228,829 General and administrative expense 2,902,941 3,584,885 Impairment of oil and gas properties 16,071,871 - Total operating expense 33,476,870 17,456,602 ---------- ---------- Operating income (loss) (17,520,575) (5,321,150) ----------- ---------- Other income (expense): Interest income(expense) 120 (4,518) Interest expense (9,238,819) (8,740,561) Gain (loss) on derivative liabilities 436,390 (2,926,555) Total other income (expense) (8,802,309) (11,671,634) Loss on continuing operations (26,322,884) (16,992,784) Income (loss) on discontinued operations (4,623,564) 635,164 ---------- ------- Net loss (30,946,448) (16,357,620) Preferred stock dividend (6,468,368) (10,477,420) ---------- ----------- Net loss available to common shareholders $(37,414,816) $(26,835,040) ============ ============ Net loss per share: Basic and diluted from continuing operations $(0.81) $(1.10) Basic and diluted from discontinued operations (0.11) 0.03 ----- ---- Total basic and diluted $(0.92) $(1.07) ====== ====== Weighted average shares outstanding: Basic and diluted 40,416,133 25,037,114 Comprehensive loss: Net loss $(30,946,448) $(16,357,620) Other comprehensive income - 924,218 --- ------- Comprehensive loss $(30,946,448) $(15,433,402) ============ ============ Six months ended June 30, -------- 2010 2009 ---- ---- Revenues $32,921,516 $23,945,639 ----------- ----------- Operating expenses: Lease operating expense and production taxes 14,219,568 13,499,872 Accretion of asset retirement obligation 920,149 799,821 Depletion, depreciation and amortization 14,400,953 13,008,369 General and administrative expense 6,348,897 8,632,465 Impairment of oil and gas properties 16,071,871 - Total operating expense 51,961,438 35,940,527 ---------- ---------- Operating income (loss) (19,039,922) (11,994,888) ----------- ----------- Other income (expense): Interest income(expense) 612 25,809 Interest expense (18,110,452) (17,419,508) Gain (loss) on derivative liabilities 1,695,264 (123,555) Total other income (expense) (16,414,576) (17,517,254) Loss on continuing operations (35,454,498) (29,512,142) Income (loss) on discontinued operations (3,410,129) 1,073,646 ---------- --------- Net loss (38,864,627) (28,438,496) Preferred stock dividend (12,871,476) (19,332,480) ----------- ----------- Net loss available to common shareholders $(51,736,103) $(47,770,976) ============ ============ Net loss per share: Basic and diluted from continuing operations $(1.20) $(2.16) Basic and diluted from discontinued operations (0.08) 0.05 ----- ---- Total basic and diluted $(1.28) $(2.11) ====== ====== Weighted average shares outstanding: Basic and diluted 40,307,376 22,660,560 Comprehensive loss: Net loss $(38,864,627) $(28,438,496) Other comprehensive income - 1,848,436 --- --------- Comprehensive loss $(38,864,627) $(26,590,060) ============ ============ Dune Energy, Inc. Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, -------- 2010 2009 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(38,864,627) $(28,438,496) Adjustments to reconcile net loss to net cash used in operating activities: Loss (income) on discontinued operations 3,410,129 (1,073,646) Depletion, depreciation and amortization 14,400,953 13,008,369 Impairment of oil and gas properties 16,071,871 - Amortization of deferred financing costs and debt discount 1,841,852 1,586,647 Stock-based compensation 1,169,997 2,512,367 Accretion of asset retirement obligation 920,149 799,821 Loss (gain) on derivative liabilities (1,749,231) 4,780,940 Changes in: Accounts receivable 4,873,396 1,896,158 Prepayments and other assets 2,244,591 2,348,032 Payments made to settle asset retirement obligations (170,555) (316,955) Accounts payable and accrued liabilities (9,734,993) (12,716,051) NET CASH USED IN CONTINUED OPERATIONS (5,586,468) (15,612,814) NET CASH PROVIDED BY DISCONTINUED OPERATIONS 2,920,768 3,735,337 NET CASH USED IN OPERATING ACTIVITIES (2,665,700) (11,877,477) ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Investment in proved and unproved properties (2,353,193) (5,165,785) Purchase of furniture and fixtures (31,189) (9,103) Increase in restricted cash (71,426) - Decrease (increase) in other assets 102,629 (612,730) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -CONTINUED OPERATIONS (2,353,179) (5,787,618) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES - DISCONTINUED OPERATIONS 29,400,348 (268,904) ---------- -------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 27,047,169 (6,056,522) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term debt 6,000,000 17,000,000 Increase in loan costs (1,131,509) - Payments on short-term debt (31,353,692) (1,726,026) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (26,485,201) 15,273,974 ----------- ---------- NET CHANGE IN CASH BALANCE (2,103,732) (2,660,025) Cash balance at beginning of period 15,053,570 15,491,532 Cash balance at end of period $12,949,838 $12,831,507 =========== =========== SUPPLEMENTAL DISCLOSURES Interest paid $16,322,703 $15,770,052 Income taxes paid - - NON-CASH DISCLOSURES Common stock issued for conversion of preferred stock $2,448,000 $29,143,000 Redeemable convertible preferred stock dividends 11,650,000 13,794,017 Accretion of discount on preferred stock 1,143,737 959,189
Dune Energy, Inc.
CONTACT: Investors, Steven J. Craig, Sr. Vice President Investor
Relations and Administration of Dune Energy, Inc., +1-713-229-6300
Web Site: http://www.duneenergy.com/
