Exhibit 99.1
| Contact: | John B. Kelso, Director of Investor Relations |
| | (303) 298-8100 |
| | |
EVERGREEN RESOURCES REPORTS FIRST QUARTER 2004 RESULTS
Denver, Colorado, May 6, 2004 …As previously reported, the boards of directors of Evergreen Resources, Inc. (NYSE: EVG) and Pioneer Natural Resources Company (NYSE: PXD) approved a strategic merger valued at approximately $2.1 billion, in which Evergreen will become a subsidiary of Pioneer and Evergreen shareholders will receive new shares of Pioneer common stock and cash. Pioneer will continue to be headquartered in Dallas, and will retain Evergreen's Denver offices as its base of operations in the Rockies. Completion of the merger is subject to the approval of the Securities and Exchange Commission as well as the shareholders of both Evergreen and Pioneer.
Today, Evergreen announced first quarter 2004 earnings of $20.4 million or 44 cents per diluted share as compared to earnings of $16.9 million or 43 cents per diluted share in the first quarter of 2003. Oil and natural gas revenues in 2004's first quarter totaled $63.9 million, up 30% over $49.0 million in the first quarter of 2003. The increase in net income and oil and natural gas revenues over the first quarter of 2003 was due primarily to increases in the company's oil and gas production.
Net gas sales in the first quarter increased to 142.1 million cubic feet (MMcf) per day or a total of 12.9 billion cubic feet (Bcf), up 23% from a daily average of 116.8 MMcf or a total of 10.5 Bcf in the corresponding 2003 period. Consequent to the company's acquisition of Carbon Energy Corporation on October 29, 2003, Evergreen also produced 25,263 barrels of crude oil and natural gas liquids in the first quarter of 2004. This equates to a daily average of 278 barrels. On an equivalent units-of-production basis, Evergreen produced 143.7 million cubic feet equivalent (MMcfe) per day in the first quarter of 2004, or a total of 13.1 billion cubic equivalent (Bcfe).
As of March 31, 2004, Evergreen had 1,223 net producing wells, 1,007 of which were in the Raton Basin. At the end of last year's first quarter, the company had 876 net producing wells, all of which were in the Raton Basin. Evergreen drilled 47 Raton Basin wells in the first quarter and plans to drill a total of 200 wells in the Raton Basin in 2004. Also during the first quarter, the company drilled 10 exploratory wells and three water disposal wells on its coal bed methane (CBM) acreage in the Forest City Basin of eastern Kansas; five wells in the Piceance Basin of western Colorado; and two wells in the south-central Alberta portion of the Western Canada Sedimentary Basin.
Evergreen's average sales price in 2004's first quarter was $4.89 per thousand cubic feet equivalent (Mcfe), a 5% increase over the company's $4.66-per-Mcfe average in the first quarter of 2003. Including hedging, the company received an average price of $4.85 per thousand cubic feet (Mcf) for its Raton Basin gas production, $4.69 per Mcf for its gas production in the Piceance and Uintah Basins, and $5.57 per Mcf for its Canadian gas production.
Evergreen realized an average price of $29.95 per barrel for its crude oil and liquids production in the Piceance and Uintah Basins and received an average realized price of $30.53 per barrel for the company's crude oil and liquids production in Canada.
Lease operating expenses on a per-Mcfe basis in the first quarter of 2004 increased 22% over the prior-year period to 55 cents per Mcfe from 45 cents per Mcfe. The increase was primarily due to the amalgamation of acquired properties and the higher lease operating expenses associated with the new properties. Transportation costs in the first quarter averaged 30 cents per Mcfe compared to 32 cents per Mcfe in last year's first quarter.
Depreciation, depletion and amortization expense in the first quarter increased 43% to 76 cents per Mcfe from 53 cents per Mcfe in the corresponding 2003 period. The increase is primarily due to the acquisition of the oil and gas properties in the Piceance, Uintah and Western Canada Sedimentary Basins in the fourth quarter of 2003.
General and administrative expenses totaled $4.5 million in the first quarter of 2004 as compared to $2.6 million in 2003's first quarter. The increase was due primarily to additional personnel and their associated salaries and payroll costs as well as additional office space. G&A costs on a per-unit-of-production basis rose 40% to 35 cents per Mcfe from 25 cents per Mcfe in the first quarter of 2003.
As previously reported, Evergreen closed a private placement of $200 million of Senior Subordinated Notes due 2012 on March 10, 2004. The securities were priced at 99.213% of par with a coupon of 5.875%. Evergreen used the majority of the net proceeds of the offering to completely discharge outstanding indebtedness under its existing credit facilities. Evergreen will use the remaining net proceeds for funding future development expenditures and for general corporate purposes.
Evergreen's interest expense in the first quarter of 2004 totaled $2.4 million as compared to $2.2 million in the same period of 2003. On a per-unit-of-production basis, interest expense fell to 18 cents per Mcfe from 21 cents per Mcfe in 2003's first quarter. At March 31, 2004, long-term debt totaled $300 million as compared to $239 million as of March 31, 2003.
Capital expenditures in the first quarter of 2004 were $50.5 million. These capital costs included $30.6 million for operations in the Raton Basin, including $15.2 million for drilling and completing 47 CBM wells, $7.5 million for gas collection facilities and compression, $1.8 million for equipment and $6.1 million of other costs primarily related to recompletions and remedial costs. Approximately $8.9 million was used for domestic exploration projects in Kansas and Alaska, $7.3 million was invested in operations in Canada, and $2.6 million was directed to operations in the Piceance and Uintah Basins.
Revised 2004 Production Guidance
Net gas production from the Raton Basin is currently averaging approximately 133 MMcf per day. Net sales from the Piceance and Uintah Basins are currently running at approximately 6 MMcfe per day and, in Canada, are averaging 11 MMcfe per day. Based on these current production rates, Evergreen has revised its 2004 production estimate to between 57.3 Bcfe and 58.9 Bcfe.
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Modeling Assumptions
The following quarterly estimates are for the year ending December 31, 2004:
| | Q1 | | Q2 | | Q3 | | Q4 | | Total | |
| | (a) | | (e) | | (e) | | (e) | | (e) | |
Wells Drilled | | | | | | | | | | | |
Raton Basin | | 47 | | 64 | | 52 | | 37 | | 200 | |
Forest City Basin | | 12 | | 10 | | 20 | | 19 | | 61 | |
Piceance/Uintah | | 5 | | 15 | | 20 | | 15 | | 55 | |
Canada | | 2 | | 18 | | 32 | | 13 | | 65 | |
| | | | | | | | | | | |
Total Wells Drilled | | 66 | | 107 | | 124 | | 84 | | 381 | |
| | | | | | | | | | | |
Net sales (Bcfe) | | | | | | | | | | | |
Raton Basin | | 11.7 | | 12.3 - 12.4 | | 13.1 - 13.3 | | 13.8 - 14.0 | | 50.9 - 51.4 | |
Piceance/Uintah | | 0.5 | | 0.5 - 0.6 | | 0.6 - 0.8 | | 0.7 - 0.9 | | 2.3 - 2.8 | |
Canada | | 0.8 | | 0.9 - 1.1 | | 1.1 - 1.3 | | 1.3 - 1.5 | | 4.1 - 4.7 | |
| | | | | | | | | | | |
Totals | | 13.1 | | 13.7 - 14.1 | | 14.8 - 15.4 | | 15.8 - 16.4 | | 57.3 - 58.9 | |
| | | | | | | | | | | |
Avg. daily sales (MMcfe) | | 143.7 | | 151 - 155 | | 161 - 167 | | 172 - 178 | | 157 - 161 | |
| | | | | | | | | | | |
Per Mcfe | | | | | | | | | | | |
| | | | | | | | | | | |
Lease operating expenses | | $ | 0.55 | | $ | 0.58 - 0.60 | | $ | 0.52 - 0.54 | | $ | 0.52 - 0.54 | | $ | 0.54 - 0.56 | |
Transportation costs | | $ | 0.30 | | $ | 0.29 - 0.31 | | $ | 0.29 - 0.31 | | $ | 0.29 - 0.31 | | $ | 0.29 - 0.31 | |
Depletion and amortization | | $ | 0.76 | | $ | 0.74 - 0.76 | | $ | 0.73 - 0.75 | | $ | 0.72 - 0.74 | | $ | 0.74 - 0.75 | |
General and administrative | | $ | 0.35 | | $ | 0.29 - 0.31 | | $ | 0.27 - 0.29 | | $ | 0.25 - 0.27 | | $ | 0.29 - 0.30 | |
Transaction costs | | $ | — | | $ | 0.20 - 0.22 | | $ | 0.06 - 0.08 | | $ | — | | $ | 0.06 - 0.08 | |
Interest expense | | $ | 0.18 | | $ | 0.30 - 0.32 | | $ | 0.27 - 0.29 | | $ | 0.26 - 0.28 | | $ | 0.25 - 0.27 | |
Minority interest | | $ | 0.05 | | $ | 0.04 - 0.05 | | $ | 0.04 - 0.05 | | $ | 0.03 - 0.04 | | $ | 0.04 - 0.05 | |
Production and property taxes are estimated to be approximately 5% of net oil and gas sales. The income tax rate for 2004 is estimated to be about 37% of income before income taxes.
| | Q1 | | Q2 | | Q3 | | Q4 | | Total | |
| | | | | | | | | | | |
Capital Expenditures | | $ | 50.5 | | $ | 74 | | $ | 59 | | $ | 36 | | $ | 220 | |
(in millions) | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Hedging Position
Remaining
Contract Period | | Market | | Volume in
Mcf/day | | Weighted
Average
$/Mcf | |
Apr 04—Oct 04 | | Midcontinent | | 65,000 | | 4.86 | |
Apr 04—Dec 04 | | Midcontinent | | 50,000 | | 4.20 | |
Apr 04—Dec 04 | | Northwest Pipeline—Rockies | | 3,000 | | 4.33 | |
Apr 04—Dec 04 | | AECO—Canada | | 4,739 | | 4.63 | |
Nov 04—Dec 04 | | Midcontinent | | 25,000 | | 5.72 | |
Jan 05—Dec 05 | | Midcontinent | | 100,000 | | 5.14 | |
Operations Update
Raton Basin
Since the first of the year, Evergreen has drilled 62 coal bed methane wells in the Raton Basin and currently has 46 wells awaiting completion operations or pipeline hookup. A total of 1,063 CBM wells are currently producing natural gas in the Basin. The company plans to drill a total of 200 wells in the Raton Basin during 2004.
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Forest City Basin
In the wake of the planned merger with Pioneer Natural Resources Company, Evergreen is planning to divest all of its 746,000 net acres in the Forest City Basin. To date, Evergreen has drilled a total of 37 CBM wells and six water disposal wells on the company's CBM exploratory project in the Forest City Basin. A total 22 CBM wells are currently in various stages of dewatering and production testing.
Piceance and Uintah Basins
On the acquired properties in the Piceance and Uintah Basins in western Colorado and eastern Utah, respectively, Evergreen is currently producing at a daily net rate of 6.0 MMcfe from 129 net wells. Another 36 net wells are shut-in and 11 net wells are awaiting pipeline hookup. Evergreen drilled four development wells in the Piceance Basin during the first quarter. All four wells appear to be productive and are awaiting completion operations. The company holds a total of 223,000 net acres in the Piceance and Uintah Basins.
Canada
Evergreen's net production in south-central Alberta, Canada is currently 9.7 MMcfe per day from 139 gross wells. Another 17 wells are currently shut-in while three wells are awaiting completion or pipeline hookup. Evergreen holds a total of approximately 105,000 net acres in Alberta, Canada.
Alaska
Evergreen recently completed drilling its fifth stratigraphic core hole in the Cook Inlet- Susitna Basin near Anchorage, Alaska. The company will evaluate the results of these core holes to determine potential locations for additional core holes or multi-well pilots.
Conference Call Information
Evergreen management will comment on first quarter 2004 financial results tomorrow, Friday, May 7 at 11:00 a.m. (Eastern Daylight Time). The dial-in number is (888) 452-7103 for domestic callers and (706) 643-3753 for international callers. The conference call will also be broadcast live on the Internet at www.EvergreenGas.com. A replay of the call will be available until May 21, 2004 at (800) 642-1687 or (706) 645-9291 for international callers. Please enter the conference ID 7138359.
Evergreen Resources is an independent energy company engaged primarily in the exploration, development, production, operation and acquisition of unconventional natural gas properties. Evergreen is one of the leading developers of coal bed methane reserves in the United States. Evergreen's current operations are principally focused on developing and expanding its coal bed methane project located in the Raton Basin in southern Colorado. Evergreen has also begun coal bed methane projects in Alaska and eastern Kansas and holds conventional oil and gas producing property interests in the Piceance Basin of western Colorado, the Uintah Basin of eastern Utah, and in the Western Canada Sedimentary Basin in south-central Alberta.
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This press release contains forward-looking statements within the meaning of federal securities laws, including statements regarding, among other things, the company's growth strategies; anticipated trends in the company's business and its future results of operations; market conditions in the oil and gas industry; the ability of the company to make and integrate acquisitions; and the impact of government regulations. These forward-looking statements are based largely on the company's expectations and are subject to a number of risks and uncertainties, many of which are beyond the company's control. Actual results could differ materially from those implied by these forward-looking statements as a result of, among other things, a decline in natural gas production, a decline in natural gas prices, incorrect estimations of required capital expenditures, increases in the cost of drilling, completion and gas collection, an increase in the cost of production and operations, an inability to meet projections, and/or changes in general economic conditions. In light of these and other risks and uncertainties of which the company may be unaware or which the company currently deems immaterial, there can be no assurance that actual results will be as projected in the forward-looking statements. These and other risks and uncertainties are described in more detail in the company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
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Evergreen Resources, Inc. – Financial Highlights
Consolidated Statements of Operations
(in 000's except per-share and per-Mcfe amounts) (unaudited)
| | Three Months Ended
March 31, | |
| | 2004 | | 2003 | |
| | | | | |
Revenues: | | | | | |
Oil and gas revenues | | $ | 63,899 | | $ | 48,974 | |
Interest and other | | 240 | | 147 | |
Total revenues | | 64,139 | | 49,121 | |
| | | | | |
Expenses: | | | | | |
Lease operating expenses | | 7,248 | | 4,717 | |
Transportation costs | | 3,863 | | 3,367 | |
Production and property taxes | | 3,050 | | 2,980 | |
Depreciation, depletion and amortization | | 9,904 | | 5,529 | |
General and administrative expense | | 4,526 | | 2,606 | |
Interest expense | | 2,350 | | 2,199 | |
Minority interest in subsidiaries | | 589 | | 14 | |
Impairment of international properties | | — | | 817 | |
Other expense (income) | | 349 | | (907 | ) |
Total expenses | | 31,879 | | 21,322 | |
| | | | | |
Income before income taxes and cumulative effect of change in accounting principle | | 32,260 | | 27,799 | |
| | | | | |
Income tax provision: | | | | | |
Current | | 567 | | — | |
Deferred | | 11,280 | | 10,147 | |
Total income tax provision | | 11,847 | | 10,147 | |
| | | | | |
Income before cumulative effect of change in accounting principle | | 20,413 | | 17,652 | |
| | | | | |
Cumulative effect of change in accounting principle, net of tax | | — | | 713 | |
| | | | | |
Net income | | $ | 20,413 | | $ | 16,939 | |
| | | | | |
Basic income per common share | | | | | |
Earnings before cumulative effect of change in accounting principle | | $ | 0.47 | | $ | 0.46 | |
Cumulative effect of change in accounting principle, net of tax | | — | | (0.02 | ) |
Net income | | $ | 0.47 | | $ | 0.44 | |
| | | | | |
Diluted income per common share | | | | | |
Earnings before cumulative effect of change in accounting principle | | $ | 0.44 | | $ | 0.45 | |
Cumulative effect of change in accounting principle, net of tax | | — | | (0.02 | ) |
Net income | | $ | 0.44 | | $ | 0.43 | |
| | | | | |
Weighted average shares outstanding | | | | | |
Basic | | 43,026 | | 38,118 | |
Diluted | | 48,437 | | 39,440 | |
| | | | | |
Net sales volume (MMcfe) | | 13,080 | | 10,515 | |
Average daily sales (MMcfe/d) | | 143.7 | | 116.8 | |
| | | | | |
Rate per Mcfe | | | | | |
Average sales price | | $ | 4.89 | | $ | 4.66 | |
Lease operating expense | | $ | 0.55 | | $ | 0.45 | |
Transportation costs | | $ | 0.30 | | $ | 0.32 | |
Production and property taxes | | $ | 0.23 | | $ | 0.28 | |
Depreciation, depletion and amortization | | $ | 0.76 | | $ | 0.53 | |
General and administrative expense | | $ | 0.35 | | $ | 0.25 | |
Interest expense | | $ | 0.18 | | $ | 0.21 | |
Minority interest in subsidiaries | | $ | 0.05 | | $ | — | |
Other expense (includes impairment) | | $ | 0.03 | | $ | (0.01 | ) |
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Evergreen Resources, Inc. – Financial Highlights
(in 000's)
Consolidated Balance Sheets
| | March 31,
2004 | | December 31,
2003 | |
| | (unaudited) | | | |
ASSETS | | | | | |
| | | | | |
Current: | | | | | |
Cash and cash equivalents | | $ | 56,625 | | $ | 3,820 | |
Accounts receivable | | 27,063 | | 25,708 | |
Other current assets | | 1,596 | | 2,817 | |
| | | | | |
Total current assets | | 85,284 | | 32,345 | |
| | | | | |
Property and equipment, at cost, based on full-cost accounting for oil and gas properties | | 1,012,082 | | 965,757 | |
Less accumulated depreciation, depletion and amortization | | 113,322 | | 103,119 | |
Net property and equipment | | 898,760 | | 862,638 | |
Other assets | | 17,597 | | 10,103 | |
| | $ | 1,001,641 | | $ | 905,086 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 10,168 | | $ | 4,697 | |
Amounts payable to oil and gas property owners | | 12,079 | | 10,557 | |
Production and property taxes payable | | 10,491 | | 9,407 | |
Derivative instruments | | 26,313 | | 17,821 | |
Accrued liabilities and other | | 21,066 | | 14,214 | |
| | | | | |
Total current liabilities | | 80,117 | | 56,696 | |
| | | | | |
Revolving credit facilities | | — | | 149,373 | |
Senior subordinated notes, net of discount | | 198,435 | | — | |
Senior convertible notes | | 100,000 | | 100,000 | |
Deferred income tax | | 95,673 | | 92,355 | |
Production taxes payable and other | | 7,747 | | 6,221 | |
Asset retirement obligation | | 13,684 | | 12,876 | |
| | | | | |
Total liabilities | | 495,656 | | 417,521 | |
| | | | | |
Minority interest in subsidiaries | | 5,218 | | 4,637 | |
| | | | | |
Stockholders' equity: | | | | | |
Common stock, $0.005 stated value; shares authorized, 100,000; shares issued and outstanding 43,200 and 42,937 | | 215 | | 215 | |
Additional paid-in capital | | 373,256 | | 370,352 | |
Retained earnings | | 143,512 | | 123,099 | |
Accumulated other comprehensive loss | | (16,216 | ) | (10,738 | ) |
Total stockholders' equity | | 500,767 | | 482,928 | |
| | | | | |
| | $ | 1,001,641 | | $ | 905,086 | |
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Evergreen Resources, Inc. – Financial Highlights
(in 000's)
(unaudited)
Consolidated Statements of Cash Flows
| | Three Months Ended
March 31, | |
| | 2004 | | 2003 | |
Operating activities: | | | | | |
Net income | | $ | 20,413 | | $ | 16,939 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Deferred income taxes | | 11,280 | | 10,147 | |
Depreciation, depletion and amortization | | 9,904 | | 5,529 | |
Cumulative effect of change in accounting principle, net of tax | | — | | 713 | |
Changes in operating assets and liabilities | | 5,693 | | (9,978 | ) |
Non-cash compensation and other | | 1,320 | | 161 | |
| | | | | |
Net cash provided by operating activities | | 48,610 | | 23,511 | |
| | | | | |
Investing activities: | | | | | |
Investment in property and equipment | | (42,179 | ) | (26,681 | ) |
Other | | 859 | | (207 | ) |
| | | | | |
Net cash used in investing activities | | (41,320 | ) | (26,888 | ) |
| | | | | |
Financing activities: | | | | | |
Proceeds from issuance of senior subordinated notes, net of discount | | 198,426 | | — | |
Net (payments on) proceeds from revolving credit facilities | | (149,373 | ) | 3,000 | |
Debt issue costs | | (5,078 | ) | — | |
Proceeds from issuance of common stock, net | | 1,631 | | 803 | |
Other | | (91 | ) | — | |
| | | | | |
Net cash provided by financing activities | | 45,515 | | 3,803 | |
| | | | | |
Effect of exchange rate changes on cash | | — | | 13 | |
| | | | | |
Increase in cash and cash equivalents | | 52,805 | | 439 | |
| | | | | |
Cash and cash equivalents, beginning of period | | 3,820 | | 871 | |
| | | | | |
Cash and cash equivalents, end of period | | $ | 56,625 | | $ | 1,310 | |
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