Erin Energy Corp. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 16, 2016

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Exhibit 99.1
                                                                                                               
erinlogoa04.jpg
News Release
November 14, 2016

Erin Energy Announces Third Quarter 2016 Results

Provides Operational Update on its West and East Africa Operations

HOUSTON, November 14, 2016 - Erin Energy Corporation (“Erin Energy” or the “Company”) (NYSE MKT:ERN) (JSE:ERN) announced today financial and operational results for the quarter ended September 30, 2016. The Company also provided an update on its upstream operations in Africa.
Third Quarter 2016 Highlights:
•
Realized revenues of $28.6 million;
•
Achieved net average daily production of 6,100 barrels of oil per day (bbls/d);
•
Lifted and sold 583,000 net barrels of oil.
Segun Omidele, Chief Executive Officer commented: “In the third quarter, our strategy remained focused on restructuring our balance sheet and growing our production. We had success in lowering some of our outstanding AP balances and our effort to raise additional capital for our next drilling campaign is progressing well with the expectation that drilling activities will commence soon.”

Operations Summary

In Nigeria, the Company continues to make progress in preparation for the next drilling campaign, which is planned to commence later this quarter or early 2017 depending on rig availability. Erin Energy has secured all required permits to drill and the operational planning process is currently being finalized.
 
A key part of the Company’s planned drilling campaign is the drilling of an additional development well, the Oyo-9 well, located within the central area of the Oyo field in Oil Mining Lease 120, offshore Nigeria. Oyo-9 is planned to be tied-back to the Oyo field production facility via planned new subsea infrastructure. This phase of development, expected to be completed in the second quarter of 2017, will increase field production by approximately 6,000 to 7,000 barrels of oil per day (bopd). 

In July 2016, the Oyo-7 well was shut-in as a result of an emergency shut-in of the Oyo field production facility (FPSO). The well was unable to come back online naturally due to high water production and resulted in a temporary loss of approximately 1,400 bopd. The Company attempted an intermittent nitrogen lift gas injection from the facility to attempt to bring the well back on production, which was not fully implemented due to some operational constraints. Erin Energy is now looking at another nitrogen lift attempt and other technical options that can provide continuous lift assistance for well startup.

1330 Post Oak Boulevard, Suite 2250 Houston, Texas 77056 USA Telephone +1 713 797 2940 erinenergy.com


In Ghana, the Company is conducting geotechnical subsurface studies of existing 2-D seismic data to further high-grade its prospect inventory on the Expanded Shallow Water Tano block. The key activity to high-grading the exploration prospects and firming up drilling locations will be a new 3-D marine seismic acquisition survey. The Company expects to issue a formal invitation to tender to marine seismic vendors shortly. Actual field operations await the resolution of the Ghana-Cote d’Ivoire maritime border dispute arbitration in mid-2017.

In The Gambia, Erin Energy completed an intensive study of existing 2-D data of its offshore A2 and A5 blocks and has continued to mature existing leads whilst awaiting the depth processing of 3-D seismic data recently acquired. The Company expects to have the processed data by the end of 2016.

In Kenya, the Company completed the interpretation of 2-D seismic data acquired on its onshore blocks L1B and L16, and identified a number of potential leads to pursue. Erin Energy continues to mature these leads and is currently designing additional targeted 2-D seismic to be acquired in 2017 on the two onshore blocks to provide a better understanding of the identified leads.

While examining ways to rationalize its exploration assets in Kenya, and focus on its most prospective of the Kenyan assets, Erin Energy has intensified efforts to identify and farm in partners in order to share exploration costs and risks in the ultra-deep water offshore blocks, L-27 and L-28. The Initial Exploration Period for the L-27 and L-28 blocks is set to expire in February 2017.

Financial Summary    

Erin Energy reported revenue for the third-quarter was $28.6 million, compared with $23.2 million for the previous quarter and $28.7 million for the third quarter 2015. In the third-quarter, the Company lifted and sold 583,000 net barrels of oil at an average price of $49.07 per barrel, compared to 571,000 net barrels at an average price of $50.20 during the same period 2015.

For the third-quarter of 2016, the Company reported a net loss of $23.5 million, or $(0.11) per basic and diluted share, compared to a net loss of $58.7 million, or $(0.28) per basic and diluted share for the same period in 2015.

Average net daily production for the quarter was approximately 6,100 barrels of oil per day, compared to 10,200 net barrels of oil per day for the same period 2015. The period-over-period decline in production is due to a combination of the revised well management policy to prevent excessive gas production, temporary loss of Oyo-7 production and natural production decline.

Erin Energy has continued its efforts to strengthen its balance sheet. These efforts have thus far resulted in a successful restructuring of its term loan facility, modest reductions in its accounts payable balances and extensions to the maturity dates of some of its related-party debt. The Company will continue these efforts to make further progress on its outstanding accounts payable balance using various methods including payment plans and equity payments.

Conference Call and Webcast

The Company will host a conference call on Tuesday, November 15, 2016 at 10:00 a.m. CT (11:00 a.m. ET) to discuss the results and update its current operations. The dial-in number to access the conference call is 1-844-883-3907 in the United States or 1-412-317-9253 internationally. Participants should ask the call operator to be placed on the “Erin Energy Third-Quarter Results Conference Call.”

1330 Post Oak Boulevard, Suite 2250 Houston, Texas 77056 USA Telephone +1 713 797 2940 erinenergy.com


To access the live audio webcast, please visit the “Investors” section of the Company’s website at www.erinenergy.com.

Erin Energy Corporation is an independent oil and gas exploration and production company focused on energy resources in sub-Saharan Africa. Its asset portfolio consists of 9 licenses across 4 countries covering an area of 40,000 square kilometres (10 million acres), including current production and other exploration projects offshore Nigeria, as well as exploration licenses offshore Ghana, Kenya and Gambia, and onshore Kenya. Erin Energy is headquartered in Houston, Texas, and is listed on the New York and Johannesburg Stock Exchanges under the ticker symbol ERN. More information about Erin Energy can be found at www.erinenergy.com.

Forward-Looking Statements     

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, concerning activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Although the Company believes the expectations reflected in these forward-looking statements are reasonable, they involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect.

The Company’s actual results could differ materially from those anticipated or implied in these forward-looking statements due to a variety of factors, including the Company’s ability to successfully finance, drill, produce and/or develop the wells and prospects identified in this release, and risks and other risk factors discussed in the Company’s periodic reports filed with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. You should not place undue reliance on forward-looking statements, which speak only as of their respective dates. The Company undertakes no duty to update these forward-looking statements.


Source:  Erin Energy Corporation

Investors and media:
Lionel C. McBee, +1 713 797 2960
lionel.mcbee@erinenergy.com




1330 Post Oak Boulevard, Suite 2250 Houston, Texas 77056 USA Telephone +1 713 797 2940 erinenergy.com


ERIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Crude oil sales, net of royalties
$
28,619

 
$
28,667

 
$
56,699

 
$
28,667

Operating costs and expenses:
 
 
 
 
 
 
 
Production costs
24,928

 
27,651

 
69,615

 
53,224

Crude oil inventory (increase) decrease
636

 
368

 
534

 
(9,493
)
Workover expenses
207

 
354

 
7,792

 
972

Exploratory expenses
1,672

 
5,266

 
4,934

 
13,283

Depreciation, depletion and amortization
18,925

 
43,293

 
38,593

 
43,536

Accretion of asset retirement obligations
472

 
522

 
1,385

 
1,398

Loss on settlement of asset retirement obligations
—

 
779

 
205

 
4,233

General and administrative expenses
3,596

 
3,857

 
10,950

 
12,789

Total operating costs and expenses
50,436

 
82,090

 
134,008

 
119,942

Operating loss
(21,817
)
 
(53,423
)
 
(77,309
)
 
(91,275
)
Other income (expense):
 
 
 
 
 
 
 
Currency transaction gain
3,282

 
176

 
14,610

 
2,167

Interest expense
(5,038
)
 
(5,650
)
 
(16,417
)
 
(12,485
)
Total other expense, net
(1,756
)
 
(5,474
)
 
(1,807
)
 
(10,318
)
Loss before income taxes
(23,573
)
 
(58,897
)
 
(79,116
)
 
(101,593
)
Income tax expense
—

 
—

 
—

 
—

Net loss before non-controlling interest
(23,573
)
 
(58,897
)
 
(79,116
)
 
(101,593
)
Net loss attributable to non-controlling interest
102

 
215

 
662

 
690

Net loss attributable to Erin Energy Corporation
$
(23,471
)
 
$
(58,682
)
 
$
(78,454
)
 
$
(100,903
)
Net loss attributable to Erin Energy Corporation per common share:
 
 
 
 
 
 
 
Basic
$
(0.11
)
 
$
(0.28
)
 
$
(0.37
)
 
$
(0.48
)
Diluted
$
(0.11
)
 
$
(0.28
)
 
$
(0.37
)
 
$
(0.48
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
212,524

 
211,517

 
212,220

 
211,036

Diluted
212,524

 
211,517

 
212,220

 
211,036




1330 Post Oak Boulevard, Suite 2250 Houston, Texas 77056 USA Telephone +1 713 797 2940 erinenergy.com

ERIN ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except for share and per share amounts)

 
September 30, 2016
 
December 31, 2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
8,304

 
$
8,363

Restricted cash
2,600

 
8,661

Accounts receivable - trade
—

 
1,029

Accounts receivable - partners
558

 
287

Accounts receivable - related party
1,844

 
1,186

Accounts receivable - other
44

 
28

Crude oil inventory
4,932

 
4,789

Prepaids and other current assets
1,128

 
684

Total current assets
19,410

 
25,027

Property, plant and equipment:
 
 
 
Oil and gas properties (successful efforts method of accounting), net
321,976

 
368,891

Other property, plant and equipment, net
892

 
1,174

Total property, plant and equipment, net
322,868

 
370,065

Other non-current assets
90

 
67

Total assets
$
342,368

 
$
395,159

LIABILITIES AND CAPITAL DEFICIENCY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
239,173

 
$
213,120

Accounts payable and accrued liabilities - related party
27,236

 
30,133

Current portion of long-term debt, net
8,141

 
96,558

Total current liabilities
274,550

 
339,811

Long-term notes payable - related party, net
128,987

 
120,006

Term loan facility, net
78,075

 
—

Asset retirement obligations
21,994

 
20,609

Total liabilities
503,606

 
480,426

Commitments and contingencies (Note 10)
 
 
 
Capital deficiency:
 
 
 
Preferred stock $0.001 par value - 50,000,000 shares authorized; none issued and outstanding as of September 30, 2016 and December 31, 2015, respectively
—

 
—

Common stock $0.001 par value - 416,666,667 shares authorized; 212,686,734 and 211,615,773 shares issued as of September 30, 2016 and December 31, 2015, respectively
213

 
212

Additional paid-in capital
792,319

 
789,615

Accumulated deficit
(954,345
)
 
(875,891
)
Treasury stock at cost, 90,347 and -0- shares as of September 30, 2016 and December 31, 2015, respectively
(206
)
 
—

Total deficit - Erin Energy Corporation
(162,019
)
 
(86,064
)
Non-controlling interest
781

 
797

Total capital deficiency
(161,238
)
 
(85,267
)
Total liabilities and capital deficiency
$
342,368

 
$
395,159





1330 Post Oak Boulevard, Suite 2250 Houston, Texas 77056 USA Telephone +1 713 797 2940 erinenergy.com

ERIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

 
Nine Months Ended September 30,
 
2016
 
2015
Cash flows from operating activities
 
 
 
Net loss, including non-controlling interest
$
(79,116
)
 
$
(101,593
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 
Depreciation, depletion and amortization
38,593

 
43,536

Accretion of asset retirement obligations
1,385

 
1,398

Amortization of debt discount and debt issuance costs
2,640

 
1,920

Loss on settlement of asset retirement obligations
—

 
4,233

Foreign currency transaction gain
(14,610
)
 
(2,167
)
Share-based compensation
2,288

 
4,398

Payments to settle asset retirement obligations
—

 
(17,220
)
Change in operating assets and liabilities:
 
 
 
Decrease in accounts receivable
730

 
390

Decrease (increase) in crude oil inventory
534

 
(9,493
)
Decrease (increase) in prepaids and other current assets
(467
)
 
324

Increase in accounts payable and accrued liabilities
54,700

 
58,126

Net cash provided by (used in) operating activities
6,677

 
(16,148
)
Cash flows from investing activities
 
 
 
Capital expenditures
(16,475
)
 
(83,156
)
Net cash used in investing activities
(16,475
)
 
(83,156
)
Cash flows from financing activities
 
 
 
Proceeds from exercise of stock options and warrants
364

 
1,855

Payments for treasury stock arising from withholding taxes upon restricted stock vesting
(206
)
 
—

Repayments of term loan facility
(6,492
)
 
—

Proceeds from short-term notes payable
504

 
—

Proceeds from notes payable - related party, net
6,829

 
63,815

Repayment of short-term notes payable
(449
)
 
—

Proceeds from short-term borrowings, net
—

 
11,303

Debt issuance costs
(1,040
)
 
—

Funds released from restricted cash, net
6,061

 
—

Funding from non-controlling interest
—

 
553

Net cash provided by financing activities
5,571

 
77,526

Effect of exchange rate changes on cash and cash equivalents
4,168

 
836

Net decrease in cash and cash equivalents
(59
)
 
(20,942
)
Cash and cash equivalents at beginning of period
8,363

 
25,143

Cash and cash equivalents at end of period
$
8,304

 
$
4,201

Supplemental disclosure of cash flow information
 
 
 
Cash paid for:
 
 
 
Interest, net
$
10,090

 
$
7,886

Supplemental disclosure of non-cash investing and financing activities:
 
 
 
Issuance of common shares for settlement of liabilities
$
—

 
$
125

Discount on notes payable pursuant to issuance of warrants
$
53

 
$
4,911

Reduction in oil and gas properties arising from settlement of accounts payable and accrued liabilities
$
9,540

 
$
—

Reduction in accounts payable from settlement of Northern Offshore contingency
$
—

 
$
24,307


1330 Post Oak Boulevard, Suite 2250 Houston, Texas 77056 USA Telephone +1 713 797 2940 erinenergy.com

Erin Energy Corp. Reports