| For Information Mark A. Hellerstein Robert T. Hanley 303-861-8140 |
ST. MARY REPORTS EARNINGS FOR SECOND QUARTER 2003
DENVER, August 6, 2003—St. Mary Land & Exploration Company (NYSE: SM) today announced its earnings for second quarter 2003 of $24.3 million or 71 cents per diluted share. Second quarter 2002 earnings were $10.6 million or 37 cents per diluted share. Revenues for the second quarter of 2003 were $103.8 million compared to $52.4 million for the second quarter of 2002. Second quarter discretionary cash flow, which is computed as net income plus depreciation, depletion, amortization, impairments, deferred taxes, exploration expense and non-cash mark-to-market adjustments related to compensation plans, less the cumulative effect of change in accounting principle and unrealized derivative gain, increased to $60.4 million in the second quarter of 2003 from $30.5 million in the second quarter of 2002. Net cash provided by operating activities increased from $34.3 million in the second quarter of 2002 to $48.5 million in the second quarter of 2003. See the attached financial highlights for a reconciliation of discretionary cash flow to net cash provided by operating activities, a presentation of other cash flow information, and a statement indicating why management believes that presentation of the non-GAAP measure of discretionary cash flow provides useful information to investors.
Earnings for the first six months of 2003 were $57.1 million or $1.67 per diluted share, compared to $12.9 million or 46 cents per diluted share for the first six months of 2002. Revenues for the first six months of 2003 were $204.9 million compared to $94.8 million for the same period in 2002. Discretionary cash flow for the first six months of 2003 increased from $54.8 million in the first six months of 2002 to $117.2 million. Net cash provided by operating activities increased from $76.1 million in the first six months of 2002 to $90.8 million in the first six months of 2003.
Daily oil and gas production during the second quarter 2003 averaged 226.3 million cubic feet of gas equivalent (MMCFE), up 51% from 150.1 MMCFE in the comparable 2002 period. Average prices realized during the quarter were $4.82 per MCF and $26.20 per barrel, compared to $3.03 per MCF and $25.39 per barrel realized in the second quarter of 2002.
Mark Hellerstein, Chairman, President and CEO commented, "With production up over 50% from the second quarter of 2002 and higher commodity prices, we enjoyed the second most profitable quarter in our history, exceeded only by the first quarter of 2003. The increase in production is the result of the two largest acquisitions in St. Mary's history that closed in December 2002 and January 2003, plus the exceptional drilling results we are experiencing in N.E. Mayfield in our Mid-Continent region. Margins have remained strong as we have not experienced significant cost increases."
The Company's forecasts for the third quarter and the full year 2003 are as follows:
| | 3rd Quarter | Year | ||||
|---|---|---|---|---|---|---|
| Oil and gas production | 19.7-20.7 BCFE | 75-80 BCFE | ||||
| Lease operating expenses, including production taxes and transportation | $ | 1.15-$1.25/MCFE | $ | 1.15-$1.20/MCFE | ||
| General & administrative expense | $ | 0.24-$0.28/MCFE | $ | 0.26-$0.30/MCFE | ||
| Depreciation, depletion & amort. | $ | 1.10-$1.20/MCFE | $ | 1.10-$1.20/MCFE | ||
Operational updates for the second quarter 2003 were provided in the Company's July 11, 2003 and July 28, 2003 press releases.
As previously announced, St. Mary has scheduled a teleconference call for August 7, 2003 at 8:00 am (MDT) to discuss second quarter results. 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 until August 17 at 800-642-1687, conference number 1613788. 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 1613788. In addition the call will be broadcast live online and can be accessed by going directly to St. Mary's web site home page atwww.stmaryland.com. An audio recording of the conference call will be available at that site through August 17.
This release contains forward looking statements within the meaning of securities laws, including forecasts and projections for future periods. The words "will," "believe," "anticipate," "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, unexpected drilling conditions and results, production rates and reserve replacement, reserve estimates, drilling and operating service availability and uncertainties in cash flow, the financial strength of hedge contract counterparties, the availability of attractive exploration and development and property acquisition opportunities and any necessary financing, expected acquisition benefits, competition, litigation, environmental matters, the potential impact of government regulations, and other such matters discussed in the "Risk Factors" section of St. Mary's 2002 Annual Report on Form 10-K filed with the SEC. 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.
PR-03-13
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Financial Highlights Follow
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
June 30, 2003
(Unaudited)
PRODUCTION DATA
| | Three Months Ended June 30, | | Six Months Ended June 30, | | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | % Change | % Change | |||||||||||||||||
| | 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| Average realized price: | |||||||||||||||||||
| Oil (per Bbl) | $ | 26.20 | $ | 25.39 | 3 | % | $ | 27.32 | $ | 24.35 | 12 | % | |||||||
| Gas (per Mcf) | $ | 4.82 | $ | 3.03 | 59 | % | $ | 5.20 | $ | 2.80 | 86 | % | |||||||
| Margin analysis per MCFE: | |||||||||||||||||||
| Net realized price | $ | 4.67 | $ | 3.38 | 38 | % | $ | 4.98 | $ | 3.18 | 56 | % | |||||||
| Oil and gas production costs | $ | 1.13 | $ | 0.84 | 34 | % | $ | 1.15 | $ | 0.93 | 24 | % | |||||||
| General and administrative costs | $ | 0.29 | $ | 0.22 | 32 | % | $ | 0.32 | $ | 0.22 | 41 | % | |||||||
| Operating margin | $ | 3.25 | $ | 2.32 | 40 | % | $ | 3.51 | $ | 2.03 | 73 | % | |||||||
| Depletion, depreciation & amortization | $ | 1.05 | $ | 0.97 | 8 | % | $ | 1.05 | $ | 0.96 | 9 | % | |||||||
| Production (in thousands): | |||||||||||||||||||
| Oil (Bbls) | 1,164 | 673 | 73 | % | 2,205 | 1,378 | 60 | % | |||||||||||
| Gas (Mcf) | 13,614 | 9,618 | 42 | % | 25,318 | 19,173 | 32 | % | |||||||||||
| MCFE (6:1) | 20,595 | 13,655 | 51 | % | 38,546 | 27,440 | 40 | % | |||||||||||
INCOME STATEMENT
(In thousands, except per share amounts)
| | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | 2003 | 2002 | ||||||||||
| Revenues: | ||||||||||||||
| Oil and gas production | $ | 96,134 | $ | 46,197 | $ | 191,822 | $ | 87,290 | ||||||
| Gas marketing revenue | 3,333 | 2,939 | 7,108 | 3,444 | ||||||||||
| Gain on sale of proved properties | 86 | 449 | 122 | 413 | ||||||||||
| Derivative gain | — | 2,327 | 33 | 1,975 | ||||||||||
| Other | 4,233 | 443 | 5,823 | 1,654 | ||||||||||
| 103,786 | 52,355 | 204,908 | 94,776 | |||||||||||
| Operating Expenses: | ||||||||||||||
| Oil and gas production costs | 23,260 | 11,531 | 44,390 | 25,561 | ||||||||||
| Depletion, depreciation & amortization and abandonment liability accretion | 21,601 | 13,279 | 40,486 | 26,333 | ||||||||||
| Exploration | 6,635 | 4,297 | 10,785 | 11,213 | ||||||||||
| Impairment and abandonment | 784 | 622 | 1,703 | 1,319 | ||||||||||
| General and administrative | 6,018 | 3,015 | 12,164 | 6,156 | ||||||||||
| Gas marketing expenses | 3,098 | 2,662 | 6,457 | 3,086 | ||||||||||
| Minority interest and other | 381 | 243 | 495 | 620 | ||||||||||
| 61,777 | 35,649 | 116,480 | 74,288 | |||||||||||
| Income from operations | 42,009 | 16,706 | 88,428 | 20,488 | ||||||||||
| Interest income | 344 | 170 | 574 | 280 | ||||||||||
| Interest expense | (2,367 | ) | (1,018 | ) | (4,583 | ) | (1,470 | ) | ||||||
| Income before income tax expense | 39,986 | 15,858 | 84,419 | 19,298 | ||||||||||
| Income tax expense—current | 10,536 | 1,205 | 21,854 | 1,402 | ||||||||||
| Income tax expense—deferred | 5,133 | 4,064 | 10,886 | 4,989 | ||||||||||
| Income from continuing operations | 24,317 | 10,589 | 51,679 | 12,907 | ||||||||||
| Cumulative effect of change in accounting principle | — | — | 5,435 | — | ||||||||||
| Net income | $ | 24,317 | $ | 10,589 | $ | 57,114 | $ | 12,907 | ||||||
| Basic weighted average shares outstanding | 31,482 | 27,825 | 30,921 | 27,805 | ||||||||||
| Diluted weighted average shares outstanding | 35,798 | 28,428 | 35,222 | 28,347 | ||||||||||
| Basic earnings per common share: | ||||||||||||||
| Income from operations | $ | 0.77 | $ | 0.38 | $ | 1.67 | $ | 0.46 | ||||||
| Cumulative effect of change in accounting principle | — | — | 0.18 | — | ||||||||||
| Basic net income per common share | $ | 0.77 | $ | 0.38 | $ | 1.85 | $ | 0.46 | ||||||
| Diluted earnings per common share: | ||||||||||||||
| Income from operations | $ | 0.71 | $ | 0.37 | $ | 1.52 | $ | 0.46 | ||||||
| Cumulative effect of change in accounting principle | — | — | 0.15 | — | ||||||||||
| Diluted net income per common share | $ | 0.71 | $ | 0.37 | $ | 1.67 | $ | 0.46 | ||||||
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
June 30, 2003
(Unaudited)
BALANCE SHEET
(In thousands)
| | Jun 30, 2003 | Dec 31, 2002 | ||||
|---|---|---|---|---|---|---|
| Working Capital | $ | 1,966 | $ | 2,050 | ||
| Long-term debt | $ | 143,649 | $ | 113,601 | ||
| Stockholders' equity | $ | 348,188 | $ | 299,513 | ||
Shares outstanding—permanent equity | 28,144 | 27,973 | ||||
| Shares outstanding—temporary equity | 3,381 | — | ||||
| Note receivable from Flying J (contra-equity) | $ | 71,594 | $ | — | ||
PROVEN RESERVES
(In thousands)
| | Dec 31, 2002 | Pro Forma * Dec 31, 2002 | ||
|---|---|---|---|---|
| Oil (Bbls) | 36,119 | 44,411 | ||
| Gas (Mcf) | 274,172 | 293,219 | ||
| MCFE (6:1) | 490,887 | 559,685 | ||
CASH FLOW
(In thousands)
Reconciliation of Discretionary Cash Flow to Net Cash
Provided by Operating Activities:
| | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | 2003 | 2002 | |||||||||
| Discretionary Cash Flow (1) | $ | 60,350 | $ | 30,524 | $ | 117,203 | $ | 54,786 | |||||
| Gain on property sales | (86 | ) | (449 | ) | (122 | ) | (413 | ) | |||||
| Non-exploratory dry hole exploration expense | (5,938 | ) | (2,342 | ) | (9,643 | ) | (5,080 | ) | |||||
| Minority interest & other | (1,071 | ) | 243 | (818 | ) | (548 | ) | ||||||
| Changes in working capital | (4,745 | ) | 5,466 | (15,856 | ) | 27,325 | |||||||
| Net Cash Provided by Operating Activities | $ | 48,510 | $ | 34,278 | $ | 90,764 | $ | 76,070 | |||||
| Net Cash Used in Investing Activities | $ | (26,565 | ) | $ | (28,574 | ) | $ | (120,618 | ) | $ | (64,476 | ) | |
| Net Cash Provided by (Used in) Financing Activities | $ | (28,389 | ) | $ | (21,039 | ) | $ | 29,547 | $ | 32,146 | |||
