GreenHunter Resources Reports Third Quarter 2013 Financial And Operating Results

GreenHunter Resources, Inc. (NYSE MKT: GRH and GRH.PRC) (the “Company”), a diversified water resource, fluids management and environmental services company specializing in the unconventional oil and natural gas shale resource plays, announced today financial results for the three months and the nine months ended September 30, 2013.
  • Total Revenues increased 119% to $10.7 million for the three months ended September 30, 2013 as compared to the similar period in 2012 of $4.9 million
  • Total Disposal Volumes increased 230% in the three months ended September 30, 2013 to 1.2 million barrels (BBL) injected compared to 522 thousand BBL injected in the similar period in 2012
  • Total Operating Salt Water Disposal Permitted Injection Capacity as of September 30, 2013 exceeded 94 thousand BBL per day representing a 343% increase from September 30, 2012
  • The Company recently executed a Letter of Intent to enter into a $35 million Second Lien Credit Facility with a closing anticipated prior to year-end.

FINANCIAL AND OPERATIONAL RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013

GreenHunter reported revenues for the three months ended September 30, 2013 of $10.7 million, compared to $4.9 million reported during the Third Quarter of 2012. The increase in revenues of 119% or $5.8 million was driven primarily by increases in daily salt water disposal volumes as a result of both organic SWD capacity growth and acquisitions that resulted in a 343% increase in permitted operating injection capacity compared to one year ago. Additionally, billable trucking hours in the Appalachian region increased 33% to 12 thousand hours in the third quarter of 2013 compared to 9 thousand in the same period of 2012. The Company’s fleet of trucks increased to 39 vacuum trucks and 23 bobtail trucks during the third quarter 2013. During the third quarter of 2013, the Company recorded its first MAG Tank sale for $1.7 million.

The operating loss for the three months ended September 30, 2013 substantially improved to ($346) thousand, compared to an operating loss of ($12.9) million during the third quarter of 2012. The operating loss for the nine months ended September 30, 2013 was ($9.6) million compared to an operating loss of ($13.7) million for the same period of 2012.

GreenHunter reported a net loss to common shareholders of ($1.5) million, or ($0.05) per share, for the third quarter of 2013 compared to ($15.5) million, or ($0.52) per share, for the quarter ended September 30, 2012. Revenues for the third quarter of 2013 were $10.7 million compared to $4.8 million for the third quarter of 2012.

FINANCIAL AND OPERATIONAL RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

GreenHunter reported revenues for the nine months ended September 30, 2013 of $28.2 million compared to $11.3 million reported during the nine months ended September 30, 2012. The increase in revenues of 149% or $16.9 million was driven primarily by increases in daily salt water disposal volumes as a result of both organic SWD capacity growth, acquisitions, and MAG Tank sales. Additionally, billable trucking hours in the Appalachian region for the nine months ended September 30, 2013 increased 74% to 33 thousand compared to 19 thousand for the same period in 2012.

The Company reported a net loss to common shareholders of ($11.7) million, or ($0.35) per share, for the nine months ended September 30, 2013 compared to a net loss to common shareholders of ($17.3) million, or ($0.61) per share, for the same period in 2012.

During the third quarter of 2013, the Company issued 181,786 units consisting of 181,786 shares of Series C Preferred Stock and 282,778 common stock warrants with an exercise price of $2.25 per share. Net proceeds received by the Company from this sale of equity was $3.2 million.

LIQUIDITY - SUBSEQUENT EVENTS

In managing liquidity risks, the Company has access to a range of funding options through the capital markets and banks, as well as credit support provided from its Chairman.

On October 30, 2013, the Company executed a Letter of Intent to enter into a Second Lien Credit Facility in the amount of $35 million for a term of four and one-half years with an institution. The proceeds are intended for use to provide growth capital for the Company. The Company and the Lender(s) legal counsel are working on definitive legal documents with a goal to close the new financing within 30 days of the date of this Letter of Intent.

On November 6, 2013, the Company engaged an escrow agent for the purpose of receiving funds pursuant to a new private placement of debt securities from accredited investors for the expressed purpose of building MAG Tank inventory. The proceeds are expected to be between $1.5 to $2.25 million. The notes will be unsecured and have a maturity date of one year from the closing of the financing.

INTERNAL CONTROLS

As disclosed in the Company's Form 10-K for the fiscal year ended December 31, 2012, the Company identified a number of material weaknesses in its internal controls. The Board of Directors, Audit Committee and senior management of the Company recognize the importance of improving the Company's internal controls and are committed to remediating these material weaknesses as quickly as possible. The Company hired a new Chief Financial Officer in the third quarter and recently hired a new Controller with a goal to remediate the previously identified material weaknesses in a timely manner. The Company is evaluating all of its internal control related processes and procedures, seeking to make improvements where needed, and expanding the number and quality of our accounting staff.

MANAGEMENT COMMENTS

Commenting on GreenHunter’s third quarter results reported today, Jonathan D. Hoopes, Interim-CEO, President and COO of the Company, said “We continue to report record revenues for the Company each quarter. The Company’s business activity, particularly in the Appalachia Region, remains very robust and we are currently at or near the disposal capacity of our existing wells in that region. GreenHunter’s field operating employees have continued to work tirelessly to keep up with record demand. Additionally, we recorded our first MAG Tank sales with other orders pending. We are seeing a high level of interest in our revolutionary new product line. We have recently begun the process of causing more inventory to be constructed so that we can fill the anticipated requests for new sales and rental of this product. In May of 2013, the Company discontinued the operations of Black Water Services located in South Texas. The operations of this company resulted in direct losses (revenue minus cost of goods and services equals direct income/ (loss)) of about $860 thousand in the first six months of 2013. In the third quarter of 2013, we no longer had the effects of these discontinued operations in our financial results, which contributed to improved consolidated direct income. Management is actively pursuing significant new SWD well expansion opportunities with a goal to double daily disposal capacity in the Appalachian region in 2014. The anticipated closing of our new financing as described herein will allow the Company to accelerate our significant growth plans efforts.”

About GreenHunter Resources, Inc.

GreenHunter Resources provides Oilfield Fluid Management Solutions™ in the unconventional shale oil and natural gas plays. Because there is no single solution to E&P fluids management, GreenHunter’s services include fixed-facility and mobile water treatment ( Frac-Cycle®), an expanding portfolio of UIC Class II Salt Water Disposal wells with advanced logistics and transport capabilities, proprietary modular above-ground storage systems ( MAG Tank™), and cradle-to-grave compliance tracking technologies ( RAMCAT™). All of these services help oil and gas producers reduce cost and improve operating efficiency.

For a visual animation of the Class II Salt Water Disposal well development and completion technique that is being utilized in GreenHunter Water’s Appalachia, Eagle Ford, Mississippian Lime and Bakken SWD program, navigate to the video by clicking on “Salt Water Disposal Animation” button on the Operations tab at GreenHunterResources.com or click here.

Additional information about GreenHunter Water may be found at www.GreenHunterWater.com
   

CONDENSED CONSOLIDATED “UNAUDITED” STATEMENTS OF OPERATIONS
 

For the Three Months EndedSeptember 30,

For the Nine Months EndedSeptember 30,
2013   2012 2013   2012
REVENUES:
Water disposal revenue 2,956,318 $ 2,396,745 $ 8,810,304 $ 4,747,771
Transportation revenue 5,647,387 2,087,993 14,082,506 5,408,380
MAG Tank Revenue 1,650,000 - 1,650,000 -
Storage rental revenue and other   409,649     386,045   3,625,358     1,159,910  
Total revenues   10,663,354     4,870,783   28,168,168     11,316,061  
 
COST OF SERVICES PROVIDED:
Cost of goods and services provided 8,368,081 2,463,448 23,717,616 6,151,684
Depreciation and accretion expense 969,242 635,423 3,083,690 1,100,188
Loss on impairment of assets less insurance proceeds (662,473 ) - 1.249,444 -
Impairment of asset value, biomass project - 12,873,013 - 12,873,013
Goodwill impairment - - 2,799,044 -
Stock based compensation 355,040 529,602 1,255,224 1,754,147
Selling, general and administrative   1,979,482     1,223,870   5,703,547     3,168,062  
Total costs and expenses   11,009,372     17,725,356   37,808,565     25,047,094  
 
OPERATING LOSS (346,018 ) (12,854,573 ) (9,640,397 ) (13,731,033 )
 
OTHER INCOME (EXPENSE):
Interest and other income 131,191 133,471 -
Interest, amortization and other expense (220,790 ) (343,640 ) (695,018 ) (821,305 )
Gain on sale of assets 64,741 - 1,839,608 -
Unrealized gain on convertible securities   -     23,857   -     23,857  
Total other income (expense)   (24,758 )   (319,603 ) 1,278,061     (797,448 )
 
Net loss before taxes (370,776 ) (13,174,176 ) (8,362,336 ) (14,528,481 )
 
Income tax expense   -     -   (6,676 )   -  
 
Net loss (370,776 ) (13,174,176 ) (8,369,012 ) (14,528,481 )
 
Preferred stock dividends (1,174,256 ) (631,699 ) (3,337,286 ) (1,130,844 )
Deemed dividend on Series A Preferred Stock conversion - 923,565 - 923,565
Deemed dividend on Series B Preferred Stock conversion   -     (2,573,025 ) -     (2,573,025 )
Net loss to common stockholders   (1,545,032 )   (15,455,335 ) (11,706,298 )   (17,308,785 )
 
Weighted average shares outstanding, basic and diluted 33,574,173 29,561,614 33,493,046 28,243,394
 
Basic and diluted loss per share:
Net loss per share $ (0.05 ) $ (0.52 ) $ (0.35 ) $ (0.61 )
 
   

SELECTED UNAUDITED BALANCE SHEET DATA
 
September 30, 2013 December 31, 2012
Cash and cash equivalents $ 1,081,204 $ 1,765,642
Total current assets 8,941,888 8,457,532
Net fixed assets 38,712,591 41,410,231
Total assets 47,665,415 52,855,226
Total current liabilities 16,780,301 19,605,885
Total long-term liabilities 9,718,096 10,139,289
Total stockholders’ equity $ 21,167,018 $ 23,110,052
 
   

EBITDA CALCULATION
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013   2012 2013   2012
Calculation of Adjusted EBITDA:
Net loss $ (370,776 ) $ (13,174,176 ) $ (8,369,012 ) $ (14,528,481 )
Interest and amort expense 220,790 343,460 695,018 821,305
Depreciation and accretion expense 969,242 635,423 3,083,690 1,100,188
Impairment of asset value (662,473 ) 12,873,013 4,048,488 12,873,013
Stock-based compensation   355,040     529,602     1,255,244     1,754,147  
Adjusted EBITDA $ 511,823   $ 1,207,322   $ 713,428   $ 2,020,172  
 

Forward-Looking Statements

Any statements in this press release about future expectations and prospects for GreenHunter Resources and its business and other statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the substantial capital expenditures required to fund its operations, the ability of the Company to implement its business plan, government regulation and competition. GreenHunter Resources undertakes no obligation to update these forward-looking statements in the future.

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