Exhibit 99 | ||||
For Immediate Release | Contact Information | |||
Wednesday, May 5, 2004 | Investors: Roberto R. Thomae | |||
(210) 496-5300 ext. 214, bthomae@txco.com | ||||
Media: Paul Hart | ||||
(210) 496-5300 ext. 264, pdhart@txco.com | ||||
NEWS RELEASE | ||||
The Exploration Company Reports First-Quarter Results; Total Revenues Increase 25%, Production Rises 8.7% | ||||
SAN ANTONIO - May 5, 2004 - The Exploration Company (Nasdaq:TXCO) today reported results for the quarter ended March 31, 2004. | ||||
Revenues were $11.4 million, 25 percent higher than the $9.1 million recorded in the first quarter of 2003. Oil and gas sales revenues were $6.2 million, up from $5.9 million in the year-earlier period. Lower gas prices partially offset higher production volumes. Gas gathering operating revenues were $5.2 million, up from $3.2 million in the prior-year period, reflecting higher third-party gas volume throughput over first-quarter 2003. TXCO recorded quarterly net income of $68,917 equal to $0.003 per share, compared to first-quarter 2003 net of $724,535, or $0.036 per share. All per-share amounts are on a diluted basis. | ||||
Net income for the period reflects the impact of a 40 percent increase in depreciation, depletion and amortization attributable to over 50 new oil and gas wells added subsequent to the prior-year period. The increase in depletion rates also reflect the maturing profile of currently producing wells. In addition, interest expense increased by $624,000, reflecting the impact of the $16 million preferred stock issuance in the third quarter of 2003. | ||||
First-quarter cash flow from operating activities was $3.8 million compared to $6.3 million in the comparative prior-year period. Adjusting for changes in operating assets and liabilities, first-quarter cash flow from operating activities reached $3.5 million in 2004 compared to $2.8 million for the first quarter of 2003. This reflects a 25 percent increase over the same period a year earlier. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense -- was $3.9 million compared to $3.3 million in the first quarter of 2003. Ebitda -- Ebitdax less exploration expense -- was $3.7 million compared to $2.9 million in the earlier period. See TXCO's Web site at www.txco.com for a reconciliation of non-GAAP financial measures. | ||||
TXCO produced a net 187,995 barrels of oil equivalent (BOE) in the quarter, up 8.7 percent from 172,996 BOE during first-quarter 2003. Gas production rose 15.8 percent, primarily due to new Georgetown gas wells placed on line during the last three months of 2003 and first three months of 2004. Oil output increased slightly. TXCO exited the quarter with a net daily production rate of 1,022 barrels of oil per day (BOPD) and 10.0 million cubic feet of gas per day (MMcfd), compared to its Dec. 31, 2003, exit rate of 1,197 BOPD and 8.9 MMcfd. | ||||
- More - |
Management's Perspective |
"We expect activity on our Maverick Basin lease block to increase substantially in the second quarter," said President and CEO James E. Sigmon. "A combination of poor weather and corporate restructuring by one of our partners reduced drilling activity during the first three months of this year. |
"TXCO continues to enjoy success with our multi-play/multi-pay strategy," Sigmon added. "We have changed the Georgetown from a hit-or-miss target to a consistent producer by employing our seismic processing technique that allows us to accurately target the formation's multiple fractures. Drilling will soon resume on the Glen Rose porosity play after six months of inactivity as our new partner resumes drilling. We remain very positive about the potential of this large oil play. We expect oil production levels to grow as drilling ramps up." |
About The Exploration Company |
The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin in Southwest Texas. Its long-term business strategy is to build shareholder value by acquiring undeveloped mineral interests and internally develop a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. The Company accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on the Nasdaq Stock Market under the symbol "TXCO." |
Forward-Looking Statements |
Statements in this press release which are not historical, including statements regarding TXCO's or management's intentions, hopes, beliefs, expectations, representations, projections, estimations, plans or predictions of the future, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include those relating to expected production levels, establishment of reserves, drilling plans, including the timing, category, number, depth, cost and/or success of wells to be drilled, expected geological formations or the availability of specific services or technologies. It is important to note that actual results may differ materially from the results predicted in any such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the costs of exploring and developing new oil and natural gas reserves, the price for which such reserves can be sold, environmental concerns affecting the drilling of oil and natural gas wells, as well as general market conditions, competition and pricing. More information about potential factors that could affect the Company's operating and financial results is included in TXCO's annual report on Form 10-K for the year ended Dec. 31, 2003. This and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's Web site at www.txco.com. Copies are available without charge, upon request from the Company. |
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(Financial Information and Selected Operational Tables Follow) |
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THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(UNAUDITED) | |||||||
March 31, | December 31, | ||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ 4,861,107 | $ 6,180,560 | |||||
Accounts receivable, net | 6,127,783 | 4,837,965 | |||||
Prepaid expenses | 351,614 | 718,853 | |||||
Total Current Assets | 11,340,504 | 11,737,378 | |||||
Property and Equipment,net - successful efforts |
| 66,155,827 | |||||
Other Assets | |||||||
Deferred tax asset | 5,232,718 | 5,232,718 | |||||
Other assets | 1,079,781 | 1,080,290 | |||||
Total Other Assets | 6,312,499 | 6,313,008 | |||||
Total Assets | $87,157,922 | $84,206,213 | |||||
THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(UNAUDITED) | |||||||
March 31, | December 31, | ||||||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable, trade | $ 8,181,343 | $ 8,186,705 | |||||
Other payables and accrued liabilities | 5,042,306 | 3,709,016 | |||||
Undistributed revenue | 692,898 | 416,399 | |||||
Current portion of long-term debt | 2,154,810 | 1,752,286 | |||||
Total Current Liabilities | 16,071,357 | 14,064,406 | |||||
Long-term Liabilities | |||||||
Long-term debt, net of current portion | 12,509,058 | 15,425,598 | |||||
Redeemable preferred stock, Series B |
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Accrued dividends - preferred stock | 97,731 | 57,732 | |||||
Asset retirement obligation | 1,581,100 | 1,537,600 | |||||
Total Long-Term Liabilities | 24,530,756 | 27,156,265 | |||||
Minority Interest in Consolidated Subsidiaries | 203,357 | 193,441 | |||||
Stockholders' Equity | |||||||
Preferred stock - series A, authorized 10,000,000 shares | |||||||
Common stock, par value $.01 per share; authorized |
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Additional paid-in capital | 67,455,074 | 63,976,021 | |||||
Accumulated deficit | (21,091,424 | ) | (21,160,341 | ) | |||
Less treasury stock, at cost, 99,800 shares | (246,007 | ) | (246,007 | ) | |||
Total Stockholders' Equity | 46,352,452 | 42,792,101 | |||||
Total Liabilities and Stockholders' Equity | $87,157,922 | $84,206,213 | |||||
THE EXPLORATION COMPANY | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
(UNAUDITED) | ||||||||||
Three Months | Three Months | |||||||||
March 31, 2004 | March 31, 2003 | |||||||||
Revenues | ||||||||||
Oil and gas sales | $ 6,155,182 | $5,882,716 | ||||||||
Gas gathering operations | 5,208,893 | 3,208,385 | ||||||||
Other operating income | 3,322 | (3,228 | ||||||||
Total revenues | 11,367,397 | 9,087,873 | ||||||||
Costs and Expenses | ||||||||||
Lease operations | 1,247,386 | 1,074,349 | ||||||||
Production taxes | 386,580 | 368,404 | ||||||||
Exploration expenses | 174,397 | 375,031 | ||||||||
Impairment and abandonments | 516,900 | 339,075 | ||||||||
Gas gathering operations | 4,894,134 | 3,597,236 | ||||||||
Depreciation, depletion and amortization | 2,335,297 | 1,673,319 | ||||||||
General and administrative | 1,005,621 | 776,106 | ||||||||
Total costs and expenses | 10,560,315 | 8,203,520 | ||||||||
Income from Operations | 807,082 | 884,353 | ||||||||
Other Income (Expense) | ||||||||||
Interest income | 3,924 | 4,605 | ||||||||
Interest expense | (729,993 | ) | (106,441 | ) | ||||||
Loan fee amortization | (5,256 | ) | (4,401 | ) | ||||||
Total other income (expense) | (731,325 | ) | (106,237 | ) | ||||||
Income before income taxes, minority interest | ||||||||||
and cumulative effect of change in accounting principle | 75,757 | 778,116 | ||||||||
Minority interest in income of subsidiaries | 18,160 | 20,419 | ||||||||
Income before income taxes and cumulative effect of change in | ||||||||||
accounting principle | 93,917 | 798,535 | ||||||||
Income tax expense | (25,000 | ) | - | |||||||
Cumulative effect of change in accounting principle, net of tax | - | (74,000 | ) | |||||||
Net Income | $ 68,917 | $ 724,535 | ||||||||
Earnings Per Share | ||||||||||
Basic earnings before cumulative effect of change in | ||||||||||
accounting principle | $ 0.003 | $ 0.040 | ||||||||
Cumulative effect of change in accounting principle | - | 0.004 | ||||||||
Basic earnings per share | $ 0.003 | $ 0.036 | ||||||||
Diluted earnings before cumulative effect of change in | ||||||||||
accounting principle | $ 0.003 | $ 0.040 | ||||||||
Cumulative effect of change in accounting principle | - | 0.004 | ||||||||
Diluted earnings per share | $ 0.003 | $ 0.036 | ||||||||
THE EXPLORATION COMPANY | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(UNAUDITED) | |||||||||
Three Months | Three Months | ||||||||
March 31, 2004 | March 31, 2003 | ||||||||
Operating Activities | |||||||||
Net income | $ 68,917 | $ 724,535 | |||||||
Adjustments to reconcile net income to net cash | |||||||||
Depreciation, depletion and amortization | 2,335,297 | 1,673,319 | |||||||
Impairment and abandonments | 516,900 | 339,075 | |||||||
Minority interest in (income) loss of subsidiaries | (18,160 | ) | (20,419 | ) | |||||
Cumulative effect of change in accounting principle | - | 74,000 | |||||||
Non-cash interest expense and accretion of liability |
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Changes in operating assets and liabilities: | |||||||||
Receivables | (1,289,818 | ) | (1,356,843 | ) | |||||
Prepaid expenses and other | 367,239 | (296,797 | ) | ||||||
Accounts payable and accrued expenses | 1,284,426 | 5,203,627 | |||||||
Net cash provided by operating activities | |||||||||
Investing Activities | |||||||||
Development and purchases of oil and gas properties | (6,125,299 | ) | (10,405,829 | ) | |||||
Purchase of other equipment | (31,978 | ) | (128,271 | ) | |||||
Changes in minority interests | 28,075 | 21,748 | |||||||
Net cash (used) by investing activities | (6,129,202 | ) | (10,512,352 | ) | |||||
Financing Activities | |||||||||
Proceeds from issuance of common stock, net of expenses | 3,491,433 | - | |||||||
Proceeds from long-term debt obligations | - | 2,700,000 | |||||||
Payments on long-term debt obligations | (1,050,000 | ) | (812,944 | ) | |||||
Proceeds from installment obligations | (1,464,017 | ) | 2,644,671 | ||||||
Net cash provided by financing activities | 977,416 | 4,531,727 | |||||||
Change in Cash and Equivalents | (1,319,453 | ) | 359,872 | ||||||
Cash and equivalents at beginning of period | 6,180,560 | 2,333,688 | |||||||
Cash and Equivalents at End of Period | $ 4,861,107 | $ 2,693,560 | |||||||
THE EXPLORATION COMPANY | ||||||||||
Three Months Ended | ||||||||||
March 31, 2004 | March 31, 2003 | |||||||||
Net cash provided in operating activities | $ | 3,832,335 | $ | 6,340,497 | ||||||
Ebitdax * | 3,851,836 | 3,292,198 | ||||||||
Ebitda * | 3,677,440 | 2,917,167 | ||||||||
Debt to asset ratio | 35.2% | 18.1% | ||||||||
Production | ||||||||||
Oil: | ||||||||||
Production, in barrels | 81,553 | 81,109 | ||||||||
Average sales price per barrel | $ | 31.98 | $ | 31.45 | ||||||
Natural Gas: | ||||||||||
Production, in Mcf | 638,650 | 551,319 | ||||||||
Average sales price per Mcf | $ | 5.55 | $ | 6.04 | ||||||
Equivalent Basis: | ||||||||||
Production in Boe | 187,995 | 172,996 | ||||||||
Average sales price per Boe | $ | 32.74 | $ | 34.01 | ||||||
Production in Mcfe | 1,127,968 | 1,037,973 | ||||||||
Average sales price per Mcfe | $ | 5.46 | $ | 5.67 | ||||||
Other Operating Data | ||||||||||
Total lifting costs | $ | 1,633,966 | $ | 1,574,007 | ||||||
Lifting costs per Mcfe | $ | 1.45 | $ | 1.52 | ||||||
Production volume - oil properties - barrels | 75,771 | 76,722 | ||||||||
Lifting costs-oil (Incl Prod & Sev Tax) | $ | 942,086 | $ | 629,278 | ||||||
Lifting costs per Barrel | $ | 12.43 | $ | 8.20 | ||||||
Production volume - gas properties - Mcf | 632,924 | 549,231 | ||||||||
Lifting costs-gas (Incl Prod & Sev Tax) | $ | 691,880 | $ | 839,009 | ||||||
Lifting costs per Mcf | $ | 1.09 | $ | 1.53 | ||||||
Production volume excluding CBM properties - Mcf | 626,022 | 540,542 | ||||||||
Lifting costs excluding CBM activities | $ | 578,027 | $ | 738,689 | ||||||
Lifting costs per Mcf excluding CBM activities | $ | 0.92 | $ | 1.37 | ||||||
Depletion cost per Boe | $ | 12.13 | $ | 9.40 | ||||||
Depletion cost per Mcfe | $ | 2.02 | $ | 1.57 | ||||||
* Please see TXCO's Web site at www.txco.com for a reconciliation of these non-GAAP financial measures. |