WESTMINSTER, Colo., Nov. 22, 2011 (GLOBE NEWSWIRE) -- Arete Industries, Inc. (OTCQB:ARET), announces record oil and gas revenue for the third quarter ended September 30, 2011. During the quarter ended September 30, 2011, Arete reported revenues of $2,916,698, which represents an increase of 6,830% from $42,088 in the second quarter ending June 30, 2011 and an increase of 8,328% from $34,606 in the quarter ended September 30, 2010. The increases were primarily attributable to the Company's acquisitions that closed during the quarter.
The Company's revenues included $436,764 of oil and natural gas revenue and a $2,479,934 gain on the sale of oil & natural gas assets during the quarter ended September 30, 2011. The oil and natural gas production has an average price $74.65 BOE for the three months ended September 30, 2011.
The Company reported net income from operations for the quarter ended September 30, 2011 of $2,299,684 as compared to a net loss from operations of ($245,890) for the quarter ended September 30, 2010. The Company reported net income of $2,150,944 or $0.28 per share for the quarter ended September 30, 2011, compared to a net loss of ($257,688) or $0.05 per share loss for the quarter ended September 30, 2010.
Private Placement
During the quarter, Arete issued a private placement of its Preferred Stock Series A1 for the sale of 750 shares at $10,000 per share, on a "best efforts" basis with a minimum offering of 520 shares and maximum offering of 750 shares at $10,000 per share. On September 29, 2011 the Company closed on the minimum by issuing 522.5 shares and received $5,225,000 in gross proceeds.
Liquidity and Capital Resources
The Company had a stockholder's equity at September 30, 2011 of $7,339,645. This is compared to stockholder's deficit at December 31, 2010 of ($1,832,847). The stockholder's equity increased due the Company's operating income and increased by the sale of common and preferred stock.
Donald Prosser, Arete's Chief Executive Officer, commented, "We are pleased to announce a record quarter to our shareholders. We continue to be strategic and aggressive with respect to purchasing and selling acreage in the Rocky Mountain Region, as evidenced by our approximate $2.5 million gain on sale of oil and natural gas assets reported during the quarter."
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About Arete Industries
The Company holds oil and gas properties in the Rocky Mountain Region of the United States and operates a small natural gas gathering system. For additional information on the Company visit our website at http://www.areteindustries.com/
For additional information on Arete Industries visit the Company's new website at: http://www.AreteIndustries.com/
SAFE HARBOR
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this report, such as statements regarding our future expectations to increase our production are forward-looking statements (often, but not always, using words such as "expects", "anticipates", "plans", "estimates", "potential", "possible", "probable", or "intends", or stating that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved). Forward-looking statements are based on our current expectations and assumptions about future events and involve inherent risks and uncertainties. These risks include, but are not limited to, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition and government regulation or other actions. Additional information on these and other factors which could affect Arete's operations or financial results are included in Arete's reports on file with the Securities and Exchange Commission. Such factors (many of which are beyond our control) could cause actual results to differ materially from those set forth in the forward-looking statements.. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. Arete undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in Arete's expectations.
| ARETE INDUSTRIES, INC. AND SUBSIDIARY | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (UNAUDITED) | ||
| December 31, | September 30, | |
| ASSETS | 2010 | 2011 |
| Current assets | ||
| Cash and cash equivalents | $ 15,990 | $ 498,886 |
| Prepaid expenses | 85,139 | 326,736 |
| Revenue receivable | 12,625 | 981,997 |
| Total current assets | 113,754 | 1,807,619 |
| Property and equipment | ||
| Oil and natural gas properties, at cost, successful efforts method: | ||
| net of accumulated depletion, depreciation, and accretion of $78,066(2011) | -- | 8,734,162 |
| Furniture and equipment, at cost net of accumulated | ||
| depreciation of $173,076(2010) and $217,296(2011) | 277,736 | 247,421 |
| Total property and equipment | 277,736 | 8,981,583 |
| TOTAL ASSETS | $ 391,490 | $ 10,789,202 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Accounts payable | $ 604,271 | $ 1,287,440 |
| Accrued expenses | 267,373 | 250,246 |
| Accrued payroll taxes | 111,690 | 111,690 |
| Notes payable | -- | 1,050,000 |
| Current portion of ARO | -- | 1,934 |
| Contracts payable | 536,528 | 18,750 |
| Notes payable & advances related parties | 704,475 | 108,069 |
| Total current liabilities | 2,224,337 | 2,828,129 |
| Long-term portion of ARO | -- | 621,428 |
| Total current liabilities | 2,224,337 | 3,449,557 |
| Stockholders' equity | ||
| Convertible Class A preferred stock; $10,000 face value, | ||
| 10,000 shares authorized | ||
| Series 1, 750 shares authorized, 0 (2010) | ||
| and 523 (2011) shares issued and outstanding | -- | 5,023,371 |
| Series 2, 2,500 shares authorized, 0 (2010) | ||
| and 0 (2011) shares issued and outstanding | -- | -- |
| Common stock, no par value; 499,000,000 shares | ||
| authorized, 4,972,635 (2010) and 7,764,476 (2011) | 13,611,903 | 16,904,154 |
| shares issued and outstanding | ||
| Accumulated deficit | (15,444,750) | (14,587,880) |
| Total stockholders' (deficit) equity | (1,832,847) | 7,339,645 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 391,490 | $ 10,789,202 |
| ARETE INDUSTRIES, INC. AND SUBSIDIARY | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| For the three and nine months, | ||||
| (UNAUDITED) | ||||
| Three Months | Three Months | Nine Months | Nine Months | |
| Ended September 30, | Ended September 30, | Ended September 30, | Ended September 30, | |
| 2010 | 2011 | 2010 | 2011 | |
| Revenues | ||||
| Oil & natural gas revenue | $ 34,606 | $ 436,764 | $ 135,086 | $ 482,403 |
| Other income | -- | -- | -- | -- |
| Gain of sale of oil & natural gas assets | -- | 2,479,934 | -- | 2,479,934 |
| Total revenues | 34,606 | 2,916,698 | 135,086 | 2,962,337 |
| Operating expenses | ||||
| Lease operating expenses including | ||||
| production taxes | 79,629 | 226,095 | 247,278 | 337,468 |
| Acquisition costs | -- | 11,821 | -- | 469,322 |
| Depreciation, depletion, and accretion | 11,065 | 89,121 | 33,174 | 111,231 |
| Rent | 1,009 | 887 | 2,679 | 3,030 |
| General and administrative | 188,793 | 289,090 | 528,602 | 1,001,513 |
| Total operating expenses | 280,496 | 617,014 | 811,733 | 1,922,564 |
| Net loss from operations | (245,890) | 2,299,684 | (676,647) | 1,039,773 |
| Other income (expense): | ||||
| Interest expense | (11,798) | (148,936) | (35,393) | (183,378) |
| Interest income | -- | 196 | -- | 475 |
| Total other income (expense) | (11,798) | (148,740) | (35,393) | (182,903) |
| Net income (loss) | $ (257,688) | $ 2,150,944 | $ (712,040) | $ 856,870 |
| Basic and diluted loss per share | $ (0.05) | $ 0.28 | $ (0.14) | $ 0.13 |
| ARETE INDUSTRIES, INC. AND SUBSIDIARY | ||
| CONSOLIDATED STATEMENTS OF CASH FLOW | ||
| For the nine months ended, September 30, | ||
| (UNAUDITED) | ||
| 2010 | 2011 | |
| Cash flows from operating activities: | ||
| Net (loss) income | $ (712,040) | $ 856,870 |
| Adjustments to reconcile net inome (loss) to net | ||
| cash used in operating activities: | ||
| Depreciation and amortization | 33,174 | 111,240 |
| Stock issued for services, notes payable, and | ||
| interest on notes | 24,500 | 469,500 |
| Non cash compensation for services | 331,599 | 426,876 |
| Sale of oil & gas assets gain | -- | (2,479,934) |
| Changes in assets and liabilities: | ||
| Accounts receivable | 10,916 | (969,372) |
| Accounts payable | 177,730 | 683,169 |
| Accrued expenses | 121,089 | 179,143 |
| Total adjustments | 699,008 | (1,579,378) |
| Net cash (used in) operating activities | (13,032) | (722,508) |
| Cash flows from investing activities: | ||
| Purchase of furniture and equipment | -- | (2,850) |
| Purchase of oil and gas properties | -- | (5,682,211) |
| Net cash (used in) investing activities | -- | (5,685,061) |
| Cash flows from financing activities: | ||
| Notes payable receipts | -- | 2,060,000 |
| Payments made on notes payable | -- | (390,000) |
| Proceeds from sale of common stock | -- | 203,500 |
| Proceeds from sale of preferred stock | -- | 5,023,371 |
| Receipt of advances - related parties | -- | 2,850 |
| Payment of advances - related parties | -- | (9,256) |
| Net cash provided by financing activities | -- | 6,890,465 |
| Net increase (decrease) in cash and cash equivalents | (13,032) | 482,896 |
| Cash and cash equivalents at beginning of period | 16,764 | 15,990 |
| Cash and cash equivalents at end of period | $ 3,732 | $ 498,886 |
| Supplemental disclosure of cash flow information: | ||
| 2010 | 2011 | |
| Interest paid during the period | $ -- | $ 266,996 |
| Income taxes paid during the period | $ -- | $ -- |
| Supplemental disclosure of non-cash investing and financing activities: | ||
| During the nine months ended September 30, 2011 non-cash expenses for contracts with consultants amounted to $426,876. | ||
| During the nine months ended September 30, 2011 wages to officers and directors and fees to | ||
| consultants of $1,284,251 were paid by the issuance of common stock | ||
| During the nine months ended September 30, 2010 non-cash expenses for contracts with consultants amounted to $211,805. | ||
| During the nine months ended September 30, 2011, notes payable of $1,335,000 were converted into common stock. | ||
| During the nine months ended September 30, 2010 wages to officers and directors and fees to | ||
| consultants of $24,500 were paid by the issuance of common stock | ||