Exhibit 99.1
For Information
Brent A. Collins
303-861-8140
FOR IMMEDIATE RELEASE
ST. MARY REPORTS RESULTS FOR THE
FULL YEAR AND FOURTH QUARTER 2007
DENVER, February 21, 2008– St. Mary Land & Exploration Company (NYSE: SM) today reports net income for the year ended 2007 of $189.7 million, or $2.94 per diluted share.
Tony Best, President and CEO, commented, “St. Mary had another solid year operationally and financially in 2007. Production for the fourth quarter and full year both were Company records for their respective periods. We posted strong earnings and cash flow numbers for the year, which reflects 16% annual production growth and strong commodity prices. Our operating margins are strong as a result of our significant oil exposure and we are generating significant cash flow. We enter 2008 on solid financial footing as we execute our business plan.”
FULL YEAR RESULTS
St. Mary announces 2007 earnings of $189.7 million or $2.94 per diluted share. Earnings for 2006 were $190.0 million or $2.94 per diluted share. Adjusted net income, which adjusts for significant non-cash and non-recurring items, was $222.2 million or $3.44 per diluted share for 2007 compared to $205.4 million or $3.18 per diluted share for 2006. Discretionary cash flow increased to $636.9 million in 2007 from $525.1 million in the preceding year, an increase of 21 percent. Net cash provided by operating activities increased to $630.8 million in 2007 from $467.7 million in 2006.
Revenues for 2007 were $990.1 million compared to $787.7 million in 2006. Oil and gas production for the year averaged 294.5 million cubic feet of gas equivalent per day (MMCFED), a new annual record for the Company. This was an increase of 16% from 254.2 MMCFED in 2006. The Company continued to enjoy strong operating margins during the year. In 2007, the operating margin increased 5% to $6.12 per MCFE, compared to $5.85 per MCFE in 2006.
Average realized prices, inclusive of hedging activities, were $7.63 per Mcf and $62.60 per barrel during 2007. These were 4% and 11% higher, respectively, than the realized prices for the prior year. Average prices, excluding hedging activities, were $6.74 per Mcf and $67.56 per barrel in 2007, which were 2% and 14% higher, respectively, than last year. The Company’s natural gas realizations continue to benefit from high Btu gas in several of our regions. This higher Btu gas is being processed to extract the
natural gas liquids (NGLs) that exist in the production stream. The price for NGLs trends directionally with crude oil prices, and accordingly the price for NGLs has increased with the rise in oil prices in recent months.
Total lease operating and transportation expense was up 6% between 2007 and 2006 on a per MCFE basis. Cost pressures related to fluid disposal, well maintenance, and trucking, as well as higher labor costs explain the majority of the difference. The increase in depletion and depreciation expense between the two periods reflects the higher finding cost environment experienced by the industry in recent years to acquire and develop properties. Year over year, the overall increase in exploration expense is the result of increased levels of personnel associated with exploration activities. General and administrative expense increased significantly, both in absolute dollars and on a per MCFE basis, due to costs associated with increased headcount and higher payments from the Net Profits Interest Bonus Plan (Net Profits Plan). The large increase in the non-cash expense related to the change in the Net Profits Plan liability is due to higher commodity prices and a decrease in the discount rate used to determine the liability.
FOURTH QUARTER 2007 RESULTS
Earnings for the fourth quarter of 2007 were $32.9 million or $0.51 per diluted share, compared to $43.5 million or $0.69 per diluted share for the same period in the prior year. Adjusted net income for the quarter was $64.4 million or $1.00 per diluted share, versus $49.1 million or $0.77 per diluted share for the fourth quarter of 2006. Discretionary cash flow increased to $176.4 million for the fourth quarter of 2007 from $126.4 million in the same period of the preceding year. Net cash provided by operating activities increased to $156.8 million for the fourth quarter 2007 from $150.2 million in the same period in 2006.
Revenues for the quarter were $275.2 million compared to $202.7 million for the same period in 2006. Quarterly production set a new record during the fourth quarter of 2007. Oil and gas production for the quarter increased 14% year over year to an average 310.2 MMCFED in the fourth quarter of 2007 from 272.5 MMCFED in the fourth quarter of 2006. St. Mary’s operating margin increased to $6.53 per MCFE in the quarter, up 18% from $5.54 per MCFE in the fourth quarter of 2006.
Average realized prices, inclusive of hedging activities, were $7.80 per Mcf and $69.99 per barrel in the fourth quarter of 2007, which were up 8% and 36%, respectively, from the same period a year ago. Average prices, excluding hedging activities, were $7.07 per Mcf and $84.63 per barrel during the quarter. These were 13% and 62% higher, respectively, than the fourth quarter of 2006.
Oil and gas production expense was up 7% between the fourth quarters of 2007 and 2006 on a per MCFE basis. The Company continues to be impacted by pricing pressure for service related to the production and maintenance of oil properties, as well as higher labor costs. The increase in depletion and depreciation expense between the two periods reflects the higher finding cost environment experienced by the industry in
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recent years to acquire and develop properties. General and administrative expense came in below guidance for the quarter as a result of lowering the cash and restricted stock unit bonuses for the year. Year over year, general and administrative expense increased as a result of increased headcount and higher Net Profits Plan payments. There was a significant increase in the expense recognized in the fourth quarter of 2007 related to the change in the Net Profits Plan liability as a result of higher oil prices and a decrease in the discount rate used to determine the liability.
YEAR-END 2007 FINANCIAL STANDING
As of the end of 2007, St. Mary had total long-term debt of $572.5 million, comprised of $287.5 million in 3.50% Senior Convertible Notes and $285.0 million drawn under our existing long-term credit facility. The Company’s debt to book capitalization ratio as of December 31, 2007 was 40%. Subsequent to year-end, the previously announced divestiture of non-strategic oil and gas properties closed on January 31, 2008 for $131.1 million before commission costs. Proceeds from this sale were used to pay down borrowings under our existing credit facility resulting in a pro forma debt to book capitalization ratio of approximately 34%. Currently, the Company has a borrowing base of $1.25 billion and commitment amount of $500 million related to the credit facility.
NON-GAAP FINANCIAL MEASURES
Adjusted net income and discretionary cash flow are non-GAAP financial measures – please refer to the respective reconciliation for the nearest comparable GAAP financial measure in the Financial Highlights section at the end of this release, which contains explanations as to how these non-GAAP measures are computed and why the Company believes these non-GAAP measures are meaningful.
EARNINGS CALL INFORMATION
The Company has scheduled a teleconference call to discuss fourth quarter and full year 2007 earnings results on February 22, 2008, at 8:00 am (Mountain Time). The call participation number is 888-424-5231. A digital recording of the conference call will be available two hours after the completion of the call, 24 hours per day through March 7, 2008, at 800-642-1687, conference number 30812009. International participants can dial 706-634-6088 to take part in the conference call and can access a replay of the call at 706-645-9291, conference number 30812009. In addition, the call will be broadcast live through St. Mary’s website at www.stmaryland.com and the earnings press release and financial highlights will be available before the call. An audio recording of the conference call will be available at that site through March 7, 2008.
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ST. MARY LAND & EXPLORATION COMPANY | ||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||
December 31, 2007 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Production Data | For the Three Months | For the Years | ||||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||||
2007 | 2006 | Percent Change | 2007 | 2006 | Percent Change | |||||||||||||
Average realized sales price, before hedging: | ||||||||||||||||||
Oil (per Bbl) | $ | 84.63 | $ | 52.39 | 62% | $ | 67.56 | $ | 59.33 | 14% | ||||||||
Gas (per Mcf) | $ | 7.07 | $ | 6.25 | 13% | $ | 6.74 | $ | 6.58 | 2% | ||||||||
Average realized sales price, net of hedging: | ||||||||||||||||||
Oil (per Bbl) | $ | 69.99 | $ | 51.57 | 36% | $ | 62.60 | $ | 56.60 | 11% | ||||||||
Gas (per Mcf) | $ | 7.80 | $ | 7.20 | 8% | $ | 7.63 | $ | 7.37 | 4% | ||||||||
Production: | ||||||||||||||||||
Oil (MMBbls) | 1.7 | 1.6 | 6% | 6.9 | 6.1 | 14% | ||||||||||||
Gas (Bcf) | 18.3 | 15.5 | 19% | 66.1 | 56.4 | 17% | ||||||||||||
BCFE (6:1) | 28.5 | 25.1 | 14% | 107.5 | 92.8 | 16% | ||||||||||||
Daily production: | ||||||||||||||||||
Oil (MBbls per day) | 18.5 | 17.4 | 6% | 18.9 | 16.6 | 14% | ||||||||||||
Gas (MMcf per day) | 199.1 | 168.0 | 19% | 181.0 | 154.7 | 17% | ||||||||||||
MMCFE per day (6:1) | 310.2 | 272.5 | 14% | 294.5 | 254.2 | 16% | ||||||||||||
Margin analysis per MCFE: | ||||||||||||||||||
Average realized sales price, before hedging | $ | 9.59 | $ | 7.20 | 33% | $ | 8.48 | $ | 7.88 | 8% | ||||||||
Average realized price, net of hedging | $ | 9.18 | $ | 7.73 | 19% | $ | 8.71 | $ | 8.18 | 6% | ||||||||
Lease operating expense and transportation | 1.45 | 1.36 | 7% | 1.45 | 1.37 | 6% | ||||||||||||
Production taxes | 0.67 | 0.51 | 31% | 0.58 | 0.54 | 7% | ||||||||||||
General and administrative | 0.53 | 0.32 | 66% | 0.56 | 0.42 | 33% | ||||||||||||
Operating margin | $ | 6.53 | $ | 5.54 | 18% | $ | 6.12 | $ | 5.85 | 5% | ||||||||
Depletion, depreciation, amortization, and | ||||||||||||||||||
asset retirement obligation liability accretion | $ | 2.27 | $ | 1.77 | 28% | $ | 2.12 | $ | 1.67 | 27% | ||||||||
Information on Reserves and Costs Incurred | ||||||||||||||||||
Proved oil and gas reserve quantities: | ||||||||||||||||||
For the Year | For the Year | |||||||||||||||||
Ended December 31, 2007 | Ended December 31, 2006 | |||||||||||||||||
Oil or Condensate | Gas | Oil or Condensate | Gas | |||||||||||||||
Developed and undeveloped: | ||||||||||||||||||
Beginning of year | 74,195 | 482,475 | 62,903 | 417,075 | ||||||||||||||
Revisions of previous estimate | 5,238 | 9,489 | 524 | 10,946 | ||||||||||||||
Discoveries and extensions | 1,166 | 28,483 | 857 | 36,723 | ||||||||||||||
Infill reserves in an existing proved field | 4,592 | 69,090 | 4,131 | 49,107 | ||||||||||||||
Purchases of minerals in place | 567 | 91,374 | 11,857 | 28,030 | ||||||||||||||
Sales of reserves | (4 | ) | (1,400 | ) | (20 | ) | (2,958 | ) | ||||||||||
Production | (6,907 | ) | (66,061 | ) | (6,057 | ) | (56,448 | ) | ||||||||||
End of year | 78,847 | 613,450 | 74,195 | 482,475 | ||||||||||||||
Proved developed reserves as of the end of the year | 68,277 | 426,627 | 61,519 | 358,477 | ||||||||||||||
Costs incurred in oil and gas producing activities: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2007 | 2006 | |||||||||||||||||
Development costs | $ | 591,013 | $ | 367,546 | ||||||||||||||
Exploration | 111,470 | 126,220 | ||||||||||||||||
Acquisitions: | ||||||||||||||||||
Proved | 161,665 | 238,400 | ||||||||||||||||
Unproved | 23,495 | 44,472 | ||||||||||||||||
Leasing activity | 38,436 | 28,816 | ||||||||||||||||
Total | $ | 926,079 | $ | 805,454 |
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ST. MARY LAND & EXPLORATION COMPANY | ||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||
December 31, 2007 | ||||||||||||||
(Unaudited) | ||||||||||||||
Consolidated Statements of Operations | ||||||||||||||
(In thousands, except per share amounts) | For the Three Months | For the Years | ||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
Operating revenues: | ||||||||||||||
Oil and gas production revenue | $ | 273,736 | $ | 180,556 | $ | 912,093 | $ | 730,737 | ||||||
Realized oil and gas hedge gain (loss) | (11,676 | ) | 13,368 | 24,484 | 28,176 | |||||||||
Marketed gas system revenue | 13,909 | 8,149 | 45,149 | 20,936 | ||||||||||
Gain (loss) on sale of proved properties | (367 | ) | (323 | ) | (367 | ) | 6,910 | |||||||
Other revenue | (355 | ) | 942 | 8,735 | 942 | |||||||||
Total operating revenues | 275,247 | 202,692 | 990,094 | 787,701 | ||||||||||
Operating expenses: | ||||||||||||||
Oil and gas production expense | 60,590 | 47,100 | 218,208 | 176,590 | ||||||||||
Depletion, depreciation, amortization, | ||||||||||||||
and asset retirement obligation liability accretion | 64,919 | 44,404 | 227,596 | 154,522 | ||||||||||
Exploration* (4) | 16,030 | 16,017 | 58,686 | 51,889 | ||||||||||
Impairment of proved properties | - | 684 | - | 7,232 | ||||||||||
Abandonment and impairment of unproved properties | 870 | 933 | 4,756 | 4,301 | ||||||||||
General and administrative* (4) | 15,187 | 7,933 | 60,149 | 38,873 | ||||||||||
Change in Net Profits Plan liability | 43,875 | 6,389 | 50,823 | 23,759 | ||||||||||
Marketed gas system expense | 13,031 | 5,545 | 42,485 | 18,526 | ||||||||||
Unrealized derivative loss | 3,234 | 1,765 | 5,458 | 7,094 | ||||||||||
Other expense | 946 | 2,649 | 2,522 | 2,649 | ||||||||||
Total operating expenses | 218,682 | 133,419 | 670,683 | 485,435 | ||||||||||
Income from operations | 56,565 | 69,273 | 319,411 | 302,266 | ||||||||||
Nonoperating income (expense): | ||||||||||||||
Interest income | 134 | 122 | 746 | 1,576 | ||||||||||
Interest expense | (6,010 | ) | (3,423 | ) | (19,895 | ) | (8,521 | ) | ||||||
Income before income taxes | 50,689 | 65,972 | 300,262 | 295,321 | ||||||||||
Income tax expense | (17,815 | ) | (22,440 | ) | (110,550 | ) | (105,306 | ) | ||||||
Net income | $ | 32,874 | $ | 43,532 | $ | 189,712 | $ | 190,015 | ||||||
Basic weighted-average common shares outstanding | 63,300 | 55,480 | 61,852 | 56,291 | ||||||||||
Diluted weighted-average common shares outstanding | 64,635 | 64,886 | 64,850 | 65,962 | ||||||||||
Basic net income per common share | $ | 0.52 | $ | 0.78 | $ | 3.07 | $ | 3.38 | ||||||
Diluted net income per common share | $ | 0.51 | $ | 0.69 | $ | 2.94 | $ | 2.94 | ||||||
* As explained in Note 4 below, due to a change in circumstances the Company adjusted its accounting classification of Net Profits Plan distributions to terminated employees. As a result, distributions to individuals that are no longer employed by the Company from the Net Profits Plan have been fully allocated to general and administrative expense during 2007. Pro forma general and administrative expense (in thousands) reflecting this reclassification is $12,891, $16,266, and $15,805 for the three month periods ended March 31, 2007, June 30, 2007, and September 30, 2007, respectively. Pro forma exploration expense (in thousands) reflecting this reclassification is $19,020, $11,074, and $12,562 for the three months ended March 31, 2007, June 30, 2007, and September 30, 2007, respectively. |
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ST. MARY LAND & EXPLORATION COMPANY | ||||||
FINANCIAL HIGHLIGHTS | ||||||
December 31, 2007 | ||||||
(Unaudited) | ||||||
Consolidated Balance Sheets | ||||||
(In thousands, except share amounts) | December 31, | December 31, | ||||
ASSETS | 2007 | 2006 | ||||
Current assets: | ||||||
Cash and cash equivalents | $ | 43,510 | $ | 1,464 | ||
Short-term investments | 1,173 | 1,450 | ||||
Accounts receivable | 159,149 | 142,721 | ||||
Refundable income taxes | 933 | 7,684 | ||||
Prepaid expenses and other | 14,129 | 17,485 | ||||
Accrued derivative asset | 17,836 | 56,136 | ||||
Deferred income taxes | 33,211 | - | ||||
Total current assets | 269,941 | 226,940 | ||||
Property and equipment (successful efforts method), at cost: | ||||||
Proved oil and gas properties | 2,721,229 | 2,063,911 | ||||
Less - accumulated depletion, depreciation, and amortization | (804,785 | ) | (630,051 | ) | ||
Unproved oil and gas properties, net of impairment allowance | ||||||
of $10,319 in 2007 and $9,425 in 2006 | 134,386 | 100,118 | ||||
Wells in progress | 137,417 | 97,498 | ||||
Oil and gas properties held for sale less accumulated depletion, | ||||||
depreciation, and amortization | 76,921 | - | ||||
Other property and equipment, net of accumulated depreciation | ||||||
of $11,549 in 2007 and $9,740 in 2006 | 9,230 | 6,988 | ||||
2,274,398 | 1,638,464 | |||||
Noncurrent assets: | ||||||
Goodwill | 9,452 | 9,452 | ||||
Accrued derivative asset | 5,483 | 16,939 | ||||
Other noncurrent assets | 12,406 | 7,302 | ||||
Total noncurrent assets | 27,341 | 33,693 | ||||
Total Assets | $ | 2,571,680 | $ | 1,899,097 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | 254,918 | $ | 171,834 | ||
Short-term note payable | - | 4,469 | ||||
Accrued derivative liability | 97,627 | 13,100 | ||||
Deferred income taxes | - | 14,667 | ||||
Deposit associated with oil and gas properties held for sale | 10,000 | - | ||||
Total current liabilities | 362,545 | 204,070 | ||||
Noncurrent liabilities: | ||||||
Long-term credit facility | 285,000 | 334,000 | ||||
Senior convertible notes | 287,500 | 99,980 | ||||
Asset retirement obligation | 96,432 | 77,242 | ||||
Asset retirement obligation associated with oil and gas properties held for sale | 8,744 | - | ||||
Net Profits Plan liability | 211,406 | 160,583 | ||||
Deferred income taxes | 257,603 | 224,518 | ||||
Accrued derivative liability | 190,262 | 46,432 | ||||
Other noncurrent liabilities | 8,843 | 8,898 | ||||
Total noncurrent liabilities | 1,345,790 | 951,653 | ||||
Stockholders' equity: | ||||||
Common stock, $0.01 par value: authorized - 200,000,000 shares; | ||||||
issued: 64,010,832 shares in 2007 and 55,251,733 shares in 2006; | ||||||
outstanding, net of treasury shares: 63,001,120 shares in 2007 | ||||||
and 55,001,733 shares in 2006 | 640 | 553 | ||||
Additional paid-in capital | 170,070 | 38,940 | ||||
Treasury stock, at cost: 1,009,712 shares in 2007 and 250,000 shares in 2006 | (29,049 | ) | (4,272 | ) | ||
Retained earnings | 878,652 | 695,224 | ||||
Accumulated other comprehensive income (loss) | (156,968 | ) | 12,929 | |||
Total stockholders' equity | 863,345 | 743,374 | ||||
Total Liabilities and Stockholders' Equity | $ | 2,571,680 | $ | 1,899,097 |
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ST. MARY LAND & EXPLORATION COMPANY | ||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||
December 31, 2007 | ||||||||||||
(Unaudited) | ||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||
(In thousands) | For the Three Months | For the Years | ||||||||||
Ended December 31, | Ended December 31, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
Reconciliation of net income to net cash provided | ||||||||||||
by operating activities: | ||||||||||||
Net income | $ | 32,874 | $ | 43,532 | $ | 189,712 | $ | 190,015 | ||||
Adjustments to reconcile net income to net cash | - | - | ||||||||||
provided by operating activities: | - | - | ||||||||||
(Gain) loss on insurance settlement | 1,097 | - | (5,243 | ) | - | |||||||
(Gain) loss on sale of proved properties | 367 | 323 | 367 | (6,910 | ) | |||||||
Depletion, depreciation, amortization, | - | - | ||||||||||
and asset retirement obligation liability accretion | 64,919 | 44,404 | 227,596 | 154,522 | ||||||||
Exploratory dry hole expense | 1,651 | 6,158 | 14,365 | 10,191 | ||||||||
Impairment of proved properties | - | 7,232 | - | 7,232 | ||||||||
Abandonment and impairment of unproved properties | 870 | (5,614 | ) | 4,756 | 4,301 | |||||||
Unrealized derivative loss | 3,234 | 1,765 | 5,458 | 7,094 | ||||||||
Change in Net Profits Plan liability | 43,875 | 6,389 | 50,823 | 23,759 | ||||||||
Stock-based compensation expense* | 1,489 | 2,443 | 10,095 | 11,422 | ||||||||
Deferred income taxes | 13,666 | 10,220 | 92,955 | 74,832 | ||||||||
Other | (5,329 | ) | (2,877 | ) | (10,497 | ) | (2,479 | ) | ||||
Changes in current assets and liabilities: | - | - | ||||||||||
Accounts receivable | (6,349 | ) | (8,334 | ) | (6,557 | ) | 22,476 | |||||
Refundable income taxes | 2,164 | 21,495 | 6,751 | - | ||||||||
Prepaid expenses and other | (8,660 | ) | (2,838 | ) | 19,375 | (17,886 | ) | |||||
Accounts payable and accrued expenses | 13,217 | 26,827 | 40,769 | 5,215 | ||||||||
Income tax benefit from the exercise of stock options | (2,275 | ) | (974 | ) | (9,933 | ) | (16,084 | ) | ||||
Net cash provided by operating activities | 156,810 | 150,151 | 630,792 | 467,700 | ||||||||
Cash flows from investing activities: | ||||||||||||
Proceeds from insurance settlement | (1,116 | ) | - | 5,948 | - | |||||||
Proceeds from sale of oil and gas properties | 171 | (323 | ) | 495 | 860 | |||||||
Capital expenditures | (137,637 | ) | (161,079 | ) | (637,748 | ) | (455,056 | ) | ||||
Acquisition of oil and gas properties | (150,233 | ) | (260,706 | ) | (182,883 | ) | (270,639 | ) | ||||
Deposits for acquisition of oil and gas assets | 15,310 | - | - | - | ||||||||
Deposits to short-term investments available-for-sale | (15 | ) | - | (1,168 | ) | - | ||||||
Receipts from short-term investments available-for-sale | - | 25 | 1,450 | 25 | ||||||||
Other | 10,005 | 12 | 10,034 | 91 | ||||||||
Net cash used in investing activities | (263,515 | ) | (422,071 | ) | (803,872 | ) | (724,719 | ) | ||||
Cash flows from financing activities: | ||||||||||||
Proceeds from credit facility | 268,086 | 597,137 | 822,000 | 935,137 | ||||||||
Repayment of credit facility | (138,086 | ) | (329,137 | ) | (871,000 | ) | (601,137 | ) | ||||
Repayment of short-term note payable | - | - | (4,469 | ) | - | |||||||
Proceeds from short-term note payable | - | 4,469 | - | 4,469 | ||||||||
Income tax benefit from the exercise of stock options | 2,275 | 974 | 9,933 | 16,084 | ||||||||
Proceeds from issuance of convertible debt, net of deferred financing costs | (7 | ) | - | 280,657 | - | |||||||
Proceeds from sale of common stock | 3,665 | 1,670 | 10,007 | 17,716 | ||||||||
Repurchase of common stock | - | - | (25,904 | ) | (123,108 | ) | ||||||
Dividends paid | (3,144 | ) | (2,745 | ) | (6,284 | ) | (5,603 | ) | ||||
Other | 186 | - | 186 | - | ||||||||
Net cash provided by financing activities | 132,975 | 272,368 | 215,126 | 243,558 | ||||||||
Net change in cash and cash equivalents | 26,270 | 448 | 42,046 | (13,461 | ) | |||||||
Cash and cash equivalents at beginning of period | 17,240 | 1,016 | 1,464 | 14,925 | ||||||||
Cash and cash equivalents at end of period | $ | 43,510 | $ | 1,464 | $ | 43,510 | $ | 1,464 | ||||
* Stock-based compensation expense is a component of General and administrative and Exploration on the Consolidated Statements of Operations. For the years ended December 31, 2007, and 2006, $6.9 million and $8.3 million, respectively, of stock-based compensation expense is included in the general and administrative expense and $3.2 million and $3.1 million, respectively, of stock-based compensation expense is included in exploration expense. For the three months ended December 31, 2007, and 2006, $889,000 and $1.8 million, respectively, of stock-based compensation expense is included in general and administrative expense and $600,000 and $656,000, respecteively, is included in exploration expense. |
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ST. MARY LAND & EXPLORATION COMPANY | ||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||
December 31, 2007 | ||||||||||||||
(Unaudited) | ||||||||||||||
Adjusted Net Income | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
Reconciliation of Net Income (GAAP) | For the Three Months | For the Years | ||||||||||||
to Adjusted Net Income (Non-GAAP): | Ended December 31, | Ended December 31, | ||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
Reported Net Income (GAAP) | $ | 32,874 | $ | 43,532 | $ | 189,712 | $ | 190,015 | ||||||
Change in Net Profits Plan liability | 43,875 | 6,389 | 50,823 | �� | 23,759 | |||||||||
Unrealized derivative loss | 3,234 | 1,765 | 5,458 | 7,094 | ||||||||||
(Gain) loss on sale of proved properties | 367 | 323 | 367 | (6,910 | ) | |||||||||
(Gain) loss on insurance settlement (1) | 1,097 | - | (5,243 | ) | - | |||||||||
Total of Adjustments | 48,573 | 8,477 | 51,405 | 23,943 | ||||||||||
Expense from tax effect on adjustments | (17,071 | ) | (2,883 | ) | (18,926 | ) | (8,538 | ) | ||||||
Adjusted Net Income (Non-GAAP) (2) | $ | 64,376 | $ | 49,126 | $ | 222,191 | $ | 205,420 | ||||||
Adjusted Net Income Per Share (Non-GAAP) | ||||||||||||||
Basic | $ | 1.02 | $ | 0.89 | $ | 3.59 | $ | 3.65 | ||||||
Diluted | $ | 1.00 | $ | 0.77 | $ | 3.44 | $ | 3.18 | ||||||
Average Number of Shares Outstanding | ||||||||||||||
Basic | 63,300 | 55,480 | 61,852 | 56,291 | ||||||||||
Diluted | 64,635 | 64,886 | 64,850 | 65,962 | ||||||||||
(1) Included within line item Other revenue on the Consolidated Statements of Operations. | ||||||||||||||
(2) Adjusted net income is calculated as net income adjusted for significant non-cash and non-recurring items. Examples of non-cash charges include non-cash changes in the Net Profits Plan liability and unrealized derivative gains and losses. Examples of non-recurring items include gains or losses from sales of properties and insurance settlements. The non-GAAP measure of adjusted net income is presented because management believes it provides useful additional information to investors for analysis of St. Mary's fundamental business on a recurring basis. In addition, management believes that adjusted net income is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted net income should not be considered in isolation or as a substitute for net income, income from operations, cash provided by operating activities or other income, profitablility, cash flow, or liquidity measures prepared under GAAP. Since adjusted net income excludes some, but not all, items that affect net income and may vary among companies, the adjusted net income amounts presented may not be comparable to similarly titled measures of other companies. |
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ST. MARY LAND & EXPLORATION COMPANY | ||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||
December 31, 2007 | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Discretionary Cash Flow | ||||||||||||||||
(In thousands) | ||||||||||||||||
Reconciliation of Net Cash Provided by Operating | For the Three Months | For the Years | ||||||||||||||
Activities (GAAP) to Discretionary Cash Flow (Non-GAAP): | Ended December 31, | Ended December 31, | ||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net cash provided by operating activities (GAAP) | $ | 156,810 | $ | 150,151 | $ | 630,792 | $ | 467,700 | ||||||||
Gain (loss) on insurance settlement | (1,097 | ) | - | 5,243 | - | |||||||||||
Gain (loss) on sale of proved properties | (367 | ) | (323 | ) | (367 | ) | 6,910 | |||||||||
Exploration (4) | 16,030 | 16,017 | 58,686 | 51,889 | ||||||||||||
Less: Exploratory dry hole expense | (1,651 | ) | (6,158 | ) | (14,365 | ) | (10,191 | ) | ||||||||
Less: Stock-based compensation expense included in Exploration | (599 | ) | - | (3,215 | ) | - | ||||||||||
Other | 5,329 | 2,877 | 10,497 | 2,476 | ||||||||||||
Changes in current assets and liabilities | 1,903 | (36,176 | ) | (50,405 | ) | 6,279 | ||||||||||
Discretionary cash flow (Non-GAAP) (3) | $ | 176,358 | $ | 126,388 | $ | 636,866 | $ | 525,063 | ||||||||
Revised Quarterly Discretionary Cash Flow | ||||||||||||||||
(In thousands) | ||||||||||||||||
Revised reconciliation of Net Cash Provided by Operating | For the Three Months Ended | |||||||||||||||
Activities (GAAP) to Discretionary Cash Flow (Non-GAAP) | March 31, | June 30, | September 30, | |||||||||||||
2007 | 2007 | 2007 | ||||||||||||||
Net cash provided by operating activities (GAAP) | $ | 126,075 | $ | 156,246 | $ | 191,661 | ||||||||||
Gain on insurance settlement | - | 6,325 | 15 | |||||||||||||
Gain on sale of proved properties | - | - | - | |||||||||||||
Exploration (4) | 19,020 | 11,074 | 12,562 | |||||||||||||
Less: Exploratory dry hole expense | (9,569 | ) | (1,651 | ) | (1,494 | ) | ||||||||||
Less: Stock-based compensation expense included in Exploration | (1,004 | ) | (886 | ) | (726 | ) | ||||||||||
Other | 125 | 2,571 | 2,472 | |||||||||||||
Changes in current assets and liabilities | 6,835 | (13,562 | ) | (45,581 | ) | |||||||||||
Discretionary cash flow (Non-GAAP) (3) | $ | 141,482 | $ | 160,117 | $ | 158,909 | ||||||||||
(3) Discretionary cash flow is computed as net income plus depreciation, depletion, amortization, asset retirement obligation liability accretion, impairments, deferred taxes, exploration expense, stock-based compensation expense, and non-cash changes in the Net Profits Plan liability less the effect of unrealized derivative (gain) loss. The non-GAAP measure of discretionary cash flow is presented since management believes that it provides useful additional information to investors for analysis of St. Mary’s ability to internally generate funds for exploration, development, and acquisitions. In addition, discretionary cash flow is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Discretionary cash flow should not be considered in isolation or as a substitute for net income, income from operations, net cash provided by operating activities or other income, profitability, cash flow, or liquidity measures prepared under GAAP. Since discretionary cash flow excludes some, but not all, items that affect net income and net cash provided by operating activities and may vary among companies, the discretionary cash flow amounts presented may not be comparable to similarly titled measures of other companies. See the Consolidated Statements of Cash Flows herein for more detailed cash flow information. | ||||||||||||||||
4) As a result of a change in circumstances, a greater portion of distributions from the Net Profits Plan have been classified as general and and administrative expense than in prior years. This is a result of a greater portion of payments being made to individuals that are no longer employed by the Company. In 2007, only those distributions related to individuals that are currently employed and are involved with the Company's exploration efforts are classified as exploration expense. As time has progressed, less of the distribution relates to prospective exploration efforts as more of the distributions are made to employees that have terminated employment and thereby do not provide any exploration support. Therefore, the quarterly financial information presented in the above tables reflects the recording of current distributions under the Net Profits Plan for terminated employees as being fully allocated entirely to general and administrative expense since there is no longer any functional link to geologic and geophysical or exploration related work by those terminated individuals. |
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