Check One
|
||
x
|
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended
June 30, 2012
|
|
or
|
||
o
|
Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
13-3145265
|
|
(State or other Jurisdiction of Incorporation or Organization)
|
I.R.S. Employer Number
|
Page
|
|||
PART I. FINANCIAL INFORMATION
|
|||
Item 1.
|
4
|
||
4
|
|||
5
|
|||
6
|
|||
7
|
|||
Item 2.
|
14
|
||
Item 3.
|
24
|
||
Item 4.
|
24
|
||
PART II. OTHER INFORMATION
|
|||
Item 1.
|
25
|
||
Item 1A.
|
25
|
||
Item 2
|
25
|
||
Item 3.
|
25
|
||
Item 4
|
25
|
||
Item 5.
|
26
|
||
Item 6.
|
26
|
||
27
|
As of
June 30, 2012
|
As of
December 31, 2011
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
1,473
|
$
|
2,122
|
||||
Accounts receivable, net
|
8,556
|
6,459
|
||||||
Restricted and designated cash
|
61
|
290
|
||||||
Deferred tax assets
|
2,749
|
2,539
|
||||||
Derivative asset
|
1,562
|
961
|
||||||
Prepaid expenses and other
|
307
|
706
|
||||||
Total Current Assets
|
14,708
|
13,077
|
||||||
Property and Equipment, at cost – successful efforts method:
|
||||||||
Oil and Gas properties
|
228,823
|
225,108
|
||||||
Advanced payment for equipment
|
300
|
650
|
||||||
Service Equipment and other
|
12,801
|
6,860
|
||||||
Total Property and Equipment
|
241,924
|
232,618
|
||||||
Accumulated depreciation, depletion and amortization
|
(110,698
|
)
|
(105,224
|
)
|
||||
Net Property and Equipment
|
131,226
|
127,394
|
||||||
Marketable securities, at market
|
-
|
4,554
|
||||||
Derivative asset
|
1,807
|
1,421
|
||||||
Deferred tax assets and other
|
4,294
|
5,461
|
||||||
Total assets
|
$
|
152,035
|
$
|
151,907
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
11,684
|
$
|
9,360
|
||||
Bank overdraft
|
-
|
823
|
||||||
Current maturities of long-term debt
|
-
|
20,000
|
||||||
Due to related party and accrued interest
|
60,299
|
25,518
|
||||||
Total current liabilities
|
71,
983
|
55,701
|
||||||
Due to related party and accrued interest
|
42,
075
|
60,408
|
||||||
Other Long-term Liabilities:
|
||||||||
Asset retirement obligations
|
17,549
|
17,250
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock $0.0l par value; authorized 7,500,000 shares; issued 2,746,958 shares; outstanding 2,717,691 shares
|
27
|
27
|
||||||
Additional paid-in capital
|
23,194
|
23,194
|
||||||
Accumulated deficit
|
(2,736
|
)
|
(6,768
|
)
|
||||
Accumulated other comprehensive income
|
-
|
2,254
|
||||||
Treasury stock, 29,267 shares at cost
|
(164
|
)
|
(164
|
)
|
||||
Total
Isramco, Inc.
shareholders’ equity
|
20,321
|
18,543
|
||||||
Non controlling interest
|
107
|
5
|
||||||
Total equity
|
20,
428
|
18,548
|
||||||
Total liabilities and shareholders’ equity
|
$
|
152,035
|
$
|
151,907
|
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Revenues
|
||||||||||||||||
Oil and gas sales
|
$
|
10,282
|
$
|
11,571
|
$
|
20,499
|
$
|
22,553
|
||||||||
Production Services
|
2,368
|
-
|
3,481
|
-
|
||||||||||||
Office services
|
147
|
152
|
252
|
305
|
||||||||||||
Other
|
31
|
24
|
60
|
39
|
||||||||||||
Total revenues
|
12,828
|
11,747
|
24,292
|
22,897
|
||||||||||||
Operating expenses
|
||||||||||||||||
Lease operating expense, transportation and taxes
|
4,841
|
6,610
|
9,458
|
11,738
|
||||||||||||
Depreciation, depletion and amortization
|
2,981
|
2,923
|
5,474
|
5,920
|
||||||||||||
Accretion expense
|
217
|
210
|
434
|
418
|
||||||||||||
Production Services
|
1,483
|
-
|
2,329
|
-
|
||||||||||||
Loss from plug and abandonment
|
149
|
57
|
324
|
170
|
||||||||||||
General and administrative
|
892
|
927
|
2,082
|
2,012
|
||||||||||||
Total operating expenses
|
10,563
|
10,727
|
20,101
|
20,258
|
||||||||||||
Operating income
|
2,265
|
1,020
|
4,191
|
2,639
|
||||||||||||
Other expenses (income)
|
||||||||||||||||
Interest expense, net
|
1,553
|
1,950
|
3,112
|
4,103
|
||||||||||||
Realized gain on marketable securities
|
-
|
-
|
(3,650
|
)
|
-
|
|||||||||||
Net (gain) loss on derivative contracts
|
(3,222
|
)
|
(2,931
|
)
|
(1,560
|
)
|
3,158
|
|||||||||
Currency exchange rate differences
|
-
|
-
|
(16
|
)
|
-
|
|||||||||||
Total other expenses (income)
|
(1,669)
|
(981
|
)
|
(2,114
|
)
|
7,261
|
||||||||||
Income (Loss) before income taxes
|
3,934
|
2,001
|
6,305
|
(4,622
|
)
|
|||||||||||
Income tax (expense) benefit
|
(1,342
|
)
|
(700
|
)
|
(2,171
|
)
|
1,617
|
|||||||||
Net Income (loss)
|
$
|
2,592
|
$
|
1,301
|
$
|
4,134
|
$
|
(3,005
|
)
|
|||||||
Net income attributable to non-controlling interests
|
102
|
-
|
102
|
-
|
||||||||||||
Net Income (loss) attributable to Isramco
|
$
|
2,490
|
$
|
1,301
|
$
|
4,032
|
$
|
(3,005
|
)
|
|||||||
Earnings (loss) per share – basic:
|
$
|
0.92
|
$
|
0.48
|
$
|
1.48
|
$
|
(1.11
|
)
|
|||||||
Earnings (loss) per share – diluted:
|
$
|
0.92
|
$
|
0.48
|
$
|
1.48
|
$
|
(1.11
|
)
|
|||||||
Weighted average number of shares outstanding basic:
|
2,717,691
|
2,717,691
|
2,717,691
|
2,717,691
|
||||||||||||
Weighted average number of shares outstanding diluted:
|
2,717,691
|
2,717,691
|
2,717,691
|
2,717,691
|
Six Months Ended June 30
|
||||||||
2012
|
2011
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income (loss)
|
$
|
4,134
|
$
|
(3,005
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation, depletion, amortization and impairment
|
5,474
|
5,920
|
||||||
Accretion expense
|
434
|
418
|
||||||
Realized gain on marketable securities
|
(3,650
|
) |
-
|
|||||
Changes in deferred taxes
|
2,171
|
(1,617
|
)
|
|||||
Net unrealized gain on derivative contracts
|
(987
|
)
|
(3,224
|
)
|
||||
Amortization of debt cost
|
70
|
126
|
||||||
Changes in components of working capital and other assets and liabilities
|
||||||||
Accounts receivable
|
(2,097
|
)
|
384
|
|||||
Prepaid expenses and other current assets
|
329
|
244
|
||||||
Due to related party
|
2,949
|
2,089
|
||||||
Accounts payable and accrued liabilities
|
550
|
(643
|
)
|
|||||
Net cash provided by operating activities
|
9,377
|
692
|
||||||
Cash flows from investing activities:
|
||||||||
Addition to property and equipment, net
|
(7,669
|
)
|
(1,655
|
)
|
||||
Proceeds from sale of marketable securities
|
4,737
|
-
|
||||||
Restricted cash and deposit, net
|
229
|
(2,000
|
)
|
|||||
Net cash used in investing activities
|
(2,703
|
) |
(3,655
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayment on loans – related parties, net
|
-
|
(954
|
)
|
|||||
Proceeds on loans – related parties, net
|
13,500
|
11,000
|
||||||
Repayment of long-term debt
|
(20,000
|
)
|
(11,200
|
)
|
||||
Borrowings
(repayment)
of short - term debt, net
|
(823
|
)
|
167
|
|||||
Net cash used in financing activities
|
(7,323
|
)
|
(987
|
)
|
||||
Net decrease in cash and cash equivalents
|
(649
|
)
|
(3,950
|
)
|
||||
Cash and cash equivalents at beginning of period
|
2,122
|
5,657
|
||||||
Cash and cash equivalents at end of period
|
$
|
1,473
|
$
|
1,707
|
Six Months Ended June 30
|
||||||||
2012
|
2011
|
|||||||
Interest
|
$
|
176
|
$
|
1,918
|
||||
Income taxes
|
-
|
-
|
·
|
Property and equipment of $1,624,000 included in accounts payable
|
Swaps | ||||||||||||
Period
|
Volume in
Bbls
|
Price /
Price Range
|
Weighted
Average Price
|
|||||||||
July 2012 – December 2012
|
47,760
|
103.51
|
103.51
|
|||||||||
January 2013 – December 2013
|
89,400
|
103.51
|
103.51
|
|||||||||
January 2014 – December 2014
|
66,000
|
103.51
|
103.51
|
As of
June 30, 2012
|
As of
December 31, 2011
|
|||||||
Libor + 2% Bank Revolving Credit Facility due 2012
|
-
|
20,000
|
||||||
Libor + 6% Related party Debt
|
12,000
|
12,000
|
||||||
Libor + 5.5% Related party Debt
|
3,500
|
-
|
||||||
Libor + 5.5% Related party Debt
|
10,000
|
-
|
||||||
Libor + 6% Related party Debt
|
11,500
|
11,500
|
||||||
Libor + 6% Related party Debt
|
6,000
|
6,000
|
||||||
Libor + 6% Related party Debt
|
41,861
|
41,861
|
||||||
Libor + 5.5% Related party Debt
|
6,456
|
6,456
|
||||||
91,317
|
97,817
|
|||||||
Less: Current Portion of Long-Term Debt
|
(49,242
|
)
|
(37,642
|
)
|
||||
Total
|
42,075
|
60,175
|
Six Months Ended
June 30
|
||||||||
2012
|
2011
|
|||||||
Current debt, long-term debt and other - banks corporation
|
$
|
242
|
$
|
887
|
||||
Long-term debt – related parties
|
2,870
|
3,216
|
||||||
$
|
3,112
|
$
|
4,103
|
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net income (loss)
|
$
|
2,592
|
$
|
1,301
|
$
|
4,134
|
$
|
(3,005
|
)
|
|||||||
Other comprehensive income
|
||||||||||||||||
Available-for-sale securities, net of taxes
|
-
|
3,292
|
(2,254
|
)
|
3,150
|
|||||||||||
Change in unrealized gains on hedging instruments, net of taxes
|
-
|
-
|
-
|
22
|
||||||||||||
Comprehensive income
|
$
|
2,592
|
$
|
4,593
|
$
|
1,880
|
$
|
167
|
|
June 30, 2012
|
|||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Commodity derivatives
|
$ |
—
|
$ |
3,369
|
$ |
—
|
$ |
3,369
|
||||||||
Total
|
$
|
—
|
$
|
3,369
|
$
|
—
|
$
|
3,369
|
|
December 31, 2011
|
|||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Marketable securities
|
$
|
4,554
|
$
|
—
|
$
|
—
|
$
|
4,554
|
||||||||
Commodity derivatives
|
—
|
2,382
|
—
|
2,382
|
||||||||||||
Total
|
$
|
4,554
|
$
|
2,382
|
$
|
—
|
$
|
6,936
|
thousands
|
Oil and Gas
Exploration
& Production
|
Well Service
|
Eliminations
|
Total
|
||||||||||||
Three Months Ended June 30, 2012:
|
||||||||||||||||
Sales revenues
|
$
|
10,282
|
$
|
2,368
|
$
|
-
|
$
|
12,650
|
||||||||
Intersegment revenues
|
-
|
324
|
(324
|
)
|
-
|
|||||||||||
Office services and other
|
208
|
-
|
(30
|
)
|
178
|
|||||||||||
Total revenues and other
|
10,490
|
2,692
|
(354
|
)
|
12,828
|
|||||||||||
Operating costs and expenses
|
8,910
|
2,007
|
(354
|
)
|
10,563
|
|||||||||||
Net gains on derivatives, contracts
|
(3,222
|
)
|
-
|
-
|
(3,222
|
)
|
||||||||||
Realized gain on marketable securities
|
-
|
-
|
-
|
-
|
||||||||||||
Interest expenses, net
|
1,374
|
179
|
-
|
1,553
|
||||||||||||
Total expenses and other
|
7,062
|
2,186
|
(354
|
)
|
8,894
|
|||||||||||
Income before income taxes
|
$
|
3,428
|
$
|
506
|
$
|
-
|
$
|
3,934
|
||||||||
Net Income
|
2,227
|
365
|
-
|
2,592
|
||||||||||||
Net income attributable to noncontrolling interests
|
-
|
102
|
-
|
102
|
||||||||||||
Net Income attributable to Isramco
|
2,227
|
263
|
-
|
2,490
|
||||||||||||
Total Assets
|
$
|
137,778
|
$
|
14,257
|
$
|
- |
$
|
152,035
|
thousands |
Oil and Gas
Exploration
& Production
|
Well Service | Eliminations | Total | ||||||||||||
Three Months Ended June 30, 2011:
|
||||||||||||||||
Sales revenues
|
$ | 11,571 | $ | - | $ | - | $ | 11,571 | ||||||||
Intersegment revenues
|
- | - | - | - | ||||||||||||
Office services and other
|
176 | - | - | 176 | ||||||||||||
Total revenues and other
|
11,747 | - | - | 11,747 | ||||||||||||
Operating costs and expenses
|
10,727 | - | - | 10,727 | ||||||||||||
Net gains on derivatives, contracts
|
(2,931 | ) | - | - | (2,931 | ) | ||||||||||
Realized gain on marketable securities
|
- | - | - | - | ||||||||||||
Interest expenses, net
|
1,950 | - | - | 1,950 | ||||||||||||
Total expenses and other
|
9,746 | - | - | 9,746 | ||||||||||||
Income before income taxes
|
$ | 2,001 | $ | - | $ | - | $ | 2,001 | ||||||||
Net Income
|
1,301 | - | - | 1,301 | ||||||||||||
Net income attributable to noncontrolling interests
|
- | - | - | - | ||||||||||||
Net Income attributable to Isramco
|
1,301 | - | - | 1,301 | ||||||||||||
Total Assets
|
$ |
169,433
|
$ | - |
$
|
- | $ |
169,433
|
thousands
|
Oil and Gas
Exploration
& Production
|
Well Service
|
Eliminations
|
Total
|
||||||||||||
Six Months Ended June 30, 2012:
|
||||||||||||||||
Sales revenues
|
$
|
20,499
|
$
|
3,481
|
$
|
-
|
$
|
23,980
|
||||||||
Intersegment revenues
|
-
|
658
|
(658
|
)
|
-
|
|||||||||||
Office services and other
|
372
|
-
|
(60
|
)
|
312
|
|||||||||||
Total revenues and other
|
20,871
|
4,139
|
(718
|
)
|
24,292
|
|||||||||||
Operating costs and expenses
|
17,489
|
3,330
|
(718
|
)
|
20,101
|
|||||||||||
Net gains on derivatives, contracts
|
(1,560
|
)
|
-
|
-
|
(1,560
|
)
|
||||||||||
Realized gain on marketable securities
|
(3,650
|
)
|
-
|
-
|
(3,650
|
)
|
||||||||||
Interest expenses, net
|
2,811
|
301
|
-
|
3,112
|
||||||||||||
Other income, net
|
(16
|
)
|
-
|
-
|
(16
|
)
|
||||||||||
Total expenses and other
|
15,074
|
3,631
|
(718
|
)
|
17,987
|
|||||||||||
Income before income taxes
|
$
|
5,797
|
$
|
508
|
$
|
-
|
$
|
6,305
|
||||||||
Net Income
|
3,768
|
366
|
-
|
4,134
|
||||||||||||
Net income attributable to noncontrolling interests
|
-
|
102
|
-
|
102
|
||||||||||||
Net Income attributable to Isramco
|
3,768
|
264
|
- |
4,032
|
||||||||||||
Total Assets
|
$
|
137,778
|
$
|
14,257
|
$
|
- |
$
|
152,035
|
thousands
|
Oil and Gas
Exploration
& Production
|
Well Service
|
Eliminations
|
Total
|
||||||||||||
Six Months Ended June 30, 2011:
|
||||||||||||||||
Sales revenues
|
$
|
22,553
|
$
|
-
|
$
|
-
|
$
|
22,553
|
||||||||
Intersegment revenues
|
-
|
-
|
-
|
-
|
||||||||||||
Office services and other
|
344
|
-
|
-
|
344
|
||||||||||||
Total revenues and other
|
22,897
|
-
|
-
|
22,897
|
||||||||||||
Operating costs and expenses
|
20,258
|
-
|
-
|
20,258
|
||||||||||||
Net losses on derivatives, contracts
|
3,158
|
-
|
-
|
3,158
|
||||||||||||
Realized gain on marketable securities
|
-
|
-
|
-
|
-
|
||||||||||||
Interest expenses, net
|
4,103
|
-
|
-
|
4,103
|
||||||||||||
Total expenses and other
|
27,519
|
-
|
-
|
27,519
|
||||||||||||
Loss before income taxes
|
$
|
(4,622
|
)
|
$
|
-
|
$
|
-
|
$
|
(4,622
|
)
|
||||||
Net Income
|
(3,005
|
)
|
-
|
-
|
(3,005
|
)
|
||||||||||
Net income attributable to noncontrolling interests
|
-
|
-
|
-
|
-
|
||||||||||||
Net Income attributable to Isramco
|
(3,005
|
)
|
-
|
(3,005
|
)
|
|||||||||||
Total Assets
|
$
|
169,433
|
$
|
-
|
$
|
-
|
$
|
169,433
|
As of June 30, | As of December 31, | |||||||
2012
|
2011
|
|||||||
Long – term debt – related party
|
$
|
42,075
|
$
|
60,211
|
||||
Short – term debt – related party
|
19,955
|
6,456
|
||||||
Current maturities of long-term debt, short-term debt and bank overdraft
|
29,287
|
32,009
|
||||||
Total debt
|
91,317
|
98,676
|
||||||
Stockholders’ equity
|
20,428
|
18,548
|
||||||
Debt to capital ratio
|
81.7
|
%
|
84
|
%
|
Six months Ended June 30,
|
||||||||
2012
|
2011
|
|||||||
(In thousands)
|
||||||||
Cash flows provided by operating activities
|
$
|
9,377
|
$
|
692
|
||||
Cash flows used in investing activities
|
(2,703
|
)
|
(3,655
|
)
|
||||
Cash flows used in financing activities
|
(7,323
|
)
|
(987
|
)
|
||||
Net decrease in cash
|
$
|
(649)
|
$
|
(3,950)
|
Three Months Ended June 30,
|
||||||||
2012
|
2011
|
|||||||
(In thousands except per share
and MBOE amounts)
|
||||||||
Financial Results
|
||||||||
Oil and Gas sales
|
$
|
10,282
|
$
|
11,571
|
||||
Production Services
|
2,368
|
-
|
||||||
Other
|
178
|
176
|
||||||
Total revenues and other
|
12,828
|
11,747
|
||||||
Cost and expenses
|
10,563
|
10,727
|
||||||
Other income
|
(1,669
|
)
|
(981
|
)
|
||||
Income tax expenses
|
1,342
|
|
700
|
|||||
Net income attributable to common shareholders
|
2,592
|
1,301
|
||||||
Net income attributable to common non-controlling interests
|
102
|
-
|
||||||
Net income attributable to Isramco
|
2,490
|
1,301
|
||||||
Earnings per common share – basic
|
$
|
0.92
|
$
|
0.48
|
||||
Earnings per common share – diluted
|
$
|
0.92
|
$
|
0.48
|
||||
Weighted average number of shares outstanding- basic
|
2,717,691
|
2,717,691
|
||||||
Weighted average number of shares outstanding- diluted
|
2,717,691
|
2,717,691
|
||||||
Operating Results
|
||||||||
Adjusted EBITDAX
(1)
|
$
|
5,322
|
$
|
4,309
|
||||
Sales volumes (MMBOE)
|
205
|
200
|
||||||
Average cost per MBOE:
|
||||||||
Production (excluding transportation and taxes)
|
$
|
18.78
|
$
|
26.46
|
||||
General and administrative
|
$
|
4.34
|
$
|
4.63
|
||||
Depletion
|
$
|
14.51
|
$
|
14.60
|
(1) See Adjusted EBITDAX for a description of Adjusted EBITDAX, which is not a Generally Accepted Accounting Principles (GAAP) measure, and a reconciliation of Adjusted EBITDAX to income from operations before income taxes, which is presented in accordance with GAAP.
|
Three Months Ended June 30,
|
||||||||||||
In thousands except percentages
|
2012
|
2011
|
D
vs. 2011
|
|||||||||
Gas sales
|
$
|
1,853
|
$
|
3,008
|
(38
|
)%
|
||||||
Oil sales
|
7,357
|
6,894
|
7
|
|||||||||
Natural gas liquid sales
|
1,072
|
1,669
|
(36
|
)
|
||||||||
Total
|
$
|
10,282
|
$
|
11,571
|
(11
|
)%
|
Three Months Ended June 30,
|
||||||||||||
2012
|
2011
|
D
vs. 2011
|
||||||||||
Natural Gas
|
||||||||||||
Sales volumes Mmcf
|
552.44
|
564.27
|
(2
|
)%
|
||||||||
Average Price per Mcf
(1)
|
$
|
3.35
|
$
|
5.33
|
(37
|
) | ||||||
Total gas sales revenues (thousands)
|
$
|
1,853
|
$
|
3,008
|
(38
|
)%
|
||||||
Crude Oil
|
||||||||||||
Sales volumes MBbl
|
80.83
|
68.40
|
18
|
%
|
||||||||
Average Price per Bbl
(1)
|
$
|
91.02
|
$
|
100.80
|
(10
|
) | ||||||
Total oil sales revenues (thousands)
|
$
|
7,357
|
$
|
6,894
|
7
|
%
|
||||||
Natural gas liquids
|
||||||||||||
Sales volumes MBbl
|
32.60
|
37.71
|
(14
|
)%
|
||||||||
Average Price per Bbl
(1)
|
$
|
32.89
|
$
|
44.25
|
(26
|
) | ||||||
Total natural gas liquids sales revenues (thousands)
|
$
|
1,072
|
$
|
1,669
|
(36
|
)%
|
(1) Amounts exclude the impact of cash paid/received on settled contracts as we did not elect to apply hedge accounting
|
In thousands
|
Natural Gas
|
Oil
|
Natural gas liquids
|
|||||||||
2011 sales revenues
|
$
|
3,008
|
$
|
6,894
|
$
|
1,669
|
||||||
Changes associated with sales volumes
|
(201
|
)
|
655
|
(339
|
)
|
|||||||
Changes in prices
|
(954
|
)
|
(192
|
)
|
(258
|
)
|
||||||
2012 sales revenues
|
$
|
1,853
|
$
|
7,357
|
$
|
1,072
|
Three Months Ended June 30,
|
||||||||||||
In thousands except percentages
|
2012
|
2011
|
D
vs. 2011
|
|||||||||
Lease operating expense, transportation and taxes
|
$
|
4,841
|
$
|
6,610
|
(27
|
%)
|
||||||
Depreciation, depletion and amortization
|
2,981
|
2,923
|
2
|
|||||||||
Accretion expense
|
217
|
210
|
3
|
|||||||||
Loss from plugging and abandonment of wells
|
149
|
57
|
161
|
|||||||||
General and administrative
|
892
|
927
|
(4
|
)
|
||||||||
$
|
9,080
|
$
|
10,727
|
(15
|
)%
|
·
|
Lease operating expense, transportation cost and taxes decreased by 27%, or $1,769,000, in 2012 when compared to 2011. This decrease was the result of lower number of workovers performed on our operated properties than in the first half of 2011. On a per unit basis, lease operating expenses (excluding transportation and taxes) decreased by $7.68 per MBOE to $18.78 per MBOE in 2012 from $26.46 per MBOE in 2011.
|
·
|
Depreciation, Depletion & Amortization (“DD&A”) of the cost of proved oil and gas properties is calculated using the unit-of-production method. Our DD&A rate and expense are the composite of numerous individual field calculations. There are several factors that can impact our composite DD&A rate and expense, including but not limited to field production profiles, drilling or acquisition of new wells, disposition of existing wells, and reserve revisions (upward or downward) primarily related to well performance, commodity prices, and impairments. Changes in these factors may cause our composite DD&A rate and expense to fluctuate from period to period. DD&A increased by 2%, or $58,000 in 2012 when compared to 2011, primarily due to higher production (MBOE) which was partially offset by higher prices in 2011 (per MBOE) that impacted our estimated total reserves, which are the basis for the depletion calculation, and the impact of a 2011 impairment of $4,034,000 on the depletable base used to calculate DD&A. On a per unit basis, depletion expense decreased by $(0.09) per MBOE to $14.51 per MBOE in 2012 from $14.60 per MBOE in 2011.
|
·
|
Accretion expense for asset retirement obligations slightly increased by 3%, or $7,000, in 2012 when compared to 2011.
|
·
|
Loss from plugging and abandonment expenses increased by 161%, or $92,000 in 2012 when compared to 2011 primarily due to work resulting from plugging operations in compliance with requirements of state and federal regulations governing our wells.
|
·
|
General and administrative expenses decreased by 4%, or $35,000 in 2012 when compared to 2011.
|
Three Months Ended June 30,
|
||||||||||||
In thousands except percentages
|
2012
|
2011
|
D
vs. 2011
|
|||||||||
Interest expense, net
|
$
|
1,553
|
$
|
1,950
|
(20
|
)%
|
||||||
Net gain on derivative contracts
|
(3,222
|
)
|
(2,931
|
)
|
10
|
|||||||
$
|
(1,669
|
)
|
$
|
(981
|
)
|
70
|
%
|
Three Months Ended June 30,
|
||||||||
In thousands
|
2012
|
2011
|
||||||
Income from operations before income taxes
|
$
|
3,934
|
$
|
2,001
|
||||
Depreciation, depletion and amortization expense
|
2,981
|
2,923
|
||||||
Interest expense
|
1,553
|
1,950
|
||||||
Unrealized loss (gain) on derivative contract
|
(3,363
|
)
|
(2,775
|
)
|
||||
Accretion Expenses
|
217
|
210
|
||||||
Consolidated Adjusted EBITDAX
|
$
|
5,322
|
$
|
4,309
|
June 30,
|
||||||||
2012
|
2011
|
|||||||
(In thousands except per share
and MBOE amounts)
|
||||||||
Financial Results
|
||||||||
Oil and Gas sales
|
$
|
20,499
|
$
|
22,553
|
||||
Production Services
|
3,481
|
-
|
||||||
Other
|
312
|
344
|
||||||
Total revenues and other
|
24,292
|
22,897
|
||||||
Cost and expenses
|
20,101
|
20,258
|
||||||
Other expense (income)
|
(2,114
|
)
|
7,261
|
|||||
Income tax expense (benefit)
|
2,171
|
(1,617
|
)
|
|||||
Net income (loss) attributable to common shareholders
|
4,134
|
(3,005
|
)
|
|||||
Net income attributable to non-controlling interests
|
102
|
-
|
||||||
Net income (loss) attributable to Isramco
|
4,032
|
(3,005
|
)
|
|||||
Earnings (loss) per common share - basic
|
$
|
1.48
|
$
|
(1.11
|
)
|
|||
Earnings (loss) per common share - diluted
|
$
|
1.48
|
$
|
(1.11
|
)
|
|||
Weighted average number of shares outstanding-basic
|
2,717,691
|
2,717,691
|
||||||
Weighted average number of shares outstanding- diluted
|
2,717,691
|
2,717,691
|
||||||
Operating Results
|
||||||||
Adjusted EBITDAX
(1)
|
$
|
14,338
|
$
|
2,595
|
||||
Sales volumes (MMBOE)
|
386
|
404
|
||||||
Average cost per MBOE:
|
||||||||
Production (excluding transportation and taxes)
|
$
|
18.81
|
$
|
22.60
|
||||
General and administrative
|
$
|
5.39
|
$
|
4.98
|
||||
Depletion
|
$
|
14.17
|
$
|
14.65
|
(1) See Adjusted EBITDAX for a description of Adjusted EBITDAX, which is not a Generally Accepted Accounting Principles (GAAP) measure, and a reconciliation of Adjusted EBITDAX to income from operations before income taxes, which is presented in accordance with GAAP.
|
Six Months Ended June 30,
|
||||||||||||
In thousands except percentages
|
2012
|
2011
|
D
vs. 2011
|
|||||||||
Gas sales
|
$
|
3,704
|
$
|
5,563
|
(33
|
)%
|
||||||
Oil sales
|
14,289
|
13,501
|
6
|
|||||||||
Natural gas liquid sales
|
2,506
|
3,489
|
(28
|
)
|
||||||||
Total
|
$
|
20,499
|
$
|
22,553
|
(9
|
)%
|
Six Months Ended June 30,
|
||||||||||||
2012
|
2011
|
D
vs. 2011
|
||||||||||
Natural Gas
|
||||||||||||
Sales volumes Mmcf
|
1,054.65
|
1,128.00
|
(7
|
)%
|
||||||||
Average Price per Mcf
(1)
|
$
|
3.51
|
$
|
4.93
|
(29
|
)
|
||||||
Total gas sales revenues (thousands)
|
$
|
3,704
|
$
|
5,563
|
(33
|
)%
|
||||||
Crude Oil
|
||||||||||||
Sales volumes MBbl
|
147.99
|
139.17
|
6
|
%
|
||||||||
Average Price per Bbl
(1)
|
$
|
96.55
|
$
|
97.01
|
(0.5
|
)
|
||||||
Total oil sales revenues (thousands)
|
$
|
14,289
|
$
|
13,501
|
6
|
%
|
||||||
Natural gas liquids
|
||||||||||||
Sales volumes MBbl
|
62.60
|
76.83
|
(19
|
)%
|
||||||||
Average Price per Bbl
(1)
|
$
|
40.03
|
$
|
45.41
|
(12
|
)
|
||||||
Total natural gas liquids sales revenues (thousands)
|
$
|
2,506
|
$
|
3,489
|
(28
|
)%
|
(1) Amounts exclude the impact of cash paid/received on settled contracts as we did not elect to apply hedge accounting
|
In thousands
|
Natural Gas
|
Oil
|
Natural gas liquids
|
|||||||||
2011 sales revenues
|
$
|
5,563
|
$
|
13,501
|
$
|
3,489
|
||||||
Changes associated with sales volumes
|
(362
|
)
|
856
|
(646
|
)
|
|||||||
Changes in prices
|
(1,497
|
)
|
(68
|
)
|
(337
|
)
|
||||||
2012 sales revenues
|
$
|
3,704
|
$
|
14,289
|
$
|
2,506
|
Six Months Ended June 30,
|
||||||||||||
In thousands except percentages
|
2012
|
2011
|
D
vs. 2011
|
|||||||||
Lease operating expense, transportation and taxes
|
$
|
9,458
|
$
|
11,738
|
(19
|
)%
|
||||||
Depreciation, depletion and amortization
|
5,474
|
5,920
|
(8
|
)
|
||||||||
Accretion expense
|
434
|
418
|
4
|
|||||||||
Loss from plug and abandonment
|
324
|
170
|
91
|
|||||||||
General and administrative
|
2,082
|
2,012
|
3
|
|||||||||
$
|
17,772
|
$
|
20,258
|
(12
|
)%
|
·
|
Lease operating expense, transportation cost and taxes decreased by 19%, or $2,280,000, in 2012 when compared to 2011. This decrease was the result of reduced number of workovers performed on our operated properties in the first half of 2011. On a per unit basis, lease operating expenses (excluding transportation and taxes) decreased by $3.79 per MBOE to $18.81 per MBOE in 2012 from $22.60 per MBOE in 2011.
|
·
|
Depreciation, Depletion & Amortization (“DD&A”) of the cost of proved oil and gas properties is calculated using the unit-of-production method. Our DD&A rate and expense are the composite of numerous individual field calculations. There are several factors that can impact our composite DD&A rate and expense, including but not limited to field production profiles, drilling or acquisition of new wells, disposition of existing wells, and reserve revisions (upward or downward) primarily related to well performance and commodity prices, and impairments. Changes in these factors may cause our composite DD&A rate and expense to fluctuate from period to period. DD&A decreased by 8%, or $(446,000), in 2012 when compared to 2011, primarily due to higher prices (per MBOE) that impacted our estimated total reserves, which are the basis for the depletion calculation, and the impact of a 2011 impairment of $4,034,000 on the depletable base used to calculate DD&A. On a per unit basis, depletion expense decreased by $(0.48) per MBOE to $14.17 per MBOE in 2012 from $14.65 per MBOE in 2011.
|
·
|
Accretion expense for asset retirement obligations increased by 4%, or $16,000, in 2012 when compared to 2011.
|
·
|
Loss from plugging and abandonment expenses increased by 91%, or $154,000 in 2012 when compared to 2011, primarily due to plugging operations required by state and federal regulations applicable to our wells.
|
·
|
General and administrative expenses increased by 3%, or $70,000 in 2012 when compared to 2011 primarily due to higher professional services expenses.
|
Six Months Ended June 30,
|
||||||||||||
In thousands except percentages
|
2012
|
2011
|
D
vs. 2011
|
|||||||||
Interest expense, net
|
$
|
3,112
|
$
|
4,103
|
(24
|
)%
|
||||||
Realized gain on marketable securities
|
(3,650
|
)
|
-
|
-
|
||||||||
Net loss (gain) on derivative contracts
|
(1,560
|
)
|
3,158
|
(149
|
)
|
|||||||
Currency exchange rate differences
|
(16
|
)
|
-
|
-
|
||||||||
$
|
(2,114
|
)
|
$
|
7,261
|
(129
|
)%
|
Six Months Ended June 30,
|
||||||||
In thousands
|
2012
|
2011
|
||||||
Income (loss) from operations before income taxes
|
$
|
6,305
|
$
|
(4,622
|
)
|
|||
Depreciation, depletion and amortization expense
|
5,474
|
5,920
|
||||||
Interest expense
|
3,112
|
4,103
|
||||||
Unrealized gain on derivative contract
|
(987
|
)
|
(3,224
|
)
|
||||
Accretion Expenses
|
434
|
418
|
||||||
Consolidated Adjusted EBITDAX
|
$
|
14,338
|
$
|
2,595
|
Exhibits
|
|||
31.1
|
|||
31.2
|
|||
32.1
|
|||
32.2
|
|||
33.1
|
|||
101.INS*
|
XBRL Instance Document
|
||
101.SCH*
|
XBRL Taxonomy Extension Schema
|
||
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
||
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
||
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase
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ISRAMCO, INC
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Date: AUGUST 9, 2012
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By:
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/s/ HAIM TSUFF
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HAIM TSUFF
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CHIEF EXECUTIVE OFFICER
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(PRINCIPAL EXECUTIVE OFFICER)
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Date: AUGUST 9, 2012
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By:
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/s/ EDY FRANCIS
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EDY FRANCIS
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CHIEF FINANCIAL OFFICER
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(PRINCIPAL FINANCIAL AND PRINCIPAL ACCOUNTING OFFICER)
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a) Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
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b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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ISRAMCO, INC
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Date: AUGUST 9, 2012
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By:
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/s/ HAIM TSUFF
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HAIM TSUFF
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CHIEF EXECUTIVE OFFICER
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(PRINCIPAL EXECUTIVE OFFICER)
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a) Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
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b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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ISRAMCO, INC
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Date: AUGUST 9, 2012
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By:
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/s/ EDY FRANCIS
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EDY FRANCIS
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CHIEF FINANCIAL OFFICER
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(PRINCIPAL FINANCIAL AND PRINCIPAL ACCOUNTING OFFICER)
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ISRAMCO, INC
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Date: AUGUST 9, 2012
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By:
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/s/ HAIM TSUFF
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HAIM TSUFF
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CHIEF EXECUTIVE OFFICER
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(PRINCIPAL EXECUTIVE OFFICER)
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ISRAMCO, INC
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Date: AUGUST 9, 2012
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By:
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/s/ EDY FRANCIS
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EDY FRANCIS
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CHIEF FINANCIAL OFFICER
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(PRINCIPAL FINANCIAL AND PRINCIPAL ACCOUNTING OFFICER)
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US $10,000,000.00 | Houston, Texas | APRIL 29, 2012 |