Exhibit 99.1
For Information
Brent A. Collins
303-861-8140
FOR IMMEDIATE RELEASE
ST. MARY REPORTS RESULTS FOR FIRST QUARTER OF 2010
· | Company reports net income of $126.2 million, or $1.96 per diluted share |
· | Quarterly production of 286 MMCFE/d exceeds guidance of 255 – 278 MMCFE/d |
· | Majority of guided costs within or below guidance |
· | Adjusted net income per diluted share of $0.45 |
DENVER, May 3, 2010 – St. Mary Land & Exploration Company (NYSE: SM) today reports financial results from the first quarter of 2010. In addition, a new presentation for the first quarter earnings and operational update will be posted on the Company’s website at stmaryland.com. This presentation will be referenced during the conference call scheduled for 8:00 a.m. Mountain time (10:00 a.m. Eastern time) on May 4, 2010. Information for the earnings call can be found below.
FIRST QUARTER 2010 RESULTS
St. Mary posted net income for the first quarter of 2010 of $126.2 million, or $1.96 per diluted share, which includes a gain from the Company’s divestitures of non-core Rocky Mountain assets that were closed during the quarter. This compares to a net loss of ($87.6 million), or ($1.41) per diluted share, for the same period in 2009. Adjusted net income for the quarter was $28.9 million, or $0.45 per diluted share, versus an adjusted net loss of ($448 thousand), or ($0.01) per diluted share, for the first quarter of 2009. Adjusted net income excludes certain items that the Company believes affect the comparability of operating results. Items excluded generally are one-time items or are items whose timing and/or amount cannot be reasonably estimated. A summary of the adjustments made to arrive at adjusted net income (loss) is presented in the table below.
For the Three Months Ended March 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Weighted-average diluted share count (in millions) | 64.4 | 62.3 | ||||||||||||||
$ in millions | Per Diluted Share | $ in millions | Per Diluted Share | |||||||||||||
Reported Net Income (Loss) | $ | 126.2 | $ | 1.96 | $ | (87.6 | ) | $ | (1.41 | ) | ||||||
Adjustments net of tax: | ||||||||||||||||
Change in Net Profits Plan liability | $ | ( 17.1 | ) | $ | (0.27 | ) | $ | (14.4 | ) | $ | (0.23 | ) | ||||
Unrealized derivative (gain) loss | $ | (4.9 | ) | $ | (0.08 | ) | $ | 1.1 | $ | 0.02 | ||||||
(Gain) loss on divestiture activity | $ | (75.9 | ) | $ | (1.18 | ) | $ | 0.4 | $ | 0.01 | ||||||
Loss related to hurricanes | - | - | $ | 1.3 | $ | 0.02 | ||||||||||
Adjusted Net Income (Loss), before impairments | $ | 28.3 | $ | 0.44 | $ | (99.2 | ) | $ | (1.59 | ) | ||||||
Non-cash impairments net of tax: | ||||||||||||||||
Impairment of proved properties | - | - | $ | 91.0 | $ | 1.46 | ||||||||||
Abandonment & impairment of unproved properties | $ | 0.6 | $ | 0.01 | $ | 2.4 | $ | 0.04 | ||||||||
Impairment of materials inventory | - | - | $ | 5.3 | $ | 0.09 | ||||||||||
Adjusted Net Income (Loss) | $ | 28.9 | $ | 0.45 | $ | (0.4 | ) | $ | (0.01 | ) | ||||||
NOTE: Totals may not add due to rounding |
Operating cash flow increased to $133.2 million for the first quarter of 2010 from $106.6 million in the same period last year. Net cash provided by operating activities increased to $153.9 million for the first quarter of 2010 from $125.2 million in the same period in 2009.
Adjusted net income and operating cash flow are non-GAAP financial measures – please refer to the respective reconciliation in the accompanying Financial Highlights section at the end of this release for additional information about these measures.
St. Mary reported quarterly production of 285.8 MMCFE/d, which was above the guidance range of 255 to 278 MMCFE/d. In spite of closing two significant divestitures earlier than scheduled, strong production performance in the Mid-Continent and South Texas & Gulf Coast regions allowed the Company to exceed production guidance for the quarter.
Revenues and other income for the quarter were $360.1 million compared to $199.2 million for the same period in 2009. For the first quarter of 2010, the average equivalent price per MCFE, net of hedging, was $8.38 per MCFE, which is an increase of 28% from the $6.56 per MCFE realized in the comparable period in 2009. Average realized prices, excluding hedging activities, were $6.15 per Mcf and $72.73 per barrel during the quarter. These prices were 54% and 111% higher, respectively, than those in the first quarter of 2009. Average realized prices, inclusive of hedging activities, were $6.84 per Mcf and $66.96 per barrel in the first quarter of 2010, which is an increase of 11% and 52%, respectively, from the same period a year ago.& #160; The Company reports its gas volumes on a “wet gas” basis, meaning that revenue dollars associated with natural gas liquids (NGLs) are reported within our natural gas revenues. Included in revenues in the first quarter of 2010 is a pre-tax gain of $121.0 million from divestiture activity. St. Mary closed on sales of non-core properties in North Dakota and Wyoming during the quarter and the proceeds from the divestitures will be used to fund a portion of the 2010 capital program.
Lease operating expense (LOE) of $1.17 per MCFE in the first quarter of 2010 was below the Company’s guidance of $1.40 to $1.45 per MCFE. Cost increases that the Company had anticipated did not materialize to the extent assumed in the provided guidance. Lease operating expense for the quarter represents a 19% decrease from the $1.45 per MCFE in the comparable period last year. Sequentially, LOE declined 11% or $0.14 per MCFE in the first quarter of 2010 from the preceding quarter.
Transportation expense of $0.16 per MCFE in the first quarter of 2010 was below guidance of $0.18 to $0.23 per MCFE. The reported per unit expense was a decrease from $0.19 per MCFE for the comparable period in 2009. Sequentially, transportation expense was down $0.04 per MCFE from the fourth quarter of 2009.
Commodity price increases over the past year for both oil and natural gas resulted in year over year and sequential increases in production taxes, both on a per MCFE basis and in absolute dollars. Between the first quarters of 2009 and 2010, production taxes on a per MCFE basis increased 72% from $0.32 to $0.55. Production taxes also increased sequentially from $0.51 per MCFE in the fourth quarter of 2009 to $0.55 per MCFE in the first quarter of 2010. The Company’s realized production tax rate for the first quarter was at the provided guidance of 7% of pre-hedge oil and natural gas revenue.
Total general and administrative (G&A) expense for the first quarter of 2010 was $0.91 per MCFE, which was within the guidance range provided by the Company. Cash G&A expense was $0.49 per MCFE for the quarter, compared to a guidance range of $0.47 to $0.50 per MCFE. Non-cash G&A for the first quarter was $0.15 per MCFE versus a guidance range of $0.15 to $0.17 per MCFE. G&A related to cash payments from the Company’s legacy Net Profits Plan (NPP) program was $0.27 per MCFE in the quarter compared to a guidance range of $0.22 to $0.24 per MCFE. Impacts from divestiture activity and higher net realized prices caused payments from the program to be higher than anticipated. The year over year and sequential increase in G&A on a per MCFE basis is a result of larg er NPP payments resulting from higher commodity prices.
Depletion and depreciation expense (DD&A) decreased to $3.02 per MCFE in the first quarter of 2010, which was within the Company’s guidance range of $2.95 to $3.15 per MCFE. DD&A in the comparable period of 2009 was $3.23 per MCFE. Sequentially, DD&A increased 5% from $2.88 per MCFE in the fourth quarter of 2009. The Company’s DD&A rate is impacted by changes in the estimated volumes of proved reserves and changes to the cost basis of its proved properties, including the impact of impairments.
In the first quarter of 2010, St. Mary recognized a pre-tax non-cash benefit of $27.3 million as a result of a decrease in the NPP liability. The decrease in NPP liability was primarily related to the divestitures which closed in the first quarter of 2010. The NPP liability is a significant management estimate that is highly sensitive to a number of assumptions including future commodity prices, production rates, and operating costs. The last pool created under this legacy compensation plan was in 2007.
FINANCIAL POSITION AND LIQUIDITY
As of March 31, 2010, St. Mary had total long-term debt of $269.0 million, which was comprised entirely of the Company’s 3.50% Senior Convertible Notes, net of debt discount. The Company’s debt-to-book capitalization ratio was 19% as of the end of the quarter.
St. Mary currently has no outstanding borrowing under its long-term credit facility. The borrowing base for the credit facility was reaffirmed by St. Mary’s bank group on March 17, 2010, and remains unchanged at an amount of $900 million. The Company has a commitment amount of $678 million from the Company’s bank group. St. Mary is in compliance with all the covenants associated with this facility.
EARNINGS CALL INFORMATION
The Company has scheduled a teleconference to discuss the first quarter results on May 4, 2010 at 8:00 a.m. Mountain time (10:00 a.m. Eastern time). The call participation number is 800-299-8538 and the participant passcode is 78566360. An audio replay of the call will be available approximately two hours after the call at 888-286-8010, with passcode 86555679. International participants can dial 617-786-2902 to take part in the conference call, using passcode 78566360 and can access a replay of the call at 617-801-6888, using passcode 86555679. Replays can be accessed through May 18, 2010.
In addition, the call will be webcast live and can be accessed at St. Mary’s web site at stmaryland.com. An audio recording of the conference call will be available at that site through May 18, 2010.
INFORMATION ABOUT FORWARD LOOKING STATEMENTS
This release contains forward looking statements within the meaning of securities laws, including forecasts and projections. The words “will,” “believe,” “budget,” “anticipate,” “plan,” “intend,” “estimate,” “forecast,” and “expect” and similar expressions are intended to identify forward looking statements. These statements involve known and unknown risks, which may cause St. Mary’s actual results to differ materially from results expressed or implied by the forward looking statements. These risks include such factors as the volatility and level of oil and natural gas prices, the uncertain nature of the expected benefits from the acquisition and divestiture of oil and gas properties, uncertain ties inherent in projecting future rates of production from drilling activities and acquisitions, the ability of purchasers of production to pay for those sales, the availability of debt and equity financing, the ability of the banks in the Company’s credit facility to fund requested borrowings, the ability of hedge counterparties to settle hedges in favor of the Company, the imprecise nature of estimating oil and gas reserves, the availability of additional economically attractive exploration, development, and property acquisition opportunities for future growth and any necessary financings, unexpected drilling conditions and results, unsuccessful exploration and development drilling, drilling and operating service availability, the risks associated with the Company’s hedging strategy, and other such matters discussed in the “Risk Factors” section of St. Mary’s 2009 Annual Report on Form 10-K and subsequent quarterly reports filed on Form 10-Q. Although St. Mary may from time to time voluntarily update its prior forward looking statements, it disclaims any commitment to do so except as required by securities laws.
ABOUT THE COMPANY
St. Mary Land & Exploration Company is an independent energy company engaged in the exploration, exploitation, development, acquisition, and production of natural gas and crude oil. St. Mary routinely posts important information about the Company on its website. For more information about St. Mary, please visit its website at stmaryland.com.
ST. MARY LAND & EXPLORATION COMPANY | ||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||
March 31, 2010 | ||||||||||||
Guidance Comparison | For the Three Months | |||||||||||
Ended March 31, 2010 | ||||||||||||
Actual | Guidance Range | |||||||||||
Oil and gas production (MMCFE per day) | 285.8 | 255 - 278 | ||||||||||
Lease operating expense (per MCFE) | $ | 1.17 | $ | 1.40 - $1.45 | ||||||||
Transportation expense (per MCFE) | $ | 0.16 | $ | 0.18 - $0.23 | ||||||||
Production taxes, as a percentage of pre-hedge revenue | 7 | % | 7 | % | ||||||||
General and administrative - cash | $ | 0.49 | $ | 0.47 - $0.50 | ||||||||
General and administrative - cash related to Net Profits Plan | $ | 0.27 | $ | 0.22 - $0.24 | ||||||||
General and administrative - non-cash | $ | 0.15 | $ | 0.15 - $0.17 | ||||||||
General and administrative - TOTAL | $ | 0.91 | $ | 0.84 - $0.91 | ||||||||
Depreciation, depletion, and amortization | $ | 3.02 | $ | 2.95 - $3.15 | ||||||||
Production Data | For the Three Months | |||||||||||
Ended March 31, | ||||||||||||
2010 | 2009 | Percent Change | ||||||||||
Average realized sales price, before hedging: | ||||||||||||
Oil (per Bbl) | $ | 72.73 | $ | 34.40 | 111 | % | ||||||
Gas (per Mcf) | 6.15 | 4.00 | 54 | % | ||||||||
Average realized sales price, net of hedging: | ||||||||||||
Oil (per Bbl) | $ | 66.96 | 44.16 | 52 | % | |||||||
Gas (per Mcf) | 6.84 | 6.14 | 11 | % | ||||||||
Production: | ||||||||||||
Oil (MMBbls) | 1.5 | 1.6 | -7 | % | ||||||||
Gas (Bcf) | 16.6 | 18.5 | -11 | % | ||||||||
BCFE (6:1) | 25.7 | 28.4 | -9 | % | ||||||||
Daily production: | ||||||||||||
Oil (MBbls per day) | 17.0 | 18.2 | -7 | % | ||||||||
Gas (MMcf per day) | 184.1 | 205.7 | -11 | % | ||||||||
MMCFE per day (6:1) | 285.8 | 315.0 | -9 | % | ||||||||
Margin analysis per MCFE: | ||||||||||||
Average realized sales price, before hedging | $ | 8.28 | $ | 4.60 | 80 | % | ||||||
Average realized sales price, net of hedging | 8.38 | 6.56 | 28 | % | ||||||||
Lease operating expense | 1.17 | 1.45 | -19 | % | ||||||||
Transportation | 0.16 | 0.19 | -16 | % | ||||||||
Production taxes | 0.55 | 0.32 | 72 | % | ||||||||
General and administrative | 0.91 | 0.57 | 60 | % | ||||||||
Operating margin | $ | 5.59 | $ | 4.03 | 39 | % | ||||||
Depletion, depreciation, amortization, and | ||||||||||||
asset retirement obligation liability accretion | $ | 3.02 | $ | 3.23 | -7 | % |
Consolidated Statements of Operations | ||||||||
(In thousands, except per share amounts) | For the Three Months | |||||||
Ended March 31, | ||||||||
2010 | 2009 | |||||||
Operating revenues and other income: | ||||||||
Oil and gas production revenue | $ | 212,887 | $ | 130,417 | ||||
Realized oil and gas hedge gain | 2,595 | 55,620 | ||||||
Gain (loss) on divestiture activity | 120,978 | (599 | ) | |||||
Marketed gas system and other operating revenue | 23,675 | 13,782 | ||||||
Total operating revenues and other income | 360,135 | 199,220 | ||||||
Operating expenses: | ||||||||
Oil and gas production expense | 48,340 | 55,829 | ||||||
Depletion, depreciation, amortization, | ||||||||
and asset retirement obligation liability accretion | 77,765 | 91,712 | ||||||
Exploration | 13,898 | 13,598 | ||||||
Impairment of proved properties | - | 147,049 | ||||||
Abandonment and impairment of unproved properties | 904 | 3,902 | ||||||
Impairment of materials inventory | - | 8,616 | ||||||
General and administrative | 23,486 | 16,399 | ||||||
Change in Net Profits Plan liability | (27,272 | ) | (23,291 | ) | ||||
Marketed gas system expense | 22,046 | 13,383 | ||||||
Unrealized derivative (gain) loss | (7,735 | ) | 1,846 | |||||
Other expense | 952 | 5,642 | ||||||
Total operating expenses | 152,384 | 334,685 | ||||||
Income (loss) from operations | 207,751 | (135,465 | ) | |||||
Nonoperating income (expense): | ||||||||
Interest income | 129 | 22 | ||||||
Interest expense | (6,787 | ) | (6,096 | ) | ||||
Income (loss) before income taxes | 201,093 | (141,539 | ) | |||||
Income tax benefit (expense) | (74,915 | ) | 53,916 | |||||
Net income (loss) | $ | 126,178 | $ | (87,623 | ) | |||
Basic weighted-average common shares outstanding | 62,792 | 62,335 | ||||||
Diluted weighted-average common shares outstanding | 64,377 | 62,335 | ||||||
Basic net income (loss) per common share | $ | 2.01 | $ | (1.41 | ) | |||
Diluted net income (loss) per common share | $ | 1.96 | $ | (1.41 | ) |
Consolidated Balance Sheets | ||||||||
(In thousands, except share amounts) | March 31, | December 31, | ||||||
ASSETS | 2010 | 2009 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 40,424 | $ | 10,649 | ||||
Accounts receivable | 129,302 | 116,136 | ||||||
Refundable income taxes | 19,770 | 32,773 | ||||||
Prepaid expenses and other | 9,772 | 14,259 | ||||||
Derivative asset | 58,364 | 30,295 | ||||||
Deferred income taxes | - | 4,934 | ||||||
Total current assets | 257,632 | 209,046 | ||||||
Property and equipment (successful efforts method), at cost: | ||||||||
Land | 1,371 | 1,371 | ||||||
Proved oil and gas properties | 2,889,235 | 2,797,341 | ||||||
Less - accumulated depletion, depreciation, and amortization | (1,116,733 | ) | (1,053,518 | ) | ||||
Unproved oil and gas properties, net of impairment allowance | ||||||||
of $63,390 in 2010 and $66,570 in 2009 | 137,192 | 132,370 | ||||||
Wells in progress | 89,676 | 65,771 | ||||||
Materials inventory, at lower of cost or market | 25,094 | 24,467 | ||||||
Oil and gas properties held for sale less accumulated depletion, | ||||||||
depreciation, and amortization | 15,578 | 145,392 | ||||||
Other property and equipment, net of accumulated depreciation | ||||||||
of $15,430 in 2010 and $14,550 in 2009 | 14,979 | 14,404 | ||||||
2,056,392 | 2,127,598 | |||||||
Other noncurrent assets: | ||||||||
Derivative asset | 23,695 | 8,251 | ||||||
Restricted cash subject to Section 1031 Exchange | 36,160 | - | ||||||
Other noncurrent assets | 14,435 | 16,041 | ||||||
Total other noncurrent assets | 74,290 | 24,292 | ||||||
Total Assets | $ | 2,388,314 | $ | 2,360,936 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 271,986 | $ | 236,242 | ||||
Derivative liability | 57,682 | 53,929 | ||||||
Deposit associated with oil and gas properties held for sale | - | 6,500 | ||||||
Deferred income taxes | 2,631 | - | ||||||
Total current liabilities | 332,299 | 296,671 | ||||||
Noncurrent liabilities: | ||||||||
Long-term credit facility | - | 188,000 | ||||||
Senior convertible notes, net of unamortized | ||||||||
discount of $18,480 in 2010, and $20,598 in 2009 | 269,020 | 266,902 | ||||||
Asset retirement obligation | 61,002 | 60,289 | ||||||
Asset retirement obligation associated with oil and gas properties held for sale | 4,245 | 18,126 | ||||||
Net Profits Plan liability | 143,019 | 170,291 | ||||||
Deferred income taxes | 384,292 | 308,189 | ||||||
Derivative liability | 46,823 | 65,499 | ||||||
Other noncurrent liabilities | 14,023 | 13,399 | ||||||
Total noncurrent liabilities | 922,424 | 1,090,695 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock, $0.01 par value: authorized - 200,000,000 shares; | ||||||||
issued: 62,950,794 shares in 2010 and 62,899,122 shares in 2009; | ||||||||
outstanding, net of treasury shares: 62,823,901 shares in 2010 | ||||||||
and 62,772,229 shares in 2009 | 630 | 629 | ||||||
Additional paid-in capital | 165,715 | 160,516 | ||||||
Treasury stock, at cost: 126,893 shares in 2010 and 2009 | (1,179 | ) | (1,204 | ) | ||||
Retained earnings | 974,620 | 851,583 | ||||||
Accumulated other comprehensive loss | (6,195 | ) | (37,954 | ) | ||||
Total stockholders' equity | 1,133,591 | 973,570 | ||||||
Total Liabilities and Stockholders' Equity | $ | 2,388,314 | $ | 2,360,936 |
Consolidated Statements of Cash Flows | ||||||||
(In thousands) | For the Three Months | |||||||
Ended March 31, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 126,178 | $ | (87,623 | ) | |||
Adjustments to reconcile net income (loss) to net cash | ||||||||
provided by operating activities: | ||||||||
(Gain) loss on divestiture activity | (120,978 | ) | 599 | |||||
Depletion, depreciation, amortization, | ||||||||
and asset retirement obligation liability accretion | 77,765 | 91,712 | ||||||
Exploratory dry hole expense | 163 | 94 | ||||||
Impairment of proved properties | - | 147,049 | ||||||
Abandonment and impairment of unproved properties | 904 | 3,902 | ||||||
Impairment of materials inventory | - | 8,616 | ||||||
Stock-based compensation expense* | 5,603 | 3,776 | ||||||
Change in Net Profits Plan liability | (27,272 | ) | (23,291 | ) | ||||
Unrealized derivative (gain) loss | (7,735 | ) | 1,846 | |||||
Loss related to hurricanes | - | 2,093 | ||||||
Amortization of debt discount and deferred financing costs | 3,291 | 2,092 | ||||||
Deferred income taxes | 64,608 | (55,390 | ) | |||||
Plugging and abandonment | (2,234 | ) | (2,018 | ) | ||||
Other | 949 | 1,189 | ||||||
Changes in current assets and liabilities: | ||||||||
Accounts receivable | (13,244 | ) | 43,703 | |||||
Refundable income taxes | 13,003 | 13,161 | ||||||
Prepaid expenses and other | 1,489 | (5,414 | ) | |||||
Accounts payable and accrued expenses | 31,402 | (20,921 | ) | |||||
Net cash provided by operating activities | 153,892 | 125,175 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from sale of oil and gas properties | 239,247 | 1,063 | ||||||
Capital expenditures | (132,445 | ) | (133,625 | ) | ||||
Acquisition of oil and gas properties | - | (53 | ) | |||||
Deposits to restricted cash | (36,160 | ) | - | |||||
Receipts from restricted cash | - | 4,348 | ||||||
Other | (6,500 | ) | - | |||||
Net cash provided by (used in) investing activities | 64,142 | (128,267 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from credit facility | 177,559 | 1,190,000 | ||||||
Repayment of credit facility | (365,559 | ) | (1,191,000 | ) | ||||
Proceeds from sale of common stock | 268 | 172 | ||||||
Other | (527 | ) | - | |||||
Net cash used in financing activities | (188,259 | ) | (828 | ) | ||||
Net change in cash and cash equivalents | 29,775 | (3,920 | ) | |||||
Cash and cash equivalents at beginning of period | 10,649 | 6,131 | ||||||
Cash and cash equivalents at end of period | $ | 40,424 | $ | 2,211 | ||||
* Stock-based compensation expense is a component of exploration expense and general and administrative expense on | ||||||||
the consolidated statements of operations. For the three months ended March 31, 2010, and 2009, respectively, | ||||||||
approximately $1.8 million and $1.6 million of stock-based compensation expense was included in exploration expense. | ||||||||
For the three months ended March 31, 2010, and 2009, respectively, approximately $3.8 million and $2.2 million of | ||||||||
stock-based compensation expense was included in general and administrative expense. |
Adjusted Net Income | ||||||||
(In thousands, except per share data) | ||||||||
Reconciliation of Net Income (Loss) (GAAP) | For the Three Months | |||||||
to Adjusted Net Income (Non-GAAP): | Ended March 31, | |||||||
2010 | 2009 | |||||||
Reported Net Income (Loss) (GAAP) | $ | 126,178 | $ | (87,623 | ) | |||
Adjustments net of tax: (1) | ||||||||
Change in Net Profits Plan liability | (17,112 | ) | (14,419 | ) | ||||
Unrealized derivative (gain) loss | (4,853 | ) | 1,143 | |||||
(Gain) loss on divestiture activity | (75,909 | ) | 371 | |||||
Loss related to hurricanes (2) | - | 1,296 | ||||||
Adjusted Net Income (Loss), before impairment adjustments | 28,304 | (99,232 | ) | |||||
Non-cash impairments net of tax: | ||||||||
Impairment of proved properties | - | 91,034 | ||||||
Abandonment and impairment of unproved properties | 567 | 2,416 | ||||||
Impairment of materials inventory | - | 5,334 | ||||||
Adjusted Net Income (Loss), non-recurring items | ||||||||
& non-cash impairments (Non-GAAP) (3) | $ | 28,871 | $ | (448 | ) | |||
Adjusted Net Income (Loss) Per Share (Non-GAAP) | ||||||||
Basic | $ | 0.46 | $ | (0.01 | ) | |||
Diluted | $ | 0.45 | $ | (0.01 | ) | |||
Average Number of Shares Outstanding | ||||||||
Basic | 62,792 | 62,335 | ||||||
Diluted | 64,377 | 62,335 | ||||||
(1) Adjustments are shown net of tax using the effective income tax rate; calculated by dividing the income tax benefit | ||||||||
(expense) by income (loss) before income taxes as stated on the consolidated statement of operations. Effective income tax | ||||||||
rates for the three months ended March 31, 2010 and 2009, were 37.3% and 38.1% respectively. | ||||||||
(2) The loss related to hurricanes is included within line item other expense on the consolidated statements of operations. | ||||||||
(3) Adjusted net income excludes certain items that the Company believes affect the comparability of operating results. Items | ||||||||
excluded generally are one-time items or are items whose timing and/or amount cannot be reasonably estimated. These items | ||||||||
include non-cash charges and adjustments such as the change in the Net Profits Plan liability, unrealized derivative (gain) loss, | ||||||||
impairment of proved properties, abandonment and impairment of unproved properties, impairment of materials inventory, | ||||||||
(gain) loss on divestiture activity, and loss related to hurricanes. 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, profitability, 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. |
Operating Cash Flow | ||||||||
(In thousands) | ||||||||
Reconciliation of Net Cash Provided by Operating Activities | For the Three Months | |||||||
(GAAP) to Operating Cash Flow (Non-GAAP): | Ended March 31, | |||||||
2010 | 2009 | |||||||
Net cash provided by operating activities (GAAP) | $ | 153,892 | $ | 125,175 | ||||
Changes in current assets and liabilities | (32,650 | ) | (30,529 | ) | ||||
Exploration | 13,898 | 13,598 | ||||||
Less: Exploratory dry hole expense | (163 | ) | (94 | ) | ||||
Less: Stock-based compensation expense included in exploration | (1,754 | ) | (1,555 | ) | ||||
Operating cash flow (Non-GAAP) (4) | $ | 133,223 | $ | 106,595 | ||||
(4) Beginning in the third quarter of 2009 the Company changed its definition of operating cash flow. Prior periods have been | ||||||||
conformed to the current definition and the change in the definition did not result in a material variance to results under the prior | ||||||||
definiton. Operating cash flow is computed as net cash provided by operating activities adjusted for changes in current | ||||||||
assets and liabilities and exploration, less exploratory dry hole expense, and stock-based compensation expense included in | ||||||||
exploration. The non-GAAP measure of operating cash flow is presented because management believes that it provides | ||||||||
useful additional information to investors for analysis of St. Mary's ability to internally generate funds for exploration, | ||||||||
development, acquisitions, and to service debt. In addition, operating 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. Operating 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 operating 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 operating 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. |