UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 2017
PETROSHARE CORP.
(Exact name of registrant as specified in its charter)
Colorado |
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001-37943 |
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46-1454523 |
(State or other jurisdiction of |
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(Commission File |
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(I.R.S. Employer |
incorporation or organization) |
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Number) |
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Identification No.) |
9635 Maroon Circle, Suite 400
Englewood, Colorado 80112
(Address of principal executive offices) (Zip Code)
Registrants telephone number including area code: (303) 500-1160
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Item 2.02 Results of Operations and Financial Condition.
On August 14, 2017, PetroShare Corp. issued a press release announcing a summary of its second quarter 2017 financial and operating results. A copy of the press release is attached to this report as Exhibit 99.1.
The information furnished under this Item 2.02, including the exhibits, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by reference to such filing.
Item 9.01 Financial Statements and Exhibits.
See the Exhibit Index at the end of this report for a listing of the exhibits furnished with this report.
Caution Concerning Forward-Looking Statements
The press release contains certain forward-looking statements and information, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information expressed, as of the date of this report, the Companys estimates, forecasts, projections, expectations or beliefs as to certain future events and results. These forward-looking statements include, among others, statements regarding and plans and objectives of management for future operations. Forward-looking statements and information are necessarily based on a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, technical, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information.
Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include, but are not limited to, risks related to receipt of working capital, the level of success in exploration, development and production activities, possible defects in title to properties, the ability to negotiate acceptable surface-use agreements with landowners, fluctuations in the market price of crude oil and natural gas, industry risks, possible federal and/or state initiatives related to regulation of hydraulic fracturing, risks related to permitting and the projected timeframes to receive the necessary permits, environmental risks and hazards, uncertainty as to calculation of crude oil and natural gas resources and reserves and other risks described in the Companys report on Form 10-K for the year ended December 31, 2016 and other reports filed with the Securities and Exchange Commission. Readers should not place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law.
All forward-looking statements and information made in the press release are qualified by this cautionary statement.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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PetroShare Corp. | |
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Date: August 14, 2017 |
By: |
/s/ Paul D. Maniscalco |
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Paul D. Maniscalco, Chief Financial Officer |
Exhibit 99.1
August 14, 2017 07:00 ET
PetroShare Corp. Issues Second Quarter 2017 Financial Results
ENGLEWOOD, CO(Marketwired August 14, 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 second quarter financial results.
Second Quarter 2017 Highlights
· Revenues were $4.5 million for the three months ended June 30, 2017
· Operating income was $0.7 million for the three months ended June 30, 2017
· Net loss was $0.7 million and Adjusted EBITDA was $2.9 million for the three months ended June 30, 2017 (see further discussion regarding the presentation of Adjusted EBITDA in Use of Non-GAAP Financial Measures below)
Second Quarter 2017 Financial Results
The following tables present a comparison of results of operations for the three and six months ended June 30, 2017:
Net Sales Volumes |
|
Three Months Ended |
|
Six Months Ended |
| ||
Crude Oil (Bbls) |
|
82,526.2 |
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111,732.5 |
| ||
Natural Gas Liquids (Bbls) |
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18,758.4 |
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20,576.6 |
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Natural Gas (Mcf) |
|
152,650.9 |
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206,075.8 |
| ||
Sales Volumes: (BOE) |
|
126,726.4 |
|
166,655.1 |
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Average Daily Sales Volumes |
|
|
|
|
| ||
Daily sales volumes (BOE/day) |
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1,392.6 |
|
920.7 |
| ||
Product Price Received |
|
|
|
|
| ||
Crude Oil ($/Bbl) |
|
$ |
46.18 |
|
$ |
45.02 |
|
Natural Gas Liquids ($/Bbl) |
|
$ |
14.57 |
|
$ |
15.20 |
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Natural Gas ($/Mcf) |
|
$ |
2.44 |
|
$ |
2.79 |
|
Average Realized Price ($/BOE) |
|
$ |
35.17 |
|
$ |
35.52 |
|
Per Unit Cost Information ($/BOE)
Lease Operating Exp. |
|
$ |
1.55 |
|
$ |
2.57 |
|
Production taxes, gathering and marketing |
|
$ |
2.33 |
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$ |
2.91 |
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DD&A Expense |
|
$ |
12.26 |
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$ |
12.02 |
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Total G&A Expense |
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$ |
13.23 |
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$ |
17.20 |
|
Crude oil, natural gas and NGL sales revenue was $4.5 million for the three months ended June 30, 2017, compared to $nil for the three months ended June 30, 2016. The revenue in the second 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 Companys 2017 second quarter net loss totaled $733,469, or $(0.03) per share compared to a net loss of $918,201 or $(0.04) per share in the 2016 second quarter. Adjusted EBITDA in the second quarter was $2,948,603 as compared to $(510,556) in the prior year quarter.
Operational Highlights
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# of Gross |
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Working |
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# of Wells |
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# of Wells |
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# of Wells Turned |
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Shook Pad (operated) |
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14 |
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45 |
% |
14 |
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0 |
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0 |
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Jacobucci Pad (non-operated) |
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14 |
|
18 |
% |
14 |
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14 |
|
14 |
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Marcus Pad (non-operated) |
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24 |
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11-15 |
% |
2 |
|
2 |
|
2 |
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Riverdale Pad (non-operated) |
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11 |
|
11 |
% |
1 |
|
1 |
|
1 |
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Total wells |
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63 |
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|
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31 |
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17 |
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17 |
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Management Comment
Steve Foley, CEO of PetroShare commented, Our transition from asset aggregation in the DJ Basin in 2016 to production and reserve growth this year is exemplified in our second quarter 2017 results. Our primary strategy to create value by focusing on properties that meet certain geo-mechanical metrics is working well for the Company. Many other operators are ramping up activities in areas where we have interests and our participation as a non-operator has increased as a result. In addition to our non-operated activity, we are completing drilling operations of our operated Shook Pad, where we are presently drilling the last of 14 wells. Subject to available capital, we anticipate beginning completion operations in late Q4 2017 and continuing into Q1 2018. The second quarter of 2017 was the first in the Companys history with significant revenues, operating income and positive adjusted EBITDA (non-GAAP). We believe we are well-positioned to improve upon those and other financial metrics, in a meaningful way, with an objective to create value for all shareholders in the future.
About PetroShare Corp.
PetroShare Corp. is an independent oil and natural gas exploration and development company that targets capital deployment opportunities in established unconventional resource plays. Its current focus is in the Niobrara/Codell formations and adjacent oil and gas producing zones in the Rocky Mountain region with specific targets in the Wattenberg field within the DJ Basin of northeast Colorado. For more information, visit www.PetroShareCorp.com
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this press release, the words plan, target, anticipate, believe, estimate, intend and expect and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding PetroShare Corp.s strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of reserves. All forward-looking statements in this press release are based upon information available to PetroShare Corp. on the date of this press release, and the company assumes no obligation to update any such forward-looking statements. Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. The Companys actual results could differ materially from those discussed in this press release. In particular, there can be no assurance that production will continue at any specific rate. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the Companys Forms 10-K and 10-Q filed with the SEC.
Condensed Financial Statements
Condensed financial statements are included below. Additional financial information, including footnotes that are considered an integral part of the condensed financial statements, can be found in PetroShares Quarterly Report on
Form 10-Q for the period ended June 30, 2017, which we expect will be available on August 14, 2017 at www.sec.gov.
PETROSHARE CORP.
CONDENSED BALANCE SHEETS
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June 30, 2017 |
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December 31, |
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ASSETS |
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Current assets: |
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|
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Cash and cash equivalents |
|
$ |
4,659,276 |
|
$ |
2,449,412 |
|
Other current assets |
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5,828,398 |
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1,911,869 |
| ||
Total current assets |
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10,487,674 |
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4,361,281 |
| ||
|
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|
|
|
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Oil and gas properties and other equipment |
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24,958,027 |
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13,610,203 |
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Property, plant and equipment, net |
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183,460 |
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39,542 |
| ||
Other assets |
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53,707 |
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15,758 |
| ||
|
|
|
|
|
| ||
Total assets |
|
$ |
35,682,868 |
|
$ |
18,026,784 |
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|
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|
|
|
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LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
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Current liabilities |
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24,755,943 |
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10,476,782 |
| ||
|
|
|
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|
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Notes payable, net of issuance costs |
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2,257,060 |
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5,005,308 |
| ||
Asset retirement obligations |
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1,025,015 |
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945,419 |
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Other liabilities |
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111,903 |
|
23,128 |
| ||
Total liabilities |
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28,149,921 |
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16,450,637 |
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|
|
|
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Shareholders equity: |
|
|
|
|
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Common stock and paid-in capital |
|
20,256,597 |
|
11,427,189 |
| ||
Accumulated deficit |
|
(12,723,650 |
) |
(9,851,042 |
) | ||
Total shareholders equity |
|
7,532,947 |
|
1,576,147 |
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|
|
|
|
|
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Total liabilities and shareholders equity |
|
$ |
35,682,868 |
|
$ |
18,026,784 |
|
PETROSHARE CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
|
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Six Months Ended June 30, |
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|
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2017 |
|
2016 |
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Cash flows from operating activities: |
|
|
|
|
| ||
Net loss |
|
$ |
(2,872,608 |
) |
$ |
(1,641,007 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
| ||
Depletion, depreciation, and accretion |
|
4,301,433 |
|
4,361 |
| ||
Share-based compensation |
|
730,745 |
|
714,984 |
| ||
Other, non-cash items |
|
23,123 |
|
17,039 |
| ||
Changes in operating assets and liabilities |
|
2,482,005 |
|
251,924 |
| ||
Net cash provided by (used in) operating activities |
|
4,664,698 |
|
(652,699 |
) | ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Additions of furniture, fixtures and equipment |
|
(164,346 |
) |
(14,158 |
) | ||
Development of crude oil and natural gas properties |
|
(3,294,424 |
) |
(585,184 |
) | ||
Acquisitions of crude oil and natural gas properties business combinations |
|
|
|
(2,305,917 |
) | ||
Acquisitions of crude oil and natural gas properties |
|
(2,695,226 |
) |
(1,173,906 |
) | ||
Net cash used in investing activities |
|
(6,153,996 |
) |
(4,079,165 |
) | ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Equity financing activities |
|
|
|
95,000 |
| ||
Debt financing activities |
|
3,699,162 |
|
3,600,000 |
| ||
Net cash provided by financing activities |
|
3,699,162 |
|
3,695,000 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and equivalents |
|
2,209,864 |
|
(1,036,864 |
) | ||
Cash and equivalents at beginning of period |
|
2,449,412 |
|
3,011,291 |
| ||
Cash and equivalents at end of period |
|
$ |
4,659,276 |
|
$ |
1,974,427 |
|
PETROSHARE CORP.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
Crude oil, natural gas, and NGL revenues |
|
$ |
4,457,502 |
|
$ |
|
|
$ |
5,918,887 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Expenses: |
|
|
|
|
|
|
|
|
| ||||
Lease operating expenses |
|
196,474 |
|
1,382 |
|
428,680 |
|
120 |
| ||||
Production taxes, gathering and marketing |
|
294,678 |
|
4,031 |
|
484,640 |
|
5,473 |
| ||||
Exploration costs |
|
2,483 |
|
|
|
66,673 |
|
2,700 |
| ||||
Depreciation, depletion, and accretion |
|
1,576,343 |
|
2,314 |
|
2,049,681 |
|
4,360 |
| ||||
Plugging expense |
|
2,075 |
|
|
|
23,123 |
|
|
| ||||
Impairment of crude oil and natural gas properties |
|
|
|
318 |
|
|
|
17,039 |
| ||||
General and administrative |
|
1,676,587 |
|
875,344 |
|
2,866,669 |
|
1,554,920 |
| ||||
Total expenses |
|
3,748,640 |
|
883,389 |
|
5,919,466 |
|
1,584,612 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income (loss) |
|
708,862 |
|
(883,389 |
) |
(579 |
) |
(1,584,612 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
144 |
|
138 |
|
246 |
|
501 |
| ||||
Interest expense |
|
(1,442,475 |
) |
(34,950 |
) |
(2,872,275 |
) |
(56,896 |
) | ||||
Total other income (expense) |
|
(1,442,331 |
) |
(34,812 |
) |
(2,872,029 |
) |
(56,395 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) |
|
$ |
(733,469 |
) |
$ |
(918,201 |
) |
$ |
(2,872,608 |
) |
$ |
(1,641,007 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) per common share: |
|
|
|
|
|
|
|
|
| ||||
Basic and diluted |
|
$ |
(0.03 |
) |
$ |
(0.04 |
) |
$ |
(0.13 |
) |
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic and diluted |
|
22,563,830 |
|
21,805,114 |
|
22,265,712 |
|
21,718,661 |
|
Use of Non-GAAP Financial Measures
We use non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the related GAAP measures, nor should they be considered superior to the related GAAP measures, and should be read together with financial information presented on a GAAP basis. Also, our non-GAAP measures may not be comparable to similarly titled measures of other companies.
This earnings release discusses Adjusted EBITDA, a non-GAAP financial performance measure that we believe is widely used in our industry as a measure of operating performance. We define Adjusted EBITDA as net income (loss) before (1) depreciation, depletion and accretion, (2) share-based compensation, and (3) interest expense, net. 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. The most directly comparable GAAP financial measure to Adjusted EBITDA is net income (loss).
Management and our Board of Directors use Adjusted EBITDA for purposes of evaluating company performance. We believe the Adjusted EBITDA provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business.
Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to be an alternative to net income (loss) as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. In particular, Adjusted EBITDA is not intended to be a measure of free cash flow available for managements discretionary expenditures, as this measure does not consider certain cash requirements, such as working capital needs, capital expenditures, contractual commitments, and interest payments.
The following table reconciles net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure:
PETROSHARE CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)
|
|
Three Months Ended June 30, |
| ||||
|
|
2017 |
|
2016 |
| ||
Net (loss) |
|
$ |
(733,469 |
) |
$ |
(918,201 |
) |
Depreciation, depletion, and accretion |
|
1,576,343 |
|
2,314 |
| ||
Share-based compensation |
|
663,398 |
|
370,519 |
| ||
Interest expense, net of interest income |
|
1,442,331 |
|
34,812 |
| ||
Adjusted EBITDA |
|
$ |
2,948,603 |
|
$ |
(510,556 |
) |
CONTACT INFORMATION
Investor Relations Contacts
Jon B. Kruljac
303-520-7479
Email: jkruljac@petrosharecorp.com
Steve Devanney
303-367-1667
Email: sdevanney@petrosharecorp.com
Web: www.PetroShareCorp.com
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