U.S. Energy (USEG) - 2024 Q1 - Quarterly Results

First Quarter 2024 Overview First Quarter 2024 Highlights U.S. Energy Corp. reported Q1 2024 net daily production of 1,207 Boe/d, Adjusted EBITDA of $0.2 million, and $17.0 million liquidity - Net daily production: 1,207 Boe/d, with oil comprising 62% of total production[8] - Lease Operating Expense (LOE): $3.2 million, or $29.02 per Boe[8] - Adjusted EBITDA: $0.2 million[8] - Share Repurchase: Approximately 0.3 million shares bought back for ~$0.3 million[8] - Liquidity: Ended the quarter with $5.0 million debt, $2.0 million cash, and $17.0 million total liquidity[8] Management Comments CEO Ryan Smith highlighted the operations team's rapid recovery from adverse weather and emphasized leveraging the strong balance sheet and stock repurchase plan to maximize shareholder returns - The operations team successfully recovered from severe weather (heavy rains and flooding) in East Texas and the Gulf Coast, bringing most production back online by late March and early April without long-term negative effects[3] - The company is leveraging its strong balance sheet and liquidity to actively execute its stock repurchase plan and pursue initiatives focused on maximizing total shareholder returns[3] Financial and Operating Performance Production Update Q1 2024 total production was 109,800 Boe (1,207 Boe/d), impacted by weather-related downtime and asset divestitures, resulting in an estimated 125-150 Boe/d temporarily shut-in Q1 2024 vs. Q1 2023 Production and Sales Prices | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Sales Volume | | | | Oil (Bbls) | 68,599 | 91,311 | | Natural gas and liquids (Mcfe) | 247,209 | 384,031 | | Total (BOE) | 109,800 | 155,316 | | Average Daily Production (BOE/Day) | 1,207 | 1,726 | | Average Sales Prices | | | | Oil ($/Bbl) | $68.91 | $77.70 | | Natural gas and liquids ($/Mcfe) | $2.69 | $3.06 | | BOE ($/BOE) | $49.10 | $53.26 | - Weather-related downtime, mainly from flooding in East Texas and the Gulf Coast, led to an estimated 125-150 Boe/d of temporarily shut-in production during the quarter[4] First Quarter 2024 Financial Results Q1 2024 total oil and gas sales decreased to $5.4 million due to lower production and an 8% price drop, resulting in a $9.5 million net loss (or $0.38 per share) primarily from a $5.4 million impairment, with Adjusted EBITDA at $0.2 million Q1 2024 Key Financial Metrics (vs. Q1 2023, in millions) | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Total Oil and Gas Sales | $5.4 | $8.3 | | Lease Operating Expense (LOE) | $3.2 | $4.4 | | Cash G&A Expenses | $2.0 | $2.1 | | Adjusted EBITDA | $0.2 | $1.2 | | Net Loss | ($9.5) | ($1.3) | | Loss Per Diluted Share | ($0.38) | ($0.05) | - The decrease in revenue was primarily due to lower production quantities following an asset divestiture and weather-related events, combined with an 8% decrease in realized prices[6] - A significant contributor to the net loss was a non-cash impairment of $5.4 million, primarily driven by a reduction in SEC reserve pricing[10] Balance Sheet Update As of March 31, 2024, U.S. Energy maintained a solid liquidity position with $5.0 million debt outstanding, $15.0 million credit facility availability, and a $2.0 million cash balance Liquidity Position as of March 31, 2024 (in millions) | Item | Amount (in millions) | | :--- | :--- | | Debt Outstanding | $5.0 | | Credit Facility Availability | $15.0 | | Cash Balance | $2.0 | Hedging Program Update The company has fixed-price crude oil swaps through Q4 2024 at $80.01/bbl and added new swaps for 2025 at $73.71/bbl to manage commodity price risk Crude Oil Hedged Volumes and Prices (as of May 9, 2024) | Period | Volume (Bbls) | Swap Price ($/bbl) | | :--- | :--- | :--- | | Q2 2024 | 48,600 | $81.76 | | Q3 2024 | 45,000 | $79.80 | | Q4 2024 | 40,720 | $78.15 | | Q1 2025 | 45,000 | $75.73 | | Q2 2025 | 43,225 | $74.19 | | Q3 2025 | 39,100 | $72.82 | | Q4 2025 | 36,800 | $71.64 | - On April 2, 2024, the Company entered into new fixed price crude oil swaps for the period from Q1 2025 to Q4 2025 with a weighted average swap price of $73.71/bbl[13] Financial Statements Unaudited Condensed Consolidated Balance Sheets As of March 31, 2024, total assets were $70.3 million (down from $80.4 million), driven by depreciation and reduced oil and gas properties, with total liabilities at $33.5 million and shareholders' equity at $36.7 million Balance Sheet Summary (in thousands) | Account | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and equivalents | $2,006 | $3,351 | | Total current assets | $5,400 | $8,372 | | Net oil and natural gas properties | $63,089 | $70,175 | | Total assets | $70,270 | $80,444 | | Total current liabilities | $10,495 | $11,078 | | Credit facility | $5,000 | $5,000 | | Total liabilities | $33,527 | $33,922 | | Total shareholders' equity | $36,743 | $46,522 | Unaudited Condensed Consolidated Statements of Operations Q1 2024 total revenues were $5.4 million (down from $8.3 million), with a $5.4 million impairment leading to an $8.0 million operating loss and a $9.5 million net loss (or $0.38 per share) Statement of Operations Summary (in thousands) | Account | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total revenue | $5,391 | $8,272 | | Total operating expenses | $13,413 | $10,232 | | Impairment of oil and natural gas properties | $5,419 | $- | | Operating income (loss) | ($8,022) | ($1,960) | | Net income (loss) | ($9,537) | ($1,247) | | Basic and diluted income (loss) per share | ($0.38) | ($0.05) | Unaudited Condensed Consolidated Statements of Cash Flows Q1 2024 net cash used in operating activities was $0.6 million, with $0.2 million used in investing and $0.6 million in financing, resulting in a $1.3 million net decrease in cash for the quarter Cash Flow Summary (in thousands) | Cash Flow Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($603) | $236 | | Net cash provided by (used in) investing activities | ($179) | ($1,367) | | Net cash provided by (used in) financing activities | ($563) | ($859) | | Net (decrease) increase in cash and equivalents | ($1,345) | ($1,990) | | Cash and equivalents, end of period | $2,006 | $2,421 | Non-GAAP Reconciliation Adjusted EBITDA Reconciliation Adjusted EBITDA, a non-GAAP measure, was $0.2 million in Q1 2024 (down from $1.2 million), with reconciliation from net loss including adjustments for a $5.4 million impairment and other non-cash items Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Net Income (Loss) | ($9,537) | ($1,247) | | Depreciation, depletion, accretion and amortization | $2,195 | $2,417 | | Non-cash loss (gain) on commodity derivatives | $1,785 | ($1,325) | | Interest Expense, net | $120 | $268 | | Income tax expense (benefit) | $18 | ($62) | | Non-cash stock based compensation | $200 | $727 | | Impairment of oil and natural gas properties | $5,419 | - | | Other Adjustments | ($3) | $405 | | Total Adjusted EBITDA | $197 | $1,183 | - Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, DD&A, non-cash derivative gains/losses, share-based compensation, and other specific non-recurring or non-cash items[25]