Exhibit 99 | ||||||
For Immediate Release | Contact Information | |||||
Wednesday, November 9, 2005 | Investors: Roberto R. Thomae | |||||
(210) 496-5300 ext. 214, bthomae@txco.com | ||||||
Media: Paul Hart | ||||||
(210) 496-5300 ext. 264, pdhart@txco.com | ||||||
The Exploration Company Reports Record Earnings | ||||||
SAN ANTONIO -- Nov. 9, 2005 -- The Exploration Company (Nasdaq:TXCO) today announced record earnings for the third quarter and first nine months of 2005. | ||||||
For the quarter ended Sept. 30, the Company reported net income of $15.3 million, or $0.53 per share, up sharply from $599,820, or $0.02 per share, for the third quarter of 2004. All per-share amounts are on a diluted basis. A $24.5 million gain ("Gain") from the sale ("Sale") of selected assets in TXCO's Maverick Basin operations area in Southwest Texas to EnCana Oil & Gas (USA) Inc., effective Sept. 1, was the primary factor for the income improvement. | ||||||
Results from the Company's continuing operations remained strong during the quarter. Operating income rose to $1.4 million, a 7.6 percent increase from $1.3 million in the year-earlier period. Oil production and commodity prices were sharply higher in the quarter, offset by lower gas production volumes primarily due to the asset sale, and lower gas-gathering revenues. | ||||||
Revenues increased to $17.1 million, up 12 percent from $15.3 million in the third quarter of 2004. Partially offsetting the higher revenues were non-cash expenses, including derivative losses and higher depreciation, depletion and amortization costs. The derivative losses were primarily non-cash, mark-to-market adjustments that did not impact cash flow in the period. Early in the fourth quarter, TXCO terminated certain gas sale derivative contracts, effective Nov. 1, in exchange for a $9.9 million payment. | ||||||
Nine-Month Period | ||||||
For the nine months, the Company had record net income of $11.0 million, equal to $0.38 per share, compared with $1.0 million, or $0.04 per share, for the January-September 2004 period. Income from operations was $3.2 million, 3.7 percent below the prior year. Total revenues climbed to $47.2 million, up 14 percent from $41.3 million in earlier period, as higher oil production and commodity prices more than offset lower gas production and gas-gathering revenues. TXCO had a $10.8 million, non-cash mark-to-market hedging loss for the nine months. | ||||||
Net cash provided by operating activities for the nine months was $12.3 million, a decline from $15.4 million for the 2004 period, due primarily to increased federal income taxes resulting from the Gain coupled with an increase in current assets resulting from the Sale. Ebitdax and Ebitda rose to record levels. Ebitdax - earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense - rose to $17.4 million, compared with $13.7 million in the 2004 period. Ebitda - Ebitdax less exploration expense - was $15.6 million, compared with $12.3 million in the 2004 period. Both reflect the impact of higher oil and gas prices. See TXCO's Web site at www.txco.com for a reconciliation of non-GAAP financial measures. | ||||||
-- More -- |
Management's Perspective |
"Our third quarter marked a turning point in the Company's history," said President and CEO James E. Sigmon. "We have recapitalized TXCO and deleveraged our balance sheet so that we now have virtually no debt. The Company has greater financial flexibility that will enable us to rapidly move ahead in exploring and developing our multi-year inventory of Maverick Basin prospects, plus our recently announced acreage acquisition in West Texas' Marfa Basin. With this transaction behind us, we're now focused on increasing our production and reserves and ultimately shareholder value." |
About The Exploration Company |
The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas. 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 Capital Market under the symbol "TXCO." |
Forward-Looking Statements |
Statements in this press release that 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 oil and gas prices, capital expenditures, production levels, drilling plans, including the timing, number and cost of wells to be drilled, projects and expected response, and establishment of reserves. 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 reserve s, 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, 2004, and its Form 10-Q for the quarter ended June 30, 2005. These 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) |
THE EXPLORATION COMPANY | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(UNAUDITED) | |||||||||
September 30, | December 31, | ||||||||
Assets | |||||||||
Current Assets | |||||||||
Cash and equivalents | $24,729,505 | $3,118,328 | |||||||
Accounts receivable, net | 13,068,050 | 8,985,373 | |||||||
Prepaid expenses and other | 1,404,047 | 800,045 | |||||||
Accrued derivative asset - current | - | 133,971 | |||||||
Total Current Assets | 39,201,602 | 13,037,717 | |||||||
Property and Equipment,net - successful efforts |
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| |||||||
Other Assets | |||||||||
Deferred tax asset | 7,580,129 | 5,232,718 | |||||||
Other assets | 909,233 | 1,130,413 | |||||||
Total Other Assets | 8,489,362 | 6,363,131 | |||||||
Total Assets | $116,877,507 | $114,237,324 | |||||||
THE EXPLORATION COMPANY | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(UNAUDITED) | ||||||||
September 30, | December 31, | |||||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable, trade | $12,447,059 | $10,339,934 | ||||||
Accrued income taxes payable | 3,002,930 | 15,000 | ||||||
Other payables and accrued liabilities | 7,039,670 | 5,434,553 | ||||||
Derivative settlements payable | 340,176 | 49,185 | ||||||
Accrued derivative obligation - current | 9,584,233 | - | ||||||
Undistributed revenue | 2,326,258 | 1,062,000 | ||||||
Current portion of long-term debt | 91,933 | 1,666,466 | ||||||
Total Current Liabilities | 34,832,259 | 18,567,138 | ||||||
Long-Term Liabilities | ||||||||
Long-term debt, net of current portion | 100,000 | 17,099,237 | ||||||
Accrued derivative obligation - long-term | 4,219,479 | - | ||||||
Redeemable preferred stock, Series B |
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| ||||||
Accrued dividends - preferred stock | - | 217,728 | ||||||
Asset retirement obligation | 1,545,330 | 1,679,600 | ||||||
Total Long-Term Liabilities | 5,864,809 | 29,987,873 | ||||||
Stockholders' Equity | ||||||||
Preferred stock, 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 | 85,493,605 | 84,010,730 | ||||||
Accumulated deficit | (7,395,705 | ) | (18,363,513 | ) | ||||
Less treasury stock, at cost, 99,800 shares | (246,007 | ) | (246,007 | ) | ||||
Accumulated other comprehensive loss, net of tax | (1,956,557 | ) | - | |||||
Total Stockholders' Equity | 76,180,439 | 65,682,313 | ||||||
Total Liabilities and Stockholders' Equity | $116,877,507 | $114,237,324 | ||||||
THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(UNAUDITED) | |||||||
Three Months | Three Months | ||||||
September 30, 2005 | September 30, 2004 | ||||||
Revenues | |||||||
Oil and gas sales | $10,950,024 | $7,846,365 | |||||
Gas gathering operations | 6,176,109 | 7,464,545 | |||||
Other operating income | 9,797 | 6,120 | |||||
Total Revenues | 17,135,930 | 15,317,030 | |||||
Costs and Expenses | |||||||
Lease operations | 1,612,796 | 1,242,615 | |||||
Production taxes | 608,320 | 446,183 | |||||
Exploration expenses | 476,281 | 696,430 | |||||
Impairment and abandonments | 780,403 | 579,968 | |||||
Gas gathering operations | 6,254,427 | 7,030,025 | |||||
Depreciation, depletion and amortization | 4,370,231 | 2,562,483 | |||||
General and administrative | 1,602,770 | 1,429,527 | |||||
Total Costs and Expenses | 15,705,228 | 13,987,231 | |||||
Income from Operations | 1,430,702 | 1,329,799 | |||||
Other Income (Expense) | |||||||
Derivative settlements loss | (546,820 | ) | - | ||||
Derivative mark-to-market loss | (7,099,264 | ) | - | ||||
Interest income | 10,706 | 8,313 | |||||
Interest expense | (1,076,355 | ) | (679,010 | ) | |||
Loan fee amortization | (31,536 | ) | (9,486 | ) | |||
Gain on sale of assets | 24,541,042 | - | |||||
Total Other Income (Expense) | 15,797,773 | (680,183 | ) | ||||
Income before income taxes and minority interest | 17,228,475 | 649,616 | |||||
Minority interest in income of subsidiaries | - | (3,094 | ) | ||||
Income before income taxes | 17,228,475 | 646,522 | |||||
Income tax expense | (1,939,928 | ) | (46,702 | ) | |||
Net Income | $15,288,547 | $599,820 | |||||
Earnings Per Share | |||||||
Basic earnings per share | $0.54 | $0.02 | |||||
Diluted earnings per share | $0.53 | $0.02 | |||||
THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(UNAUDITED) | |||||||
Nine Months | Nine Months | ||||||
September 30, 2005 | September 30, 2004 | ||||||
Revenues | |||||||
Oil and gas sales | $27,510,788 | $20,957,990 | |||||
Gas gathering operations | 19,683,100 | 20,340,020 | |||||
Other operating income | 30,293 | 10,926 | |||||
Total Revenues | 47,224,181 | 41,308,936 | |||||
Costs and Expenses | |||||||
Lease operations | 5,021,141 | 3,918,242 | |||||
Production taxes | 1,599,058 | 1,288,423 | |||||
Exploration expenses | 1,827,312 | 1,446,212 | |||||
Impairment and abandonments | 1,935,229 | 1,613,768 | |||||
Gas gathering operations | 19,076,333 | 18,964,695 | |||||
Depreciation, depletion and amortization | 10,479,151 | 7,334,923 | |||||
General and administrative | 4,126,240 | 3,462,188 | |||||
Total Costs and Expenses | 44,064,464 | 38,028,451 | |||||
Income from Operations | 3,159,717 | 3,280,485 | |||||
Other Income (Expense) | |||||||
Derivative settlements loss | (999,935 | ) | - | ||||
Derivative mark-to-market loss | (10,832,036 | ) | - | ||||
Interest income | 34,673 | 27,724 | |||||
Interest expense | (2,878,173 | ) | (2,136,913 | ) | |||
Loan fee amortization | (67,594 | ) | (68,437 | ) | |||
Gain on sale of assets | 24,541,082 | - | |||||
Total Other Income (Expense) | 9,798,017 | (2,177,626 | ) | ||||
Income before income taxes and minority interest | 12,957,734 | 1,102,859 | |||||
Minority interest in income of subsidiaries | - | 34,889 | |||||
Income before income taxes | 12,957,734 | 1,137,748 | |||||
Income tax expense | (1,989,926 | ) | (96,702 | ) | |||
Net Income | $10,967,808 | $1,041,046 | |||||
Earnings Per Share | |||||||
Basic earnings per share | $0.39 | $0.04 | |||||
Diluted earnings per share | $0.38 | $0.04 | |||||
THE EXPLORATION COMPANY | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(UNAUDITED) | |||||||||
Nine Months | Nine Months | ||||||||
September 30, 2005 | September 30, 2004 | ||||||||
Operating Activities | |||||||||
Net income | $10,967,808 | $1,041,046 | |||||||
Adjustments to reconcile net income to | |||||||||
Depreciation, depletion and amortization | 10,479,151 | 7,334,923 | |||||||
Impairment and abandonments | 1,935,229 | 1,613,768 | |||||||
Minority interest in income of subsidiaries | - | (34,889 | ) | ||||||
Gain on sale of assets | (24,541,082 | ) | - | ||||||
Deferred income taxes | (1,198,321 | ) | - | ||||||
Non-cash compensation expense on stock options and warrants | - | 237,333 | |||||||
Non-cash derivative mark-to-market loss | 10,832,036 | - | |||||||
Non-cash interest expense and/or accretion of liability | 684,190 | 750,722 | |||||||
Changes in operating assets and liabilities: | |||||||||
Receivables | (4,707,677 | ) | (1,895,392 | ) | |||||
Prepaid expenses and other | (382,823 | ) | (799,202 | ) | |||||
Accounts payable and accrued expenses | 8,255,421 | 7,127,440 | |||||||
Net cash provided by operating activities | 12,323,932 | 15,375,749 | |||||||
Investing Activities | |||||||||
Proceeds from the sale of oil and gas properties | 78,000,131 | - | |||||||
Development and purchases of oil and gas properties | (35,605,590 | ) | (27,807,179 | ) | |||||
Purchase of other equipment | (20,401 | ) | (220,890 | ) | |||||
Changes in minority interests | - | (158,552 | ) | ||||||
Net cash provided (used) by investing activities | 42,374,140 | (28,186,621 | ) | ||||||
Financing Activities | |||||||||
Proceeds from issuance of common stock, net of expenses | 1,486,875 | 18,484,000 | |||||||
Proceeds from long-term debt obligations | 15,000,764 | 10,599,237 | |||||||
Payments on long-term debt obligations | (32,000,000 | ) | (16,000,000 | ) | |||||
Payments on installment obligations | (1,696,997 | ) | (1,728,244 | ) | |||||
Proceeds from installment obligations | 122,463 | 116,739 | |||||||
Redemption of preferred stock | (16,000,000 | ) | - | ||||||
Net cash provided (used) by financing activities | (33,086,895 | ) | 11,471,732 | ||||||
Change in Cash and Equivalents | 21,611,177 | (1,339,140 | ) | ||||||
Cash and equivalents at beginning of period | 3,118,328 | 6,180,560 | |||||||
Cash and Equivalents at End of Period | $24,729,505 | $4,841,420 | |||||||
THE EXPLORATION COMPANY | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
Sept. 30, 2005 | Sept. 30, 2004 | Sept. 30, 2005 | Sept. 30, 2004 | ||||||
Net cash provided in operating activities | $ | 2,715,898 | $ | 10,148,094 | $ | 12,323,932 | $ | 15,375,749 | |
Ebitdax * | 7,057,577 | 5,165,586 | 17,401,409 | 13,710,277 | |||||
Ebitda * | 6,581,296 | 4,469,156 | 15,574,097 | 12,264,065 | |||||
Debt to asset ratio | 0.2% | 24.7% | 0.2% | 24.7% | |||||
Sales | |||||||||
Oil: | |||||||||
Sales, in barrels (BO) | 110,418 | 81,602 | 265,971 | 228,751 | |||||
Average sales price per barrel | $ | 60.23 | $ | 40.61 | $ | 53.00 | $ | 35.84 | |
Natural Gas: | |||||||||
Sales, in Mcf | 498,842 | 806,895 | 1,902,342 | 2,228,471 | |||||
Average sales price per Mcf | $ | 8.62 | $ | 5.62 | $ | 7.05 | $ | 5.73 | |
Equivalent Basis: | |||||||||
Sales in BOE | 193,558 | 216,085 | 583,028 | 600,163 | |||||
Average sales price per BOE | $ | 56.57 | $ | 36.31 | $ | 47.19 | $ | 34.92 | |
Sales in Mcfe | 1,161,350 | 1,296,507 | 3,498,168 | 3,600,977 | |||||
Average sales price per Mcfe | $ | 9.43 | $ | 6.05 | $ | 7.86 | $ | 5.82 | |
Other Operating Data | |||||||||
Total lifting costs | $ | 2,221,116 | $ | 1,688,798 | $ | 6,620,199 | $ | 5,206,665 | |
Lifting costs per Mcfe | $ | 1.91 | $ | 1.30 | $ | 1.89 | $ | 1.45 | |
Sales volume - oil properties - barrels | 104,980 | 74,829 | 245,742 | 211,289 | |||||
Lifting costs-oil (Incl Prod & Sev Tax) | $ | 1,145,157 | $ | 798,985 | $ | 3,357,924 | $ | 2,615,646 | |
Lifting costs per Barrel | $ | 10.91 | $ | 10.68 | $ | 13.66 | $ | 12.38 | |
Sales volume - gas properties - Mcf | 472,667 | 793,433 | 1,786,678 | 2,201,677 | |||||
Lifting costs-gas (Incl Prod & Sev Tax) | $ | 1,075,959 | $ | 889,951 | $ | 3,262,275 | $ | 2,591,487 | |
Lifting costs per Mcf | $ | 2.28 | $ | 1.12 | $ | 1.83 | $ | 1.18 | |
Sales volume excluding CBM properties - Mcf | 470,303 | 788,093 | 1,773,471 | 2,183,225 | |||||
Lifting costs excluding CBM activities | $ | 1,003,364 | $ | 742,427 | $ | 3,018,718 | $ | 2,232,511 | |
Lifting costs per Mcf excluding CBM activities | $ | 2.13 | $ | 0.94 | $ | 1.70 | $ | 1.02 | |
Depletion cost per BOE | $ | 22.30 | $ | 11.58 | $ | 17.70 | $ | 11.94 | |
Depletion cost per Mcfe | $ | 3.72 | $ | 1.93 | $ | 2.95 | $ | 1.99 | |
* Please see TXCO's Web site at www.txco.com for a reconciliation of these non-GAAP financial measures. |