Erin Energy Announces Second Quarter 2016 Results

Erin Energy Corporation (“Erin Energy” or the “Company”) (NYSE MKT:ERN)
(JSE:ERN) announced today financial and operational results for the
quarter ended June 30, 2016. The Company also provided an update on its
upstream operations in Africa.

Second Quarter 2016 and Current Highlights:

• Successfully re-established production from the Oyo-8 well;
• Achieved net average daily production of 5,400 barrels of oil per day
  (bbls/d);
• Lifted and sold 508,000 barrels of oil;
• Realized revenues of $23.2 million;
• Successfully restructured Zenith term loan facility.

Segun Omidele, Chief Executive Officer commented: “We continue to
make progress with our balance sheet restructuring and debt reduction
initiatives, with our debt-to-equity conversion strategy receiving
positive responses from some of our vendors. Various cost reduction
measures that were initiated in the first-quarter 2016 are now becoming
deeply embedded into our operations, even as new ways of managing costs
are continually being assessed for implementation. In addition to these
initiatives, management has made the tactical decision to explore
acquisition opportunities created by the current upstream environment
and to look for accretive, inorganic ways to grow our business.”

Nigeria

During the quarter the Company successfully brought back online the
Oyo-8 well using a deepwater light intervention vessel and achieved net
average daily oil production of 5,400 barrels per day compared to 1,800
barrels per day in Q1, 2016. Currently, Oyo-8 is producing more than
7,000 barrels of oil per day. The Oyo-7 well could not come back on
production naturally, after an emergency shut down that occurred on July
1, 2016. This is due to high water production from the well and this has
resulted in a temporary production loss of about 1,400 barrels of oil
per day.

Plans are currently being made to attempt to bring the Oyo-7 well back
by introducing nitrogen from the production facilities via subsea
infrastructure to the well. The Company intends to carry out this
nitrogen lift after its next crude lifting scheduled for the week of
August 15, 2016.

The Company continues to make progress in preparations for the next
drilling campaign, which is planned to commence in the fourth-quarter of
this year. Both the identification of a drilling rig and the procurement
of long-lead well and subsea equipment are progressing well.

The Oyo-9 production well is planned as an additional development well
within the central area of the Oyo field in Oil Mining Lease 120 and
will be tied into the existing production facilities to increase the
Company’s production by approximately 6,000 – 7,000 barrels of oil per
day.

Ghana

The Ghana government has recently approved the extension of the Initial
Exploration Period for the Expanded Shallow Water Tano (ESWT) block
operated by Erin Energy by 18 months, to July 2018. The government also
made some adjustments to the commercial terms of the petroleum agreement
to enable the early realization of the Tano development project when the
oil price recovers.

Geological and reservoir studies are ongoing with the existing 2-D and
3-D seismic datasets to evaluate the various possible development
options and the exploration potential of the block. New 3-D marine
seismic data acquisition over the entire block is in the execution
planning phase. The new seismic data will enable the high-grading of the
exploration prospects as well as firm-up the drilling candidates. Actual
field operations await the resolution of the Ghana-Cote d’Ivoire
maritime border dispute arbitration in mid-2017.

The Gambia

The Company is currently awaiting the completion of the processing of
the recently acquired 3-D seismic data, expected to be completed in the
third-quarter of 2016. Erin Energy expects to resume talks with
potential farm-out partners once the data is in-house. The Company’s A2
and A5 blocks are located in the same prolific offshore geological basin
as the recent world-class discoveries by Cairn Energy in its offshore
Senegal blocks.

Kenya

Erin Energy is currently interpreting 2-D seismic data on its onshore
blocks, L1B and L16. Based on the interpretation of this 2-D data, the
Company plans to design and acquire additional seismic data in 2017 on
blocks L1B and L16. The Company is actively marketing both its onshore
and offshore Kenya blocks to potential farm-out partners as part of our
growth strategy.

Balance Sheet Strengthening and Cost Reduction Efforts

The Company has actively been working with its creditors and vendors to
restructure its debt facilities, finalize negotiations of payment
agreements with vendors and to lower some of its current outstanding
accounts payable balance.

Erin Energy announced it has successfully completed the restructuring of
its term loan facility with Zenith Bank (Zenith). Under the new terms of
the credit facility, the Company will only make interest payments to
Zenith until June 2017, with principal repayment beginning in June of
2017 on a sculpted basis to align with Company cash flows and allowing
the facility to be fully paid off at year-end 2021. The Company has
received favorable response from some of its vendors to convert
outstanding payables to company equity.

In line with the Company’s stated goal of increasing production and
reserves with a three-part strategy of development, exploration and
accretive production and reserves acquisitions, Erin Energy has begun
looking at strategic production asset acquisitions to help grow the
Company’s production and reserves. Erin Energy’s management team
believes that focusing on potential asset acquisitions in West Africa
will allow the Company to leverage its strengths and focus to increase
revenue, corporate cash flows, and ultimately, shareholder value.

Financial Summary

For the second quarter 2016, Erin Energy reported revenues of $23.2
million, compared to nil revenue during the second-quarter 2015. In the
second-quarter, the Company lifted and sold approximately 508,000 net
barrels of oil at an average price of $45.58 per barrel, compared to no
liftings during the same period 2015. When compared to the first-quarter
2016, second-quarter revenues were up 370% driven by increase in
production from Oyo-8 being back online.

For the second quarter of 2016, the Company reported a net loss of $22.6
million, or $(0.11) per basic and diluted share, compared to a net loss
of $9.2 million, or $(0.04) per basic and diluted share for the same
period in 2015 and a first-quarter 2016 loss of $32.4 million, or
$(0.15) per basic and diluted share.

Average net daily production for the quarter was approximately 5,400
barrels of oil per day, compared to 4,400 barrels oil per day for the
same period 2015; and 1,800 barrels of oil per day during the
first-quarter 2016.

Erin Energy Corporation is an independent oil and gas exploration
and production company focused on energy resources in sub-Saharan
Africa. Its asset portfolio consists of 9 licenses across 4 countries
covering an area of 40,000 square kilometres (10 million acres),
including current production and other exploration projects offshore
Nigeria, as well as exploration licenses offshore Ghana, Kenya and
Gambia, and onshore Kenya. Erin Energy is headquartered in Houston,
Texas, and is listed on the New York and Johannesburg Stock Exchanges
under the ticker symbol ERN. More information about Erin Energy can be
found at www.erinenergy.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. All statements, other than
statements of historical fact, concerning activities, events or
developments that the Company expects, believes or anticipates will or
may occur in the future are forward-looking statements. Although the
Company believes the expectations reflected in these forward-looking
statements are reasonable, they involve assumptions, risks and
uncertainties, and these expectations may prove to be incorrect.

The Company’s actual results could differ materially from those
anticipated or implied in these forward-looking statements due to a
variety of factors, including the Company’s ability to successfully
finance, drill, produce and/or develop the wells and prospects
identified in this release, and risks and other risk factors discussed
in the Company’s periodic reports filed with the Securities and Exchange
Commission. All forward-looking statements are expressly qualified in
their entirety by this cautionary statement. You should not place undue
reliance on forward-looking statements, which speak only as of their
respective dates. The Company undertakes no duty to update these
forward-looking statements.

ERIN ENERGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016				2015
Revenues:
Crude oil sales, net of royalties		$	23,151			$	—			$	28,080			$	—
Operating costs and expenses:
Production costs		22,123				4,258				44,687				25,573
Crude oil inventory (increase) decrease		729				(9,874		)		(102		)		(9,861		)
Workover expenses		7,585				618				7,585				618
Exploratory expenses		1,200				1,502				3,262				8,017
Depreciation, depletion and amortization		14,856				123				19,668				243
Accretion of asset retirement obligations		461				299				913				876
Loss on settlement of asset retirement obligations		—				3,454				205				3,454
General and administrative expenses		3,396				5,441				7,354				8,932
Total operating costs and expenses		50,350				5,821				83,572				37,852
Operating loss		(27,199		)		(5,821		)		(55,492		)		(37,852		)
Other income (expense):
Currency transaction gain		10,465				555				11,328				1,991
Interest expense		(5,954		)		(4,224		)		(11,379		)		(6,835		)
Total other income (expense), net		4,511				(3,669		)		(51		)		(4,844		)
Loss before income taxes		(22,688		)		(9,490		)		(55,543		)		(42,696		)
Income tax expense		—				—				—				—
Net loss before non-controlling interest		(22,688		)		(9,490		)		(55,543		)		(42,696		)
Net loss attributable to non-controlling interest		116				328				560				475
Net loss attributable to Erin Energy Corporation		$	(22,572	)		$	(9,162	)		$	(54,983	)		$	(42,221	)
Net loss attributable to Erin Energy Corporation per common share:
Basic		$	(0.11	)		$	(0.04	)		$	(0.26	)		$	(0.20	)
Diluted		$	(0.11	)		$	(0.04	)		$	(0.26	)		$	(0.20	)
Weighted average common shares outstanding:
Basic		212,290				211,108				212,067				210,791
Diluted		212,290				211,108				212,067				210,791

ERIN ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except for share and per share amounts)
		June 30, 2016				December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents		$	8,759			$	8,363
Restricted cash		—				8,661
Accounts receivable - trade		3				1,029
Accounts receivable - partners		667				287
Accounts receivable - related party		1,732				1,186
Accounts receivable - other		71				28
Crude oil inventory		5,895				4,789
Prepaids and other current assets		1,363				684
Total current assets		18,490				25,027
Property, plant and equipment:
Oil and gas properties (successful efforts method of accounting), net		329,371				348,331
Other property, plant and equipment, net		1,023				1,174
Total property, plant and equipment, net		330,394				349,505
Other non-current assets		76				67
Total assets		$	348,960			$	374,599
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Accounts payable and accrued liabilities		$	242,033			$	213,120
Accounts payable and accrued liabilities - related party		29,465				30,133
Short-term note payable		357				—
Current portion of long-term debt, net		3,802				96,558
Total current liabilities		275,657				339,811
Long-term notes payable - related party, net		127,517				120,006
Term loan facility, net		83,441				—
Asset retirement obligations		21,522				20,609
Total liabilities		508,137				480,426
Commitments and contingencies (Note 10)
Capital deficiency:
Preferred stock $0.001 par value - 50,000,000 shares authorized; none issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		—				—
Common stock $0.001 par value - 416,666,667 shares authorized; 212,517,199 and 211,615,773 shares issued as of June 30, 2016 and December 31, 2015, respectively		213				212
Additional paid-in capital		791,453				789,615
Accumulated deficit		(951,434		)		(896,451		)
Treasury stock at cost, 84,185 and -0- shares as of June 30, 2016 and December 31, 2015, respectively		(192		)		—
Total deficit - Erin Energy Corporation		(159,960		)		(106,624		)
Non-controlling interests		783				797
Total capital deficiency		(159,177		)		(105,827		)
Total liabilities and capital deficiency		$	348,960			$	374,599

ERIN ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
		Six Months Ended June 30,
		2016				2015
Cash flows from operating activities
Net loss, including non-controlling interest		$	(55,543	)		$	(42,696	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation, depletion and amortization		19,668				243
Accretion of asset retirement obligations		913				876
Amortization of debt discount and debt issuance costs		1,789				1,119
Loss on settlement of asset retirement obligations		—				3,454
Foreign currency transaction gain		(11,328		)		(1,991		)
Share-based compensation		1,619				3,434
Payments to settle asset retirement obligations		—				(16,441		)
Change in operating assets and liabilities:
Decrease in accounts receivable		603				470
Increase in crude oil inventory		(102		)		(9,861		)
Increase in prepaids and other current assets		(688		)		(1,234		)
Increase in accounts payable and accrued liabilities		41,895				34,653
Net cash used in operating activities		(1,174		)		(27,974		)
Cash flows from investing activities
Capital expenditures		(9,667		)		(56,741		)
Net cash used in investing activities		(9,667		)		(56,741		)
Cash flows from financing activities
Proceeds from exercise of stock options and warrants		167				1,855
Payments for treasury stock arising from withholding taxes upon restricted stock vesting		(192		)		—
Repayments of term loan facility		(5,981		)		—
Proceeds from short-term notes payable		504				—
Proceeds from notes payable - related party, net		6,129				57,815
Debt issuance costs		(693		)		—
Funds released from restricted cash		8,661				—
Funding from non-controlling interest		—				375
Net cash provided by financing activities		8,595				60,045
Effect of exchange rate changes on cash and cash equivalents		2,642				568
Net decrease in cash and cash equivalents		396				(24,102		)
Cash and cash equivalents at beginning of period		8,363				25,143
Cash and cash equivalents at end of period		$	8,759			$	1,041
Supplemental disclosure of cash flow information
Cash paid for:
Interest, net		$	5,680			$	4,927
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common shares for settlement of liabilities		$	—			$	125
Discount on notes payable pursuant to issuance of warrants		$	53			$	4,484
Reduction in accounts payable from settlement of Northern Offshore contingency		$	—			$	24,307

View source version on businesswire.com: http://www.businesswire.com/news/home/20160808006314/en/

Source: Business Wire
(August 8, 2016 - 6:22 PM EDT)

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