HOUSTON, Aug. 7 /PRNewswire-FirstCall/ -- Dune Energy, Inc. (NYSE
AMEX: DNE) today announced results for the second quarter of 2009.
Revenue and Production Revenue for the second quarter totaled $14.9
million as compared with $51.5 million for the second quarter of
2008. Production volumes in the second quarter were 177 Mbbls of
oil and 1.3 Bcf of natural gas, or 2.3 Bcfe. This compares with 263
Mbbls of oil and 1.6 Bcf of natural gas, or 3.2 Bcfe for the second
quarter of 2008. In the second quarter of 2009, the average sales
price per barrel of oil was $56.43, and $3.80 per Mcf for natural
gas, as compared with $118.87 per barrel and $12.43 per Mcf,
respectively for the second quarter of 2008. The primary reasons
behind the decrease in revenue were lower production and lower
average sales prices in the second quarter of 2009 versus the
second quarter of 2008. Average price received per Mcfe produced
was $6.34 in the second quarter of 2009 versus $16.05 in the second
quarter of 2008 or a 60% decline. Costs and Expenses Total lease
operating expense for the second quarter totaled $8.0 million
versus $11.3 million for the second quarter of 2009. DD&A
expense was $7.6 million for the second quarter versus $15.1
million for the second quarter of 2008. Cash G&A expense
totaled $2.7 million for the second quarter of 2009 versus $3.9
million for the second quarter of 2008. The $1.2 million decrease
reflects a continued emphasis on cost controls. Interest and
financing expense was $8.7 million for the second quarter of 2009
versus $8.9 million for the second quarter of 2008 primarily
associated with payment of 10.5% interest on the $300 million of
Senior Secured Notes. We incurred a net loss of $2.9 million, of
which $2.2 million was a realized gain, on hedging during the
second quarter of 2009 versus a net loss of $24.8 million, of which
$3.7 million was a realized loss, in the second quarter of 2008.
Earnings Net loss totaled $16.4 million for the second quarter of
2009, versus a $33.1 million loss for the second quarter of 2008.
The second quarter 2008 loss included a $24.5 million loss for
discontinued operations in the Barnett Shale of North Texas.
Preferred stock dividends were $10.5 million in the second quarter
of 2009 versus $74.7 million in the second quarter of 2008
primarily reflecting the difference in coupon rate of the preferred
stock and the $68.4 million dividend associated with the change in
conversion price of the preferred which occurred in the second
quarter of 2008. Net loss per share both basic and fully diluted
for the quarter was $0.21, based on 125.2 million weighted average
shares outstanding as compared with $1.24 loss in the second
quarter of 2008 with 86.9 million weighted average shares
outstanding. The increased outstanding common shares are
predominately associated with conversion of preferred shares into
common shares. Liquidity At the end of the quarter cash was $12.8
million versus $15.5 million at year end 2008. Accounts payable
were $7.5 million in the current quarter versus $21.7 million at
year end 2008. Availability under the Wells Fargo Foothill Revolver
was reduced to $35 million after the year end redetermination.
Currently there is $17 million drawn against the revolver and $8.8
million issued in standby letters of credit. The $17 million is now
considered a current liability as the maturity of the revolver is
May 15, 2010. Under our Wells Fargo Foothill revolver, we are
required to maintain $10 million of cash or availability at the end
of each quarter. Mid -Year Reserves The Company prepared a mid-year
unaudited reserve report for review of the borrowing base with
Wells Fargo Foothill. Based on this review proved reserves were
138.1 Bcfe up from 133.0 Bcfe at year end 2008. Oil reserves were
9.2 million barrels and natural gas reserves were 82.6 Bcf. PV10
based on NYMEX strip pricing as of June 30, 2009 was $460 million.
Probable and possible reserves were an additional 23.2 Bcfe with a
PV10 value of $42 million. Exploratory upside associated with
unbooked prospects at Garden Island Bay, Bateman Lake and Chocolate
Bayou could add an additional net 142 Bcfe on an unrisked basis
with a PV10 of $388 million. These potential reserves are dependent
of successfully establishing joint ventures for the drilling of the
various prospects. By category 43.3% of the mid year reserves were
proved developed producing, 21.6% were proved behind pipe and 35.1%
were proved undeveloped. At year end 2008 the category breakdown
was 33.4%, 33.2% and 33.4% respectively. Capital Program and
Operations In the first six months of 2009, we invested $5.4
million primarily in workovers of existing wells in our various
fields. This level of activity has allowed for the offset of
natural reservoir declines and kept production volumes between 24
and 28 Mmcfe/day for the two quarters. We anticipate a similar
level of workovers in the second half of 2009 will allow for the
maintenance of production at these same levels. We have commenced a
program of seeking industry joint venture partners to participate
in drilling opportunities with unbooked upside. These partners will
pay a disproportionate amount of the risk capital to earn an
interest in the project. Currently we are drilling the Alvin
Townsite well in Brazoria County, Texas, where Dune has a 76.6%
working interest. When this well is completed in approximately two
weeks the rig will move to the Chocolate Bayou field also in
Brazoria County, and drill the Wieting #32. Dune will have a 50%
interest in the reserves and production from this well but will not
pay any of the exploratory well costs. We are seeking partners on a
similar basis for drilling 3 shallow wells at Garden Island Bay
after the main hurricane season has passed and an additional well
at Chocolate Bayou with significant exploratory upside. These
projects have the potential to add new volumes and reserves with
minimal risk capital exposed. Common Equity and Preferred Shares At
the end of the quarter there were 139.4 million common shares
outstanding up from 108.0 million at the end of the first quarter
reflecting the conversion of 21,116 preferred shares into 31.2
million new common shares. This total includes 19.1 million common
shares issued to pay make whole premiums. The make whole premium
can be paid at Dune's election in cash or shares of common stock.
When paid in shares of common stock, this creates significant
dilution for the common stock holders. This provision is only
applicable through June of 2010. At the end of the quarter there
were 221,686 preferred shares outstanding. James A. Watt, President
and Chief Executive Officer commented "This has been a challenging
year for Dune and the industry. We have restructured our business
plan to utilize available cash flow coupled with industry joint
ventures to fund our ongoing projects. Once the uncertainty
associated with the dilutive impact of the make whole shares is
behind us, we believe that our positive operating results and the
upside potential of many of our fields should translate into
increased value for the common equity." Click here for more
information: http://www.duneenergy.com/news.html?b=1683&1=1
FORWARD-LOOKING STATEMENTS: This document includes forward-looking
statements. Forward-looking statements include, but are not limited
to, statements concerning estimates of expected drilling and
development wells and associated costs, statements relating to
estimates of, and increases in, production, cash flows and values,
statements relating to the continued advancement of Dune Energy,
Inc.'s projects and other statements which are not historical
facts. When used in this document, the words such as "could,"
"plan," "estimate," "expect," "intend," "may," "potential,"
"should," and similar expressions are forward-looking statements.
Although Dune Energy, Inc. believes that its expectations reflected
in these forward-looking statements are reasonable, such statements
involve risks and uncertainties and no assurance can be given that
actual results will be consistent with these forward-looking
statements. Important factors that could cause actual results to
differ from these forward-looking statements include the potential
that the Company's projects will experience technological and
mechanical problems, geological conditions in the reservoir may not
result in commercial levels of oil and gas production, changes in
product prices and other risks disclosed in Dune's Annual report on
Form 10-K filed with the U.S. Securities and Exchange Commission.
Investor Contact: Steven J. Craig Sr. Vice President Investor
Relations and Administration 713-229-6300 Dune Energy, Inc.
Consolidated Balance Sheets (Unaudited) June 30, December 31,
ASSETS 2009 2008 -------- ------------ Current assets: Cash
$12,831,507 $15,491,532 Accounts receivable, net of reserve for
doubtful accounts of $396,629 and $396,629 12,396,118 14,477,918
Prepayments and other current assets 1,308,013 6,910,422 Derivative
assets 1,268,355 4,015,219 --------- --------- Total current assets
27,803,993 40,895,091 ---------- ---------- Oil and gas properties,
using successful efforts accounting - proved 583,509,258
578,074,569 Less accumulated depreciation, depletion, amortization
and impairment (238,078,777) (222,876,172) ------------
------------ Net oil and gas properties 345,430,481 355,198,397
----------- ----------- Property and equipment, net of accumulated
depreciation of $1,852,410 and $1,406,927 1,649,933 2,086,313
Deferred financing costs, net of accumulated amortization of
$1,267,674 and $970,068 1,324,051 1,621,657 Other assets 6,117,975
2,250,868 --------- --------- 9,091,959 5,958,838 ---------
--------- TOTAL ASSETS $382,326,433 $402,052,326 ============
============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current
liabilities: Accounts payable $7,469,589 $21,662,965 Accrued
liabilities 21,479,243 20,038,900 Short-term debt 17,287,673
2,013,699 Preferred stock dividend payable 2,217,000 2,446,985
--------- --------- Total current liabilities 48,453,505 46,162,549
Long-term debt, net of discount of $9,104,172 and $10,393,213
290,895,828 289,606,787 Other long-term liabilities 16,274,303
15,732,483 ---------- ---------- Total liabilities 355,623,636
351,501,819 ----------- ----------- Commitments and contingencies -
- Redeemable convertible preferred stock, net of discount of
$8,220,738 and $9,179,927, liquidation preference of $1,000 per
share, 750,000 shares designated, 221,686 and 236,805 shares issued
and outstanding 213,465,262 227,625,073 STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value, 1,000,000 shares authorized,
250,000 shares undesignated, no shares issued and outstanding - -
Common stock, $.001 par value, 300,000,000 shares authorized,
139,434,685 and 96,129,047 shares issued and outstanding 139,435
96,129 Treasury stock, at cost (203,925 and 34,009 shares) 35,270
8,332 Additional paid-in capital 66,971,065 50,139,148 Accumulated
other comprehensive loss (1,860,741) (3,709,177) Accumulated
deficit (252,047,494) (223,608,998) ------------ ------------ Total
stockholders' deficit (186,762,465) (177,074,566) ------------
------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$382,326,433 $402,052,326 ============ ============ Dune Energy,
Inc. Consolidated Statements of Operations and Comprehensive Loss
(Unaudited) Three months ended Six months ended June 30, June 30,
---------- ---------- 2009 2008 2009 2008 ---- ---- ---- ----
Revenues $14,885,510 $51,502,943 $29,184,158 $88,194,170
----------- ----------- ----------- ----------- Operating expenses:
Lease operating expense and production taxes 7,983,331 11,286,905
15,003,054 23,314,148 Exploration expense - 100,000 - 100,000
Accretion of asset retirement obligation 410,919 160,946 821,793
317,766 Depletion, depreciation and amortization 7,592,361
15,127,773 15,648,088 28,327,274 General and administrative expense
3,584,885 5,206,167 8,632,465 10,170,512 --------- ---------
--------- ---------- Total operating expense 19,571,496 31,881,791
40,105,400 62,229,700 ---------- ---------- ---------- ----------
Operating income (loss) (4,685,986) 19,621,152 (10,921,242)
25,964,470 ---------- ---------- ----------- ---------- Other
income (expense): Interest income (4,518) 92,484 25,809 197,769
Interest expense (8,740,561) (8,873,067) (17,419,508) (17,524,686)
Loss on derivative liabilities (2,926,555) (24,819,149) (123,555)
(36,721,128) ---------- ----------- -------- ----------- Total
other income (expense) (11,671,634) (33,599,732) (17,517,254)
(54,048,045) ----------- ----------- ----------- ----------- Loss
from continuing operations before income taxes (16,357,620)
(13,978,580) (28,438,496) (28,083,575) Income tax benefit -
5,325,840 - 10,699,843 --- --------- --- ---------- Loss from
continuing operations (16,357,620) (8,652,740) (28,438,496)
(17,383,732) ----------- ---------- ----------- -----------
Discontinued operations: Loss from operations of Barnett Shale
Properties (including impairment in 2008 of $40,909,374) -
(39,537,612) - (39,449,751) Income tax benefit - 15,063,830 -
15,030,355 --- ---------- --- ---------- Loss on discontinued
operations - (24,473,782) - (24,419,396) --- ----------- ---
----------- Net loss (16,357,620) (33,126,522) (28,438,496)
(41,803,128) Preferred stock dividend (10,477,420) (74,703,377)
(19,332,480) (80,427,407) ----------- ----------- -----------
----------- Net loss available to common shareholders $(26,835,040)
$(107,829,899) $(47,770,976) $(122,230,535) ============
============= ============ ============= Net loss per share: Basic
and diluted from continuing operations $(0.21) $(0.96) $(0.42)
$(1.18) Basic and diluted from discontinued operations - (0.28) -
(0.29) --- ----- --- ----- Total basic and diluted $(0.21) $(1.24)
$(0.42) $(1.47) ====== ====== ====== ====== Weighted average shares
outstanding: Basic and diluted 125,185,509 86,895,055 113,302,751
83,250,766 Comprehensive loss: Net loss $(16,357,620) $(33,126,522)
$(28,438,496) $(41,803,128) Other comprehensive income 924,218
225,042 1,848,436 1,060,818 ------- ------- --------- ---------
Comprehensive loss $(15,433,402) $(32,901,480) $(26,590,060)
$(40,742,310) ============ ============ ============ ============
Dune Energy, Inc. Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, ---------- 2009 2008 ---- ---- CASH FLOWS
FROM OPERATING ACTIVITIES Net loss $(28,438,496) $(41,803,128)
Adjustments to reconcile net loss to net cash used in operating
activities: Loss from discontinued operations - 24,419,396
Depletion, depreciation and amortization 15,648,088 28,327,274
Amortization of deferred financing costs and debt discount
1,586,647 1,447,953 Stock-based compensation 2,512,367 2,443,870
Exploration expense - 100,000 Deferred tax benefit - (10,699,843)
Accretion of asset retirement obligation 821,793 317,766 Loss on
derivative liabilities 4,780,940 31,445,447 Changes in: Accounts
receivable 1,896,158 (684,276) Prepayments and other assets
2,348,032 2,757,480 Payments made to settle asset retirement
obligations (316,955) (1,021,831) Accounts payable and accrued
liabilities (12,716,051) (41,258,994) ----------- ----------- NET
CASH PROVIDED BY (USED IN) CONTINUED OPERATIONS (11,877,477)
(4,208,886) NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS
- 5,285,593 --- --------- NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (11,877,477) 1,076,707 ----------- --------- CASH FLOWS
FROM INVESTING ACTIVITIES Investment in proved and unproved
properties (5,434,689) (21,335,845) Purchase of furniture and
fixtures (9,103) (374,064) Increase in other assets (612,730)
(12,429) -------- ------- NET CASH USED IN INVESTING ACTIVITIES -
CONTINUED OPERATIONS (6,056,522) (21,722,338) NET CASH USED IN
INVESTING ACTIVITIES - DISCONTINUED OPERATIONS - (8,859,470) ---
---------- NET CASH USED IN INVESTING ACTIVITIES (6,056,522)
(30,581,808) ---------- ----------- CASH FLOWS FROM FINANCING
ACTIVITIES Proceeds from short-term debt 17,000,000 - Proceeds from
long-term debt - 28,100,000 Payments on short-term debt (1,726,026)
(1,716,598) ---------- ---------- NET CASH PROVIDED BY FINANCING
ACTIVITIES 15,273,974 26,383,402 ---------- ---------- NET CHANGE
IN CASH BALANCE (2,660,025) (3,121,699) Cash balance at beginning
of period 15,491,532 16,771,726 ---------- ---------- Cash balance
at end of period $12,831,507 $13,650,027 =========== ===========
SUPPLEMENTAL DISCLOSURES Interest paid $15,770,052 $15,925,872
Income taxes paid - - NON-CASH DISCLOSURES Common stock issued for
conversion of preferred stock $29,143,000 $15,240,000 Redeemable
convertible preferred stock dividends 13,794,017 80,427,407
Accretion of discount on preferred stock 959,189 856,732
DATASOURCE: Dune Energy, Inc. CONTACT: Investors, Steven J. Craig,
Sr. Vice President Investor Relations and Administration of Dune
Energy, Inc., +1-713-229-6300 Web Site: http://www.duneenergy.com/
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