UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,
2015
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-30234
![](image_001.jpg)
(Exact name of registrant as specified in
its charter)
Nevada |
|
88-0422242 |
(State or other jurisdiction of incorporation or
organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
4040 Broadway |
|
|
Suite 508 |
|
|
San Antonio, Texas |
|
78209 |
(Address of principal executive offices) |
|
(Zip Code) |
(210) 451-5545 |
(Registrant's telephone number, including area code) |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes þ
No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ
No ¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
¨ |
Accelerated filer
¨ |
|
|
Non-accelerated filer ¨ (Do not check if a smaller reporting company) |
Smaller reporting company x |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
¨ No
þ
The number of shares of Common Stock, $0.001 par value, outstanding on May 15, 2015 was 8,406,661 shares.
ENERJEX RESOURCES, INC.
FORM 10-Q
TABLE OF CONTENTS
PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EnerJex Resources, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
March 31, |
|
|
December 31, |
|
|
|
2015 |
|
|
2014 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
2,933,562 |
|
|
$ |
805,524 |
|
Accounts receivable |
|
|
959,653 |
|
|
|
1,278,509 |
|
Inventory |
|
|
222,929 |
|
|
|
248,218 |
|
Derivative receivable |
|
|
3,952,092 |
|
|
|
3,736,005 |
|
Marketable securities |
|
|
1,018,573 |
|
|
|
1,018,573 |
|
Deposits and prepaid expenses |
|
|
722,187 |
|
|
|
324,339 |
|
Total current assets |
|
|
9,808,996 |
|
|
|
7,411,168 |
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
Fixed assets, net of accumulated depreciation of $2,005,467 and $1,945,607 |
|
|
2,335,805 |
|
|
|
2,404,703 |
|
Oil and gas properties using full-cost accounting, net of accumulated DD&A of $14,501,249 and $13,827,347 |
|
|
47,300,714 |
|
|
|
64,263,272 |
|
Derivative receivable |
|
|
615,102 |
|
|
|
985,746 |
|
Other non-current assets |
|
|
941,650 |
|
|
|
993,207 |
|
Total non-current assets |
|
|
51,193,271 |
|
|
|
68,646,928 |
|
Total assets |
|
$ |
61,002,267 |
|
|
$ |
76,058,096 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,027,686 |
|
|
$ |
3,042,835 |
|
Accrued liabilities |
|
|
1,494,740 |
|
|
|
1,096,521 |
|
Total current liabilities |
|
|
3,522,426 |
|
|
|
4,139,356 |
|
|
|
|
|
|
|
|
|
|
Asset retirement obligation |
|
|
2,974,833 |
|
|
|
2,906,093 |
|
Long-term debt |
|
|
23,504,928 |
|
|
|
23,011,660 |
|
Total non-current liabilities |
|
|
26,479,761 |
|
|
|
25,917,753 |
|
Total liabilities |
|
|
30,002,187 |
|
|
|
30,057,109 |
|
Commitments & Contingencies |
|
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
|
|
|
10% Series A Cumulative Redeemable Perpetual Preferred Stock, $.001 par value, 25,000,000 shares authorized; 751,815 shares issued and outstanding at March 31, 2015 and December 31, 2014 |
|
|
752 |
|
|
|
752 |
|
Series B Convertible Preferred Stock,
$.001 par value, 1,764 share authorized, issued and outstanding at March 31, 2015 |
|
|
2 |
|
|
|
- |
|
Common stock, $0.001 par value, 250,000,000 shares authorized; shares issued and outstanding 8,406,661 at March 31, 2015 and 7,643,114 at December 31, 2014 |
|
|
8,407 |
|
|
|
7,643 |
|
Paid-in capital |
|
|
66,648,974 |
|
|
|
63,825,998 |
|
Accumulated other comprehensive income |
|
|
(552,589 |
) |
|
|
(552,589 |
) |
Retained (deficit) |
|
|
(35,105,466 |
) |
|
|
(17,280,817 |
) |
Total stockholders' equity |
|
|
31,000,080 |
|
|
|
46,000,987 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
|
$ |
61,002,267 |
|
|
$ |
76,058,096 |
|
See Notes to Condensed Consolidated Financial
Statements.
EnerJex Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Oil revenues |
|
$ |
1,380,646 |
|
|
$ |
3,612,579 |
|
Natural gas revenues |
|
|
117,195 |
|
|
|
242,398 |
|
Total revenues |
|
|
1,497,841 |
|
|
|
3,854,977 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Direct operating costs |
|
|
1,267,301 |
|
|
|
1,531,907 |
|
Depreciation, depletion and amortization |
|
|
745,608 |
|
|
|
763,758 |
|
Impairment of oil and gas properties |
|
|
16,401,376 |
|
|
|
- |
|
Professional fees |
|
|
253,729 |
|
|
|
224,902 |
|
Salaries |
|
|
521,287 |
|
|
|
310,348 |
|
Administrative expense |
|
|
230,740 |
|
|
|
141,029 |
|
Total expenses |
|
|
19,420,041 |
|
|
|
2,971,944 |
|
Income (loss) from operations |
|
|
(17,922,200 |
) |
|
|
883,033 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(309,496 |
) |
|
|
(378,928 |
) |
Derivative losses |
|
|
(217,522 |
) |
|
|
(404,353 |
) |
Other income |
|
|
1,094,657 |
|
|
|
3,882 |
|
Total other income (expense) |
|
|
567,639 |
|
|
|
(779,399 |
) |
Net income (loss) |
|
$ |
(17,354,561 |
) |
|
$ |
103,634 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(17,354,561 |
) |
|
|
103,634 |
|
Preferred dividends |
|
|
(407,088 |
) |
|
|
(399,447 |
) |
Net income (loss) attributable to common
stockholders |
|
$ |
(17,761,649 |
) |
|
$ |
(295,813 |
) |
Net income (loss) per share basic and
diluted |
|
$ |
(2.28 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares |
|
|
7,795,823 |
|
|
|
7,293,877 |
|
See Notes to Condensed Consolidated Financial
Statements.
EnerJex Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2015 |
|
|
2014 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(17,354,561 |
) |
|
$ |
103,634 |
|
Depreciation, depletion and amortization |
|
|
745,608 |
|
|
|
763,758 |
|
Impairment of oil and gas properties |
|
|
16,401,376 |
|
|
|
- |
|
Shares based payments issued for services |
|
|
109,527 |
|
|
|
258,498 |
|
Accretion of asset retirement obligation |
|
|
70,984 |
|
|
|
63,695 |
|
Loss on derivatives |
|
|
154,557 |
|
|
|
69,289 |
|
Settlement of asset retirement obligation |
|
|
(2,244 |
) |
|
|
(4,996 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
318,856 |
|
|
|
(99,299 |
) |
Inventory |
|
|
25,289 |
|
|
|
3,551 |
|
Deposits and prepaid expenses |
|
|
(397,848 |
) |
|
|
(356,275 |
) |
Accounts payable |
|
|
(1,015,149 |
) |
|
|
81,308 |
|
Accrued liabilities |
|
|
398,219 |
|
|
|
(949,011 |
) |
Cash flows from operating activities |
|
|
(545,386 |
) |
|
|
(65,848 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets |
|
|
(2,809 |
) |
|
|
(80,143 |
) |
Additions to oil and gas properties |
|
|
(112,719 |
) |
|
|
(1,234,890 |
) |
Sales of oil and gas properties |
|
|
- |
|
|
|
987,521 |
|
Proceeds from sale of fixed assets |
|
|
- |
|
|
|
- |
|
Cash flows from investing activities |
|
|
(115,528 |
) |
|
|
(327,512 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from sale of common and preferred stock |
|
|
2,714,215 |
|
|
|
- |
|
Proceeds from borrowings |
|
|
500,000 |
|
|
|
500,000 |
|
Dividends paid on preferred stock |
|
|
(470,088 |
) |
|
|
- |
|
Repayment of long-term debt |
|
|
(6,732 |
) |
|
|
(9,096 |
) |
Deferred financing costs |
|
|
51,557 |
|
|
|
30,902 |
|
Cash flows from financing activities |
|
|
2,788,952 |
|
|
|
521,806 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
2,128,038 |
|
|
|
128,446 |
|
Cash – beginning |
|
|
805,524 |
|
|
|
1,308,196 |
|
Cash – ending |
|
$ |
2,933,562 |
|
|
$ |
1,436,642 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
197,046 |
|
|
$ |
74,499 |
|
Income taxes paid |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-cash transactions: |
|
|
|
|
|
|
|
|
Share based payments issued for services |
|
$ |
109,527 |
|
|
$ |
258,498 |
|
See Notes to Condensed Consolidated Financial
Statements.
EnerJex Resources, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial
Statements
Note 1 – Basis of Presentation
The unaudited condensed consolidated financial
statements of EnerJex Resources, Inc. (“we”, “us”, “our” and “Company”) have been
prepared in accordance with United States generally accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation. All
such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily
indicative of the results to be expected for a full year. Certain amounts in the prior year statements have been reclassified
to conform to the current year presentations. The statements should be read in conjunction with the financial statements
and footnotes thereto included in our Annual Report Form 10-K for the fiscal year ended December 31, 2014.
Our consolidated financial statements include the accounts of our wholly-owned subsidiaries, EnerJex Kansas,
Inc., Black Sable Energy, LLC, Working Interest, LLC, and Black Raven Energy, Inc. (“Black Raven”) for the quarter
ended March 31, 2015 and for the year ended December 31, 2014. All intercompany transactions and accounts have been eliminated
in consolidation.
Note 2 - Stock Options
A summary of stock
options is as follows:
|
|
Options |
|
|
Weighted
Avg.
Exercise
Price |
|
|
Warrants |
|
|
Weighted
Avg.
Exercise
Price |
|
Outstanding December 31, 2014 |
|
|
231,332 |
|
|
$ |
9.33 |
|
|
|
- |
|
|
$ |
- |
|
Granted |
|
|
67,332 |
|
|
|
9.85 |
|
|
|
- |
|
|
|
- |
|
Cancelled |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding March 31, 2015 |
|
|
298,664 |
|
|
$ |
9.45 |
|
|
|
- |
|
|
$ |
- |
|
Note 3 – Fair Value Measurements
We hold certain financial assets which are
required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157,
"Fair Value Measurements" ("ASC Topic 820-10"). ASC Topic 820-10 establishes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement
assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability.
The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:
Level 1. Valuations based on quoted
prices in active markets for identical assets or liabilities that an entity has the ability to access.
Level 2. Valuations based on quoted
prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or
other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. We
consider the derivative liability to be Level 2. We determine the fair value of the derivative liability utilizing
various inputs, including NYMEX price quotations and contract terms.
Level 3. Valuations based on inputs that
are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider
our marketable securities to be Level 3.
Our derivative instruments consist of fixed
price commodity swaps.
| |
Fair Value Measurement | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | |
Crude oil contracts | |
$ | - | | |
$ | 4,194,738 | | |
$ | - | |
Marketable Securities | |
$ | - | | |
$ | - | | |
$ | 1,018,573 | |
Note 4 - Asset Retirement Obligation
Our asset retirement obligations relate
to the liabilities associated with the abandonment of oil wells. The amounts recognized are based on numerous estimates and assumptions,
including future retirement costs, inflation rates and credit adjusted risk-free interest rates. The following shows the changes
in asset retirement obligations:
Asset retirement obligations, December 31, 2014 |
|
$ |
2,906,093 |
|
Liabilities incurred during the period |
|
|
- |
|
Accretion |
|
|
70,984 |
|
Liabilities settled during the quarter |
|
|
(2,244 |
) |
Asset retirement obligations, March 31, 2015 |
|
$ |
2,974,833 |
|
Note 5 - Derivative Instruments
We have entered into certain derivative
or physical arrangements with respect to portions of our crude oil production to reduce our sensitivity to volatile commodity prices
and/or to meet hedging requirements under our Credit Facility. We believe that these derivative arrangements, although
not free of risk, allow us to achieve a more predictable cash flow and to reduce exposure to commodity price fluctuations. However,
derivative arrangements limit the benefit of increases in the prices of crude oil. Moreover, our derivative arrangements apply
only to a portion of our production.
We have an Intercreditor Agreement in place
between the Company; our counterparties, BP Corporation North America, Inc. ("BP") and Cargill Incorporated (“Cargill”)
and our agent Texas Capital Bank, N.A., which allows Texas Capital Bank to also act as agent for the counterparties for the purpose
of holding and enforcing any liens or security interests resulting from our derivative arrangements. Therefore, we are not
required to post additional collateral, including cash.
The following derivative contracts were
in place at March 31, 2015:
| |
Term | |
Monthly Volumes | |
Price/Bbl | | |
Fair Value | |
Deferred premium put | |
1/16-6/16 | |
9,000 Bbls | |
$ | 85.00 | | |
| 1,256,288 | |
Crude oil swap | |
1/15-12/15 | |
5,800 Bbls | |
$ | 88.55 | | |
| 1,879,490 | |
Crude oil swap | |
7/11-12/15 | |
3,000 Bbls | |
$ | 83.70 | | |
| 841,200 | |
Crude oil swap | |
7/12-12/15 | |
1,000 Bbls | |
$ | 76.74 | | |
| 217,760 | |
| |
| |
| |
| | | |
$ | 4,194,738 | |
Monthly volume is the weighted average throughout
the period.
The total fair value is shown as a derivative
instrument in both current and non-current assets on the balance sheet.
Note 6 - Long-Term Debt
Senior Secured Credit Facility
On October 3, 2011, the Company and
DD Energy, Inc., EnerJex Kansas, Inc., Black Sable Energy, LLC and Working Interest, LLC ("Borrowers") entered into an
Amended and Restated Credit Agreement with Texas Capital Bank, N.A. (the “Bank”) and other financial institutions and
banks that may become a party to the Credit Agreement from time to time. The facilities provided under the Amended and Restated
Credit Agreement were to be used to refinance Borrowers prior outstanding revolving loan facility with Bank, dated July 3, 2008,
and for working capital and general corporate purposes.
At our option, loans under the facility
will bear stated interest based on the Base Rate plus Base Rate Margin, or Floating Rate plus Floating Rate Margin (as those terms
are defined in the Credit Agreement). The Base Rate will be, for any day, a fluctuating rate per annum equal to the higher of (a)
the Federal Funds Rate plus 0.50% and (b) the Bank's prime rate. The Floating Rate shall mean, at Borrower's option, a per annum
interest rate equal to (i) the Eurodollar Rate plus Eurodollar Margin, or (ii) the Base Rate plus Base Rate Margin (as those terms
are defined in the Amended and Restated Credit Agreement). Eurodollar borrowings may be for one, two, three, or six months, as
selected by the Borrowers. The margins for all loans are based on a pricing grid ranging from 0.00% to 0.75% for the Base Rate
Margin and 2.25% to 3.00% for the Floating Rate Margin based on the Company's Borrowing Base Utilization Percentage (as defined
in the Amended and Restated Credit Agreement).
On December 15, 2011, we entered into a
First Amendment to Amended and Restated Credit Agreement and Second Amended and Restated Promissory Note in the amount of $50,000,000
with the Bank. The Amendment reflected the addition of Rantoul Partners as an additional Borrower and added as additional security
for the loans the assets held by Rantoul Partners.
On August 31, 2012, we entered into a Second
Amendment to Amended and Restated Credit Agreement with the Bank. The Second Amendment: (i) increased our borrowing base to $7,000,000,
(ii) reduced the minimum interest rate to 3.75%, and (iii) added additional new leases as collateral for the loan.
On November 2, 2012, we entered into a Third
Amendment to Amended and Restated Credit Agreement with the Bank. The Third Amendment (i) increased our borrowing base to $12,150,000,
and (ii) clarified certain continuing covenants and provided a limited waiver of compliance with one of the covenants so clarified
for the quarter ended December 31, 2011.
On January 24, 2013, we entered into a Fourth
Amendment to Amended and Restated Credit Agreement, which was made effective as of December 31, 2012 with the Bank. The Fourth
Amendment reflects the following changes: (i) the Bank consented to the restructuring transactions related to the dissolution of
Rantoul Partners, and (ii) the Bank terminated a Limited Guaranty, as defined in the Credit Agreement, executed by Rantoul Partners
in favor of the Bank.
On April 16, 2013, the Bank increased our
borrowing base to $19.5 million.
On September 30, 2013, we entered into a
Fifth Amendment to the Amended and Restated Credit Agreement. The Fifth Amendment reflects the following changes: (i)
expanded principal commitment amount of the Bank to $100,000,000, (ii) increased the Borrowing Base to $38,000,000, (iii) added
Black Raven Energy, Inc. to the Credit Agreement as a borrower party, (iv) added certain collateral and security interests in favor
of the Bank, and (v) reduced the Company’s current interest rate to 3.30%.
On November 19, 2013, we entered into a
Sixth Amendment to the Amended and Restated Credit Agreement. The Sixth Amendment reflects the following changes: (i) added Iberia
Bank as a participant into our credit facility, and (ii) a technical correction to our covenant calculations.
On May 22, 2014, we entered into a Seventh
Amendment to the Amended and Restated Credit Agreement. The Seventh Amendment reflects the Bank’s consent to our issuance
of up to 850,000 shares of our 10% Series A Cumulative Redeemable Perpetual Preferred Stock.
On August 15, 2014, we entered into an Eighth
Amendment to the Amended and Restated Credit Agreement. The Eighth Amendment reflects the following changes: (i) the borrowing
base was increased from $38 million to $40 million, and (ii) the maturity of the facility was extended by three years to October
3, 2018.
Our borrowing base at March 31, 2015 and
December 31, 2014 was $40 million, of which we had borrowed $23.5 million and $23 million respectively. For the three month period
ended March 31, 2015 and for the year ended December 31, 2014 the interest rate was 3.3%. This facility expires on October 3, 2018.
Other Long Term Debt
We financed the purchase of vehicles through
a bank. The notes are for four years and the vehicles collateralize these notes. The long term balance on the notes
at March 31, 2015 was $4,928.
Note 7 – Commitments & Contingencies
As of March 31, 2015, the Company has an
outstanding irrevocable letter of credit in the amount of $50,000 issued in favor of the Texas Railroad Commission. The letter
of credit is required by the Texas Railroad Commission for all companies operating in the state of Texas with production greater
than limits they prescribe.
Rent expense for the three months ended
March 31, 2015 and 2014 was approximately $43,000 and $51,000 respectively. Future non-cancellable minimum lease payments are approximately
$120,000 for the remainder of 2015, $147,000 for 2016, $145,000 for 2017, $91,000 for 2018 and $77,000 for 2019.
Note 8 - Equity Transactions
On January 15, 2015, 67,332 options
were issued to employees and directors.
On March 13, 2015 the Company issued in
a registered offering 763,547 registered shares of its common stock together with 1,242.17099 shares of its newly designated Series
B Convertible Preferred Stock (the "Preferred Stock") convertible into 709,812 shares of common stock. We also issued
in an unregistered offering, 521.62076 shares of Preferred Stock convertible into 298,069 shares of common stock, and warrants
to purchase 1,771,428 shares of its common stock. The shareholder’s ability to convert a portion of the Preferred Stock and
to exercise the warrant are restricted: (i) prior to the Company obtaining approval of the offering by its shareholders, which
we expect to obtain before May 31, 2015, and (ii) pursuant to customary “blocker” provisions restricting the investor’s
ownership to 9.99% of our outstanding common stock.
The Preferred Stock has a liquidation preference
of $1,000 per share, and will be convertible at the option of the shareholder at a conversion ratio equal to approximately 571
shares of common stock for each one (1) share of Preferred Stock, subject to customary adjustments and anti-dilution price protection.
Dividends are payable on the shares of Preferred Stock only if and to the extent that dividends are payable on the common stock
into which the Preferred Stock is convertible. The Preferred Stock has no maturity date and can be redeemed by the Company beginning
twelve months after the closing of the offering or upon a change of control. Each warrant will be exercisable for one share of
common stock, for a period of five years beginning six months after March 13, 2015, at a cash exercise price of $2.75 per share,
and may be exercised on a cashless basis after that six-month period if no effective registration statement covers the warrant
shares by that time.
Note 9 – Impairment of Oil and
Gas Properties
Pursuant to full cost
accounting rules, the Company must perform a ceiling test each quarter on its proved oil and natural gas assets within each separate
cost center. All of the Company’s costs are included in one cost center because all of the Company’s operations are
located in the United States. The Company’s ceiling test was calculated using trailing twelve-month, unweighted-average first-day-of-the-month
prices for oil and natural gas as of March 31, 2015, which were based on a West Texas Intermediate oil price of $78.82 per
Bbl and a Henry Hub natural gas price of $3.74 per MMBtu (adjusted for basis and quality differentials), respectively. Utilizing
these prices, the calculated ceiling amount was less than the net capitalized cost of oil and natural gas properties as of March 31,
2015, and as a result, a pre-tax write-down of $16.4 million was recorded at March 31, 2015. Additional material write-downs
of the Company’s oil and gas properties could occur in subsequent quarters in the event that oil and natural gas prices remain
at current levels, or if the Company experiences significant downward adjustments to its estimated proved reserves.
We follow the full-cost method of accounting
under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize
internal costs that can be directly identified with our acquisition, exploration and development activities and do not include
costs related to production, general corporate overhead or similar activities.
Proved properties are amortized using the
units of production method (UOP). Currently we only have operations in the Unites States of America. The UOP calculation multiplies
the percentage of estimated proved reserves produced each quarter by the cost of these reserves. The amortization base in the UOP
calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization (DD&A), estimated
future development costs (future costs to access and develop proved reserves) and asset retirement costs, less related salvage
value.
The cost of unproved properties are excluded
from the amortization calculation until it is determined whether or not proved reserves can be assigned to such properties or until
development projects are placed into service. Geological and geophysical costs not associated with specific properties are recorded
as proved property immediately. Unproved properties are reviewed for impairment quarterly.
Under the full cost method of accounting,
the net book value of oil and gas properties, less deferred income taxes, may not exceed a calculated “ceiling.” The
ceiling limitation is (a) the present value of future net revenues computed by applying current prices of oil & gas reserves
(with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of
proved oil & gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on
current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of 10 percent and
assuming continuation of existing economic conditions plus (b) the cost of properties not being amortized plus (c) the lower of
cost or estimated fair value of unproven properties included in the costs being amortized less (d) income tax effects related to
differences between book and tax basis of properties. Future cash outflows associated with settling accrued retirement obligations
are excluded from the calculation. Estimated future cash flows are calculated using end-of-period costs and an unweighted arithmetic
average of commodity prices in effect on the first day of each of the previous 12 months held flat for the life of the production,
except where prices are defined by contractual arrangements.
Note 10 - Subsequent Events
We have reviewed all material events through
the date of this report in accordance with ASC 855-10.
On April 15, 2015,
The Company announced that Oakridge Energy, Inc. (“Oakridge”) completed the sale of its La Plata County, Colorado
real estate at a sales price that is expected to generate for EnerJex a cash distribution of approximately $1.75 million. Oakridge
announced plans to distribute the after-tax net proceeds from the sale, within the next 60 to 90 days, to its shareholders of
record as of April 9, 2015. As of the record date for that distribution, EnerJex owned approximately 15.9% of Oakridge's issued
and outstanding shares.
On April 28, 2015, the Company entered into
six deferred premium put contracts with BP Energy Company for the six month period ending December 31, 2016. Each contract entitles
the Company to sell 5,000 barrels of crude oil at $60.00. A premium of $5.72 per barrel will be paid by the Company at the expiration
or settlement of the contract.
On April 29, 2015, the Borrowers entered
into a Ninth Amendment to Amended and Restated Credit Agreement (the "Ninth Amendment") with the Banks. In the Ninth
Amendment, the Banks (i) reduced the borrowing base from $40 million to $22.6 million, (ii) imposed affirmative obligations on
the Borrowers to use a portion of proceeds received with regard to future sales of securities, or distributions received with
regard to securities held, to repay the loan, (iii) consented to non-compliance by Borrowers with certain terms of the Credit
Agreement, (iv) waived certain provisions of the Credit Agreement, and (v) agreed to certain other amendments to the Credit Agreement.
On May 1, 2015, the Borrowers and the Banks
entered into a Letter Agreement (the “Letter Agreement”) to clarify that up to $1,000,000 in proceeds from any potential
future securities offering will be unencumbered by the Banks’ Liens as described in the Credit Agreement through November
1, 2015, and that, until November 1, 2015, such proceeds shall not be subject to certain provisions in the Credit Agreement prohibiting
the Company from declaring and paying dividends that may be due and payable to holders of securities issued in such potential offerings
or issued prior to the Letter Agreement.
On May 13, 2015 the Company sold
183,433 shares of its 10% Series A Cumulative Redeemable Perpetual Preferred Stock at $12.50 per share for gross proceeds of
approximately $2.3 million. The Company intends to use the net proceeds of this offering for general corporate purposes,
including capital expenditures, working capital, preferred stock dividends, and repayment of outstanding borrowings under its
senior credit facility.
The offering was made pursuant to a registration
statement on Form S-3 (File No. 333-199030) previously filed and declared effective by the U.S. Securities and Exchange Commission
(SEC).
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements.
These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All
statements, other than statements of historical fact, contained in this report, including statements regarding future events, our
future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking
statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes,"
"can," "continue," "could," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," or "should" or the negative of these terms or other comparable
terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot
guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors,
including the risks outlined under "Risk Factors" or elsewhere in this report, which may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive
and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors,
nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may
cause our actual results to differ materially from those contained in any forward-looking statements. The factors impacting these
risks and uncertainties include, but are not limited to:
|
· |
inability to attract and obtain additional development capital; |
|
· |
inability to achieve sufficient future sales levels or other operating results; |
|
· |
inability to efficiently manage our operations; |
|
· |
effect of our hedging strategies on our results of operations; |
|
· |
potential default under our secured obligations or material debt agreements; |
|
· |
estimated quantities and quality of oil reserves; |
|
· |
declining local, national and worldwide economic conditions; |
|
· |
fluctuations in the price of oil; |
|
· |
continued weather conditions that impact our abilities to efficiently manage our drilling and development activities; |
|
· |
the inability of management to effectively implement our strategies and business plans; |
|
· |
approval of certain parts of our operations by state regulators; |
|
· |
inability to hire or retain sufficient qualified operating field personnel; |
|
· |
increases in interest rates or our cost of borrowing; |
|
· |
deterioration in general or regional economic conditions; |
|
· |
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations; |
|
· |
the occurrence of natural disasters, unforeseen weather conditions, or other events or circumstances that could impact our operations or could impact the operations of companies or contractors we depend upon in our operations; |
|
· |
inability to acquire mineral leases at a favorable economic value that will allow us to expand our development efforts; |
|
· |
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations; and |
|
· |
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate. |
You should not place undue
reliance on any forward-looking statement, each of which applies only as of the date of this report. Except as required by law,
we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this report to
conform our statements to actual results or changed expectations. For a detailed description of these and other factors that could
cause actual results to differ materially from those expressed in any forward-looking statement, please see "Risk Factors"
in this document and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
All references in this report to "we,"
"us," "our," "company" and "EnerJex" refer to EnerJex Resources, Inc. and our wholly-owned
operating subsidiaries, EnerJex Kansas, Inc., Black Sable Energy, LLC, Working Interest, LLC, and Black Raven Energy, Inc. unless
the context requires otherwise. We report our financial information on the basis of a December 31st fiscal year end.
AVAILABLE INFORMATION
We file annual, quarterly and other reports
and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website
at www.sec.gov or on our website at www.enerjex.com. You can also obtain copies of the documents at prescribed
rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days
between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations
of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial
statements, at no charge upon receipt to of a written request to us at EnerJex Resources, Inc., 4040 Broadway, Suite 508, San Antonio,
Texas 78209.
INDUSTRY AND MARKET DATA
The market data and certain other statistical
information used throughout this report are based on independent industry publications, government publications, reports by market
research firms or other published independent sources. In addition, some data are based on our good faith estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion of our financial
condition and results of operations should be read in conjunction with our financial statements and the related notes to our financial
statements included elsewhere in this report. In addition to historical financial information, the following discussion and analysis
contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected
events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including
those discussed under ITEM 1A. Risk Factors and elsewhere in this report.
Overview
Our principal strategy is to acquire, develop,
explore and produce domestic onshore oil and natural gas properties. Our business activities are currently focused in Kansas, Colorado,
Nebraska and Texas.
We continue to investigate multiple opportunities
to both unlock value and accelerate growth in an accretive manner on behalf of shareholders, including but not limited to mergers,
acquisitions, joint ventures, and non-dilutive financings. There can be no assurance of the results or timing associated with this
process.
Recent Developments
The following is a brief description of
our most significant corporate developments that have occurred since the end of 2014:
| · | On March 13, 2015 the Company issued in a registered offering 763,547
registered shares of its common stock together with 1,242.17099 shares of its newly designated Series B Convertible Preferred Stock
(the "Preferred Stock") convertible into 709,812 shares of common stock. We also issued in an unregistered offering,
521.62076 shares of Preferred Stock convertible into 298,069 shares of common stock, and warrants to purchase 1,771,428 shares
of its common stock. The shareholder’s ability to convert a portion of the Preferred Stock and to exercise the warrant are
restricted: (i) prior to the Company obtaining approval of the offering by its shareholders, which we expect to obtain before May
31, 2015, and (ii) pursuant to customary “blocker” provisions restricting the investor’s ownership to 9.99% of
our outstanding common stock. |
The Preferred Stock has a liquidation preference of
$1,000 per share, and will be convertible at the option of the shareholder at a conversion ratio equal to approximately 571 shares
of common stock for each one (1) share of Preferred Stock, subject to customary adjustments and anti-dilution price protection.
Dividends are payable on the shares of Preferred Stock only if and to the extent that dividends are payable on the common stock
into which the Preferred Stock is convertible. The Preferred Stock has no maturity date and can be redeemed by the Company beginning
twelve months after the closing of the offering or upon a change of control. Each warrant will be exercisable for one share of
common stock, for a period of five years beginning six months after March 13, 2015, at a cash exercise price of $2.75 per share,
and may be exercised on a cashless basis after that six-month period if no effective registration statement covers the warrant
shares by that time.
|
· |
On April 28, 2015, the Company entered into six deferred premium
put contracts with BP Energy Company for the six month period ending December 31, 2016. Each contract entitles the Company to sell
5,000 barrels of crude oil at $60.00. A premium of $5.72 per barrel will be paid by the Company
at the expiration or settlement of the contract.
|
|
· |
On April 29, 2015, the Borrowers entered into a Ninth Amendment to Amended and Restated Credit Agreement (the "Ninth Amendment") with the Banks. In the Ninth Amendment, the Banks (i) reduced the borrowing base from $40 million to $22.6 million , (ii) imposed affirmative obligations on the Borrowers to use a portion of proceeds received with regard to future sales of securities, or distributions received with regard to securities held, to repay the loan, (iii) consented to non-compliance by Borrowers with certain terms of the Credit Agreement, (iv) waived certain provisions of the Credit Agreement, and (v) agreed to certain other amendments to the Credit Agreement. |
|
· |
On May 13, 2015 the Company sold 183,433 shares of its 10% Series A
Cumulative Redeemable Perpetual Preferred Stock at $12.50 per share for gross proceeds of approximately $2.3
million. The Company intends to use the net proceeds of this offering for general corporate purposes, including
capital expenditures, working capital, preferred stock dividends, and repayment of outstanding borrowings under its senior
credit facility. |
Net Production, Average Sales Price and Average Production
and Lifting Costs
The table below sets forth our net oil production
(net of all royalties, overriding royalties and production due to others), the average sales prices, average production costs and
direct lifting costs per unit of production for the periods ending March 31, 2015 and March 31, 2014.
| |
For the Three Months Ended | |
| |
March 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Net Production | |
| | | |
| | |
Oil (Bbl) | |
| 33,095 | | |
| 39,665 | |
Natural gas (Mcf) | |
| 64,301 | | |
| 57,141 | |
| |
| | | |
| | |
Average Sales Prices | |
| | | |
| | |
Oil (per Bbl) | |
$ | 41.72 | | |
$ | 91.08 | |
Natural gas (Mcf) | |
$ | 1.82 | | |
$ | 4.24 | |
| |
| | | |
| | |
Average Production Cost (1) | |
| | | |
| | |
Per Barrel of Oil Equivalent (“Boe”) | |
$ | 45.94 | | |
$ | 46.67 | |
| |
| | | |
| | |
Average Lifting Costs (2) | |
| | | |
| | |
Per Boe | |
$ | 28.93 | | |
$ | 31.14 | |
(1) Production costs include all operating expenses, transportation
expenses, depreciation, depletion and amortization, lease operating expenses and all associated taxes. Impairment of oil properties
is not included in production costs.
(2) Direct lifting costs do not include impairment expense or
depreciation, depletion and amortization.
Results of Operations for the Three Months Ended March 31,
2015 and 2014 compared.
Income:
| |
Three Months Ended | | |
Increase / | |
| |
March 31, | | |
(Decrease) | |
| |
2015 | | |
2014 | | |
| |
Oil revenues | |
$ | 1,380,646 | | |
$ | 3,612,579 | | |
$ | (2,231,933 | ) |
Natural gas revenues | |
| 117,195 | | |
| 242,398 | | |
| (125,203 | ) |
Oil Revenues
Oil revenues for the three months ended
March 31, 2015 were $1,380,646 compared to oil revenues of $3,612,579 for the three months ended March 31, 2014. Oil revenues decreased
due to a $49.36 decrease in realized prices or approximately 54% to $41.72 for the quarter ended March 31, 2015 versus $91.08 for
the quarter ended March 31, 2014. In addition to the decrease in realized prices, production decreased by approximately 6,600 bbls
for the quarter ended March 31, 2015 compared to the quarter ended March 31, 2014.
Natural Gas Revenues
Natural gas revenues
for the three months ended March 31, 2015 were $117,195 compared to natural gas revenues of $242,398 for the three months ended
March 31, 2014. Natural gas revenues decreased due to a significant decrease in realized prices of 57% or $2.42 to $1.82 for the
quarter ended March 31, 2015 compared to $4.24 for the quarter ended March 31, 2014. The decrease in realized prices was slightly
offset by an increase in production.
Expenses:
|
|
Three Months Ended |
|
|
Increase / |
|
|
|
March 31, |
|
|
(Decrease) |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
Production expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating costs |
|
$ |
1,267,301 |
|
|
$ |
1,531,907 |
|
|
$ |
(264,606 |
) |
Depreciation, depletion and amortization |
|
|
745,608 |
|
|
|
763,758 |
|
|
|
(18,150 |
) |
Impairment of oil and gas properties |
|
|
16,401,376 |
|
|
|
- |
|
|
|
16,401,376 |
|
Total production expenses |
|
|
18,414,285 |
|
|
|
2,295,665 |
|
|
|
16,118,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
253,729 |
|
|
|
224,902 |
|
|
|
28,827 |
|
Salaries |
|
|
521,287 |
|
|
|
310,348 |
|
|
|
210,939 |
|
Administrative expense |
|
|
230,740 |
|
|
|
141,029 |
|
|
|
89,711 |
|
Total general expenses |
|
|
1,005,756 |
|
|
|
676,279 |
|
|
|
329,477 |
|
Total production and general expenses |
|
|
19,420,041 |
|
|
|
2,971,944 |
|
|
|
16,448,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
(17,922,200 |
) |
|
|
883,033 |
|
|
|
(18,805,233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(309,496 |
) |
|
|
(378,928 |
) |
|
|
69,432 |
|
Derivative losses |
|
|
(217,522 |
) |
|
|
(404,353 |
) |
|
|
186,831 |
|
Other income |
|
|
1,094,657 |
|
|
|
3,882 |
|
|
|
1,090,775 |
|
Total other income (expense) |
|
|
567,639 |
|
|
|
(779,399 |
) |
|
|
1,347,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(17,354,561 |
) |
|
$ |
103,634 |
|
|
$ |
(17,458,195 |
) |
Direct Operating Costs
Direct operating costs primarily include
direct labor and equipment costs related to pumping, gauging, pulling, well repairs, compression, transportation costs, and general
maintenance requirements in our oil and gas fields. These costs also include certain contract labor costs, and other non-capitalized
expenses. Direct operating costs for the three months ended March 31, 2015 decreased 17% to $1,267,301 from $1,531,907 for the
three months ended March 31, 2014. Direct operating costs per Boe decreased 7.1% to $28.93 from $31.14. The $264,606 decrease
in direct operating costs is due primarily to reduced lease operating expenses resulting from cost reductions that were implemented
in response to the decline in commodity prices.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization
for the three months ended March 31, 2015 was $745,608 compared to $763,758 for the three months ended March 31, 2014. The decrease
in depletion expense is due primarily to a decrease in oil production which was slightly offset by an increase in natural gas production
during the first quarter of 2015 compared to the first quarter of 2014. Depletion expense per Boe decreased $1.48 or 9.5% in the
first quarter of 2015 compared to the first quarter of 2014.
Impairment of oil and gas properties
Impairment of oil and
gas properties was $16,401,376 for the quarter ended March 31, 2015. The impairment was due the dramatic decrease in commodity
pricing as noted above.
Professional Fees
Professional fees for the three months
ended March 31, 2015 were $253,729 compared to $224,902 for the three months ended March 31, 2014. The increase in professional
fees is due primarily to increased fees paid to our external reserve engineer, attorneys and financial advisors.
Salaries
Salaries for the three months ended March
31, 2015 were $521,287 compared to $310,348 for the three months ended March 31, 2014. Salaries increased $210,939
due primarily to new hires of technical personnel during the 3rd quarter of 2014 and raises to specialty and technical
positions within the company. The Company increased its technical capabilities in 2014 to support forecasted growth and the pursuit
of strategic opportunities.
Administrative Expenses
Administrative expenses for the three months ended March 31, 2015 were $230,740 compared to $141,029 for
the three months ended March 31, 2014. The increase in administrative expenses is due primarily to a reduction in reimbursements
from working interest partners and increased SEC filing fees.
Interest Expense
Interest expense, which includes amortization
of deferred financing costs and accretion, for the three months ended March 31, 2015 was $309,496 compared to $378,928 for the
three months ended March 31, 2014. Interest expense and amortization of deferred financing costs decreased as a result of decreased
borrowings under our Credit Facility.
Derivative Losses
We incurred an unrealized loss of $217,522 on our derivative contracts in the first quarter of 2015 compared
to a loss of $404,353 for the three months ended March 31, 2014. The increase in the loss was due primarily to the completion of
contracts.
Net Income (Loss)
Net loss for the three months ended
March 31, 2015 was ($17,354,561) compared to a net income of $103,634 for the three months ended March 31,
2014. The net loss during the first quarter of 2015 compared to the prior year period was primarily a result of
the $16,401,376 impairment of oil and gas properties as well as decreased revenues related to the decrease in realized sales
prices. The decreases were partially offset by realized derivative gains.
Liquidity and Capital Resources
Liquidity is a measure of a company's ability
to meet potential cash requirements. We have historically met our capital requirements through debt financing, revenues from operations,
asset sales, and the issuance of equity securities. Due to the decline in oil prices, the resulting decline in our reserves as
reflected in our reserve report which caused a corresponding reduction in our borrowing base, and the recent issuances of equity
securities from our "shelf" registration, it will be more difficult in 2015 to use our historical means of meeting our
capital requirements to provide us with adequate liquidity to fund our operations and capital program.
The following table summarizes total
current assets, total current liabilities and working capital.
|
|
March 31,
2015 |
|
|
December 31,
2014 |
|
|
Increase /
(Decrease) |
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
$ |
9,808,996 |
|
|
$ |
7,411,168 |
|
|
$ |
2,397,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
$ |
3,522,426 |
|
|
$ |
4,139,356 |
|
|
$ |
(616,930 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Capital (deficit) |
|
$ |
6,286,570 |
|
|
$ |
3,271,812 |
|
|
$ |
3,014,758 |
|
Senior Secured Credit Facility
On October 3, 2011, the Company and DD Energy,
Inc., EnerJex Kansas, Inc., Black Sable Energy, LLC and Working Interest, LLC ("Borrowers") entered into an Amended and
Restated Credit Agreement with Texas Capital Bank, N.A. (the “Bank”) and other financial institutions and banks that
may become a party to the Credit Agreement from time to time. The facilities provided under the Amended and Restated Credit Agreement
were to be used to refinance Borrowers prior outstanding revolving loan facility with Bank, dated July 3, 2008, and for working
capital and general corporate purposes.
At our option, loans under the
facility will bear stated interest based on the Base Rate plus Base Rate Margin, or Floating Rate plus Floating Rate Margin (as
those terms are defined in the Credit Agreement). The Base Rate will be, for any day, a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 0.50% and (b) the Bank's prime rate. The Floating Rate shall mean, at Borrower's option,
a per annum interest rate equal to (i) the Eurodollar Rate plus Eurodollar Margin, or (ii) the Base Rate plus Base Rate Margin
(as those terms are defined in the Amended and Restated Credit Agreement). Eurodollar borrowings may be for one, two, three, or
six months, as selected by the Borrowers. The margins for all loans are based on a pricing grid ranging from 0.00% to 0.75% for
the Base Rate Margin and 2.25% to 3.00% for the Floating Rate Margin based on the Company's Borrowing Base Utilization Percentage
(as defined in the Amended and Restated Credit Agreement).
On December 15, 2011, we entered into
a First Amendment to Amended and Restated Credit Agreement and Second Amended and Restated Promissory Note in the amount of $50,000,000
with the Bank. The Amendment reflected the addition of Rantoul Partners as an additional Borrower and added as additional security
for the loans the assets held by Rantoul Partners.
On August 31, 2012, we entered into a Second
Amendment to Amended and Restated Credit Agreement with the Bank. The Second Amendment: (i) increased our borrowing base to $7,000,000,
(ii) reduced the minimum interest rate to 3.75%, and (iii) added additional new leases as collateral for the loan.
On November 2, 2012, we entered into
a Third Amendment to Amended and Restated Credit Agreement with the Bank. The Third Amendment (i) increased our borrowing base
to $12,150,000, and (ii) clarified certain continuing covenants and provided a limited waiver of compliance with one of the covenants
so clarified for the quarter ended December 31, 2011.
On January 24, 2013, we entered into a Fourth
Amendment to Amended and Restated Credit Agreement, which was made effective as of December 31, 2012 with the Bank. The Fourth
Amendment reflects the following changes: (i) the Bank consented to the restructuring transactions related to the dissolution of
Rantoul Partners, and (ii) the Bank terminated a Limited Guaranty, as defined in the Credit Agreement, executed by Rantoul Partners
in favor of the Bank.
On April 16, 2013, the Bank increased our
borrowing base to $19.5 million.
On September 30, 2013, we entered into a
Fifth Amendment to the Amended and Restated Credit Agreement. The Fifth Amendment reflects the following changes: (i)
an expanded principal commitment amount of the Bank to $100,000,000, (ii) increased the Borrowing Base to $38,000,000, (iii) added
Black Raven Energy, Inc. to the Credit Agreement as a borrower party, (iv) added certain collateral and security interests in favor
of the Bank, and (v) reduced the Company’s current interest rate to 3.30%.
On November 19, 2013, we entered into a
Sixth Amendment to the Amended and Restated Credit Agreement. The Sixth Amendment reflects the following changes: (i) added Iberia
Bank as a participant into our credit facility, and (ii) made a technical correction to our covenant calculations.
On May 22, 2014, we entered into a
Seventh Amendment to the Amended and Restated Credit Agreement. The Seventh Amendment reflects the Bank’s consent to our
issuance of up to 850,000 shares of our 10% Series A Cumulative Redeemable Perpetual Preferred Stock.
On August 15, 2014, we entered into an Eighth
Amendment to the Amended and Restated Credit Agreement. The Eighth Amendment reflects the following changes: (i) the borrowing
base was increased from $38 million to $40 million, and (ii) the maturity of the facility was extended by three years to October
3, 2018.
Our borrowing base at March 31, 2015 and
December 31, 2014 was $40 million, of which we had borrowed $23.5 million and $23 million respectively. For the three month period
ended March 31, 2015 and for the year ended December 31, 2014 the interest rate was 3.3%. This facility expires on October 3, 2018.
Satisfaction of our cash obligations
for the next 12 months
We intend to meet our near term cash obligations
through financings under our credit facility with Texas Capital Bank and through cash flow generated from operations.
Summary of product research and development
We do not anticipate performing any significant
product research and development under our plan of operation.
Expected
purchase or sale of any significant equipment
We anticipate that we will purchase the
necessary production and field service equipment required to produce oil during our normal course of operations over the next twelve
months.
Significant changes in the number
of employees
There have been no significant changes
in the number of our employees since December 31, 2014. We currently have 29 full-time employees, including field personnel.
As production and drilling activities increase or decrease, we may have to continue to adjust our technical, operational and
administrative personnel as appropriate. We are using and will continue to use independent consultants and contractors to
perform various professional services, particularly in the area of land services, reservoir engineering, geology drilling,
water hauling, pipeline construction, well design, well-site monitoring and surveillance, permitting and environmental
assessment. We believe that this use of third-party service providers may enhance our ability to contain operating expenses,
general expenses, and capital costs.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and
Estimates
Our critical accounting estimates include
the value of our oil and gas properties, asset retirement obligations, and share-based payments.
Oil and Gas Properties
We follow the full-cost method of accounting
under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize
internal costs that can be directly identified with our acquisition, exploration and development activities and do not include
costs related to production, general corporate overhead or similar activities.
Proved properties are amortized using the
units of production method (UOP). Currently we only have operations in the Unites States of America. The UOP calculation multiplies
the percentage of estimated proved reserves produced each quarter by the cost of these reserves. The amortization base in the UOP
calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization (DD&A), estimated
future development costs (future costs to access and develop proved reserves) and asset retirement costs, less related salvage
value.
The cost of unproved properties are excluded
from the amortization calculation until it is determined whether or not proved reserves can be assigned to such properties or until
development projects are placed into service. Geological and geophysical costs not associated with specific properties are recorded
as proved property immediately. Unproved properties are reviewed for impairment quarterly.
Under the full cost method of accounting,
the net book value of oil and gas properties, less deferred income taxes, may not exceed a calculated “ceiling.” The
ceiling limitation is (a) the present value of future net revenues computed by applying current prices of oil & gas reserves
(with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of
proved oil & gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on
current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of 10 percent and
assuming continuation of existing economic conditions plus (b) the cost of properties not being amortized plus (c) the lower of
cost or estimated fair value of unproven properties included in the costs being amortized less (d) income tax effects related to
differences between book and tax basis of properties. Future cash outflows associated with settling accrued retirement obligations
are excluded from the calculation. Estimated future cash flows are calculated using end-of-period costs and an unweighted arithmetic
average of commodity prices in effect on the first day of each of the previous 12 months held flat for the life of the production,
except where prices are defined by contractual arrangements.
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes,
over the ceiling is charged to expense and reflected as additional DD&A in the statement of operations. The ceiling calculation
is performed quarterly. During the quarter ended March 31, 2015, we incurred a $16,401,376 impairment. For the year ended December
31, 2014, there were no impairments resulting from the quarterly ceiling tests.
Proceeds from the sale or disposition of
oil and gas properties are accounted for as a reduction to capitalized costs unless a significant portion (greater than 25%) of
our reserve quantities are sold, in which case a gain or loss is recognized in income.
Asset Retirement Obligations
The asset retirement obligation relates
to the plug and abandonment costs when our wells are no longer useful. We determine the value of the liability by obtaining quotes
for this service and estimate the increase we will face in the future. We then discount the future value based on an intrinsic
interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the
future however we monitor the costs of the abandoned wells and we will adjust this liability if necessary.
Share-Based Payments
The value we assign to the options and warrants
that we issue is based on the fair market value as calculated by the Black-Scholes pricing model. To perform a calculation of the
value of our options and warrants, we determine an estimate of the volatility of our stock. We need to estimate volatility
because there has not been enough trading of our stock to determine an appropriate measure of volatility. We believe our estimate
of volatility is reasonable, and we review the assumptions used to determine this whenever we issue a new equity instruments. If
we have a material error in our estimate of the volatility of our stock, our expenses could be understated or overstated.
Effects of Inflation and Pricing
The oil industry is very cyclical and the
demand for goods and services of oil field companies, suppliers and others associated with the industry puts extreme pressure on
the economic stability and pricing structure within the industry. Material changes in prices impact revenue stream, estimates of
future reserves, borrowing base calculations of bank loans and value of properties in purchase and sale transactions. Material
changes in prices can impact the value of oil companies and their ability to raise capital, borrow money and retain personnel.
We anticipate business costs and the demand for services related to production and exploration will fluctuate while the commodity
prices for oil remains volatile.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
We are a smaller reporting Company as defined
by Rule 12b-2 under the Securities Exchange Act of 1934, and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Our chief executive officer, Robert G. Watson,
Jr., and our Chief Financial Officer, Douglas M. Wright evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report
pursuant to Exchange Act Rule 13-a-15(b). Based on the evaluation, Mr. Watson and Mr. Wright concluded that our disclosure
controls and procedures are effective.
There were no changes in our internal control
over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We may become involved in various routine
legal proceedings incidental to our business. However, to our knowledge as of the date of this transition report, there are no
material pending legal proceedings to which we are a party or to which any of our property is subject.
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibit
No. |
|
Description |
2.1 |
|
Agreement and Plan of Merger between Millennium Plastics Corporation and Midwest Energy, Inc. effective August 15, 2006 (incorporated by reference to Exhibit 2.3 to the Form 8-K filed on August 16, 2006). |
2.2 |
|
Agreement and Plan of Merger by and among Registrant, BRE Merger Sub, Inc., Black Raven Energy, Inc. and West Coast Opportunity Fund, LLC dated July 23, 2013 (incorporated herein by reference to Exhibit 10.4 on Form 8-K filed July 29, 2013). |
3.1 |
|
Amended and Restated Articles of Incorporation, as currently in effect (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed on August 14, 2008) |
3.2 |
|
Amended and Restated Bylaws, as currently in effect (incorporated by reference to Appendix C to Schedule 14A, filed on June 6, 2013) |
3.3 |
|
Certificate of Amendment of Articles of Incorporation as filed with the Nevada Secretary of State on May 29, 2014 (incorporated herein by reference as Exhibit 3.1 on Current Report Form 8-K filed on May 29, 2014) |
3.4 |
|
Certificate of Amendment of Articles of Incorporation (incorporated by reference as Exhibit 3.1 on Current Report Form 8-K filed on May 29, 2014) |
3.5 |
|
Amended and Restated Certificate of Designation for Series A Preferred Stock (incorporated by reference to Exhibit 4.6 to the Form S-1/A filed on June 3, 2014) |
3.6 |
|
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated herein by reference as Exhibit 4.1 on Current Report Form 8-K filed on March 11, 2015) |
4.1 |
|
Specimen common stock certificate (incorporated by reference to Exhibit 4.3 to the Form S-1/A filed on May 27, 2008) |
4.2 |
|
Specimen Series A Preferred Stock Certificate (incorporated by reference to Exhibit 4.4 to the Form S-1/A filed on June 3, 2014) |
4.3 |
|
Specimen Series B Convertible Preferred Stock Certificate (incorporated herein by reference as Exhibit 4.2 on Current Report Form 8-K filed on March 11, 2015) |
4.4 |
|
Amended and Restated Certificate of Designation for Series A Preferred Stock (incorporated by reference
to Exhibit 4.6 to the Form S-1/A filed on June 3, 2014)
|
4.5 |
|
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock
(incorporated herein by reference as Exhibit 4.1 on Current Report Form 8-K filed on March 11, 2015) |
4.6 |
|
Form of Warrant to Purchase Common Stock (incorporated herein by reference as Exhibit 4.3 on Current Report Form 8-K filed on March 11, 2015) |
4.7 |
|
Form of Placement Agent Warrant (incorporated herein by reference as Exhibit 4.4 on Current Report Form 8-K filed on March 11, 2015) |
10.1 |
|
Form of Officer and Director Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on October 16, 2008) |
10.2 |
|
Amendment 4 to Joint Exploration Agreement effective as of November 6, 2008 between MorMeg, LLC and EnerJex Resources, Inc. (incorporated by reference to Exhibit 10.15 to the Form 10-K filed July 14, 2009) |
10.3 |
|
Amendment 5 to Joint Exploration Agreement effective as of December 31, 2009 between MorMeg LLC and EnerJex Resources, Inc. (incorporated by reference to Exhibit 10.15 to the Form 10-Q filed on February 16, 2010) |
10.4 |
|
Amendment 6 to Joint Exploration Agreement effective as of March 31, 2010 between MorMeg LLC and EnerJex Resources, Inc. (incorporated by reference to Exhibit 10.24 to the Form 10-K filed on July 15, 2010) |
10.5 |
|
Amended and Restated EnerJex Resources, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 16, 2008) |
10.6 |
|
Joint Development Agreement between EnerJex Resources, Inc. and Haas Petroleum, LLC dated December 31, 2010 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on January 27, 2011). |
10.7 |
|
Joint Operating Agreement between EnerJex Resources, Inc. and Haas Petroleum, LLC and MorMeg, LLC dated December 31, 2010 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on January 27, 2011). |
10.8 |
|
Amended and Restated Credit Agreement dated October 3, 2011 (incorporated herein by reference to Exhibit 10.1 on Form 8-K filed on October 6, 2011). |
10.9 |
|
Option and Joint Development Agreement by and among Registrant and MorMeg, LLC dated August 2011 (incorporated herein by reference to Exhibit 10.1 on Form 8-K filed on November 15, 2011). |
10.10 |
|
First Amendment to Amended and Restated Credit Agreement dated December 14, 2011 (incorporated herein by reference to Exhibit 10.2 on Form 8-K filed on December 14, 2011). |
10.11 |
|
Second Amendment to Amended and Restated Credit Agreement dated August 31, 2012 (incorporated herein by reference to Exhibit 10.1 on Form 8-K filed on November 8, 2012). |
10.12 |
|
Third Amendment to Amended and Restated Credit Agreement dated November 2, 2012 (incorporated herein by reference to Exhibit 10.2 on Form 8-K filed on November 8, 2012). |
10.13 |
|
Amended and Restated Employment Agreement by and among Registrant and Robert G. Watson, Jr. dated December 31, 2012 (incorporated herein by reference to Exhibit 10.1 on Form 8-K filed on January 4, 2013). |
10.14 |
|
Fourth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank dated December 31, 2012 (incorporated herein by reference to Exhibit 10.2 on Form 8-K filed on January 30, 2013). |
10.15 |
|
First Amendment to Amended & Restated Mortgage Security Agreement, Financing Statement and Assignment of Production by and among Working Interest, LLC and Texas Capital Bank dated December 31, 2012 (incorporated herein by reference to Exhibit 10.3 on Form 8-K filed on January 30, 2013). |
10.16 |
|
Mortgage, Security Agreement, Financing Statement and Assignment of Production and Revenues by and among Working Interest, LLC and Texas Capital Bank dated December 31, 2012 (incorporated herein by reference to Exhibit 10.4 on Form 8-K filed on January 30, 2013). |
10.17 |
|
2013 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 on Registration Statement on Form S-8 filed on June 12, 2013). |
10.18 |
|
Fifth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated September 30, 2013 (incorporated herein by reference to Exhibit 10.1 on Form 8-K filed October 1, 2013). |
10.19 |
|
Sixth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated November 19, 2013 (incorporated by reference to Exhibit 10.37 on Form 10-Q filed May 13, 2014). |
10.20 |
|
Exchange Agreement between EnerJex Resources, Inc. and holders of Series A preferred stock (incorporated by reference to Exhibit 10.38 on Form S-1/A Amendment No. 2 filed June 3, 2014). |
10.21 |
|
Seventh Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated May 22, 2014 (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 27, 2014). |
10.22 |
|
Form of Securities Purchase Agreement dated as of March 11, 2015 (incorporated herein by reference as Exhibit 10.1 on Current Report Form 8-K filed on March 11, 2015) |
10.23 |
|
Eighth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated August 13, 2014 (incorporated herein by reference as Exhibit 10.23 on Form 10-K filed March 31, 2015). |
10.24 |
|
Ninth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated April 29, 2015 (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 5, 2015). |
31.1 |
|
Certification of Chief Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
|
Certification of Chief Executive and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
In accordance with
the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ENERJEX RESOURCES, INC. |
|
(Registrant) |
|
|
|
By: |
/s/ Robert G. Watson, Jr. |
|
|
Robert G. Watson, Jr. Chief Executive Officer |
|
|
|
Date: May 15, 2015 |
|
EXHIBIT 31.1
CERTIFICATION
I, Robert G. Watson, Jr. Chief Executive Officer of EnerJex
Resources, Inc., certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of EnerJex Resources, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 15, 2015
/s/ Robert G. Watson, Jr. |
|
Robert G. Watson, Jr. |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION
I, Douglas M. Wright Chief Financial Officer of EnerJex Resources,
Inc., certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of EnerJex Resources, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 15, 2015
/s/ Douglas M. Wright |
|
Douglas M. Wright |
|
Chief Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
I, Robert G. Watson, Jr., certify pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of EnerJex Resources, Inc.
on Form 10-Q for the quarterly period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects,
the financial condition and results of operations of EnerJex Resources, Inc.
|
1. |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2015 |
|
|
|
/s/ Robert G. Watson, Jr. |
|
Robert G. Watson, Jr. |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
I, Douglas M. Wright, certify pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of EnerJex Resources, Inc.
on Form 10-Q for the quarterly period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects,
the financial condition and results of operations of EnerJex Resources, Inc.
|
1. |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2015 |
|
|
|
/s/ Douglas M. Wright |
|
Douglas M. Wright |
|
Chief Financial Officer |
|
Enerjex Resources, Inc. (AMEX:ENRJ)
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