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PetroShare Corp. Issues Third Quarter 2017 Financial Results

ENGLEWOOD, CO--(Marketwired - November 15, 2017) - PetroShare Corp. (OTCQB: PRHR), a Colorado-based oil and gas exploration and production company with operations in the Wattenberg Field of the Denver-Julesburg Basin, today provided its 2017 third quarter financial results.

Third Quarter 2017 Highlights

  • Revenues were $2.8 million for the three months ended September 30, 2017
  • Net loss was $2.0 million and Adjusted EBITDA was $1.3 million for the three months ended September 30, 2017 (see further discussion regarding the presentation of Adjusted EBITDA in "Use of Non-GAAP Financial Measures" below)

Third Quarter 2017 Financial Results

The following tables present a comparison of results of operations for the three and nine months ended:

                                                                            
                                               Three Months    Nine Months  
                                                  Ended           Ended     
Net Sales Volumes                               9/30/2017       9/30/2017   
-------------------------------------------- --------------- ---------------
Crude Oil (Bbls)                                  46,392         158,124    
Natural Gas Liquids (Bbls)                        15,985          36,562    
Natural Gas (Mcf)                                175,659         381,735    
Sales Volumes: (BOE)                              91,653         258,308    
Average Daily Sales Volumes                                                 
--------------------------------------------                                
Daily sales volumes (BOE/day)                      996             946      
Product Price Received                                                      
--------------------------------------------                                
Crude Oil ($/Bbl)                                 $45.14          $45.06    
Natural Gas Liquids ($/Bbl)                       $16.14          $15.61    
Natural Gas ($/Mcf)                               $2.77           $2.78     
Average Realized Price ($/BOE)                    $30.97          $33.90    
                      Per Unit Cost Information ($/BOE)                     
----------------------------------------------------------------------------
Lease Operating Exp.                              $2.09           $2.40     
Production Tax                                    $2.17           $2.33     
DD&A Expense                                      $12.72          $12.27    
Total G&A Expense                                 $16.52          $16.96    
                                                                            

Crude oil, natural gas and NGL sales revenue was $2.8 million, for the three months ended September 30, 2017 compared to $0.1 million for the three months ended September 30, 2016. The revenue that we reported in the third quarter of 2017 came from the sale of crude oil, natural gas and NGLs produced primarily from horizontal wells in which we participated as a non-operator and which were placed in service primarily during the first quarter of 2017, and to a much lesser extent, the vertical wells that we acquired during 2016.

The Company's 2017 third quarter net loss totaled $2.0 million, or $(0.09) per diluted share compared to a net loss of $1.2 million or $(0.05) per diluted share in the year ago quarter. Adjusted EBITDA in the third quarter was $1,289,857 as compared to $(637,987) in the year ago quarter.

Important Cautions Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. The use of words such as "believes", "expects", "anticipates", "intends", "plans", "estimates", "should", "likely", "guidance" or similar expressions indicates a forward-looking statement. Forward-looking statements herein include statements regarding future transactions, plans and midstream issues. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, and information currently available to management. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. The identification in this press release of factors that may affect the Company's future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Factors that could cause the Company's actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: the success of the Company's exploration and development efforts; the price of oil and gas; worldwide economic situation; change in interest rates or inflation; willingness and ability of third parties to honor their contractual commitments; the availability of adequate midstream infrastructure, the Company's ability to raise additional capital, as it may be affected by current conditions in the stock market and competition in the oil and gas industry for risk capital; the Company's capital costs, which may be affected by delays or cost overruns; costs of production; environmental and other regulations, as the same presently exist or may later be amended; the Company's ability to identify, finance and integrate any future acquisitions; the volatility of the Company's stock price; and the other factors described in the "Risk Factors" sections of the Company's filings with the Securities and Exchange Commission, all of which are incorporated by reference in this release.

Reconciliation of Non-GAAP Financial Measures

We define adjusted EBITDA, a non-GAAP financial measure, as net (loss) adjusted to exclude the impact of the items set forth in the table below. We exclude those items because they can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired. We believe that adjusted EBITDA is widely used in our industry as a measure of operating performance and may also be used by investors to measure our ability to meet debt covenant requirements. The following table presents a reconciliation of adjusted EBITDA to net (loss), its nearest GAAP measures.

                                                                            
                              PETROSHARE CORP.                              
                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES               
                                 (unaudited)                                
                                                                            
                                           Three Months Ended September 30, 
                                         -----------------------------------
                                                2017              2016      
                                         ----------------- -----------------
Adjusted EBITDA:                                                            
  Net (loss)                             $     (2,031,072) $     (1,152,045)
  Depletion, depreciation, and accretion        1,191,890            39,064 
  Stock-based compensation                        397,205           378,870 
  Interest expense, net of interest                                         
   income                                       1,731,834            96,124 
                                         ----------------- -----------------
      Adjusted EBITDA                    $      1,289,857  $       (637,987)
                                         ================= =================
                                                                            

Condensed Consolidated Financial Statements

Condensed consolidated financial statements are included below. Additional financial information, including footnotes that are considered an integral part of the condensed consolidated financial statements, can be found in PetroShare's Quarterly Report on Form 10-Q for the period ended September 30, 2017, which is available at www.sec.gov.

                                                                            
                              PETROSHARE CORP.                              
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                 (unaudited)                                
                                                                            
                                           September 30,      December 31,  
                 ASSETS                         2017              2016      
                                         ----------------- -----------------
Current assets:                                                             
  Cash and cash equivalents              $        719,091  $      2,449,412 
  Other current assets                          3,226,992         1,911,869 
                                         ----------------- -----------------
    Total current assets                        3,946,083         4,361,281 
                                         ----------------- -----------------
                                                                            
Oil and gas properties and other                                            
 equipment, net                                28,698,193        13,610,203 
Property, plant and equipment, net                170,703            39,542 
Other assets                                      103,707            15,758 
                                         ----------------- -----------------
                                                                            
    Total assets                         $     32,918,686  $     18,026,784 
                                         ================= =================
                                                                            
  LIABILITIES AND SHAREHOLDERS' EQUITY                                      
Current liabilities                            22,044,954        10,476,782 
                                                                            
Notes payable, net of issuance costs            3,288,251         5,005,308 
Asset retirement obligations                    1,114,874           945,419 
Other liabilities                                 127,527            23,128 
                                         ----------------- -----------------
    Total liabilities                          26,575,606        16,450,637 
                                         ----------------- -----------------
                                                                            
Shareholders' equity:                                                       
  Common stock and paid-in capital             21,097,802        11,427,189 
  Accumulated deficit                         (14,754,722)       (9,851,042)
                                         ----------------- -----------------
Total shareholders' equity                      6,343,080         1,576,147 
                                         ----------------- -----------------
                                                                            
Total liabilities and shareholders'                                         
 equity                                  $     32,918,686  $     18,026,784 
                                         ================= =================
                                                                            
                                                                            
                              PETROSHARE CORP.                              
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS              
                                 (unaudited)                                
                                                                            
                                           Nine Months Ended September 30,  
                                         -----------------------------------
                                                2017              2016      
                                         ----------------- -----------------
Cash flows from operating activities:                                       
  Net (loss)                             $     (4,903,680) $     (2,793,052)
  Adjustments to reconcile net (loss) to                                    
   net cash provided by (used in)                                           
   operating activities:                                                    
    Depletion, depreciation, and                                            
     accretion                                  6,770,357            43,425 
    Stock-based compensation                    1,127,950         1,093,854 
    Other, non-cash items                          34,716            26,880 
    Changes in operating assets and                                         
     liabilities                                1,067,260         1,225,324 
                                         ----------------- -----------------
    Net cash provided by (used in)                                          
     operating activities                       4,096,603          (403,569)
                                         ----------------- -----------------
                                                                            
Cash flows from investing activities:                                       
  Additions of property, plant and                                          
   equipment                                      (79,886)          (16,417)
  Development of crude oil and natural                                      
   gas properties                              (8,082,911)       (2,127,869)
  Acquisitions of crude oil and natural                                     
   gas properties - business                                                
   combinations                                         -        (2,260,890)
  Acquisitions of crude oil and natural                                     
   gas properties                              (3,003,339)       (1,138,893)
                                         ----------------- -----------------
    Net cash used in investing                                              
     activities                               (11,166,136)       (5,544,069)
                                         ----------------- -----------------
                                                                            
Cash flows from financing activities:                                       
  Equity financing activities                   8,891,712            95,000 
  Debt financing activities                    (3,552,500)        3,937,815 
                                         ----------------- -----------------
    Net cash provided by financing                                          
     activities                                 5,339,212         4,032,815 
                                         ----------------- -----------------
                                                                            
Net (decrease) in cash and equivalents         (1,730,321)       (1,914,823)
Cash and equivalents at beginning of                                        
 period                                         2,449,412         3,011,291 
                                         ----------------- -----------------
Cash and equivalents at end of period    $        719,091  $      1,096,468 
                                         ================= =================
                                                                            
                                                                            
                              PETROSHARE CORP.                              
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS              
                                 (unaudited)                                
                                                                            
                             Three Months Ended        Nine Months Ended    
                               September 30,             September 30,      
                         ------------------------- -------------------------
                             2017         2016         2017         2016    
Crude oil, natural                                                          
 gas, and NGL                                                               
 revenues                $ 2,838,192  $    87,157  $ 8,757,079  $    87,157 
                                                                            
Costs and expenses:                                                         
  Lease operating                                                           
   expenses                  191,204       34,923      619,884       34,844 
  Production taxes,                                                         
   gathering and                                                            
   marketing                 268,550       29,793      753,190       35,465 
  Exploration costs              708       14,740       67,382       17,440 
  Depletion,                                                                
   depreciation, and                                                        
   accretion               1,191,890       39,064    3,241,569       43,425 
  Plugging expense                 -       33,847       23,123       33,847 
  Impairment of                                                             
   proved crude oil                                                         
   and natural gas                                                          
   properties                      -        9,841            -       26,880 
  General and                                                               
   administrative          1,514,007      980,870    4,380,676    2,535,789 
                         ------------ ------------ ------------ ------------
    Total costs and                                                         
     expenses              3,166,359    1,143,078    9,085,824    2,727,690 
                         ------------ ------------ ------------ ------------
                                                                            
Operating (loss)            (328,167)  (1,055,921)    (328,745)  (2,640,533)
                         ------------ ------------ ------------ ------------
                                                                            
Other income                                                                
 (expense):                                                                 
  Other income                28,948           33       29,194          534 
  Interest expense        (1,731,853)     (96,157)  (4,604,129)    (153,053)
                         ------------ ------------ ------------ ------------
    Total other                                                             
     (expense)            (1,702,905)     (96,124)  (4,574,935)    (152,519)
                         ------------ ------------ ------------ ------------
                                                                            
Net (loss)               $(2,031,072) $(1,152,045) $(4,903,680) $(2,793,052)
                         ============ ============ ============ ============
                                                                            
Net (loss) per                                                              
 common share:                                                              
  Basic and diluted      $     (0.09) $     (0.05) $     (0.22) $     (0.13)
                         ============ ============ ============ ============
                                                                            
Weighted-average                                                            
 shares outstanding:                                                        
  Basic and diluted       22,577,417   21,878,553   22,270,291   21,798,185 

Investor Relations Contacts

Jon B. Kruljac
303-520-7479
Email: [email protected]
Web: www.PetroShareCorp.com

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