Filing summary
Entity note: The supplied filing is Houston American Energy Corp.’s Form 10-Q, not a filing identified as Abundia Global Impact Group, Inc. It covers the quarter and six months ended June 30, 2022; financial statements are unaudited.
Business context and reporting period
Houston American Energy is an oil and gas company with producing U.S. properties and an investment in Hupecol Meta, which holds interests in the CPO-11 block in Colombia. At June 30, 2022, the company reported 0.68 net producing wells in the U.S. and an approximately 11% indirect interest in the Venus Exploration Area and 5.5% in the remainder of the CPO-11 block.
Financial performance and position
| Metric | Three months ended June 30, 2022 | Six months ended June 30, 2022 |
|---|---|---|
| Oil and gas revenue | $462,989 | $886,809 |
| Operating income (loss) | $2,107 | $(163,684) |
| Net income (loss) | $4,365 | $(161,195) |
| Net income (loss) per share | $0.00 | $(0.02) |
- For the six months, lease operating expense and severance tax was $311,757, general and administrative expense was $628,996, and depreciation and depletion was $109,740. The filing does not report a gross margin measure.
- Six-month operating cash flow was $(29,361), investing cash flow $(262,444), and financing cash flow $0. Cash declined by $291,805 to $4,602,772.
- At June 30, cash was $4,602,772, working capital was $4,852,063, total assets were $10,631,214, and total liabilities were $369,461. Liabilities included lease obligations and a plugging-and-abandonment reserve; no borrowings are reported.
- Six-month capital investment was $262,444, including $248,282 invested in Hupecol Meta and $14,162 related principally to final Lou Brock well plugging-and-abandonment costs.
Changes versus the prior comparable period
- Revenue rose 52% in the quarter and 40% in the six-month period year over year. Management attributed the increase to higher natural gas production and improved oil and gas prices, partly offset by lower oil production.
- Six-month net loss narrowed to $161,195 from $313,820 in 2021. The 2021 comparison included $37,201 of preferred-stock dividends, so loss attributable to common shareholders was $351,021 in that period.
- Six-month operating cash use improved from $527,759 in 2021. Investing cash use increased from $166,949, while 2021 financing provided $4,570,888, primarily from ATM stock offerings; there was no financing cash flow in 2022.
- Six-month stock-based compensation increased to $111,005 from $15,109. Management cited the timing of option grants and vesting.
Outlook, risks and other notable items
- Management said cash on hand was expected to fund operating costs and anticipated drilling operations for at least the next 12 months. It provided no specific earnings, revenue, or production guidance.
- Hupecol Meta completed drilling the Bugalu 1 vertical test well, which was awaiting testing at June 30; a directional well began drilling in July. The timing and extent of future drilling depend on operators, financing, prices, costs, permits, and other factors.
- Management warned that Colombia’s president-elect had advocated winding down fossil fuel production and ending fracking. The company said existing contracts appeared to be honored, but policy uncertainty could make drilling more challenging.
- The company has incurred continuing losses since 2011. Additional acreage or expanded drilling could require financing; the company reported no funding commitments and fewer than one million common shares available for capital raising. Failure to fund well costs could lead to penalties, loss of interests, or curtailed activity.
- Commodity prices are volatile, and the company reported no historical hedging. Cash deposits of $4,308,432 exceeded the FDIC insurance limit; $5,019 held in Colombian banks was also uninsured.
- Disclosure controls and procedures were deemed ineffective as of June 30, 2022, due to a lack of segregation of duties following the CFO’s 2013 departure and the CEO’s assumption of principal financial officer duties. The company relied on outside consultants for financial reporting.
- The office lease runs through October 2025. The company reported no off-balance-sheet arrangements or third-party guarantees.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing names Houston American Energy Corp., not Abundia Global Impact Group, Inc.
- Review Bugalu 1 test results and subsequent Colombian drilling progress, including the effects of policy and permitting developments.
- Assess U.S. production trends, especially declining oil volumes, and whether higher commodity prices and gas production persist.
- Monitor cash use, well-by-well capital needs, available financing capacity, and any risk of dilution or inability to meet drilling obligations.
- Track remediation of the disclosed ineffective controls and the company’s reliance on external reporting consultants.