Exhibit 99.2
For Immediate Release For Further Information Contact:
Monday, February 21, 2000 Robert E. Phaneuf
Vice President - Corporate Development
(918) 592-0101
VINTAGE PETROLEUM REPORTS 1999 RESULTS;
REVISES YEAR 2000 TARGETS
Tulsa, Oklahoma - Vintage Petroleum, Inc. today announced earnings for
the year ended December 31, 1999 of $73.4 million, or $1.24 per share, inclusive
of after-tax gains totaling $33.6 million, or $0.57 per share, attributable to
oil and gas property divestitures. This compares to the prior year's loss of
$87.7 million, or $1.69 per share. The 1998 results included $51.4 million of
certain after-tax, non-cash charges related primarily to low year-end oil and
gas prices which resulted in property impairments. Excluding such 1998 charges
and the 1999 after-tax gains on asset sales, Vintage had earnings of $39.8
million, or $0.67 per share, in 1999 compared to a loss of $36.3 million, or
$0.70 per share, in 1998. The substantial increase in earnings for 1999
resulted from a significantly higher price for oil and a rise in production.
Total production for the year reached an all-time high of 24.9 million
equivalent barrels (BOE), up from 24.3 million BOE in 1998. Spurred by the mid-
year acquisition of the El Huemul concession in Argentina and a full year of
production from acquisitions in late 1998, oil production rose three percent to
16.9 million barrels and gas production was up two percent to 48.4 billion cubic
feet (Bcf).
The three percent rise in total production together with a much higher
average price of oil combined to increase oil and gas revenues by 39 percent to
$370.7 million compared to $265.9 million in the prior year. The company's
realized price of oil averaged $16.62 per barrel, 53 percent above last year's
average realized price of $10.87 per barrel. The realized price of gas for 1999
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averaged $1.87 per thousand cubic feet (Mcf), roughly equivalent to 1998's $1.85
per Mcf.
Proceeds from sales of oil and gas properties in 1999 totaled $87.9
million, resulting in net pre-tax gains aggregating to $55.0 million. Driven
primarily by higher oil and gas sales and gains on asset dispositions, total
revenues rose 51 percent for the year to $496.7 million.
Total lease operating costs declined six percent despite a three percent
rise in production. Lease operating costs on a BOE basis were reduced eight
percent to $4.63 per BOE compared to $5.05 last year, primarily as a result of:
management's efforts to reduce costs, restructuring certain field operations,
the shutting in of certain high cost U.S. production early in 1999 and
increasing production in lower operating cost Argentina. General and
administrative costs on a BOE basis rose 11 percent to $1.46 per BOE due to the
accrual of estimated 1999 bonuses. The company recently implemented a bonus
program covering all U.S. employees designed to provide additional incentive to
achieve certain corporate goals. Combined lease operating costs and general and
administrative costs on a BOE basis were four percent lower than last year.
Exploration expense of $14.7 million for 1999 included $7.1 million of
seismic and other geological and geophysical costs and $7.6 million of dry hole
and other costs. This compares to 1998's exploration expense of $24.1 million
which included higher seismic, geological and geophysical costs. Interest
expense rose $15.0 million to $58.7 million in response to higher outstanding
borrowings utilized to fund acquisitions in late 1998 and the excess of capital
spending over cash flow in 1998.
The 14 percent increase in diluted shares outstanding is due primarily to
the impact of the June 1999 equity offering, shares issued and contingent shares
which may become issuable to acquire certain oil and gas properties in November
1998 and the dilutive effect of stock options. Weighted average diluted shares
outstanding in 1999 were 59.3 million compared to 51.9 million in 1998.
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Cash flow (before changes in working capital) for the year was $162.5
million, up 112 percent compared to 1998 cash flow of $76.8 million.
Fourth Quarter Results
The fourth quarter 1999 improvement over last year's fourth quarter was
even more pronounced than the year-to-year comparison. A dramatically higher
average price of oil and a substantial rise in the price of gas combined to
accentuate the 11 percent increase in total BOE of production causing oil and
gas revenues to grow 119 percent to $129.8 million. Fourth quarter daily
production averaged 73,946 BOE compared to the year-ago quarter of 66,685 BOE.
Lease operating and general and administrative expenses before the impact
of estimated 1999 bonuses, all of which were accrued during the fourth quarter,
rose in line with production. Interest expense rose primarily as a result of a
higher average interest rate on the company's total debt during the quarter.
Net income for the quarter just ended was $59.0 million, or $0.92 a share,
inclusive of $28.9 million, or $0.45 a share, in after-tax gains from the sale
of certain oil and gas properties. This compares to the fourth quarter 1998
net loss of $66.7 million, or $1.27 per share, which included $51.4 million of
after-tax, non-cash charges. Absent these items, the fourth quarter 1998 loss
was $15.3 million, or $0.29 per share. The 22 percent increase in diluted
shares outstanding is due primarily to the impact of the June 1999 equity
offering, shares issued and contingent shares which may become issuable to
acquire certain oil and gas properties in November 1998 and the dilutive effect
of stock options. Weighted average diluted shares outstanding were 64.0 million
compared to 52.6 million in the fourth quarter of 1998.
Cash flow (before changes in working capital) in the fourth quarter of 1999
was $68.8 million compared to cash flow of $11.9 million in the year-earlier
quarter.
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Vintage Revises 2000 Capital Budget
During 1999, oil and gas capital spending of $237.5 million was composed of
$166.8 million for acquisitions and $70.7 million for exploitation and
exploration activities. During the year, the company acquired 94.1 million BOE
of reserves at a low average cost of $1.77 per BOE. Total reserve additions
from all sources, including the impact of higher oil and gas prices, were 201.1
million BOE at a cost of $1.18 per BOE.
For the year 2000, Vintage has revised its preliminary non-acquisition
capital spending plan from $135 million to $146 million. The increase is
attributable primarily to slippage in the timing associated with some late 1999
projects which resulted in 1999 spending falling short of the $83 million
previously budgeted. Approximately $79 million, or 54 percent, of the year 2000
budget is earmarked for lower-risk exploitation activities that use the
company's large inventory of projects aimed at replacing and growing production.
Exploitation expenditures are divided about equally between domestic and
international projects. U.S. activity will be concentrated in the Gulf Coast
with international activity focused in Argentina, particularly in the recently
acquired El Huemul concession.
Approximately $67 million will be directed primarily toward high-impact
exploration projects, particularly in Bolivia, Yemen and Ecuador. In Bolivia,
the company recently initiated the drilling of an exploratory well to test the
deep and potentially prolific Huamampampa formation with target depth expected
to be reached in the second quarter. Vintage has also begun a three consecutive
well program initiating the testing of several exploratory concepts on the
company's 1.1 million acre S-1 Damis Block in Yemen. The first well, An Naeem,
is expected to spud this week and is an offset to the Halewah field. The company
plans to drill an exploratory well on its Cotapino prospect in Block 19 in
Ecuador during the third quarter.
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Growth Targets for 2000 Revised
Based upon the company's revised non-acquisition capital budget of $146.0
million, the company is targeting a 20 percent increase in production to 29.9
million BOE, as described in the accompanying table. As a result of the
substantial increase in year-end 1999 reserve volumes, the anticipated DD&A rate
is expected to decline to $3.30 per BOE from the previous target of $3.40 per
BOE. Lease operating and general and administrative expenses are expected to
rise modestly from previously targeted levels to $4.70 per BOE and $1.25 per
BOE, respectively, primarily attributable to a slightly lower production level
than previously targeted. The lease operating and general and administrative
expense targets are before the impact, if any, of year 2000 bonuses. Estimated
bonuses added approximately $0.12 per BOE to general and administrative expenses
during 1999.
The company has entered into hedging arrangements through swaps on a
portion of its oil production. To date, Vintage has hedged approximately five
million barrels, or 23.5 percent of its targeted 2000 oil production, at an
average NYMEX price of $24.19 per barrel. The company continues to review the
oil and gas markets to determine whether additional hedging is likely to make a
positive contribution toward the achievement of its corporate goals.
Based on the year-to-date average NYMEX price for oil, the hedges in place
and the outlook for the remainder of 2000, Vintage has increased the assumed
average NYMEX oil price for the year 2000 to between $23.00 and $25.00 per
barrel. The assumed NYMEX gas price has remained unchanged at $2.50 per MMbtu.
The company's average net realized oil price expectation has been raised to 86
percent of the NYMEX price, based on recent experience and the higher average
NYMEX oil prices assumed for 2000. Given the revised expectations for the
capital budget, production, assumed prices and costs enumerated in the
accompanying table, as well as other expectations, Vintage has raised its target
for cash flow and cash flow per share to between $255
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million and $277 million, or between $3.95 and $4.30 per share, assuming 64.5
million shares outstanding for the year. This range of targeted cash flow
substantially exceeds budgeted capital expenditures for 2000, providing the
company between $103 million and $131 million to be used to further reduce debt
or fund acquisitions.
Strengthened Balance Sheet
During 1999, the company generated $162.5 million in cash flow and raised
additional capital of $171.3 million from asset sales and a common stock
offering, for a total of $333.8 million. The excess of capital generated over
the $237.5 million of oil and gas capital expenditures allowed net debt to be
reduced significantly. The company's net debt (long-term debt less cash) at
year-end 1999 was $582.6 million compared to $667.3 million at last year-end.
As a result of this decline and a substantial contribution to equity from
earnings, Vintage's net debt-to-book capitalization ratio declined to 57 percent
at year-end 1999 as compared to 71 percent at the prior year end. To further
strengthen the balance sheet, the company plans to continue its program of non-
strategic asset sales, targeting proceeds totaling $30 to $55 million by the end
of this year.
"We made significant progress in reducing leverage in 1999 and remain
committed to reducing the debt-to-book capitalization ratio to our target of the
low-to-mid 50's percent by year-end 2000," said S. Craig George, CEO. "Further,
our borrowing availability under the bank revolving credit facility is in excess
of $310 million and we have over $40 million in cash on the balance sheet at
year-end 1999. We are in an excellent position to meet our internally generated
growth targets and are prepared to capitalize on acquisition opportunities while
maintaining our financial discipline. Given our outlook for the year 2000, a
$200 to $250 million acquisition may be within our reach without the need to
return to the equity market in order to maintain our balance sheet targets," Mr.
George concluded.
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Forward-Looking Statements
This release includes certain statements that may be deemed to be "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements in this release, other than statements of
historical facts, that address future production and costs, reserve potential,
exploitation and exploration activities, capital budget, NYMEX reference prices,
company realized prices, financial targets and sales of properties and other
future events or developments that the company expects are forward-looking
statements. Although Vintage believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions, such statements
are not guarantees of future performance and actual results or developments may
differ materially from those in the forward-looking statements. Factors that
could cause actual results to differ materially from those in forward-looking
statements include oil and gas prices, exploitation and exploration successes,
continued availability of capital and financing, and general economic, market or
business conditions.
Vintage Petroleum, Inc. is an independent energy company engaged in the
acquisition, exploitation, exploration and development of oil and gas properties
and the marketing of natural gas and crude oil. The company is headquartered in
Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange
under the symbol VPI.
-Table follows-
VINTAGE PETROLEUM, INC.
----------------------
TARGETS FOR 2000
----------------
2000
Target
------
Oil production (MMBbls):
U.S. 9.3
Argentina 10.2
Other 1.6
Total 21.1
Gas production (Bcf):
U.S. 37.2
Argentina 7.9
Bolivia 7.4
Total 52.5
Total MMBOE 29.9
Net realized price as a percent
of NYMEX - Total Company:
Oil 86%
Gas 78%
DD&A per BOE $3.30
LOE per BOE $4.70
G&A per BOE $1.25
Non-Acquisition Capital Spending Budget $ 146 million
- -------------------------------------------------------------------------------
Cash Flow (before working capital changes):
Assumed NYMEX - $23.00 oil and $2.50 gas $ 255 million
Assumed NYMEX - $25.00 oil and $2.50 gas $ 277 million
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NYMEX :
Oil - Average of the daily settlement price for the near-month contract for
light crude oil as quoted on the New York Mercantile Exchange.
Gas - Average of the settlement price per MMBtu for the last 3 trading days
for the applicable contract month for natural gas as quoted on the New York
Mercantile Exchange.
Targets do not reflect any year 2000 acquisitions or planned oil and gas
property dispositions.
See "Growth Targets for 2000 Revised" and "Forward-Looking Statements" elsewhere
in this release.
-Table follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---------------------------------- --------------------------------
1999 1998 1999 1998
---------------- -------------- -------------- --------------
REVENUES:
Oil and gas sales $129,829 $ 59,279 $370,731 $ 265,863
Gas marketing 21,370 14,444 60,275 54,108
Oil and gas gathering 1,771 930 6,955 7,741
Gain on disposition of assets 47,319 - 54,991 -
Other income 1,452 71 3,783 1,223
---------------- -------------- -------------- --------------
201,741 74,724 496,735 328,935
---------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Lease operating, including production taxes 34,480 31,033 115,471 122,726
Exploration costs 5,151 5,117 14,674 24,056
Impairment of oil and gas properties 3,306 70,913 3,306 70,913
Gas marketing 20,455 13,859 57,550 51,560
Oil and gas gathering 1,221 407 5,153 6,258
General and administrative 11,927 8,074 36,409 31,996
Depreciation, depletion and amortization 24,567 28,692 107,807 108,975
Interest 14,344 12,885 58,665 43,680
---------------- -------------- -------------- --------------
115,451 170,980 399,035 460,164
---------------- -------------- -------------- --------------
Income (loss) before income taxes 86,290 (96,256) 97,700 (131,229)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 3,158 (3,481) 5,954 (4,068)
Deferred 24,101 (26,125) 18,375 (39,496)
---------------- -------------- -------------- --------------
NET INCOME (LOSS) $ 59,031 $(66,650) $ 73,371 $ (87,665)
================ ============== ============== ==============
EARNINGS (LOSS) PER SHARE:
Basic $.95 $(1.27) $1.27 $(1.69)
================ ============== ============== ==============
Diluted $.92 $(1.27) $1.24 $(1.69)
================ ============== ============== ==============
Weighted average common shares outstanding:
Basic 62,394 52,600 57,989 51,900
================ ============== ============== ==============
Diluted 64,004 52,600 59,315 51,900
================ ============== ============== ==============
-Table follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands, except shares
and per share amounts)
(Unaudited)
A S S E T S
December 31,
-------------------------------------
1999 1998
-------------- ---------------
CURRENT ASSETS:
Cash and cash equivalents $ 42,687 $ 5,245
Accounts receivable -
Oil and gas sales 87,484 54,680
Joint operations 5,211 5,905
Prepaids and other current assets 19,109 18,312
-------------- ---------------
Total current assets 154,491 84,142
-------------- ---------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties 1,521,672 1,368,914
Oil and gas gathering systems 15,453 14,774
Other 17,287 16,276
-------------- ---------------
1,554,412 1,399,964
Less accumulated depreciation, depletion and amortization 583,060 501,722
-------------- ---------------
971,352 898,242
-------------- ---------------
OTHER ASSETS, net 42,291 31,791
-------------- ---------------
$1,168,134 $1,014,175
============== ===============
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Revenue payable $ 25,899 $ 17,382
Accounts payable - trade 26,118 24,812
Other payables and accrued liabilities 41,885 24,731
-------------- ---------------
Total current liabilities 93,902 66,925
-------------- ---------------
LONG-TERM DEBT 625,318 672,507
-------------- ---------------
DEFERRED INCOME TAXES 15,780 -
-------------- ---------------
OTHER LONG-TERM LIABILITIES 2,005 785
-------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized,
zero shares issued and outstanding - -
Common stock, $.005 par, 80,000,000 shares authorized,
62,407,866 and 53,107,066 shares issued and outstanding 312 266
Capital in excess of par value 314,490 230,736
Retained earnings 116,327 42,956
-------------- ---------------
431,129 273,958
-------------- ---------------
$1,168,134 $1,014,175
============== ===============
-Table follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
SUMMARY OPERATING DATA
----------------------
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---------------------------------- --------------------------------
1999 1998 1999 1998
-------------- --------------- -------------- -------------
Production:
Oil (MBbls) -
U.S. 2,159 2,403 8,643 9,912
Argentina 2,229 1,685 7,560 6,322
Ecuador 216 78 597 78
Bolivia 19 23 77 122
Total 4,623 4,189 16,877 16,434
Gas (MMcf) -
U.S. 10,140 10,646 39,150 42,176
Argentina 1,761 - 4,682 -
Bolivia 1,177 1,026 4,522 5,062
Total 13,078 11,672 48,354 47,238
Total MBOE 6,803 6,135 24,936 24,307
Average price:
Oil (per Bbl) -
U.S. $ 21.66 $ 9.83 $ 15.92 (a) $ 11.20
Argentina 22.65 8.29 17.48 10.41
Ecuador 24.34 5.77 15.67 5.77
Bolivia 24.67 10.57 17.03 11.31
Total 22.28 9.14 16.62 (a) 10.87
Gas (per Mcf) -
U.S. $ 2.30 $ 1.91 $ 2.06 $ 1.97
Argentina 1.38 - 1.34 -
Bolivia .94 .64 .71 .78
Total 2.05 1.80 1.87 1.85
(a) Includes the impact of hedging activities.
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