IGPG News Ignis Petroleum Group Announces Fiscal Year 2006 Results
DALLAS--(BUSINESS WIRE)--Ignis Petroleum Group, Inc. (OTCBB: IGPG) today announced its financial
results for the fiscal year ended June 30, 2006. Following are financial
highlights from the Company’s Annual Report on
Form 10-KSB:
Fiscal Year Results
For the fiscal year ended June 30, 2006, Ignis reported a net loss of
$12.424 million, or $0.26 per average diluted share. The loss includes
$519,535 of revenue from oil and gas sales, $4.813 million in
exploration expenses, including a dry hole impairment expense, $1.932
million non-cash charge for amortization of the discount of debentures,
and a $1.299 non-cash charge from valuation of derivatives related to
the $5.0 million convertible debt financing.
Sales from production were 5,874 barrels of oil and 20.5 million cubic
feet of natural gas or 9,294 barrels of oil equivalent. The average
prices the Company received for its oil and natural gas were $58.88 per
barrel of oil and $7.89 per thousand cubic feet of gas. The sales were
primarily related to new oil and natural gas production volumes from the
Company’s Acom A-6 well, which commenced
operations in October 2005. As of June 30, 2006, the Company had
estimated total proved reserves of 29,495 barrels of oil equivalent of
which 100% were proved producing reserves. This compares with no proved
reserves for the period ended June 30, 2005.
Exploration Expenses
Exploration expenses, including a dry hole, were partly comprised of a
$2.813 million expense for the Wefel Family Trust 19-1 #1 well, located
in Escambia County, Alabama that we decided to plug and abandon. In
addition, we recorded a $2.000 million impairment expense related to our
North Wright prospect investments. Compared to other opportunities, this
prospect does not meet the technical and economic criteria put in place
by current management. Accordingly we have decided not to drill the
prospect.
Financing Expenses
To obtain funding for our ongoing operations, we entered into securities
purchase agreements during fiscal 2006 with Cornell Capital Partners, LP
(“Cornell”), for the
sale of $5,000,000 in secured convertible debentures and 12,000,000
warrants from which we received total net proceeds of $4,265,000 after
fees associated with the transaction. The convertible feature of the
debenture allows Cornell the option to have the note repaid with shares
of our common stock. In accordance with accounting rules, the $5.0
million face amount of the note was discounted into both: 1) a
derivative liability (to reflect the beneficial conversion feature) in
an amount of $1.306 million, and 2) a warrant liability (to reflect the
warrant value) in the amount of $3.694 million.
The derivative liability is marked to market at the end of each
reporting period. As of June 30, 2006, after adjustment, we revalued
this derivative liability and recorded a non-cash expense of $1.299
million. Generally, as the common stock price increases, gains are
recorded because fewer shares are required to repay the debt.
Conversely, as the common stock price decreases losses are recorded
because more shares are required to repay the debt. We also recorded a
non-cash expense of $1.931 million to reflect the amortization of the
discount on the debenture.
Management Comments
Michael P. Piazza, Ignis’ President and Chief
Executive Officer, stated, “Fiscal 2006 was
our first full year of operation with the current management. We built a
team of experienced world-class individuals, generated revenues from
production volumes, completed multiple financings, and defined and
executed a strategy to source, select and acquire high-potential
projects. For example, we recently signed a definitive agreement to
acquire 45% of acreage, producing properties and a natural gas gathering
and treating system owned by W. B. Osborn Oil & Gas Operations, Ltd. and
St. Jo Pipeline Limited within the St. Jo Ridge (Barnett Shale) Field
located in North Texas.” Piazza continued, “Our
recently announced acquisition and development program is progressing
towards closing and we look forward with considerable confidence to
participating in this full-scale, multi-well, continuous development
program.
“Even though we had to make some challenging
decisions this year, I believe Ignis has the right people and the right
projects, and remains on course to achieve continued increases in
production, reserves and revenues. We have a lot of work to do to
realize the Company's full value and remain fully committed to that end."
Summary financial statements follow. In addition to this press release,
please refer to the Company's Annual Report on Form 10-KSB for the year
ended June 30, 2006 that was filed with the Securities & Exchange
Commission on October 13, 2006.
About Ignis Petroleum
Ignis Petroleum Group, Inc. is a Dallas-based oil and gas production
company focused on exploration, acquisition and development of crude oil
and natural gas reserves in the United States. The Company's management
has closely aligned itself with strategic industry partnerships and is
building a diversified energy portfolio. It focuses on prospects that
result from new lease opportunities, new technology and new information.
For further information, visit www.ignispetro.com.
Safe Harbor for Forward-Looking Statements
This release contains certain "forward-looking statements" as defined by
the Private Securities Litigation Reform Act of 1995, including, without
limitation, expectations, beliefs, plans and objectives regarding the
potential transactions and ventures discussed in this release. Among the
important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements are the risks
inherent in oil and gas exploration, the need to obtain additional
financing, the availability of needed personnel and equipment for the
future exploration and development, fluctuations in gas prices, and
general economic conditions.
Ignis Petroleum Group, Inc. and Subsidiary
Consolidated Balance Sheet
June 30, 2006
ASSETS
Current assets:
Cash and cash equivalents
$
872,572
Accounts receivable
55,782
Prepaid expenses and other current assets
188,500
Total current assets
1,116,854
Property and equipment:
Oil and gas properties, successful efforts method
2,521,869
Other assets
669,760
Total assets
$
4,308,483
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses
$
1,089,396
Note payable
100,000
Total current liabilities
1,189,396
Convertible notes
1,931,886
Derivative liability
2,604,813
Warrant liability
3,694,293
8,230,992
Commitments and contingencies
-
Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 5,000,000 shares authorized
none issued and outstanding
-
Common stock, $0.001 par value, 300,000,000 shares authorized
50,026,464 issued and outstanding
50,026
Additional paid-in capital
7,554,137
Accumulated deficit
(12,716,068)
Total stockholders' equity (deficit)
(5,111,905)
Total liabilities and stockholders' equity (deficit)
