Filing identity and period
Important mismatch: The request identifies Abundia Global Impact Group, Inc., but the supplied filing is Houston American Energy Corp.’s Form 10-Q for the quarter ended June 30, 2011. This summary reflects the filing text, not Abundia.
Houston American Energy is an oil and gas company with U.S. and Colombian operations. The unaudited report covers the second quarter and six months ended June 30, 2011.
Financial results and liquidity
| Metric | Three months ended June 30, 2011 | Six months ended June 30, 2011 |
|---|---|---|
| Revenue | $353,505 | $477,808 |
| Operating loss | $1,637,537 | $2,846,987 |
| Net loss | $1,702,806 | $2,934,720 |
| Basic and diluted loss per share | $0.05 | $0.09 |
- Revenue fell 95.4% in the quarter and 96.0% for the six-month period from the comparable 2010 periods. Management attributes the decline principally to the late-2010 sale of interests in Colombian producing properties.
- Six-month operating cash flow was negative $4.303 million, versus positive $4.641 million in 2010. Investing activities used $3.556 million; financing activities had no cash flow.
- Cash was $18.798 million at June 30, down from $26.656 million at year-end 2010. Restricted cash of $3.056 million was pledged for a letter of credit. Working capital was $28.491 million.
- Total assets were $48.913 million; shareholders’ equity was $48.590 million. The balance sheet reports no borrowings; total liabilities were $323,451, including current liabilities of $284,653.
- Oil and gas property investment totaled $4.072 million in the first half. The company reported 22 gross producing wells and 0.44 net producing wells; first-half net oil production was 4,465 barrels.
Changes, outlook, and risks
- The 2010 asset sale sharply reduced production, revenue, operating costs, and depletion expense; therefore, year-over-year comparisons are not like-for-like. The sold properties generated most of the company’s 2010 production and revenue in the comparable periods.
- During the first half, 13 wells were drilled in Colombia on concessions where the company held a 1.6% working interest: seven were producing by June 30 and six were dry holes. No drilling was underway at quarter-end. Drilling on the first CPO-4 test well began in July.
- The 2011 acquisition and drilling budget for the remainder of the year was approximately $17.5 million, including three CPO-4 and two Serrania test wells. Management expected existing resources and operating cash flows to fund planned activity for at least 12 months without additional capital; further prospects could require financing.
- Macaya and Los Picachos agreements converted to exploration and production contracts, subject to final Colombian regulatory approval of the company’s interests.
- Hupecol was evaluating a possible transaction involving La Cuerva, in which Houston American held approximately 1.6%. No transaction had been agreed or completed; the company said the assets represented a substantial portion of its Colombian operations and principal revenue-producing assets, and it had no effective ability to prevent or alter a transaction.
- Other notable items included $179,595 of loss on oil-property sales and post-closing adjustments, $526,000 in cash bonuses, and restricted stock awards valued at $743,400. The company disclosed no current litigation, but noted environmental liabilities and that it was not fully insured against environmental risks.
- Oil and gas prices are volatile; the company reported that it had not historically hedged commodity-price exposure. Management said disclosure controls were effective and there had been no material change in internal control during the quarter.
Key facts for investors to verify
- Confirm the filing issuer: the supplied document is for Houston American Energy Corp., not Abundia Global Impact Group, Inc.
- Assess the cash burn and whether the planned $17.5 million drilling and acquisition budget remains affordable if operating cash flow stays negative.
- Track CPO-4 and Serrania drilling results, regulatory approvals for Macaya and Los Picachos, and the timing and outcome of the La Cuerva process.
- Review recoverability and release timing of escrow receivables, including amounts subject to purchaser claims or reimbursement.
- Consider the reduced production base after the divestitures, exposure to commodity prices without hedging, and the concentration of Colombian assets and operations.