Patina Oil & Gas (POG) 8-K Financial statements and exhibits

Exhibit 99.1

NEWS RELEASE

PATINA PRODUCTION AND INCOME RISE

DENVER, COLORADO – JULY 28, 2004 – PATINA OIL & GAS CORPORATION (NYSE:POG) today reported results for the second quarter of 2004. Production rose 20% from the prior year period. Revenues rose 39% to $128.4 million as net income increased 57% to $31.8 million. Net income per share rose 52% to $0.45 ($0.43 fully diluted). Cash flow from operations, before changes in working capital, rose 37% to $84.1 million. The increases were due to continuing production growth, higher realized prices and the benefit of an acquisition made in late 2003. The results were achieved despite an after-tax non-cash charge of $4.9 million related to the impact of the Company’s rising stock price during the quarter on its deferred compensation plan assets and $32.8 million of hedging losses ($20.3 million after-tax) which limited the benefits of high commodity prices.

Production in the quarter averaged 318.2 MMcfe a day, comprised of 17,768 barrels of oil and 211.6 MMcf of gas. The growth was achieved primarily through development drilling, refracs and the contribution of Mid Continent and San Juan properties acquired in October 2003. Wellhead prices, after hedging, averaged $4.38 per Mcfe, a 16% increase from the prior year period. Prices averaged $26.31 per barrel, a 3% increase, and $4.37 per Mcf, an increase of 26%. Hedging reduced average prices by $1.13 per Mcfe or $10.84 per barrel and $0.79 per Mcf in the quarter.

Development expenditures of $51.3 million in the period were funded with less than 65% of internal cash flow. In Wattenberg, development projects continued to yield outstanding results. Approximately $22.0 million was spent in the Field to drill 31 wells, perform 71 refracs and trifracs and two recompletions. In the Mid Continent, an additional $21.0 million was spent to drill 31 wells and perform a recompletion. A further $2.4 million was spent to complete five previously drilled wells and to perform one refrac in the San Juan. Finally, $5.9 million was spent to drill 26 wells and perform 23 recompletions in the Central division and $512,000 was spent on minor acquisitions and other projects.

Since year-end, $50.0 million of bank debt has been repaid. The repayments were made despite a $20.3 million increase in margin deposits related to hedging. A total of $30.2 million of margin deposits were held by counterparties at quarter end. At June 30^th, outstanding debt stood at $366.0 million and stockholders’ equity totaled $343.7 million, which reflected a deduction of $127.1 million for outstanding hedges. Based on current commodity prices and forecast production, and exclusive of any significant expenditures on acquisitions or equity repurchases, approximately $20 - $25 million per month of combined bank debt and hedging liabilities will be retired through year-end.

Commenting, Thomas J. Edelman, Patina’s Chairman said, “We remain exceptionally pleased with the Company’s results. Volume increases in the second quarter were achieved despite production curtailments of as much as 6 MMcfe a day due to high line pressures in the Mid Continent and to a lesser degree, delays in capital projects due to permitting and rig availability in the Mid Continent and San Juan Basin. By June 30^th, additional compression had been brought on line near the Buffalo Wallow field and net production rose by more than 4 MMcfe per day. Based on undertakings received from the principal gas gatherer in the area, further compression should be added in the course of the next six months. Simultaneously, longer term commitments are being entered into to assure timely access to rigs. In the interim, ongoing development continues to be aggressively pursued in Wattenberg. Additional reserve potential there continues to be identified through refinement of completion techniques and increased focus on certain of the Field’s productive formations. Drilling in the Mid Continent, primarily targeting the Granite Wash formation, has also yielded exceptional returns, setting up the potential for reserve additions there through potential down-spacing, exploitation of our growing undeveloped acreage position and consolidation. Finally, recent additions to senior management should provide the Company growing organizational flexibility, an enhanced ability to exploit its asset base and the capability for further profitable expansion. With continued strength in oil and gas prices, our large inventory of high return development projects and the steady development of our operational and technical expertise, particularly in the Mid Continent, we anticipate continuing to report excellent results in the second half.”

The Company plans to host a conference call on Thursday, July 29, 2004, beginning at 2:00 p.m. (EDT) to discuss second quarter results. To participate, please dial (800) 289-0528. A replay of the call will be available beginning Friday, July 30, 2004 for a period of 30 days. The replay can be accessed by dialing (888) 203-1112 and giving the access code 355153.

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)

	Three Months Ended June 30,						Six Months Ended June 30,
	% Change		2004		2003		% Change		2004		2003
Revenues
Oil and gas sales			$	126,704	$	90,952			$	255,772	$	180,482
Deferred compensation asset gain				841		902				1,222		734
Gain on sale of oil and gas properties				—		—				7,384		—
Other				858		564				1,951		1,169
	39	%		128,403		92,418	46	%		266,329		182,385
Expenses
Lease operating expenses				17,551		13,948				33,289		24,646
Production taxes				11,222		6,407				21,758		12,892
Exploration				545		1,036				638		2,169
Gross margin	40	%		99,085		71,027	48	%		210,644		142,678
General and administrative				5,889		4,237				11,223		8,683
Interest and other				3,139		1,937				6,291		4,102
Deferred compensation adjustment				8,749		8,861				13,457		9,919
Depletion, depreciation and amortization				30,097		23,270				59,508		44,357
Pre-tax income	57	%		51,211		32,722	59	%		120,165		75,617
Provision for income taxes
Current				7,297		4,663				17,123		10,775
Deferred				12,163		7,771				28,540		17,959
				19,460		12,434				45,663		28,734
Net income before cumulative effect of change in accounting principle	57	%	$	31,751	$	20,288	59	%	$	74,502	$	46,883
Cumulative effect of change in accounting principle				—		—				—		(2,613	)
Net income	57	%	$	31,751	$	20,288	68	%	$	74,502	$	44,270
Net income per share before cumulative effect of change in accounting principle
Basic	52	%	$	0.45	$	0.30	55	%	$	1.07	$	0.69
Diluted	52	%	$	0.43	$	0.28	55	%	$	1.02	$	0.66
Net income per share
Basic	52	%	$	0.45	$	0.30	64	%	$	1.07	$	0.65
Diluted	52	%	$	0.43	$	0.28	65	%	$	1.02	$	0.62
Weighted average shares outstanding
Basic				70,472		68,316				69,841		68,104
Diluted				73,748		71,700				72,864		71,232

PATINA OIL & GAS CORPORATION

SUMMARY BALANCE SHEET, OPERATIONAL AND CASH FLOW DATA

(in thousands, except price data)

			June 30, 2004		June 30, 2003
Summary Balance Sheet
Total assets	51	%	$	1,295,546	$	859,640
Total debt	53	%	$	366,000	$	239,000
Stockholders’ equity	17	%	$	343,702	$	294,160

	% Change		Three Months Ended June 30,						% Change			Six Months Ended June 30,
			2004			2003						2004			2003
Summary Operational Data
Oil production (Bbl per day)	10	%		17,768			16,165		20	%			17,756			14,782
Gas production (Mcf per day)	26	%		211,575			168,274		27	%			208,173			164,417
Total production (Mcfe per day)	20	%		318,183			265,264		24	%			314,711			253,111
Average oil price (per Bbl)	3	%	$	26.31		$	25.60		1	%		$	26.47		$	26.11
Average gas price (per Mcf)	26	%	$	4.37		$	3.48		21	%		$	4.49		$	3.72
Average price per Mcfe	16	%	$	4.38		$	3.77		13	%		$	4.47		$	3.94
Summary Cash Flow
Net income	57	%	$	31,751		$	20,288		68	%		$	74,502		$	44,270
Cumulative effect of change in accounting principle				—			—						—			2,613
Depletion, depreciation and amortization				30,097			23,270						59,508			44,357
Deferred compensation adjustments				7,908			7,959						12,235			9,185
Gain on sale of oil and gas properties				—			—						(7,384	)		—
Exploration and other				1,050			1,171						1,474			2,437
Stock option tax benefit				1,142			1,077						9,931			4,657
Deferred tax provision				12,163			7,771						28,540			17,959
Cash flow before changes in working capital (1)	37	%		84,111			61,536		42	%			178,806			125,478
Changes in working capital				(26,445	)		(1,032	)					(30,171	)		(11,813	)
Cash flow provided by operations	-5	%	$	57,666		$	60,504		31	%		$	148,635		$	113,665
Adjusted weighted average shares outstanding-diluted (2)				75,862			74,428						75,113			73,920
Reconciliation of Net income per share to Net income per share before deferred compensation adjustments
Net income			$	31,751		$	20,288				��	$	74,502		$	44,270
Deferred compensation adjustments				7,908			7,959						12,235			9,185
Provision for income taxes at 38%				(3,005	)		(3,024	)					(4,649	)		(3,490	)
Non-cash deferred compensation adjustments, net of tax			$	4,903		$	4,935					$	7,586		$	5,695
Net income before deferred compensation adjustments	45	%		36,654			25,223		64	%			82,088			49,965
Adjusted weighted average shares outstanding (2)
Basic				72,586			71,044						72,090			70,792
Diluted				75,862			74,428						75,113			73,920
Net income per share before deferred compensation adjustments (3)
Basic	42	%	$	0.50		$	0.36		61	%		$	1.14		$	0.71
Diluted	43	%	$	0.48		$	0.34		62	%		$	1.09		$	0.68
(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:
Weighted Average Shares Outstanding - Basic				70,472			68,316						69,841			68,104
Weighted Average Shares Held in Deferred Compensation Plan				2,114			2,728						2,249			2,688
Adjusted Weighted Average Shares Outstanding - Basic				72,586			71,044						72,090			70,792
Weighted Average Shares Outstanding - Diluted				73,748			71,700						72,864			71,232
Weighted Average Shares Held in Deferred Compensation Plan				2,114			2,728						2,249			2,688
Adjusted Weighted Average Shares Outstanding - Diluted				75,862			74,428						75,113			73,920

(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.