Welcome!

News Feed Item

Escalera Resources Reports Second Quarter Financial and Operating Results

DENVER and HOUSTON, Aug. 14, 2014 /PRNewswire/ -- Escalera Resources Co. (NASDAQ: ESCR) today reported financial and operating results for the three and six months ended June 30, 2014.  The Company had a net loss attributable to common stock of $4.0 million, or $(0.29) per share, for the second quarter of 2014, as compared to a net loss of $570,000, or $(0.05) per share, for the second quarter of 2013. 

For the first six months of 2014 the Company had a net loss attributable to common stock of $9.3 million, or $(0.72) per share compared to a net loss of $6.7 million, or $(0.59) per share for the first six months of 2013.

Clean earnings, a non-GAAP measure, totaled $1.5 million, or $0.11 per share, for the second quarter of 2014, compared to $3.0 million, or $0.26 per share, for the same prior-year period. 

Clean earnings for the six months ended June 30, 2014 was $4.1 million, or $0.31 per share as compared to $5.4 million, or $0.48 per share for the first six months of 2013. Clean earnings excludes the effects on net loss of non-cash charges, consisting of depreciation, depletion and amortization expense, unrealized gains and losses related to the Company's economic hedges, impairment charges and stock-based compensation expense.  Clean earnings also exclude the impact of income taxes, as the Company does not expect to pay income tax in the foreseeable future due to its net operating loss carryforwards.  Please see the table at the end of this release for the reconciliation of GAAP net loss to clean earnings. 

Clean earnings for the three and six months ended June 30, 2014 was impacted by the following:

Pricing  

The results for the second quarter of 2014 were impacted by a 3% decrease in the average realized natural gas price, which decreased from $3.98 per Mcf in the second quarter of 2013 to $3.87 per Mcf in the comparable 2014 period.  

Production 

Production totaled 2.2 and 4.4 Bcfe for the three and six months ended June 30, 2014, respectively, representing a 5% and 6% decrease from the comparable 2013 periods, respectively.  

The Company experienced a 13% increase in its average daily net production at its operated Catalina Unit compared to second quarter of 2013.  The 2014 results reflect the recovery from equipment challenges experienced in the second quarter of 2013.  The recovered production was partially offset by normal field declines.  The Company realized a 1% increase for the six months ended June 30, 2014 as compared to the prior year. 

Production at the Spyglass Hill Unit decreased by 15% during the second quarter of 2014 compared to the same period in 2013. The operator is working to increase injection capacity and enhance the gathering system which should result in an increase in production. Additionally, the Company plans to participate in the drilling of up to 48 new wells in the Spyglass Unit in 2014. The operator plans to complete 23 of these wells by the end of the third quarter of the year and the remaining 25 wells are scheduled to be drilled in the fourth quarter. This drilling program will satisfy the minimum well requirement through August 2015 as set in the federal exploratory agreement.

The decrease in production from the Mesa Units during the three and six months ended June 30, 2014 was primarily due to normal production decline as drilling in this field is complete.

General and administrative expenses

The Company's general and administrative expenses increased $341,000 and $807,000 for the three and six months ended June 30, 2014 compared to the comparable 2013 periods.  The increased costs were primarily due to the severance payable to the Company's former chief executive officer of $691,000, which was recorded in the first quarter of 2014, and also the establishment of its Houston location. 

Non-cash gain/loss on derivative instruments

The Company recognized an unrealized non-cash loss from its derivatives of $258,000 in the second quarter of 2014, resulting from the change in the fair value of its commodity contracts and interest rate swap at June 30, 2014.  This compared to an unrealized non-cash gain of $2.7 million in the second quarter of 2013.  For the first six months of 2014 the Company recognized an unrealized non-cash loss from its derivatives of $1.8 million compared to a net loss of $2.0 million for the first six months of 2013.   

Hedging Activity

As a result of rising natural gas prices and the settlement of our hedges during the three and six months ended June 30, 2014, the Company's realized a loss of $533,000 and $1.5 million, respectively, from its commodity derivatives. The Company has historically entered into forward sales contracts, collars and fixed price swaps to manage the price risk associated with its natural gas production.  All of the contracts the Company enters into require no up-front costs to the Company.  The table below summarizes the Company's current open derivative contracts as of June 30, 2014. 


Type of Contract


Remaining
Contractual
Volume (Mcf)


Term


Price (1)

Fixed Price Swap 


920,000


01/14-12/14


$        4.27



Costless Collar 


900,000


01/14-12/14


$        4.00


floor







$        4.50


ceiling

Fixed Price Swap 


900,000


01/14-12/14


$        4.20



Fixed Price Swap 


270,000


01/14-12/14


$        4.17



Fixed Price Swap 


3,000,000


01/15-12/15


$        4.28



Fixed Price Swap 


3,600,000


01/15-12/15


$        4.15



Fixed Price Swap 


1,830,000


01/16-12/16


$        4.07



Fixed Price Swap 


3,660,000


01/16-12/16


$        4.15



Total 


15,080,000








(1)

All contracts are indexed to the New York Mercantile Exchange

Liquidity and Capital Investment

For the six months ended June 30, 2014, the Company generated cash flow from operations of $6.0 million, compared to $6.7 million during the same period in 2013.

The Company had $45.9 million outstanding on its credit facility as of June 30, 2014, with an average interest rate of 3.5%.  The Company has received a non-binding commitment letter from an international financial institution for an initial $50 million, borrowing base credit facility to replace its existing credit facility.  The Company is currently working to finalize the terms for a new credit facility based on this commitment letter.

The Company expects that cash to be generated from operations for the full-year 2014 and cash currently on hand will fully fund the Company's 2014 capital spending program and payments currently due under the credit facility.  The 2014 capital spending program includes the Company's expected participation in 48 new wells in the Spyglass Hill Unit. 

Termination of International Joint Venture

In April of this year the Company announced plans to form an Energy Joint Venture with headquarters in Tirana, Albania. In June, the Company made the decision to terminate its international efforts in order to focus its full attention on domestic natural gas production, acquisition and development, and on its recently announced gas-to-liquids ("GTL") initiative.

Form 10-Q and Earnings Conference Call

Please refer to the Company's Form 10-Q, which will be filed with the Securities and Exchange Commission on August 14, 2014, for a more detailed discussion of the Company's results. 

Escalera Resources Co. will host a conference call to discuss results on Friday, August 15, 2014 at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time).  Those wanting to listen can call (800) 311-9406 and use conference code 40197#.

A replay of this conference call will be available for one week by calling (877) 919-4059 and using pass code 63009132.    

Other Upcoming Events

The Company will make a corporate presentation at The Oil & Gas Conference hosted by EnerCom, Inc.  The conference is held in Denver, Co August 17-21, 2014. Charles Chambers, President, CEO & Chairman will be attending and Adam Fenster, CFO, will present at 8:00 AM (MT) on Wednesday, August 20, 2014. The presentation will be webcast and can be viewed at the Company website, www.escaleraresources.com.

 

SUMMARY STATEMENT OF OPERATIONS

(In thousands, except per share data)

















Three months ended June 30,


Six months ended June 30,



2014


2013


2014


2013










Revenues









Natural gas and oil sales


$             9,320


$             8,502


$           19,886


$           16,035

Transportation revenue


940


858


1,904


1,837

Price risk management activities, net


(751)


3,438


(3,267)


634

Other income, net


47


503


186


508










Total revenues


9,556


13,301


18,709


19,014










Expenses









Lease operating expenses


3,174


3,288


6,472


6,196

Production taxes


1,130


1,023


2,364


1,965

Pipeline operating expenses


1,115


1,198


2,310


2,712

Exploration expenses including 









dry holes


22


46


56


70

Impairment and abandonment of









   equipment and properties


405


472


1,080


1,536










Total Expenses


5,846


6,027


12,282


12,479










Gross Margin Percentage


38.8%


54.7%


34.4%


34.4%










General and administrative


1,688


1,347


3,770


2,963

Depreciation, depletion and 









amortization expense


4,939


5,231


10,189


10,453

Interest expense, net


455


123


805


455










Pre-tax income (loss)


(3,372)


573


(8,337)


(7,336)










Benefit (Provision) for deferred taxes


289


(212)


869


2,521










Net income (loss)


(3,083)


361


(7,468)


(4,815)










Preferred stock requirements


931


931


1,862


1,862










Net loss attributable to common stock


$           (4,014)


$              (570)


$           (9,330)


$           (6,677)










Net loss per common share:









Basic and diluted


$             (0.29)


$             (0.05)


$             (0.72)


$             (0.59)










Weighted average shares outstanding:









Basic and diluted


14,081,582


11,238,697


12,907,091


11,233,725

 

SELECTED BALANCE SHEET DATA

(In thousands)








June 30,


December 31,




2014


2013


% Change













Total assets

$           126,520


$          132,400


-4%







Balance outstanding on credit facility

45,950


47,450


-3%







Total stockholders' equity

22,479


27,311


-18%



















SELECTED CASH FLOW DATA

(In thousands)








Six months ended June 30,




2014


2013


% Change







Net cash provided by






operating activities

$               6,012


$              6,755


-11%







Net cash used in






investing activities

(2,334)


(5,319)


-56%







Net cash provided by (used in)






financing activities

752


(1,883)


140%













SELECTED OPERATIONAL DATA








Three months ended,




June 30,


June 30,




2014


2013


% Change







Total production (Mcfe)

2,150,977


2,267,799


-5%







Average price realized per Mcfe

$                 4.09


$                4.21


-3%








Six months ended,




June 30,


June 30,




2014


2013


% Change







Total production (Mcfe)

4,368,580


4,668,837


-6%







Average price realized per Mcfe

$                 4.21


$                4.06


4%







Use of Non-GAAP Financial Measures

The Company believes that the presentation of "clean earnings" below provides a meaningful non-GAAP financial measure to help management and investors understand and compare operating results and business trends among different reporting periods on a consistent basis, independent of regularly reported non-cash charges.  The measure also excludes the impact of income taxes because the Company does not expect to pay taxes in the near future due to its net operating loss carryforwards.  The Company's management also uses clean earnings in its planning and development of target operating models and to enhance its understanding of ongoing operations. Readers should not view clean earnings as superior to or an alternative to GAAP results or as being comparable to results reported or forecasted by other companies. Readers should refer to the reconciliation of net loss to clean earnings for the three and six months ended June 30, 2014 and 2013, respectively, contained below.


 Three Months Ended June 30, 


 Six Months Ended June 30, 


2014


2013


2014


2013









Net Income (loss) attributable to common stock 








to as reported under US GAAP

$                (4,014)


$                   (570)


$                (9,330)


$                (6,677)

Add back non-cash items:








        Provision/(benefit) for income taxes

(289)


212


(869)


(2,521)

Depreciation, depletion, amortization and accretion expense

5,000


5,295


10,311


10,578

Non-cash loss (gain) on derivatives

258


(2,684)


1,795


1,952

Stock-based compensation expense 

178


234


383


516

Impairments, abandonments and dry hole costs

405


472


1,080


1,536

Other non-cash items

-


-


691


10

Clean Earnings

$                 1,538


$                 2,958


$                 4,061


$                 5,395

















Clean Earnings per Share

$                   0.11


$                   0.26


$                   0.31


$                   0.48

Weighted average shares outstanding

14,082


11,326


12,907


11,316



(1)

Non-cash loss (gain) on derivatives is comprised of an unrealized loss (gain) from the Company's mark-to-market derivative instruments (both commodity contracts and interest rate swaps), resulting from recording the instruments at fair value at each period end.

(2)

During the six months ended June 30, 2014, the Company recorded accrued severance payable to its former chief executive officer of $691.

About Escalera Resources Co.

Escalera Resources Co. ("Escalera") is headquartered in Denver, CO, with executive offices in Houston, TX and a regional office is Casper, WY. Escalera explores, develops and transports natural gas in the U.S. Escalera is seeking strategic acquisitions of abundant, low cost dry natural gas assets that are currently undervalued or underutilized; and identifying alternative ways to enhance the value of its dry natural gas reserves. 

This release may contain forward-looking statements regarding Escalera Resources Co.'s future and expected performance based on assumptions that the Company believes are reasonable.  No assurances can be given that these statements will prove to be accurate.  A number of risks and uncertainties could cause actual results to differ materially from these statements, including, without limitation, decreases in prices for natural gas and crude oil, unexpected decreases in gas and oil production, the timeliness, costs and results of development and exploration activities, unanticipated delays and costs resulting from regulatory compliance, and other risk factors described from time to time in the Company's Forms 10-K and 10-Q and other reports filed with the Securities and Exchange Commission.  Escalera undertakes no obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.

Company Contact:
John Campbell, IR
(303) 794-8445
www.escaleraresources.com

 

SOURCE Escalera Resources Co.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Blockchain is a shared, secure record of exchange that establishes trust, accountability and transparency across business networks. Supported by the Linux Foundation's open source, open-standards based Hyperledger Project, Blockchain has the potential to improve regulatory compliance, reduce cost as well as advance trade. Are you curious about how Blockchain is built for business? In her session at 21st Cloud Expo, René Bostic, Technical VP of the IBM Cloud Unit in North America, will discuss th...
While some vendors scramble to create and sell you a fancy solution for monitoring your spanking new Amazon Lambdas, hear how you can do it on the cheap using just built-in Java APIs yourself. By exploiting a little-known fact that Lambdas aren’t exactly single-threaded, you can effectively identify hot spots in your serverless code. In his session at @DevOpsSummit at 21st Cloud Expo, Dave Martin, Product owner at CA Technologies, will give a live demonstration and code walkthrough, showing how ...
Docker containers have brought great opportunities to shorten the deployment process through continuous integration and the delivery of applications and microservices. This applies equally to enterprise data centers as well as the cloud. In his session at 20th Cloud Expo, Jari Kolehmainen, founder and CTO of Kontena, discussed solutions and benefits of a deeply integrated deployment pipeline using technologies such as container management platforms, Docker containers, and the drone.io Cl tool. H...
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, will introduce two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a...
Translating agile methodology into real-world best practices within the modern software factory has driven widespread DevOps adoption, yet much work remains to expand workflows and tooling across the enterprise. As models evolve from pockets of experimentation into wholescale organizational reinvention, practitioners find themselves challenged to incorporate the culture and architecture necessary to support DevOps at scale.
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
SYS-CON Events announced today that CAST Software will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CAST was founded more than 25 years ago to make the invisible visible. Built around the idea that even the best analytics on the market still leave blind spots for technical teams looking to deliver better software and prevent outages, CAST provides the software intelligence that matter ...
As more and more companies are making the shift from on-premises to public cloud, the standard approach to DevOps is evolving. From encryption, compliance and regulations like GDPR, security in the cloud has become a hot topic. Many DevOps-focused companies have hired dedicated staff to fulfill these requirements, often creating further siloes, complexity and cost. This session aims to highlight existing DevOps cultural approaches, tooling and how security can be wrapped in every facet of the bu...
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
yperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let’s say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it....
SYS-CON Events announced today that Pulzze Systems will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems Inc, provides the software product "The Interactor" that uniquely simplifies building IoT, Web and Smart Enterprise Solutions. It is a Silicon Valley startup funded by US government agencies, NSF and DHS to bring innovative solutions to market.
In his session at @ThingsExpo, Dr. Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, presented the findings of a series of six detailed case studies of how large corporations are implementing IoT. The session explored how IoT has improved their economic performance, had major impacts on business models and resulted in impressive ROIs. The companies covered span manufacturing and services firms. He also explored servicification, how manufacturing firms shift from se...
With Cloud Foundry you can easily deploy and use apps utilizing websocket technology, but not everybody realizes that scaling them out is not that trivial. In his session at 21st Cloud Expo, Roman Swoszowski, CTO and VP, Cloud Foundry Services, at Grape Up, will show you an example of how to deal with this issue. He will demonstrate a cloud-native Spring Boot app running in Cloud Foundry and communicating with clients over websocket protocol that can be easily scaled horizontally and coordinate...
SYS-CON Events announced today that Elastifile will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Elastifile Cloud File System (ECFS) is software-defined data infrastructure designed for seamless and efficient management of dynamic workloads across heterogeneous environments. Elastifile provides the architecture needed to optimize your hybrid cloud environment, by facilitating efficient...
For financial firms, the cloud is going to increasingly become a crucial part of dealing with customers over the next five years and beyond, particularly with the growing use and acceptance of virtual currencies. There are new data storage paradigms on the horizon that will deliver secure solutions for storing and moving sensitive financial data around the world without touching terrestrial networks. In his session at 20th Cloud Expo, Cliff Beek, President of Cloud Constellation Corporation, d...