U.S. Energy (US:USEG)2024-08-07 20:11Financial Performance - Total revenue for Q2 2024 was $6,046,000, a decrease of 24.3% compared to $7,978,000 in Q2 2023[10] - Oil sales contributed $5,472,000 in Q2 2024, down from $7,028,000 in Q2 2023, representing a 22.1% decline[10] - Net loss for Q2 2024 was $1,974,000, compared to a net loss of $2,515,000 in Q2 2023, showing an improvement of 21.5%[10] - For the six months ended June 30, 2024, the net income loss was $11,511,000 compared to a loss of $3,762,000 for the same period in 2023, indicating a significant increase in losses[13] - Total revenue for the six months ended June 30, 2024, was $11.4 million, a decrease of $4.8 million, or 30%, from $16.3 million in the same period of 2023, primarily due to a 34% decrease in production quantities[120] Assets and Liabilities - Total current assets decreased to $5,189,000 as of June 30, 2024, down from $8,372,000 at December 31, 2023, a decline of 38.8%[8] - Total liabilities increased to $35,949,000 as of June 30, 2024, compared to $33,922,000 at December 31, 2023, an increase of 6.0%[9] - Shareholders' equity decreased to $37,728,000 as of June 30, 2024, down from $46,522,000 at December 31, 2023, a decline of 18.9%[9] - The company’s total assets as of June 30, 2024, were $221,092,000, compared to $218,403,000 as of December 31, 2023, showing a slight increase in asset base[13] Production and Sales - Oil production decreased by 38% to 71,634 barrels, while natural gas and liquids production also fell by 38% to 236,738 Mcfe, leading to a total production of 111,090 BOE, averaging 1,221 BOE per day[110] - The Company’s oil revenue in the Rockies region decreased to $2,042,000 for the three months ended June 30, 2024, from $2,470,000 in 2023, a decline of 17.3%[29] - The Company’s natural gas and liquids revenue in the Mid-Continent region was $2,087,000 for the three months ended June 30, 2024, compared to $2,246,000 in 2023, a decrease of 7.1%[29] - Average sales price for oil increased by 25% to $76.39 per barrel, while the average sales price for natural gas and liquids decreased by 3% to $2.42 per Mcfe[110] - Oil production decreased by 32% to 140,232 barrels for the six months ended June 30, 2024, compared to 206,211 barrels in the same period of 2023[120] Expenses - Operating expenses for Q2 2024 totaled $7,762,000, a decrease of 27.5% from $10,679,000 in Q2 2023[10] - General and administrative expenses decreased by $1.3 million, or 38%, to $2.1 million for the three months ended June 30, 2024, compared to $3.4 million in the prior year[115] - Lease operating expenses decreased by 18% to $3.1 million, but increased on a per BOE basis to $27.69 due to lower production volumes[111] - Total general and administrative expenses for the six months ended June 30, 2024, were $4.3 million, a decrease of $1.8 million, or 30%, from $6.1 million in the prior year[126] Investments and Acquisitions - The company acquired helium properties for $2,213,000 during the first half of 2024, indicating a strategic investment in expanding its resource base[13] - The Company acquired 82.5% of Wavetech's rights for approximately 144,000 net acres for $2.0 million in cash and 2.6 million shares valued at $2.7 million[23] - The company entered into a purchase and sale agreement to sell its remaining oil and gas properties in Karnes County, Texas, for a gross sales price of $6.0 million, resulting in net proceeds of $5.2 million[82] Shareholder Actions - The Board of Directors suspended the Company's dividend payment program on August 9, 2023, resulting in no dividends paid for the six months ended June 30, 2024[55] - The Company authorized a share repurchase program for up to $5.0 million of its common stock, with an extension approved on March 19, 2024[57] - The company made share repurchases totaling $145,300 in 2024, reflecting a commitment to returning value to shareholders[13] - In Q2 2024, the company repurchased 145,300 shares at a weighted average price of $1.158, totaling $168,250, compared to 163,300 shares at $1.475 for $240,793 in Q2 2023[58] Debt and Financing - The outstanding amount on the Credit Agreement was $7.0 million as of June 30, 2024, compared to $5.0 million as of December 31, 2023[40] - The Company’s weighted average interest rate on its credit agreement was 9.0% for the three months ended June 30, 2024, compared to 8.9% for the same period in 2023[38] - The company repaid $5.0 million of its credit facility, reducing the balance drawn to $2.0 million[83] - The company is in compliance with all financial covenants as of June 30, 2024, including a total debt to EBITDAX ratio of 3:1 and a current assets to current liabilities ratio of 1:1 or higher[134] Commodity Derivatives - The company reported a commodity derivative loss of $112,000 in Q2 2024, compared to a gain of $288,000 in Q2 2023[10] - Total commodity derivatives gains in 2024 were $1,493,000, compared to losses of $1,208,000 in 2023, showing improved performance in commodity trading[13] - The company had commodity derivative contracts totaling 249,845 Bbls with a weighted average price of $75.53 as of June 30, 2024[42] - Commodity derivative losses for the six months ended June 30, 2024, amounted to $1.5 million, primarily due to a decrease in the fair value of outstanding contracts[127] Impairments and Write-downs - The company reported an impairment of oil and natural gas properties amounting to $5,419,000 in 2024, while there was no such impairment recorded in 2023[13] - The Company recorded a ceiling test write-down of $5.4 million during the six months ended June 30, 2024, due to a reduction in the value of proved oil and natural gas reserves[36] - The Company expects to record a ceiling test write-down of $1 million to $3 million in Q3 2024 due to lower commodity prices and the recent sale of properties[107] Tax and Regulatory - The company's effective tax rate was approximately 0% for the six months ended June 30, 2024, down from 7% in 2023, primarily due to changes in the valuation allowance against net deferred tax assets[61] - The company had no uncertain tax positions during the six months ended June 30, 2024, indicating stability in tax-related matters[63]