EX-99.1

EX-99.1 2 d244849dex991.htm EX-99.1 EX-99.1

Exhibit 99.1


*MOR-1*		UNITED STATES BANKRUPTCY COURT


*CASE NAME:*	Warren Resources, Inc., et al.	PETITION DATE:	6/2/2016
*CASE NUMBER:*	16-32760	DISTRICT OF TEXAS:	Southern
		DIVISION:	Houston

MONTHLY OPERATING REPORT SUMMARY: August 2016


*MONTH*	June			July			August			September		October
REVENUES (MOR-6)		4,988,081			5,650,524			5,110,713			—		—
INCOME BEFORE INT: DEPREC./TAX (MOR-6)		(1,169,637	)		179,451			678,424			—		—
NET INCOME (LOSS) (MOR-6)		(10,162,825	)		(6,106,670	)		(5,274,476	)		—		—
PAYMENTS TO INSIDERS (MOR-9)		57,930			69,200			70,684			—		—
PAYMENTS TO PROFESSIONALS (MOR-9)		—			755,662			1,184,148			—		—
TOTAL DISBURSEMENTS (MOR-7)		(10,302,272	)		(5,862,446	)		(6,128,341	)		—		—

***	The original of this document must be filed with the United States Bankruptcy Court and a copy must be sent to the United States Trustee***


REQUIRED INSURANCE MAINTAINED AS OF SIGNATURE DATE		EXP. DATE
CASUALTY	YES (X) NO ( )	09-01-2017
LIABILITY	YES (X) NO ( )	09-01-2017
VEHICLE	YES (X) NO ( )	09-01-2017
WORKER’S	YES (X) NO ( )	09-01-2017
OTHER	YES (X) NO ( )	09-01-2017


		CIRCLE ONE
Are all accounts receivable being collected within terms?		Yes
Are all post-petition liabilities, including taxes, being paid within terms?		No
Have any pre-petition liabilities been paid? If so, describe: Certain payments were made pursuant to First Day Orders		No
		No
Are all funds received being deposited into DIP bank accounts?		No
Were any assets disposed of outside the normal course of business?		Yes
If so, describe
Are all U.S. Trustee Quarterly Fee Payments current?		No
What is the status of your Plan of Reorganization? Confirmed on September 14, 2016


Consolidated Debtors	Case Number		August-2016 Disbursements
Warren Resources, Inc. (Confirmed on September 14, 2016)		16-32760		(5,281	)
Warren E&P, Inc. (Confirmed on September 14, 2016)		16-32761		(6,123,060	)
Warren Resources of California, Inc. (Confirmed on September 14, 2016)		16-32762		—
Warren Marcellus, LLC (Confirmed on September 14, 2016)		16-32764		—
Warren Energy Services, LLC (Confirmed on September 14, 2016)		16-32765		—
Warren Management Corp. (Confirmed on September 14, 2016)		16-32766		—

Total consolidated disbursements (MOR-7)				(6,128,341	)


ATTORNEY NAME:	Timothy A. Davidson II	I certify under penalty of perjury that the following complete
FIRM NAME:	Andrews Kurth LLP	Monthly Operating Report (MOR), consisting of MOR-1 through
ADDRESS:	600 Travis	MOR-9 plus attachments, is true and correct.
	Suite 4200
CITY, STATE, ZIP:	Houston, Texas 77002	SIGNED X
TELEPHONE/FAX:	713-220-4200		(ORIGINAL SIGNATURE)

*MOR-1*		TITLE:	President, Chief Executive Officer and Chief Restructuring Officer


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

COMPARATIVE BALANCE SHEETS


ASSETS	FILING DATE (1) June 2, 2016			MONTH June 2016			MONTH July 2016			MONTH August 2016			MONTH September 2016
CURRENT ASSETS
Cash (2)		13,918,623			11,090,776			11,366,706			12,035,268			—
Accounts Receivable, Net		10,235,813			9,275,942			9,709,987			8,369,870			—
Inventory: Lower of Cost or Market		—			—			—			—			—
Prepayments and other current assets		5,656,625			5,188,894			4,668,701			4,399,936			—
Investments		6,087,653			1,844,008			2,126,726			1,851,065			—
Other		—			—			—			—			—
TOTAL CURRENT ASSETS		35,898,715			27,399,619			27,872,120			26,656,139			—
PROPERTY, PLANT & EQUIP. @ COST		27,636,990			27,667,366			27,668,188			26,736,430			—
Less Accumulated Depreciation		(26,305,548	)		(26,365,769	)		(26,424,438	)		(25,525,382	)		—
NET BOOK VALUE OF PP & E		1,331,442			1,301,597.45			1,243,749.55			1,211,047.22			—
OTHER ASSETS
1. Deferred Financing Costs		10,598,434			10,400,273			10,202,112			10,003,951			—
2. Oil & Gas Properties		115,893,656			113,741,170			112,477,430			110,262,603			—
3. Oil & Gas Properties, Other		14,657,923			14,657,923			14,657,923			14,749,009			—
4. Notes Receivable		2,948,592			2,948,592			2,948,592			2,948,592			—
5. Midstream Assets		20,012,903			19,895,178			19,810,941			19,693,105			—
TOTAL ASSETS	$	201,341,665			190,344,353			189,212,867			185,524,446			—

(1)	Information as of May 31, 2016.


MOR-2		Revised 07/01/98


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

COMPARATIVE BALANCE SHEETS


LIABILITIES & OWNER’S EQUITY	FILING DATE (1) June 2, 2016			MONTH June 2016			MONTH July 2016			MONTH August 2016			MONTH September 2016
LIABILITIES
POST-PETITION LIABILITIES(MOR-4)		—			6,242,054			8,131,936			5,415,483			—
PRE-PETITION LIABILITIES
Notes Payable - Secured		—			—			—			—			—
Priority Debt		477,338,089			477,515,421			475,858,222			475,481,564			—
Federal Income Tax		—			—			—			—			—
FICA/Withholding		—			—			—			—			—
Unsecured Debt		—			—			—			—			—
Other (2)		80,997,280			73,618,449			78,658,748			83,153,643.14			—
TOTAL PRE-PETITION LIABILITIES		558,335,368			551,133,870			554,516,970			558,635,208			—
TOTAL LIABILITIES		558,335,368			557,375,925			562,648,906			564,050,690			—
OWNER’S EQUITY (DEFICIT)
PREFERRED STOCK		128,437			128,437			128,437			128,437			—
COMMON STOCK		8,520			8,520			8,520			8,520			—
ADDITIONAL PAID-IN CAPITAL		517,385,291			517,510,247			517,212,450			517,396,721			—
RETAINED EARNINGS: Filing Date		(874,515,951	)		(874,515,951	)		(874,515,951	)		(874,515,951	)		—
RETAINED EARNINGS: Post Filing Date		—			(10,162,825	)		(16,269,495	)		(21,543,971	)		—
TOTAL OWNER’S EQUITY (NET WORTH)		(356,993,703	)		(367,031,572	)		(373,436,039	)		(378,526,244	)		—
LIABILITIES & OWNERS EQUITY	$	201,341,665		$	190,344,353		$	189,212,867		$	185,524,446			0

(1)	Information as of May 31, 2016.

(2)	Pursuant to court order, prepetition lease operating expenses continue to be due and payable post petition. Increase from July to August 2016 primarily relates to accrued interest.


MOR-3		Revised 07/01/98


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

SCHEDULE OF POST-PETITION LIABILITIES


	FILING DATE		MONTH		MONTH		MONTH		MONTH
	June 2, 2016		June 2016		July 2016		August 2016		September 2016
*TRADE ACCOUNTS PAYABLE*		—		930,910		2,396,078		210,402		—
TAX PAYABLE
Federal Payroll Taxes		—		—		—		—		—
State Payroll Taxes		—		—		—		—		—
Ad Valorem Taxes		—		29,161		61,055		48,161		—
Other Taxes		—		45,949		127,750		72,224		—
TOTAL TAXES PAYABLE (1)		—		75,110		188,805		120,386		—
SECURED DEBT POST-PETITION		—		—		—		—		—
ACCRUED INTEREST PAYABLE		—		—		—		—		—
OTHER ACCRUED LIABILITIES
1. PAYROLL (2)		—		225,437		275,210		74,564		—
2. LEASE OPERATING & G&A (3)		—		3,555,832		3,542,704		3,742,000		—
3. ROYALTIES (4)		—		1,454,765		1,729,138		1,268,131		—
TOTAL POST-PETITION LIABILITIES (MOR-3)	$	—	$	6,242,054	$	8,131,936	$	5,415,483	$	—

(1)	The balance represents the movement of accounts between July 31 and August 31, 2016.

(2)	Represents a timing difference for the payment of the debtor’s bi-weekly payroll.

(3)	August 2016 includes unpaid restructuring professional fees ($3,172,000) and lease operating expense ($570,000).

(4)	Represents proceeds from gross production receipts that are payable to third-party working interests.


MOR-4		Revised 07/01/98


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

AGING OF POST-PETITION LIABILITIES: AUGUST 2016


DAYS	TOTAL		TRADE ACCOUNTS		FEDERAL TAXES		STATE TAXES		AD VALOREM, OTHER TAXES		OTHER
0-30		5,415,483		210,402		—		—		120,386		5,084,695
31-60		—		—		—		—		—		—
61-90		—		—		—		—		—		—
91+		—		—		—		—		—		—
TOTAL		5,415,483	$	210,402	$	0	$	0	$	120,386	$	5,084,695

AGING OF ACCOUNTS RECEIVABLE (2)


MONTH	June 2, 2016 (1)		June 2016		July 2016		August 2016		September 2016
0-30 DAYS		6,072,541		5,983,435		7,195,913		6,501,753		—
31-60 DAYS		—		—		—		—		—
61-90 DAYS		—		—		—		—		—
91+ DAYS		4,163,272		3,292,507		2,514,074		1,868,117		—
TOTAL	$	10,235,813	$	9,275,942	$	9,709,987	$	8,369,870	$	0

(1)	Information as of May 31, 2016.

(2)	Warren’s Accounts Receivable accounts do not represent any Oil and Gas production that has not been sold.

MOR-5


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

STATEMENT OF INCOME (LOSS)


	MONTH			MONTH			MONTH			MONTH	FILING TO
	June 2016			July 2016			August 2016			September 2016	DATE
REVENUES (MOR-1)		4,988,081			5,650,524			5,110,713				15,749,318
TOTAL COST OF REVENUES		(2,660,189	)		(3,912,326	)		(2,621,030	)			(9,193,545	)
GROSS PROFIT		2,327,892			1,738,198			2,489,683				6,555,773
OPERATING EXPENSES:
Selling & Marketing		—			—			—				—
General & Administrative		(3,497,529	)		(1,558,747	)		(1,811,259	)			(6,867,535	)
Other		—			—			—				—
TOTAL OPERATING EXPENSES		(3,497,529	)		(1,558,747	)		(1,811,259	)			(6,867,535	)
INCOME BEFORE INT, DEPR/TAX (MOR-1)		(1,169,637	)		179,451			678,424				(311,762	)
INTEREST EXPENSE (1)		(3,441,934	)		(3,570,906	)		(3,570,905	)			(10,583,745	)
DEPRECIATION		(2,601,328	)		(2,566,888	)		(2,581,624	)			(7,749,840	)
OTHER (INCOME) EXPENSE (2)		(2,949,926	)		(148,327	)		199,629				(2,898,624	)
OTHER ITEMS		—			—			—				—
TOTAL INT, DEPR & OTHER ITEMS		(8,993,188	)		(6,286,121	)		(5,952,900	)			(21,232,209	)
NET INCOME BEFORE TAXES		(10,162,825	)		(6,106,670	)		(5,274,476	)			(21,543,971	)
FEDERAL INCOME TAXES		—			—			—				—
NET INCOME (LOSS) (MOR-1)		(10,162,825	)		(6,106,670	)		(5,274,476	)			(21,543,971	)

Accrual Accounting Required, Otherwise Footnote with Explanation.

August 2016 notes:

(1)	Deferred Financing Costs ($198,161) and Interest Expenses ($3,372,744)

(2)

Accretion of asset retirement obligations ($249,914), Loss on derivative instruments ($183,201), Loss on USTB investment ($11,844), Loss on contingent consideration ($50,000) and Other Revenues ($694,587) relating to the receipt of funds held in escrow from the sale of property in 2105 and an adjustment to accrued exepense payables.

MOR-6


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760


CASH RECEIPTS AND DISBURSEMENTS	MONTH June 2016			MONTH July 2016			MONTH August 2016			MONTH September 2016		MONTH October 2016		FILING TO DATE
1. CASH-BEGINNING OF MONTH (3)		12,858,577			11,072,052			11,366,700			—		—		12,858,577
RECEIPTS:
2. CASH SALES		—			—			—			—		—		—
3. COLLECTION OF ACCOUNTS RECEIVABLE		8,515,748			6,157,094			6,796,909			—		—		21,469,751
4. LOANS & ADVANCES (attach list)		—			—			—			—		—		—
5. SALE OF ASSETS		—			—			—			—		—		—
6. OTHER (attach list)		—			—			—			—		—		—
TOTAL RECEIPTS		8,515,748			6,157,094			6,796,909			—		—		—
(Withdrawal) Contribution by Individual Debtor MFR-2*		—			—			—			—		—		—
DISBURSEMENTS:
7. NET PAYROLL		(569,986	)		(684,643	)		(1,030,642	)		—		—		(2,285,272	)
8. PAYROLL TAXES PAID		—			—			—			—		—		—
9. SALES, USE & OTHER TAXES PAID		(57,036	)		(23,150	)		(110,175	)		—		—		(190,361	)
10. SECURED/RENTAL/LEASES		—			—			—			—		—		—
11. UTILITIES & TELEPHONE		—			—			—			—		—		—
12. INSURANCE		—			—			—			—		—		—
13. INVENTORY PURCHASES		—			—			—			—		—		—
14. VEHICLE EXPENSES		—			—			—			—		—		—
15. TRAVEL & ENTERTAINMENT		—			—			—			—		—		—
16. REPAIRS, MAINTENANCE & SUPPLIES		(2,228,526	)		(1,586,412	)		(2,019,135	)		—		—		(5,834,072	)
17. ADMINISTRATIVE & SELLING		(227,951	)		(460,266	)		(680,085	)		—		—		(1,368,302	)
18. OTHER (2)		(1,558,563	)		(2,213,085	)		(1,104,157	)		—		—		(4,875,805	)
TOTAL DISBURSEMENTS FROM OPERATIONS		(4,642,062	)		(4,967,557	)		(4,944,193	)		—		—		—
19. PROFESSIONAL FEES		—			(755,662	)		(1,184,148	)		—		—		(1,939,810	)
20. U.S. TRUSTEE FEES		—			(24,700	)		—			—		—		(24,700	)
21. OTHER REORGANIZATION EXPENSES		(5,660,210	)		(114,527	)		—			—		—		(5,774,737	)
TOTAL DISBURSEMENTS (3)		(10,302,272	)		(5,862,446	)		(6,128,341	)		—		—		—
22. NET CASH FLOW		(1,786,524	)		294,648			668,568			—		—		(823,308	)
23. CASH - END OF MONTH (MOR-2) (1)		11,072,052			11,366,700			12,035,268			—		—		12,035,268

(1)	June 2016 closing cash balance does not reconcile to balance sheet cash due to the exclusion of one bank account held in the name of “Warren Development Corp.” totalling $18,722.46.

August 2016 notes:

(2)	Other represents royalty payments on land assets ($1,104,157).

(3)	Includes all checks written, wire transfers made from, or any other withdrawal from the bank accounts listed on MOR-8. No amounts have been paid from the accounts of others on the debtor’s behalf.

MOR-7


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

CASH ACCOUNT RECONCILIATION

MONTH OF August 2016


	JP MORGAN		JP MORGAN			JP MORGAN			JP MORGAN		MERRILL			MERRILL		JP MORGAN			JP MORGAN		JP MORGAN		JP MORGAN
BANK NAME	CHASE		CHASE			CHASE			CHASE		LYNCH (1)			LYNCH		CHASE			CHASE		CHASE		CHASE
ACCOUNT NUMBER		3794		5477			7471			2692		7789 & 7B88					3751			6115		2888		5209

*ACCOUNT TYPE*		*CDA* BY *GSO*		*PAYROLL*			*OPERATIONS*			*CD-* *COLLATERAL*		*STOCK* *OPTIONS*			*MONEY* *MARKET*		*DISBURSEMENT*			*CHECKING*		*CHECKING*		*OPERATIONS*			*TOTAL*	*(1)*

CASE NAME	Warren Resources, Inc.		Warren Resources, Inc.			Warren Resources, Inc.			Warren Resources, Inc.		Warren Resources, Inc.			Warren Resources, Inc.		Warren E&P, Inc.			Warren E&P, Inc.		Warren Resources of California, Inc.		Warren Energy Services, LLC
CASE NUMBER	16-32760		16-32760			16-32760			16-32760		16-32760			16-32760		16-32761			16-32761		16-32762		16-32765			n/a
BANK BALANCE	$	—	$	106,785		$	7,520,741		$	—	$	—		$	—	$	6,542,114		$	—	$	—	$	—		$	14,169,640
DEPOSITS IN TRANSIT	$	—	$	—		$	—		$	—	$	—		$	—	$	—		$	—	$	—	$	—		$	—
OUTSTANDING CHECKS	$	—	$	—		$	—		$	—	$	—		$	—	$	(2,134,372	)	$	—	$	—	$	—		$	(2,134,372	)
ADJUSTED BANK BALANCE	$	—	$	106,785		$	7,520,741		$	—	$	—		$	—	$	4,407,742		$	—	$	—	$	—		$	12,035,268
BEGINNING CASH - PER BOOKS	$	—	$	109,110		$	7,193,097		$	—	$	16,443		$	—	$	4,048,050		$	—	$	—	$	—		$	11,366,700
RECEIPTS	$	—	$	—		$	330,600		$	—	$	—		$	—	$	6,231,434		$	—	$	—	$	234,876		$	6,796,909
TRANSFERS OUT OF ACCOUNT	$	—	$	—		$	—		$	—	$	(16,443	)	$	—	$	—		$	—	$	—	$	(234,876	)	$	(251,319	)
TRANSFERS INTO ACCOUNT	$	—	$	—		$	—		$	—	$	—		$	—	$	251,319		$	—	$	—	$	—		$	251,319
CHECKS/OTHER DISBURSEMENTS	$	—	$	(2,324	)	$	(2,957	)	$	—	$	—		$	—	$	(6,123,060	)	$	—	$	—	$	—		$	(6,128,341	)
ENDING CASH - PER BOOKS	$	—	$	106,785		$	7,520,741		$	—	$	—		$	—	$	4,407,742		$	—	$	—	$	—		$	12,035,268

(1)	Merrill Lynch account #7789 and #7B88 have been consolidated to reflect the Company’s balance sheet.

MOR-8


CASE NAME:		Warren Resources, Inc., et al.
CASE NUMBER:		16-32760

PAYMENTS TO INSIDERS AND PROFESSIONALS

Of the total disbursements shown for the month, list the amount paid to insiders (as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the professionals. Also, for insiders, identify the type of compensation paid (e.g., salary, commission, bonus, etc.) (Attach additional pages as necessary).


	MONTH		MONTH		MONTH		MONTH
INSIDERS: NAME/COMP TYPE	June 2016		July 2016		August 2016		September 2016
1. James A Watt		17,691		27,450		27,450		—
2. Frank T. Smith Jr.		17,684		17,684		17,684		—
3. John R. Powers		11,484		11,758		13,242		—
4. Zach Waite		11,071		12,308		12,308		—
TOTAL INSIDERS (MOR-1)		57,930		69,200		70,684		—


	MONTH		MONTH		MONTH		MONTH
PROFESSIONALS	June 2016		July 2016		August 2016		September 2016
1. Andrews Kurth LLP		—		—		521,467		—
2. Jefferies LLC		—		—		—		—
3. Deloitte Transactions and Business Analytics LLP		—		—		340,539		—
4. Epiq Systems		—		—		211,790		—
5. Kirkland & Ellis LLP		—		755,662		110,352		—
6. Bracewell & Giuliani LLP		—		—		—		—
7. Stroock & Stroock & Lavan LLP		—		—		—		—
TOTAL PROFESSIONALS (MOR-1)		—		755,662		1,184,148		—

MOR-9