• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

St. Mary Reports Record Results for Second Quarter 2005, Records Fourth Consecutive Quarter With Increasing Production and Updates Guidance

Posted on: Wednesday, 3 August 2005, 18:00 CDT

St. Mary Land & Exploration Company (NYSE: SM) today reported record earnings for the second quarter 2005 of $38.3 million, or $0.59 per diluted share. Second quarter 2004 earnings were $21.8 million, or $0.34 per diluted share. Revenues for the second quarter of 2005 were a record $164.6 million compared to $102.2 million for the second quarter of 2004. Second quarter 2005 Discretionary Cash Flow(1) increased to a record $105.2 million from $64.5 million in the second quarter of 2004. Net cash provided by operating activities increased to $93.4 million in the second quarter of 2005 from $59.9 million in the second quarter of 2004.

Earnings for the first six months of 2005 were $73.4 million, or $1.13 per diluted share, compared to $43.3 million, or $0.67 per diluted share for the first six months of 2004. Revenues for the first six months of 2005 were $308.4 million compared to $198.6 million for the same period in 2004. Discretionary cash flow for the first six months of 2005 increased to $196.0 million from $120.7 million in the first six months of 2004. Net cash provided by operating activities increased to $185.6 million in the first six months of 2005 from $99.8 million in the first six months of 2004

Daily oil and gas production during the second quarter 2005 averaged a record 239.1 million cubic feet of gas equivalent (MMCFED), up from 198.2 MMCFED in the comparable 2004 period. Average prices realized during the quarter were $6.77 per Mcf and $48.39 per barrel, 26% and 57% higher, respectively, than the realized prices in the second quarter of 2004.

The Company also announced that it has increased its 2005 capital expenditures forecast to $436 million from $418 million. The increase is allocated to the following regions: Mid-Continent Region $8 million Rocky Mountain Region 8 million Hanging Woman Basin 2 million ArkLaTex Region 2 million Gulf Coast Region (1 million) Permian Basin Region (1 million) ----------- Total Increase $18 million

The changes to the capital expenditures forecast reflect cost increases and additions in the Company's planned drilling activity in the Mid-Continent, Rocky Mountain and ArkLaTex regions.

Mark Hellerstein, Chairman, President and CEO, commented: "This was another record quarter at St. Mary. We have now increased production and net income for four consecutive quarters. On August 1 we closed a $39 million acquisition of oil and gas properties, principally from Wold Oil Properties, Inc., which included 22.5 BCFE of proved reserves (72% developed), primarily in the Wind River and Powder River Basins. The actual cash paid was $36.7 million after adjustments between the effective and closing dates. We continue to have good drilling results and have several multi-year drilling programs that give us a solid base for future growth. We anticipate our drilling program will provide an increasing rate of production throughout the balance of the year."

The Company's forecasts for the third quarter and the full year 2005 are shown below. 3rd Quarter Year ----------------- ----------------- Oil and gas production 22.0 - 23.0 BCFE 85.0 - 88.0 BCFE Lease operating expenses, including production taxes and transportation $1.55 - $1.70/MCFE $1.55 - $1.65/MCFE General and administrative exp. $0.38 - $0.43/MCFE $0.34 - $0.39/MCFE Depreciation, depletion & amort. $1.57 - $1.63/MCFE $1.55 - $1.62/MCFE

The estimated future liability for the Net Profits Plan continues to increase with the record level of oil and gas prices realized in the second quarter of 2005. The increase in the liability recognized in the second quarter of 2005 is $12.2 million. The increase in the liability is non-cash and will be paid as future oil and gas revenues are received.

Operational updates for the second quarter 2005 were provided in the Company's June 29, 2005, press release.

As previously announced, the St. Mary second quarter earnings teleconference call is scheduled for August 4 at 8:00 a.m. (MDT). The call participation number is 888-424-5231. A digital recording of the conference call will be available two hours after the completion of the call, 24 hours per day through August 13 at 800-642-1687, conference number 3038634377. International participants can dial 706-634-6088 to take part in the conference call, and can access a replay of the call at 706-645-9291, conference number 3038634377. In addition, the call will be broadcast live at St. Mary's website at www.stmaryland.com and this press release and financial highlights attachment will be available before the call at www.stmaryland.com under "News--Press Releases." An audio recording of the conference call will be available at that site through August 13, 2005.

This release contains forward-looking statements within the meaning of securities laws, including forecasts and projections. The words "will,""believe,""anticipate,""intend,""estimate,""forecast" and "expect" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, which may cause St. Mary's actual results to differ materially from results expressed or implied by the forward-looking statements. These risks include such factors as the uncertain nature of the expected benefits from the acquisition of oil and gas properties, the volatility and level of oil and natural gas prices, unexpected drilling conditions and results, the risks of various exploration strategies, production rates and reserve replacement, the imprecise nature of oil and gas reserve estimates, drilling and operating service availability, uncertainties in cash flow, the financial strength of hedge contract counterparties, the availability of economically attractive exploration and development and property acquisition opportunities and any necessary financing, competition, litigation, environmental matters, the potential impact of government regulations, and other such matters discussed in the "Risk Factors" section of St. Mary's 2004 Annual Report on Form 10-K filed with the SEC. Although St. Mary may from time to time voluntarily update its prior forward looking statements, it disclaims any commitment to do so except as required by securities laws.

(1) Discretionary cash flow is computed as net income plus

depreciation, depletion, amortization, impairments, deferred

taxes, exploration expense, stock based compensation expense and

non-cash changes in the Net Profits Plan liability, less the

cumulative effect of unrealized derivative loss. See the attached

financial highlights for a reconciliation of discretionary cash

flow to net cash provided by operating activities, a presentation

of other cash flow information, and a statement indicating why

management believes the presentation of the non-GAAP measure of

discretionary cash flow provides useful information to investors.

ST. MARY LAND & EXPLORATION COMPANY FINANCIAL HIGHLIGHTS June 30, 2005 (Unaudited) Three Months Six Months PRODUCTION DATA Ended Ended --------------- June 30, June 30, ----------------- ----------------- Percent Percent 2005 2004 Change 2005 2004 Change ----------------- ----------------- Average realized price, net of hedging: Gas (per Mcf) $6.77 $5.39 26% $6.50 $5.30 23% Oil (per Bbl) $48.39 $30.78 57% $46.88 $29.50 59% Production: Gas (MMcf) 13,184 11,070 19% 25,231 22,683 11% Oil (MBbls) 1,428 1,161 23% 2,862 2,302 24% MMCFE (6:1) 21,754 18,038 21% 42,401 36,494 16% Daily production: Gas (Mcf per day) 144,882 121,648 19% 139,398 124,631 12% Oil (Bbls per day) 15,695 12,762 23% 15,811 12,648 25% MCFE per day (6:1) 239,053 198,220 21% 234,261 200,516 17% Margin analysis per MCFE: Average net realized price, net of hedging $7.28 $5.29 38% $7.03 $5.15 37% Lease Operating Expense 0.96 0.95 1% 1.02 0.93 10% Production Taxes 0.42 0.25 68% 0.45 0.31 45% General and administrative costs 0.34 0.30 13% 0.32 0.30 7% ----------------- ----------------- Operating margin $5.56 $3.79 47% $5.24 $3.61 45% ----------------- ----------------- Depletion, depreciation & amortization $1.56 $1.15 36% $1.51 $1.13 34% INCOME STATEMENT ------------------------- (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2005 2004 2005 2004 ------------------- ------------------- Operating Revenues: Oil and gas production revenue $160,421 $106,581 $298,791 $207,787 Oil and gas hedge loss (2,086) (11,134) (526) (19,733) Marketed gas revenue 5,551 3,724 8,947 7,297 Gain (loss) on sale of proved properties (26) 1,581 (26) 1,776 Other revenue 714 1,399 1,206 1,506 ------------------- ------------------- 164,574 102,151 308,392 198,633 ------------------- ------------------- Operating expenses: Oil and gas production expense 30,188 21,573 62,347 45,116 Depletion, depreciation, amortization and abandonment liability accretion 33,907 20,673 63,981 41,299 Exploration 9,699 6,569 16,782 11,200 Impairment of proved properties - 494 - 494 Abandonment and impairment of unproved properties 1,819 966 3,689 1,888 General and administrative 7,481 5,410 13,467 10,987 Change in Net Profits Plan liability 12,175 4,325 16,396 6,485 Marketed gas operating expense 5,227 3,310 8,352 6,721 Derivative loss 241 1,721 1,370 869 Other expense 1,083 525 1,597 1,110 ------------------- ------------------- 101,820 65,566 187,981 126,169 ------------------- ------------------- Income from operations 62,754 36,585 120,411 72,464 Interest income 98 242 180 386 Interest expense (2,274) (1,565) (4,218) (3,053) ------------------- ------------------- Income before income taxes 60,578 35,262 116,373 69,797 Income tax expense - current 14,484 7,520 24,907 13,421 Income tax expense - deferred 7,833 5,906 18,102 13,091 ------------------- ------------------- Net income $38,261 $21,836 $73,364 $43,285 =================== =================== Basic weighted-avg shares outstanding 56,960 57,167 57,095 58,401 ========= ========= ========= ========= Diluted weighted-avg shares outstanding 66,769 66,121 66,847 67,292 ========= ========= ========= ========= Basic net income per common share $0.67 $0.38 $1.28 $0.74 ========= ========= ========= ========= Diluted net income per common share $0.59 $0.34 $1.13 $0.67 ========= ========= ========= ========= BALANCE SHEET -------------- (In thousands) June 30, December 31, 2005 2004 ----------- ------------ Working capital $739 $12,035 Long-term debt $150,838 $136,791 Stockholders' equity $518,420 $484,455 Shares outstanding 56,375 56,958 PROVEN RESERVES ---------------- December 31 December 31 2004 2003 ----------- ------------ Oil (MBbls) 56,574 47,787 Gas (MMcf) 319,196 307,024 ----------- ------------ MMCFE (6:1) 658,638 593,744 =========== ============ CASH FLOW -------------- (In thousands) Reconciliation of Discretionary Cash Flow to Net Cash Provided by Operating Activities: Three Months Ended Six Months Ended June 30, June 30, ------------------- -------------------- 2005 2004 2005 2004 --------- --------- ---------- --------- Discretionary Cash Flow (1) $105,175 $64,520 $195,959 $120,712 (Gain) loss on property sales 26 (1,581) 26 (1,776) Exploration exp, excluding exploratory dry hole exp (7,797) (4,304) (14,680) (9,964) Minority interest & other (1,339) (3,749) (293) (2,588) Changes in working capital and deferred taxes (2,620) 5,015 4,564 (6,565) --------- --------- ---------- --------- Net cash provided by operating activities $93,445 $59,901 $185,576 $99,819 ========= ========= ========== ========= Net cash used in investing activities $(75,700) $(20,818) $(169,978) $(62,290) ========= ========= ========== ========= Net cash used in financing activities $(24,697) $(29,308) $(11,448) $(24,775) ========= ========= ========== ========= (1) Discretionary cash flow is computed as net income plus depreciation, depletion, amortization, impairments, deferred taxes, exploration expense, stock-based compensation expense and non-cash changes in the Net Profits Plan liability less the cumulative effect of unrealized derivative loss. The non-GAAP measure of discretionary cash flow is presented since management believes that it provides useful additional information to investors for analysis of St. Mary's ability to internally generate funds for exploration, development and acquisitions. In addition, discretionary cash flow is widely used by professional research analysts and others in the valuation, comparison and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Discretionary cash flow should not be considered in isolation or as a substitute for net income, income from operations, net cash provided by operating activities or other income, profitability, cash flow or liquidity measures prepared under GAAP. Since discretionary cash flow excludes some, but not all, items that affect net income and net cash provided by operating activities and may vary among companies, the discretionary cash flow amounts presented may not be comparable to similarly titled measures of other companies.

Source: Business Wire

More News in this Category