Exhibit 99.1 | ||||
For Immediate Release | Contact Information | |||
Friday, May 5, 2006 | 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 First-Quarter Results | ||||
SAN ANTONIO -- May 5, 2006 -- The Exploration Company (Nasdaq:TXCO) today reported improved financial results for its quarter ended March 31, 2006. Highlights include: | ||||
- Record total revenues and oil and gas sales. | ||||
TXCO's first-quarter net income was $1.3 million, equal to $0.04 per share, in contrast to a $3.3 million loss, or $0.12 per share, in the first quarter of 2005. Excluding mark-to-market charges related to derivatives, first-quarter 2005 income would have been $262,000. The year-earlier loss was due to a non-cash hedging charge. A portion of the derivative contracts were terminated in late 2005. All per-share amounts are on a diluted basis. Operating income reached $2.8 million, a record for a first-quarter, up 141.0 percent from $1.2 million in the year-earlier period. | ||||
Total revenues rose to a record $16.0 million, up 9.6 percent from the 2005 first quarter, while oil and gas sales were a record $10.5 million, up 36.3 percent from $7.7 million. Oil volumes were higher and sold at a higher average realized price, offset by lower natural gas volumes. As previously announced, the Company sold approximately 20 percent of its production, primarily gas, to EnCana Oil & Gas (USA) Inc. in the third quarter of 2005. | ||||
Due to reductions in trade payables, cash flow (net cash provided by operating activities) was a negative $0.4 million, compared to a positive $2.5 million a year earlier. Excluding changes in operating assets and liabilities, net cash from operations for the quarter was $4.7 million, up 38.2 percent from $3.4 million in the 2005 period. | ||||
Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment, exploration expense and certain other non-cash items -- rose to $6.7 million, or $0.22 per share, a 41.9 percent increase from $4.7 million, or $0.17 per share, in the earlier period. Ebitda -- Ebitdax less exploration expense -- increased 48.7 percent to $6.3 million, or $0.20 per share, compared to $4.2 million or $0.15 per share in the year-ago quarter. See the Company's Web site at www.txco.com for a reconciliation of non-GAAP financial measures. | ||||
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Management's Perspective | |||||||
"The Company improved its already strong balance sheet with very positive financial results in what is usually our weakest quarter of the year," said President and CEO James E. Sigmon. "Cash flow was excellent as Ebitdax and Ebitda increased sharply over the year-earlier period. | |||||||
"In addition, the private placement of 3 million shares we announced at the end of March raised nearly $30 million, which is going toward funding our largest drilling program ever. I believe TXCO is on track for an excellent 2006 with continuing growth in sales, reserves and profitability. Because we are underleveraged, we retain great flexibility to take advantage of the many opportunities before us," Sigmon added. | |||||||
About The Exploration Company | |||||||
The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas and the Marfa Basin in West 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 developing 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 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, 2005. 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. | |||||||
(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 and equivalents | $1,432 | $6,083 | |||||
Accounts receivable, net | 7,573 | 9,344 | |||||
Prepaid expenses and other | 2,059 | 1,620 | |||||
Total Current Assets | 11,064 | 17,047 | |||||
Property and Equipment,net - successful efforts |
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Other Assets | |||||||
Deferred tax asset | 7,410 | 7,242 | |||||
Other assets | 661 | 780 | |||||
Total Other Assets | 8,071 | 8,022 | |||||
$114,259 | $109,536 | ||||||
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THE EXPLORATION COMPANY | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(UNAUDITED) | ||||||||
| March 31, | December 31, | ||||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable, trade | $6,412 | $10,003 | ||||||
Undistributed revenue | 1,966 | 2,479 | ||||||
Current income taxes payable | 2,848 | 4,952 | ||||||
Other payables and accrued liabilities | 3,864 | 4,297 | ||||||
Derivative settlements payable | 203 | 151 | ||||||
Accrued derivative obligation - short-term | 2,815 | 2,084 | ||||||
Long-term debt, current portion | 159 | 262 | ||||||
Total Current Liabilities | 18,267 | 24,228 | ||||||
Long-term Liabilities | ||||||||
Long-term debt, net of current portion | 9,301 | 1 | ||||||
Accrued derivative obligation - long-term | 161 | 461 | ||||||
Asset retirement obligation | 1,597 | 1,565 | ||||||
Total Long-Term Liabilities | 11,059 | 2,027 | ||||||
Stockholders' Equity | ||||||||
Preferred stock, Series A & Series B; 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 | 120,155 | 89,680 | ||||||
Accumulated deficit | (3,348 | ) | (4,622 | ) | ||||
Less stock subscription receivable, 3,000,000 shares, net of costs | (29,875 | ) | - | |||||
Less treasury stock, at cost, 99,800 shares | (246 | ) | (246 | ) | ||||
Accumulated other comprehensive loss, net of tax | (2,083 | ) | (1,826 | ) | ||||
Total Stockholders' Equity | 84,933 | 83,281 | ||||||
Total Liabilities and Stockholders' Equity | $114,259 | $109,536 | ||||||
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THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(UNAUDITED) | |||||||
Three Months | Three Months | ||||||
(in thousands, except earnings per share data) | March 31, 2006 | March 31, 2005 | |||||
Revenues | |||||||
Oil and gas sales | $10,469 | $ 7,684 | |||||
Gas gathering operations | 5,540 | 6,927 | |||||
Other operating income | 14 | 6 | |||||
Total Revenues | 16,023 | 14,617 | |||||
Costs and Expenses | |||||||
Lease operations | 1,643 | 1,686 | |||||
Production taxes | 512 | 462 | |||||
Exploration expenses | 444 | 512 | |||||
Impairment and abandonments | 476 | 564 | |||||
Gas gathering operations | 5,751 | 6,572 | |||||
Depreciation, depletion and amortization | 2,726 | 2,481 | |||||
General and administrative | 1,420 | 1,179 | |||||
Stock compensation expense | 252 | - | |||||
Total Costs and Expenses | 13,224 | 13,456 | |||||
Income from Operations | 2,799 | 1,161 | |||||
Other Income (Expense) | |||||||
Derivative mark-to-market loss | (6 | ) | (3,396 | ) | |||
Derivative settlements loss | (633 | ) | (168 | ) | |||
Interest expense | (87 | ) | (870 | ) | |||
Interest income | 38 | 12 | |||||
Loan fee amortization | (73 | ) | (16 | ) | |||
Total Other Income (Expense) | (761 | ) | (4,438 | ) | |||
Income before income taxes | 2,038 | (3,277 | ) | ||||
Income tax expense | 763 | 25 | |||||
$1,275 | $(3,302 | ) | |||||
Earnings (Loss) Per Share | |||||||
Basic earnings (loss) per share | $0.04 | $(0.12 | ) | ||||
Diluted earnings (loss) per share | $0.04 | $(0.12 | ) | ||||
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THE EXPLORATION COMPANY | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(UNAUDITED) | |||||||||
Three Months | Three Months | ||||||||
(in thousands) | March 31, 2006 | March 31, 2005 | |||||||
Operating Activities | |||||||||
Net income (loss) | $1,275 | $(3,302 | ) | ||||||
Adjustments to reconcile net income (loss) to | |||||||||
Depreciation, depletion and amortization | 2,726 | 2,481 | |||||||
Impairment and abandonments | 476 | 564 | |||||||
Non-cash compensation expense related to stock options and warrants | 252 | - | |||||||
Non-cash derivative mark-to-market loss | 6 | 3,396 | |||||||
Non-cash interest expense and accretion of liability |
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Changes in operating assets and liabilities: | |||||||||
Receivables | 1,771 | 1,690 | |||||||
Prepaid expenses and other | (320 | ) | (813 | ) | |||||
Accounts payable and accrued expenses | (6,589 | ) | (1,821 | ) | |||||
Net cash (used) provided by operating activities | (403 | ) | 2,460 | ||||||
Investing Activities | |||||||||
Development and purchases of oil and gas properties | (9,776 | ) | (7,112 | ) | |||||
Purchase of other equipment | (4,055 | ) | (15 | ) | |||||
Proceeds from sale of assets | 3 | - | |||||||
Net cash (used) by investing activities | (13,828 | ) | (7,127 | ) | |||||
Financing Activities | |||||||||
Proceeds from issuance of common stock, net of expenses | 382 | 1,296 | |||||||
Proceeds from long-term debt obligations | 9,300 | 3,300 | |||||||
Payments on installment obligations | (102 | ) | (1,532 | ) | |||||
Net cash provided by financing activities | 9,580 | 3,064 | |||||||
Change in Cash and Equivalents | (4,651 | ) | (1,603 | ) | |||||
Cash and equivalents at beginning of period | 6,083 | 3,118 | |||||||
Cash and Equivalents at End of Period | $1,432 | $ 1,515 | |||||||
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THE EXPLORATION COMPANY | |||||||
Three Months Ended | |||||||
($'s in thousands, except average prices) | Mar. 31, 2006 | Mar. 31, 2005 | |||||
Net cash (used) provided in operating activities | $ | (403 | ) | $ | 2,460 | ||
Ebitdax * | 6,698 | 4,719 | |||||
Ebitda * | 6,254 | 4,207 | |||||
Debt to asset ratio | 8.3% | 31.6% | |||||
Sales | |||||||
Oil: | |||||||
Sales, in thousands of barrels (MBbl) | 138 | 75 | |||||
Average sales price per barrel | $ | 58.94 | $ | 45.78 | |||
Natural Gas: | |||||||
Sales, in MMcf ** | 293 | 693 | |||||
Average sales price per Mcf | $ | 8.06 | $ | 6.14 | |||
Equivalent Basis: | |||||||
Sales in MBOE | 186 | 190 | |||||
Average sales price per BOE | $ | 56.17 | $ | 40.35 | |||
Sales in MMcfe | 1,118 | 1,142 | |||||
Average sales price per Mcfe | $ | 9.36 | $ | 6.73 | |||
Other Operating Data | |||||||
Total lifting costs | $ | 2,155 | $ | 2,147 | |||
Total lifting costs per BOE | $ | 11.56 | $ | 11.28 | |||
Total lifting costs per Mcfe | $ | 1.93 | $ | 1.88 | |||
Sales volume - oil properties - MBbl | 136 | 68 | |||||
Oil prop. lifting costs-oil (Incl Prod & Sev Tax) | $ | 1,642 | $ | 1,066 | |||
Oil prop. lifting costs per Barrel | $ | 12.08 | $ | 15.63 | |||
Glen Rose Porosity - volumes - MBbl | 107 | 25 | |||||
Glen Rose Porosity lifting costs per Barrel | $ | 7.07 | $ | 5.67 | |||
Sales volume - gas properties - MMcf | 268 | 664 | |||||
Gas prop. lifting costs-gas (Incl Prod & Sev Tax) | $ | 512 | $ | 1,081 | |||
Gas prop. lifting costs per Mcf | $ | 1.91 | $ | 1.63 | |||
Total depletion cost per BOE | $ | 14.39 | $ | 12.75 | |||
Total depletion cost per Mcfe | $ | 2.40 | $ | 2.13 | |||
* Please see TXCO's Web site at www.txco.com for a reconciliation of these non-GAAP financial measures. | |||||||
** Quantities reflect impact of gas production sold to EnCana Oil & Gas (USA) Inc., effective Sept. 1, 2005. | |||||||
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