Business context and reporting period
The supplied filing is Houston American Energy Corp.’s unaudited Form 10-Q for the three months ended March 31, 2022—not a filing identified as Abundia Global Impact Group, Inc. The company reports oil and gas interests in the United States and Colombia; first-quarter revenue came entirely from U.S. production. The statements are prepared on a going-concern basis.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 / prior date |
|---|---|---|
| Oil and gas revenue | $423,820 | $328,488 |
| Operating expenses | $589,611 | $607,338 |
| Operating loss | $165,791 | $278,850 |
| Net loss | $165,560 | $268,476 |
| Loss per common share | $0.02 | $0.03 |
| Operating cash flow | $(96,807) | $(365,191) |
| Investing cash flow | $(30,893) | $(177,031) |
| Cash | $4,766,877 | $4,894,577 at Dec. 31, 2021 |
| Working capital | $4,988,063 | $4,988,062 at Dec. 31, 2021 |
| Total liabilities | $476,866 | $421,910 at Dec. 31, 2021 |
| Total assets | $10,708,734 | $10,733,853 at Dec. 31, 2021 |
There was no interest-bearing debt reported; liabilities primarily comprise lease obligations and the plugging-and-abandonment reserve. Current liabilities were $223,036. The company reported $231 of other income, no income tax expense, and no financing cash flow in Q1 2022. Cash declined by $127,700 during the quarter.
Material changes versus the prior comparable period
- Revenue increased 29%, primarily as the average realized oil price rose 76% to $91.67 per barrel and natural gas production increased 21%. These gains were partly offset by a 31% decrease in oil production and a 16% decline in the average natural gas price.
- Net loss narrowed by $102,916. Lower general and administrative costs excluding stock compensation and lower operating cash use contributed; stock-based compensation rose to $85,485 from $15,109.
- Operating expenses fell to $589,611 from $607,338, while depreciation and depletion increased to $58,239 from approximately $32,364.
- Unlike Q1 2021, Q1 2022 had no equity financing or preferred-stock redemption. The prior-year period included $6.6 million of net common-stock proceeds and $2.0 million of preferred-stock redemptions and dividends.
Outlook, risks, and unusual items
- Management said available cash should fund operations and its share of planned 2022 wells for at least the next 12 months. It anticipated Colombia CPO-11 drilling to begin in mid-2022, subject to operator decisions and factors including financing, commodity prices, service costs, and industry conditions. No drilling took place during Q1.
- Additional acreage acquisitions or expanded drilling could require external funding. The company reported no funding commitments and less than one million common shares available for issuance; it cautioned that funding may not be available on acceptable terms. Failure to fund well costs could result in penalties, loss of interests, curtailed operations, or forgone opportunities.
- The company has incurred continuing losses since 2011. It also disclosed $4.41 million of cash deposits above the FDIC insurance limit and $4,741 held in Colombian banks without FDIC insurance.
- Commodity prices are volatile, and the company said it has not historically hedged its oil and gas exposure. The filing linked the higher realized oil price to global supply uncertainty following Russia’s invasion of Ukraine.
- Disclosure controls and procedures were deemed ineffective at March 31, 2022, reflecting a lack of segregation of duties after the CFO’s 2013 departure and the CEO’s assumption of principal financial officer duties. The company relies on outside consultants and its accounting firm while these weaknesses remain.
- Q1 U.S. property spending of $14,161 principally related to final Lou Brock well plugging-and-abandonment expenses; $16,732 was invested in Hupecol Meta. The company reported no off-balance-sheet arrangements or guarantees of third-party obligations.
Important facts for investors to verify
- Confirm the issuer: the supplied filing identifies Houston American Energy Corp. (HUSA), not Abundia Global Impact Group, Inc.
- Check whether the anticipated mid-2022 CPO-11 drilling began, and review subsequent operator plans and the company’s funding share.
- Monitor cash use, capital requirements, and the availability of financing given the limited remaining share capacity and lack of funding commitments.
- Review remediation of the disclosed ineffective disclosure controls and lack of segregation of duties.
- Assess production trends and exposure to oil and gas price volatility, including the absence of hedging.