Mesa Energy Holdings, Inc. (fka MSEH)

Mesa Energy Holdings, Inc. Releases 2011 Year-End Financials

Mesa Energy Holdings, Inc. (the "Company") (OTC: MSEH), an oil and gas exploration and production company, announced today that the Company has released its 2011 audited financial results on Form 10-K for the year ended December 31, 2011.

Revenues for the fiscal year ended December 31, 2011 increased to $6,941,354, from $61,647 for the year ended December 31, 2010. This increase in revenue reflects an increase in sales volumes as a result of the addition of producing wells purchased in our acquisition of Tchefuncte Natural Resources, LLC ("TNR") as well as other enhancements and recompletions in the 4th quarter.

Non-GAAP income (adjusted EBIDTA) for fiscal year 2011 increased to $2,596,219, compared to a non-GAAP loss of $867,150 in 2010.

GAAP net income for fiscal year ended December 31, 2011 totaled $4,151,958 or $0.06 per diluted share, compared to $6,561,235 or $0.13 per diluted share for fiscal year ended December 31, 2010. The high level of GAAP net income in 2010 resulted primarily from unrealized gain on changes in the value of derivative instruments, whereas net income in 2011, both GAAP and non-GAAP, is attributable to significantly increased operating income.

The Company ended the 2011 fiscal year with $3,104,453 in working capital.

"2011 was a pivotal year for the Company and its shareholders. We are already seeing increased monthly production of oil and gas from our south Louisiana properties acquired in the TNR transaction and we expect to see continued revenue growth this year as we advance with our drilling and recompletion program," said Randy M. Griffin, CEO of Mesa Energy Holdings, Inc. "Our team remains focused on executing our business plan and achieving our 2012 growth objectives."

For full disclosure relating to the 2011 year-end financial results, please refer to the Company's Form 10-K filed with the Securities and Exchange Commission on April 13, 2012 available for review at www.sec.gov.

About Mesa Energy Holdings, Inc.

Headquartered in Dallas, TX, Mesa Energy Holdings, Inc. is a growth-oriented Exploration and Production (E&P) company with a definitive focus on growing reserves and net asset value per share, primarily through the acquisition and enhancement of high quality producing properties and the development of highly diversified developmental drilling opportunities. The company currently owns producing oil properties in Plaquemines and Lafourche Parishes in Louisiana as well as developmental properties in Wyoming County, NY.

More information about the Company may be found at http://mesaenergy.us.

Forward-Looking Statements

Certain statements in this news release, which are not historical facts, are forward-looking statements. These statements are subject to risks and uncertainties. Words such as "expects", "intends", "plans", "may", "could", "should", "anticipates", "likely", "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management. Actual results may differ materially from those currently anticipated due to a number of factors which may be beyond the reasonable control of the Company, including, but not limited to, the Company's ability to locate and acquire suitable interests in oil and gas properties on terms acceptable to the Company and to integrate and successfully exploit any resulting acquisitions, the availability and pricing of additional capital to finance operations and leasehold acquisitions, the ability of the Company to build and maintain a successful operations infrastructure, the intensity of competition, changes and volatility in energy prices and general economic conditions. Readers are urged not to place undue reliance on the forward-looking statements, which speak only as of the date of this release. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release. Additional information on risks and other factors that may affect the business and financial results of the Company can be found in the filings of the Company with the U.S. Securities and Exchange Commission at www.sec.gov.

Contact:
Mesa Energy Holdings, Inc.
Ph: 972-490-9595
IR@mesaenergy.us

Mesa Energy Holdings, Inc. Now Eligible and Trading on OTCBB

Print Alert

MESA ENERGY HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 

		December 31, 2011				December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents		$	3,182,392			$	6,096
Accounts receivable - oil and gas			2,460,260				-
Accounts receivable - other			58,818				8,348
Derivative assets, commodity contracts - current			656,413				-
Deferred financing costs - current			51,507				135,552
Prepaid expenses			3,971				3,750
TOTAL CURRENT ASSETS			6,413,361				153,746
Oil and gas properties, successful efforts accounting:
Properties not subject to amortization less accumulated impairment of $0 and $247,500, respectively			-				-
Proved properties subject to amortization less accumulated depletion and impairment of $2,359,193 and $898,483, respectively			6,727,027				-
Support facilities and equipment less accumulated depreciation of $100,724 and $0, respectively			2,076,777				-
Land			48,345				38,345
Net oil and gas properties			8,852,149				38,345
Property and equipment less accumulated depreciation of $2,854 and $5,203, respectively			31,834				-
Deferred tax asset - noncurrent			3,088,740				-
Deferred financing cost - noncurrent, net of accumulated amortization of $287,943 and $147,072, respectively			28,431				-
Derivative assets, commodity contracts - noncurrent			282,537				-
Deposits on asset retirement obligations			640,000				40,000
Other assets			5,000				-
TOTAL ASSETS		$	19,342,052			$	232,091
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable - trade		$	1,518,603			$	67,409
Revenue payable			796,221				-
Accrued expenses			259,808				778,240
Accrued expenses - related parties			54,840				131,832
Deferred tax liability - current			212,781				-
Notes payable - related parties			-				21,000
Notes payable - current			466,655				20,000
Convertible notes payable - current			-				1,480,000
TOTAL CURRENT LIABILITIES			3,308,908				2,498,481
Non-current liabilities:
Long term debt - related parties			-				451,400
Notes payable - noncurrent			5,162,018				-
Convertible notes payable, net of discount of $4,279 and $0, respectively			461,740				665,000
Derivative liability, convertible debt - noncurrent			113,083				-
Asset retirement obligations			3,450,252				80,217
TOTAL LIABILITIES			12,496,001				3,695,098
Commitments and contingencies			-				-
Stockholders' equity (deficit):
Preferred stock, par value $0.0001, 10,000,000 shares authorized, -0- shares issued and outstanding			-				-
Common stock, par value $0.0001, 300,000,000 shares authorized, 79,531,616 and 40,232,021 shares issued and outstanding, respectively			7,953				4,023
Additional paid-in capital (deficiency)			(633,745	)			(6,786,915	)
Retained earnings			7,471,843				3,319,885
TOTAL  STOCKHOLDERS' EQUITY (DEFICIT)			6,846,051				(3,463,007	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	19,342,052			$	232,091

 

See accompanying notes to consolidated financial statements.

 

 

MESA ENERGY HOLDINGS, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS

 

		Year Ended December 31,
		2011				2010
Revenues		$	6,941,354			$	61,647
Operating expense:
Lease operating expense			2,830,241				33,407
Exploration cost			129,478				13,492
Depletion, depreciation, amortization, accretion and impairment			1,429,100				1,136,305
General and administrative expense			1,855,282				2,017,244
Gain on sale of oil and gas properties			(22,396	)			-
Total operating expense			6,221,705				3,200,448
Income (loss) from operations			719,649				(3,138,801	)
Other income (expense):
Interest income			2,886				3,805
Interest expense			(549,512	)			(1,077,269	)
Realized gain on commodity contracts			137,358				-
Unrealized gain on change in derivatives - commodity contracts			938,950				-
Unrealized gain (loss) on change in derivatives - convertible debt			(113,083	)			10,773,500
Gain on settlement of accounts payable with common stock			286,041				-
Loss on conversion of debt - related party			(62,306	)			-
Loss on extinguishment of debt			(17,620	)			-
Other income			25,803				-
Total other income			648,517				9,700,036
Income before income taxes			1,368,166				6,561,235
Income tax benefit			2,783,792				-
Net income		$	4,151,958			$	6,561,235
Net income per share:
Basic		$	0.07			$	0.16
Diluted		$	0.06			$	0.13
Weighted average number of common shares outstanding:
Basic			61,494,530				39,932,479
Diluted			67,905,495				49,190,627

 

See accompanying notes to consolidated financial statements.

 

 

MESA ENERGY HOLDINGS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the Years Ended December 31, 2011 and 2010

 

		Common Stock								Additional				Retained
						Par				Paid-In				Earnings
		Shares				Value				Capital				(Deficit)				Total
Balances at December 31, 2009			39,385,700			$	3,939			$	(5,457,156	)		$	(3,241,350	)		$	(8,694,567	)
Share-based compensation			372,900				37				1,131,504				-				1,131,541
Conversion of convertible debt and accrued interest			473,421				47				185,557				-				185,604
Discount on convertible debt			-				-				665,000				-				665,000
Derivative liability on convertible debt			-				-				(3,311,820	)			-				(3,311,820	)
Net income			-				-				-				6,561,235				6,561,235
Balances at December 31, 2010			40,232,021				4,023				(6,786,915	)			3,319,885				(3,463,007	)
Shares issued for cash			320,000				32				39,968				-				40,000
Share-based compensation			816,967				83				324,242				-				324,325
Shares issued to settle accounts payable			1,250,000				125				177,195				-				177,320
Conversion of convertible debt and accrued interest			14,646,628				1,464				2,463,624				-				2,465,088
Common shares issued to induce debt conversion			1,036,000				103				111,871				-				111,974
Shares issued for acquisition of Tchefuncte Natural Resources, LLC			21,200,000				2,120				2,965,880				-				2,968,000
Shares issued in exchange for personal guarantees on debt			30,000				3				4,647				-				4,650
Debt discount			-				-				5,743				-				5,743
Related party forgiveness of debt			-				-				60,000				-				60,000
Net income			-				-				-				4,151,958				4,151,958
Balances at December 31, 2011			79,531,616			$	7,953			$	(633,745	)		$	7,471,843			$	6,846,051

 

See accompanying notes to consolidated financial statements.

 

{C} {C}

 

MESA ENERGY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2011 and 2010

 

		Year Ended December 31,
		2011				2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	4,151,958			$	6,561,235
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, depletion, amortization, accretion and impairment expense			1,429,100				1,136,305
Deferred income taxes			(2,875,959	)			-
Share-based compensation			324,325				1,131,541
Gain on sale of oil and gas assets			(22,396	)			-
Amortization of debt discount charged to interest expense			1,464				665,000
Amortization of deferred financing cost			140,871				147,072
Induced debt conversion expense charged to interest expense			111,974				-
Shares issued for continuation of loan guarantees charged to interest expense			4,650				-
Unrealized gain on change in derivative values			(825,867	)			(10,773,500	)
Gain on settlement of accounts payable with common stock			(286,041	)			-
Loss on conversion of debt - related party			62,306				-
Loss on extinguishment of debt			17,620				-
Changes in operating assets and liabilities:
Accounts receivable - oil and gas			(450,172	)			17,546
Accounts receivable - other			(50,470	)			-
Prepaid and other current assets			11,669				-
Accounts payable and accrued expenses			904,849				670,483
Revenue payable			663,747				-
Accrued expenses - related party			50,823				27,373
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			3,364,451				(416,945	)
CASH FLOWS FROM INVESTING ACTIVITIES
Release of restricted cash			-				20,000
Cash received for sale of oil and gas property			17,960				-
Cash paid for acquisition of Tchefuncte Natural Resources, LLC, net of cash acquired			(4,809,368	)			-
Cash paid for development of oil and gas properties			(569,689	)			(435,462	)
Cash paid for support facilities and equipment			(246,214	)			-
Cash paid for furniture and fixtures			(6,319	)			-
CASH USED IN INVESTING ACTIVITIES			(5,613,630	)			(415,462	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock			40,000				-
Proceeds from borrowings on debt, net of financing costs			5,713,086				20,000
Proceeds from borrowings on convertible debt, net of financing costs			-				573,362
Proceeds from borrowings on debt - related party			72,000				21,000
Principal payments on long-term notes payable			(306,611	)			-
Principal payments on debt - related party			(93,000	)			(43,000	)
CASH PROVIDED BY FINANCING ACTIVITIES			5,425,475				571,362
NET CHANGE IN CASH			3,176,296				(261,045	)
CASH AT BEGINNING OF YEAR			6,096				267,141
CASH AT END OF YEAR		$	3,182,392			$	6,096
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest		$	210,495			$	578
Cash paid for income taxes		$	-			$	-
NON-CASH INVESTING AND FINACING TRANSACTIONS
Accrued oil and gas development cost		$	36,364			$	(30,000	)
Common stock issued for purchase of Tchefuncte Natural Resources, LLC		$	2,968,000			$	-
Derivative liability		$	-			$	3,311,820
Common stock issued for the conversion of notes payable and accrued interest		$	2,465,088			$	185,604
Promissory note and accrued interest exchanged for convertible note		$	41,019			$	-
Debt discount on convertible note		$	5,743			$	-
Common stock issued to settle accounts payable		$	177,320			$	-
Forgiveness of accrued salary by CEO recorded as contributed capital		$	60,000			$	-

 

See accompanying notes to consolidated financial statements. 

 

{C} {C}

 

MESA ENERGY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Mesa Energy, Inc. ("MEI") is a wholly owned subsidiary of Mesa Energy Holdings, Inc. (the "Company"). MEI's predecessor entity, Mesa Energy, LLC, was formed in April 2003 as an exploration and production company in the oil and gas industry. MEI's oil and gas operations are conducted through itself and its wholly owned subsidiaries. MEI is a qualified operator in the State of New York and operates the Java Field. Mesa Gulf Coast, LLC, a wholly owned subsidiary, operates all properties in Louisiana. Mesa Energy Operating, LLC is a qualified operator in the states of Texas, Oklahoma, and Wyoming.

 

On July 22, 2011, MEI acquired Tchefuncte Natural Resources, LLC ("TNR"). TNR owns interests in 80 wells and related surface production equipment in five fields located in Plaquemines and Lafourche Parishes in Louisiana. The operator of all operated properties in Louisiana is Mesa Gulf Coast, LLC. Our operating entities have historically employed, and will continue in the future to employ, on an as-needed basis, the services of drilling contractors, other drilling related vendors, field service companies and professional petroleum engineers, geologists and land men as required in connection with future drilling and production operations.

 

Basis of Presentation and Principles of Consolidation

 

The consolidated financial statements herein have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of the Company and those of its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

 

Exploration Stage Company

 

The Company was previously in the exploration state in accordance with SEC guidance and Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic No 915 - Development Stage Entities. During the year ended December 31, 2011, the Company exited the exploration stage upon the acquisition of TNR.

 Comparison of Nine Months Ended September 30, 2011 and 2010

Revenues

Revenues from sales of oil and natural gas were $3,314,703 in the nine months ended September 30, 2011 as compared to $35,999 for the nine months ended September 30, 2010. This increase in revenues reflects an increase in sales volumes as a result of additional producing wells resulting from the Company's acquisition of TNR. It also reflects an increase in average natural gas prices to $4.81/Mcf during the nine months ended September 30, 2011 from an average price of $4.47/Mcf during the nine months ended September 30, 2010. The average price of oil during the nine months ended September 30, 2011 was $108.76. The Company had no oil production or sales prior to the third quarter of 2011. Natural gas sales volumes increased during the nine months ended September 30, 2011 to 972 Mcf per day from 26 Mcf per day during the nine months ended September 30, 2010. Oil sales volumes increased during the nine months ended 2011 to 377 Bbls per day from 0 Bbls per day during the nine months ended September 30, 2010. The increase in volumes is also attributable to the addition of producing properties resulting from the Company's acquisition of TNR in the third quarter of 2011 which included the addition of oil production.

Operating Expenses

· Production expense. Production expense increased to $1,002,069 during the nine months ended September 30, 2011 from $0 during the nine months ended September 30, 2010. This increase is due to the acquisition of TNR.
· Exploration expense. Exploration expense increased to $40,303 during the nine months ended September 30, 2011 from $35,139 during the nine months ended September 30, 2010. This increase was primarily attributable to delay rentals associated with the acquisition of TNR, and, secondarily to exploration costs incurred in the first quarter of 2011 associated with a potential acquisition that we decided not to pursue.
· General and Administrative Expense. The decrease in general and administrative expense to $1,042,364 during the nine months ended September 30, 2011 from $1,738,723 during the nine months ended September 30, 2010 primarily reflects reduced share based compensation associated with stock options and reduced legal and other professional fees, net of additional payroll burden due to the acquisition of TNR.
· Depreciation, depletion, amortization, and accretion expense. The increase in depreciation, depletion, amortization, and accretion expense to $639,693 for the nine months ended September 30, 2011 from $69,560 for the nine months ended September 30, 2010 reflects the substantial increase in volumes of oil and natural gas produced as a result of the Company's acquisition of TNR and increased capital investment in oil and gas properties depreciated on a units of production basis; the addition of support facilities and equipment through the TNR acquisition, depreciated on a straight line basis, and the increase in the discounted value of the asset retirement obligation due to the TNR acquisition, accreted in accordance with its discount rate.
· Gain on sale of oil and gas properties. We recognized a gain of $17,960 on the sale of our Coal Creek Property in Oklahoma.

Operating Income. As a result of the above described revenues and expenses, we produced operating income of $608,234 during the nine months ended September 30, 2011 as compared to an operating loss of $1,807,423 during the nine months ended September 30, 2010.