GreenHunter Resources Reports Second Quarter 2013 Financial and Operating Results
GreenHunter Resources Reports Second 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 and six months ended June 30, 2013.
- Total Revenue Increased 172% to $17.5 million for the six months ended June 30, 2013 versus the similar period in 2012 of $6.4 million
- Total Disposal Volumes Increased 216% in the first six months of 2013 to 2.3 million barrels (BBL) injected compared to 728,700 BBL injected in the first six months of 2012
- Total Operating Salt Water Disposal Permitted Injection Capacity as of June 30, 2013 Exceeded 97,000 BBL per day representing a 1,400% Increase from June 30, 2012
- The Company has received guidance from the US Coast Guard for Waterborne Transport of Oil Field Wastes regarding plans to convert existing infrastructure into a water recycling station and build up to 19,000 barrels of water tank storage
- Three new Hazmat vacuum trucks ordered and delivered for the Appalachia division in August 2013
FINANCIAL AND OPERATIONAL RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2013
GreenHunter reported revenues for the three months ended June 30, 2013 of $8.9 million, compared to $4.2 million reported during the Second Quarter of 2012. The increase in revenues of 113% or $4.7 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 1,400% increase in permitted operating injection capacity compared to one year ago.
The operating loss for the three months ended June 30, 2013 was ($2.1) million, compared to an operating loss of ($0.4) million during the Second Quarter of 2012. Net loss to common shareholders was ($1.7) million, (($0.05) loss per common share basic and diluted) for the three months ended June 30, 2013 compared to a net loss of ($1.0) million, (($0.04) loss per common share basic and diluted), during the Second Quarter of 2012.
For the three months ended June 30, 2013, GreenHunter's Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA") was $1.2 million. Operating margins decreased during this period resulting in an operating loss and loss to common shareholders due primarily to increased costs associated with a greater scale of operations in South Texas. This is a result of low margin services associated with well-pad completion and rig washing services previously offered by our White Top and Black Water business lines. These services were discontinued during the month of May 2013.
On June 10, 2013, the Company's wholly-owned subsidiary, GreenHunter Water, LLC closed on the sale of one underutilized saltwater disposal well and associated equipment located in South Texas. The Company received $5.2 million from this non-core asset divestiture, resulting in a gain of $2.3 million.
FINANCIAL AND OPERATIONAL RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2013
GreenHunter reported revenues for the six months ended June 30, 2013 of $8.9 million, compared to $4.2 million reported during the six months ended June 30, 2012. The increase in revenues of 113% or $4.7 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 1,400% increase in permitted operating injection capacity compared to one year ago.
The operating loss for the six months ended June 30, 2013 was ($9.3) million, compared to an operating loss of ($0.9) million during the similar period of 2012. Net loss to common shareholders was ($10.2) million, (($0.30) loss per common share basic and diluted) for the six months ended June 30, 2013 compared to a net loss of ($1.9) million, (($0.07) loss per common share basic and diluted), during the six months ended June 30, 2012.
For the six months ended June 30, 2013, GreenHunter's Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA") was $202 thousand. Operating margins decreased during this period resulting in an operating loss and loss to common shareholders due primarily to increased costs associated with greater 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, an impairment of asset value of $1.9 million due to a lightning strike and subsequent fire in Oklahoma, 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 Company has adequate property, environmental, and casualty insurance in this asset and is presently negotiating a settlement with its existing insurance carriers. 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. The Company has initiated litigation against the prior owners of White Top and Black Water and has recently received injunctive relief associated with its claims.
TOTAL DISPOSAL CAPACITY AND INJECTION VOLUMES OVERVIEW
The Company's total daily operating permitted SWD capacity as of June 30, 2013 was over 97,000 BBL representing a 1,400% Increase from June 30, 2012. As of June 30, 2013, the Company operated one SWD well servicing producers in Oklahoma's Horizontal Mississippian Lime play, three SWD wells servicing producers in the Eagle Ford Shale play in South Texas, eight 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 were completed during the second quarter and a total of 22,500 BBL of high-solids fluids have been received and are being processed at an average rate of 600 BBL per day. Additional processing capacity is being reviewed by management with equipment expansion anticipated this year.
Quarterly Injection Volumes by region are detailed in the table below.
Barrels Disposed (In thousands)
|2Q 2012||3Q 2012||4Q 2012||1Q 2013||2Q 2013|
SUBSEQUENT EVENTS AND DEVELOPMENT PIPELINE
Subsequent to the end of the Second Quarter and as previously announced, management has i) commenced the sale of its next-generation modular above-ground MAG Tank™ and ii) entered into negotiations with multiple parties to potentially sell two South Texas salt water disposal operations. These potential sales coincide with a reorganization of GreenHunter's South Texas operations which should result in significantly improved operating efficiencies during the second half of this year. By concentrating development efforts in the Appalachia region where the Company has established a dominant position as the leading commercial disposal well operator, management plans to further distance itself from the competition by augmenting its logistics capabilities with barge transport infrastructure. Some of the more notable ongoing development projects include:
1. New Appalachia Barge facility with disposal wells on location;
2. Additional Ohio Disposal Facilities,
3. Riverside Frac-Cycle® Water Treatment system; and,
4. Increased deployment of our new MAG Tank™ above ground storage system.
5. Three new Hazmat vacuum trucks ordered and delivered for the Appalachia division in August 2013.
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 has contracted with an independent consulting firm that specializes in the areas of financial advisory and interim staffing solutions to assist us in complying with our financial reporting obligations, 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. The Company announced today the hiring of a new Senior Vice President and CFO.
Commenting on GreenHunter Resources Second 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 are continuing to increase following a seasonal slow down experienced earlier in the year, 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 which carried over to the second quarter of this year. 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. Our Appalachian operation is currently experiencing record volumes of water handling with existing SWD wells running at 100% of capacity. We are especially excited to deploy additional MAG Tanks in the Appalachia region where we expect to see new orders from customers who have expressed an interest in this exciting new product since the first Appalachia deployment occurred during the Second Quarter of 2013. In addition, we are completing the insurance settlement process on our Rhoades well, which was struck by lighting and plan to commence rebuilding this location in the third quarter this year. We are realizing significant cost savings and operational efficiencies as a result of our recent reorganization efforts in South Texas and expect to see further improvements throughout the remainder of the year."
About GreenHunter Water, LLC (a wholly owned subsidiary or GreenHunter Resources, 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-Cycle®), 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
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
For the Six Months Ended
|Water disposal revenue||$||3,040,150||$||1,611,671||$||5,853,986||$||2,351,027|
|Storage rental revenue and other||1,632,745||367,339||3,215,709||773,862|
|COST OF SERVICES PROVIDED:|
|Cost of services provided||7,577,463||2,361,662||15,349,535||3,688,236|
|Depreciation and accretion expense||1,064,174||272,472||2,114,448||464,764|
|Loss on impairment of assets||-||-||1,911,917||-|
|Stock based compensation||483,261||728,771||900,184||1,224,545|
|Selling, general and administrative||1,875,011||1,242,532||3,724,065||1,944,192|
|Total costs and expenses||10,999,909||4,605,437||26,799,193||7,321,737|
|OTHER INCOME (EXPENSE):|
|Interest and other income||1,678||2||2,180||4|
|Interest, amortization and other expense||(227,008||)||(272,164||)||(474,228||)||(477,845||)|
|Gain on sale of assets||1,774,867||-||1,774,867||-|
|Total other income (expense)||1,549,537||(272,162||)||1,302,819||(477,841||)|
|Net loss before taxes||(537,128||)||(700,838||)||(7,991,560||)||(1,354,302||)|
|Income tax expense||-||-||(6,676||)||-|
|Preferred stock dividends||(1,136,383||)||(303,741||)||(2,163,030||)||(499,145||)|
|Net loss to common stockholders||(1,673,511||)||(1,004,579||)||(10,161,266||)||(1,853,447||)|
|Weighted average shares outstanding, basic and diluted||33,433,083||28,115,904||33,395,992||27,587,626|
|Basic and diluted loss per share:|
|Net loss per share||$||(0.05||)||$||(0.04||)||$||(0.30||)||$||(0.07||)|
SELECTED BALANCE SHEET DATA
|June 30, 2013||December 31, 2012|
|Cash and cash equivalents||$||549,626||$||1,765,642|
|Total current assets||9,994,863||8,457,532|
|Net fixed assets||37,746,568||41,410,231|
|Total current liabilities||18,845,757||19,605,885|
|Total long-term liabilities||9,808,963||10,139,289|
|Total stockholders' equity||$||19,097,647||$||23,110,052|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Calculation of Adjusted EBITDA:|
|Interest expense, net||227,008||272,164||474,228||477,845|
|Impairment of asset value||-||-||4,710,961||-|
GreenHunter Resources, Inc.
Jonathan D. Hoopes
Interim CEO, President and COO
1048 Texan Trail
Grapevine, TX 76051
Tel: (972) 410-1044
KEYWORDS: United States North America Texas
The article GreenHunter Resources Reports Second Quarter 2013 Financial and Operating Results originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.