DELAWARE
(State or other jurisdiction of
incorporation or organization)
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94-0787340
(IRS Employer
Identification No.)
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1177 West Loop South, Suite 1825
Houston, Texas
(Address of principal executive offices)
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77027
(Zip Code)
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(713) 968-7000
(Registrant’s telephone number, including area
code)
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Name of
each exchange on which registered
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Common Stock, $0.001 par value per share
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NYSE MKT
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Page
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Glossary
of Selected Oil and Natural Gas Terms
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1
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PART I
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Item
1.
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Business.
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4
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Item
1A.
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Risk
Factors.
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22
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Item
1B.
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Unresolved
Staff Comments.
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36
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Item
2.
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Properties.
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36
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Item
3.
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Legal
Proceedings.
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36
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Item
4.
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Mine
Safety Disclosures.
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36
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PART II
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Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
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37
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Item
6.
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Selected
Financial Data.
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37
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
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37
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk.
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50
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Item
8.
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Financial
Statements and Supplementary Data.
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50
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosures.
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50
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Item
9A.
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Controls
and Procedures.
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50
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Item
9B.
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Other
Information.
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51
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PART III
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Item
10.
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Directors,
Executive Officers and Corporate Governance.
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52
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Item
11.
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Executive
Compensation.
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52
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
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52
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence.
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52
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Item
14.
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Principal
Accounting Fees and Services.
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52
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PART IV
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Item
15.
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Exhibits,
Financial Statement Schedules.
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53
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Item
16.
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Form
10-K Summary.
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55
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Signatures.
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56
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Oil (MBbls)
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Natural Gas Liquids (MBbls)
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Natural Gas (MMcf)
|
Total
(MBoe)
(1)
|
Present Value Discounted at 10% ($ in
thousands)
(2)
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Proved developed
(3)
|
|
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Lac Blanc Field
(4)
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266
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600
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10,341
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2,589
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21,802
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Bayou Hebert Field
(4)
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171
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306
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7,965
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1,805
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19,888
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Other
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1,766
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155
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3,613
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2,523
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25,627
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Total
proved developed
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2,203
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1,061
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21,919
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6,917
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67,317
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Proved
undeveloped
(3)
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|
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Lac Blanc Field
(4)
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-
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-
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-
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-
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-
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Bayou Hebert Field
(4)
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-
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-
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-
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-
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-
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Other
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773
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287
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2,060
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1,404
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6,283
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Total
proved undeveloped
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773
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287
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2,060
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1,404
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6,283
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Total proved
(3)
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2,976
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1,348
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23,979
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8,321
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73,600
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Present
value of estimated future net revenues (PV10)
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73,600
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Future
income taxes discounted at 10%
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-
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Standardized
measure of discounted future net cash flows
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73,600
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Beginning
proved undeveloped reserves at January 1, 2016
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1,731
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Undeveloped
reserves transferred to developed
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(325
)
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Purchases
of minerals-in-place
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6,379
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Extensions
and discoveries
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83
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Production
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-
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Revisions
|
(6,464
)
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Proved
undeveloped reserves at December 31, 2016
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1,404
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Oil
(1)
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Natural Gas
(1)
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Total
(1)
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|||
Gross
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Net
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Gross
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Net
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Gross
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Net
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Wells
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Wells
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Wells
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Wells
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Wells
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Wells
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207
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118
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58
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8
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265
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126
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Developed
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Undeveloped
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Total
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State
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Gross
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Net
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Gross
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Net
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Gross
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Net
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Louisiana
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20,023
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3,833
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8,135
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7,136
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28,158
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10,969
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North
Dakota
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18,553
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706
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-
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-
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18,553
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706
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Texas
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43,710
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2,756
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3,017
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355
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46,727
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3,111
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Oklahoma
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2,000
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79
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-
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-
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2,000
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79
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California
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1,342
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1,342
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-
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-
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1,342
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1,342
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Wyoming
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7,360
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3
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-
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-
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7,360
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3
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Total
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92,988
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8,719
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11,152
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7,491
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104,140
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16,210
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Net Exploratory
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Net
Developement
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Total Net Productive
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Wells Drilled
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Wells
Drilled
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and Dry Wells
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Year
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Productive
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Dry
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Productive
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Dry
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Drilled
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2016
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-
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-
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1.0
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-
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1.0
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2015
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0.3
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-
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0.2
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-
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0.5
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Executive
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Name
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Officer Since
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Age
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Position
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Sam L. Banks
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October 2016
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67
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Director, President and Chief Executive Officer
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James J. Jacobs
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October 2016
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39
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Chief Financial Officer, Treasurer and Corporate
Secretary
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Paul D. McKinney
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October 2016
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58
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Executive Vice President and Chief Operating Officer
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Common Stock Price
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High
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Low
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Quarter Ended
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2015
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March
31
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$
42.20
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$
20.20
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June
30
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$
23.40
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$
9.80
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September
30
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$
16.60
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$
6.00
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December
31
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$
12.00
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$
2.60
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2016
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March
31
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$
6.60
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$
3.00
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June
30
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$
7.40
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$
3.80
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September
30
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$
6.20
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$
3.98
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December
31
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$
5.40
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$
1.94
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Years Ended December 31,
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2016
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2015
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Production
volumes:
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Crude
oil and condensate (Bbls)
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172,003
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209,545
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Natural
gas (Mcf)
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2,326,400
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2,547,300
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Natural
gas liquids (Bbls)
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104,689
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129,670
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Total (Boe)
(1)
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664,425
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763,765
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Average
prices realized:
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Crude
oil and condensate (per Bbl)
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$
42.21
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$
46.92
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Natural
gas (per Mcf)
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$
2.45
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$
2.63
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Natural
gas liquids (per Bbl)
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$
17.33
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$
17.01
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Years Ended December 31,
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2016
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2015
|
Sales
of natural gas and crude oil:
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Crude
oil and condensate
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$
7,260,169
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$
9,764,907
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Natural
gas
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5,697,879
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6,687,095
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Natural
gas liquids
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1,814,660
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2,175,998
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Total
revenues
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$
14,772,708
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$
18,628,000
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Years Ended December 31,
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2016
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2015
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Lease
operating expenses
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$
3,303,789
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$
5,158,553
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Severance,
ad valorem taxes and marketing
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2,259,841
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2,484,484
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Total LOE
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$
5,563,630
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$
7,643,037
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LOE
per Boe
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$
8.37
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$
10.01
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LOE
per Boe without severance, ad valorem taxes and
marketing
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$
4.97
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$
6.75
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Years Ended December 31,
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2016
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2015
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General
and administrative:
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Stock-based
compensation
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$
3,449,667
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$
933,017
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Capitalized
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(1,717,698
)
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-
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Net stock-based compensation
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1,731,969
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933,017
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Other
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14,698,272
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8,365,944
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Capitalized
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(1,970,944
)
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(1,500,181
)
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Net other
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12,727,328
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6,865,763
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|
|
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Net
general and administrative expenses
|
$
14,459,297
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$
7,798,780
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2016
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2015
|
DD&A
|
$
7,756,107
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$
16,547,787
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DD&A
per Boe
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$
11.67
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$
21.67
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2016
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2015
|
Interest
expense
|
$
685,693
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$
577,936
|
Interest
capitalized
|
(26,121
)
|
-
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Net
|
$
659,572
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$
577,936
|
|
|
|
Bank
debt
|
$
39,500,000
|
$
-
|
|
2016
|
2015
|
Consolidated
net income (loss) before income taxes
|
$
(40,173,369
)
|
$
(51,855,023
)
|
Income
tax expense (benefit)
|
$
1,425,964
|
$
10,460,802
|
Effective
tax rate
|
(3.55
)%
|
(20.17
)%
|
|
2016
|
2015
|
Cash
flows provided by (used in) operating activities
|
$
(4,299,238
)
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$
10,044,958
|
Cash
flows used in investing activities
|
(5,419,250
)
|
(11,247,528
)
|
Cash
flows provided by (used in) financing activities
|
9,280,080
|
(5,210,341
)
|
Net
increase (decrease) in cash
|
$
(438,408
)
|
$
(6,412,911
)
|
|
Years Ended
December 31,
|
|
|
2016
|
2015
|
Credit
facilities:
|
|
|
Balances
outstanding, beginning of year
|
$
-
|
$
5,000,000
|
Activity
|
39,500,000
|
(5,000,000
)
|
Balances
outstanding, end of period
|
$
39,500,000
|
$
-
|
|
December 31, 2016
|
December 31, 2015
|
||
|
Oil
|
Natural Gas
|
Oil
|
Natural Gas
|
Assets
|
|
|
|
|
Current
|
$
-
|
$
-
|
$
-
|
$
1,711,072
|
Noncurrent
|
$
-
|
$
-
|
$
-
|
$
-
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
|
$
(24,140
)
|
$
(1,316,311
)
|
$
-
|
$
-
|
Noncurrent
|
$
(932,857
)
|
$
(282,694
)
|
$
-
|
$
-
|
|
|
Liability for
|
|
Asset
|
|
|
Commodity
|
Operating
|
Retirement
|
|
Debt
(1)
|
Derivatives
(2)
|
Leases
|
Obligations
|
2017
|
$
-
|
$
1,340,451
|
$
551,325
|
$
376,735
|
2018
|
-
|
902,626
|
2,264
|
434,388
|
2019
|
39,500,000
|
312,925
|
-
|
665,235
|
2020
|
-
|
-
|
-
|
557,039
|
2021
|
-
|
-
|
-
|
794,487
|
Thereafter
|
-
|
-
|
-
|
7,368,499
|
Totals
|
$
39,500,000
|
$
2,556,002
|
$
553,589
|
$
10,196,383
|
Form 10-K for the fiscal year ended December 31, 2016.
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Incorporated
by Reference
|
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||||||||||||
Exhibit
No.
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|
Description
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Form
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SEC
File No.
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Exhibit
|
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Filing
Date
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Filed
Herewith
|
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Furnished
Herewith
|
||||||
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||||||
2.1
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Agreement
and Plan of Merger and Reorganization dated as of February 10,
2016, by and among Yuma Energy, Inc., Yuma Delaware Merger
Subsidiary, Inc., Yuma Merger Subsidiary, Inc. and Davis Petroleum
Acquisition Corp.
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8-K
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001-32989
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2.1
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February
16, 2016
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||||||
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||||||
2.1(a)
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First
Amendment to the Agreement and Plan of Merger and Reorganization
dated as of September 2, 2016, by and among Yuma Energy, Inc., Yuma
Delaware Merger Subsidiary, Inc., Yuma Merger Subsidiary, Inc. and
Davis Petroleum Acquisition Corp.
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8-K
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001-32989
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2.1
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September
6, 2016
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||||||
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||||||
3.1
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Certificate
of Incorporation dated February 10, 2016.
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S-4
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333-212103
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3.4
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August
4, 2016
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||||||
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||||||
3.1(a)
|
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Certificate
of Amendment of Certificate of Incorporation dated October 26,
2016.
|
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8-K
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0001672326
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3.1
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November
1, 2016
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||||||
3.2
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|
Amended
and Restated Certificate of Incorporation dated October 26,
2016.
|
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8-K
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0001672326
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3.2
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|
November
1, 2016
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||||||
3.3
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Certificate
of Designation of the Series D Convertible Preferred Stock of Yuma
Energy, Inc. dated October 26, 2016.
|
|
8-K
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0001672326
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3.3
|
|
November
1, 2016
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||||||
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||||||
3.4
|
|
Bylaws
dated February 10, 2016.
|
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S-4
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333-212103
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3.5
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|
August
4, 2016
|
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||||||
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||||||
3.5
|
|
Amended
and Restated Bylaws dated October 26, 2016.
|
|
8-K
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0001672326
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3.4
|
|
November
1, 2016
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||||||
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||||||
10.1
|
|
Credit
Agreement dated as of October 26, 2016, among Yuma Energy, Inc.,
Yuma Exploration and Production Company, Inc., Pyramid Oil LLC,
Davis Petroleum Corp., Société Générale, SG
Americas Securities, LLC and the lenders party
thereto.
|
|
8-K
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0001672326
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10.1
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|
November
1, 2016
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||||||
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||||||
10.2†
|
|
Employment
Agreement dated October 1, 2012, between Yuma Energy, Inc. and Sam
L. Banks.
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S-4
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333-197826
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10.8
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|
August
4, 2014
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||||||
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||||||
10.2(a)†
|
|
First
Amendment to the Employment Agreement dated October 26, 2016,
between Yuma Energy, Inc. and Sam L. Banks.
|
|
8-K
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0001672326
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10.5(a)
|
|
November
1, 2016
|
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||||||
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||||||
10.3†
|
|
Employment
Agreement dated July 15, 2013, between Yuma Energy, Inc. and James
J. Jacobs.
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S-4
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333-212103
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10.7
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June
17, 2016
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||||||
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||||||
10.4†
|
|
Employment
Agreement dated October 14, 2014, between Yuma Energy, Inc. and
Paul D. McKinney.
|
|
10-Q
|
|
001-32989
|
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10.1
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|
November
14, 2014
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||||||
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||||||
10.4(a)†
|
|
Amendment
to the Employment Agreement dated March 12, 2015, between Yuma
Energy, Inc. and Paul D. McKinney.
|
|
8-K
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001-32989
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10.1
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|
March
17, 2015
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||||||
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10.5
|
|
Form of
Indemnification Agreement.
|
|
8-K
|
|
0001672326
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10.2
|
|
November
1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Registration
Rights Agreement dated October 26, 2016.
|
|
8-K
|
|
0001672326
|
|
10.3
|
|
November
1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Form of
Lock-up Agreement.
|
|
8-K
|
|
0001672326
|
|
10.4
|
|
November
1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8†
|
|
2006
Equity Incentive Plan of the Registrant.
|
|
S-8
|
|
333-175706
|
|
4.3
|
|
July
21, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9†
|
|
Yuma
Energy, Inc. 2011 Stock Option Plan.
|
|
8-K
|
|
001-32989
|
|
10.5
|
|
September
16, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10†
|
|
Yuma
Energy, Inc. 2014 Long-Term Incentive Plan.
|
|
8-K
|
|
001-32989
|
|
10.6
|
|
September
16, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10(a)†
|
|
Amendment
to the Yuma Energy, Inc. 2014 Long-Term Incentive
Plan.
|
|
8-K
|
|
0001672326
|
|
10.7(a)
|
|
November
1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25†
|
|
Form of
Restricted Stock Award Agreement (Employees).
|
|
8-K
|
|
0001672326
|
|
10.1
|
|
March
27, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26†
|
|
Form of
Restricted Stock Award Agreement (Directors).
|
|
8-K
|
|
0001672326
|
|
10.2
|
|
March
27, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Code of
Ethics.
|
|
8-K
|
|
0001672326
|
|
14
|
|
November
1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
List of
Subsidiaries.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent
of Grant Thornton LLP.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.2
|
|
Consent
of PricewaterhouseCoopers LLP.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.3
|
|
Consent
of Netherland, Sewell & Associates, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification
of the Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act.
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
Certification
of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act.
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99.1
|
|
Report
of Netherland, Sewell & Associates, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL
Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL
Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL
Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL
Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL
Label Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL
Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
YUMA ENERGY, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sam
L. Banks
|
|
|
|
Name:
|
Sam L.
Banks
|
|
Date:
April 12, 2017
|
|
Title:
|
President
and Chief Executive Officer
(Principal
Executive Officer)
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Sam
L. Banks
|
|
Director,
President and Chief Executive Officer (Principal Executive
Officer)
|
|
April
12, 2017
|
Sam L.
Banks
|
|
|
||
|
|
|
|
|
/s/
James J. Jacobs
|
|
Chief
Financial Officer, Treasurer and Corporate Secretary (Principal
Financial Officer and Principal Accounting Officer)
|
|
April
12, 2017
|
James
J. Jacobs
|
|
|
||
|
|
|
|
|
/s/
James W. Christmas
|
|
Director
|
|
April
12, 2017
|
James
W. Christmas
|
|
|
||
|
|
|
|
|
/s/
Frank A. Lodzinski
|
|
Director
|
|
April
12, 2017
|
Frank
A. Lodzinski
|
|
|
||
|
|
|
|
|
/s/
Neeraj Mital
|
|
Director
|
|
April
12, 2017
|
Neeraj
Mital
|
|
|
||
|
|
|
|
|
/s/
Richard K. Stoneburner
|
|
Director
|
|
April
12, 2017
|
Richard
K. Stoneburner
|
|
|
||
|
|
|
|
|
/s/ J.
Christopher Teets
|
|
Director
|
|
April
12, 2017
|
J.
Christopher Teets
|
|
|
||
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
2015
|
|
|
|
REVENUES:
|
|
|
Sales
of natural gas and crude oil
|
$
14,772,708
|
$
18,628,000
|
|
|
|
EXPENSES:
|
|
|
Lease
operating and production costs
|
5,563,630
|
7,643,037
|
General
and administrative – stock-based compensation
|
1,731,969
|
933,017
|
General
and administrative – other
|
12,727,328
|
6,865,763
|
Depreciation,
depletion and amortization
|
8,239,802
|
17,139,137
|
Asset
retirement obligation accretion expense
|
254,573
|
175,643
|
Impairment
of oil and gas properties
|
20,654,848
|
40,479,906
|
Loss
on write-off of other assets
|
833,157
|
-
|
Other
|
561,723
|
8,542
|
Total
expenses
|
50,567,030
|
73,245,045
|
|
|
|
LOSS
FROM OPERATIONS
|
(35,794,322
)
|
(54,617,045
)
|
|
|
|
OTHER
INCOME (EXPENSE):
|
|
|
Net
gains (losses) from commodity derivatives
|
(3,775,254
)
|
3,319,004
|
Interest
expense
|
(659,572
)
|
(577,936
)
|
Other,
net
|
55,779
|
20,954
|
Total
other income (expense)
|
(4,379,047
)
|
2,762,022
|
|
|
|
LOSS
BEFORE INCOME TAXES
|
(40,173,369
)
|
(51,855,023
)
|
|
|
|
Income
tax expense - current
|
-
|
6,000
|
Income
tax expense - deferred
|
1,425,964
|
10,454,802
|
|
|
|
NET
LOSS
|
(41,599,333
)
|
(62,315,825
)
|
|
|
|
PREFERRED
STOCK:
|
|
|
Dividends
paid in kind
|
1,323,641
|
1,230,343
|
Loss
on retirement of DPAC Series "A" Preferred Stock
|
(271,914
)
|
-
|
|
|
|
NET
LOSS ATTRIBUTABLE TO
|
|
|
COMMON
STOCKHOLDERS
|
$
(42,651,060
)
|
$
(63,546,168
)
|
|
|
|
LOSS
PER COMMON SHARE:
|
|
|
Basic
|
$
(5.13
)
|
$
(8.58
)
|
Diluted
|
$
(5.13
)
|
$
(8.58
)
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF
|
|
|
COMMON
SHARES OUTSTANDING:
|
|
|
Basic
|
8,317,777
|
7,409,201
|
Diluted
|
8,317,777
|
7,409,201
|
|
Preferred
Stock
|
Common
Stock
|
Paid-in
Capital
|
Treasury
Stock
|
Accumulated
Deficit
|
Stockholders'
Equity
|
||
|
Shares
|
Value
|
Shares
|
Value
|
|
|
|
|
December
31, 2014
|
31,130,201
|
$
311,302
|
7,354,358
|
$
7,354
|
$
207,372,081
|
$
(41,140,147
)
|
$
(55,830,122
)
|
$
110,720,468
|
DPAC net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(62,315,825
)
|
(62,315,825
)
|
Payment of DPAC
Series "A" dividends in kind
|
2,236,986
|
22,370
|
-
|
-
|
1,207,973
|
-
|
(1,230,343
)
|
-
|
DPAC restricted
stock grants, net of cancellations
|
-
|
-
|
85,794
|
86
|
520
|
-
|
-
|
606
|
DPAC treasury stock
- employee tax payment
|
-
|
-
|
-
|
-
|
-
|
(210,341
)
|
-
|
(210,341
)
|
DPAC amortization of
stock-based compensation
|
-
|
-
|
-
|
-
|
932,411
|
-
|
-
|
932,411
|
December
31, 2015
|
33,367,187
|
$
333,672
|
7,440,152
|
$
7,440
|
$
209,512,985
|
$
(41,350,488
)
|
$
(119,376,290
)
|
$
49,127,319
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(41,599,333
)
|
(41,599,333
)
|
Payment of DPAC
Series "A" dividends in kind
|
1,952,801
|
19,528
|
-
|
-
|
1,054,513
|
-
|
(1,074,041
)
|
-
|
Retirement of DPAC
Series "A" preferred stock
|
(35,319,988
)
|
(353,200
)
|
-
|
-
|
(18,800,880
)
|
-
|
(271,914
)
|
(19,425,994
)
|
Issuance of Series
"D" preferred stock
|
1,754,179
|
1,754
|
-
|
-
|
19,424,240
|
-
|
-
|
19,425,994
|
Payment of Series
"D" dividends in kind
|
22,539
|
23
|
-
|
-
|
249,577
|
-
|
(249,600
)
|
-
|
DPAC stock awards
vested
|
-
|
-
|
14,651
|
15
|
98,335
|
-
|
-
|
98,350
|
Reclass DPAC equity
at merger to paid-in capital
|
-
|
-
|
-
|
-
|
(150,184,510
)
|
-
|
150,184,510
|
-
|
Common stock at
merger
|
-
|
-
|
4,746,180
|
4,746
|
20,930,798
|
-
|
-
|
20,935,544
|
Stock awards
vested
|
-
|
-
|
901
|
1
|
(1
)
|
-
|
-
|
-
|
Amortization of
stock-based compensation
|
-
|
-
|
-
|
-
|
3,351,317
|
-
|
-
|
3,351,317
|
Treasury stock -
employee tax payment
|
-
|
-
|
-
|
-
|
-
|
(408,323
)
|
-
|
(408,323
)
|
Retire DPAC treasury
stock
|
-
|
-
|
-
|
-
|
(41,758,811
)
|
41,758,811
|
-
|
-
|
December
31, 2016
|
1,776,718
|
$
1,777
|
12,201,884
|
$
12,202
|
$
43,877,563
|
$
-
|
$
(12,386,668
)
|
$
31,504,874
|
|
Years
Ended December 31,
|
|
|
2016
|
2015
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
Reconciliation
of net loss to net cash provided by (used in) operating
activities:
|
|
|
Net
loss
|
$
(41,599,333
)
|
$
(62,315,825
)
|
Depreciation,
depletion and amortization of property and equipment
|
8,239,802
|
17,139,137
|
Impairment
of oil and gas properties
|
20,654,848
|
40,479,906
|
Amortization
of debt issuance costs
|
148,970
|
210,067
|
Net
deferred income tax expense
|
1,425,964
|
10,454,802
|
Stock-based
compensation expense
|
1,731,969
|
933,017
|
Settlement
of asset retirement obligations
|
(287,902
)
|
(1,032,661
)
|
Accretion
of asset retirement obligation
|
254,573
|
175,643
|
Bad
debt expense
|
556,406
|
-
|
Net
gains (losses) from commodity derivatives
|
3,775,254
|
(3,319,004
)
|
Losses
on sales and write-offs of fixed assets
|
838,473
|
-
|
Changes in assets and liabilities:
|
|
|
Decrease
in accounts receivable
|
3,698,004
|
1,133,493
|
Decrease
in prepaids, deposits and other assets
|
353,889
|
10,924,780
|
Decrease
in accounts payable and other current and non-current
liabilities
|
(4,090,155
)
|
(4,738,397
)
|
|
|
|
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(4,299,238
)
|
(10,044,958
)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
Capital
expenditures for oil and gas properties
|
(10,066,999
)
|
(23,301,875
)
|
Proceeds
from sale of oil and gas properties and other fixed
assets
|
1,152,958
|
1,710,140
|
Merger
with Yuma California
|
1,887,426
|
-
|
Derivative
settlements
|
1,607,365
|
10,344,207
|
|
|
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(5,419,250
)
|
(11,247,528
)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
Proceeds
from borrowings
|
247,013
|
-
|
Borrowings
on senior credit facility
|
18,700,000
|
10,000,000
|
Repayments
of borrowings
|
(9,049,625
)
|
(15,000,000
)
|
Debt
issuance costs
|
(208,985
)
|
-
|
Treasury
stock repurchases
|
(408,323
)
|
(210,341
)
|
|
|
|
NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
9,280,080
|
(5,210,341
)
|
|
|
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(438,408
)
|
(6,412,911
)
|
|
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
4,064,094
|
10,477,005
|
|
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
3,625,686
|
$
4,064,094
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Interest
payments (net of interest capitalized)
|
$
590,160
|
$
362,860
|
Interest
capitalized
|
$
26,121
|
$
-
|
Income
tax payments
|
$
-
|
$
-
|
|
|
|
Supplemental
disclosure of significant non-cash activity:
|
|
|
Change
in capital expenditures financed by accounts payable
|
$
323,910
|
$
13,729,612
|
|
|
|
|
State of
|
|
Date of
|
Company Name
|
|
Reference
|
|
Incorporation
|
|
Incorporation
|
The Yuma Companies, Inc.
|
|
“YCI”
|
|
Delaware
|
|
10/30/1996
|
Yuma Exploration and Production Company, Inc.
|
|
“Exploration”
|
|
Delaware
|
|
01/16/1992
|
Davis Petroleum Acquisition Corp.
|
|
“DPAC”
|
|
Delaware
|
|
01/18/2006
|
Davis Petroleum Pipeline LLC
|
|
“DPP”
|
|
Delaware
|
|
11/15/1999
|
Davis GOM Holdings, LLC
|
|
“Davis GOM”
|
|
Delaware
|
|
07/25/2014
|
Davis Petroleum Corp.
|
|
“DPC”
|
|
Delaware
|
|
07/08/1986
|
Yuma Petroleum Company
|
|
“Petroleum”
|
|
Delaware
|
|
12/19/1991
|
Texas Southeastern Gas Marketing Company
|
|
“TSM”
|
|
Texas
|
|
09/12/1996
|
Pyramid Oil LLC
|
|
“POL”
|
|
California
|
|
08/08/2014
|
Pyramid Delaware Merger Subsidiary, Inc.
|
|
“PDMS”
|
|
Delaware
|
|
02/04/2014
|
|
December 31,
|
|
|
2016
|
2015
|
Prepaid
insurance
|
$
817,268
|
$
152,709
|
Prepaid
taxes
|
97,934
|
-
|
Other
prepayments
|
148,216
|
175,509
|
Total
prepayments
|
$
1,063,418
|
$
328,218
|
Purchase
Consideration
|
|
Common
stock (1)
|
$
20,883
|
Stock
appreciation rights (2)
|
85
|
Stock
options (3)
|
1
|
Restricted
stock awards (4)
|
181
|
Restricted
stock units (5)
|
-
|
Debt
(6)
|
30,202
|
Net
purchase considered to be allocated
|
$
51,352
|
|
|
Estimated
fair value of assets acquired
|
|
Proved
natural gas and oil properties
|
$
54,974
|
Unproved
natural gas and oil properties
|
505
|
Real
property
|
2,755
|
Personal
property
|
1,427
|
Commodity
derivatives - asset
|
1,195
|
Deposits
|
414
|
Other
assets
|
485
|
Other
long-term assets
|
2
|
Total
assets acquired
|
61,757
|
|
|
Estimated
fair value of liabilities acquired
|
|
Net
working capital
|
(4,453
)
|
Asset
retirement obligation
|
(5,874
)
|
Commodity
derivatives - liabilities
|
(78
)
|
Total
liabilities acquired
|
(10,405
)
|
|
|
Total
assets and liabilities acquired
|
$
51,352
|
|
December 31,
|
|
|
2016
|
2015
|
Subject
to amortization (proved properties)
|
$
488,723,905
|
$
425,767,477
|
Less:
Accumulated depreciation, depletion,
|
|
|
amortization
and impairment
|
(410,440,433
)
|
(381,987,616
)
|
Proved
properties, net
|
$
78,283,472
|
$
43,779,861
|
|
|
|
Not
subject to amortization (unproved properties)
|
|
|
Leasehold
acquisition costs
|
2,411,402
|
178,761
|
Exploration
and development
|
1,219,466
|
-
|
Capitalized
Interest
|
26,121
|
-
|
Total
unproved properties
|
3,656,989
|
178,761
|
|
|
|
Oil
and gas properties, net
|
$
81,940,461
|
$
43,958,622
|
|
Year Incurred
|
|
|
|
2016
|
2015 and prior
|
Total
|
Leasehold
acquisition costs
|
$
2,232,641
|
$
178,761
|
$
2,411,402
|
Exploration
and development
|
1,219,466
|
-
|
1,219,466
|
Capitalized
interest
|
26,121
|
-
|
26,121
|
Total
|
$
3,478,228
|
$
178,761
|
$
3,656,989
|
|
December 31,
|
|
|
2016
|
2015
|
|
|
|
Receivables
from affiliates, CEO and employees:
|
|
|
Current:
|
|
|
CEO
|
$
67,114
|
$
-
|
Employees
|
900
|
1,121
|
|
|
|
Total
|
$
68,014
|
$
1,121
|
|
December 31,
|
|
|
2016
|
2015
|
|
|
|
Senior
credit facility
|
$
39,500,000
|
$
-
|
Installment
loan due 7/15/17 originating from the financing of
|
|
|
insurance
premiums at 4.38% interest rate
|
599,341
|
-
|
Total
debt
|
40,099,341
|
-
|
Less:
current maturities
|
(599,341
)
|
-
|
Total
long-term debt
|
$
39,500,000
|
$
-
|
|
December 31,
|
|
|
2016
|
2015
|
Current
expense (benefit)
|
|
|
Federal
|
$
-
|
$
-
|
State
|
-
|
6,000
|
|
|
|
Deferred
expense (benefit)
|
|
|
Federal
|
-
|
11,060,403
|
State
|
1,425,964
|
(605,601
)
|
|
|
|
Total
income tax expense
|
$
1,425,964
|
$
10,460,802
|
2017
|
$
551,325
|
2018
|
2,264
|
2019
|
-
|
2020
|
-
|
2021
|
-
|
|
Years Ended December 31,
|
|
|
2016
|
2015
|
Costs
incurred for the year:
|
|
|
Exploration
(including geological and geophysical costs)
|
$
23,000
|
$
-
|
Development
|
8,268,653
|
3,847,000
|
Acquisition
of properties, net
(1)
|
55,479,000
|
1,401,000
|
Capitalized
overhead
|
3,688,642
|
1,502,000
|
Lease
acquisition costs, net of recoveries
|
670,514
|
899,000
|
|
|
|
Total
costs incurred
|
$
68,129,809
|
$
7,649,000
|
|
Oil (bbls)
|
NGL (bbls)
|
Gas (mcf)
|
Boe
|
Proved
reserves at December 31, 2014
|
1,995,900
|
717,400
|
12,650,500
|
4,821,700
|
|
|
|
|
|
Revisions
of previous estimates
|
(871,400
)
|
14,100
|
3,711,100
|
(238,800
)
|
Extension,
discoveries and other additions
|
261,200
|
403,600
|
2,132,100
|
1,020,200
|
Purchases
of minerals in place
|
12,800
|
25,100
|
516,600
|
124,000
|
Sales
of minerals in place
|
(21,300
)
|
(2,300
)
|
(945,100
)
|
(181,100
)
|
Production
|
(209,500
)
|
(129,700
)
|
(2,547,300
)
|
(763,800
)
|
Proved
reserves at December 31, 2015
|
1,167,700
|
1,028,200
|
15,517,900
|
4,782,200
|
|
|
|
|
|
Revisions
of previous estimates
|
(3,913,400
)
|
(1,253,000
)
|
(12,481,500
)
|
(7,246,700
)
|
Extension,
discoveries and other additions
|
286,900
|
-
|
30,400
|
292,000
|
Purchases
of minerals in place
|
5,682,100
|
1,685,700
|
23,322,800
|
11,255,000
|
Sales
of minerals in place
|
(75,400
)
|
(7,900
)
|
(84,300
)
|
(97,400
)
|
Production
|
(172,000
)
|
(104,700
)
|
(2,326,400
)
|
(664,400
)
|
Proved
reserves at December 31, 2016
|
2,975,900
|
1,348,300
|
23,978,900
|
8,320,700
|
|
|
|
|
|
Proved
developed reserves
|
|
|
|
|
December
31, 2014
|
1,084,900
|
579,400
|
11,901,600
|
3,647,900
|
December
31, 2015
|
703,300
|
604,300
|
10,464,300
|
3,051,600
|
December
31, 2016
|
2,203,000
|
1,061,000
|
21,918,700
|
6,917,100
|
|
|
|
|
|
Proved
undeveloped reserves
|
|
|
|
|
December
31, 2014
|
911,000
|
138,000
|
748,900
|
1,173,800
|
December
31, 2015
|
464,400
|
423,900
|
5,053,600
|
1,730,600
|
December
31, 2016
|
772,900
|
287,300
|
2,060,200
|
1,403,600
|
By:
|
/s/ C.
H. (Scott) Rees III, P.E.
|
|
|
|
|
|
|
Chairman
and Chief Executive Officer
|
|
|
|
|
/s/
Sam L. Banks
|
|
|
|
Sam L.
Banks
|
|
|
|
Principal Executive
Officer
|
|
|
|
April 12, 2017 |
|
|
Net
Reserves
|
Future Net
Revenue (M$)
|
|||
|
Oil
|
NGL
|
Gas
|
|
Present
Worth
|
Category
|
(MBBL)
|
(MBBL)
|
(MMCF)
|
Total
|
at
10%
|
|
|
|
|
|
|
Proved Developed
Producing
|
1,461.8
|
533.6
|
11,376.0
|
45,391.3
|
39,230.5
|
Proved Developed
Non-Producing
|
741.2
|
527.3
|
10,542.7
|
38,813.4
|
28,086.4
|
Proved
Undeveloped
|
772.9
|
287.3
|
2,060.2
|
16,103.7
|
6,283.2
|
|
|
|
|
|
|
Total
Proved
|
2,975.9
|
1,348.3
|
23,978.9
|
100,308.4
|
73,600.1
|
|
Sincerely,
|
|
|
|
|
|
|
|
NETHERLAND, SEWELL & ASSOCIATES, INC. |
|
|
|
Texas Registered
Engineering Firm F-2699
|
|
|
|
|
|
|
|
By:
|
/s/
C.H.
(Scott) Rees III
|
|
|
|
C.H. (Scott) Rees
III, P.E.
|
|
|
|
Chairman and Chief
Executive Officer
|
|
By:
|
/s/ G. Lance
Binder
|
|
By:
|
Philip R.
Hodgson
|
|
|
G. Lance Binder,
P.E. 61794
|
|
|
Philip R. Hodgson,
P.G. 1314
|
|
|
Executive Vice
President
|
|
|
Vice
President
|
|
|
|
|
|
|
|
Date Signed:
February 20, 2017
|
|
Date Signed:
February 20,
2017
|
Please
be advised that the digital document you are viewing is provided by
Netherland, Sewell & Associates, Inc. (NSAI) as a convenience
to our clients. The digital document is intended to be
substantively the same as the original signed document maintained
by NSAI. The digital document is subject to the parameters,
limitations, and conditions stated in the original document. In the
event of any differences between the digital document and the
original document, the original document shall control and
supersede the digital document.
|
Supplemental
definitions from the 2007 Petroleum Resources Management
System:
Developed
Producing Reserves – Developed Producing Reserves are
expected to be recovered from completion intervals that are open
and producing at the time of the estimate. Improved recovery
reserves are considered producing only after the improved recovery
project is in operation.
|
Excerpted from the
FASB Accounting Standards Codification Topic 932, Extractive
Activities—Oil and Gas:
932-235-50-30 A
standardized measure of discounted future net cash flows relating
to an entity's interests in both of the following shall be
disclosed as of the end of the year:
a.
Proved oil and gas
reserves (see paragraphs 932-235-50-3 through 50-11B)
b.
Oil and gas subject
to purchase under long-term supply, purchase, or similar agreements
and contracts in which the entity participates in the operation of
the properties on which the oil or gas is located or otherwise
serves as the producer of those reserves (see paragraph
932-235-50-7).
The
standardized measure of discounted future net cash flows relating
to those two types of interests in reserves may be combined for
reporting purposes.
932-235-50-31 All
of the following information shall be disclosed in the aggregate
and for each geographic area for which reserve quantities are
disclosed in accordance with paragraphs 932-235-50-3 through
50-11B:
a.
Future cash
inflows. These shall be computed by applying prices used in
estimating the entity's proved oil and gas reserves to the year-end
quantities of those reserves. Future price changes shall be
considered only to the extent provided by contractual arrangements
in existence at year-end.
b.
Future development
and production costs. These costs shall be computed by estimating
the expenditures to be incurred in developing and producing the
proved oil and gas reserves at the end of the year, based on
year-end costs and assuming continuation of existing economic
conditions. If estimated development expenditures are significant,
they shall be presented separately from estimated production
costs.
c.
Future income tax
expenses. These expenses shall be computed by applying the
appropriate year-end statutory tax rates, with consideration of
future tax rates already legislated, to the future pretax net cash
flows relating to the entity's proved oil and gas reserves, less
the tax basis of the properties involved. The future income tax
expenses shall give effect to tax deductions and tax credits and
allowances relating to the entity's proved oil and gas
reserves.
d.
Future net cash
flows. These amounts are the result of subtracting future
development and production costs and future income tax expenses
from future cash inflows.
e.
Discount. This
amount shall be derived from using a discount rate of 10 percent a
year to reflect the timing of the future net cash flows relating to
proved oil and gas reserves.
f.
Standardized
measure of discounted future net cash flows. This amount is the
future net cash flows less the computed discount.
|
From the SEC's Compliance and Disclosure Interpretations (October
26, 2009):
Although several
types of projects — such as constructing offshore platforms
and development in urban areas, remote locations or environmentally
sensitive locations — by their nature customarily take a
longer time to develop and therefore often do justify longer time
periods, this determination must always take into consideration all
of the facts and circumstances. No particular type of project per
se justifies a longer time period, and any extension beyond five
years should be the exception, and not the rule.
Factors that a
company should consider in determining whether or not circumstances
justify recognizing reserves even though development may extend
past five years include, but are not limited to, the
following:
●
The company's level
of ongoing significant development activities in the area to be
developed (for example, drilling only the minimum number of wells
necessary to maintain the lease generally would not constitute
significant development activities);
●
The company's
historical record at completing development of comparable long-term
projects;
●
The amount of time
in which the company has maintained the leases, or booked the
reserves, without significant development activities;
●
The extent to which
the company has followed a previously adopted development plan (for
example, if a company has changed its development plan several
times without taking significant steps to implement any of those
plans, recognizing proved undeveloped reserves typically would not
be appropriate); and
●
The extent to which
delays in development are caused by external factors related to the
physical operating environment (for example, restrictions on
development on Federal lands, but not obtaining government
permits), rather than by internal factors (for example, shifting
resources to develop properties with higher priority).
|