GreenHunter Resources Reports First Quarter 2013 Financial and Operating Results

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GreenHunter Resources Reports First Quarter 2013 Financial and Operating Results

GRAPEVINE, Texas--(BUSINESS WIRE)-- GreenHunter Resources, Inc. (NYSE MKT: GRH)(NYSE MKT: GRH.PRC), a diversified water resource, waste management and environmental services company specializing in the unconventional oil and natural gas shale resource plays, announced today financial and operating results for the three months ended March 31, 2013.

  • Total Revenue Increased 279% to $8.6 million for the Quarter Ended March 31, 2013 versus last year's first quarter results of $2.3 million
  • Total Disposal Volumes Increased 249% in the First Quarter 2013 to 1.1 million barrels (BBL) Injected compared to 317,100 BBL Injected in the First Quarter of 2012
  • Total Operating Salt Water Disposal Permitted Injection Capacity as of March 31, 2013 Exceeded 115,000 BBL per day representing a 1,455% Increase from March 31, 2012
  • The Company Operated Fifteen SWD Wells at March 31, 2013 Compared to Four at March 31, 2012

FINANCIAL AND OPERATIONAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2013


GreenHunter reported revenues for the three months ended March 31, 2013 of $8.6 million, compared to $2.3 million reported during the first quarter of 2012. The increase in revenues of 279% or $6.3 million was driven primarily by increases in daily salt water disposal volumes as a result of both organic SWD capacity growth and acquisitions that resulted in a 1,455% increase in permitted operating injection capacity compared to one year ago.

The operating loss for the three months ended March 31, 2013 was $(7.2) million, compared to an operating loss of $(0.4) million during the first quarter of 2012. Net loss to common shareholders was $(8.5) million, ($(0.25) loss per common share basic and diluted) for the three months ended March 31, 2013 compared to a net loss of $(0.8) million, ($(0.03) loss per common share basic and diluted), during the first quarter of 2012.

For the three months ended March 31, 2013, GreenHunter's Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA") was negative ($1.0) million. Operating margins decreased resulting in an operating loss and loss to common shareholders due primarily to increased costs associated with increased scale of operations, decreased volumes of product accepted at the New Matamoras bulk storage and barge transloading facility in the Appalachia region due to adverse weather conditions, increase usage of company owned trucks and equipment, an impairment of asset value of $1.9 million due to a lightning strike and subsequent fire, and an impairment of goodwill of $2.8 million.

FIXED ASSET AND GOODWILL IMPAIRMENTS

A lightning strike at the Company's Rhodes SWD well site in Oklahoma in April resulted in an impairment of $1.9 million to ground facilities at this location. The carrying value of goodwill for the White Top and Black Water acquisitions that were completed on December 31, 2012 was fully impaired at March 31, 2013 due to the recent decision of eliminating certain operating segments of White Top and Black Water.

TOTAL DISPOSAL CAPACITY AND INJECTION VOLUMES OVERVIEW

The Company's total daily operating permitted SWD capacity as of March 31, 2013 was over 115,000 BBL representing a 1,455% Increase from March 31, 2012. As of March 31, 2013 the Company operated two SWD wells servicing producers in Oklahoma's Horizontal Mississippian Lime play, four SWD wells servicing producers in the Eagle Ford Shale play in South Texas, nine SWD wells servicing producers in the Marcellus and Utica Shale plays in Appalachia and one bulk storage and barge transloading terminal on the Ohio River. Infrastructure upgrades to enable Frac-Cycle™ water treatment services at the New Matamoras Ohio River barge facility are almost complete and are scheduled to commence before the end of June, 2013. Management anticipates that this business segment will generate improved operating margins. Quarterly Injection Volumes by region are detailed in the table below.

            

Barrels Disposed (In thousands)

 
1Q 20122Q 20123Q 20124Q 20121Q 2013
 
Appalachia317.1411.6454.9715.8492.4
Oklahoma0.00.067.3106.6267.0
South Texas0.00.00.071.0346.1
 
Total317.1411.6522.2893.41,105.5
 

SUBSEQUENT EVENTS AND DEVELOPMENT PIPELINE

Subsequent to the end of the first quarter and as previously announced, management has i) commenced the sale of its next-generation modular above-ground MAG Tank™, ii) entered into an agreement to sell two South Texas salt water disposal operations and iii) closed on the sale of a South Texas salt water disposal well. The South Texas sales coincide with a reorganization of GreenHunter's South Texas operations which should result in significantly improved operating efficiencies during the subsequent quarters this year. Management has decided to concentrate its development efforts in the Appalachia region where the Company has established a dominant position as the leading commercial disposal well operator for its exploration and production customers who are operating in the unconventional Marcellus and Utica Shale plays. Some of the more notable development projects include:

1. New Appalachia Barge facility with disposal wells on location;

2. Northern Ohio Disposal Facility;

3. Riverside Frac-Cycle™ Water Treatment system; and,

4. Increased deployment of our new MAG Tank™ above ground storage system.

INTERNAL CONTROLS

As disclosed in the Company's Form 10-K for the fiscal year ended December 31, 2012, the Company identified a number of material weaknesses in its internal controls. The Board of Directors, Audit Committee and senior management of the Company recognize the importance of improving the Company's internal controls and are committed to remediating these material weaknesses as quickly as possible. The Company is implementing remediation plans which it believes will successfully address these material weaknesses. Management is in the process of expanding the number and quality of staff; is adding outside consultants with the knowledge, training and experience necessary to develop and support the Company's overall internal control environment; and is implementing an operations tracking and an improved accounting information system.

MANAGEMENT COMMENTS

Commenting on GreenHunter Resources First Quarter 2013 financial and operating results, Mr. Jonathan D. Hoopes, GreenHunter Resources' Interim CEO, President and COO, stated, "Volumes in our core operating area of the Appalachia region experienced a seasonal slow down during the first quarter primarily as a result of weather-related issues that delayed our customers' drilling and completion efforts in this area. This slow down resulted in lowered margins and an operating loss. However, we are seeing a strong pickup in activity in Appalachia—especially around both the Marcellus and the Utica Shale Plays where we are strategically positioned as a dominant commercial SWD operator. We are especially excited to deploy our first MAG Tank in the Appalachia region where we expect to see additional orders from customers who have expressed an interest in this exciting new product and are waiting to witness a field deployment, which is expected prior to the end of June 2013. As announced earlier this month, management has taken steps to reorganize our South Texas operations alongside the sale of three SWD facilities that are underutilized. We are realizing significant cost savings and operational efficiencies as a result of our recent reorganization and expect to see further improvements throughout the remainder of the year."

About GreenHunter Water, LLC (a wholly owned subsidiary or GreenHunter Rerources, Inc.)

GreenHunter Water, LLC provides Total Water Management Solutions™ in the oilfield. An understanding that there is no single solution to E&P fluids management shapes GreenHunter's technology-agnostic approach to services. In addition to licensing of and joint ventures with manufacturers of mobile water treatment systems (Frac-CycleTM), GreenHunter Water is expanding capacity of salt water disposal facilities, next-generation modular above-ground storage tanks (MAG Tank™), advanced hauling and fresh water logistics services—including 21st Century tracking technologies (RAMCATTM) that allow Shale producers to optimize the efficiency of their water resource management and planning while complying with emerging regulations and reducing cost.

For a visual animation of the Class II Salt Water Disposal well development and completion technique that is being utilized in GreenHunter Water's Appalachia, Eagle Ford, Mississippian Lime and Bakken SWD program, navigate to the video by clicking on "Salt Water Disposal Animation" button on the Operations tab at GreenHunterResources.com or click here.

Additional information about GreenHunter Water may be found at www.GreenHunterWater.com

Forward-Looking Statements

Any statements in this press release about future expectations and prospects for GreenHunter Resources and its business and other statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the substantial capital expenditures required to fund its operations, the ability of the Company to implement its business plan, government regulation and competition. GreenHunter Resources undertakes no obligation to update these forward-looking statements in the future.

Non-GAAP Financial Measures

This release contains certain financial measures that are non-GAAP measures.We have provided reconciliations within this release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with GAAP that are presented in this release. We believe adjusted EBITDA (as defined by period net loss as adjusted for income tax, interest expense, depreciation expense, impairment of asset value, non-cash stock based compensation and other non cash gains) to be an important measure for evaluating the company's operational progress and as useful information to investors because it is widely used by professional analysts and investors in evaluating companies in a state of high growth. However, adjusted EBITDA should not be considered as an alternative to the standardized measure as computed under GAAP.

  

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 
For the Three Months Ended March 31,
2013  2012
REVENUES:
Water disposal revenue$2,813,836$739,356
Transportation revenue4,194,7701,122,636
Storage rental revenue and other 1,582,964  406,523 
Total revenues 8,591,570  2,268,515 
 
COST OF SERVICES PROVIDED:
Cost of services provided7,772,0721,326,574
Depreciation expense1,050,274192,292
Loss on impairment of assets1,911,917-
Goodwill impairment2,799,044-
Selling, general and administrative 2,265,977  1,197,434 
Total costs and expenses 15,799,284  2,716,300 
 
OPERATING LOSS(7,207,714)(447,785)
 
OTHER INCOME (EXPENSE):
Interest and other income5022
Interest, accretion and other expense(247,220)(205,681)
Unrealized gain (loss) on convertible securities -  - 
Total other income (expense) (246,718) (205,679)
 
Income tax expense(6,676)-
 
Net loss(7,461,108)(653,464)
 
Preferred stock dividends(1,026,647)(195,404)
  
Net loss to common stockholders (8,487,755) (848,868)
 
Weighted average shares outstanding, basic and diluted33,358,48927,059,348
 
Basic and diluted loss per share:
Net loss per share$(0.25)$(0.03)

     

SELECTED BALANCE SHEET DATA

 
March 31, 2013December 31, 2012
Cash and cash equivalents$1,253,109$1,765,642
Total current assets8,231,0898,457,532
Net fixed assets42,169,93741,410,231
Total assets50,411,96252,855,226
Total current liabilities20,020,88819,605,885
Total long-term liabilities10,087,59410,139,289
Total stockholders' equity$20,303,480$23,110,052
 
EBITDA CALCULATION
 
For the Three Months Ended March 31,
20132012
Net income$(7,461,108)$(653,464)
Income tax expense6,676-
Interest expense247,220205,681
Depreciation expense1,050,274192,292
Impairment of asset value4,710,961-
Non-cash stock comp416,923495,774
  
EBITDA$(1,029,054)$240,283 



GreenHunter Resources, Inc.
Jonathan D. Hoopes
Interim CEO, President and COO
1048 Texan Trail
Grapevine, TX 76051
Tel: (972) 410-1044
jhoopes@greenhunterresources.com

KEYWORDS:   United States  North America  Texas

INDUSTRY KEYWORDS:

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