CONTACT: Paul Korus FOR RELEASE AT 2:00 P.M. (MST)
(303) 295-3995 November 8, 2001
KEY REPORTS THIRD QUARTER EARNINGS OF $.35 PER SHARE
Gas production increases 17 percent
Denver - Key Production Company, Inc. (NYSE: KP) today announced third quarter
2001 net income of $5 million, or $0.35 per diluted share, on revenues of $21.3
million. For the same period a year ago, the company earned $8.5 million, or
$0.67 per share, on revenues of $27.4 million. Cash flow from operations in the
third quarter of 2001 totaled $17.3 million ($1.22 per share), compared with $22
million ($1.73 per share) for the same three months of 2000.
Net income for the first nine months of 2001 was $27.2 million, or $1.90 per
diluted share, versus earnings of $18 million, or $1.45 per share, in the
year-earlier period. Revenues for the first nine months of 2001 were $91
million, a 33-percent increase compared to $68.4 million during the same period
last year.
Aggregate production volumes during the third quarter of 2001 increased by 9
percent to 70.4 million cubic feet (MMcf) equivalent per day, comprised of 46.2
MMcf of gas per day and 4,040 barrels of oil per day. Compared with the same
three months of 2000, gas volumes grew 17 percent while oil output declined 5
percent.
"Even though our recent financial results were severely impacted by lower gas
and oil prices, we are very pleased that we were able to boost our gas
production by 17 percent," said Monroe W. Robertson, President and Chief
Operating Officer. "The increase was driven by positive drilling results in our
Mid-Continent region and the year-end 2000 merger with Columbus Energy."
The company's average gas price realization during the third quarter of 2001 was
$2.80 per thousand cubic feet (Mcf) versus $4.14 per Mcf during the same three
months of last year. Oil prices in the third quarter of 2001 averaged $24.37 per
barrel, down from $30.55 per barrel during the comparable period a year earlier.
Since Key has not implemented any hedging arrangements, reported gas and oil
prices fully reflect changes in market conditions. We remain un-hedged.
Capital expenditures totaled $15.6 million and $61 million for the third quarter
and first nine months of 2001, respectively. During the first nine months of
2000, capital expenditures amounted to $40.6 million. At September 30, 2001,
total debt was $35 million, down from $44 million at year-end 2000, and our debt
to total capitalization ratio was 17 percent.
PRODUCTION VOLUME OUTLOOK
The production and sale of oil and gas involves many complex processes that are
subject to numerous uncertainties, including reservoir risk, mechanical failure,
market conditions, transportation issues, human error, adverse weather
conditions, and other factors. Nonetheless, we currently assume that
fourth-quarter 2001 combined gas and oil volumes will roughly approximate third
quarter volumes. Projected growth in 2002 aggregate production will be dependent
on capital expenditures, which in turn will depend on rig rates and energy
prices. Management expects to complete its 2002 capital budget process early
next year and will provide updated volume guidance at that time.
CONFERENCE CALL
Management will conduct a conference call to further review third quarter
results and other operational matters on Friday, November 9 at 10:00 am Mountain
Time. Interested parties in the U.S. and Canada may access the call by dialing
(800) 881-5262 and requesting the Key Production Company, Inc. teleconference. A
digital recording will be available through November 16, 2001. To access the
replay, call (800) 642-1687 and provide reservation number 2207765.
Key is a Denver-based independent natural gas and crude oil exploration and
production company with operations focused in western Oklahoma, the Gulf Coast,
California and the Rocky Mountain region.
Financial statements and other information follow:
KEY PRODUCTION COMPANY, INC.
SUMMARY FINANCIAL INFORMATION
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
----------- ----------- ----------- -----------
SUMMARY OF OPERATIONS
(In thousands, except per share data)
Revenues:
Gas sales $ 11,913 $ 15,005 $ 60,384 $ 34,749
Oil sales 9,055 11,925 29,547 32,211
Plant product sales 335 356 972 1,194
Other 28 68 85 277
----------- ----------- ----------- ----------
21,331 27,354 90,988 68,431
----------- ----------- ----------- ----------
Operating expenses:
Depreciation, depletion
and amortization 6,012 8,917 25,442 25,181
Lease operating 4,613 2,480 12,806 8,035
Production taxes 1,394 1,102 5,725 2,505
General and administrative 1,124 758 2,822 2,179
Financing costs:
Interest expense 438 1,099 1,631 3,338
Capitalized interest (282) (459) (939) (1,194)
Interest income (34) (53) (154) (134)
----------- ----------- ----------- ----------
13,265 13,844 47,333 39,910
----------- ----------- ----------- ----------
Income before income taxes 8,066 13,510 43,655 28,521
Provision for income taxes 3,106 4,999 16,458 10,553
----------- ----------- ----------- ----------
Net income $ 4,960 $ 8,511 $ 27,197 $ 17,968
=========== =========== =========== ==========
Basic earnings per share $ 0.35 $ .69 $ 1.95 $ 1.51
=========== =========== =========== ==========
Diluted earnings per share $ 0.35 $ .67 $1.90 $ 1.45
=========== =========== ===== ==========
Weighted average basic
shares 13,978 12,302 13,972 11,934
=========== =========== =========== ===========
Weighted average diluted
shares 14,159 12,725 14,320 12,384
=========== =========== =========== ==========
KEY PRODUCTION COMPANY, INC.
SUMMARY FINANCIAL INFORMATION
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
----------- ----------- ----------- -----------
PRODUCTION AND PRICING DATA
Natural gas production:
Million cubic feet 4,248 3,624 12,099 10,414
Average daily volumes, million
cubic feet per day 46.2 39.4 44.3 38.0
Average price per thousand
cubic feet $ 2.80 $ 4.14 $ 4.99 $ 3.34
Oil production:
Barrels 371,700 390,300 1,147,800 1,136,500
Average daily volumes, barrels
per day 4,040 4,242 4,204 4,148
Average price per barrel $ 24.37 $ 30.55 $ 25.74 $ 28.34
NET CASH PROVIDED BY OPERATING ACTIVITIES
(In thousands)
Net income $ 4,960 $ 8,511 $ 27,197 $ 17,968
Depreciation, depletion
amortization 6,012 8,917 25,442 25,181
Deferred taxes and other 6,365 4,540 13,550 9,554
----------- ----------- ------------- --------------
17,337 21,968 66,189 52,703
Changes in operating assets and
liabilities (440) 746 (619) (4,191)
----------- ----------- ------------- --------------
Net cash provided by operating
activities $ 16,897 $ 22,714 $ 65,570 $ 48,512
=========== =========== ============= ==============
CAPITALIZED COSTS INCURRED
(In thousands)
Exploration and development $ 15,268 $ 16,507 $ 60,468 $ 40,493
Acquisitions 355 - 527 121
Property sales (68) (138) (69) (265)
BALANCE SHEET DATA September 30, December 31,
(In thousands) 2001 2000
------------------- ------------------
Total debt $ 35,000 $ 44,000
Stockholders' equity $ 166,023 $ 138,087
Common shares outstanding 13,978 13,921
This news release may contain projections and other forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Any such projections or statements reflect the Company's current views
with respect to future events and financial performance. No assurances can be
given, however, that these events will occur or that such projections will be
achieved and actual results could differ materially from those projected. A
discussion of important factors that could cause actual results to differ
materially from those projected is included in the Company's periodic reports
filed with the Securities and Exchange Commission.
-end-