Yuma Energy, Inc. Announces Third Quarter 2016 Financial Results

HOUSTON, TX / ACCESSWIRE / November 14, 2016 / Yuma Energy, Inc. (NYSE MKT: YUMA) (the “Company” or “Yuma”) today announced its financial results for the quarter ended September 30, 2016. These financial results only reflect Yuma Energy, Inc. as a stand-alone entity prior to the merger with Davis Petroleum Acquisition Corp., and do not reflect the combination of the two companies.

Financial Results

Sales and Other Operating Revenues

The following table presents the net quantities of oil, natural gas and natural gas liquids produced and sold by us for the three and nine months ended September 30, 2016 and 2015, and the average sales price per unit sold:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2016

2015

2016

2015

Production volumes:

Crude oil and condensate (Bbl)

47,079

61,938

155,986

186,531

Natural gas (Mcf)

340,189

497,868

1,148,587

1,488,408

Natural gas liquids (Bbl)

12,613

20,899

41,771

54,838

Total (Boe)(1)

116,390

165,815

389,188

489,437

Average prices realized:

Excluding commodity derivatives:

Crude oil and condensate (per Bbl)

$
42.49

$
46.10

$
37.51

$
50.52

Natural gas (per Mcf)

$
2.72

$
2.28

$
2.77

Natural gas liquids (per Bbl)

$
17.94

$
18.61

$
17.71

$
19.20

Including commodity derivatives:

Crude oil and condensate (per Bbl)

$
53.46

$
51.41

$
49.24

$
66.25

Natural gas (per Mcf)

$
2.64

$
2.93

$
2.61

$
4.24

Natural gas liquids (per Bbl)

$
17.94

$
18.61

$
17.71

$
19.20

(1) Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).

The following table presents our revenues for the three and six months ended September 30, 2016 and 2015:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2016

2015

2016

2015

Sales of natural gas and crude oil:

Crude oil and condensate

$
2,000,373

$
2,855,530

$
5,851,235

$
9,423,519

Natural gas

924,994

1,340,877

2,616,440

4,112,065

Natural gas liquids

226,259

388,966

739,961

1,053,076

Realized gain (loss) on commodity derivatives

488,409

432,824

2,205,216

5,114,609

Unrealized loss on commodity derivatives

(40,473
)

3,460,825

(2,613,044
)

(1,847,371
)

Gas marketing sales

–

63,637

–

167,923

Total revenues

$
3,599,562

$
8,542,659

$
8,799,808

$
18,023,821

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

The following table reconciles reported net income to Adjusted EBITDA for the periods indicated:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2016

2015

2016

2015

Net Loss

$
(2,115,444
)

$
(90,410
)

$
(20,863,218
)

$
(13,323,076
)

Depreciation, depletion & amortization of property and equipment

1,711,043

3,123,812

6,178,248

11,020,278

Interest expense, net of interest income and amounts capitalized

245,343

131,114

974,248

319,561

Income tax benefit

(47,429
)

329,653

(1,272,664
)

(3,605,839
)

Impairment of oil and gas properties

–

11,015,589

–

Impairment of goodwill

–

4,927,508

Merger costs

229,647

–

1,061,324

–

Stock-based compensation net of capitalized cost

189,211

338,619

909,309

2,210,950

Unrealized (gains) losses on commodity derivatives

40,473

(3,460,825
)

2,613,044

1,847,371

Accretion of asset retirement obligation

107,760

170,209

318,016

499,766

Adjusted EBITDA

$
360,604

$
542,172

$
933,896

$
3,896,519

Adjusted EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance compared to that of other companies in our industry, without regard to financing methods, capital structure or historical costs basis. It is also used to assess our ability to incur and service debt and fund capital expenditures. Our Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flow provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner.

Yuma Energy, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

September 30,

December 31,

2016

2015

(Unaudited)

(As Restated)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$
1,831,928

$
5,355,191

Accounts receivable, net of allowance for doubtful accounts:

Trade

2,942,948

2,829,266

Officers and employees

65,153

75,404

Other

338,461

633,573

Commodity derivative instruments

1,016,583

2,658,047

Prepayments

321,237

704,523

Other deferred charges

29,921

415,740

Total current assets

6,546,231

12,671,744

OIL AND GAS PROPERTIES (full cost method):

Not subject to amortization

15,336,916

14,288,716

Subject to amortization

205,331,835

204,512,038

220,668,751

218,800,754

Less: accumulated depreciation, depletion and amortization

(134,312,088
)

(117,304,945
)

Net oil and gas properties

86,356,663

101,495,809

OTHER PROPERTY AND EQUIPMENT:

Land, buildings and improvements

2,795,000

Other property and equipment

3,497,948

3,460,507

6,292,948

6,255,507

Less: accumulated depreciation and amortization

(2,361,010
)

(2,174,316
)

Net other property and equipment

3,931,938

4,081,191

OTHER ASSETS AND DEFERRED CHARGES:

Commodity derivative instruments

177,724

1,070,541

Deposits

414,064

264,064

Other noncurrent assets

–

38,104

Total other assets and deferred charges

591,788

1,372,709

TOTAL ASSETS

$
97,426,620

$
119,621,453

Yuma Energy, Inc.
CONSOLIDATED BALANCE SHEETS – CONTINUED
(Unaudited)

September 30,

December 31,

2016

2015

(Unaudited)

(As Restated)

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current maturities of debt

$
29,800,000

$
30,063,635

Accounts payable, principally trade

6,378,942

7,933,664

Commodity derivative instruments

74,331

–

Asset retirement obligations

243,711

70,000

Other accrued liabilities

2,593,813

1,781,484

Total current liabilities

39,090,797

39,848,783

OTHER NONCURRENT LIABILITIES:

Asset retirement obligations

8,571,895

8,720,498

Commodity derivative instruments

4,432

–

Deferred taxes

144,700

1,417,364

Other liabilities

7,467

30,090

Total other noncurrent liabilities

8,728,494

10,167,952

EQUITY:

Preferred stock

10,828,603

Common stock, no par value (300 million shares authorized, 3,628,991 and 3,591,731 issued)

142,724,775

141,858,946

Accumulated earnings (deficit)

(103,946,049
)

(83,082,831
)

Total equity

49,607,329

69,604,718

TOTAL LIABILITIES AND EQUITY

$
97,426,620

$
119,621,453

Yuma Energy, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2016

2015

2016

2015

(As Restated)

REVENUES:

Sales of natural gas and crude oil

$
3,151,626

$
4,649,009

$
9,207,636

$
14,756,582

Net gains (losses) from commodity derivatives

447,936

3,893,650

(407,828
)

3,267,239

Total revenues

3,599,562

8,542,659

8,799,808

18,023,821

EXPENSES:

Lease operating

1,798,868

2,718,919

5,692,077

9,168,260

Re-engineering and workovers

132,708

1,136

132,708

555,628

Marketing cost of sales

–

234,507

–

434,189

General and administrative – stock-based compensation

189,211

338,619

909,309

2,210,950

General and administrative – other

1,581,619

1,873,484

5,742,824

5,389,859

Depreciation, depletion and amortization

1,711,043

3,123,812

6,178,248

11,020,278

Asset retirement obligation accretion expense

107,760

170,209

318,016

499,766

Impairments

–

11,015,589

4,927,508

Other

6,612

(274,329
)

(10,173
)

444,320

Total expenses

5,527,821

8,186,357

29,978,598

34,650,758

INCOME (LOSS) FROM OPERATIONS

(1,928,259
)

356,302

(21,178,790
)

(16,626,937
)

OTHER INCOME (EXPENSE):

Interest expense

(245,359
)

(131,114
)

(974,403
)

(337,499
)

Other, net

10,745

14,055

17,311

35,521

Total other income (expense)

(234,614
)

(117,059
)

(957,092
)

(301,978
)

NET INCOME (LOSS) BEFORE INCOME TAXES

(2,162,873
)

239,243

(22,135,882
)

(16,928,915
)

Income tax expense (benefit)

(47,429
)

329,653

(1,272,664
)

(3,605,839
)

NET INCOME (LOSS)

(2,115,444
)

(90,410
)

(20,863,218
)

(13,323,076
)

PREFERRED STOCK, PERPETUAL PREFERRED SERIES A:

Dividends paid in cash

–

320,626

–

940,315

Dividends in arrears

320,625

–

961,877

–

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON

STOCKHOLDERS

$
(2,436,069
)

$
(411,036
)

$
(21,825,095
)

$
(14,263,391
)

EARNINGS (LOSS) PER COMMON SHARE ADJUSTED FOR

OCTOBER 26, 2016 1-FOR-20 REVERSE STOCK SPLIT:

Basic

$
(0.67
)

$
(0.11
)

$
(6.04
)

$
(4.03
)

Diluted

$
(0.67
)

$
(0.11
)

$
(6.04
)

$
(4.03
)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

OUTSTANDING ADJUSTED FOR OCTOBER 26, 2016 1-FOR-20

REVERSE STOCK SPLIT:

Basic

3,628,683

3,580,163

3,611,241

3,539,755

Diluted

3,628,683

3,580,163

3,611,241

3,539,755

Yuma Energy, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended

September 30,

2016

2015

(As Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

Reconciliation of net loss to net cash provided by (used in) operating activities

Net loss

$
(20,863,218
)

$
(13,323,076
)

Impairment of oil and gas properties

11,015,589

–

Impairment of goodwill

–

4,927,508

Depreciation, depletion and amortization of property and equipment

6,178,248

11,020,278

Accretion of asset retirement obligation

318,016

499,766

Stock-based compensation net of capitalized cost

909,309

2,210,950

Amortization of other assets and liabilities

518,478

209,904

Deferred tax expense (benefit)

(1,272,664
)

(3,608,239
)

Bad debt expense increase (decrease)

(10,173
)

787,264

Unrealized losses on commodity derivatives

2,613,044

1,847,371

Other

–

(342,944
)

Changes in current operating assets and liabilities:

Accounts receivable

201,854

4,411,640

Other current assets

383,286

(77,453
)

Accounts payable

(1,471,397
)

(13,938,649
)

Other current liabilities

783,551

1,095,356

Other noncurrent assets and liabilities

(108,618
)

–

NET CASH USED IN OPERATING ACTIVITIES

(804,695
)

(4,280,324
)

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures on property and equipment

(2,588,455
)

(11,211,634
)

Proceeds from sale of property

340,603

30,442

Decrease in short-term investments

–

1,170,868

NET CASH USED IN INVESTING ACTIVITIES

(2,247,852
)

(10,010,324
)

CASH FLOWS FROM FINANCING ACTIVITIES:

Change in borrowing on line of credit

–

$
6,800,000

Proceeds from insurance note

–

813,562

Payments on insurance note

(263,635
)

(579,005
)

Line of credit financing costs

(132,659
)

(215,141
)

Net proceeds from sale of common stock

–

1,363,160

Net proceeds from sale of perpetual preferred stock

–

870,386

Cash dividends to preferred shareholders

–

(940,315
)

Common stock purchased from employees

(74,422
)

(300,732
)

Other

–

(31,485
)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

(470,716
)

7,780,430

NET DECREASE IN CASH AND CASH EQUIVALENTS

(3,523,263
)

(6,510,218
)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

5,355,191

11,558,322

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
1,831,928

$
5,048,104

Supplemental disclosure of cash flow information:

Interest payments (net of interest capitalized)

$
354,344

$
73,342

Interest capitalized

$
395,244

$
750,107

Supplemental disclosure of significant non-cash activity:

(Increase) decrease in capital expenditures financed by accounts payable

$
83,325

$
2,979,301

About Yuma Energy, Inc.

Yuma Energy, Inc. is an independent Houston-based exploration and production company. We are focused on the acquisition, development, and exploration for conventional and unconventional oil and natural gas resources, primarily in the U.S. Gulf Coast and California. We have employed a 3-D seismic-based strategy to build a multi-year inventory of development and exploration prospects. Our current operations are focused on onshore assets located in central and southern Louisiana, where we are targeting the Austin Chalk, Tuscaloosa, Wilcox, Frio, Marg Tex and Hackberry formations. We also have company-operated conventional fields located onshore in south Louisiana and the upper Texas Gulf Coast, and non-operated properties include Eagle Ford and Eaglebine properties in east Texas. In addition, we have a non-operated position in the Bakken Shale in North Dakota and operated positions in Kern and Santa Barbara Counties in California. Our common stock is traded on the NYSE MKT under the trading symbol “YUMA.” For more information about Yuma Energy, Inc., please visit our website at www.yumaenergyinc.com.

Agreement and Plan of Merger and Reorganization

On February 10, 2016, Yuma Energy, Inc., a California corporation (“Yuma California”), Yuma Energy, Inc., a Delaware corporation and wholly-owned subsidiary of Yuma California (the “Company”), Delaware Merger Subsidiary, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Subsidiary”), and Davis Petroleum Acquisition Corp. (“Davis”) entered into an agreement and plan of merger and reorganization, as subsequently amended on September 2, 2016 (the “Merger Agreement”), providing for the merger of Yuma California with and into the Company (the “Reincorporation Merger”) and the merger of Merger Subsidiary with and into Davis (the “Merger”). The Reincorporation Merger and the Merger were consummated on October 26, 2016. In connection with the Reincorporation Merger, Yuma California converted each outstanding share of its 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share (the “Series A Preferred Stock”), into 35 shares of its common stock, no par value per share (the “Yuma California Common Stock”), and then each share of Yuma California Common Stock was exchanged for one-twentieth of one share of common stock, $0.001 par value per share, of the Company (the “Common Stock”). In connection with the Merger, the Company issued approximately 7,455,000 shares of Common Stock to former holders of common stock of Davis and approximately 1,754,000 shares of Series D Convertible Preferred Stock, $0.001 par value per share (the “Series D Preferred Stock”), of the Company, to former holders of Davis preferred stock. After the Reincorporation Merger and the Merger, the Company had approximately 12,201,000 shares of Common Stock issued and outstanding.

In connection with the Davis merger, on October 26, 2016, we entered into a Credit Agreement providing for a $75.0 million 3-year revolving credit facility (the “Credit Agreement”) with SG Americas Securities, LLC (“SG Americas”) as Lead Arranger and Bookrunner, Société Générale S.A. as Administrative Agent and the lenders party thereto. The Credit Agreement replaces our existing credit agreement. The initial borrowing base of the Credit Agreement is $44.0 million, and is subject to redetermination as of January 1, 2017 as well as April 1st and October 1st of each year. As of October 26, 2016, we had approximately $39.5 million outstanding under the Credit Agreement. All of the obligations under the Credit Agreement, and the guarantee of those obligations, are secured by substantially all of our assets and customary financial covenants have been made.

Please refer to our annual report on Form 10-K/A for the year ended December 31, 2015, our Form 10-Q for the quarterly periods ended March 31, 2016, June 30, 2016, and September 30, 2016 and all our filings with the SEC for further information.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as “expects,” “believes,” “intends,” “anticipates,” “plans,” “estimates,” “potential,” “possible,” or “probable” or statements that certain actions, events or results “may,” “will,” “should,” or “could” be taken, occur or be achieved. The forward-looking statements include statements about future operations, estimates of reserve and production volumes, the anticipated timing for closing the proposed merger and the ability of the Company to enter into an amendment to its credit agreement. Forward-looking statements are based on current expectations and assumptions and analyses made by Yuma and Davis in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances. However, whether actual results and developments will conform with expectations is subject to a number of risks and uncertainties, including but not limited to: the possibility that the companies may be unable to obtain stockholder approval or satisfy the other conditions to closing; the possibility that the combined company may be unable to obtain an acceptable reserve-based credit facility; that problems may arise in the integration of the businesses of the two companies; that the acquisition may involve unexpected costs; the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas); risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; revisions to reserve estimates as a result of changes in commodity prices; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather; further declines in oil and gas prices; inability of management to execute its plans to meet its goals, shortages of drilling equipment, oil field personnel and services, unavailability of gathering systems, pipelines and processing facilities and the possibility that government policies may change. Yuma’s annual report on Form 10-K/A for the year ended December 31, 2015, quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other SEC filings discuss some of the important risk factors identified that may affect its business, results of operations, and financial condition. Yuma and Davis undertake no obligation to revise or update publicly any forward-looking statements, except as required by law.

For more information, please contact:

James J. Jacobs
Treasurer and Chief Financial Officer
Yuma Energy, Inc.
1177 West Loop South, Suite 1825
Houston, TX 77027
Telephone: (713) 968-7000

SOURCE: Yuma Energy, Inc.

ReleaseID: 448669

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