MSEH.. $0.22 Very good earnings after the bell!
Year Ended December 31,
2011 2010
Revenues $ 6,941,354 $ 61,647
Operating expense:
Lease operating expense 2,830,241 33,407
Exploration cost 129,478 13,492
Depletion, depreciation, amortization, accretion and impairment 1,429,100 1,136,305
General and administrative expense 1,855,282 2,017,244
Gain on sale of oil and gas properties (22,396 ) —
Total operating expense 6,221,705 3,200,448
Income (loss) from operations 719,649 (3,138,801 )
Other income (expense):
Interest income 2,886 3,805
Interest expense (549,512 ) (1,077,269 )
Realized gain on commodity contracts 137,358 —
Unrealized gain on change in derivatives - commodity contracts 938,950 —
Unrealized gain (loss) on change in derivatives – convertible debt (113,083 ) 10,773,500
Gain on settlement of accounts payable with common stock 286,041 —
Loss on conversion of debt – related party (62,306 ) —
Loss on extinguishment of debt (17,620 ) —
Other income 25,803 —
Total other income 648,517 9,700,036
Income before income taxes 1,368,166 6,561,235
Income tax benefit 2,783,792 —
Net income $ 4,151,958 $ 6,561,235
Net income per share:
Basic $ 0.07 $ 0.16
Diluted $ 0.06 $ 0.13
Weighted average number of common shares outstanding:
Basic 61,494,530 39,932,479
Diluted 67,905,495 49,190,627
MESA ENERGY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2011 December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents $ 3,182,392 $ 6,096
Accounts receivable – oil and gas 2,460,260 —
Accounts receivable – other 58,818 8,348
Derivative assets, commodity contracts - current 656,413 —
Deferred financing costs - current 51,507 135,552
Prepaid expenses 3,971 3,750
TOTAL CURRENT ASSETS 6,413,361 153,746
Oil and gas properties, successful efforts accounting:
Properties not subject to amortization less accumulated impairment of $0 and $247,500, respectively — —
Proved properties subject to amortization less accumulated depletion and impairment of $2,359,193 and $898,483, respectively 6,727,027 —
Support facilities and equipment less accumulated depreciation of $100,724 and $0, respectively 2,076,777 —
Land 48,345 38,345
Net oil and gas properties 8,852,149 38,345
Property and equipment less accumulated depreciation of $2,854 and $5,203, respectively 31,834 —
Deferred tax asset – noncurrent 3,088,740 —
Deferred financing cost – noncurrent, net of accumulated amortization of $287,943 and $147,072, respectively 28,431 —
Derivative assets, commodity contracts – noncurrent 282,537 —
Deposits on asset retirement obligations 640,000 40,000
Other assets 5,000 —
TOTAL ASSETS $ 19,342,052 $ 232,091
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable - trade $ 1,518,603 $ 67,409
Revenue payable 796,221 —
Accrued expenses 259,808 778,240
Accrued expenses - related parties 54,840 131,832
Deferred tax liability - current 212,781 —
Notes payable - related parties — 21,000
Notes payable - current 466,655 20,000
Convertible notes payable - current — 1,480,000
TOTAL CURRENT LIABILITIES 3,308,908 2,498,481
Non-current liabilities:
Long term debt - related parties — 451,400
Notes payable - noncurrent 5,162,018 —
Convertible notes payable, net of discount of $4,279 and $0, respectively 461,740 665,000
Derivative liability, convertible debt - noncurrent 113,083 —
Asset retirement obligations 3,450,252 80,217
TOTAL LIABILITIES 12,496,001 3,695,098
Commitments and contingencies — —
Stockholders’ equity (deficit):
Preferred stock, par value $0.0001, 10,000,000 shares authorized, -0- shares issued and outstanding — —
Common stock, par value $0.0001, 300,000,000 shares authorized, 79,531,616 and 40,232,021 shares issued and outstanding, respectively 7,953 4,023
Additional paid-in capital (deficiency) (633,745 ) (6,786,915 )
Retained earnings 7,471,843 3,319,885
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 6,846,051 (3,463,007 )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 19,342,052 $ 232,091
Year Ended December 31,
2011 2010
Revenues $ 6,941,354 $ 61,647
Operating expense:
Lease operating expense 2,830,241 33,407
Exploration cost 129,478 13,492
Depletion, depreciation, amortization, accretion and impairment 1,429,100 1,136,305
General and administrative expense 1,855,282 2,017,244
Gain on sale of oil and gas properties (22,396 ) —
Total operating expense 6,221,705 3,200,448
Income (loss) from operations 719,649 (3,138,801 )
Other income (expense):
Interest income 2,886 3,805
Interest expense (549,512 ) (1,077,269 )
Realized gain on commodity contracts 137,358 —
Unrealized gain on change in derivatives - commodity contracts 938,950 —
Unrealized gain (loss) on change in derivatives – convertible debt (113,083 ) 10,773,500
Gain on settlement of accounts payable with common stock 286,041 —
Loss on conversion of debt – related party (62,306 ) —
Loss on extinguishment of debt (17,620 ) —
Other income 25,803 —
Total other income 648,517 9,700,036
Income before income taxes 1,368,166 6,561,235
Income tax benefit 2,783,792 —
Net income $ 4,151,958 $ 6,561,235
Net income per share:
Basic $ 0.07 $ 0.16
Diluted $ 0.06 $ 0.13
Weighted average number of common shares outstanding:
Basic 61,494,530 39,932,479
Diluted 67,905,495 49,190,627
Common Stock Additional Retained
Par Paid-In Earnings
Shares Value Capital (Deficit) Total
Balances at December 31, 2009 39,385,700 $ 3,939 $ (5,457,156 ) $ (3,241,350 ) $ (8,694,567 )
Share-based compensation 372,900 37 1,131,504 — 1,131,541
Conversion of convertible debt and accrued interest 473,421 47 185,557 — 185,604
Discount on convertible debt — — 665,000 — 665,000
Derivative liability on convertible debt — — (3,311,820 ) — (3,311,820 )
Net income — — — 6,561,235 6,561,235
Balances at December 31, 2010 40,232,021 4,023 (6,786,915 ) 3,319,885 (3,463,007 )
Shares issued for cash 320,000 32 39,968 — 40,000
Share-based compensation 816,967 83 324,242 — 324,325
Shares issued to settle accounts payable 1,250,000 125 177,195 — 177,320
Conversion of convertible debt and accrued interest 14,646,628 1,464 2,463,624 — 2,465,088
Common shares issued to induce debt conversion 1,036,000 103 111,871 — 111,974
Shares issued for acquisition of Tchefuncte Natural Resources, LLC 21,200,000 2,120 2,965,880 — 2,968,000
Shares issued in exchange for personal guarantees on debt 30,000 3 4,647 — 4,650
Debt discount — — 5,743 — 5,743
Related party forgiveness of debt — — 60,000 — 60,000
Net income — — — 4,151,958 4,151,958
Balances at December 31, 2011 79,531,616 $ 7,953 $ (633,745 ) $ 7,471,843 $ 6,846,051
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,151,958 $ 6,561,235
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, depletion, amortization, accretion and impairment expense 1,429,100 1,136,305
Deferred income taxes (2,875,959 ) —
Share-based compensation 324,325 1,131,541
Gain on sale of oil and gas assets (22,396 ) —
Amortization of debt discount charged to interest expense 1,464 665,000
Amortization of deferred financing cost 140,871 147,072
Induced debt conversion expense charged to interest expense 111,974 —
Shares issued for continuation of loan guarantees charged to interest expense 4,650 —
Unrealized gain on change in derivative values (825,867 ) (10,773,500 )
Gain on settlement of accounts payable with common stock (286,041 ) —
Loss on conversion of debt – related party 62,306 —
Loss on extinguishment of debt 17,620 —
Changes in operating assets and liabilities:
Accounts receivable – oil and gas (450,172 ) 17,546
Accounts receivable – other (50,470 ) —
Prepaid and other current assets 11,669 —
Accounts payable and accrued expenses 904,849 670,483
Revenue payable 663,747 —
Accrued expenses – related party 50,823 27,373
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,364,451 (416,945 )
CASH FLOWS FROM INVESTING ACTIVITIES
Release of restricted cash — 20,000
Cash received for sale of oil and gas property 17,960 —
Cash paid for acquisition of Tchefuncte Natural Resources, LLC, net of cash acquired (4,809,368 ) —
Cash paid for development of oil and gas properties (569,689 ) (435,462 )
Cash paid for support facilities and equipment (246,214 ) —
Cash paid for furniture and fixtures (6,319 ) —
CASH USED IN INVESTING ACTIVITIES (5,613,630 ) (415,462 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock 40,000 —
Proceeds from borrowings on debt, net of financing costs 5,713,086 20,000
Proceeds from borrowings on convertible debt, net of financing costs — 573,362
Proceeds from borrowings on debt – related party 72,000 21,000
Principal payments on long-term notes payable (306,611 ) —
Principal payments on debt – related party (93,000 ) (43,000 )
CASH PROVIDED BY FINANCING ACTIVITIES 5,425,475 571,362
NET CHANGE IN CASH 3,176,296 (261,045 )
CASH AT BEGINNING OF YEAR 6,096 267,141
CASH AT END OF YEAR $ 3,182,392 $ 6,096
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 210,495 $ 578
Cash paid for income taxes $ — $ —
NON-CASH INVESTING AND FINACING TRANSACTIONS
Accrued oil and gas development cost $ 36,364 $ (30,000 )
Common stock issued for purchase of Tchefuncte Natural Resources, LLC $ 2,968,000 $ —
Derivative liability $ — $ 3,311,820
Common stock issued for the conversion of notes payable and accrued interest $ 2,465,088 $ 185,604
Promissory note and accrued interest exchanged for convertible note $ 41,019 $ —
Debt discount on convertible note $ 5,743 $ —
Common stock issued to settle accounts payable $ 177,320 $ —
Forgiveness of accrued salary by CEO recorded as contributed capital $ 60,000 $ —
Mesa Energy, Inc. (“MEI”) is a wholly owned subsidiary of Mesa Energy Holdings, Inc. (the “Company”). MEI’s predecessor entity, Mesa Energy, LLC, was formed in April 2003 as an exploration and production company in the oil and gas industry. MEI’s oil and gas operations are conducted through itself and its wholly owned subsidiaries. MEI is a qualified operator in the State of New York and operates the Java Field. Mesa Gulf Coast, LLC, a wholly owned subsidiary, operates all properties in Louisiana. Mesa Energy Operating, LLC is a qualified operator in the states of Texas, Oklahoma, and Wyoming.
On July 22, 2011, MEI acquired Tchefuncte Natural Resources, LLC (“TNR”). TNR owns interests in 80 wells and related surface production equipment in five fields located in Plaquemines and Lafourche Parishes in Louisiana. The operator of all operated properties in Louisiana is Mesa Gulf Coast, LLC. Our operating entities have historically employed, and will continue in the future to employ, on an as-needed basis, the services of drilling contractors, other drilling related vendors, field service companies and professional petroleum engineers, geologists and land men as required in connection with future drilling and production operations.
Exploration Stage Company
The Company was previously in the exploration state in accordance with SEC guidance and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No 915 – Development Stage Entities. During the year ended December 31, 2011, the Company exited the exploration stage upon the acquisition of TNR. |
