Filing summary
Entity mismatch: The supplied filing is for Houston American Energy Corp., not Abundia Global Impact Group, Inc. This summary reflects the filing text provided. The report covers the quarter and six months ended June 30, 2013; the financial statements are unaudited.
Business context and results
The company reported U.S. and Colombian oil and gas interests. It drilled no wells in the first half of 2013 and had no drilling operations underway at June 30. In March, it relinquished its entire CPO 4 interest to SK Innovation, ending related past, present, and future capital-call obligations.
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Oil and gas revenue, 2013 | $19,223 | $34,255 |
| Oil and gas revenue, 2012 | $36,347 | $356,857 |
| Operating loss, 2013 | $(1,296,227) | $(2,081,417) |
| Net loss, 2013 | $(1,266,267) | $(2,072,442) |
| Net loss, 2012 | $(22,022,079) | $(42,690,174) |
| Basic and diluted loss per share, 2013 | $(0.02) | $(0.04) |
Financial position and cash flows
- At June 30, cash was $8.92 million and working capital was $10.95 million, compared with cash of $5.63 million and working capital of $9.14 million at December 31, 2012.
- Total assets were $14.10 million, total liabilities $327,553, and shareholders’ equity $13.78 million. The filing reports no borrowings or interest-bearing debt.
- First-half operating activities provided $316,926; investing activities provided $2.97 million, mainly reflecting the release of $3.06 million of restricted cash; financing activities were nil. Cash increased $3.29 million.
- Operating cash flow benefited from collection of an approximately $3.3 million federal tax refund. The company paid $1.61 million in income taxes during the first half.
- Revenue was very limited relative to operating costs, so the filing does not present a meaningful gross-margin measure. General and administrative expense was $1.30 million for the quarter and $2.17 million for the half-year.
Changes versus prior periods and unusual items
- Revenue declined 47% in the quarter and 90% for the half-year, primarily because the La Cuerva interest was sold in 2012; the company also cited reduced Crown Paper #1 production during recompletion.
- Net losses were substantially lower than in 2012, principally because 2012 included oil and gas property impairment charges of $16.63 million for the quarter and $36.63 million for the half-year. The company recorded no impairment in 2013.
- The CPO 4 settlement relieved $3.22 million of accrued cash-call obligations and enabled release of the $3.06 million letter-of-credit collateral. The settlement also transferred the company’s interest in the prospect.
- First-half stock-based compensation was $1.01 million. Shareholders approved an increase in the equity plan reserve, and 1.3 million options were granted in June, in addition to 915,525 previously granted options becoming exercisable.
Outlook, risks, and contingencies
- Management budgeted approximately $3.5 million of capital expenditures for the remainder of 2013, including two planned test wells on the Serrania concession and seismic work on Los Picachos and Macaya. Timing and plans could change.
- In July, the company agreed to a 10% working interest in a planned Pecos County, Texas test well, with expected costs of $400,000 or less; drilling was expected to begin in September 2013.
- Management expected cash on hand to fund 2013 operations and the stated budget, but cautioned that additional capital might be needed. No additional financing was committed, and failure to fund planned work could result in penalties or loss of prospect interests.
- The company disclosed an ongoing SEC investigation focused on past disclosures concerning CPO 4 resource potential and consolidated securities class-action litigation alleging misleading statements, including regarding the Tamandua #1 well. Outcomes and potential financial effects could not be predicted; the company said it intended to defend the litigation.
- Management cited volatility in oil and gas prices and said it had not historically hedged commodity-price exposure. The company also had $5.5 million of cash deposits above the FDIC-insured limit reported in the filing.
- In July, the CFO resigned and the company decided not to renew the exploration SVP’s agreement. Management expected these changes to reduce annual overhead by more than $500,000. An employee production incentive plan adopted in August may allocate up to 2% of company revenue from eligible wells to participant pools.
Important facts for investors to verify
- Confirm the issuer identity: the filing is Houston American Energy Corp., despite the request metadata naming Abundia Global Impact Group, Inc.
- Track the SEC investigation and class-action case, including any material developments, costs, or potential remedies.
- Verify whether the planned Colombian capital program and Texas test well proceeded, their funding requirements, and resulting production or reserve outcomes.
- Assess the collectability and timing of the $2.10 million in escrow receivables and the remaining Colombian tax payments.
- Monitor production and revenue concentration, cash use, and whether further financing is required.