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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                    to                    

 

Commission File Number: 01-34525

 

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CAMAC ENERGY INC.

(Exact name of registrant as specified in its charter)

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Delaware	30-0349798
(State or Other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1330 Post Oak Blvd., Suite 2250, Houston, Texas	77056
(Address of principal executive offices)	(Zip Code)

 

(713) 797-2940

(Registrant’s telephone number, including area code)

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

At November 8, 2013 there were 157,040,513 shares of common stock, par value $0.001 per share, outstanding.

 

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CAMAC ENERGY INC.

TABLE OF CONTENTS

 

PART I.     FINANCIAL INFORMATION			Page
	Item 1. Financial Statements:
		Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012	5
		Consolidated Statements of Operations for the three months ended September 30, 2013 and 2012 (unaudited)	6
		Consolidated Statements of Operations for the nine months ended September 30, 2013 and 2012 (unaudited)	7
		Consolidated Statements of Comprehensive (Loss) Income for the three months ended September 30, 2013 and 2012 (unaudited)	8
		Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2013 and 2012 (unaudited)	9
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 (unaudited)	10
		Notes to Unaudited Consolidated Financial Statements	11
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		21
	Item 4. Controls and Procedures		21
PART II.     OTHER INFORMATION
	Item 1. Legal Proceedings		21
	Item 1A. Risk Factors		21
	Item 6. Exhibits		21
	Signatures		23
	Exhibits

  

 

INDEX OF CERTAIN DEFINED TERMS USED IN THIS REPORT

 

 

Throughout this quarterly report on Form 10-Q, the terms “we,” “us,” “our,” “Company,” and “our Company” refer to CAMAC Energy Inc. (“CAMAC”) and its subsidiaries and affiliates.

 

When used in this report, the terms:

 

●

“Allied” refers to Allied Energy Plc.;

●

“ASU” refers to the FASB Accounting Standards Update;

●

“Block” refers to the asset exploration area under lease;

●

“CEHL” refers to CAMAC Energy Holdings Limited;

●

“CEO” refers to the Chief Executive Officer;

●

“Cost Oil” as stated in the OML 120 and 121 PSC, refers to the amounts recoverable of operating costs and capital costs incurred;

●

“CPL” refers to CAMAC Petroleum Limited;

●

“Exchange Act” refers to the Securities Exchange Act of 1934;

●

“FASB” refers to the Financial Accounting Standards Board;

●

“GNPC” refers to the Gambia National Petroleum Company;

●

“IMPCO” refers to Inner Mongolia Production Company Limited;

●

“Kenya PSCs” refers to four production sharing contracts with the Government of the Republic of Kenya, covering exploration Blocks L1B, L16, L27 and L28;

●

“Leyshon” refers to Leyshon Resources Limited;

●

“NAE” refers to Nigerian Agip Exploration Limited;

●

“OML 120 and 121” refers to two offshore oil mining leases in Nigeria;

●

“Oyo Field” refers to the production field within OML 120 and 121;

●

“PAPL” refers to Pacific Asia Petroleum Limited;

●

“PFO” refers to the Principle Financial Officer;

●

“Profit Oil” as stated in the OML 120 and 121 PSC, refers to the balance available of crude oil proceeds after the allocation of Royalty Oil, Cost Oil and Tax Oil;

●

“Promissory Note” refers to CPL’s Promissory Note with Allied;

●

“PSC” refers to Production Sharing Contract;

●

“Royalty Oil” as stated in the OML 120 and 121 PSC, refers to the portion of the available crude oil proceeds owned by royalty interests;

●

“SEC” refers to the Securities and Exchange Commission;

●

“Tax Oil” as stated in the OML 120 and 121 PSC, refers to the amount of petroleum profit taxes owed on the sale of crude oil;

●

“The Gambia Licenses” refers to two petroleum exploration, development and production licenses with the Republic of The Gambia, for explorations Blocks A2 and A5;

●

“U.S. GAAP” refers to the Generally Accepted Accounting Principles of the United States.

  

  

CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION

 

 

 

All statements, other than statements of historical fact, included in this Form 10-Q, including without limitation the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are, or may be deemed to be, forward-looking statements. Such forward-looking statements involve assumptions, known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements contained in this Form 10-Q.

 

We may from time to time make written or oral forward-looking statements with respect to our long-term objectives or expectations which may be included in our filings with the SEC, reports to stockholders and information provided on our website.

 

The words or phrases “will likely,” “are expected to,” “is anticipated,” “is predicted,” “forecast,” “estimate,” “project,” “plans to continue,” “believes,” or similar expressions identify “forward-looking statements.” Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. We wish to caution you not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We are calling to your attention important factors that could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

 

The following list of important factors may not be all-inclusive, and we specifically decline to undertake an obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Among the factors that could have an impact on our ability to achieve expected operating results and growth plan goals and/or affect the market price of our stock are:

 

●

Limited operating history, operating revenue or earnings history.

●

Ability to raise capital to fund our business plan, including participation in the Oyo Field development and other oil and gas leases we may participate in, on terms and conditions acceptable to the Company.

●

Ability to develop oil and gas reserves.

●

Dependence on key personnel, technical services and contractor support.

●

Fluctuation in quarterly operating results.

●

Possible significant influence over corporate affairs by significant stockholders.

●

Ability to enter into definitive agreements to formalize foreign energy ventures and secure necessary exploitation rights.

●

Ability to successfully integrate and operate acquired or newly formed entities and multiple foreign energy ventures and subsidiaries.

●

Competition from large petroleum and other energy interests.

●

Changes in laws and regulations that affect our operations and the energy industry in general.

●

Risks and uncertainties associated with exploration, development and production of oil and gas, and drilling and production risks.

●

Expropriation and other risks associated with foreign operations.

●

Risks associated with anticipated and ongoing third party pipeline construction and transportation of oil and gas.

●

The lack of availability of oil and gas field goods and services.

●

Environmental risks and changing economic conditions.

 

 

 

PART I. – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

CAMAC ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)

 

		September 30, 2013				December 31, 2012
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	435			$	3,806
Accounts receivable			8,715				6,103
Other current assets			899				1,013
Total current assets			10,049				10,922
Property, plant and equipment, net:
Oil and gas properties (successful efforts method of accounting), net			184,408				188,630
Property, plant and equipment, other, net			822				456
Total property, plant and equipment, net			185,230				189,086
Other assets			53				11
Noncurrent assets of discontinued operations			-				36
Total assets		$	195,332			$	200,055
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	5,397			$	15,112
Note payable - related party			11,683				-
Accrued expenses			6,379				2,770
Total current liabilities			23,459				17,882
Long-term note payable - related party			-				872
Other long-term liabilities			58				55
Total liabilities			23,517				18,809
Commitments and contingencies
Equity
Stockholders' equity - CAMAC Energy Inc.
Preferred stock $0.001 par value - 50,000,000 shares authorized, none issued and outstanding			-				-
Common stock $0.001 par value - 300,000,000 shares authorized, 157,040,511 and 156,095,346 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively			157				156
Paid-in capital			464,268				462,801
Accumulated deficit			(292,834	)			(281,929	)
Accumulated other comprehensive income			224				224
Total stockholders' equity - CAMAC Energy Inc.			171,815				181,252
Noncontrolling interests of discontinued operations			-				(6	)
Total equity			171,815				181,246
Total liabilities and equity		$	195,332			$	200,055

 

See accompanying notes to unaudited consolidated financial statements.

 

 

CAMAC ENERGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share amounts)

 

		Three Months Ended September 30,
		2013				2012
		(Unaudited)
Continuing Operations
Crude oil sales, net of royalties		$	3,480			$	7,945
Operating costs and expenses:
Lease operating expenses and production costs			(93	)			76
Exploratory expenses			967				1,012
Depreciation, depletion and amortization			1,892				5,384
General and administrative expenses			3,394				3,417
Total operating costs and expenses			6,160				9,889
Operating loss			(2,680	)			(1,944	)
Other expense, net			16				36
Loss from continuing operations before income taxes			(2,696	)			(1,980	)
Income tax expense			-				-
Net loss from continuing operations			(2,696	)			(1,980	)
Discontinued Operations
Net loss from discontinued operations, net of tax			-				(142	)
Gain on divestiture, net			-				4,160
Net income from discontinued operations			-				4,018
Net (loss) income		$	(2,696	)		$	2,038
Net (loss) income per common share attributable to CAMAC Energy Inc. - basic:
Continuing operations		$	(0.02	)		$	(0.01	)
Discontinued operations		$	-			$	0.03
Total		$	(0.02	)		$	0.01
Net (loss) income per common share attributable to CAMAC Energy Inc. - diluted:
Continuing operations		$	(0.02	)		$	(0.01	)
Discontinued operations		$	-			$	0.03
Total		$	(0.02	)		$	0.01
Weighted average common shares outstanding:
Basic			156,202				155,964
Diluted			156,202				155,964

 

See accompanying notes to unaudited consolidated financial statements.

 

 

CAMAC ENERGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share amounts)

 

		Nine Months Ended September 30,
		2013				2012
		(Unaudited)
Continuing Operations
Crude oil sales, net of royalties		$	7,873			$	13,617
Operating costs and expenses:
Lease operating expenses and production costs			(266	)			255
Exploratory expenses			4,064				2,167
Depreciation, depletion and amortization			4,446				8,739
General and administrative expenses			10,508				8,773
Total operating costs and expenses			18,752				19,934
Operating loss			(10,879	)			(6,317	)
Other expense, net			26				96
Loss from continuing operations before income taxes			(10,905	)			(6,413	)
Income tax expense			-				-
Net loss from continuing operations			(10,905	)			(6,413	)
Discontinued Operations
Net loss from discontinued operations, net of tax			-				(988	)
Gain on divestiture, net			-				4,160
Net income from discontinued operations			-				3,172
Net loss			(10,905	)			(3,241	)
Net loss attributable to noncontrolling interests - discontinued operations			-				8
Net loss attributable to CAMAC Energy Inc.		$	(10,905	)		$	(3,233	)
Net (loss) income per common share attributable to CAMAC Energy Inc. - basic:
Continuing operations		$	(0.07	)		$	(0.04	)
Discontinued operations		$	-			$	0.02
Total		$	(0.07	)		$	(0.02	)
Net (loss) income per common share attributable to CAMAC Energy Inc. - diluted:
Continuing operations		$	(0.07	)		$	(0.04	)
Discontinued operations		$	-			$	0.02
Total		$	(0.07	)		$	(0.02	)
Weighted average common shares outstanding:
Basic			156,433				155,718
Diluted			156,433				155,718

 

See accompanying notes to unaudited consolidated financial statements.

  

 

CAMAC ENERGY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

 

		Three Months Ended September 30,
		2013				2012
		(Unaudited)
Net (loss) income		$	(2,696	)		$	2,038
Other comprehensive loss:
Foreign currency adjustments			-				104
Unrealized loss on investments, net of tax			-				(249	)
Total other comprehensive loss			-				(145	)
Comprehensive (loss) income		$	(2,696	)		$	1,893

 

See accompanying notes to unaudited consolidated financial statements.

 

 

CAMAC ENERGY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands) 

 

		Nine Months Ended September 30,
		2013				2012
		(Unaudited)
Net loss		$	(10,905	)		$	(3,241	)
Other comprehensive income:
Foreign currency adjustments			-				104
Unrealized loss on investments, net of tax			-				(102	)
Total other comprehensive income			-				2
Comprehensive loss			(10,905	)			(3,239	)
Comprehensive loss attributable to noncontrolling interests - discontinued operations			-				8
Comprehensive loss attributable to CAMAC Energy Inc.		$	(10,905	)		$	(3,231	)

 

See accompanying notes to unaudited consolidated financial statements.

  

 

CAMAC ENERGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

		Nine Months Ended September 30,
		2013				2012
		(Unaudited)
Operating activities
Net loss		$	(10,905	)		$	(3,241	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation, depletion and amortization			4,446				8,747
Stock-based compensation			1,468				423
Currency transaction loss			-				10
Dry hole expenses			-				(37	)
Gain on divestiture, net			-				(4,160	)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable			(2,612	)			16,056
Decrease in other current assets			114				221
Decrease in accounts payable			(404	)			(20,742	)
Increase (decrease) in accrued expenses			3,609				(2,598	)
Other			3				-
Net cash used in operating activities			(4,281	)			(5,321	)
Investing activities
Capital expenditures			(590	)			(3,426	)
Proceeds on divestiture, net			-				2,364
Decrease in other assets			-				2
Net cash used in investing activities			(590	)			(1,060	)
Financing activities
Proceeds from note payable - related party			1,500				5,000
Payments to note payable - related party			-				(6,581	)
Proceeds from exercise of stock options			-				3
Net provided by (used in) financing activities			1,500				(1,578	)
Effect of exchange rate on cash and cash equivalents			-				(6	)
Net decrease in cash and cash equivalents			(3,371	)			(7,965	)
Cash and cash equivalents at beginning of period			3,806				13,626
Cash and cash equivalents at end of period		$	435			$	5,661
Supplemental disclosure of cash flow information
Cash paid for:
Interest, net		$	26			$	96
Supplemental disclosure of non-cash investing and financing activities:
Nonsubsidiary common stock received as partial proceeds for divestiture, net		$	-			$	1,877
Related party accounts payable settled with note payable - related party		$	9,311			$	-

 

See accompanying notes to unaudited consolidated financial statements. 

  

  

CAMAC ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Company Description

 

CAMAC Energy, Inc. (NYSE MKT: CAK) is an independent exploration and production company engaged in the acquisition and development of energy resources in Africa. The Company's principal assets include interests in OMLs 120 and 121 in Nigeria, which include our current production in the Oyo Field, and additional exploration blocks in Kenya and The Gambia.

 

The Company’s corporate headquarters is located in Houston, Texas and has offices in Nairobi, Kenya, Banjul, The Gambia and Lagos, Nigeria.

 

2. Basis of Presentation and Recently Issued Accounting Standards

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for the filing of Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation. Prior interim period data has been reclassified to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for any subsequent quarter or for the year ending December 31, 2013. This Form 10-Q should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.

 

In July 2012, the Company signed a definitive share sale and purchase agreement to divest its interest in the Zijinshan Gas Block in China. This transaction was completed on August 6, 2012. The Company has classified the current and historical results of its China operations, including other inactive operations not involved in this sale, as discontinued operations, net of tax, in the accompanying consolidated statements of operations. See Note 4, Discontinued Operations, for more information regarding the sale. Unless otherwise indicated, the information in these notes to the consolidated financial statements relates to the Company’s continuing operations.

 

Recently Issued Accounting Standards 

 

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in ASU 2013-02 to Topic 220, Comprehensive Income, update, supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 and 2011-12. ASU 2013-02 requires either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. The new guidance is effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted the guidance required as of January 1, 2013, and determined that there were no significant amounts reclassified in the current period that would require enhanced disclosure.

 

In February 2013, the FASB issued ASU 2013-04, Obligations Resulting From Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The amendments in ASU 2013-04 to Topic 405, Liabilities, provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the update is fixed at the reporting date, except for obligations addressed with existing U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation, as well as other information about those obligations. The amendment is effective retrospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

  

 

CAMAC ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

 

In April 2013 the FASB issued ASU 2013-07, Liquidation Basis of Accounting. The amendments in ASU 2013-07 to Topic 205, Presentation of Financial Statements, clarify when an entity should apply the liquidation basis of accounting and provide principles for the recognition and measurement of associated assets and liabilities. In accordance with the amendments, the liquidation basis is used when liquidation is imminent. Liquidation is considered imminent when the likelihood is remote that the organization will return from liquidation and either: (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties; or (b) a plan for liquidation is being imposed by other forces. The amendments in ASU 2013-07 are effective prospectively for entities that determine liquidation is imminent for reporting periods beginning after December 15, 2013, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

In July 2013 the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The amendments in ASU 2013-11 to Topic 740, Income Taxes, clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Retrospective application is permitted. The Company is currently evaluating the possible impact of ASU 2013-11, but does not anticipate that it will have a material impact on the Company’s consolidated financial statements.

 

3. Going Concern

 

The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. To date, the Company has incurred substantial losses from operations and during the three months ending September 30, 2013, the Company’s outstanding Promissory Note of $11.7 million became payable within the next 12 months. This significantly affected the working capital position, and as of September 30, 2013, current liabilities exceed current assets by $13.4 million.  The Company has minimal liquid assets and negative operating cash flows, and internal cash flow models do not forecast enough operating cash flows to fund operations and pay outstanding liabilities for the next 12 months. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company is in active discussions concerning potential transactions that, if successfully concluded, would result in additional capital funding for the Company. If the Company is not successful in completing one or more of these potential transactions, amending the current terms of the Promissory Note or generating additional capital through the issuance of debt or equity, the Company may not be able to continue as a going concern.

 

There can be no assurance that any additional financing will be available on acceptable terms, if at all. To the extent the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business.

 

Although there are no assurances that the Company’s plans will be realized, the Company believes that it will be able to continue operations in the future. Accordingly, no adjustments relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying consolidated financial statements in anticipation of the Company not being able to continue as a going concern.

 

4. Discontinued Operations

 

In August 2012, the Company divested its wholly owned Hong Kong subsidiary Pacific Asia Petroleum Limited for cash consideration of $2.5 million and 9.6 million fully paid ordinary shares, net of selling expenses, of Leyshon Resources Limited, a natural resources mining company based in Beijing, China. The Leyshon shares had a fair market value of $1.9 million, and have since been sold.

  

 

CAMAC ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

 

PAPL held the Company’s interest in the Zijinshan production sharing contract relating to the Zijinshan Block in the Shanxi Province of China. Since 2008, the Company engaged in exploration activities on this Block in search of coalbed methane and other gas. The Company made a strategic decision to monetize this asset and withdraw from activity in China in order to focus its efforts and capital resources on its core Africa activities.

 

The Company has reclassified all the results of its China operations, including other inactive operations not involved in this sale, to discontinued operations for all periods presented.

 

Results of operations from discontinued operations are as follows:

 

		Three Months Ended September 30,				Nine Months Ended September 30,
		2012				2012
Costs and expenses:		(In thousands)
Exploratory expenses		$	27			$	204
Depreciation, depletion and amortization			1				8
General and administrative expenses			114				776
Total costs and expenses			142				988
Loss before income taxes			(142	)			(988	)
Income tax expense			-				-
Net loss before noncontrolling interests			(142	)			(988	)
Noncontrolling interests			-				8
Net loss		$	(142	)		$	(980	)

 

 Assets and liabilities of discontinued operations are as follows:

 

		December 31, 2012
		(In thousands)
Other assets		$	36
Total assets		$	36

  

5.  Property, Plant and Equipment 

 

Property, plant and equipment is comprised of the following:

 

		September 30, 2013				December 31, 2012
Oil and gas properties:		(In thousands)
Proved oil and gas properties		$	206,212			$	206,212
Less: Accumulated depreciation, depletion and amortization			(30,044	)			(25,822	)
Proved oil and gas properties, net			176,168				180,390
Unproved oil and gas properties			8,240				8,240
Oil and gas properties, net			184,408				188,630
Property, plant and equipment, other			1,578				989
Less: Accumulated depreciation			(756	)			(533	)
Property, plant and equipment, other, net			822				456
Total property, plant and equipment		$	185,230			$	189,086

 

  

CAMAC ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

 

6. Note Payable – Related Party

 

In June 2011, CPL, a wholly owned subsidiary of the Company, executed a Promissory Note in favor of Allied. Under the initial terms of the Promissory Note, Allied agreed to make loans to CPL from time to time for purposes of making payments relating to the workover of Oyo well #5 in an aggregate sum of up to $25.0 million. Interest accrues on the outstanding principal under the Promissory Note at a rate of 30 day LIBOR plus 2% per annum. In August 2013, CPL and Allied agreed to amend the Promissory Note to, among other things, allow for borrowings up to an aggregate of $10.0 million for general corporate purposes other than making payments relating to the workover of Oyo well #5. As of September 30, 2013, borrowings for general corporate purposes totaled $1.5 million. Pursuant to the initial terms of the Promissory Note, the outstanding principal amount of all loans was to mature on June 6, 2013. In August 2012, the Promissory Note was amended to extend the maturity date to October 15, 2013, and in March 2013 the Promissory Note was again amended to extend the maturity date to July 15, 2014.  On September 10, 2013, the Company and Allied amended the Promissory Note and the Guaranty to add the Company as a borrower, to allow for borrowings of up to $10 million for general corporate purposes and to pledge the stock of the subsidiary of CEI that holds the exploration licenses in Gambia and Kenya as collateral pursuant to an equitable share mortgage arrangement. The Company has guaranteed all of CPL’s obligations under the Promissory Note.   As of September 30, 2013, $11.7 million was outstanding.

 

7. Accounts Payable and Accrued Expenses

 

As of September 30, 2013, the Company had approximately $5.4 million of approved and unpaid workover invoices related to Oyo well #5, and $15.1 million as of December 31, 2012.

 

Accrued expenses are as follows:

 

		September 30, 2013				December 31, 2012
		(In thousands)
Accrued professional fees		$	2,338			$	565
Accrued lease related costs			1,677				524
Accrued payroll and benefits			868				397
Accrued workover costs			538				538
Other			958				746
Total accrued expenses		$	6,379			$	2,770

 

8.  Equity 

 

During the three and nine months ended September 30, 2013, the Company issued 176,099 and 945,165, respectively, shares of Common Stock upon the vesting of restricted stock awards. During the nine months ended September 30, 2013, the Company granted employees options to purchase a total of 3,287,282 shares of common stock and granted 1,009,943 shares of restricted stock with vesting periods from 24 months to 36 months.

 

The Company also grants shares of restricted stock to non-employee Directors. During the nine months ended September 30, 2013, the Company granted 700,002 shares of restricted stock to non-employee Directors, which vest after a one year period.

  

 

CAMAC ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

 

9. Earnings (Loss) Per Common Share 

 

Basic earnings (loss) per common share are computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. The weighted average number of common shares outstanding for computing basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2013 and 2012 were as follows:

 

Basic and diluted EPS shares by period indicated:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
		(In thousands)
Basic			156,202				155,964				156,433				155,718
Diluted			156,202				155,964				156,433				155,718

      

 

The number of stock options and restricted stock awards that were excluded from dilutive shares outstanding as these potentially dilutive securities are anti-dilutive because the Company was in a loss position were as follows:

 

Anti-dilutive additional shares by period indicated:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
		(In thousands)
Stock options			-				-				-				5
Nonvested restricted stock awards			810				161				558				287

         

 

 

10. Financial Instruments and Fair Value Measurements 

 

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, trade receivables, deposits, accounts payable, accrued expenses, other long-term liabilities and debt at floating interest rates approximate their fair values at September 30, 2013, principally due to the short-term nature, maturities or nature of interest rates of the above listed items.

 

11. Commitments and Contingencies 

 

Commitments 

 

The Company has substantial commitments related to its Kenya PSCs and The Gambia Licenses. To maintain compliance and ownership, the Company is and will be required to fulfill minimum work obligations and to make certain payments as stated in each PSC and License.

 

Contingencies   

 

From time to time we may be involved in various legal proceedings and claims in the ordinary course of our business. As of September 30, 2013, and through the filing date of this report, we do not believe the ultimate resolution of such actions or potential actions of which we are currently aware will have a material effect on our consolidated financial position or our results of operations.

  

 

CAMAC ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

 

12. Related Party Transactions   

 

The Company entered into a technical services agreement with Allied effective September 1, 2012, whereby the Company agreed to provide services related to the Oyo Field in Nigeria.  Pursuant to the terms of the Technical Service Agreement, Allied agreed to pay the Company $150,000 per month. The amounts earned under the agreement are recorded as a reduction to lease operating expenses and production costs and general and administrative expenses.

 

During 2012, the Company made cash severance payments totaling an aggregate of $169,167 to two former executives pursuant to the terms of separation agreements entered into with each former executive.

 

In June 2011, CPL, a wholly owned subsidiary of the Company, executed a Promissory Note in favor of Allied. Refer to Note 6, Note Payable – Related Party, for details relating to the Promissory Note. As of September 30, 2013, $11.7 million was outstanding.

 

The Company has transactions in the normal course of business with its shareholders, CEHL and their affiliates. The following tables summarize related party transactions and balances for the respective periods.

 

    

		September 30, 2013				December 31, 2012
		(In thousands)
CEHL, accounts receivable		$	8,556			$	6,103
CEHL, other current assets		$	624			$	624
CEHL, accounts payable		$	841			$	10,213
CEHL, note payable-related party		$	11,683			$	-
CEHL, accrued expenses		$	51			$	25
CEHL, long-term note payable-related party		$	-			$	872
CEHL, other long-term liabilities		$	58			$	55

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
		(In thousands)
CEHL, total operating costs and expenses		$	(221	)		$	252			$	(800	)		$	544
CEHL, other expense, net		$	17			$	36			$	26			$	97

 

  

 

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   

 

Our Business 

 

CAMAC Energy, Inc. (NYSE MKT: CAK) is an independent exploration and production company engaged in the acquisition and development of energy resources in Africa. The Company's principal assets include interests in OMLs 120 and 121 in Nigeria, which include our current production in the Oyo Field, and additional exploration blocks in Kenya and The Gambia.

 

The Company’s corporate headquarters is located in Houston, Texas and has offices in Nairobi, Kenya, Banjul, The Gambia and Lagos, Nigeria.

 

In August 2012, the Company divested its wholly owned Hong Kong subsidiary Pacific Asia Petroleum Limited for cash consideration of $2.5 million and 9.6 million fully paid ordinary shares, net of selling expenses, of Leyshon Resources Limited, a natural resources mining company based in Beijing, China. The Leyshon shares had a fair market value of $1.9 million, and have since been sold.

 

As a result of the above transaction, the Company is reporting its China operations, including other inactive operations not involved in this sale, for all presented periods in discontinued operations and, as such, the financial statement information provided in this report for continuing operations for the periods ended September 30, 2013 and 2012 are presented in one reportable segment.

 

Nigeria   

 

There was one lifting during the three months ended September 30, 2013, totaling approximately 220,000 barrels of crude oil, 31,000 barrels net to the Company’s interests, at an average price of $112.09 per barrel. During the same period last year, there were two liftings totaling approximately 475,000 barrels of crude oil, 109,000 barrels net to the Company’s interests, at an average price of $108.00 per barrel. For the three months ended September 30, 2013 and 2012, the Oyo Field had gross crude oil production from two producing wells (wells #5 and #6) averaging 2,228 and 2,641 barrels per day, respectively, of which the Company’s net share, including Cost Oil, were 314 and 388 barrels per day, respectively.

 

There were three liftings during the nine months ended September 30, 2013, totaling approximately 671,000 barrels of crude oil, 73,000 barrels net to the Company’s interests, at an average price of $107.85 per barrel. During the same period last year, there were three liftings totaling approximately 765,000 barrels of crude oil, 120,000 barrels net to the Company’s interests, at an average price of $113.23 per barrel. For the nine months ended September 30, 2013 and 2012, the Oyo Field had gross crude oil production from two producing wells (wells #5 and #6) averaging 2,302 and 2,791barrels per day, respectively, of which the Company’s net share, including Cost Oil, were 250 and 438 barrels per day, respectively.

 

At September 30, 2013, the Company had remaining liabilities related to the Oyo well #5 workover of approximately $5.9 million which have been charged to expense in prior periods. This amount will be eligible for recovery as future Cost Oil revenue after payment occurs, and the rate of recovery will be affected by future production levels and other field expenditures.

 

In June 2012, NAE completed the sale of its 40% working interest in OML 120 and 121 to Allied, an affiliate of the Company.  At that time, Allied informed the Company of its plans to drill a new well in the Oyo Field, commencing in the third quarter of 2013.  

 

In early September 2013, the Sedneth 701 drilling rig arrived on location at OML 120 and drilling operations commenced shortly after on the new well, Oyo #7. The new well is designed to both increase production levels from the Oyo field and to test prospective resource potential of the deeper Miocene reservoir on the block.

 

In November 2013, preliminary data from the Oyo #7 well in OML 120, revealed results that exceeded the Company’s internal pre-drill expectations. Based on logging while drilling ("LWD") data, the well encountered gross oil pay of 133 feet (net oil pay of 116 feet) and gross gas pay of 103 feet (net gas pay of 93 feet) in the gas cap from the currently producing Pliocene reservoir, with excellent reservoir quality. Additionally, based on LWD data, the well encountered approximately 65 feet of total hydrocarbon column in the Miocene reservoir. 

 

 

The Company entered into a technical services agreement with Allied effective September 1, 2012, whereby the Company agreed to provide services related to the Oyo Field in Nigeria.  Pursuant to the terms of the Agreement, Allied agreed to pay the Company $150,000 per month.  The amounts recovered under the agreement are recorded as a reduction to lease operating expenses and production costs and general and administrative expenses.

 

Kenya 

 

In May 2012, the Company, through an indirect wholly owned subsidiary, entered into four production sharing contracts with the Government of the Republic of Kenya, covering previously awarded exploration Blocks L1B and L16, and new offshore exploration Blocks L27 and L28. For all Blocks, the Company is the operator, with the Government having the right to participate up to 20%, either directly or through an appointee, in any area subsequent to declaration of a commercial discovery. The Company is responsible for all exploration expenditures.

 

The Kenya PSCs for Blocks L1B and L16 each provide for an initial exploration period of two years with specified minimum work obligations during that period. Prior to the end of the initial exploration period, the Company will conduct for each Block a gravity and magnetic survey and acquire, process and interpret 2D seismic data. The gravity and magnetic survey on Block L1B and L16 was completed in April, 2013. The Company has the right to apply for up to two additional two-year exploration periods with specified additional minimum work obligations, including the acquisition of 3D seismic data and the drilling of one exploratory well on each Block during each such additional period.

 

The Kenya PSCs for Blocks L27 and L28 each provide for an initial exploration period of three years with specified minimum work obligations during that period. Prior to the end of the initial exploration period, the Company will conduct for each Block a regional geological and geophysical study, acquire 2D seismic data and acquire, process and interpret 3D seismic data. The Company has the right to apply for up to two additional two-year exploration periods with specified additional minimum work obligations, including the drilling of one exploratory well on each Block, during each such additional period.

 

In addition to the minimum work obligations, each of the Kenya PSCs requires annual surface rental payments, training fund payments and contributions to local community development projects. All of the Kenya PSCs also include customary provisions including but not limited to governing law, confidentiality, force majeure, arbitration, and abandonment and decommissioning costs.  

 

The Gambia 

 

In May 2012, the Company, through an indirect wholly owned subsidiary, signed two Petroleum Exploration, Development & Production Licenses with The Republic of The Gambia, for previously awarded exploration blocks A2 and A5. For both Blocks, the Company is the operator, with the GNPC having the right to elect to participate up to a 15% interest, following approval of a development and production plan. The Company is responsible for all expenditures prior to such approval even if the GNPC elects to participate.

 

The Gambia Licenses for both Blocks provide for an initial exploration period of four years with specified work obligations during that period. Prior to the end of the initial exploration period, the Company will conduct, for each Block, a regional geological study, acquire, process and interpret 3D seismic data, drill one exploration well to the total depth of 5,000 meters below mean sea level and evaluate drilling results, with the first two work obligations due prior to the end of the second year. The Company has the right to apply for up to two additional two-year exploration periods with specified additional minimum work obligations, including the drilling of one exploration well during each additional period for each Block.

 

In addition to the minimum work obligations, The Gambia Licenses require annual rental payments and training and resource fees. Each of The Gambia Licenses also includes customary provisions including but not limited to governing law, confidentiality, force majeure, arbitration, and abandonment and decommissioning costs. 

 

Results of Operations – Continuing Operations 

 

The following discussion pertains to the Company’s results of operations, financial condition, liquidity and capital resources and should be read together with our unaudited consolidated financial statements and notes to unaudited consolidated financial statements as well as our Annual Report on Form 10-K for the year ended December 31, 2012.

 

Three months ended September 30, 2013, compared to the three months ended September 30, 2012: 

 

Revenues. Revenue is recognized when a lifting occurs. Our revenues for the three months ended September 30, 2013 decreased $4,465,000 as compared to the three months ended September 30, 2012. The decrease was primarily due to lower Cost Oil recovery (recovery of workover costs incurred on well #5 in the Oyo Field) of $2,972,000 and lower Profit Oil sales of $1,493,000 due to a reduction in sales volumes of 43,484 barrels, net of royalty, partially offset by higher sales prices. There were two liftings in the prior period compared to one lifting in the current period.

 

 

 

Lease operating expenses and production costs.  Lease operating expenses consist of personnel costs and other charges directly associated with the production of oil and technical service agreements. Our lease operating expenses for the three months ended September 30, 2013 decreased $169,000 as compared to the three months ended September 30, 2012. The decrease was primarily due to an increase in amounts recovered in the current period under the technical services agreement with Allied of $300,000, which offset lease operating expenses, partially offset by higher salaries and benefits of $138,000.

 

Exploratory expenses.  Exploratory expenses consist of salaries and personnel costs related to exploration activities, drilling costs for unsuccessful wells, costs for acquisition of seismic data and lease related costs (surface fees, training and community development expenditures) charged to expense. Our exploratory expenses for the three months ended September 30, 2013 decreased $45,000 as compared to the three months ended September 30, 2012. The decrease was primarily due to lower seismic data purchases in the current period of $87,000.

 

Depreciation, depletion and amortization. Depreciation, depletion and amortization expenses consist of depletion of oil reserves and depreciation of leasehold improvements, furniture and fixtures and computer equipment. Our depreciation, depletion and amortization expenses for the three months ended September 30, 2013 decreased $3,492,000 as compared to the three months ended September 30, 2012. The decrease was primarily due to the timing of the liftings period over period, partially offset by a lower depletion rate in the current period. There were two liftings in the prior period compared to one lifting in the current period.

 

General and administrative expenses. General and administrative expenses consist primarily of salaries and related personnel costs of executive management, finance, accounting, legal and human resources, consulting projects and insurance. Our general and administrative expenses for the three months ended September 30, 2013 decreased $23,000 as compared to the three months ended September 30, 2012. The decrease was primarily due to amounts recovered in the current period under the technical services agreement with Allied of $150,000, which offset general and administrative expenses, mostly offset by higher salaries and benefits of $122,000.

 

Nine months ended September 30, 2013, compared to the nine months ended September 30, 2012: 

 

Revenues. Revenue is recognized when a lifting occurs. Our revenues for the nine months ended September 30, 2013 decreased $5,744,000 as compared to the nine months ended September 30, 2012. The decrease was primarily due to lower Cost Oil recovery (recovery of workover costs incurred on well #5 in the Oyo Field), of $4,938,000, lower Profit Oil sales of $806,000 due to a reduction in sales volumes of 48,000 barrels, net of royalty, and lower sales prices.

 

Lease operating expenses and production costs. Lease operating expenses consist of personnel costs and other charges directly associated with the production of oil and technical service agreements. Our lease operating expenses for the nine months ended September 30, 2013 decreased $521,000 as compared to the nine months ended September 30, 2012. The decrease was primarily due to an increase in amounts recovered in the current period under the technical services agreement with Allied of $900,000, which offset lease operating expenses, partially offset by higher salaries and benefits of $428,000.

 

Exploratory expenses. Exploratory expenses consist of salaries and personnel costs related to exploration activities, drilling costs for unsuccessful wells, costs for acquisition of seismic data and lease related costs (surface fees, training and community development expenditures) charged to expense. Our exploratory expenses for the nine months ended September 30, 2013 increased $1,897,000 as compared to the nine months ended September 30, 2012. The increase was primarily due to current period gravity and magnetic survey expenses in Kenya of $842,000, higher consulting expenses of $682,000 and higher lease related costs in Kenya and The Gambia of $387,000, offset by lower salaries and benefits of $33,000.

 

Depreciation, depletion and amortization. Depreciation, depletion and amortization expenses consist of depletion of oil reserves and depreciation of leasehold improvements, furniture and fixtures and computer equipment. Our depreciation, depletion and amortization expenses for the nine months ended September 30, 2013 decreased $4,293,000 as compared to the nine months ended September 30, 2012. The decrease was primarily due to the lower sales volumes and a lower depletion rate in the current period.

 

General and administrative expenses. General and administrative expenses consist primarily of salaries and related personnel costs of executive management, finance, accounting, legal and human resources, consulting projects and insurance. Our general and administrative expenses for the nine months ended September 30, 2013 increased $1,735,000 as compared to the nine months ended September 30, 2012. The increase was primarily due to higher consulting and legal expenses of $1,056,000 and higher share-based compensation expense of $1,045,000, partially offset by amounts recovered in the current period under the technical services agreement with Allied of $450,000, which offset general and administrative expenses.

  

 

Liquidity and Capital Resources   

 

As of September 30, 2013, the Company had a net working capital (current assets minus current liabilities) deficit of $13,410,000, including cash and cash equivalents of $435,000.

 

During the nine months ended September 30, 2013, net cash used in operating activities was $4,281,000 as compared to $5,321,000 for the nine months ended September 30, 2012. The net decrease in cash used in operating activities of $1,040,000 was primarily due to the timing of receivable collections and payments.

 

During the nine months ended September 30, 2013, net cash used in investing activities was $590,000 as compared to $1,060,000 in the nine months ended September 30, 2012. The decreases in cash used in investing activities is primarily due to a decrease in capital expenditures of $2,836,000 (primarily due to The Gambia and Kenya lease bonus payments of $3,240,000 in the prior period), partially offset by the impact of net cash proceeds of $2,364,000 from the divestiture of China operations.

 

During the nine months ended September 30, 2013, net cash provided by financing activities was $1,500,000 as compared to net cash used in financing activities of $1,578,000. The net increase in cash provided by financing activities of $3,078,000 was primarily due to the net proceeds received from the Promissory Note.

 

In June 2011, CPL, a wholly owned subsidiary of the Company, executed a Promissory Note in favor of Allied. Under the initial terms of the Promissory Note, Allied agreed to make loans to CPL from time to time for purposes of making payments relating to the workover of Oyo well #5 in an aggregate sum of up to $25.0 million. Interest accrues on the outstanding principal under the Promissory Note at a rate of 30 day LIBOR plus 2% per annum. In August 2013, CPL and Allied agreed to amend the Promissory Note to, among other things, allow for borrowings up to an aggregate of $10.0 million for general corporate purposes other than making payments relating to the workover of Oyo well #5. As of September 30, 2013, borrowings for general corporate purposes totaled $1.5 million. Pursuant to the initial terms of the Promissory Note, the outstanding principal amount of all loans was to mature on June 6, 2013. In August 2012, the Promissory Note was amended to extend the maturity date to October 15, 2013, and in March 2013 the Promissory Note was again amended to extend the maturity date to July 15, 2014.  On September 10, 2013, the Company and Allied amended the Promissory Note and the Guaranty to add the Company as a borrower, to allow for borrowings of up to $10 million for general corporate purposes and to pledge the stock of the subsidiary of CEI that holds the exploration licenses in Gambia and Kenya as collateral pursuant to an equitable share mortgage arrangement.   The Company has guaranteed all of CPL’s obligations under the Promissory Note.   As of September 30, 2013, $11.7 million was outstanding.

 

The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. To date, the Company has incurred substantial losses from operations and during the three months ending September 30, 2013, the Company’s outstanding Promissory Note of $11.7 millon became payable within the next 12 months. This significantly affected the working capital position, and as of September 30, 2013, current liabilities exceed current assets by $13.4 millon.  The Company has minimal liquid assets and negative operating cash flows, and internal cash flow models do not forecast enough operating cash flows to fund operations and pay outstanding liabilities for the next 12 months. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company is in active discussions concerning potential transactions that, if successfully concluded, would result in additional capital funding for the Company. If the Company is not successful in completing one or more of these potential transactions, amending the current terms of the Promissory Note or generating additional capital through the issuance of debt or equity, the Company may not be able to continue as a going concern.

 

There can be no assurance that any additional financing will be available on acceptable terms, if at all. To the extent the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business.

 

Although there are no assurances that the Company’s plans will be realized, the Company believes that it will be able to continue operations in the future. Accordingly, no adjustments relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying consolidated financial statements in anticipation of the Company not being able to continue as a going concern.

 

 

 

Off-Balance Sheet Arrangements   

 

We have no off-balance sheet arrangements, other than normal operating leases and employee contracts, that have or are likely to have a current or future material effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this Item.

 

ITEM 4. CONTROLS AND PROCEDURES   

 

(a) Evaluation of Disclosure Controls and Procedures.   

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its CEO and PFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Management of the Company, with the participation of its CEO and PFO, evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on their evaluation, as of the end of the period covered by this Form 10-Q, the Company’s CEO and PFO have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

 

(b) Changes in Internal Control Over Financial Reporting.   

 

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION   

 

Item 1. Legal Proceedings 

 

From time to time we may be involved in various legal proceedings and claims in the ordinary course of our business. As of September 30, 2013, we do not believe the ultimate resolution of such actions or potential actions of which we are currently aware will have a material effect on our consolidated financial position or our results of operations.

 

Item 1A. Risk Factors   

 

Please see our Annual Report on Form 10-K for the year ended December 31, 2012, Part I, Item 1A, for discussion of the risk factors affecting our business.

 

Item 6. Exhibits   

 

The following exhibits are filed with this report:

 

 

 

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of our Form 10-SB (No. 000-52770) filed on August 15, 2007).
3.2	Amended and Restated Bylaws of the Company as of April 11, 2011 (incorporated by reference to Exhibit 3.1 of our Quarterly Report on Form 10-Q filed on May 3, 2011).
10.1	Amended and Restated Promissory Note effective September 10, 2013, by and among CAMAC Petoleum Limited and Allied Energy Plc.
10.2	Amendment no. 1 to Guaranty Agreement effective September 10, 2013, by and among the Company and Allied Energy Plc.
10.3	Equitable Share Mortgage Arrangement effective September 10, 2013 by and among the Company and Allied Energy Plc.
10.4	Executive Employment Agreement dated September 1, 2013, by and between Heidi Wong and the Company.*
31.1	Certification of Chief Executive Officer Pursuant to 15 U.S.C. § 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to 15 U.S.C. § 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101. INS	XBRL Instance Document.
101. SCH	XBRL Schema Document.
101. CAL	XBRL Calculation Linkbase Document.
101. DEF	XBRL Taxonomy Extension Definition Linkbase Document
101. LAB	XBRL Label Linkbase Document.
101. PRE	XBRL Presentation Linkbase Document.
*	Indicates a management contract or compensatory plan or arrangement.

 

 

 

 

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, thereunto duly authorized.

 

CAMAC Energy Inc. 

Date: November 13, 2013                       

	/S/ Earl W. McNiel
	Earl W. McNiel
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

 

  

 

 

 

 

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