Exhibit 99.1 | ||||
For Immediate Release | Contact Information | |||
Friday, November 3, 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 | ||||
SAN ANTONIO -- Nov. 3, 2006 -- The Exploration Company (Nasdaq:TXCO) today reported record earnings for the third quarter and nine months ended Sept. 30, 2006. Highlights include record: | ||||
- Nine-month earnings. | ||||
Third Quarter | ||||
TXCO's net income for the third quarter was $6.4 million, equal to $0.19 per share, in contrast to net income of $15.3 million, or $0.53 per share, in the third quarter of 2005, which included a one-time, $24.5 million pre-tax gain from the sale of selected assets in TXCO's Maverick Basin operations area to EnCana Oil & Gas (USA) Inc. All per-share amounts are on a diluted basis. Quarterly operating income rose sharply to a record $8.4 million, compared with $1.4 million reported for the year-earlier period. | ||||
Total revenues rose to a record $21.6 million, a 26 percent increase from $17.1 million in the 2005 period. Oil and gas sales of $18.1 million rose 65 percent on record volumes and record oil prices, offset by lower gas gathering revenues of $3.5 million. A 119 percent increase in oil sales volumes more than offset a decline in natural gas volumes. The Company's 2006 drilling budget focuses on the oil-prone Glen Rose Porosity play with a corresponding increase in oil output. | ||||
Nine-Month Period | ||||
For the January-September period, TXCO reported record net income of $11.6 million, equal to $0.35 per share. In the year-earlier period, net income was $11.0 million, or $0.38 a share, including the asset-sale gain mentioned above. Operating income for the nine months was sharply higher at $18.1 million, more than 400 percent above the $3.2 million reported in the prior-year period. Revenues were a record $57.2 million, up 21 percent from $47.2 million for the 2005 period. TXCO's assets rose to $145.3 million, 33 percent above the $109.5 million recorded at year-end 2005. | ||||
Net cash provided by operating activities for the nine months was $14.0 million, a 13 percent increase from $12.3 million in the year-earlier period. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense -- rose to a record $32.0 million, an 84 percent increase from $17.4 million in 2005. Ebitda -- Ebitdax less exploration expense -- was $31.1 million, double the $15.6 million reported in the 2005 period. See TXCO's Web site atwww.txco.com/gaaprecon.html for a reconciliation of non-GAAP financial measures. | ||||
-- More -- |
Management's Perspective |
"TXCO sustained its strong financial performance in the third quarter as rising oil sales from the expansion of our successful Glen Rose Porosity play combined with record oil prices," said President and CEO James E. Sigmon. "Our record cash flow metrics and low debt levels allow us to anticipate an ambitious drilling program in 2007. |
"I want to emphasize once again that our strong financial and operational results are based on organic, drillbit growth as we continue to successfully develop our Maverick Basin leasehold. We look to continue the trend of creating measurable value for our shareholders. Key to our objectives are the Porosity play -- as well as our new tar sand project, the highly prospective Pearsall formation and the Marfa Basin in West Texas. Our growth prospects have never been stronger." |
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 Nasdaq's Global Select 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 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 b e 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, and its Form 10-Q for the quarter ended June 30, 2006. This and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's Web site atwww.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) | |||||||||
| September 30, | December 31, | |||||||
Assets | |||||||||
Current Assets | |||||||||
Cash and equivalents | $6,029 | $6,083 | |||||||
Accounts receivable, net | 9,573 | 9,344 | |||||||
Prepaid expenses and other | 2,886 | 1,620 | |||||||
Total Current Assets | 18,488 | 17,047 | |||||||
Property and Equipment,net - successful efforts |
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Other Assets | |||||||||
Deferred tax asset | 8,836 | 7,242 | |||||||
Other assets | 590 | 780 | |||||||
Total Other Assets | 9,426 | 8,022 | |||||||
$145,342 | $109,536 | ||||||||
3 |
THE EXPLORATION COMPANY | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(UNAUDITED) | |||||||||
| September 30, | December 31, | |||||||
Liabilities and Stockholders' Equity | |||||||||
Current Liabilities | |||||||||
Accounts payable, trade | $7,818 | $10,003 | |||||||
Undistributed revenue | 1,414 | 2,479 | |||||||
Current income taxes payable | 2,090 | 4,952 | |||||||
Other payables and accrued liabilities | 4,290 | 4,297 | |||||||
Derivative settlements payable | 217 | 151 | |||||||
Accrued derivative obligation - short-term | 932 | 2,084 | |||||||
Long-term debt, current portion | 124 | 262 | |||||||
Total Current Liabilities | 16,885 | 24,228 | |||||||
Long-Term Liabilities | |||||||||
Long-term debt, net of current portion | 1 | 1 | |||||||
Accrued derivative obligation - long-term | - | 461 | |||||||
Asset retirement obligation | 1,691 | 1,565 | |||||||
Total Long-Term Liabilities | 1,692 | 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 | 121,583 | 89,680 | |||||||
Retained earnings / (accumulated deficit) | 7,021 | (4,622 | ) | ||||||
Less treasury stock, at cost, 99,800 shares | (246 | ) | (246 | ) | |||||
Accumulated other comprehensive loss, net of tax | (1,925 | ) | (1,826 | ) | |||||
Total Stockholders' Equity | 126,765 | 83,281 | |||||||
Total Liabilities and Stockholders' Equity | $145,342 | $109,536 | |||||||
4 |
THE EXPLORATION COMPANY | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(UNAUDITED) | ||||||
Three Months | Three Months | |||||
(in thousands, except earnings per share data) | September 30, 2006 | September 30, 2005 | ||||
Revenues | ||||||
Oil and gas sales | $18,067 | $10,950 | ||||
Gas gathering operations | 3,511 | 6,176 | ||||
Other operating income | 5 | 10 | ||||
Total Revenues | 21,583 | 17,136 | ||||
Costs and Expenses | ||||||
Lease operations | 1,816 | 1,613 | ||||
Production taxes | 879 | 608 | ||||
Exploration expenses | 320 | 476 | ||||
Impairment and abandonments | - | 780 | ||||
Gas gathering operations | 3,555 | 6,255 | ||||
Depreciation, depletion and amortization | 4,539 | 4,370 | ||||
General and administrative | 2,105 | 1,603 | ||||
Total Costs and Expenses | 13,214 | 15,705 | ||||
Income from Operations | 8,369 | 1,431 | ||||
Other Income (Expense) | ||||||
Derivative mark-to-market gain (loss) | 1,319 | (7,099 | ) | |||
Derivative settlements loss | (949 | ) | (547 | ) | ||
Interest expense | (73 | ) | (1,076 | ) | ||
Interest income | 258 | 11 | ||||
Loan fee amortization | (52 | ) | (32 | ) | ||
Loss on sale of assets | - | 24,541 | ||||
Total Other Income (Expense) | 503 | 15,798 | ||||
Income (loss) before income taxes | 8,872 | 17,229 | ||||
Income tax expense | 2,484 | 1,940 | ||||
$6,388 | $15,289 | |||||
Earnings (Loss) Per Share | ||||||
Basic earnings (loss) per share | $0.20 | $0.54 | ||||
Diluted earnings (loss) per share | $0.19 | $0.53 | ||||
5 |
THE EXPLORATION COMPANY | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(UNAUDITED) | ||||||
Nine Months | Nine Months | |||||
(in thousands, except earnings per share data) | September 30, 2006 | September 30, 2005 | ||||
Revenues | ||||||
Oil and gas sales | $44,389 | $27,511 | ||||
Gas gathering operations | 12,730 | 19,683 | ||||
Other operating income | 40 | 30 | ||||
Total Revenues | 57,159 | 47,224 | ||||
Costs and Expenses | ||||||
Lease operations | 5,328 | 5,021 | ||||
Production taxes | 2,170 | 1,599 | ||||
Exploration expenses | 960 | 1,827 | ||||
Impairment and abandonments | 1,094 | 1,935 | ||||
Gas gathering operations | 12,930 | 19,077 | ||||
Depreciation, depletion and amortization | 10,892 | 10,479 | ||||
General and administrative | 5,666 | 4,126 | ||||
Total Costs and Expenses | 39,040 | 44,064 | ||||
Income from Operations | 18,119 | 3,160 | ||||
Other Income (Expense) | ||||||
Derivative mark-to-market gain (loss) | 1,787 | (10,832 | ) | |||
Derivative settlements loss | (2,540 | ) | (1,000 | ) | ||
Interest expense | (209 | ) | (2,878 | ) | ||
Interest income | 471 | 35 | ||||
Loan fee amortization | (174 | ) | (68 | ) | ||
Loss on sale of assets | (11 | ) | 24,541 | |||
Total Other Income (Expense) | (676 | ) | 9,798 | |||
Income (loss) before income taxes | 17,443 | 12,958 | ||||
Income tax expense | 5,799 | 1,990 | ||||
Net Income (Loss) | $11,644 | $10,968 | ||||
Earnings (Loss) Per Share | ||||||
Basic earnings (loss) per share | $0.37 | $0.39 | ||||
Diluted earnings (loss) per share | $0.35 | $0.38 | ||||
6 |
THE EXPLORATION COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(UNAUDITED) | |||||||
Nine Months | Nine Months | ||||||
(in thousands) | September 30, 2006 | September 30, 2005 | |||||
Operating Activities | |||||||
Net income (loss) | $11,644 | $10,968 | ) | ||||
Adjustments to reconcile net income (loss) to | |||||||
Depreciation, depletion and amortization | 11,066 | 10,547 | |||||
Impairment and abandonments | 1,094 | 1,935 | |||||
Loss on sale of assets | 11 | (24,541 | |||||
Non-cash stock compensation expense | 974 | - | |||||
Non-cash derivative mark-to-market (gain) loss | (1,787 | ) | 10,832 | ||||
Non-cash interest expense and accretion of liability |
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Changes in operating assets and liabilities: | |||||||
Receivables | (229 | ) | (4,708 | ) | |||
Prepaid expenses and other | (1,251 | ) | (451 | ) | |||
Accounts payable and accrued expenses | (6,053 | ) | 8,256 | ||||
Deferred tax asset | (1,519 | ) | (1,198 | ) | |||
Net cash provided by operating activities | 13,950 | 12,324 | |||||
Investing Activities | |||||||
Development and purchases of oil and gas properties | (38,395 | ) | (35,606 | ) | |||
Purchase of other equipment | (5,762 | ) | (20 | ) | |||
Proceeds from sale of assets | 19 | 78,000 | |||||
Net cash (used) by investing activities | (44,138 | ) | 42,374 | ||||
Financing Activities | |||||||
Proceeds from issuance of common stock, net of expenses | 30,272 | 1,487 | |||||
Proceeds from long-term debt obligations | 9,300 | 15,001 | |||||
Payments on long-term debt obligations | (9,300 | ) | (32,000 | ) | |||
Proceeds from installment obligations | 178 | 122 | |||||
Payments on installment obligations | (316 | ) | (1,697 | ) | |||
Redemption of preferred stock | - | (16,000 | ) | ||||
Net cash provided by financing activities | 30,134 | (33,087 | ) | ||||
Change in Cash and Equivalents | (54 | ) | 21,611 | ||||
Cash and equivalents at beginning of period | 6,083 | 3,118 | |||||
Cash and Equivalents at End of Period | $6,029 | $24,729 | |||||
7 |
THE EXPLORATION COMPANY | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
($'s in thousands, except average prices) | Sept. 30, 2006 | Sept. 30, 2005 | Sept. 30, 2006 | Sept. 30, 2005 | |||||
Net cash provided in operating activities | $ | 4,050 | $ | 2,716 | $ | 13,950 | $ | 12,324 | |
Ebitdax * | 13,586 | 7,057 | 32,038 | 17,401 | |||||
Ebitda * | 13,265 | 6,581 | 31,078 | 15,574 | |||||
Debt to asset ratio | 0.1% | 24.7% | 0.1% | 24.7% | |||||
Sales | |||||||||
Oil: | |||||||||
Sales, in barrels (MBbl) | 242 | 110 | 588 | 266 | |||||
Average realized sales price per barrel | $ | 66.51 | $ | 60.23 | $ | 64.68 | $ | 53.00 | |
Natural Gas: | |||||||||
Sales, in MMcf ** | 278 | 499 | 864 | 1,902 | |||||
Average realized sales price per Mcf | $ | 7.02 | $ | 8.62 | $ | 7.38 | $ | 7.05 | |
Equivalent Basis: | |||||||||
Sales in MBOE | 289 | 194 | 732 | 583 | |||||
Average realized sales price per BOE | $ | 62.59 | $ | 56.57 | $ | 60.66 | $ | 47.19 | |
Sales in MMcfe | 1,732 | 1,161 | 4,390 | 3,498 | |||||
Average realized sales price per Mcfe | $ | 10.43 | $ | 9.43 | $ | 10.11 | $ | 7.86 | |
Other Operating Data | |||||||||
Total lifting costs | $ | 2,696 | $ | 2,221 | $ | 7,498 | $ | 6,620 | |
Total lifting costs per BOE | $ | 9.34 | $ | 11.48 | $ | 10.25 | $ | 11.35 | |
Lifting costs per Mcfe | $ | 1.56 | $ | 1.91 | $ | 1.71 | $ | 1.89 | |
Sales volume - oil properties - MBbl | 240 | 105 | 582 | 246 | |||||
Oil prop. lifting costs (Incl Prod & Sev Tax) | $ | 2,169 | $ | 1,145 | $ | 5,920 | $ | 3,358 | |
Oil prop. lifting costs per Barrel | $ | 9.02 | $ | 10.91 | $ | 10.17 | $ | 13.66 | |
Glen Rose Porosity - volumes - MBbl | 215 | 77 | 506 | 133 | |||||
Glen Rose Porosity lifting costs per Barrel | $ | 6.57 | $ | 3.98 | $ | 6.53 | $ | 4.56 | |
Sales volume - gas properties - MMcf** | 252 | 473 | 796 | 1,787 | |||||
Gas prop. lifting costs (Incl Prod & Sev Tax) | $ | 548 | $ | 1,076 | $ | 1,600 | $ | 3,262 | |
Gas prop. lifting costs per Mcf | $ | 2.18 | $ | 2.28 | $ | 2.01 | $ | 1.83 | |
Total depletion cost per BOE | $ | 15.57 | $ | 23.30 | $ | 14.70 | $ | 17.70 | |
Total depletion cost per Mcfe | $ | 2.60 | $ | 3.72 | $ | 2.45 | $ | 2.95 | |
* 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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