isramco10q063014.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 

 
 
Check One
 
 
x
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2014
     
   
or
     
 
o
Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Commission File Number 0-12500
 
ISRAMCO, INC
(Exact Name of registrant as Specified in its Charter)
 
Delaware
 
13-3145265
(State or other Jurisdiction of Incorporation or Organization)
 
I.R.S. Employer Number
 
2425 West Loop South, Suite 810, HOUSTON, TX 77027
 (Address of Principal Executive Offices)
 
713-621-5946
(Registrant’s Telephone Number, Including Area Code)
 
Indicate by check whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer Accelerated filer Non-accelerated filer o (Do not check if a smaller reporting company)     Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o No x
 
As of August 8, 2014, Isramco, Inc, had 2,717,691 outstanding shares of common stock, par value $0.01 per share.
 
 
TABLE OF CONTENTS

   
Page
PART I. FINANCIAL INFORMATION
 
     
Item 1.
4
 
4
 
5
 
 6
 
7
 
8
Item 2.
14
Item 3.  
25
Item 4.
25
     
PART II. OTHER INFORMATION
 
     
Item 1.
26
Item 1A.
27
Item 2.
27
Item 3.
27
Item 4
27
Item 5.
27
Item 6.
27
 
28
 
 
Forward Looking Statements
 
CERTAIN STATEMENTS MADE IN THIS QUARTERLY REPORT ON FORM 10-Q ARE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS “MAY”, “WILL”, “SHOULD”, “EXPECTS”, “INTENDS”, “ANTICIPATES”, “BELIEVES”, “ESTIMATES”, “PREDICTS”, OR “CONTINUE” OR THE NEGATIVE OF THESE TERMS OR OTHER COMPARABLE TERMINOLOGY AND INCLUDE, WITHOUT LIMITATION, STATEMENTS BELOW REGARDING EXPLORATION AND DRILLING PLANS, FUTURE GENERAL AND ADMINISTRATIVE EXPENSES, FUTURE GROWTH, FUTURE EXPLORATION, FUTURE GEOPHYSICAL AND GEOLOGICAL DATA, GENERATION OF ADDITIONAL PROPERTIES, RESERVES, NEW PROSPECTS AND DRILLING LOCATIONS, FUTURE CAPITAL EXPENDITURES, SUFFICIENCY OF WORKING CAPITAL, ABILITY TO RAISE ADDITIONAL CAPITAL, PROJECTED CASH FLOWS FROM OPERATIONS, OUTCOME OF ANY LEGAL PROCEEDINGS, DRILLING PLANS, THE NUMBER, TIMING OR RESULTS OF ANY WELLS, INTERPRETATION AND RESULTS OF SEISMIC SURVEYS OR SEISMIC DATA, FUTURE PRODUCTION OR RESERVES, LEASE OPTIONS OR RIGHTS, PARTICIPATION OF OPERATING PARTNERS, CONTINUED RECEIPT OF ROYALTIES, AND ANY OTHER STATEMENTS REGARDING FUTURE OPERATIONS, FINANCIAL RESULTS, OPPORTUNITIES, GROWTH, BUSINESS PLANS AND STRATEGY. BECAUSE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CANNOT GUARANTEE FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS. MOREOVER, NEITHER THE COMPANY NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THESE FORWARD-LOOKING STATEMENTS. THE COMPANY IS UNDER NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENTS AFTER THE DATE OF THIS REPORT TO CONFORM SUCH STATEMENTS TO ACTUAL RESULTS.

 
PART I - Financial Information
 
ITEM 1. Financial Statements
 
ISRAMCO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
 (Unaudited)
 
   
As of
June 30, 2014
   
As of
December 31, 2013
 
ASSETS
 
Current Assets:
           
Cash and cash equivalents
 
$
6,180
   
$
4,149
 
Accounts receivable, net of allowances for doubtful accounts of $560 and $536
   
19,127
     
14,755
 
Restricted cash
   
61
     
1,561
 
Inventories
   
588
     
428
 
Deferred tax assets
   
7,465
     
6,539
 
Prepaid expenses and other
   
397
     
911
 
Total Current Assets
   
33,818
     
28,343
 
                 
Property and Equipment, at cost – successful efforts method:
               
Oil and gas properties
   
238,881
     
236,399
 
Advanced payment for equipment and oil and gas properties
   
550
     
330
 
Production service equipment and other
   
46,906
     
36,836
 
Total Property and Equipment
   
286,337
     
273,565
 
Accumulated depreciation, depletion and amortization and impairment
   
(158,405
)
   
(153,147
)
Net Property and Equipment
   
127,932
     
120,418
 
                 
Deferred tax assets and other
   
6,697
     
9,152
 
Total assets
 
$
168,447
   
$
157,913
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Current liabilities:
           
Accounts payable and accrued expenses
 
$
13,849
   
$
13,906
 
Bank overdraft
   
-
     
791
 
Short term debt
   
214
     
601
 
Due to related party and accrued interest
   
28,902
     
15,275
 
Total current liabilities
   
42,965
     
30,573
 
                 
Due to related party and accrued interest
   
84,956
     
96,035
 
                 
Other Long-term Liabilities:
               
Deferred tax liabilities
   
57
     
-
 
Asset retirement obligations
   
19,269
     
18,814
 
Total liabilities
   
147,247
     
145,422
 
                 
Commitments and contingencies
               
                 
Shareholders’ equity:
               
Common stock $0.01 par value; authorized 7,500,000 shares;  issued 2,746,958 shares; outstanding 2,717,691 shares
   
27
     
27
 
Additional paid-in capital
   
23,853
     
23,268
 
Accumulated deficit
   
(3,219
)
   
(11,257
)
Treasury stock, 29,267 shares at cost
   
(164
)
   
(164
)
Total Isramco, Inc. shareholders’ equity
   
20,497
     
11,874
 
Non controlling interest
   
703
     
617
 
Total equity
   
21,200
     
12,491
 
Total liabilities and shareholders’ equity
 
$
168,447
   
$
157,913
 
 
See notes to the unaudited condensed consolidated financial statements. 
 
 
ISRAMCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
 
   
Three Months Ended June 30
   
Six Months Ended June 30
 
   
2014
   
2013
   
2014
   
2013
 
                         
Revenues
                       
Oil and gas sales
 
$
15,185
   
$
13,800
   
$
29,875
   
$
22,272
 
Production services
   
7,482
     
2,993
     
13,896
     
5,697
 
Office services
   
189
     
179
     
323
     
327
 
Other
   
377
     
66
     
507
     
194
 
Total revenues
   
23,233
     
17,038
     
44,601
     
28,490
 
                                 
Operating expenses
                               
Lease operating expense, transportation and taxes
   
5,399
     
5,170
     
10,018
     
9,699
 
Depreciation, depletion and amortization
   
2,745
     
2,431
     
5,258
     
4,934
 
Accretion expense
   
218
     
225
     
422
     
440
 
Production services
   
6,143
     
1,903
     
10,832
     
3,922
 
Loss (gain) from plug and abandonment
   
1
     
6
     
(1
   
223
 
General and administrative
   
946
     
839
     
2,255
     
2,029
 
Total operating expenses
   
15,452
     
10,574
     
28,784
     
21,247
 
Operating income
   
7,781
     
6,464
     
15,817
     
7,243
 
                                 
Other expenses
                               
Interest expense, net
   
1,697
     
1,619
     
3,355
     
3,188
 
Capital (gain) loss
   
13
     
-
     
11
     
(6
)
Total other expenses
   
1,710
     
1,619
     
3,366
     
3,182
 
                                 
Income before income taxes
   
6,071
     
4,845
     
12,451
     
4,061
 
Income tax expense
   
(2,132
)
   
(1,673
)
   
(4,327
)
   
(1,398
)
                                 
Net income
 
$
3,939
   
$
3,172
   
$
8,124
   
$
2,663
 
Net income (loss) attributable to non-controlling interests
   
(22
)
   
65
     
86
     
64
 
Net income attributable to Isramco
 
$
3,961
   
$
3,107
   
$
8,038
   
$
2,599
 
                                 
Earnings per share – basic:
 
$
1.46
   
$
1.14
   
$
2.96
   
$
0.96
 
                                 
Earnings per share – diluted:
 
$
1.46
   
$
1.14
   
$
2.96
   
$
0.96
 
                                 
Weighted average number of shares outstanding basic:
   
2,717,691
     
2,717,691
     
2,717,691
     
2,717,691
 
Weighted average number of shares outstanding diluted:
   
2,717,691
     
2,717,691
     
2,717,691
     
2,717,691
 

See notes to the unaudited condensed consolidated financial statements.
 
 
ISRAMCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
   
Three Months Ended June 30
   
Six Months Ended June 30
 
   
2014
   
2013
   
2014
   
2013
 
Net income
 
$
3,939
   
$
3,172
   
$
8,124
   
$
2,663
 
Other comprehensive income
                               
Comprehensive income
 
 
3,939
     
3,172
     
8,124
   
 
2,663
 
Comprehensive income (loss) attributable to non-controlling interests
   
(22
)
   
65
     
86
     
64
 
Comprehensive Income attributable to Isramco
 
$
3,961
   
$
3,107
   
$
8,038
   
$
2,599
 
 
See notes to the unaudited condensed consolidated financial statements.

 
ISRAMCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
   
Six Months Ended
June 30,
 
   
2014
   
2013
 
             
Cash Flows From Operating Activities:
           
Net income
 
$
8,124
   
$
2,663
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation, depletion, amortization and impairment
   
5,258
     
4,934
 
Bad debt expense
   
24
     
-
 
Accretion expense
   
422
     
440
 
Changes in deferred taxes
   
1,586
     
238
 
Capital (gain) loss
   
 11
     
 (6
)
Changes in components of working capital and other assets and liabilities
               
Accounts receivable
   
(4,397
)
   
(2,656
)
Prepaid expenses, other receivables and other current assets
   
1,018
     
102
 
Due to related party
   
3,257
     
3,210
 
Inventories
   
(160
)
   
-
 
Accounts payable and accrued expenses
   
(1,342
)
   
(1,572
)
Net cash provided by operating activities
   
13,801
     
7,353
 
                 
Cash flows from investing activities:
               
Addition to property and equipment, net
   
(11,627
)
   
(6,577
)
Restricted cash and deposit, net
   
1,500
     
(1,500
)
Proceeds from sale of equipment
   
40
     
38
 
Net cash used in investing activities
   
(10,087
)
   
(8,039
)
                 
Cash flows from financing activities:
               
Proceeds on loans – related parties, net
   
-
     
1,500
 
Borrowings (repayments) of bank overdraft, net
   
(791
)
   
289
 
Repayments of short - term debt, net
   
(892
)
   
-
 
Net cash provided by (used in) financing activities
   
(1,683
)
   
1,789
 
                 
Net increase in cash and cash equivalents
   
2,031
     
1,103
 
Cash and cash equivalents at beginning of period
   
4,149
     
615
 
Cash and cash equivalents at end of period
 
$
6,180
   
$
1,718
 
 
See notes to the unaudited condensed consolidated financial statements.
 
 
Isramco Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 
Note 1 - Financial Statement Presentation
 
Isramco, Inc. and its subsidiaries and affiliated companies (together referred to as “We”, “Our”, “Isramco” or the “Company") is predominately an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas properties located onshore in the United States and ownership of various royalty interests in oil and gas concessions located offshore Israel. The Company also operates a well service company that provides well maintenance and workover services, well completion, and recompletion services.
 
The accompanying unaudited financial statements and notes of Isramco have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying financial statements and notes should be read in conjunction with the accompanying financial statements and notes included in Isramco’s Annual Report on Form 10-K for the year ended December 31, 2013.
 
The accompanying unaudited interim financial statements furnished in this report reflect all adjustments that are, in the opinion of management, necessary to fairly present Isramco’s results of operations and cash flows for the three-month and six-month periods ended June 30, 2014 and 2013 and Isramco’s financial position as of June 30, 2014.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained, and as the Company’s operating environment changes. Actual results may differ from the estimates and assumptions used in the preparation of the Company’s condensed consolidated financial statements.
 
Consolidated interim period results are not necessarily indicative of results of operations or cash flows for the full year and accordingly, certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted. The Company has evaluated events or transactions through the date of issuance of these condensed consolidated financial statements.
 
Risk Management Activities

The Company follows Accounting Standards Codification (ASC) 815, Derivatives and Hedging. From time to time, the Company may hedge a portion of its forecasted oil and natural gas production. Derivative contracts entered into by the Company have consisted of transactions in which the Company hedges the variability of cash flow related to a forecasted transaction. The Company has elected not to designate any of its positions for hedge accounting. Accordingly, the Company records the net change in the mark-to-market valuation of these positions, as well as payments and receipts on settled contracts, in “Net loss (gain) on derivative contracts” in the consolidated statements of operations.
 
Consolidation
 
The condensed consolidated financial statements include the accounts of Isramco and its subsidiaries. Inter-company balances and transactions have been eliminated in consolidation.

Asset Retirement Obligation
 
ASC 410, Asset Retirement and Environmental Obligations (ASC 410) requires that the fair value of an asset retirement cost, and corresponding liability, should be recorded as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The Company records asset retirement obligations to reflect the Company’s legal obligations related to future plugging and abandonment of its oil and natural gas wells and gas gathering systems. The Company estimates the expected cash flow associated with the obligation and discounts the amounts using a credit-adjusted, risk-free interest rate. At least annually, the Company reassesses the obligation to determine whether a change in the estimated obligation is necessary. The Company evaluates whether there are indicators that suggest the estimated cash flows underlying the obligation have materially changed. Should those indicators suggest the estimated obligation may have materially changed on an interim basis (quarterly), the Company will accordingly update its assessment.
 
 
Note 2 - Supplemental Cash Flow Information
 
There were no cash payments for interest or taxes for the six-month periods ended June 30, 2014 and 2013 respectively.
 
The condensed consolidated statement of cash flows for the period ended June 30, 2014 excludes the following non-cash transactions:
 
  ●   
Property and equipment of $1,178,000 included in accounts payable.
  ●   
Insurance premiums financed through issuance of short term debt of $505,000.
  ●   
Proceeds from short swing profits from parent company of $585,000. This resulted in a reduction of $709,000 due to related party accrued interest, and an increase of $124,000 to accounts payable.

The condensed consolidated statement of cash flows for the six-month period ended June 30, 2013 excludes the following non-cash transactions:
 
  ●   
Property and equipment of $888,000 included in accounts payable.
  ●   
Accrued interest of $1,840,000 included as part of the related-party loan amended on June 30, 2013.
 
Note 3 - Debt and Interest Expense
 
Long-Term Related Party Debt as of June 30, 2014 and December 31, 2013 consisted of the following (in thousands):
 
   
As of 
June 30, 2014
   
As of
December 31, 2013
 
Libor + 6% Related party Debt
  $
12,000
    $
12,000
 
Libor + 5.5% Related party Debt
   
3,500
     
3,500
 
Libor + 5.5% Related party Debt
   
10,000
     
10,000
 
Libor + 6% Related party Debt
   
11,500
     
11,500
 
Libor + 6% Related party Debt
   
6,000
     
6,000
 
Libor + 6% Related party Debt
   
43,701
     
43,701
 
Libor + 5.5% Related party Debt
   
6,456
     
6,456
 
Libor + 6% Related party Debt
   
1,500
     
1,500
 
Accrued interest
   
18,943
     
16,299
 
     
113,600
     
110,956
 
Less: Current Portion of Long-Term Debt and Accrued Interest
   
(28,644
)
   
(14,921
)
Total
  $
84,956
    $
96,035
 
 
Related Party Debt
 
On February 13, 2013, the Company entered into a Loan Agreement with Israel Oil Company LTD (“IOC”), pursuant to which it borrowed $1,500,000. The loan bears interest of Libor+6% per annum and matures on February 13, 2018, when all accrued interest and principal is due and payable. The loan may be prepaid at any time without penalty or premium. The loan is unsecured. The purpose of the loan was to provide funds to back up a Letter of Credit.
 
As we disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 under Note 5. Long-Term Debt and Interest Expense, on March 1, 2013 Loan agreements and notes with aggregated principal amount of $49,456,000 were amended. The terms of all these loans and notes between the Company and related parties were amended extending the maturity to December 31, 2018.  In addition the payment schedule was changed on all of the loans and notes to require interest only payments on December 31, 2014, December 31, 2015, December 31, 2016, December 31, 2017 and final interest payment on December 31, 2018 along with all outstanding principal paid in four equal installments with the first payment on December 31, 2015 and a similar payment made December 31 in each of the following three years until the final payment on December 31, 2018.  The other terms of these loan agreements and notes remained unchanged.
 
On June 30, 2013, the terms of an Amended and Restated Loan Agreement dated May 25, 2008, and note between the Company and Jerusalem Oil Exploration, Ltd. (“JOEL”) were amended to extend the maturity date to June 30, 2017.  The payment schedule of the loan agreement and note was amended to require principal and accrued interest to be paid in three (3) installments in the amounts reflected in Promissory Note due on June 30th of each year commencing June 30, 2015. The other terms of the loan agreement and note remained unchanged.
 
 
The Company evaluated the application of ASC 470-50 “Debt Modification and Extinguishment” and ASC 470-60 “Troubled Debt Restructuring” and concluded that the revised terms constituted a debt modification, rather than a debt extinguishment or a troubled debt restructuring. 

Isramco also had related party payables of $258,000 and $354,000 as of June 30, 2014, and December 31, 2013, respectively which are included in the Due to related party and accrued interest section of the condensed consolidated balance sheets.
 
Short-Term Debt
 
As of June 30, 2014 and December 31, 2013 outstanding debt from short-term insurance financing agreements totaled $214,000 and $601,000 respectively. During the six-months ended June 30, 2014 the Company borrowed an additional $505,000 and made cash payments totaling $892,000. The Company also reduced the bank overdraft by $791,000.
 
Interest expense
 
The following table summarizes the amounts included in interest expense for the six months ended June 30, 2014 and 2013 (in thousands):
 
   
Six Months Ended
June 30,
 
   
2014
   
2013
 
Current debt, long-term debt and other - banks corporation
 
$
-
   
$
-
 
Long-term debt – related parties
   
3,355
     
3,188
 
   
$
3,355
   
$
3,188
 
 
Note 4 - Tamar Field Proceeds
 
We own an overriding royalty interest of 1.5375% in the Tamar Field, which will increase to 2.7375% after payout (collectively the “Tamar Royalty”).  An overriding royalty interest is an ownership interest in the oil and gas leasehold estate equating to a certain percentage of production or production revenues, calculated free of the costs of production and development of the underlying lease(s), but subject to its proportionate share of certain post production costs.  An overriding royalty interest is a non-possessory interest in the oil and gas leasehold estate and, accordingly, we have no control over the operations, drilling, expenses, timing, production, sales, or any other aspect of development or production of the Tamar Field. For additional information, please see the disclosure related to the Tamar Royalty set forth in the ITEM 1. BUSINESS section included in our Annual Report on Form 10-K for the year ended December 31, 2013, which is incorporated by reference herein. 
 
In 2009, two natural gas discoveries, known as "Tamar" and "Dalit", were made within the area covered by Michal and Matan Licenses, respectively. In December 2009, the Israeli Petroleum Commissioner granted Noble Energy, Inc. (“Noble”) and its partners, Isramco Negev 2-LP, Delek Drilling, Avner Oil & Gas, and Dor Gas (the “Tamar Consortium”), two leases (the “Leases”). The Leases are scheduled to expire in December 2038 and cover the Tamar and Dalit gas fields (collectively the “Tamar Field”). The Tamar Field is approximately 95 kilometers off the coast of the Israel, in the Israel exclusive economic zone of the Eastern Mediterranean, with a water depth of approximately 1,700 meters. On March 31, 2013 the Tamar Field commenced its initial production of the natural gas.

During six months ended June 30, 2014, Tamar Field net sales attributable to Isramco amounted to 1,715,313 Mcf of natural gas and 2,428 Bbl of condensate with prices of $5.84 per Mcf and $102.17 per Bbl of condensate. Total revenues net of marketing and transportations expenses were $10,214,000. Israeli Tax Authorities withheld $2,707,000 of this revenue which is recognized as an asset on the Company’s condensed consolidated balance sheets.
 
Note 5 - Segment Information
 
Isramco’s primary business segments are vertically integrated within the oil and gas industry. These segments are separately managed due to distinct operational differences, unique technology, distribution, and marketing requirements. The Company’s two reporting segments are oil and gas exploration and production and well service. The oil and gas exploration and production segment explores for and produces natural gas, crude oil, condensate, and natural gas liquids (“NGLs”). The well service segment is engaged in rig-based workover services, well completion and recompletion services, plugging and abandonment of wells, and other ancillary oilfield services.
 
Oil and Gas Exploration and Production Segment
 
Our Oil and Gas segment is engaged in the exploration, development and production of oil and natural gas properties located onshore in the United States and ownership of various royalty interests in oil and gas concessions located offshore Israel. We own varying working interests in oil and gas wells in Louisiana, Texas, New Mexico, Oklahoma, Wyoming, Utah and Colorado and currently serve as operator of approximately 589 wells, most of which are located in Texas and New Mexico.
 
 
Well Service Segment
 
Our rig-based services include the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives.
 
Our completion and recompletion services prepare a newly drilled well, or alternative production zones in a well, for production. The completion process may involve selectively perforating the well casing to access production zones, stimulating and testing these zones, and installing tubular and downhole equipment. We typically provide a well service rig and also may provide other equipment to assist in the completion process. The completion process may take a few days to several weeks, depending on the nature of the completion.
 
Our workover services are designed to enhance the production of existing wells and, generally, are more complex and time consuming than normal maintenance services. Workover services can include sealing off depleted production zones and accessing previously bypassed production zones, converting former production wells into injection wells for enhanced recovery operations, and conducting major subsurface repairs due to equipment failures. Workover services may last from a few days to several weeks, depending on the complexity of the workover.
 
The maintenance services that we provide with our rig fleet are generally required throughout the life cycle of an oil or natural gas well. Examples of these maintenance services include routine mechanical repairs to the pumps, tubing and other equipment, removing debris and formation material from wellbores, and pulling the rods and other downhole equipment from wellbores to identify and resolve production problems. Maintenance services generally take less than 48 hours to complete. Our rig fleet is also used in the process of permanently shutting-in oil or natural gas wells that are at the end of their productive lives. These plugging and abandonment services generally require auxiliary equipment in addition to a well servicing rig. The demand for plugging and abandonment services is not significantly impacted by the demand for oil and natural gas because well operators are required by state and federal regulations to plug wells that are no longer productive.
 
thousands
 
Oil and Gas
Exploration
 & Production
   
Well Service
   
Eliminations
   
Total
 
Three Months Ended June 30, 2014:
                       
Sales revenues
                               
United States
 
$
10,073
   
$
7,482
   
$
-
   
$
17,555
 
Non-U.S.
   
5,112
     
 -
     
 -
     
5,112
 
Intersegment revenues
   
-
     
184
     
(184
)
   
-
 
Office services and other
   
596
     
-
     
(30
)
   
566
 
                                 
Total revenues and other
   
15,781
     
7,666
     
(214
)
   
23,233
 
                                 
Operating costs and expenses
   
8,582
     
7,084
     
(214
)
   
15,452
 
Interest expenses, net
   
1,003
     
694
     
-
     
1,697
 
Other income, net
   
13
     
-
     
-
     
13
 
                                 
Total expenses and other
   
9,598
     
7,778
     
(214
)
   
17,162
 
                                 
Income (loss) before income taxes
 
$
6,183
   
$
(112
)
 
$
-
   
$
6,071
 
Net Income (Loss)
   
4,019
     
(80
)
   
-
     
3,939
 
Net loss attributable to noncontrolling interests
   
-
     
(22
)
   
-
     
(22
)
Net income (loss) attributable to Isramco
   
4,019
     
(58
)
   
-
     
3,961
 
Total Assets
 
$
115,782
   
$
52,665
   
$
 -
   
$
168,447
 

 
thousands
 
Oil and Gas
Exploration
 & Production
   
Well Service
   
Eliminations
   
Total
 
Three Months Ended June 30, 2013:
                       
Sales revenues
                               
United States
 
$
9,159
   
$
2,993
   
$
-
   
$
12,152
 
Non-U.S.
   
 4,641
     
  -
     
  -
     
 4,641
 
Intersegment revenues
   
-
     
740
     
(740
)
   
-
 
Office services and other
   
275
     
-
     
(30
)
   
245
 
                                 
Total revenues and other
   
14,075
     
3,733
     
(770
)
   
17,038
 
                                 
Operating costs and expenses
   
8,300
     
3,044
     
(770
)
   
10,574
 
Interest expenses, net
   
1,255
     
364
     
-
     
1,619
 
Other income, net
   
-
     
-
     
-
     
-
 
                                 
Total expenses and other
   
9,555
     
3,408
     
(770
)
   
12,193
 
                                 
Income before income taxes
 
$
4,520
   
$
325
   
$
-
   
$
4,845
 
Net Income
   
2,939
     
233
     
-
     
3,172
 
Net income attributable to noncontrolling interests
   
-
     
65
     
-
     
65
 
Net Income attributable to Isramco
   
2,939
     
168
     
-
     
3,107
 
Total Assets
 
$
133,961
   
$
27,415
   
$
 -
   
$
161,376
 
 
thousands
 
Oil and Gas
Exploration
 & Production
   
Well Service
   
Eliminations
   
Total
 
Six Months Ended June 30, 2014:
                       
Sales revenues
                               
United States
 
$
19,661
   
$
13,896
   
$
-
   
$
33,557
 
Non-U.S.
   
 10,214
     
  -
     
  -
     
 10,214
 
Intersegment revenues
   
-
     
469
     
(469
)
   
-
 
Office services and other
   
890
     
-
     
(60
)
   
830
 
                                 
Total revenues and other
   
30,765
     
14,365
     
(529
)
   
44,601
 
                                 
Operating costs and expenses
   
16,547
     
12,766
     
(529
)
   
28,784
 
Interest expenses, net
   
2,186
     
1,169
     
-
     
3,355
 
Other income, net
   
11
     
-
     
-
     
11
 
                                 
Total expenses and other
   
18,744
     
13,935
     
(529
)
   
32,150
 
                                 
Income before income taxes
 
$
12,021
   
$
430
   
$
-
   
$
12,451
 
Net Income
   
7,814
     
310
     
-
     
8,124
 
Net income attributable to noncontrolling interests
   
-
     
86
     
-
     
86
 
Net Income attributable to Isramco
   
7,814
     
224
     
-
     
8,038
 
Total Assets
 
$
115,782
   
$
52,665
   
$
 -
   
$
168,447
 


thousands
 
Oil and Gas
Exploration
 & Production
   
Well Service
   
Eliminations
   
Total
 
Six Months Ended June 30, 2013:
                       
Sales revenues
                               
United States
 
$
17,631
   
$
5,697
   
$
-
   
$
23,328
 
Non-U.S.
   
 4,641
     
  -
     
  -
     
 4,641
 
Intersegment revenues
   
-
     
1,330
     
(1,330
)
   
-
 
Office services and other
   
581
     
-
     
(60
)
   
521
 
                                 
Total revenues and other
   
22,853
     
7,027
     
(1,390
)
   
28,490
 
                                 
Operating costs and expenses
   
16,618
     
6,019
     
(1,390
)
   
21,247
 
Interest expenses, net
   
2,493
     
695
     
-
     
3,188
 
Capital gain
   
-
     
(6
)
   
-
     
(6
)
                                 
Total expenses and other
   
19,111
     
6,708
     
(1,390
)
   
24,429
 
                                 
Income before income taxes
 
$
3,742
   
$
319
   
$
-
   
$
4,061
 
Net Income
   
2,434
     
229
     
-
     
2,663
 
Net income attributable to noncontrolling interests
   
-
     
64
     
-
     
64
 
Net Income attributable to Isramco
   
2,434
     
165
     
-
     
2,599
 
Total Assets
 
$
133,961
   
$
27,415
   
$
 -
   
$
161,376
 

 
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
THE FOLLOWING COMMENTARY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES CONTAINED ELSEWHERE IN THIS REPORT ON FORM 10-Q. THE DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. IN SOME CASES, YOU CAN IDENTIFY THESE FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “PLAN,” “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “PREDICT,” “POTENTIAL,” “INTEND,” OR “CONTINUE,” AND SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY PREDICTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER “RISK FACTORS” AND ELSEWHERE IN THIS REPORT ON FORM 10-Q. ISRAMCO INC. DISCLAIMS ANY OBLIGATION TO UPDATE SUCH FORWARD LOOKING STATEMENTS.
 
Overview
 
Isramco is predominately an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas properties located onshore in the United States and ownership of various royalty interests in oil and gas concessions located offshore Israel. The Company also operates a well service company that provides well maintenance, workover services, well completion and recompletion services. Our properties are primarily located in Texas, New Mexico and Oklahoma. We also act as the operator of a certain number of these properties. Historically, we have grown through acquisitions, with a focus on properties within our core operating areas that we believe have significant development and exploration opportunities and where we can apply our technical experience and economies of scale to increase production and proved reserves, while lowering lease operating costs.

We own an overriding royalty interest of 1.5375% in the Tamar Field, which will increase to 2.7375% after payout (collectively the “Tamar Royalty”).  An overriding royalty interest is an ownership interest in the oil and gas leasehold estate equating to a certain percentage of production or production revenues, calculated free of the costs of production and development of the underlying lease(s), but subject to its proportionate share of certain post production costs.  An overriding royalty interest is a non-possessory interest in the oil and gas leasehold estate and, accordingly, we have no control over the operations, drilling, expenses, timing, production, sales, or any other aspect of development or production of the Tamar Field. For additional information, please see the disclosure related to the Tamar Royalty set forth in the ITEM 1. BUSINESS section included in our Annual Report on Form 10-K for the year ended December 31, 2013, which is incorporated by reference herein.

As noted above in Note 1, in 2009 two natural gas discoveries known as "Tamar" and "Dalit" were made within the area covered by Michal and Matan Licenses respectively and are known as the Tamar Field. In December 2009 the Israeli Petroleum Commissioner granted Noble Energy, Inc. (“Noble”) and its partners, Isramco Negev 2-LP, Delek Drilling, Avner Oil & Gas, and Dor Gas (the “Tamar Consortium”), two leases (the “Leases”). The Leases are scheduled to expire in December 2038. The Tamar Field is approximately 95 kilometers off the coast of the Israel in the Israel exclusive economic zone of the Eastern Mediterranean with a water depth of approximately 1,700 meters. On March 31, 2013, the Tamar Field began its initial production of the natural gas.

During six months ended June 30, 2014 Tamar Field net sales attributable to Isramco amounted to 1,715,313 Mcf of natural gas and 2,428 Bbl of condensate with prices of $5.84 per Mcf and $102.17 per Bbl of condensate. Total revenues net of marketing and transportations expenses were $10,214,000. Israeli Tax Authorities withheld $2,707,000 of this revenue which is recognized as an asset on the Company’s condensed consolidated balance sheets.
 
Our financial results depend upon many factors, but are largely driven by the volume of our oil and natural gas production and the prices received for that production. Our production volumes will decline as reserves are depleted unless we expend capital in successful development and exploration activities or acquire additional properties with existing production. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, weather, pipeline capacity constraints, inventory storage levels, basis differentials and other factors, and secondarily upon our commodity price hedging activities. Accordingly, finding and developing oil and natural gas reserves at economical costs is critical to our long-term success. Our future drilling plans are subject to change based upon various factors, some of which are beyond our control, including drilling results, oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, gathering system and pipeline transportation constraints and regulatory approvals. To the extent these factors lead to reductions in our drilling plans and associated capital budgets in future periods, our financial position, cash flows and operating results could be adversely impacted. 
 

Liquidity and Capital Resources
  
Our primary source of cash during the six months ended June 30, 2014 was cash flow from operating activities. We continuously monitor our liquidity and evaluate our development plans in light of a variety of factors, including, but not limited to, our cash flows, capital resources and drilling success.
 
Our future capital resources and liquidity may depend, in part, on our success in developing the leasehold interests that we have acquired. Cash is required to fund capital expenditures necessary to offset inherent declines in production and proven reserves, which is typical in the capital-intensive oil and gas industry. Future success in growing reserves and production will be highly dependent on the capital resources available and our success in finding and acquiring additional reserves. Our oil well service subsidiary also requires capital resources to acquire and maintain equipment and continue growth. We expect to fund our future capital requirements through internally generated cash flows, borrowings under loans from related parties, and a future credit facility. Long-term cash flows are subject to a number of variables, including the level of production, prices, amount of work orders received, and our commodity price hedging activities, as well as various economic conditions that have historically affected the oil and natural gas industry.

The Company is also in negotiations for one or more credit facilities with several commercial lenders, to obtain a new credit facility on terms favorable to the Company. The Company hopes to obtain a new credit facility that would replace its existing financing from affiliated parties and also provide additional financing for Company operations and investments. While the Company believes that it has made substantial progress in obtaining a new facility, the process is ongoing.  Accordingly, the Company remains uncertain as to whether it will be successful in obtaining new replacement financing or, if it is obtained, the timetable upon which such facility will be closed and other material terms and conditions. The Company believes that the current sources of its affiliate financing will remain flexible and additional funding will be made available if needed until a new commercial credit facility can be obtained.
  
During the six months ended June 30, 2014, our cash increased by $2.0 million. Specifically, the net cash provided by operating activities of $13.8 million and a release of restricted cash in the amount of $1.5 million were offset by an investment of $11.6 million in well service equipment and oil and gas properties and $1.7 million in repayments of short-term debt and bank overdraft.
 
Debt

   
As of 
June 30,
 
As of
December 31,
 
   
2014
   
2013
 
Long – term debt – related party
 
$
94,657
   
$
94,657
 
Current maturities of long-term debt, short-term debt and bank overdraft
   
214
     
1,392
 
Total debt
 
$
94,871
   
$
96,049
 
                 
Stockholders’ equity
 
$
21,200
   
$
12,491
 
                 
Debt to capital ratio
   
82
%
   
88
%
 
As of June 30, 2014, our total debt was $94,871,000, compared to total debt of $96,049,000 at December 31, 2013.
 
 
Cash Flow
 
Our primary source of cash during the six months ended June 30, 2014 was cash flow from operating activities. In 2014, cash received from operations and the release of restricted cash was primarily used for investments in well service equipment and oil and gas properties. In 2013, cash received from operations and proceeds from a related party loan was primarily used for investments in equipment for well service subsidiary, oil and gas properties and a restricted cash deposit.
 
Operating cash flow fluctuations were substantially driven by changes in commodity prices and changes in our production volumes. Working capital was substantially influenced by these variables. Fluctuation in commodity prices and our overall cash flow may result in an increase or decrease in our future capital expenditures. Prices for oil and natural gas have historically been subject to seasonal fluctuations characterized by peak demand and higher prices in the winter heating season; however, the impact of other risks and uncertainties have influenced prices throughout recent years. See Results of Operations below for a review of the impact of prices and volumes on sales. 
 
   
Six months Ended June 30,
 
   
2014
   
2013
 
   
(In thousands)
 
Cash flows provided by operating activities
 
$
13,801
   
$
7,353
 
Cash flows used in investing activities
   
(10,087
   
(8,039
Cash flows used in financing activities
   
(1,683
   
1,789
 
Net increase in cash
 
$
2,031
   
$
1,103
 
 
Operating Activities, During the six months ended June 30, 2014, compared to the same period in 2013, net cash flow provided by operating activities increased by $6,448,000 to $13,801,000. The increase was primarily attributable to proceeds from our overriding royalty interest in the Tamar Field offshore Israel, revenues from our well service segment, and an increase in revenues from our United States based production operations. This increase was partially offset by changes in the working capital.
 
The increase in revenues from crude oil, natural gas and natural gas liquids (“NGLs”) was caused by an increase in prices for crude oil, natural gas, and NGLs and an increase in sales volumes of crude oil, which were slightly offset by a decrease in sales volumes of natural gas and NGLs. The average crude oil price for the six months ended June 30, 2014 was $96.84/Bbl compared to $92.97/Bbl, natural gas $4.95/Mcf compared to $4.04/Mcf, and NGLs $35.26/Bbl compared to $30.90/Bbl for the six months ended June 30, 2013.

Investing Activities, Net cash flows used in investing activities for the six months ended June 30, 2014 and 2013 were $10,087,000 and $8,039,000, respectively. During the first six months of 2014, the Company invested $11,627,000 in equipment for well service subsidiary and oil and gas properties and decreased the restricted cash balance by $1,500,000.
 
Financing Activities, Net cash flows provided by (used in) financing activities were ($1,683,000) and $1,789,000 for the six months ended June 30, 2014 and 2013, respectively. During the first six months of 2014 the Company made payments on insurance premium financing in the amount of $892,000 and reduced its bank overdraft by $791,000.
 
 
Results of Operations

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013
 
Selected Data
   
Three Months Ended June 30,
 
   
2014
   
2013
 
   
(In thousands except per share
and BOE amounts)
 
Financial Results
           
Oil and Gas sales
               
United States
 
$
10,073
   
$
9,159
 
Non-U.S.
   
5,112
     
4,641
 
Production Services
   
7,482
     
2,993
 
Other
   
566
     
245
 
Total revenues and other
   
23,233
     
17,038
 
                 
Cost and expenses
   
15,452
     
10,574
 
Other expenses
   
1,710
     
1,619
 
Income tax expense
   
2,132
 
   
1,673
 
Net income attributable to common shareholders
   
3,939
     
3,172
 
Net income (loss) attributable to non-controlling interests
   
(22
   
65
 
Net income attributable to Isramco
   
3,961
     
3,107
 
Earnings per common share – basic
 
$
1.46
   
$
1.14
 
Earnings per common share – diluted
 
$
1.46
   
$
1.14
 
                 
Weighted average number of shares outstanding- basic
   
2,717,691
     
2,717,691
 
Weighted average number of shares outstanding- diluted
   
2,717,691
     
2,717,691
 
                 
Operating Results
               
Adjusted EBITDAX (1)
 
$
10,731
   
$
9,120
 
Sales volumes United States (MBOE)
   
178
     
175
 
Sales volumes Non-U.S. (MBOE)
   
144
     
141
 
                 
Average cost per BOE United States: (2)
               
Production (excluding transportation and taxes)
 
$
24.83
   
$
23.33
 
General and administrative
 
$
5.30
   
$
4.80
 
Depletion
 
$
11.66
   
$
12.10
 
 
(1)  
See Adjusted EBITDAX for a description of Adjusted EBITDAX, which is not a Generally Accepted Accounting Principles (GAAP) measure, and a reconciliation of Adjusted EBITDAX to income from operations before income taxes, which is presented in accordance with GAAP.
 
(2)  
There are no costs associated with revenues from Non-US operations since the Company owns overriding royalty which is free of operating expenses.
 
 
Financial Results

Net Income in the second quarter of 2014 was $3,939,000 or $1.46 per share. This compares to net income of $3,172,000 or $1.14 per share for the same period in 2013.
 
This increase was primarily due to revenues from the Tamar Royalty, an increase in revenues from well service activities, and an increase in United States based production revenues. These increases were partially offset by increased operating and income tax expenses.
 
Revenues, Volumes and Average Prices (United States)
Sales Revenues
 
   
Three Months Ended June 30,
 
In thousands except percentages
 
2014
   
2013
   
D vs. 2013
 
Gas sales
 
$
2,165
   
$
1,979
     
9
%
Oil sales
   
7,073
     
6,234
     
13
 
Natural gas liquid sales
   
835
     
946
     
(12
)
Total
 
$
10,073
   
$
9,159
     
10
%
 
Our sales revenues from U.S. based oil and gas operations for the second quarter of 2014 increased by 10% when compared to same period in 2013 due to higher prices received for natural gas, and crude oil and higher volumes produced of crude oil. This increase was partially offset by a decrease sales volumes of natural gas and NGLs.
 
Revenues, Volumes and Average Prices (Non-U.S.)

During three months ended June 30, 2014 the Tamar Field net sales applicable to Isramco amounted to 859,329 Mcf of natural gas and 1,262 Bbl of condensate with prices of $5.84 per Mcf and $102.74 per Bbl of condensate. Total revenues net of marketing and transportations expenses were $5,112,000. 
   
Volumes and Average Prices (United States)
 
   
Three Months Ended June 30,
 
   
2014
   
2013
   
D vs. 2013
 
Natural Gas
                 
Sales volumes Mmcf
   
472.76
     
476.01
     
(1
)%
Average Price per Mcf
 
$
4.58
   
$
4.16
     
10
 
Total gas sales revenues (thousands)
 
$
2,165
   
$
1,979
     
9
%
                         
Crude Oil
                       
Sales volumes MBbl
   
72.38
     
65.14
     
11
%
Average Price per Bbl
 
$
97.72
   
$
95.70
     
2
 
Total oil sales revenues (thousands)
 
$
7,073
   
$
6,234
     
13
%
                         
Natural gas liquids
                       
Sales volumes MBbl
   
27.15
     
30.42
     
(11
)%
Average Price per Bbl
 
$
30.75
   
$
31.10
     
(1
Total natural gas liquids sales revenues (thousands)
 
$
835
   
$
946
     
(12
)%

 
The company’s natural gas sales volumes decreased by 1%, crude oil sales volumes increased by 11%, and natural gas liquids sales volumes decreased by 11% for the second quarter of 2014 compared to the same period of 2013.
 
Our average natural gas price received for the second quarter of 2014 increased by 10%, or $0.42 per Mcf, when compared to the same period of 2013. Our average crude oil price for the second quarter of 2014 increased by 2%, or $2.02 per Bbl, when compared to the same period of 2013. Our average natural gas liquids price for the second quarter of 2014 decreased by 1%, or $0.35 per Bbl, when compared to the same period of 2013.
 
 
Analysis of Oil and Gas Operations Sales Revenues

The following table provides a summary of the effects of changes in volumes and prices on Isramco’s United States sales revenues for the three months ended June 30, 2014 compared to the same period of 2013.

In thousands
 
Natural Gas
   
Oil
   
Natural gas liquids
 
2013 sales revenues
 
$
1,979
   
$
6,234
   
$
946
 
Changes associated with sales volumes
   
(14
)
   
693
     
(102
)
Changes in prices
   
200
     
146
     
(9
2014 sales revenues
 
$
2,165
   
$
7,073
   
$
835
 

Operating Expenses

   
Three Months Ended June 30,
In thousands except percentages
 
2014
   
2013
   
D vs. 2013
Lease operating expense, transportation and taxes
 
$
5,399
   
$
5,170
     
4
%
Production services
   
6,143
     
1,903
     
223
 
Depreciation, depletion and amortization of oil and gas properties
   
2,079
     
2,116
     
(2
Depreciation, depletion and amortization of production equipment
   
666
     
315
     
111
 
Accretion expense
   
218
     
225
     
(3
Loss from plugging and abandonment of wells
   
1
     
6
     
(83
General and administrative
   
946
     
839
     
13
 
   
$
15,452
   
$
10,574
     
46
%
 
During three months ended June 30, 2014, our operating expenses increased by 46% when compared to the same period of 2013 due to the following factors:
 
·
Lease operating expenses, transportation costs and taxes increased by 4%, or $229,000, in 2014 when compared to 2013. On a per unit basis, lease operating expenses (excluding transportation and taxes) increased by $1.49 per MBOE to $24.83 per MBOE in 2014 from $23.33 per MBOE in 2013. The increase in average lease operating cost per unit was a result of a general increase in expenses.
 
·
The expenses for production services pertain to our well service activities performed by well service subsidiary. Production services increased by $4,240,000 in 2014 compared to 2013 due to expansion of the well service operations following purchase of additional rigs, auxiliary equipment, and hiring additional personnel.

·
Depreciation, Depletion & Amortization (“DD&A”) of the cost of proved oil and gas properties is calculated using the unit-of-production method. Our DD&A rate and expense are the composite of numerous individual field calculations. There are several factors that can impact our composite DD&A rate and expense including, but not limited to, field production profiles, drilling or acquisition of new wells, disposition of existing wells, and reserve revisions (upward or downward) primarily related to well performance and commodity prices, and impairments. Changes in these factors may cause our composite DD&A rate and expense to fluctuate from period to period.  DD&A decreased by 2%, or $37,000 in 2014 when compared to 2013, primarily due to a 2013 impairment of $23,161,000 on the depletable base used to calculate DD&A, which was partially offset by an increase in MBOE. On a per unit basis, depletion expense decreased by $0.44 per MBOE to $11.66 per MBOE in 2014 from $12.10 per MBOE in 2013.
 
·
Well service equipment depreciation – the amounts represent depreciation of well service rigs and auxiliary equipment for our well service subsidiary, the increase in depreciation expenses in the second quarter of 2014 of $351,000 associated with increase in the number of rigs and the amount of auxiliary equipment.
 
·
General and administrative expenses increased by 13%, or $107,000 in 2014 when compared to 2013 primarily due to increase in consultants fees, payroll expenses associated with the growth of the well service operations, and a slight increase in bad debt allowance.
 
 
Other expenses
   
Three Months Ended June 30,
In thousands except percentages
 
2014
   
2013
   
D vs. 2013
 
Interest expense, net
 
$
1,697
   
$
1,619
     
5
%
Capital Loss
   
13
     
-
     
100
 
   
$
1,710
   
$
1,619
     
6
%
 
Interest expense.  Isramco’s interest expense increased by 5%, or $78,000, for the three months ended June 30, 2014 compared to the same period of 2013.  This increase was primarily due to higher average outstanding loans balance during the second quarter of 2014 compared to 2013.

Adjusted EBITDAX.  
 
To assess the operating results of Isramco, management analyzes income from operations before income taxes, interest expense, exploration expense, unrealized gain (loss) on derivative contracts and DD&A expense and impairments (“Adjusted EBITDAX”). Adjusted EBITDAX is not a GAAP measure. Isramco’s definition of Adjusted EBITDAX excludes exploration expense because exploration expense is not an indicator of operating efficiency for a given reporting period, but rather is monitored by management as a part of the costs incurred in exploration and development activities. Similarly, Isramco excludes DD&A expense and impairments from Adjusted EBITDAX as a measure of segment operating performance because capital expenditures are evaluated at the time capital costs are incurred. The Company’s definition of Adjusted EBITDAX also excludes interest expense to allow for assessment of segment operating results without regard to Isramco’s financing methods or capital structure. Adjusted EBITDAX is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures and make payments on its long term loans. Management believes that the presentation of Adjusted EBITDAX provides information useful in assessing the Company’s financial condition and results of operations.
 
However, Adjusted EBITDAX, as defined by Isramco, may not be comparable to similarly titled measures used by other companies. Therefore, Isramco’s consolidated Adjusted EBITDAX should be considered in conjunction with income (loss) from operations and other performance measures prepared in accordance with GAAP, such as operating income or cash flow from operating activities. Adjusted EBITDAX has important limitations as an analytical tool because it excludes certain items that affect income from continuing operations and net cash provided by operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Isramco’s results as reported under GAAP. Below is a reconciliation of consolidated Adjusted EBITDAX to income (loss) from operations before income taxes.
 
   
Three Months Ended June 30,
 
In thousands except percentages
 
2014
   
2013
 
Income from operations before income taxes
 
$
6,071
   
$
4,845
 
Depreciation, depletion and amortization expense
   
2,745
     
2,431
 
Interest expense
   
1,697
     
1,619
 
Accretion Expenses
   
218
     
225
 
Consolidated Adjusted EBITDAX
 
$
10,731
   
$
9,120
 
 
 
Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013
 
Selected Data
 
   
June 30,
 
   
2014
   
2013
 
   
(In thousands except per share
and MBOE amounts)
 
Financial Results
           
Oil and Gas sales
               
United States
 
$
19,661
   
$
17,631
 
Non-U.S.
   
10,214
     
4,641
 
Production Services
   
13,896
     
5,697
 
Other
   
830
     
521
 
Total revenues and other
   
44,601
     
28,490
 
                 
Cost and expenses
   
28,784
     
21,247
 
Other expense
   
3,366
     
3,182
 
Income tax expense
   
4,327
     
1,398
 
Net income attributable to common shareholders
   
8,124
     
2,663
 
Net income attributable to non-controlling interests
   
86
     
64
 
Net income attributable to Isramco
   
8,038
     
2,599
 
Earnings per common share - basic
 
$
2.96
   
$
0.96
 
Earnings per common share - diluted
 
$
2.96
   
$
0.96
 
                 
Weighted average number of shares outstanding-basic
   
2,717,691
     
2,717,691
 
Weighted average number of shares outstanding- diluted
   
2,717,691
     
2,717,691
 
                 
Operating Results
               
Adjusted EBITDAX (1)
 
$
21,486
   
$
12,623
 
Sales volumes United States (MMBOE)
   
342
     
347
 
Sales volumes Non-U.S. (MMBOE) 
   
288
     
141
 
                 
Average cost per MBOE - United States: (2)
               
Production (excluding transportation and taxes)
 
$
23.45
   
$
21.95
 
General and administrative
 
$
6.54
   
$
5.85
 
Depletion
 
$
11.66
   
$
12.48
 
 
(1) See Adjusted EBITDAX for a description of Adjusted EBITDAX, which is not a Generally Accepted Accounting Principles (GAAP) measure, and a reconciliation of Adjusted EBITDAX to income from operations before income taxes, which is presented in accordance with GAAP.
(2) There are no costs associated with revenues from Non-US operations since the Company owns overriding royalty which is free of operating expenses.
 
Financial Results
 
Net income, in the six months ended June 30, 2014, was $8,124,000 or $2.96 per share. This compares to net income of $2,663,000, or $0.96 per share, for the same period of 2013.
 
This increase was primarily due to revenues from our Tamar Royalty, an increase in revenues from well service activities, and increase in United States based production revenues. These increases were partially offset by increased production service, lease operating and income tax expenses.

Revenues, Volumes and Average Prices (United States)
 
Sales Revenues
 
   
Six Months Ended June 30,
 
In thousands except percentages
 
2014
   
2013
   
D vs. 2013
 
Gas sales
 
$
4,481
   
$
3,829
     
17
%
Oil sales
   
13,292
     
11,925
     
11
 
Natural gas liquid sales
   
1,888
     
1,877
     
1
 
Total
 
$
19,661
   
$
17,631
     
12
%
 
Our sales revenues from US based oil and gas operations for the six months ended June 30, 2014 increased by 12% when compared to same period of 2013 due to higher prices received for oil, natural gas, and NGLs and increased production volumes for crude oil which was slightly offset by lower production volumes for natural gas and NGLs.
 
Volumes and Average Prices
 
   
Six Months Ended June 30,
 
   
2014
   
2013
   
D vs. 2013
 
Natural Gas
                 
Sales volumes Mmcf
   
905.85
     
947.89
     
(4
)%
Average Price per Mcf
 
$
4.95
   
$
4.04
     
22
 
Total gas sales revenues (thousands)
 
$
4,481
   
$
3,829
     
17
%
                         
Crude Oil
                       
Sales volumes MBbl
   
137.25
     
128.26
     
7
%
Average Price per Bbl
 
$
96.84
   
$
92.97
     
4
 
Total oil sales revenues (thousands)
 
$
13,292
   
$
11,925
     
11
%
                         
Natural gas liquids
                       
Sales volumes MBbl
   
53.55
     
60.74
     
(12
)%
Average Price per Bbl
 
$
35.26
   
$
30.90
     
14
 
Total natural gas liquids sales revenues (thousands)
 
$
1,888
   
$
1,877
     
1
%
 
The company’s natural gas sales volumes decreased by 4%, crude oil sales volumes increased by 7%, and natural gas liquids sales volumes decreased by 12% for the six months ended June 30, 2014 compared to the same period of 2013.  

Our average natural gas price for the six months ended June 30, 2014 increased by 22%, or $0.91 per Mcf, when compared to the same period of 2013. Our average crude oil price for the six months ended June 30, 2014 increased by 4% or $3.87 per Bbl, when compared to the same period of 2013. Our average natural gas liquids price for the six months ended June 30, 2014 increased by 14%, or $4.36 per Bbl, when compared to the same period of 2013.
 
 
Analysis of Oil and Gas Operations Sales Revenues

The following table provides a summary of the effects of changes in volumes and prices on Isramco’s sales revenues for the six months ended June 30, 2014 compared to the same period of 2013.

In thousands
 
Natural Gas
   
Oil
   
Natural gas liquids
 
2013 sales revenues
 
$
3,829
   
$
11,925
   
$
1,877
 
Changes associated with sales volumes
   
(170
   
836
     
(222
Changes in prices
   
822
     
531
     
233
 
2014 sales revenues
 
$
4,481
   
$
13,292
   
$
1,888
 

Operating Expenses
 
   
Six Months Ended June 30,
In thousands except percentages
 
2014
   
2013
   
D vs. 2013
Lease operating expense, transportation and taxes
 
$
10,018
   
$
9,699
     
3
%
Production Services
   
10,832
     
3,922
     
176
 
Depreciation, depletion and amortization of oil and gas properties
   
3,984
     
4,332
     
(8
Depreciation, depletion and amortization of production equipment
   
1,274
     
602
     
112
 
Accretion expense
   
422
     
440
     
(4
)
Loss (gain) from plug and abandonment
   
(1
)
   
223
     
(100
General and administrative
   
2,255
     
2,029
     
11
 
   
$
28,784
   
$
21,247
     
35
%
 
During six months ended June 30, 2014, our operating expenses increased by 35% when compared to the same period of 2013 due to the following factors:

·
Lease operating expense, transportation cost and taxes slightly increased by 3%, or $319,000, in 2014 when compared to 2013.  On a per unit basis, lease operating expenses (excluding transportation and taxes) increased by $1.50 per MBOE to $23.45 per MBOE in 2014 from $21.95 per MBOE in 2013.
 
·
The expenses for production services pertain to our well service activities performed by well service subsidiary. Production services increased by $6,910,000 in 2014 compared to 2013 due to expansion of the well service operations following purchase of additional workover rigs, auxiliary equipment and hire new personnel.

·
Depreciation, Depletion & Amortization (“DD&A”) of the cost of proved oil and gas properties is calculated using the unit-of-production method. Our DD&A rate and expense are the composite of numerous individual field calculations. There are several factors that can impact our composite DD&A rate and expense, including but not limited to field production profiles, drilling or acquisition of new wells, disposition of existing wells,  and reserve revisions (upward or downward) primarily related to well performance and commodity prices, and impairments. Changes in these factors may cause our composite DD&A rate and expense to fluctuate from period to period.  DD&A decreased by 8%, or $(348,000), in 2014 when compared to 2013, primarily due to a 2013 impairment of $23,161,000 on the depletable base used to calculate DD&A. On a per unit basis, depletion expense decreased by $0.83 per MBOE to $11.66 per MBOE in 2014 from $12.48 per MBOE in 2013.
 
·
Well service equipment depreciation – the amounts represents depreciation of well service rigs and auxiliary equipment for our well service subsidiary. The increase of $672,000 is associated with increase in the number of workover rigs and auxiliary equipment.

·
Loss from plugging and abandonment expenses decreased  by 100%, or $(224,000) in 2014 when compared to 2013, primarily due to fewer plugging operations required by state and federal regulations applicable to our wells.
 
·
General and administrative expenses increased by 11%, or $226,000 in 2014 when compared to 2013 primarily due to increase in consultants fees, payroll expenses associated with the growth of the well service operations and slight increase in bad debt allowance.
 
 
Other expenses (income)

   
Six Months Ended June 30,
In thousands except percentages
 
2014
   
2013
   
D vs. 2013
 
Interest expense, net
 
$
3,355
   
$
3,188
     
5
%
Capital Gain
   
11
     
(6
   
(283
)
   
$
3,366
   
$
3,182
     
6
%
 
Interest expense.  Isramco’s interest expense increased by 5%, or $167,000, for the six months ended June 30, 2014 compared to the same period of 2013.  This increase was primarily due to higher average outstanding loans balance during the six month ended June 30, 2014 compared to same period in 2013.
 
Adjusted EBITDAX.  
 
To assess the operating results of Isramco, management analyzes income from operations before income taxes, interest expense, exploration expense, unrealized gain (loss) on derivative contracts and DD&A expense and impairments (“Adjusted EBITDAX”). EBITDAX is not a GAAP measure. Isramco’s definition of Adjusted EBITDAX excludes exploration expense because exploration expense is not an indicator of operating efficiency for a given reporting period, but rather is monitored by management as a part of the costs incurred in exploration and development activities. Similarly, Isramco excludes DD&A expense and impairments from Adjusted EBITDAX as a measure of segment operating performance because capital expenditures are evaluated at the time capital costs are incurred. The Company’s definition of Adjusted EBITDAX also excludes interest expense to allow for assessment of segment operating results without regard to Isramco’s financing methods or capital structure. Adjusted EBITDAX is a widely accepted financial indicator of a company’s ability to incur and service debt and fund capital expenditures and make payments on its long term loans and Management believes that the presentation of Adjusted EBITDAX provides information useful in assessing the Company’s financial condition and results of operations.
 
However, Adjusted EBITDAX, as defined by Isramco, may not be comparable to similarly titled measures used by other companies. Therefore, Isramco’s consolidated Adjusted EBITDAX should be considered in conjunction with income (loss) from operations and other performance measures prepared in accordance with GAAP, such as operating income or cash flow from operating activities. Adjusted EBITDAX has important limitations as an analytical tool because it excludes certain items that affect income from continuing operations and net cash provided by operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Isramco’s results as reported under GAAP. Below is a reconciliation of consolidated Adjusted EBITDAX to income (loss) from operations before income taxes.
 
   
Six Months Ended June 30,
In thousands
 
2014
   
2013
 
Income from operations before income taxes
 
$
12,451
   
$
4,061
 
Depreciation, depletion and amortization expense
   
5,258
     
4,934
 
Interest expense
   
3,355
     
3,188
 
Accretion Expenses
   
422
     
440
 
Consolidated Adjusted EBITDAX
 
$
21,486
   
$
12,623
 


ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
 
Derivative Instruments and Hedging Activity
 
We are exposed to various risks, including risks associated with energy commodity price. If oil and natural gas prices decline significantly, our ability to finance our capital budget and operations could be adversely impacted. We expect energy prices to remain volatile and unpredictable, therefore we have adopted a risk management policy which allows for the use of derivative instruments to provide partial protection against declines in oil and natural gas prices by reducing the risk of price volatility and the affect it could have on our operations. The type of derivative instrument that we typically utilize is swaps. The total volumes which we hedge through the use of our derivative instruments vary from period to period.  Currently, we have no open positions or contracts in place.
 
When such contracts are in place, we are exposed to market risk on our open derivative contracts of non-performance by our counterparties. However, we usually do not expect such non-performance because our contracts are with major financial institutions with investment grade credit ratings.
 
We are also exposed to interest rate risk on our variable interest rate debt. If interest rates increase, our interest expense would increase and our available cash flow would decrease. We continue to monitor our risk exposure as we incur future indebtedness at variable interest rates and will look to continue our risk management policy as situations present themselves. Periodically, we look to utilize interest rate swaps to reduce the exposure to market rate fluctuations by converting variable interest rates to fixed interest rates. Currently, no interest rate swaps are in place.
 
We account for our derivative activities under the provisions of ASC 815, Derivatives and Hedging (ASC 815). ASC 815 establishes accounting and reporting that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at fair value. See Item 1. Consolidated Financial Statements.
 
ITEM 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures.
 
In accordance with Exchange Act Rule 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2014 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer as appropriate, to allow timely decisions regarding required disclosure.
 
There were no changes in the Company’s internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 
 
 
PART II - Other Information
 
ITEM 1. Legal Proceedings
 
We have previously disclosed information relating to two putative shareholder derivative petitions that were filed by individual shareholders of the Company in the District Court of Harris County, Texas. These petitions each named certain of our officers and directors as defendants. Each of these suits claims that the shareholders were damaged as a result of various breaches of fiduciary duty, self-dealing, and other wrongdoing in connection with the Restated Agreement between the Company and Goodrich Global, Ltd. (“Goodrich”) and other matters, primarily on the part of the Company’s Chairman and Chief Executive Officer, Haim Tsuff, and Jackob Maimon. Mr. Maimon is a former President and a director who resigned from all positions held with the Company on June 29, 2011.
 
On or about April 6, 2011, a third complaint was filed in the 295th District Court of Harris County, Texas by Yuval Ran, who claimed to be a shareholder, against certain of our officers and directors and several corporate parties controlled by Haim Tsuff. As with the prior suits, this complaint alleged various breaches of duty, self dealing and other wrongdoing in connection with the Restated Agreement between the Company and Goodrich, primarily on the part of the Company’s Chairman and Chief Executive Officer, Haim Tsuff, and Jackob Maimon. In addition, this suit alleged claims relating to other transactions between the Company and entities controlled by Haim Tsuff, including but not limited to the loan transactions between the Company and related parties, the lease and sale of a cruise ship, and the closure of the Company’s Israel branch office. The third complaint was transferred to the 55th Judicial District Court of Harris County, Texas by order signed April 20, 2011, and consolidated with the above-referenced first and second original shareholder suits by order signed May 21, 2011, into a single case, called “Lead Cause No. 2010-34535; In Re: Isramco, Inc. Shareholder Derivative Litigation; In the 55th Judicial District Court of Harris County, Texas (the “Derivative Litigation”).
 
We also disclosed information in our quarterly report for the three months ended September 30, 2011, relating to an additional putative shareholder derivative complaint that was filed by an individual shareholder, Yuval Lapiner, on July 7, 2011, in the Delaware Chancery Court in Wilmington, Delaware, naming certain of our officers and directors as defendants. The claims asserted in this case are essentially the same damage claims as asserted in the lawsuit filed in April 2011 and described above. The Company filed motions in the Chancery Court to Dismiss or Stay the lawsuit and, by order dated October 20, 2011, the case was dismissed. The plaintiff did not appeal. Yuval Lapiner then filed a motion to intervene in the Derivative Litigation and that motion was denied Mr. Lapiner then filed a motion for attorney’s fees that was also denied. On December 12, 2011, the court approved the terms of the mediated settlement and entered final order and judgment in the case. The Company paid plaintiff attorney’s fees of $1,000,000, replaced its bylaws, amended various committee charters, and adopted other corporate governance changes as set out in the stipulation of settlement. After the judgment was rendered, Mr. Lapiner filed a motion for new trial and on February 12, 2012, filed a Notice of Appeal to the Fourteenth Court of Appeals in Houston, Texas. A Motion to Dismiss the appeal was filed. Oral arguments were presented to the Court of Appeals on January 9, 2013. On April 22, 2014, the Fourteenth Court of Appeals dismissed Mr. Lapiner’s appeal.   On June 6, 2014, Mr. Lapiner filed a Petition for review to the Supreme Court of Texas.  On August 1, 2014, the Supreme Court of Texas requested the respondents in the matter, including the Company, to respond to the Petition for Review. The Company’s response is due September 2, 2014.
 
On or about September 21, 2011, the Company’s former Vice President and General Counsel, Dennis Holifield resigned. Mr. Holifield had been hired in March 2011. On or about October 12, 2011, Mr. Holifield submitted a “Summary Report” to the SEC (the “Summary Report”), in which made numerous factual allegations regarding Haim Tsuff, the Company‘s Chief Executive Officer, Chairman, and President; Edy Francis, the Company’s Chief Financial Officer; Amir Sanker, the Company’s Asset Manager; and other Company personnel. In the Summary Report, Mr. Holifield characterized the alleged conduct as illegal or criminal. On November 3, 2011, the Company’s Board of Directors constituted a committee of independent directors consisting of Max Pridgeon and Asaf Yarkoni, referred to as the Special Investigative Committee of the Board of Directors (“SIC”) which was directed to investigate all of the Holifield allegations and report back to the full board and make any recommendations, if any, for corrective action. On January 7, 2013, SIC made their final report to the Board of Directors of the conclusions and results of the fourteen-month investigation into the allegations made by Mr. Holifield. The SIC determined that Mr. Holifield’s allegations were not supported by any available documentary evidence or by any statements made by former or current Isramco, Inc., directors, management, or employees interviewed by the SIC or its counsel. The SIC also determined that the Company had not engaged in wrongdoing of any sort including any unlawful or unethical business practices, any lapses in financial controls, or any governance issues that require redress or reform.
 
 
On September 10, 2013, the Company filed suit against Mr. Holifield in Cause No. 201352927 of the 270th Judicial District Court of Harris County, Texas, to collect damages owing to the Company by virtue of Mr. Holifield’s actions, which are alleged in the suit to include, but are not limited to, negligence, negligence per se, gross negligence, and breach of fiduciary duty owed to the Company. In response, in December 2013, Mr. Holifield filed a pro se answer which included counterclaims and a summary judgment motion. In his counterclaims. Mr. Holifield seeks to recover from the Company the following damages, inter alia: (i) over $2,000,000 for loss of income and failure to secure gainful employment arising from his constructive discharge or termination by the Company; (ii) over $2,000,000 for loss of earnings due to his alleged inability to obtain gainful employment by virtue of the damage caused to his professional reputation by alleged willful and deliberate acts of Haim Tsuff, Edy Francis, and Amir Sanker, (iii) over $2,000,000 due to the intentional infliction of emotional distress to Mr. Holifield; (iv) an amount estimated at $5,000,000 arising from Mr. Holifield’s claim that the Company violated the Racketeer Influenced Corrupt Organizations Act, by engaging in racketeering and conspiracy; (v) over $5,000,000 arising from the Company’s alleged fraudulent misrepresentation regarding Isramco’s purpose in hiring Mr. Holifield and (vi) other relief. The Company believes Mr. Holifield’s counter claims have no merit. The Company intends to  vigorously (i) pursue its case against Mr. Holifield and  (ii) defend against Mr. Holifield’s counterclaims.
 
In addition, Mr. Holifield has sought whistleblower status from the United States Department of Labor.  After an initial determination by the Department of Labor that there was no reasonable basis for whistleblower status, Mr. Holifield initiated Cause No. 2014-SOX-00017 in the U. S. Department of Labor, Office of Administrative Law Judges, styled In Re: Dennis J. Holifield v. Isramco, Inc. wherein he alleges whistleblower status under the Sarbanes-Oxley Act, the Dodd Frank Act, and the Exchange Acts.   A two-day hearing in the matter commenced June 10, 2014.  The Company’s brief based on the evidence admitted in the hearing is being prepared.  The Company expects a ruling in the matter in the coming months.
 
From time to time, we are involved in disputes and other legal actions arising in the ordinary course of business. In management's opinion, none of these other disputes and legal actions is expected to have a material impact on our consolidated financial position or results of operations.
 
ITEM 1ARisk Factors
 
           None
 
ITEM 2Change in Securities & Use of Proceeds
 
           None
 
ITEM 3Default Upon Senior Securities
 
           None
 
ITEM 4Removed and Reserved
 
           None
 
ITEM 5. Other Information
 
           None
 
ITEM 6. Exhibits
 
Exhibits
 
31.1
31.2
31.3
32.1
32.2
32.3
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
 
 
ISRAMCO, INC
 
       
Date: August 8, 2014
By:
/s/ HAIM TSUFF             
 
   
HAIM TSUFF
 
   
CHIEF EXECUTIVE OFFICER
 
   
(PRINCIPAL EXECUTIVE OFFICER)
 
       
Date: August 8, 2014
By:
/s/ EDY FRANCIS      
 
   
EDY FRANCIS
 
   
CHIEF FINANCIAL OFFICER
 
   
(PRINCIPAL FINANCIAL OFFICER)
 
       
Date: August 8, 2014
By:
/s/ ZEEV KOLTOVSKOY      
 
   
ZEEV KOLTOVSKOY      
 
   
CHIEF ACCOUNTING OFFICER
 
   
(PRINCIPAL ACCOUNTING OFFICER)
 
 
 
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