U.S. Energy Corp. Reports Financial and Operating Results for First Quarter 2024
U.S. Energy Corp. (USEG) reported financial and operating results for Q1 2024, highlighting net daily production, oil production, operating expenses, adjusted EBITDA, stock repurchase, debt balance, and liquidity. Despite weather challenges affecting production, the company maintained a strong balance sheet and liquidity position, focusing on maximizing shareholder returns.
Production in Q1 2024 totaled 109,800 Boe, with average daily production of 1,207 Boe/d. Total revenue decreased to $5.4 million, primarily due to reduced production quantities from asset divestiture and weather-related events, coupled with an 8% decrease in realized prices. The company reported an adjusted EBITDA of $0.2 million, with a net loss of $9.5 million, driven by a non-cash impairment due to a reduction in SEC reserve pricing.
As of March 31, 2024, the company had a debt balance of $5.0 million, cash balance of $2.0 million, and a hedging program in place for crude oil swaps with fixed prices for future settlement dates.
Strong balance sheet and liquidity position
Focus on maximizing shareholder returns
Repurchase of 0.3 million shares of common stock
Reduced lease operating expense by 28% from Q1 2023
Entered into fixed price crude oil swaps for revenue stability
Net loss of $9.5 million in Q1 2024
Revenue decreased to $5.4 million from $8.3 million in Q1 2023
Adjusted EBITDA decreased to $0.2 million from $1.2 million in Q1 2023
Non-cash impairment of $5.4 million due to reduction in SEC reserve pricing
Insights
HOUSTON, May 09, 2024 (GLOBE NEWSWIRE) -- U.S. Energy Corporation (NASDAQ: USEG, “U.S. Energy” or the “Company”), a growth-focused energy company engaged in operating a portfolio of high-quality producing oil and natural gas assets, today reported financial and operating results for the three months ended March 31, 2024.
FIRST QUARTER 2024 HIGHLIGHTS
- Net daily production of 1,207 barrels of oil equivalent per day (“Boe/d”);
- Oil production of 68,599 barrels, or
62% of total production; - Lease Operating Expense of
$3.2 million , or$29.02 per Boe, a28% and2% decrease, respectively, from first quarter of 2023; - Adjusted EBITDA of
$0.2 million ; - Repurchased approximately 0.3 million shares of common stock, representing nearly
1.5% of outstanding shares, for approximately$0.3 million ; - Ended the quarter with an outstanding debt balance of
$5.0 million ,$2.0 million of cash, and total liquidity of$17.0 million .
MANAGEMENT COMMENTS
"I’m pleased with U.S. Energy’s first quarter, with our operations team rebounding quickly against highly adverse weather conditions while the Company continues to uphold its balance sheet strength and actively executes our stock repurchase plan,” said Ryan Smith, U.S. Energy’s Chief Executive Officer. “While the heavy rains and flooding significantly affected our East Texas and Gulf Coast operations during the quarter, much of the production was brought back online without any negative long-term effects in late March and early April. As we continue through 2024, U.S. Energy’s balance sheet and liquidity position affords the Company a high degree of optionality as we continue to pursue value enhancing initiatives with a clear focus of maximizing total returns for our shareholders."
PRODUCTION UPDATE
During the first quarter of 2024, the Company produced 109,800 Boe, or an average of 1,207 Boe/d. Weather related downtime, primarily attributed to heavy flooding throughout East Texas and the Gulf Coast, caused an estimated of 125-150 boe/d of temporarily shut-in production during the quarter. The first quarter of 2024 was the first period since the Company divested substantially all of its non-operated assets during the fourth quarter of 2023.
| Three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Sales volume | ||||||||
| Oil (Bbls) | 68,599 | 91,311 | ||||||
| Natural gas and liquids (Mcfe) | 247,209 | 384,031 | ||||||
| BOE | 109,800 | 155,316 | ||||||
| Average daily production (BOE/Day) | 1,207 | 1,726 | ||||||
| Average sales prices: | ||||||||
| Oil (Bbls) | $ | 68.91 | $ | 77.70 | ||||
| Natural gas and liquids (Mcfe) | $ | 2.69 | $ | 3.06 | ||||
| BOE | $ | 49.10 | $ | 53.26 | ||||
FIRST QUARTER 2024 FINANCIAL RESULTS
Total oil and gas sales during the first quarter of 2024 were approximately
Lease operating expense (“LOE”) for the first quarter of 2024 was approximately
Cash general and administrative (“G&A”) expenses were approximately
Adjusted EBITDA was
BALANCE SHEET UPDATE
As of March 31, 2024, the Company had debt outstanding of
HEDGING PROGRAM UPDATE
The Company previously entered into fixed priced crude oil swaps with outstanding settlement dates from the second quarter of 2024 through the fourth quarter of 2024 with a weighted average swap price of
On April 2, 2024, the Company entered into fixed price crude oil swaps with outstanding settlement dates from the first quarter of 2025 to the fourth quarter of 2025 with a weighted average swap price of
| Swaps | |||||||||
| Period | Commodity | Volume (Bbls) | Price ($/bbl) | ||||||
| Q2 2024 | Crude Oil | 48,600 | $ | 81.76 | |||||
| Q3 2024 | Crude Oil | 45,000 | $ | 79.80 | |||||
| Q4 2024 | Crude Oil | 40,720 | $ | 78.15 | |||||
| Q1 2025 | Crude Oil | 45,000 | $ | 75.73 | |||||
| Q2 2025 | Crude Oil | 43,225 | $ | 74.19 | |||||
| Q3 2025 | Crude Oil | 39,100 | $ | 72.82 | |||||
| Q4 2025 | Crude Oil | 36,800 | $ | 71.64 | |||||
ABOUT U.S. ENERGY CORP.
We are a growth company focused on consolidating high-quality producing assets in the United States with the potential to optimize production and generate free cash flow through low-risk development while maintaining an attractive shareholder returns program. We are committed to being a leader in reducing our carbon footprint in the areas in which we operate. More information about U.S. Energy Corp. can be found at www.usnrg.com.
INVESTOR RELATIONS CONTACT
Mason McGuire
IR@usnrg.com
(303) 993-3200
www.usnrg.com
FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements.
Important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, risks associated with the integration of the recently acquired assets; the Company’s ability to recognize the expected benefits of the acquisitions and the risk that the expected benefits and synergies of the acquisition may not be fully achieved in a timely manner, or at all; the amount of the costs, fees, expenses and charges related to the acquisitions; the Company’s ability to comply with the terms of its senior credit facilities; the ability of the Company to retain and hire key personnel; the business, economic and political conditions in the markets in which the Company operates; fluctuations in oil and natural gas prices, uncertainties inherent in estimating quantities of oil and natural gas reserves and projecting future rates of production and timing of development activities; competition; operating risks; acquisition risks; liquidity and capital requirements; the effects of governmental regulation; adverse changes in the market for the Company’s oil and natural gas production; dependence upon third-party vendors; risks associated with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19 and the efforts to stop the spread of the virus, and COVID-19 in general; economic uncertainty relating to increased inflation and global conflicts; the lack of capital available on acceptable terms to finance the Company’s continued growth; the review and evaluation of potential strategic transactions and their impact on stockholder value; the process by which the Company engages in evaluation of strategic transactions; the outcome of potential future strategic transactions and the terms thereof; and other risk factors included from time to time in documents U.S. Energy files with the Securities and Exchange Commission, including, but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly filed reports, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. These reports and filings are available at www.sec.gov.
The Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of any Sale Agreement Parties are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on U.S. Energy’s future results. The forward-looking statements included in this press release are made only as of the date hereof. U.S. Energy cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, U.S. Energy undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by U.S. Energy. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
FINANCIAL STATEMENTS
| U.S. ENERGY CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and equivalents | $ | 2,006 | $ | 3,351 | ||||
| Oil and natural gas sales receivables | 2,088 | 2,336 | ||||||
| Marketable equity securities | 179 | 164 | ||||||
| Commodity derivative asset -current | 59 | 1,844 | ||||||
| Other current assets | 929 | 527 | ||||||
| Real estate assets held for sale, net of selling costs | 139 | 150 | ||||||
| Total current assets | 5,400 | 8,372 | ||||||
| Oil and natural gas properties under full cost method: | ||||||||
| Unevaluated properties | - | - | ||||||
| Evaluated properties | 171,339 | 176,679 | ||||||
| Less accumulated depreciation, depletion and amortization | (108,250 | ) | (106,504 | ) | ||||
| Net oil and natural gas properties | 63,089 | 70,175 | ||||||
| Other Assets: | ||||||||
| Property and equipment, net | 842 | 899 | ||||||
| Right-of-use asset | 653 | 693 | ||||||
| Other assets | 286 | 305 | ||||||
| Total assets | $ | 70,270 | $ | 80,444 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 3,695 | $ | 4,064 | ||||
| Accrued compensation and benefits | 404 | 702 | ||||||
| Revenue and royalties payable | 4,937 | 4,857 | ||||||
| Asset retirement obligations - current | 1,273 | 1,273 | ||||||
| Current lease obligation | 186 | 182 | ||||||
| Total current liabilities | 10,495 | 11,078 | ||||||
| Noncurrent liabilities: | ||||||||
| Credit facility | 5,000 | 5,000 | ||||||
| Asset retirement obligations - noncurrent | 17,452 | 17,217 | ||||||
| Long-term lease obligation, net of current portion | 564 | 611 | ||||||
| Deferred tax liability | 16 | 16 | ||||||
| Total liabilities | 33,527 | 33,922 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Common stock, | 253 | 253 | ||||||
| Additional paid-in capital | 218,161 | 218,403 | ||||||
| Accumulated deficit | (181,671 | ) | (172,134 | ) | ||||
| Total shareholders’ equity | 36,743 | 46,522 | ||||||
| Total liabilities and shareholders’ equity | $ | 70,270 | $ | 80,444 | ||||
| U.S. ENERGY CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED AND 2023 (In thousands, except share and per share amounts) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue: | ||||||||
| Oil | $ | 4,727 | $ | 7,095 | ||||
| Natural gas and liquids | 664 | 1,177 | ||||||
| Total revenue | 5,391 | 8,272 | ||||||
| Operating expenses: | ||||||||
| Lease operating expenses | 3,186 | 4,409 | ||||||
| Gathering, transportation and treating | 64 | 114 | ||||||
| Production taxes | 343 | 520 | ||||||
| Depreciation, depletion, accretion and amortization | 2,195 | 2,417 | ||||||
| Impairment of oil and natural gas properties | 5,419 | - | ||||||
| General and administrative expenses | 2,206 | 2,772 | ||||||
| Total operating expenses | 13,413 | 10,232 | ||||||
| Operating income (loss) | (8,022 | ) | (1,960 | ) | ||||
| Other income (expense): | ||||||||
| Commodity derivative gain (loss), net | (1,381 | ) | 919 | |||||
| Interest (expense), net | (120 | ) | (268 | ) | ||||
| Other income (expense), net | 4 | - | ||||||
| Total other income (expense) | (1,497 | ) | 651 | |||||
| Net income (loss) before income taxes | $ | (9,519 | ) | $ | (1,309 | ) | ||
| Income tax (expense) benefit | (18 | ) | 62 | |||||
| Net income (loss) | $ | (9,537 | ) | $ | (1,247 | ) | ||
| Basic and diluted weighted average shares outstanding | 25,388,221 | 25,178,565 | ||||||
| Basic and diluted income (loss) per share | $ | (0.38 | ) | $ | (0.05 | ) | ||
| U.S. ENERGY CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (in thousands) | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (9,537 | ) | $ | (1,247 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation, depletion, accretion, and amortization | 2,195 | 2,417 | ||||||
| Impairment of oil and natural gas properties | 5,419 | - | ||||||
| Deferred income taxes | - | (62 | ) | |||||
| Total commodity derivatives (gains) losses, net | 1,381 | (919 | ) | |||||
| Commodity derivative settlements received (paid) | 404 | (406 | ) | |||||
| (Gains) losses on marketable equity securities | (15 | ) | - | |||||
| Impairment and loss on real estate held for sale | 11 | - | ||||||
| Amortization of debt issuance costs | 12 | 12 | ||||||
| Stock-based compensation | 200 | 727 | ||||||
| Right of use asset amortization | 40 | 55 | ||||||
| Changes in operating assets and liabilities: | - | - | ||||||
| Oil and natural gas sales receivable | 248 | 1,145 | ||||||
| Other assets | (397 | ) | 52 | |||||
| Accounts payable and accrued liabilities | (245 | ) | (794 | ) | ||||
| Accrued compensation and benefits | (298 | ) | (754 | ) | ||||
| Revenue and royalties payable | 80 | 79 | ||||||
| Payments on operating lease liability | (43 | ) | (58 | ) | ||||
| Payments of asset retirement obligations | (58 | ) | (11 | ) | ||||
| Net cash provided by (used in) operating activities | (603 | ) | 236 | |||||
| Cash flows from investing activities: | ||||||||
| Oil and natural gas capital expenditures | (144 | ) | (1,106 | ) | ||||
| Property and equipment expenditures | - | (261 | ) | |||||
| Proceeds from sale of oil and natural gas properties, net | (35 | ) | - | |||||
| Net cash provided by (used in) investing activities | (179 | ) | (1,367 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on insurance premium finance note | (62 | ) | (112 | ) | ||||
| Shares withheld to settle tax withholding obligations for restricted stock awards | (105 | ) | (151 | ) | ||||
| Dividends paid | - | (596 | ) | |||||
| Repurchases of common stock | (396 | ) | - | |||||
| Net cash provided by (used in) financing activities | (563 | ) | (859 | ) | ||||
| Net (decrease) increase in cash and equivalents | (1,345 | ) | (1,990 | ) | ||||
| Cash and equivalents, beginning of period | 3,351 | 4,411 | ||||||
| Cash and equivalents, end of period | $ | 2,006 | $ | 2,421 | ||||
ADJUSTED EBITDA RECONCILIATION
In addition to our results calculated under generally accepted accounting principles in the United States (“GAAP”), in this earnings release we also present Adjusted EBITDA. Adjusted EBITDA is a “non-GAAP financial measure” presented as supplemental measures of the Company’s performance. It is not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company defines Adjusted EBITDA as net income (loss), plus net interest expense, net unrealized loss (gain) on change in fair value of derivatives, income tax (benefit) expense, deferred income taxes, depreciation, depletion, accretion and amortization, one-time costs associated with completed transactions and the associated assumed derivative contracts, non-cash share-based compensation, transaction related expenses, transaction related acquired realized derivative loss (gain), and loss (gain) on marketable securities. Company management believes this presentation is relevant and useful because it helps investors understand U.S. Energy’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA is presented because we believe it provides additional useful information to investors due to the various noncash items during the period. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: Adjusted EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and other companies in this industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.
The Company’s presentation of this measure should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of this non-GAAP measure to the most comparable GAAP measure, below. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view this non-GAAP measure in conjunction with the most directly comparable GAAP financial measure.
| Three months ended March 31, | ||||||||
| In Thousands | 2024 | 2023 | ||||||
| Adjusted EBITDA Reconciliation | ||||||||
| Net Income (Loss) | $ | (9,537 | ) | $ | (1,247 | ) | ||
| Depreciation, depletion, accretion and amortization | 2,195 | 2,417 | ||||||
| Non-cash loss (gain) on commodity derivatives | 1,785 | (1,325 | ) | |||||
| Interest Expense, net | 120 | 268 | ||||||
| Income tax expense (benefit) | 18 | (62 | ) | |||||
| Non-cash stock based compensation | 200 | 727 | ||||||
| Transaction related acquired realized derivative losses | - | 405 | ||||||
| Loss (gain) on marketable securities | (14 | ) | - | |||||
| Loss (gain) on real estate held for sale | 11 | - | ||||||
| Impairment of oil and natural gas properties | 5,419 | - | ||||||
| Total Adjustments | 9,734 | 2,430 | ||||||
| Total Adjusted EBITDA | $ | 197 | $ | 1,183 | ||||
FAQ
What were U.S. Energy Corp.'s net daily production highlights in Q1 2024?
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What was the primary reason for U.S. Energy Corp.'s net loss in Q1 2024?
