Gateway Energy Reports Year End 2008 Financial Results.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy
The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; , March 30 /PRNewswire-FirstCall/ -- Gateway Energy Corporation (BULLETIN BOARD: GNRG) (the "Company") today announced full year 2008 financial results. For the year, the Company posted revenue of $14,987,541, an increase of 31% from the prior year. Gateway experienced an income from continuing operations continuing operations
Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $817,541, or $0.04 per diluted di·lute
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a decrease from $2,126,110, or $0.13 per diluted share in 2007. Net income decreased to $817,541, or $0.04 per share, for 2008, compared to $3,616,875, or $0.20 per diluted share, for 2007. Net income was negatively impacted due primarily to reduced volumes flowing through the offshore assets Oil and gas facilities, mining and industrial installations, ocean thermal energy conversion facilities, deep water ports, aids to navigation, and nuclear power plants located or in operation seaward of the coastline. due to hurricanes Gustav Gustav is a name of Old Swedish origin, means "staff of the Goths", derived from the Old Norse elements Gautr "Goth" and stafr "staff". This name has been borne by six kings of Sweden, including the 16th-century Gustav I Vasa. and Ike (Internet Key Exchange) A method for establishing a security association (SA) that authenticates users, negotiates the encryption method and exchanges the secret key. IKE is used in the IPsec protocol. during September 2008. In addition, net income in 2008 was favorably fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
3. impacted by a $1.7 million insurance recovery and net income in 2007 was favorably impacted by a $1.2 million one-time after tax gain on the sale of Fort Cobb Fuel Authority, LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control and a $1.7 million income tax benefit. Additionally during 2008 the Company had the following results:
-- Adjusted EBITDA of $2.4 million, a 96% increase over 2007, which includes the $1.7 million insurance recovery, offset by the impact of hurricanes Gustav and Ike, and -- Increased shareholder equity to $12.2 million, or $0.63 per diluted share.
For onshore on·shore
1. Moving or directed toward the shore: an onshore wind.
2. Located on the shore: an onshore beacon; an onshore patrol.
adv. operations, total revenue increased 32% from $9,352,113 in 2007 to $12,373,321 in 2008 due primarily to increased sales volumes and gas prices on the Company's Waxahachie distribution system. Operating margin Operating Margin
A ratio used to measure a company's pricing strategy and operating efficiency.
Calculated by: for the onshore assets decreased slightly to $1,148,036 in 2008 from $1,221,874 in 2007, due primarily to decreased throughput volumes in the Company's Madisonville pipeline system. The Company expects increased operating margins on its onshore assets as throughput volumes in the Madisonville system increase during 2009 due to the producer's announced intention to significantly increase production in the Madisonville field.
Revenue from the offshore operations increased to $2,609,220 for 2008 as compared to $2,102,398 for 2007. Operating margin for the year ended December 31, 2008 increased to $1,784,265 compared to $1,563,502 for 2007. This increase is due primarily to the recognition of a full year of revenue in 2008 from the acquisition of Gulfshore Midstream's assets in August, 2007 and increased throughput volumes on the Company's Bolivar pipeline system. These increases were offset by reduced volumes due to hurricanes Gustav and Ike beginning in September, 2008. The Company estimates it lost approximately $800,000 in operating margin due to the hurricanes.
General and administrative expenses increased from $2,044,342 for 2007 to $2,424,045 for 2008. This increase is due primarily to hiring of new personnel and increased non-cash stock compensation expenses, offset by decreased insurance and consulting expenses.
Mr. Robert Panico, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Gateway Energy said, "2008 began with exceptionally strong oil and gas prices which prompted the industry to put a record number of drilling rigs to work both onshore and offshore which increased throughput volumes on our systems. During the last half of 2008, oil and gas prices plunged and the central Gulf Coast took direct hits from two major hurricanes. Many of the wells on our offshore pipeline systems in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico
Golfo de Mexico
Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east were shut-in, some for many months, as a result of the storms. A majority of the wells were back online by the end of 2008."
Mr. Panico continued, "Although it was a difficult year, we were able to make two important acquisitions in 2008, both involving the Madisonville project. With the first acquisition, we acquired all of the minority owner's interest in the Madisonville pipeline resulting in our ownership of 100% of the pipeline. The second acquisition involved the purchase of a 9.1% net profits interest in the principal producers interest in the Madisonville field. Leveraging our knowledge of the Madisonville project, we believe these two acquisitions will position us for accelerated revenue growth as natural gas production increases in the field."
Mr. Panico also noted "We are well positioned to pursue acquisitions in an environment we expect will improve in 2009 as valuations become more economically viable and opportunities are presented by companies repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. their asset bases and seeking liquidity."
About Gateway Energy
Gateway Energy Corporation owns and operates natural gas gathering, transportation and distribution systems in Texas, Texas state waters and in federal waters of the Gulf of Mexico off the Texas and Louisiana Louisiana (ləwē'zēăn`ə, lē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. coasts. Gateway gathers offshore wellhead natural gas production and liquid hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·bnz),
n. from producers, and then aggregates this production for processing and transportation to other pipelines. Gateway also transports gas through its mainline mainline Drug slang verb To inject a drug systems for non-affiliated shippers and through its affiliated distribution system and makes sales of natural gas to end users.
Safe Harbor Safe Harbor
1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.
2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement
Certain of the statements included in this press release, which express a belief, expectation or intention, as well as those regarding future financial performance or results, or which are not historical facts, are "forward-looking" statements as that term is defined in the Securities Act of 1933, as amended a·mend
v. a·mend·ed, a·mend·ing, a·mends
1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive.
2. , and the Securities Exchange Act of 1934, as amended. The words "expect", "plan", "believe", "anticipate", "project", "estimate", and similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance or events and such statements involve a number of risks, uncertainties and assumptions, including but not limited to industry conditions, prices of crude oil and natural gas, regulatory changes, general economic conditions, interest rates, competition, and other factors. Should one or more of these risks or uncertainties materialize ma·te·ri·al·ize
v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es
1. To cause to become real or actual: By building the house, we materialized a dream. or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated in the forward-looking statements, which speak only as of the date hereof here·of
Formal or law of or concerning this
Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company undertakes no obligation to republish re·pub·lish
tr.v. re·pub·lished, re·pub·lish·ing, re·pub·lish·es
1. To publish again.
2. Law To revive (a libel or a canceled will). revised forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events.
GATEWAY ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2008 2007 ASSETS Current Assets Cash and cash equivalents $1,789,029 $1,807,224 Trade accounts receivable 969,859 1,852,849 Insurance receivable 1,750,000 - Prepaid expenses and other assets 176,565 41,812 Total current assets 4,685,453 3,701,885 Property and Equipment, at cost Gas gathering, processing and transportation 12,796,424 11,120,558 Net profits production interest 763,909 - Office furniture and other equipment 143,654 229,298 13,703,987 11,349,856 Less accumulated depreciation, depletion and amortization (3,805,733) (3,390,634) 9,898,254 7,959,222 Other Assets Deferred tax assets 1,205,000 1,668,743 Intangible assets, net of accumulated amortization of $65,278 and $22,082, at 2008 and 2007, respectively 765,337 922,142 Other 136,657 269,601 2,106,994 2,860,486 Total assets $16,690,701 $14,521,593 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $776,519 $1,138,653 Accrued expenses and other liabilities 323,100 251,368 Note payable 1,062,000 - Current maturities of capital lease 20,235 17,371 Total current liabilities 2,181,854 1,407,392 Future asset retirement obligations 2,318,315 394,640 Long-term debt, less current maturities - 750,000 Long-term capital lease, less current maturities 9,187 29,422 Total liabilities 4,509,356 2,581,454 Minority interest - 816,222 Commitments and contingencies - - Stockholders' Equity Preferred stock - $1.00 par value; 10,000 shares authorized; no shares issued and outstanding - - Common stock - $0.25 par value; 35,000,000 shares authorized; 19,207,249 and 19,026,665 issued and outstanding in 2008 and 2007, respectively 4,801,812 4,756,665 Additional paid-in capital 17,284,485 17,089,744 Accumulated deficit (9,904,952) (10,722,492) Total stockholders' equity 12,181,345 11,123,917 Total liabilities and stockholders' equity $16,690,701 $14,521,593 GATEWAY ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2008 2007 Operating revenues Sales of natural gas $12,033,817 $8,732,108 Transportation of natural gas and liquids 2,381,252 2,280,882 Net profits income 5,000 - Treating and other 567,472 441,521 14,987,541 11,454,511 Operating costs and expenses Cost of natural gas purchased 10,979,136 7,914,502 Operation and maintenance 1,071,104 754,633 General and administrative 2,424,045 2,044,342 Depreciation, depletion and amortization 745,411 523,586 Accretion and changes in estimates 25,921 26,385 15,245,617 11,263,448 Operating income (loss) (258,076) 191,063 Other income (expense) Interest income 29,119 114,265 Interest expense (157,091) (95,599) Gain on sale of intangible assets - 286,579 Other income, net 1,731,155 55,119 Minority interest (28,824) (94,060) Other income 1,574,359 266,304 Income from continuing operations before income taxes and discontinued operations 1,316,283 457,367 Provision for income taxes Current income tax expense 35,000 - Deferred income tax expense (benefit) 463,742 (1,668,743) 498,742 (1,668,743) Income from continuing operations 817,541 2,126,110 Discontinued operations, net of taxes Income from discontinued operations, net of taxes - 249,043 Gain on disposal of discontinued operations, net of taxes - 1,241,722 Net income $817,541 $3,616,875 Basic and diluted income per share: Continuing operations $0.04 $0.12 Discontinued operations - 0.08 Net income $0.04 $0.20 Weighted average number of common shares outstanding: Basic 19,126,587 17,781,059 Diluted 19,330,409 17,956,541 GATEWAY ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2008 2007 Cash flows from operating activities - continuing operations: Income from continuing operations $817,541 $2,126,110 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation, depletion and amortization 745,411 523,586 Gain on sale of intangible assets - (286,579) Minority interest 28,824 94,060 Deferred tax expense (benefit) 463,742 (1,668,743) Stock based compensation expense 169,888 51,516 Accretion expense 25,921 26,385 Amortization of deferred loan costs 124,835 62,646 Gain on involuntary conversion/receivable (1,698,658) - Loss on disposal of assets 1,999 - Net change in cash and cash equivalents resulting from changes in: Trade accounts receivable 882,990 (227,086) Prepaid expenses and other current assets (126,644) 549,686 Accounts payable (362,134) 311,606 Accrued expenses and other liabilities 71,732 185,964 Net cash provided by operating activities 1,145,447 1,749,151 Cash flows from investing activities - continuing operations Capital expenditures (133,444) (57,234) Acquisition of minority interest and net profits interest (1,303,075) (3,778,435) Property write-offs 18,067 - Proceeds from collection of notes receivable - 300,000 Net cash used in investing activities (1,418,452) (3,535,669) Cash flows from financing activities - continuing operations Proceeds from borrowings 1,362,000 1,150,000 Payments on borrowings (1,067,370) (963,392) Proceeds from exercise of stock options - 77,008 Restricted cash for letter of credit, net - 43,145 Deferred financing costs - (125,342) Distributions to minority partner (39,820) (116,200) Net cash provided by financing activities 254,810 65,219 Net decrease in cash and cash equivalents from continuing operations (18,195) (1,721,299) Discontinued operations: Net cash provided by discontinued operating activities - 203,143 Net cash provided by discontinued investing activities - 2,706,289 Net cash used in discontinued financing activities - (373,730) Net increase (decrease) in cash and cash equivalents from discontinued operations - 2,535,702 Cash and cash equivalents at beginning of year 1,807,224 992,821 Cash and cash equivalents at end of year $1,789,029 $1,807,224 GATEWAY ENERGY CORPORATION AND SUBSIDIARIES Non-GAAP Financial Measures Operating Margin The following table presents a reconciliation of the non-GAAP financial measures of total segment operating margin (which consists of the sum of individual segment operating margin and corporate) to the nearest comparable GAAP financial measure of operating income. Year Ended December 31, 2008 2007 Onshore Operations Revenues $12,373,321 $9,352,113 Cost of natural gas purchased 10,979,136 7,914,502 Operation and maintenance expense 246,149 215,740 Operating margin 1,148,036 1,221,871 General and administrative expense 993,997 973,544 Depreciation, depletion and amortization expense 194,455 207,966 Operating income (loss) (40,416) 40,361 Offshore Operations Revenues $2,609,220 $2,102,398 Operation and maintenance expense 824,955 538,893 Operating margin 1,784,265 1,563,505 General and administrative expense 1,416,921 1,064,422 Depreciation, depletion and amortization expense 545,050 311,168 Accretion expense 25,921 26,385 Operating income (loss) (203,627) 161,530 Net Profits Interest Revenues $5,000 $ - Operating margin 5,000 - General and administrative expense 1,638 - Depreciation, depletion and amortization expense 783 - Operating income 2,579 - Adjusted EBITDA Adjusted EBITDA is defined as pre-tax net income plus: -- interest expense; -- depreciation, depletion and amortization expense; -- non-recurring gain (loss) on sale of assets; -- minority interest; -- accretion expense; and -- non-cash compensation expense.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is a significant performance metric used by Company management, and by external users of Company's financial statements, such as investors, commercial banks, research analysts and others, including our principal lender.
Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, operating income Operating Income
The profit realized from a business' own operations.
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , cash flows from operating activities or any other measure of financial performance presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.
As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP
See: Generally Accepted Accounting Principles
See generally accepted accounting principles (GAAP). as measures of operating performance, liquidity or ability to service debt obligations. Adjusted EBITDA does not include interest expense, income taxes, depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization expense, non-recurring gain (loss) on sale of assets, minority interest, accretion expense In accounting, accretion expense is the expense created when updating the present value(PV) of a financial instrument.
For example, if one originally recognizes the present value of a liability at $650, which has a future value (FV) of $1000, every year one must increase the or non-cash compensation expense. Because the Company has borrowed, and intend to borrow, money to finance their operations, interest expense is a necessary element of Company's overall costs. Because the Company uses capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) , depreciation and amortization are also necessary elements of Company's overall costs. Because the Company have used, and intend to use, non-cash equity awards as part of their overall compensation package for executive officers and employees, non-cash compensation expense is a necessary element of Company's overall costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, Company management believes that it is important to consider net income determined under GAAP, as well as Adjusted EBITDA, to evaluate Company's financial performance.
Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating this knowledge into management's decision-making processes.
Year Ended December 31, 2008 2007 Net income (loss) $817,541 $3,616,875 Minority interest 28,824 94,060 Interest expense 157,091 95,599 Income taxes 498,742 (1,668,743) Depreciation, depletion, and amortization 745,411 523,586 Gain on sale of assets - (1,528,301) Non-cash stock compensation 100,891 51,516 Accretion expense 25,921 26,385 Adjusted EBITDA $2,374,421 $1,210,977
CONTACT: Brad Holmes, Investor Relations Investor relations
The process by which the corporation communicates with its investors. , +1-713-654-4009 or Chris Rasmussen, CFO See Chief Financial Officer. , +1-713-600-1044, both of Gateway Energy Corporation
Web Site: http://www.gatewayenergy.com/
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|Date:||Mar 30, 2009|
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