8-K
US ENERGY CORP (USEG)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): May 11, 2023
U.S.
ENERGY CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 000-06814 | 83-0205516 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
| 1616 S. Voss, Suite 725, Houston, Texas | 77057 | |
| --- | --- | |
| (Address of principal executive<br> offices) | (Zip Code) |
Registrant’s telephone number, including area code: (303) 993-3200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications<br> pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant<br> to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications<br> pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications<br> pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | USEG | The NASDAQ Stock Market LLC<br><br> <br>(Nasdaq Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item2.02 Results of Operations and Financial Condition.
On May 11, 2023, U.S. Energy Corp. (“U.S. Energy” or the “Company”) issued a press release regarding its financial results for the three months ended March 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and incorporated into this item 2.02 by reference.
The information contained in this Current Report and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as expressly set forth by specific reference in such a filing.
The Company is making reference to non-GAAP financial information in the press release, presentation and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release and presentation.
This Current Report on Form 8-K, including the press release attached as Exhibit 99.1 to this Current Report on Form 8-K, contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and assumptions. You can identify these forward-looking statements by words such as “may,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. These forward-looking statements relate to the Company’s current expectations and are subject to the limitations and qualifications set forth in the press release and presentation as well as in the Company’s other filings with the Securities and Exchange Commission, including, without limitation, that actual events and/or results may differ materially from those projected in such forward-looking statements. These statements also involve known and unknown risks, which may cause the results of the Company, its divisions and concepts to be materially different than those expressed or implied in such statements, which include, without limitation, risks associated with increased inflation, interest rates and possible recessions; 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; drilling, completions, workovers and other activities and the anticipated costs and results of such activities; the Company’s anticipated operational results for 2023 including, but not limited to, estimated or anticipated production levels, capital expenditures and drilling plans; acquisition risks; liquidity and capital requirements; the effects of governmental regulation; anticipated future production and revenue; drilling plans including the timing of drilling, commissioning, and startup and the impact of delays thereon; 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; and other risk factors, and others, including those referenced in the press release and the Company’s filings with the Securities and Exchange Commission. Accordingly, readers should not place undue reliance on any forward-looking statements. Forward-looking statements may include comments as to the Company’s beliefs and expectations as to future financial performance, events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the Company’s control. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Cautionary Statement Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s periodic and current filings with the SEC, including the Form 10-Qs and Form 10-Ks, filed with the SEC and available at www.sec.gov and in the “Investors” – “SEC Filings” section of the Company’s website at https://usnrg.com. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date, except as otherwise provided by law.
Item9.01 Financial Statements and Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1* | Press Release of U.S. Energy Corp., dated May 11, 2023 |
| 104 | Inline XBRL for the cover<br> page of this Current Report on Form 8-K |
* Furnished herewith.
Theinclusion of any website address in this Form 8-K, and any exhibit thereto, is intended to be an inactive textual reference only andnot an active hyperlink. The information contained in, or that can be accessed through, such website is not part of or incorporated intothis Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| U.S. ENERGY CORP. | |
|---|---|
| By: | /s/ Ryan Smith |
| Ryan Smith | |
| Chief Executive Officer | |
| Dated: | May<br> 11, 2023 |
| --- | --- |
Exhibit99.1
U.S.Energy Corp. Reports Financial and Operating Results for First Quarter 2023
HOUSTON,May 11, 2023 — 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, 2023.
FIRSTQUARTER 2023 HIGHLIGHTS
| ● | Net<br> daily production of 1,726 barrels of oil equivalent per day (“Boe/d”), a 29% increase over first quarter of 2022 |
|---|---|
| ● | Produced<br> oil volumes of 91,311 barrels, or 59% of total production |
| ● | Adjusted<br> EBITDA of $1.2 million |
| ● | Returned<br> $0.6 million to shareholders through quarterly cash dividend |
| ● | In<br> April 2023, announced $5.0 million share repurchase program |
MANAGEMENTCOMMENTARY
“We are pleased with our operational performance in the first quarter and have continued to carry forward the momentum created during 2022,” said Ryan Smith, CEO of U.S. Energy Corp. “Our strategic focus on acquiring and developing mature producing assets in our core focus areas has positioned us well to weather industry cycles and generate sustainable returns for our shareholders. In April, as a recent example of this, we recently expanded our capital returns program by initiating the Company’s first share repurchase program, which reflects our confidence in the underlying business and our firm commitment to making shareholder returns a key tenet of our capital allocation strategy.
“Looking ahead, we will continue to pursue opportunities to optimize our portfolio and enhance shareholder value. Our experienced team and long-standing relationships with industry partners give us a competitive edge in identifying and executing on value-enhancing opportunities. We are committed to disciplined capital allocation to create and maintain value and believe that building a diversified, well-balanced portfolio of producing assets is key to generating reliable cash flows and delivering consistent returns.”
PRODUCTIONUPDATE
During the first quarter of 2023, the Company produced 155,329 Boe, or an average of 1,726 Boe/d, a 29% increase compared to 120,712 Boe, or an average of 1,341 Boe/d, during the first quarter of 2022.
| 1Q<br> 2023 | 1Q<br> 2022 | |||
|---|---|---|---|---|
| Sales<br> Volume (Total) | ||||
| Oil (Bbls) | 91,311 | 90,821 | ||
| Gas and liquids (Mcfe) | 384,106 | 179,343 | ||
| Sales volumes (Boe) | 155,329 | 120,712 | ||
| Average<br> Daily Production (Boe/d) | 1,726 | 1,341 | ||
| Average<br> Sales Prices | ||||
| Oil (Bbl) | $ | 77.70 | $ | 86.25 |
| Gas and liquids (Mcfe) | $ | 3.06 | $ | 5.79 |
| Barrel of Oil Equivalent | $ | 53.25 | $ | 73.50 |
FIRSTQUARTER 2023 FINANCIAL RESULTS
U.S. Energy reported total oil and gas sales of approximately $8.3 million for the first quarter of 2023, compared to $8.9 million in the first quarter of 2022. The decline in revenue was primarily due to a 28% decline in realized prices. Sales from oil production represented 86% of total revenue during the quarter, down slightly from 88% in the first quarter of 2022.
The Company recorded lease operating expense (“LOE”) of approximately $4.5 million, or $29.12 per Boe, for the first quarter of 2023, as compared to $2.7 million, or $22.66 per Boe, in the first quarter of 2022. LOE increased due to increased activity as a result of unplanned maintenance on a portion of the Company’s South Texas assets. These assets have since been brought back to production.
Severance and Ad Valorem taxes in the third quarter were approximately $0.5 million, as compared to approximately $0.6 million in the second quarter. On a percentage basis, U.S. Energy paid approximately 6.3% of total oil and natural gas sales revenue in taxes during the quarter.
Cash general and administrative (“G&A”) expenses were approximately $2.0 million, or $13.17 per Boe, during the first quarter of 2023, as compared to approximately $1.4 million, or $11.98 per Boe, during the prior period.
Based on a realized price of $53.25 per Boe, the Company achieved an operating margin of $7.61 per Boe, or 14% for the first quarter of 2023, down from $30.48 per Boe, or 41%, from the first quarter of 2022. Operating costs, including LOE, production taxes and cash G&A increased by 6% year-over-year while realized prices declined by 28%, resulting in margin compression.
Adjusted EBITDA, excluding the impact of hedges, was $1.2 million. The Company reported a net loss of $1.2 million, or a loss of $0.05 per diluted share, which includes a $1.3 million net unrealized gain on the value of derivative contracts.
RETURNOF CAPITAL PROGRAM
Consistent with the Company’s long-term return of capital strategy, the Company’s board of directors paid a $0.0225 per share dividend to shareholders of record on February 23, 2023.
Subsequent to the end of the first quarter of 2023, the Company announced that its board of directors authorized a share repurchase program under which the Company may purchase up to $5.0 million of its outstanding shares of common stock in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934.
Finally, on May 8, 2023, the Company declared a cash dividend payable on May 30, 2023, to stockholders of record as of the close of business on May 19, 2023.
STRATEGICUPDATE
U.S. Energy’s portfolio comprises mature, producing assets that generate high-margin free cash flow, which we allocate to maintaining a quarterly cash dividend, opportunistically repurchasing our common stock, and paying down the outstanding balance on our revolving credit facility. Our aim is to achieve greater scale through the acquisition of high-quality, low-decline assets, which can provide a platform for sustained profitability. As we add new assets to the portfolio, we expect cash flows to increase, creating potential for an increased return of capital program.
HEDGINGPROGRAM UPDATE
The following table reflects the hedged volumes under U.S. Energy’s commodity derivative contracts and the average fixed, floor and ceiling prices at which production is hedged for the remainder of 2023:
| Collars | |||||
|---|---|---|---|---|---|
| Period | Commodity | Volume<br> <br><br> <br>(Bbls) | Floor (<br> / Bbl) | Ceiling (<br> / Bbl) | |
| Q2 2023 | Crude Oil | 53,500 | |||
| Q3 2023 | Crude Oil | 52,600 | |||
| Q4 2023 | Crude Oil | 51,200 |
All values are in US Dollars.
| Swaps | ||||||
|---|---|---|---|---|---|---|
| Period | Commodity | Volume<br> <br><br> <br>(Bbls | MMBtu) | Avg<br> Price<br> (/Bbl<br> | /MMBtu) | |
| Q2 2023 | Crude Oil | 6,000 |
All values are in US Dollars.
BALANCESHEET UPDATE
As of March 31, 2023, the Company had debt outstanding of $12.0 million on its revolving credit facility with availability of $8.0 million and a cash balance of approximately $2.4 million.
CONFERENCECALL AND WEBCAST
U.S. Energy will host an investor conference call tomorrow at 8:30 a.m. Eastern Time to discuss these operating and financial results. Interested parties may join the call by dialing 1-877-407-3982 (U.S.), or 1-201-493-6780 (international), at least 15 minutes before the call begins and providing the Conference ID: 13738723. A telephonic replay will be available for fourteen days following the call by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (international)and providing the replay PIN number: 13738723.
A webcast of the conference call will be available in the Investor Relations section of the Company’s website at www.usnrg.com. To listen to the live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
ABOUTU.S. ENERGY
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 ESG stewardship and 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 .
FORWARD-LOOKINGSTATEMENTS
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; 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, 2021. 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.
U.S.ENERGY CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED BALANCE SHEETS
(inthousands, except share and per share amounts)
| December 31,<br> <br><br> <br>2022 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and equivalents | 2,421 | $ | 4,411 | ||
| Oil and natural gas sales<br> receivable | 2,048 | 3,193 | |||
| Marketable equity securities | 107 | 107 | |||
| Other current assets | 1,160 | 558 | |||
| Real<br> estate assets held for sale, net of selling costs | 175 | 175 | |||
| Total<br> current assets | 5,911 | 8,444 | |||
| Oil and natural gas properties<br> under full cost method: | |||||
| Unevaluated properties | 1,584 | 1,584 | |||
| Evaluated properties | 204,282 | 203,144 | |||
| Less<br> accumulated depreciation, depletion, amortization and impairment | (98,825 | ) | (96,725 | ) | |
| Net<br> oil and natural gas properties | 107,041 | 108,003 | |||
| Property and equipment, net | 861 | 651 | |||
| Right-of-use asset | 813 | 868 | |||
| Other assets | 343 | 354 | |||
| Total<br> assets | 114,969 | $ | 118,320 | ||
| LIABILITIES AND SHAREHOLDERS’<br> EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable and accrued<br> liabilities | 7,641 | $ | 7,832 | ||
| Accrued compensation and<br> benefits | 357 | 1,111 | |||
| Commodity derivative liability-current | 369 | 1,694 | |||
| Asset retirement obligations-current | 657 | 668 | |||
| Current<br> lease obligation | 174 | 189 | |||
| Total<br> current liabilities | 9,198 | 11,494 | |||
| Credit facility | 12,000 | 12,000 | |||
| Asset retirement obligations- noncurrent | 15,091 | 14,774 | |||
| Long-term lease obligation, net of current<br> portion | 750 | 794 | |||
| Deferred tax liability | 836 | 898 | |||
| Other noncurrent liabilities | 6 | 6 | |||
| Total<br> liabilities | 37,881 | 39,966 | |||
| Commitments and contingencies<br> (Note 8) | |||||
| Shareholders’ equity: | |||||
| Common stock, 0.01 par<br> value; 245,000,000 shares authorized; 25,234,672 and 25,023,812 shares issued and outstanding at March 31, 2023 and December 31,<br> 2022, respectively | 252 | 250 | |||
| Additional paid-in capital | 217,265 | 216,690 | |||
| Accumulated<br> deficit | (140,429 | ) | (138,586 | ) | |
| Total<br> shareholders’ equity | 77,088 | 78,354 | |||
| Total<br> liabilities and shareholders’ equity | 114,969 | $ | 118,320 |
All values are in US Dollars.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
U.S.ENERGY CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FORTHE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Inthousands, except share and per share amounts)
| 2023 | 2022 | |||||
|---|---|---|---|---|---|---|
| Revenue: | ||||||
| Oil | $ | 7,095 | $ | 7,833 | ||
| Natural<br> gas and liquids | 1,177 | 1,039 | ||||
| Total<br> revenue | 8,272 | 8,872 | ||||
| Operating expenses: | ||||||
| Lease operating expense | 4,523 | 2,735 | ||||
| Production taxes | 520 | 572 | ||||
| Depreciation, depletion,<br> accretion and amortization | 2,417 | 1,886 | ||||
| General<br> and administrative expenses | 2,772 | 2,946 | ||||
| Total<br> operating expenses | 10,232 | 8,139 | ||||
| Operating<br> (loss) income | (1,960 | ) | 733 | |||
| Other income (expense): | ||||||
| Commodity derivative gain<br> (loss) | 919 | (6,837 | ) | |||
| Marketable equity securities<br> gain | - | 81 | ||||
| Interest<br> expense, net | (268 | ) | (50 | ) | ||
| Total<br> other income (expense) | 651 | (6,806 | ) | |||
| Net loss before income taxes | (1,309 | ) | (6,073 | ) | ||
| Income tax benefit | 62 | 2,689 | ||||
| Net<br> loss | $ | (1,247 | ) | $ | (3,384 | ) |
| Basic and diluted weighted average shares outstanding | 25,178,565 | 23,717,240 | ||||
| Basic and diluted net loss per share | $ | (0.05 | ) | $ | (0.14 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
U.S.ENERGY CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FORTHE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(inthousands)
| 2023 | 2022 | |||||
|---|---|---|---|---|---|---|
| Cash flows from operating<br> activities: | ||||||
| Net loss | $ | (1,247 | ) | $ | (3,384 | ) |
| Adjustments to reconcile<br> net loss to net cash used in operating activities: | ||||||
| Depreciation, depletion,<br> accretion, and amortization | 2,417 | 1,886 | ||||
| Deferred income taxes | (62 | ) | (2,689 | ) | ||
| Unrealized (gain) loss<br> on commodity derivatives | (1,325 | ) | 5,193 | |||
| Gain on marketable equity<br> securities | - | (81 | ) | |||
| Amortization of debt issuance<br> costs | 12 | 10 | ||||
| Stock-based compensation | 727 | 1,500 | ||||
| Right of use asset amortization | 55 | 24 | ||||
| Changes in operating assets<br> and liabilities: | ||||||
| Oil and natural gas sales<br> receivable | 1,145 | (3,337 | ) | |||
| Other assets | 52 | (212 | ) | |||
| Accounts payable and accrued<br> liabilities | (715 | ) | 2,594 | |||
| Accrued compensation and<br> benefits | (754 | ) | (990 | ) | ||
| Payments on operating lease<br> liability | (58 | ) | (27 | ) | ||
| Payments<br> for asset retirement obligations | (11 | ) | - | |||
| Net<br> cash provided by operating activities | 236 | 487 | ||||
| Cash<br> flows from investing activities: | ||||||
| Acquisition of properties | - | (783 | ) | |||
| Oil and natural gas capital<br> expenditures | (1,106 | ) | (855 | ) | ||
| Expenditures for cash calls | - | (1,456 | ) | |||
| Property<br> and equipment expenditures | (261 | ) | (159 | ) | ||
| Net<br> cash used in investing activities | (1,367 | ) | (3,253 | ) | ||
| Cash flows from financing<br> activities: | ||||||
| Borrowings on credit facility | - | 4,000 | ||||
| Repayment of debt | - | (3,847 | ) | |||
| Payment of fees for credit<br> facility | - | (172 | ) | |||
| Repayments of insurance<br> premium finance note payable | (112 | ) | (78 | ) | ||
| Exercise of warrant | - | 195 | ||||
| Shares withheld to settle<br> tax withholding obligations for restricted stock awards | (151 | ) | (307 | ) | ||
| Dividends<br> paid | (596 | ) | - | |||
| Net<br> cash used in financing activities | (859 | ) | (209 | ) | ||
| Net decrease in cash and<br> equivalents | (1,990 | ) | (2,975 | ) | ||
| Cash<br> and equivalents, beginning of period | 4,411 | 4,422 | ||||
| Cash and equivalents,<br> end of period | $ | 2,421 | $ | 1,447 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. Please see Note-15- SupplementalDisclosures of Cash Flow Information.
ADJUSTEDEBITDA 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<br> Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | March 31, | |||||
| 2023 | 2022 | |||||
| Net Income | $ | (1,247 | ) | $ | (3,384 | ) |
| Depreciation, depletion, accretion and amortization | 2,417 | 1,886 | ||||
| Unrealized loss (gain) on commodity derivatives | (1,325 | ) | 5,193 | |||
| Interest Expense, net | 268 | 50 | ||||
| Deferred income taxes | (62 | ) | (2,689 | ) | ||
| Non-cash stock-based compensation | 726 | 1,500 | ||||
| Transaction related expenses | - | 406 | ||||
| Transaction related acquired realized derivative<br> losses | 405 | 1,220 | ||||
| Loss (gain) on marketable securities | - | (81 | ) | |||
| Total Adjustments | 2,429 | 7,485 | ||||
| Total Adjusted EBITDA | $ | 1,182 | $ | 4,101 |
INVESTORRELATIONS CONTACT
U.S. Energy Corp.
IR@usnrg.com
(303) 993-3200
www.usnrg.com
