Exhibit 99 | ||||
For Immediate Release | Contact Information | |||
Friday, August 6, 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 Earnings; | ||||
SAN ANTONIO -- Aug. 6, 2004 - The Exploration Company (Nasdaq:TXCO) today reported financial results for the second quarter and first half of 2004. | ||||
TXCO's net income in the second quarter rose to $372,309, a significant increase from $9,588 reported in the second quarter of 2003. On a per-share basis, earnings rose to $0.014 from a fractional $0.0005 in the prior-year period. All per-share amounts are on a diluted basis. Revenues rose to a record $14.6 million, 48 percent above $9.9 million for the year-earlier quarter. Income from operations for the second quarter of 2004 was approximately $1.1 million, an increase of approximately $0.9 million, a significant increase from the second quarter of 2003. This increase in operating income was due largely to a positive contribution from gas gathering and marketing activities in 2004, versus a negative contribution in 2003. The Company's assets at June 30 stood at a record $100.1 million, 19 percent higher than the $84.2 million reported at the end of June 2003. | ||||
Higher gas production and oil and gas prices in the April-June 2004 period led to record revenue levels, while partially offset by a temporary decline in oil production. Gas gathering revenues increased 133 percent over the year-earlier quarter, resulting in a record gas-gathering gross margin of $626,000 in the second quarter, compared with a $126,000 negative margin for the prior-year period. | ||||
For the first half of 2004, revenues were approximately $26.0 million, a 37 percent increase from approximately $19.0 million for the first six months of 2003. Income from operations for the first six months of 2004 was approximately $2.0 million, an increase of approximately $0.9 million, or 80 percent, from the 2003 period. This increase in operating income was due largely to a positive contribution from gas gathering and marketing activities in 2004 versus a negative contribution in 2003.Gas gathering gross margin reached $941,000 for the six months, compared with a negative margin of $515,000 in the first half of 2003. | ||||
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Net income for the first six months was $441,226, a 39.9 percent decrease from $734,123, a year earlier. 2004 earnings per share were $0.018 in the first half, compared with $0.036 in the prior period. The decline in current-year, first-half net income compared to first-half 2003 was due primarily to higher interest expense relating to redeemable preferred stock issued in August 2003. |
Net cash provided by operating activities before changes in operating assets and liabilities was $6.7 million, a 10 percent increase from $6.1 million in the prior-year period. First-half cash flow from operating activities was $5.2 million, compared with $11.3 million in the first half of 2003. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense -- was $8.5 million, a 14 percent increase from $7.5 million in the year-earlier period. Ebitda -- Ebitdax less exploration expense -- rose 20 percent to $7.8 million from $6.5 million in 2003's first half. See TXCO's Web site at www.txco.com for a reconciliation of non-GAAP financial measures. |
Management's Perspective |
"We believe TXCO is on track for a successful 2004, with higher reserves and production as our field activity increases," said President and CEO James E. Sigmon. "Our first-half results were impacted by severe weather in our Maverick Basin operating area, a curtailment in drilling by an important operating partner as it underwent a corporate restructuring and by limited rig availability. I'm pleased that we now have these issues behind us. |
"Our current drilling activity is significantly higher than it was at any point in the first half of the year," Sigmon added. "Currently, we have seven rigs running on our Maverick Basin, compared with as few as two rigs at some points in the first half. Indicative of this increased activity, TXCO's net daily production rate at July 31 reached 18 million cubic feet of gas equivalent, a 19 percent increase from the 15.1 million cubic feet equivalent we produced on June 30." |
About The Exploration Company |
The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas. Headquartered in San Antonio, TXCO is celebrating its 25th anniversary. The Company has a consistent record of long-term growth in its proved oil and gas reserves, leasehold acreage position, production and cash flow through its established exploration and development programs. Its 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." |
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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 budget plans, interest rates, capital expenditures, ongoing access to additional capital, production levels, drilling plans, equipment availability, including the timing, number, type of and cost of wells to be drilled, completed, re-entered, placed on production, planned projects and expected responses, establishment and evaluation of reserves, continuing overall success and the future exercise of seismic or lease options. 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, and its Form 10-Q for the quarter and year-to-date period ended March 31, 2004. These and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's website 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 following tables should be read in conjunction with the Company's latest audited consolidated financial statements and notes thereto, as reported in its Form 10-K for the year ended Dec. 31, 2003. | ||||||
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THE EXPLORATION COMPANY | ||||||
CONDENSEDCONSOLIDATED BALANCE SHEETS | ||||||
(UNAUDITED) | ||||||
June 30, | December 31, | |||||
Assets | ||||||
Current Assets | ||||||
Cash and equivalents | $7,352,143 | $ 6,180,560 | ||||
Accounts receivable, net | 10,101,547 | 4,837,965 | ||||
Prepaid expenses | 1,485,260 | 718,853 | ||||
Total Current Assets | 18,938,950 | 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 | 1,110,098 | 1,080,290 | ||||
Total Other Assets | 6,342,816 | 6,313,008 | ||||
| $100,125,200 | $84,206,213 | ||||
THE EXPLORATION COMPANY | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(UNAUDITED) | ||||||||
June 30, | December 31, | |||||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable, trade | $9,734,405 | $ 8,186,705 | ||||||
Other payables and accrued liabilities | 6,002,882 | 3,709,016 | ||||||
Undistributed revenue | 1,127,759 | 416,399 | ||||||
Current portion of long-term debt | 1,725,405 | 1,752,286 | ||||||
Total Current Liabilities | 18,590,451 | 14,064,406 | ||||||
Long-term Liabilities | ||||||||
Long-term debt, net of current portion | 6,061,914 | 15,425,598 | ||||||
Redeemable preferred stock, Series B |
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Accrued dividends - preferred stock | 137,730 | 57,732 | ||||||
Asset retirement obligation | 1,648,600 | 1,537,600 | ||||||
Total Long-Term Liabilities | 18,398,816 | 27,156,265 | ||||||
Minority Interest in Consolidated Subsidiaries | 214,856 | 193,441 | ||||||
Stockholders' Equity | ||||||||
Preferred stock, Series A; authorized 10,000,000 shares |
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Common stock, par value $.01 per share; authorized |
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Additional paid-in capital | 83,605,611 | 63,976,021 | ||||||
Accumulated deficit | (20,719,115 | ) | (21,160,341 | ) | ||||
Less treasury stock, at cost, 99,800 shares | (246,007 | ) | (246,007 | ) | ||||
Total Stockholders' Equity | 62,921,077 | 42,792,101 | ||||||
Total Liabilities and Stockholders' Equity | $100,125,200 | $84,206,213 | ||||||
THE EXPLORATION COMPANY | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(UNAUDITED) | ||||||||
Three Months | Three Months | |||||||
June 30, 2004 | June 30, 2003 | |||||||
Revenues | ||||||||
Oil and gas sales | $ 6,956,443 | $6,574,218 | ||||||
Gas gathering operations | 7,666,582 | 3,291,401 | ||||||
Other operating income | 1,484 | 3,150 | ||||||
Total revenues | 14,624,509 | 9,868,769 | ||||||
Costs and Expenses | ||||||||
Lease operations | 1,428,241 | 977,967 | ||||||
Production taxes | 455,660 | 434,869 | ||||||
Exploration expenses | 575,385 | 626,570 | ||||||
Impairment and abandonments | 516,900 | 537,075 | ||||||
Gas gathering operations | 7,040,536 | 3,417,324 | ||||||
Depreciation, depletion and amortization | 2,437,143 | 2,821,148 | ||||||
General and administrative | 1,027,040 | 854,798 | ||||||
Total costs and expenses | 13,480,905 | 9,669,751 | ||||||
Income from Operations | 1,143,604 | 199,018 | ||||||
Other Income (Expense) | ||||||||
Interest income | 15,487 | 5,955 | ||||||
Interest expense | (727,910 | ) | (156,839 | ) | ||||
Loan fee amortization | (53,695 | ) | (4,401 | ) | ||||
Total Other Income (Expense) | (766,118 | ) | (155,285 | ) | ||||
Income before income taxes and minority interest | 377,486 | 43,733 | ||||||
Minority interest in income of subsidiaries | 19,823 | 15,855 | ||||||
Income before income taxes | 397,309 | 59,588 | ||||||
(25,000 | ) | (50,000 | ) | |||||
Net Income | $ 372,309 | $ 9,588 | ||||||
Earnings Per Share | ||||||||
Basic earnings per share | $0.015 | $0.000 | ||||||
Diluted earnings per share | $0.014 | $0.000 | ||||||
THE EXPLORATION COMPANY | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(UNAUDITED) | ||||||
Six Months | Six Months | |||||
June 30, 2004 | June 30, 2003 | |||||
Revenues | ||||||
Oil and gas sales | $13,111,625 | $12,456,934 | ||||
Gas gathering operations | 12,875,475 | 6,499,786 | ||||
Other operating income | 4,806 | (78 | ) | |||
25,991,906 | 18,956,642 | |||||
Costs and Expenses | ||||||
Lease operations | 2,675,627 | 2,052,316 | ||||
Production taxes | 842,240 | 803,273 | ||||
Exploration expenses | 749,782 | 1,001,601 | ||||
Impairment and abandonments | 1,033,800 | 876,150 | ||||
Gas gathering operations | 11,934,670 | 7,014,560 | ||||
Depreciation, depletion and amortization | 4,772,440 | 4,494,468 | ||||
General and administrative | 2,032,661 | 1,630,903 | ||||
Total costs and expenses | 24,041,220 | 17,873,271 | ||||
Income from Operations | 1,950,686 | 1,083,371 | ||||
Other Income (Expense) | ||||||
Interest income | 19,411 | 10,560 | ||||
Interest expense | (1,457,903 | ) | (263,280 | ) | ||
Loan fee amortization | (58,951 | ) | (8,802 | ) | ||
Total Other Income (Expense) | (1,497,443 | ) | (261,522 | ) | ||
Income before income taxes, minority interest and |
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Minority interest in income of subsidiaries | 37,983 | 36,274 | ||||
Income before income taxes and cumulative effect of change |
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Income tax expense | (50,000 | ) | (50,000 | ) | ||
Cumulative effect of change in accounting principle, net of tax | - | (74,000 | ) | |||
Net Income | $ 441,226 | $ 734,123 | ||||
Earnings Per Share | ||||||
Basic earnings before cumulative effect of change |
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Cumulative effect of change in accounting principle | - | (0.003 | ) | |||
Basic earnings per share | $0.018 | $0.037 | ||||
Diluted earnings before cumulative effect of change |
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Cumulative effect of change in accounting principle | - | (0.004 | ) | |||
Diluted earnings per share | $0.018 | $0.036 | ||||
THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(UNAUDITED) | |||||||
Six Months | Six Months | ||||||
June 30, 2004 | June 30, 2003 | ||||||
Operating Activities | |||||||
Net income | $ 441,226 | $ 734,123 | |||||
Adjustments to reconcile net income to | |||||||
Depreciation, depletion and amortization | 4,772,440 | 4,494,468 | |||||
Impairment and abandonments | 1,033,800 | 876,150 | |||||
Minority interest in income of subsidiaries | (37,983 | ) | (36,274 | ) | |||
Cumulative effect of change in accounting principle | - | 74,000 | |||||
Non-cash interest expense and accretion of liability |
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Net cash provided by operating activities, |
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Changes in operating assets and liabilities: | |||||||
Receivables | (5,263,582 | ) | (1,628,364 | ) | |||
Prepaid expenses and other | (766,407 | ) | (163,631 | ) | |||
Accounts payable and accrued expenses | 4,512,923 | 6,955,691 | |||||
Net cash provided by operating activities | 5,227,655 | 11,306,163 | |||||
Investing Activities | |||||||
Development and purchases of oil and gas properties | (13,026,412 | ) | (18,932,655 | ) | |||
Purchase of other equipment | (150,618 | ) | (282,401 | ) | |||
Net changes in minority interests | 59,398 | 55,844 | |||||
Net cash used by investing activities | (13,117,632 | ) | (19,159,212 | ) | |||
Financing Activities | |||||||
Proceeds from issuance of common stock, net of expenses | 18,452,125 | - | |||||
Proceeds from long-term debt obligations | 116,739 | 10,928,082 | |||||
Payments on long-term debt obligations | (9,507,304 | ) | (979,499 | ) | |||
Deferred financing fees | - | 17,876 | |||||
Net cash provided by financing activities | 9,061,560 | 9,966,459 | |||||
Change in Cash and Equivalents | 1,171,583 | 2,113,410 | |||||
Cash and equivalents at beginning of period | 6,180,560 | 2,333,688 | |||||
Cash and Equivalents at End of Period | $7,352,143 | $4,447,098 | |||||
THE EXPLORATION COMPANY | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003 | ||||||
Net cash provided in operating activities (NCPIOA) | $ | 1,395,322 | $ | 4,965,666 | $ | 5,227,655 | $ | 11,306,163 | |
NCPIOA, excluding changes in operating assets |
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Ebitdax * | 4,692,855 | 4,199,667 | 8,544,691 | 7,491,864 | |||||
Ebitda * | 4,117,470 | 3,573,097 | 7,794,909 | 6,490,263 | |||||
Debt to asset ratio | 23.8% | 23.8% | 23.8% | 23.8% | |||||
Production | |||||||||
Oil: | |||||||||
Production, in barrels | 65,696 | 141,062 | 147,149 | 222,171 | |||||
Average sales price per barrel | $ | 34.70 | $ | 26.61 | $ | 33.20 | $ | 28.38 | |
Natural Gas: | |||||||||
Production, in Mcf | 782,926 | 495,794 | 1,421,576 | 1,047,113 | |||||
Average sales price per Mcf | $ | 5.98 | $ | 5.69 | $ | 5.79 | $ | 5.88 | |
Equivalent Basis: | |||||||||
Production in barrels of oil equivalent (Boe) | 196,084 | 223,694 | 384,078 | 396,690 | |||||
Average sales price per Boe | $ | 35.48 | $ | 29.39 | $ | 34.14 | $ | 31.40 | |
Production in Mcfe | 1,176,502 | 1,342,166 | 2,304,470 | 2,380,139 | |||||
Average sales price per Mcfe | $ | 5.91 | $ | 4.90 | $ | 5.69 | $ | 5.23 | |
Other Operating Data | |||||||||
Total lifting costs | $ | 1,883,902 | $ | 1,412,836 | $ | 3,517,867 | $ | 2,855,589 | |
Lifting costs per Mcfe | $ | 1.60 | $ | 1.05 | $ | 1.53 | $ | 1.20 | |
Production volume - oil properties - barrels | 60,689 | 138,447 | 136,460 | 215,169 | |||||
Lifting costs-oil (Incl Prod & Sev Tax) | $ | 874,245 | $ | 1,023,176 | $ | 1,816,331 | $ | 1,652,454 | |
Lifting costs per Barrel | $ | 14.41 | $ | 7.39 | $ | 13.31 | $ | 7.68 | |
Production volume - gas properties - Mcf | 775,320 | 492,537 | 1,408,244 | 1,041,768 | |||||
Lifting costs-gas (Incl Prod & Sev Tax) | $ | 1,009,657 | $ | 396,990 | $ | 1,701,536 | $ | 1,235,999 | |
Lifting costs per Mcf | $ | 1.30 | $ | 0.81 | $ | 1.21 | $ | 1.19 | |
Production volume excluding CBM properties - Mcf | 769,110 | 485,432 | 1,395,132 | 1,025,974 | |||||
Lifting costs excluding CBM activities | $ | 912,058 | $ | 286,196 | $ | 1,490,084 | $ | 1,024,885 | |
Lifting costs per Mcf excluding CBM activities | $ | 1.19 | $ | 0.59 | $ | 1.07 | $ | 1.00 | |
Depletion cost per Boe | $ | 12.14 | $ | 12.38 | $ | 12.14 | $ | 11.08 | |
Depletion cost per Mcfe | $ | 2.02 | $ | 2.06 | $ | 2.02 | $ | 1.85 | |
* Please see TXCO's Web site at www.txco.com for a reconciliation of these non-GAAP financial measures. |