Exhibit 99.1
NEWS RELEASE
PATINA PRODUCTION AND INCOME UP SHARPLY
DENVER, COLORADO – APRIL 28, 2004 – PATINA OIL & GAS CORPORATION (NYSE:POG) today reported record results for the first quarter of 2004. Production rose 29% from the prior year period. Revenues rose 53% to $137.9 million as net income increased 78% to $42.8 million. Net income per share rose 75% to $0.62 ($0.59 fully diluted). Cash flow from operations, before changes in working capital, rose 48% to $94.7 million. The dramatic increases were due to continuing production growth, the benefit of acquisitions and higher realized prices.
Production in the quarter averaged to 311.2 MMcfe a day, comprised of 17,744 barrels of oil and 204.8 MMcf of gas. The growth was achieved primarily through development drilling, recompletions and the contribution of recently acquired Mid Continent and San Juan properties. Wellhead prices, after hedging, averaged $4.56 per Mcfe, a 10% increase from the prior year. Prices averaged $26.62 per barrel, a slight decrease, and $4.62 per Mcf, an increase of 16%. Hedging reduced average prices by $0.66 per Mcfe or $7.39 per barrel and $0.36 per Mcf during the quarter.
Development expenditures of $53.7 million in the period were funded with 57% of internal cash flow. A further $3.0 million was spent on acquisitions. Wattenberg development continued to yield outstanding results. Approximately $24.3 million was spent in the Field to drill or deepen 13 J-Sand wells, to drill 14 Codell wells, perform 117 Codell refracs and trifracs and one recompletion. An additional $22.2 million was spent to drill 46 wells and perform 12 recompletions in the Mid Continent, $3.3 million to drill five wells and perform two recompletions in the San Juan and $3.9 million on further development of Central division properties.
During the quarter, the Company sold its interest in the Adams Baggett project in west Texas and various properties in the Permian Basin and elsewhere for a total of $22.7 million. A gain of $7.4 million was recorded on the sales. These and other minor dispositions reduced production approximately 5 MMcfe a day in the quarter. The Company declared a 2-for-1 stock split to shareholders of record on February 23, 2004. Subsequent to the split, the Company increased its dividend per share to a quarterly rate of $0.05, a 25% increase. Coupled with the increases in June and December of 2003, dividends more than doubled in the past twelve months. The Company repurchased 667,800 common shares during the quarter for $14.7 million. Despite the repurchase and the increased development expenditures, bank debt was reduced by $46.0 million during the period.
Commenting, Thomas J. Edelman, Patina’s Chairman said, “We were again extraordinarily pleased with the quarter’s results. The Company continues to aggressively pursue further development in Wattenberg as well as on the properties acquired in the past 18 months. Results in Wattenberg and the Mid Continent continue to be extremely encouraging and initial work on the recently acquired San Juan Basin properties is now underway. The financial and operational benefits of these acquisitions, combined with the Company’s sizeable inventory of high return development projects, lead us to believe Patina will report exceptional results throughout 2004.”
The Company plans to host a conference call on Thursday, April 29, 2004, beginning at 2:00 p.m. (EDT) to discuss first quarter results. To participate, please dial (800) 946-0782. A replay of the call will be available beginning Friday, April 30, 2004 for a period of 30 days. The replay can be accessed by dialing (888) 203-1112 and giving the access code 742903.
This release contains certain forward-looking statements within the meaning of the Federal securities laws. Such statements are based on management’s current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Factors that could cause actual results to differ from those anticipated are discussed in the Company’s periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2003.
Patina is an independent energy company engaged in the acquisition, development, exploitation and production of oil and natural gas primarily in Colorado’s Wattenberg Field, the Mid Continent region of western Oklahoma and the Texas Panhandle, and the San Juan Basin in New Mexico.
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Contact: | | David J. Kornder |
| | | Executive Vice President |
| | | Chief Financial Officer |
| | | (303) 389-3600 |
| | | dkornder@patinaoil.com |
PATINA OIL & GAS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
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| | | Three Months Ended March 31,
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| | | % Change
| | | 2004
| | 2003
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Revenues | | | | | | | | | | |
Oil and gas sales | | | | | $ | 129,068 | | $ | 89,530 | |
Deferred compensation asset gain (loss) | | | | | | 381 | | | (168 | ) |
Gain on sale of oil and gas properties | | | | | | 7,384 | | | — | |
Other | | | | | | 1,093 | | | 605 | |
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| | | 53 | % | | | 137,926 | | | 89,967 | |
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Expenses | | | | | | | | | | |
Lease operating expenses | | | | | | 15,738 | | | 10,698 | |
Production taxes | | | | | | 10,536 | | | 6,485 | |
Exploration | | | | | | 93 | | | 1,133 | |
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Gross margin | | 56 | % | | | 111,559 | | | 71,651 | |
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General and administrative | | | | | | 5,334 | | | 4,446 | |
Interest and other | | | | | | 3,152 | | | 2,165 | |
Deferred compensation adjustment | | | | | | 4,708 | | | 1,058 | |
Depletion, depreciation and amortization | | | | | | 29,411 | | | 21,087 | |
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Pre-tax income | | 61 | % | | | 68,954 | | | 42,895 | |
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Provision for income taxes | | | | | | | | | | |
Current | | | | | | 9,826 | | | 6,113 | |
Deferred | | | | | | 16,377 | | | 10,187 | |
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| | | | | | | 26,203 | | | 16,300 | |
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Net income before cumulative effect of change in accounting principle | | 61 | % | | $ | 42,751 | | $ | 26,595 | |
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Cumulative effect of change in accounting principle | | | | | | — | | | (2,613 | ) |
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Net income | | 78 | % | | $ | 42,751 | | $ | 23,982 | |
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Net income per share before cumulative effect of change in accounting principle | | | | | | | | | | |
Basic | | 58 | % | | $ | 0.62 | | $ | 0.39 | |
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Diluted | | 56 | % | | $ | 0.59 | | $ | 0.38 | |
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Net income per share | | | | | | | | | | |
Basic | | 75 | % | | $ | 0.62 | | $ | 0.35 | |
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Diluted | | 75 | % | | $ | 0.59 | | $ | 0.34 | |
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Weighted average shares outstanding | | | | | | | | | | |
Basic | | | | | | 69,209 | | | 67,888 | |
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Diluted | | | | | | 72,345 | | | 71,052 | |
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PATINA OIL & GAS CORPORATION
SUMMARY BALANCE SHEET, OPERATIONAL AND CASH FLOW DATA
(in thousands, except price data)
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| | | | | | March 31, 2004
| | | March 31, 2003
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Summary Balance Sheet | | | | | | | | | | | |
Total assets | | 47 | % | | $ | 1,237,394 | | | $ | 839,071 | |
Total debt | | 50 | % | | $ | 370,000 | | | $ | 246,000 | |
Stockholders’ equity | | 8 | % | | $ | 332,038 | | | $ | 307,362 | |
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| | | | | | Three Months Ended March 31,
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| | | % Change
| | | 2004
| | | 2003
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Summary Operational Data | | | | | | | | | | | |
Oil production (Bbl per day) | | 33 | % | | | 17,744 | | | | 13,385 | |
Gas production (Mcf per day) | | 28 | % | | | 204,771 | | | | 160,516 | |
Total production (Mcfe per day) | | 29 | % | | | 311,237 | | | | 240,824 | |
Average oil price (per Bbl) | | 0 | % | | $ | 26.62 | | | $ | 26.73 | |
Average gas price (per Mcf) | | 16 | % | | $ | 4.62 | | | $ | 3.97 | |
Average price per Mcfe | | 10 | % | | $ | 4.56 | | | $ | 4.13 | |
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Summary Cash Flow | | | | | | | | | | | |
Net income | | 78 | % | | $ | 42,751 | | | $ | 23,982 | |
Cumulative effect of change in accounting principle | | | | | | — | | | | 2,613 | |
Depletion, depreciation and amortization | | | | | | 29,411 | | | | 21,087 | |
Deferred compensation adjustments | | | | | | 4,327 | | | | 1,226 | |
Gain on sale of oil and gas properties | | | | | | (7,384 | ) | | | — | |
Exploration and other | | | | | | 424 | | | | 1,267 | |
Stock option tax benefit | | | | | | 8,789 | | | | 3,580 | |
Deferred tax provision | | | | | | 16,377 | | | | 10,187 | |
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Cash flow before changes in working capital (1) | | 48 | % | | | 94,695 | | | | 63,942 | |
Changes in working capital | | | | | | (3,726 | ) | | | (10,781 | ) |
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Cash flow provided by operations | | 71 | % | | $ | 90,969 | | | $ | 53,161 | |
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Adjusted weighted average shares outstanding-diluted (2) | | | | | | 74,729 | | | | 73,698 | |
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Reconciliation of Net income per share to Net income per share before deferred compensation adjustments | | | | | | | | | | | |
Net income | | | | | $ | 42,751 | | | $ | 23,982 | |
Deferred compensation adjustments | | | | | | 4,327 | | | | 1,226 | |
Provision for income taxes at 38% | | | | | | (1,644 | ) | | | (466 | ) |
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Non-cash deferred compensation adjustments, net of tax | | | | | $ | 2,683 | | | $ | 760 | |
Net income before deferred compensation adjustments | | 84 | % | | | 45,434 | | | | 24,742 | |
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Adjusted weighted average shares outstanding (2) | | | | | | | | | | | |
Basic | | | | | | 71,593 | | | | 70,534 | |
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Diluted | | | | | | 74,729 | | | | 73,698 | |
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Net income per share before deferred compensation adjustments (3) | | | | | | | | | | | |
Basic | | 81 | % | | $ | 0.63 | | | $ | 0.35 | |
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Diluted | | 81 | % | | $ | 0.61 | | | $ | 0.34 | |
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| (1) | Management believes that the non-GAAP measure of cash flow before changes in working capital is useful information to investors because it is widely used by professional analysts and sophisticated investors in valuing oil and gas companies. Many other investors use research reports of these analysts in making investment decisions. Cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flow provided by operations or net income, each as defined under GAAP. Cash flow before changes in working capital should also not be considered as being comparable to any similarly titled measures of other companies. |
| (2) | Includes shares held in treasury for deferred compensation as follows: |
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Weighted Average Shares Outstanding - Bas ic | | 69,209 | | 67,888 |
Weighted Average Shares Held in Deferred Compensation Plan | | 2,384 | | 2,646 |
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Adjusted Weighted Average Shares Outstanding - Basic | | 71,593 | | 70,534 |
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Weighted Average Shares Outstanding - Diluted | | 72,345 | | 71,052 |
Weighted Average Shares Held in Deferred Compensation Plan | | 2,384 | | 2,646 |
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Adjusted Weighted Average Shares Outstanding - Diluted | | 74,729 | | 73,698 |
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| (3) | Management believes that the non-GAAP measure of net income per share before deferred compensation adjustments is useful information to investors due to the nature of the required accounting for shares of the Company’s common stock held in the deferred compensation plan. Under EITF 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested,” shares of the Company’s common stock in the trust are treated as treasury stock and reported at historical cost. However, the liability to plan participants related to the shares held in the trust is reported at fair value. As a result, an increase in the value of the Company’s common stock results in a charge to earnings, whereas a decrease in the value of the Company’s common stock results in an increase to earnings. In addition, as the shares of the Company’s common stock in the trust are treated as treasury stock, generally accepted accounting principles require the shares to be excluded from the calculation of basic weighted average shares outstanding and, if dilutive, excluded from diluted weighted average shares outstanding. Based on conversations with investors, management believes that net income per share before deferred compensation adjustments is an important indicator for its investors of the Company’s performance. |
