HOUSTON, Nov. 10, 2010 /PRNewswire-FirstCall/ -- Dune Energy, Inc. (OTC Bulletin Board: DUNR) today announced results for the third quarter of 2010.
Revenue and Production
Revenue from continuing operations for the third quarter totaled $15.6 million as compared with $11.3 million for the third quarter of 2009. Production volumes in the third quarter were 148 Mbbls of oil and 0.9 Bcf of natural gas, or 1.8 Bcfe. This compares with 123 Mbbls of oil and 0.9 Bcf of natural gas, or 1.6 Bcfe for the third quarter of 2009. In the third quarter of 2010, the average sales price per barrel of oil was $74.91, and $4.87 per Mcf for natural gas, as compared with $66.91 per barrel and $3.44 per Mcf, respectively, for the third quarter of 2009. The primary reason behind the increase in revenue was higher average sales prices in the third quarter of 2010 versus the third quarter of 2009. Average price received per Mcfe produced was $8.59 in the third quarter of 2010 versus $6.90 in the third quarter of 2009 or a 24% increase.
Costs and Expenses
Total lease operating expense from continuing operations for the third quarter totaled $5.2 million versus $6.7 million for the third quarter of 2009. Cash G&A expense totaled $2.1 million for the third quarter of 2010 versus $2.3 million for the third quarter of 2009. The $0.2 million decrease reflects a continued focus on cost controls. Interest financing expense was $9.1 million for the third quarter of 2010 versus $8.8 million for the third quarter of 2009. We incurred a gain of $0.1 million on hedging during the third quarter of 2010 versus a $1.1 million loss in the third quarter of 2009.
Earnings
Net loss totaled $9.1 million for the third quarter of 2010 and $11.3 million for the third quarter of 2009. The third quarter of 2010 included a $0.1 million loss on discontinued operations in the South Florence field. Preferred stock dividends were $6.5 million in the third quarter of 2010 versus $9.7 million in the third 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 $.39, based on 40.4 million weighted average shares outstanding as compared with a loss of $0.71 per share in the third quarter of 2009 with 29.6 million weighted average shares outstanding, both share amounts reflect a 1 for 5 reverse split completed in December of 2009. The increased outstanding common shares are associated with the conversion of preferred shares into common shares primarily in the fourth quarter of 2009.
Liquidity
At the end of the quarter, cash was $13.8 million versus $15.0 million at year end 2009. The net of accounts receivable over accounts payable was $6.6 million in the current quarter, compared to $3.3 million at year end 2009. Currently there are no borrowings against the Revolver and $8.5 million issued in standby letters of credit.
James A. Watt, President and Chief Executive Officer stated, "We anticipate closing our two previously announced joint ventures before the end of the month. These closings will provide an additional $8 million of liquidity. This will provide liquidity for the December 1, 2010 interest payment on our $300 million of 10 ½% Senior Secured notes and for participation in drilling the 19,500 foot deep subsalt well at Garden Island Bay."
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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) September 30, ASSETS 2010 -------------- Current assets: Cash $13,825,501 Accounts receivable 10,650,137 Assets held for sale - Prepayments and other current assets 659,739 Derivative asset 55,253 Total current assets 25,190,630 ---------- Oil and gas properties, using successful efforts accounting -proved 536,720,692 Less accumulated depreciation, depletion, amortization and impairment (271,266,207) Net oil and gas properties 265,454,485 ----------- Property and equipment, net of accumulated depreciation of $2,759,271 and $2,247,220 697,234 Deferred financing costs, net of accumulated amortization of $2,437,971 and $1,565,280 1,287,415 Other assets 4,088,845 6,073,494 --------- TOTAL ASSETS $296,718,609 ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $4,013,536 Accrued liabilities 24,534,710 Derivative liability - Short-term debt - Preferred stock dividend payable 1,940,000 Total current liabilities 30,488,246 Long-term debt, net of discount of $5,584,103 and $7,737,553 294,415,897 Other long-term liabilities 18,560,274 Total liabilities 343,464,417 ----------- Commitments and contingencies - Redeemable convertible preferred stock, net of discount of $5,522,265 and $7,205,812, liquidation preference of $1,000 per share, 750,000 shares designated, 207,262 and 192,050 shares issued and outstanding 201,739,735 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, 40,343,892 and 39,801,796 shares issued and outstanding 40,344 Treasury stock, at cost (100,785 and 68,089 shares) (52,056) Additional paid-in capital 82,227,041 Accumulated deficit (330,700,872) Total stockholders' deficit (248,485,543) ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $296,718,609 ============ December 31, ASSETS 2009 ------------- Current assets: Cash $15,053,571 Accounts receivable 15,026,945 Assets held for sale 36,526,883 Prepayments and other current assets 2,724,666 Derivative asset - Total current assets 69,332,065 ---------- Oil and gas properties, using successful efforts accounting -proved 541,705,920 Less accumulated depreciation, depletion, amortization and impairment (245,531,157) Net oil and gas properties 296,174,763 ----------- Property and equipment, net of accumulated depreciation of $2,759,271 and $2,247,220 1,215,123 Deferred financing costs, net of accumulated amortization of $2,437,971 and $1,565,280 1,026,445 Other assets 4,427,826 6,669,394 --------- TOTAL ASSETS $372,176,222 ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $11,760,370 Accrued liabilities 21,656,922 Derivative liability 1,596,545 Short-term debt 1,579,308 Preferred stock dividend payable 1,985,000 Total current liabilities 38,578,145 Long-term debt, net of discount of $5,584,103 and $7,737,553 316,262,447 Other long-term liabilities 17,640,000 Total liabilities 372,480,592 ----------- Commitments and contingencies - Redeemable convertible preferred stock, net of discount of $5,522,265 and $7,205,812, liquidation preference of $1,000 per share, 750,000 shares designated, 207,262 and 192,050 shares issued and outstanding 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, 40,343,892 and 39,801,796 shares issued and outstanding 39,802 Treasury stock, at cost (100,785 and 68,089 shares) (48,642) Additional paid-in capital 97,600,721 Accumulated deficit (282,740,439) Total stockholders' deficit (185,148,558) ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $372,176,222 ============ Dune Energy, Inc. Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Three months ended September 30, ------------- 2010 2009 ---- ---- Revenues $15,600,205 $11,336,319 ----------- ----------- Operating expenses: Lease operating expense and production taxes 5,259,215 6,694,513 Accretion of asset retirement obligation 456,101 392,237 Depletion, depreciation and amortization 7,534,943 4,340,993 General and administrative expense 2,382,323 3,060,245 Impairment of oil and gas properties - - Total operating expense 15,632,582 14,487,988 ---------- ---------- Operating income (loss) (32,377) (3,151,669) ------- ---------- Other income (expense): Interest income - 12,270 Interest expense (9,063,778) (8,814,933) Gain (loss) on derivative liabilities 63,877 (1,137,767) Total other income (expense) (8,999,901) (9,940,430) Loss on continuing operations (9,032,278) (13,092,099) Income (loss) on discontinued operations (63,528) 1,831,485 ------- --------- Net loss (9,095,806) (11,260,614) Preferred stock dividend (6,504,810) (9,657,788) ---------- ---------- Net loss available to common shareholders $(15,600,616) $(20,918,402) ============ ============ Net loss per share: Basic and diluted from continuing operations $(0.39) $(0.77) Basic and diluted from discontinued operations - 0.06 --- ---- Total basic and diluted $(0.39) $(0.71) ====== ====== Weighted average shares outstanding: Basic and diluted 40,365,873 29,632,574 Comprehensive loss: Net loss $(9,095,806) $(11,260,614) Other comprehensive income - 924,218 --- ------- Comprehensive loss $(9,095,806) $(10,336,396) =========== ============ Nine months ended September 30, ------------- 2010 2009 ---- ---- Revenues $48,521,721 $35,281,958 ----------- ----------- Operating expenses: Lease operating expense and production taxes 19,478,783 20,194,385 Accretion of asset retirement obligation 1,376,250 1,192,058 Depletion, depreciation and amortization 21,935,896 17,349,362 General and administrative expense 8,731,220 11,692,710 Impairment of oil and gas properties 16,071,871 - Total operating expense 67,594,020 50,428,515 ---------- ---------- Operating income (loss) (19,072,299) (15,146,557) ----------- ----------- Other income (expense): Interest income 612 38,079 Interest expense (27,174,230) (26,234,441) Gain (loss) on derivative liabilities 1,759,141 (1,261,322) Total other income (expense) (25,414,477) (27,457,684) Loss on continuing operations (44,486,776) (42,604,241) Income (loss) on discontinued operations (3,473,657) 2,905,131 ---------- --------- Net loss (47,960,433) (39,699,110) Preferred stock dividend (19,376,286) (28,990,268) ----------- ----------- Net loss available to common shareholders $(67,336,719) $(68,689,378) ============ ============ Net loss per share: Basic and diluted from continuing operations $(1.58) $(2.86) Basic and diluted from discontinued operations (0.09) 0.12 ----- ---- Total basic and diluted $(1.67) $(2.74) ====== ====== Weighted average shares outstanding: Basic and diluted 40,327,091 25,010,097 Comprehensive loss: Net loss $(47,960,433) $(39,699,110) Other comprehensive income - 2,772,654 --- --------- Comprehensive loss $(47,960,433) $(36,926,456) ============ ============ Dune Energy, Inc. Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30, ------------- 2010 2009 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(47,960,433) $(39,699,110) Adjustments to reconcile net loss to net cash used in operating activities: Loss (income) on discontinued operations 3,473,657 (2,905,131) Depletion, depreciation and amortization 21,935,896 17,349,362 Impairment of oil and gas properties 16,071,871 - Amortization of deferred financing costs and debt discount 3,026,141 2,408,777 Stock-based compensation 1,477,410 3,313,135 Accretion of asset retirement obligation 1,376,250 1,192,058 Loss (gain) on derivative liabilities (1,651,797) 7,418,357 Changes in: Accounts receivable 5,130,533 3,928,512 Prepayments and other assets 2,064,927 2,780,838 Payments made to settle asset retirement obligations (218,481) (553,287) Accounts payable and accrued liabilities (5,025,218) (3,598,292) NET CASH USED IN CONTINUED OPERATIONS (299,244) (8,364,781) NET CASH PROVIDED BY DISCONTINUED OPERATIONS 2,857,240 6,746,935 NET CASH USED IN OPERATING ACTIVITIES 2,557,996 (1,617,846) --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Investment in proved and unproved properties (6,746,352) (9,011,836) Purchase of furniture and fixtures (13,704) (4,452) Decrease in other assets 338,980 1,079,778 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -CONTINUED OPERATIONS (6,421,076) (7,936,510) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES - DISCONTINUED OPERATIONS 29,347,980 (1,070,507) ---------- ---------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 22,926,904 (9,007,017) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term debt 6,000,000 17,000,000 Increase in loan costs (1,133,662) - Payments on short-term debt (31,579,308) (2,013,699) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (26,712,970) 14,986,301 ----------- ---------- NET CHANGE IN CASH BALANCE (1,228,070) 4,361,438 Cash balance at beginning of period 15,053,571 15,491,532 Cash balance at end of period $13,825,501 $19,852,970 =========== =========== SUPPLEMENTAL DISCLOSURES Interest paid $16,327,192 $15,864,575 Income taxes paid - - NON-CASH DISCLOSURES Common stock issued for conversion of preferred stock $2,448,000 $52,753,000 Redeemable convertible preferred stock dividends 17,692,739 27,530,781 Accretion of discount on preferred stock 1,683,547 1,459,487
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/
