Immediate Release | For Further Information Contact: |
Wednesday, August 5, 2009 | Robert E. Phaneuf |
| Vice President - Corporate Development |
| (918) 632-0680 |
RAM ENERGY RESOURCES REPORTS SECOND QUARTER 2009 RESULTS
| - | 2Q09 Production of 652 Thousand BOE Up 1.2% vs. 2Q08 Production |
| - | RAM Reaffirms 2009 Production Target of 2.5 Million BOE |
| - | First Half 2009 Free Cash Flow of $25.0 Million, Or $0.33 Per Share |
Tulsa, Oklahoma – RAM Energy Resources, Inc. (Nasdaq: RAME) today announced second quarter 2009 earnings and financial highlights.
Second quarter production totaled 652 thousand barrel of oil equivalents (BOE), up 1.2% from 644 thousand BOE in the second quarter 2008. Sales of oil, natural gas liquids (NGLs) and natural gas totaled $23.5 million, 59% below comparative sales in the second quarter of last year, principally the result of a dramatic fall in the price of each of the company’s principal commodities.
Free cash flow (a non-GAAP measure) was $16.9 million, or $0.23 per share, for the second quarter 2009 compared to $24.8 million, or $0.36 per share, in last year’s second quarter. RAM’s free cash flow of $16.9 million more than fully funded the second quarter capital expenditures of $4.5 million. Similarly, EBITDA (a non-GAAP measure) was $20.3 million for the second quarter, representing a decrease of 37% from the same period last year.
For the second quarter 2009, RAM’s adjusted net income was $2.9 million, or $0.04 per common share. The calculation of adjusted net income excludes the after tax impact of unrealized, non-cash, mark-to-market (MTM) losses associated with oil and natural gas derivatives covering future periods. Such MTM losses are typically not included in the published estimates of the company’s financial results made by certain securities analysts. During the second quarter an unrealized, non-cash, pre-tax MTM loss of $23.8 million attributable to future period oil and natural gas derivatives was incurred primarily as a result of an increase in the price of oil at June 30, 2009 compared to prevailing prices at March 31, 2009. Including the MTM losses noted above and realized gains associated with contract settlements net of amortized premium costs of derivatives during the
second quarter 2009, RAM reported a net loss during the second quarter of $11.8 million, or a loss of $0.16 per common share.
“Our asset base dominated by oil and liquids, above average length of reserve life, derivatives position, ample liquidity under our loan facility and excess cash flow relative to non-acquisition capital spending provides us with both operational and financial flexibility to meet our 2009 targets while positioning the company for future growth,” said Larry Lee, Chairman and CEO.
Commodity Prices and Revenues
The company’s realized price for oil fell 55% to an average of $55.98 per barrel in the second quarter of 2009, compared with last year’s second quarter average realized price of $123.15 per barrel. Similarly, the company’s realized price for natural gas dropped 69% to an average of $3.06 per thousand cubic feet (Mcf) compared to an average of $9.94 per Mcf in the second quarter of 2008. In addition, the price of NGLs decreased 59%, averaging $24.96 per barrel for this year’s second quarter. The negative impact from the substantial decline in the price of commodities compared to last year’s historic high price levels, however, was somewhat offset by the company’s derivative position.
In the second quarter 2009 the average realized price of oil rose 44% and the average realized price for natural gas declined 21%, compared to realized prices in the first quarter of the year. The substantial change in commodity prices together with monetization of certain hedge positions during the quarter resulted in net realized derivative gains of $10.7 million and unrealized MTM derivative losses of $23.8 million for the second quarter. The combined net loss of $13.1 million effectively offset a substantial portion of the quarter’s oil and gas revenue of $23.5 million, reducing total revenues to $10.4 million for the quarter. In the year-ago quarter, the realized prices of oil and natural gas both rose substantially. The resulting impact from realized and unrealized losses totaled $41.0 million and, as a result, total revenues for the second quarter 2008 were reduced to $16.6 million.
Costs and Expenses
Production expenses were $13.99 per BOE in the second quarter of 2009, or a total of $9.1 million, 5% below the $14.69 per BOE in the previous year’s quarter. Production taxes were $1.42 per BOE in this year’s second quarter, or a total of $0.9 million, 73% below the $5.19 per BOE posted in the 2008 quarter. The decrease is principally the result of lower commodity prices in the current quarter compared to those prevailing
in the second quarter of 2008. General and administrative expenses of $3.7 million declined 32% below those expenses in last year’s second quarter of $5.5 million as a result of accounting function consolidation, lower employee related costs and lower professional fees in the 2009 period.
Capital Expenditures
Capital expenditures totaled$4.5 million in the second quarter 2009; $4.3 million was allocated to development and exploratory activities and $0.2 million for the acquisition of proved properties. During the second quarter RAM carried out a variety of well workovers and recompletions and participated in the drilling of six gross (six net) development wells, all of which were completed and capable of commercial production. In addition the company finalized the drilling and completion of two gross (two net) wells drilled in the previous quarter. Based on the ability to hold production relatively stable through the first half and at a level consistent with the achievement of the company’s previously established target production level of 2.5 million BOE for 2009, the non-acquisition capital budget for the year has been trimmed to $30.0 - $35.0 million from the previously disclosed range of $40.0 - $45.0 million. The focus during the second half of 2009 will concentrate on low cost, high return, workover activity and more generally on lower risk developmental activity aimed at maintaining production levels as well as processing exploratory data to identify future growth projects.
Long-Term Debt and Liquidity
As of June 30, 2009, RAM’s outstanding borrowings under its credit facility totaled $255.4 million, composed of $113.4 million of term debt and $142.0 million outstanding under its revolver, which is currently subject to a $175.0 million borrowing base. Based on the borrowing base and the amount drawn on its revolver, at mid-year RAM had $32.8 million available under its facility. In June, 2009 RAM amended the existing loan agreement to provide for greater flexibility in certain financial covenants under the loan agreement through the remaining term of the facility. In exchange for the added flexibility afforded by these changes to the credit facility, RAM agreed to increase the base cash interest rate on both the revolving facility and the term facility. Based on the company’s outstanding debt balance at June 30, 2009, RAM expects the cash interest percent spread to the LIBOR floor to be 2.75% on its revolving credit facility and 8.50% on its term loan facility during the second half of the year.
Interest expense for the second quarter 2009 was $3.6 million, or $5.52 per BOE, a substantial decline from the same quarter last year of $6.2 million, or $9.62 per BOE. The decrease in interest expense was due to lower
average debt balances in the current quarter and lower effective interest rates. In the second quarter 2009, the blended interest rate on borrowings was 5.7% compared to the blended rate in last year’s quarter of 11.3%. In addition, the average outstanding borrowings under the company’s credit facility in the second quarter of 2008 of $273.5 million were approximately 7% higher than in the current quarter.
Subsequent to the 2009 second quarter end, the company realized approximately $5.6 million in proceeds from non-strategic asset sales in late July. These proceeds along with cash flow in excess of capital spending are anticipated to be used to reduce existing debt during the third quarter of 2009.
Six Month 2009 Results
Six month production totaled 1.3 million BOE, up 4% from production in the first half of 2008, driven primarily by a 13% volume increase from the company’s “developing fields” and a 6% increase from “mature oil fields” which, net of the decline experienced in “mature natural gas fields”, rose a total of 52 thousand BOE over last year’s first half production. The positive impact from the increase in production in the first half of the year, however, was more than offset by the fall in the price of all commodities, resulting in a decline in total sales of oil, NGLs and natural gas to $42.6 million, 58% below the sales in the same period of 2008.
Free cash flow per share (a non-GAAP measure) for the first half of 2009 was $25.0 million, or $0.33 per share compared to $39.3 million, or $0.61 per share, for the same period last year. Free cash flow of $25.0 million more than funded capital expenditures of $17.7 million made during the first six months of the year. Similarly, EBITDA (a non-GAAP measure) was $32.1 million for the first half of 2009 compared to $56.0 million for the same period last year, a decrease of 43%.
Operational and Financial Targets
Based on first half results, the NYMEX strip of prices prevailing at June 30, 2009 for oil and natural gas, as well as revised capital expenditures planned for the second half and estimated production costs, management continues to target full year production of 2.5 million BOE. Total capital expenditures for the 2009 year have been trimmed to $30.0 - $35.0 million as a result of the company’s ability to maintain production at levels consistent with targeted annual production with lesser amounts of drilling than originally anticipated and its decision to defer natural gas projects due to the prevailing low price of the commodity. Through the first half of 2009, capital expenditures totaled $17.7 million. In addition, despite a recent amendment to the company’s senior credit facility which provides additional financial flexibility in exchange for
higher interest costs, the company reaffirms the high end of its previous target of interest costs of $17.0 - $18.0 million for the 2009 year. Through the first half of the year interest expense totaled $7.2 million. Similarly, EBITDA for the first half of the year totaled $32.1 million and the company continues to expect that EBITDA will approximate the lower end of the $60.0 - $65.0 million range projected for the 2009 year. Additionally, the company anticipates that internally generated cash flow will be sufficient to fund revised non-acquisition capital expenditures planned for the second half of 2009.
RAM to Webcast Second Quarter 2008 Conference Call
The company’s teleconference call to review second quarter results will be broadcast live on a listen-only basis over the internet on Thursday, August 6 at 10:00 a.m. Central Daylight Time. Interested parties may access the webcast by visiting the RAM Energy Resources, Inc. website at www.ramenergy.com. From the home page, select the Investor Relations tab and then click on the microphone icon. The teleconference may be accessed by dialing 1.800.261.3417 (domestic) or 1.617.614.3673 (international) and providing the call identifier “42073502” to the operator. The webcast will be available for replay on the company’s website. An audio replay will be available until August 13, 2009 by dialing 1.888.286.8010 (domestic) or 1.617.801.6888 (international) and using pass code “26341263”.
Forward-Looking Statements
This release includes certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts, that address targets for production, costs, property dispositions, EBITDA, free cash flow, estimates of capital spending, realized prices of oil and gas, the impact of oil and gas derivatives, drilling activities, borrowing availability, and events or developments that the company expects or believes are forward-looking statements. Although the company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, exploitation and exploration successes, actions taken and to be taken by the government as a result of political and economic conditions, continued availability of capital and financing, and general economic, market or business conditions as well as other risk factors described from time to time in the company’s filings with the SEC. The company assumes no obligation
to update publicly such forward-looking statements, whether as a result of new information, future
events or otherwise.
RAM Energy Resources, Inc. is an independent energy company engaged in the acquisition, exploitation, exploration, and development of oil and natural gas properties and the marketing of crude oil and natural gas. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the Nasdaq under the symbol RAME. For additional information, visit the company website at www.ramenergy.com
TABLE 1 RAM Energy Resources, Inc. Condensed Consolidated Balance Sheets (in thousands, except share and per share amounts) |
| | |
| June 30, | December 31, |
| 2009 | | 2008 |
| (unaudited) | | |
ASSETS | | | |
CURRENT ASSETS: | | | |
Cash and cash equivalents | $ 2,204 | | $ 164 |
Cash, restricted | - | | 16,000 |
Accounts receivable: | | | |
Oil and natural gas sales, net of allowance of $50 ($50 at December 31, 2008) | 11,408 | | 8,702 |
Joint interest operations, net of allowance of $515 ($515 at December 31, 2008) | 801 | | 818 |
Other, net of allowance of $35 ($35 at December 31, 2008) | 910 | | 4,045 |
Derivative assets | 3,051 | | 21,006 |
Prepaid expenses | 1,982 | | 2,330 |
Deferred tax asset | 6,518 | | - |
Other current contingencies | - | | 2,816 |
Other current assets | 4,297 | | 4,141 |
Total current assets | 31,171 | | 60,022 |
PROPERTIES AND EQUIPMENT, AT COST: | | | |
Proved oil and natural gas properties and equipment, using full cost accounting | 701,860 | | 683,341 |
Other property and equipment | 9,117 | | 9,460 |
| 710,977 | | 692,801 |
Less accumulated depreciation, amortization and impairment | (471,557) | | (396,301) |
Total properties and equipment | 239,420 | | 296,500 |
OTHER ASSETS: | | | |
Deferred tax asset | 44,434 | | 28,724 |
Derivative assets | - | | 4,531 |
Deferred loan costs, net of accumulated amortization of $1,880 ($1,282 at
December 31, 2008) | 5,741 | | 4,015 |
Other | 2,335 | | 2,053 |
Total assets | $ 323,101 | | $ 395,845 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | |
CURRENT LIABILITIES: | | | |
Accounts payable: | | | |
Trade | $ 20,025 | | $ 26,370 |
Oil and natural gas proceeds due others | 8,912 | | 7,218 |
Other | 261 | | 982 |
Accrued liabilities: | | | |
Compensation | 1,065 | | 2,893 |
Interest | 607 | | 865 |
Franchise taxes | 1,340 | | 1,300 |
Income taxes | 193 | | 399 |
Contingencies | - | | 16,000 |
Deferred income taxes | - | | 5,779 |
Asset retirement obligations | 1,073 | | 1,093 |
Long-term debt due within one year | 145 | | 160 |
Total current liabilities | 33,621 | | 63,059 |
OIL & NATURAL GAS PROCEEDS DUE OTHERS | 1,695 | | 2,523 |
DERIVATIVE LIABILITIES | 1,732 | | - |
LONG-TERM DEBT | 255,514 | | 250,536 |
ASSET RETIREMENT OBLIGATIONS | 30,864 | | 29,106 |
COMMITMENTS AND CONTINGENCIES | 900 | | 900 |
| | | |
STOCKHOLDERS' EQUITY (DEFICIT): | | | |
| | | |
Common stock, $0.0001 par value, 100,000,000 shares authorized, 80,623,674
and 79,423,574, shares issued, 76,840,587 and 78,532,134 shares outstanding at
June 30, 2009 and December 31, 2008, respectively | 8 | | 8 |
Additional paid-in capital | 221,893 | | 220,800 |
Treasury stock - 3,783,087 shares (891,440 shares at December 31,2008) at cost | (6,167) | | (4,027) |
Accumulated deficit | (216,959) | | (167,060) |
Stockholders' equity (deficit) | (1,225) | | 49,721 |
Total liabilities and stockholders' equity (deficit) | $ 323,101 | | $ 395,845 |
TABLE 2 RAM Energy Resources, 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, |
| 2009 | | 2008 | | 2009 | | 2008 |
REVENUES AND OTHER OPERATING INCOME: | | | | | | | |
Oil and natural gas sales | | | | | | | |
Oil | $ 16,206 | | $ 36,984 | | $ 27,464 | | $ 65,644 |
Natural gas | 4,907 | | 15,349 | | 10,957 | | 26,227 |
NGLs | 2,387 | | 5,221 | | 4,135 | | 9,216 |
Realized gains (losses) on derivatives | 10,671 | | (7,218) | | 18,549 | | (9,536) |
Unrealized losses on derivatives | (23,795) | | (33,808) | | (24,802) | | (39,067) |
Other | 43 | | 117 | | 128 | | 211 |
Total revenues and other operating income | 10,419 | | 16,645 | | 36,431 | | 52,695 |
| | | | | | | |
OPERATING EXPENSES: | | | | | | | |
Oil and natural gas production taxes | 927 | | 3,341 | | 1,799 | | 5,770 |
Oil and natural gas production expenses | 9,119 | | 9,458 | | 19,204 | | 18,780 |
Depreciation and amortization | 7,560 | | 11,179 | | 16,504 | | 21,802 |
Accretion expense | 532 | | 540 | | 936 | | 1,078 |
Impairment | - | | - | | 58,929 | | - |
Share-based compensation | 552 | | 932 | | 1,093 | | 1,479 |
General and administrative, overhead and other expenses, net of | | | | | | | |
operator's overhead fees | 3,745 | | 5,539 | | 8,090 | | 11,056 |
Total operating expenses | 22,435 | | 30,989 | | 106,555 | | 59,965 |
Operating loss | (12,016) | | (14,344) | | (70,124) | | (7,270) |
| | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | |
Interest expense | (3,601) | | (6,197) | | (7,209) | | (14,359) |
Interest income | 9 | | 75 | | 29 | | 148 |
Other expense | (106) | | (205) | | (539) | | (354) |
LOSS BEFORE INCOME TAXES | (15,714) | | (20,671) | | (77,843) | | (21,835) |
INCOME TAX BENEFIT | (3,908) | | (14,809) | | (27,944) | | (15,450) |
Net loss | $ (11,806) | | $ (5,862) | | $ (49,899) | | $ (6,385) |
| | | | | | | |
BASIC LOSS PER SHARE | $ (0.16) | | $ (0.08) | | $ (0.66) | | $ (0.10) |
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING | 74,696,028 | | 69,198,767 | | 75,986,262 | | 64,190,725 |
| | | | | | | |
DILUTED LOSS PER SHARE | $ (0.16) | | $ (0.08) | | $ (0.66) | | $ (0.10) |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | 74,696,028 | | 69,198,767 | | 75,986,262 | | 64,190,725 |
| | | | | | | |
Table 3 RAM Energy Resources, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
| Six months ended June 30, |
| 2009 | | 2008 |
OPERATING ACTIVITIES: | | | |
Net loss | $ (49,899) | | $ (6,385) |
Adjustments to reconcile net loss to net cash provided by operating activities- | | | |
Depreciation and amortization | 16,504 | | 21,802 |
Amortization of deferred loan costs and Senior Notes discount | 641 | | 602 |
Accretion expense | 936 | | 1,078 |
Impairment | 58,929 | | - |
Unrealized loss on derivatives and premium amortization | 25,633 | | 39,067 |
Deferred income tax benefit | (28,007) | | (15,490) |
Share-based compensation | 1,093 | | 1,479 |
Loss on disposal of other property, equipment and subsidiary | 96 | | 174 |
Other expense | 448 | | 174 |
Changes in operating assets and liabilities | | | |
Accounts receivable | 444 | | (8,366) |
Prepaid expenses and other assets | 144 | | (405) |
Derivative premiums | (1,414) | | - |
Accounts payable and proceeds due others | (6,200) | | 11,250 |
Accrued liabilities and other | (18,046) | | (2,843) |
Restricted cash | 16,000 | | - |
Income taxes payable | (207) | | (237) |
Asset retirement obligations | (181) | | (309) |
Total adjustments | 66,813 | | 47,976 |
Net cash provided by operating activities | 16,914 | | 41,591 |
INVESTING ACTIVITIES: | | | |
Payments for oil and natural gas properties and equipment | (17,746) | | (37,434) |
Proceeds from sales of oil and natural gas properties | 213 | | 295 |
Payments for other property and equipment | (363) | | (504) |
Proceeds from sales of other property and equipment | 433 | | 19 |
Proceeds from sale of subsidiary, net of cash | - | | 308 |
Payments of merger costs | - | | 35 |
Net cash used in investing activities | (17,463) | | (37,281) |
FINANCING ACTIVITIES: | | | |
Payments on long-term debt | (13,081) | | (134,924) |
Proceeds from borrowings on long-term debt | 18,000 | | 54,226 |
Payments for deferred loan costs | (2,324) | | (30) |
Stock repurchased | (6) | | (70) |
Warrants exercised | - | | 86,614 |
Net cash provided by financing activities | 2,589 | | 5,816 |
INCREASE IN CASH AND CASH EQUIVALENTS | 2,040 | | 10,126 |
CASH AND CASH EQUIVALENTS, beginning of period | 164 | | 6,873 |
CASH AND CASH EQUIVALENTS, end of period | $ 2,204 | | $ 16,999 |
SUPPLEMENTAL CASH FLOW INFORMATION: | | | |
Cash paid for income taxes | $270 | | $277 |
Cash paid for interest | $ 6,788 | | $ 16,335 |
DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES: | | | |
Asset retirement obligations | $ 984 | | $ 516 |
Payment-in-kind interest | $ 43 | | $ - |
| | | |
TABLE 4
RAM Energy Resources, Inc.
Production by Area |
| | | | | | | | | | |
| | | | | | | | Mature | | |
| | Developing Fields | | Mature Oil Fields* | | Natural Gas Fields | | |
Three Months Ended June 30, 2009 | South Texas | Barnett Shale | Appalachia | | Various | | Various | | Total |
Aggregate Net Production | | | | | | | | | |
Oil (MBbls) | 14 | 2 | 1 | | 242 | | 31 | | 290 |
NGLs (MBbls) | 28 | 27 | - | | 22 | | 19 | | 96 |
Natural Gas (MMcf) | 502 | 171 | 22 | | 277 | | 631 | | 1,603 |
MBoe | | 125 | 57 | 4 | | 310 | | 156 | | 652 |
| | | | | | | | | | |
Three Months Ended June 30, 2008 | | | | | | | | | |
Aggregate Net Production | | | | | | | | | |
Oil (MBbls) | 11 | 1 | - | | 237 | | 51 | | 300 |
NGLs (MBbls) | 32 | 14 | - | | 22 | | 18 | | 86 |
Natural Gas (MMcf) | 704 | 78 | 5 | | 187 | | 570 | | 1,544 |
MBoe | | 161 | 27 | 1 | | 290 | | 165 | | 644 |
| | | | | | | | | | |
Change in MBoe | (36) | 30 | 3 | | 20 | | (9) | | 8 |
Percentage Change in MBoe | -22.4% | 111.1% | 300.0% | | 6.9% | | -5.5% | | 1.2% |
| | | | | | | | | | |
* Includes Electra/Burkburnett, Allen/Fitts and Layton Fields.
TABLE 5 RAM Energy Resources, Inc. Production and Prices Summary | |
| | | |
| Three Months Ended | Six Months Ended | |
| June 30, 2009 | June 30, 2009 | |
Production volumes: | | | |
Oil (MBbls) | 290 | 580 | |
NGLs (MBbls) | 96 | 199 | |
Natural gas (MMcf) | 1,603 | 3,170 | |
Total (Mboe) | 652 | 1,308 | |
| | | |
Average sale prices received: | | | |
Oil (per Bbl) | $ 55.98 | $ 47.35 | |
NGLs (per Bbl) | $ 24.96 | $ 20.74 | |
Natural gas (per Mcf) | $ 3.06 | $ 3.46 | |
Total per Boe | $ 36.03 | $ 32.54 | |
| | |
Cash effect of derivative contracts: | | |
Oil (per Bbl) | $ 6.19 | $ 10.59 |
NGLs (per Bbl) | $ - | $ - |
Natural gas (per Mcf) | $ 5.54 | $ 3.91 |
Total per Boe | $ 16.37 | $ 14.18 |
| | | |
Average prices computed after cash effect | | | |
of settlement of derivative contracts: | | | |
Oil (per Bbl) | $ 62.17 | $ 57.94 | |
NGLs (per Bbl) | $ 24.96 | $ 20.74 | |
Natural gas (per Mcf) | $ 8.60 | $ 7.37 | |
Total per Boe | $ 52.40 | $ 46.72 | |
| | | |
Cash expenses (per Boe): | | | |
Oil and natural gas production taxes | $ 1.42 | $ 1.38 | |
Oil and natural gas production expenses | $ 13.99 | $ 14.68 | |
General and administrative | $ 5.74 | $ 6.19 | |
Cash interest | $ 5.12 | $ 5.19 | |
Cash taxes | $ 0.19 | $ 0.21 | |
Total per Boe | $ 26.46 | $ 27.65 | |
| | | |
Cash flow per Boe | $ 25.94 | $ 19.07 | |
| | | | | | |
Table 6
RAM Energy Resources, Inc.
EBITDA, Free Cash Flow and Adjusted Net Income
(non-GAAP measures)
(unaudited)
Non-GAAP Financial Measures
EBITDA, a non-GAAP measure, is determined by adding the following to net income (loss): interest expense, capitalized PIK interest, amortized deferred loan costs, income taxes, depreciation, amortization, accretion, share based compensation, impairment charges, unrealized gains or losses on derivatives and MTM settlement charges. Free cash flow is also a non-GAAP measure representing EBITDA after adjustments for the cash portion of interest and income taxes. Adjusted net income is a non-GAAP measure which excludes the income tax affected impact of unrealized derivative gains or losses, MTM settlement charges and impairment charges on GAAP income. These non-GAAP measures are presented because management believes it is a useful adjunct to cash provided by operating activities under accounting principles generally accepted in the United States (GAAP). These non-GAAP measures are widely accepted as financial indicators of an oil and gas company’s ability to generate cash used to internally fund exploration and development activities and fund debt service costs. These non-GAAP measures are not a measure of financial performance under GAAP and should not be considered as an alternative to cash provided (used) by operating, investing, or financing activities as an indicator of cash flows, or as a measure of liquidity.
| | | Qtr Ended | | Qtr Ended | | 6 Mos Ended | | 6 Mos Ended |
| | | 6/30/2009 | | 6/30/2008 | | 6/30/2009 | | 6/30/2008 |
| | | ($000s, except per share amounts) |
EBITDA: | | | | | | | | | |
| Net income (loss) | | $ (11,806) | | $ (5,862) | | $ (49,899) | | $ (6,385) |
| Plus: Interest expense | | $ 3,259 | | $ 5,902 | | $ 6,568 | | $ 14,060 |
| Plus: PIK interest | | $ 43 | | $ - | | $ 43 | | $ - |
| Plus: Amortization of deferred loan costs | | $ 299 | | $ 295 | | $ 598 | | $ 299 |
| Plus: Amortization and depreciation & accretion | | $ 8,092 | | $ 11,719 | | $ 17,440 | | $ 22,880 |
| Plus: Share-based compensation | | $ 552 | | $ 932 | | $ 1,093 | | $ 1,479 |
| Plus: Income tax benefit | | $ (3,908) | | $ (14,809) | | $ (27,944) | | $ (15,450) |
| Plus: Impairment charges | | $ - | | $ - | | $ 58,929 | | $ - |
| Less: Unrealized (gain) loss on derivatives | | $ 23,795 | | $ 33,808 | | $ 24,802 | | $ 39,067 |
| Plus: Settlement transaction charge | | $ - | | $ - | | $ 448 | | $ - |
| | | | | | | | | |
| | | | | | | | | |
EBITDA | | | $ 20,326 | | $ 31,985 | | $ 32,078 | | $ 55,950 |
| | | | | | | | | |
Less: | | | | | | | | | |
| | | | | | | | | |
| Cash paid for interest | | $ 3,338 | | $ 6,869 | | $ 6,788 | | $ 16,335 |
| Cash paid for income tax | | $ 121 | | $ 277 | | $ 270 | | $ 277 |
| | | | | | | | | |
| | | | | | | | | |
Free cash flow | | $ 16,867 | | $ 24,839 | | $ 25,020 | | $ 39,338 |
| | | | | | | | | |
Weighted average shares outstanding - basic | | 74,696 | | 69,199 | | 75,986 | | 64,191 |
Weighted average shares outstanding - diluted | | 74,838 | | 69,509 | | 76,157 | | 64,431 |
| | | | | | | | | |
Cash flow per share - basic | | $ 0.23 | | $ 0.36 | | $ 0.33 | | $0.61 |
Cash flow per share - diluted | | $ 0.23 | | $ 0.36 | | $ 0.33 | | $0.61 |
| | | | | | | | | |
| | | | | | | | | |
Adjusted net income (loss): | | | | | | | | |
| Net income (loss) | | $ (11,806) | | $ (5,862) | | $ (49,899) | | $ (6,385) |
| | | | | | | | | |
| Plus: Tax effected impairment charge | | $ - | | - | | $ 37,535 | | $ - |
| Plus: Tax effected settlement charge | | $ - | | - | | $ 278 | | $ - |
| | | | | | | | | |
| Plus: Tax effected unrealized (gain) loss on derivatives | | $ 14,753 | | $ 20,623 | | $ 15,377 | | $ 24,222 |
| | | | | | | | | |
Adjusted net income (loss) | | $ 2,947 | | $ 14,761 | | $ 3,291 | | $ 17,837 |
| | | | | | | | | |
Weighted average shares outstanding - basic | | 74,696 | | 69,199 | | 75,986 | | 64,191 |
Weighted average shares outstanding - diluted | | 74,838 | | 69,509 | | 76,157 | | 64,431 |
| | | | | | | | | |
Adjusted net income (loss) per share - basic | | $ 0.04 | | $ 0.21 | | $ 0.04 | | $ 0.28 |
Adjusted net income (loss) per share - diluted | | $ 0.04 | | $ 0.21 | | $ 0.04 | | $ 0.28 |
| | | | | | | | | | |
