Exhibit 99.1
For Further Information Contact
Robert E. Phaneuf
For Immediate Release Vice President - Corporate Development
Wednesday, August 9, 2000 (918) 592-0101
VINTAGE PETROLEUM REPORTS RECORD RESULTS FOR THE SECOND QUARTER; REVISES 2000
CAPITAL BUDGET AND TARGETS
Tulsa, Oklahoma - Vintage Petroleum, Inc. today announced record second
quarter 2000 income of $46.1 million, or $0.72 a share, excluding a previously
announced non-recurring after-tax charge, compared to income of $5.2 million, or
nine cents a share, in the same quarter last year. Cash flow from operations
(before working capital changes and the non-recurring charge) for the second
quarter of 2000 increased dramatically to a record $77.6 million, more than
double the $31.5 million in the year-ago quarter. A substantially higher
average price for both oil and gas and the record high oil and gas production
accounted for the majority of the increase in profitability and cash flow.
The previously announced non-recurring charge experienced in the quarter
just ended is a one-time after-tax charge to earnings of $16.3 million ($25
million pre-tax) or $0.25 per share. This charge resulted from an adverse
decision by the Argentine Supreme Court in an administrative dispute over the
appropriate rate of royalty due on certain of the company's Argentina oil
production. Including this non-recurring charge, the company reported net
income of $29.8 million, or $0.47 a share and cash flow (before changes in
working capital) of $61.3 million for the second quarter of 2000.
Oil and gas production for the quarter rose 25 percent to a record 7.0
million equivalent barrels (BOE) from 5.6 million BOE in last year's quarter.
Most of the increase is attributable to acquisitions made in Argentina, the U.S.
and Ecuador net of asset sales in 1999, an increase in the capital budget in the
first half of 2000 which resulted in increased production from exploitation and
exploration, an
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improvement in Bolivia market takes and the return of certain oil production
temporarily shut-in during the second quarter of last year. Oil production
during the second quarter of 2000 grew 25 percent to 4.8 million barrels,
principally from acquisitions and exploitation activity. Company production of
natural gas increased 26 percent to 13.2 billion cubic feet (Bcf) compared to
10.5 Bcf in last year's quarter principally as a result of acquisitions, an
increase in exploitation and exploration activity in the U.S. and improved
market takes in Bolivia.
Average prices for gas and especially oil were substantially higher than
prices received in the year-ago quarter. The average realized price of oil rose
70 percent to $24.37 per barrel ($25.75 per barrel before the impact of hedges).
The average realized price of gas increased 58 percent to $2.84 per Mcf compared
to $1.80 per Mcf in the same quarter last year.
The combined impact of higher oil and gas prices and increased oil and gas
production resulted in oil and gas sales rising to a level of $154.2 million,
more than doubling the level of sales in last year's quarter. Driven by the
increase in oil and gas sales, total revenues for the second quarter grew 72
percent to $159.2 million. Lease operating costs on a BOE basis rose 19 percent
to $5.37 per BOE compared to $4.53 per BOE in last year's second quarter. The
increases result primarily from greater production taxes associated with higher
oil and gas prices, higher direct costs in the U.S. associated with bringing on
higher cost oil production, and certain other maintenance and workover costs
deferred in 1999. General and administrative expense rose in line with
production and remained flat on a BOE basis with last year's level of $1.46.
The second quarter benefited from lower interest and exploration expenses.
Interest expense declined 18 percent to $11.9 million for the quarter as a
result of lower outstanding debt levels. Exploration expense dropped 53 percent
to $1.1 million, principally a function of lower seismic and geological and
geophysical expenses.
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Income for the quarter just ended increased nearly eight times to $46.1
million or $0.72 a share, before the impact of the non-recurring item, compared
to last year's quarter. Including the non-recurring charge, net income still
recorded a nearly five-fold increase to $29.8 million, or $0.47 a share,
compared to the second quarter 1999 income of $5.2 million, or nine cents per
share. Weighted average diluted shares outstanding of 63.9 million were 14
percent higher in the current quarter, primarily the result of the June 1999
public sale of 9.2 million common shares to partially fund the purchase of the
El Huemul acquisition in Argentina.
First Half 2000 Summary
For the six months, oil and gas sales more than doubled last year's first
half level, rising to $298.7 million. The higher sales were the product of a 22
percent increase in BOE of production and increases of 106 percent and 52
percent in average oil and gas prices, respectively. Mostly as a result of
higher production and prices, total revenues more than doubled to $326.5
million.
Income for the first half of the year before the impact of the non-
recurring charge rose to $88.8 million, or $1.40 per share, compared to the 1999
period's loss of $12.9 million, or $0.24 a share. Net income for the first half
of 2000 including the impact of the non-recurring charge was $72.5 million, or
$1.14 per share. There were 63.6 million weighted average diluted shares
outstanding in the first six months of 2000 compared to 53.6 million in the
prior year.
Cash flow from operations (before changes in working capital) for the first
half of 2000 before the impact of the non-recurring charge was $151.4 million,
more than four times the $35.8 million amount for the first six months of 1999.
Similarly, cash flow after the impact of the non-recurring charge was $135.1
million, more than three times the cash flow for the first half of last year.
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Update and Outlook
Excess Cash Flow Allows Continued Debt Reduction
"We are pleased that at the end of the second quarter of 2000, the
company's net debt-to-book capitalization ratio was reduced to 48 percent from
57 percent at year-end 1999 and 63 percent in last year's second quarter. The
company continues to generate more cash flow than is required to fund our
internal growth targets, allowing increased financial flexibility to fund future
acquisitions," said S. Craig George, CEO.
Excess cash flow and other working capital changes over second quarter
capital expenditures were applied to reduce debt to $479.2 million at the end of
the quarter. As a result, the unused availability under the company's bank
credit facility as of the end of the second quarter was increased to
approximately $435 million.
"We continue to focus on adding shareholder value through acquisitions with
our traditional vigor. Based on our outlook for the remainder of this year,
Vintage could make a $325 million acquisition without a concomitant equity
financing and still meet its target net debt-to-book capitalization of the low-
to-mid 50s percent ratio by year-end 2000. If the company is not successful in
making an acquisition this year, the net debt-to-book capitalization ratio could
decline to the low 40s percent range placing us in an outstanding financial
position to pursue even more sizable acquisitions next year," added Mr. George.
2000 Capital Budget Revised Upward on the Prospect of Continued Strength in Cash
Flow
As a result of management's growing confidence in the ability of the
company to generate excess cash flow in the second half of the year because of
its production base and continued strength in the oil and gas price environment,
the 2000 non-acquisition capital budget has been increased from
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$146 million to $172 million. Capital spending in the second half of the year
will be one and one-half times the $68.2 million spent in the first half. The
increase in spending is to be used to fund additional exploration projects in
the U.S and Yemen aimed at internally growing reserves and production and to
fund an increase in exploitation activity in Argentina and the U.S. The
increase is about evenly split between the U.S. and international projects with
nearly two-thirds of the increase being allocated to exploration projects. As a
result, most of the expected benefit to production from the budget increase is
likely to occur in 2001 and beyond.
Exploration Activity Update
Coincident with the increase in the 2000 capital budget, exploration
activity is targeted to grow in the second half of the year. Domestically the
Hematite #2, an exploratory well in the Cedar Point area of Galveston Bay,
Texas, is being completed in the Vicksburg formation. In the Mid-Continent
area, the Defender #1-24, a 3-D seismic based exploratory well, has been drilled
and is currently being completed in the Dornick Hills zone. Similarly, the
Pistol #1-6 and Kovo #1-25 exploratory wells targeting the deep Springer and
shallow Cisco formations, respectively, were spud earlier this week. In
addition, a deep Hunton exploration well is underway in the Mills Ranch area of
the Texas panhandle. If successful, each of these wells could generate
additional offset drilling locations.
Internationally, the company's second exploration well on Yemen's Block S-
1, the Harmel #1, has been drilled and a completion rig has been moved to the
site to begin testing. Testing is expected to be completed in September. The
third exploratory well, the Fordus #1, has been drilled and is expected to
commence testing following the testing of the Harmel #1.
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A decision was made to drill a fourth well, the An Naeem # 2, in an attempt
to confirm the existence of an oil rim downdip of the gas and condensate tested
in the Alif formation in the An Naeem # 1 well drilled earlier this year. The
drilling rig used to drill the Harmel #1 and the Fordus #1 wells has been moved
and has commenced drilling the An Naeem #2. Drilling and testing is anticipated
to be completed in October. The offset An Naeem #1 tested 40 MMcf per day of gas
and 1,020 barrels of condensate per day from the Alif formation.
Site preparation and construction is underway for an expected early
September spud date on the company's Rio Cotapino exploration prospect in Block
19 in the Oriente basin in Ecuador. The well is projected to be drilled to a
depth of 7,100 feet and targets the Hollin formation, from which much of the oil
in the Oriente basin is produced. Vintage owns a 100 percent working interest
in the well and the prospect. Drilling and testing of the well is expected to
be completed in early October.
In Bolivia, the NJL X-111 and the NJL X-118 exploratory wells are drilling,
each targeting the deep Devonian Huamampampa and Santa Rosa formations at a
projected target depth of approximately 20,000 feet. In addition, the NJL X-111
well is also targeted to test the lower Iquiri in a downdip position that has
the potential to extend the known productive limits of the Naranjillos field.
Both wells are anticipated to reach target depth late in the fourth quarter of
this year.
Growth Targets for 2000 Revised - Increases Cash Flow Target to $315 Million
Based upon the company's first half results and the revisions to the non-
acquisition capital budget, Vintage is also revising its operating and financial
targets for 2000. The company is targeting production of approximately 28.9
million BOE, as described in the accompanying table, slightly below the previous
target of 29.9 million BOE as a result of a slower rate of growth for Argentina
production. Lease operating and general and administrative expenses are
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expected to rise modestly on a BOE basis from previously targeted levels to
$5.04 per BOE and $1.33 per BOE, respectively, primarily attributable to a
slightly lower production level than previously targeted and, in the case of
LOE, higher severance taxes associated with higher expected oil and gas prices.
Based on the year-to-date average NYMEX price for oil and the outlook for
the remainder of 2000, Vintage has increased the assumed average NYMEX oil price
for the year 2000 to $28.50 per barrel. The assumed NYMEX gas price has been
increased to $3.50 per MMBtu. The company's average net realized oil price
expectation has been raised to 88 percent of the NYMEX price (before hedges)
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 to approximately $315
million, including the impact of the non-recurring charge.
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 operating and financial targets, estimates of
capital expenditures, future production, costs and cash flow, NYMEX reference
prices, company realized prices, exploration drilling, exploitation activities
and 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
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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 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. Company headquarters are in
Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange
under the symbol VPI.
-Table follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------- -----------------------------------
2000 1999 2000 1999
-------------- ----------------- ------------- ---------------
REVENUES:
Oil and gas sales $154,220 $73,828 $298,675 $127,322
Gas marketing 25,418 12,183 43,880 22,501
Oil and gas gathering and processing 4,276 1,870 7,694 3,450
Gain (loss) on disposition of assets (289) 4,364 (383) 4,366
Other income (expense) (24,403)(a) 316 (23,322)(a) 926
-------------- ----------------- ------------- ---------------
159,222 92,561 326,544 158,565
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COSTS AND EXPENSES:
Lease operating, including production taxes 37,522 25,258 72,522 49,105
Exploration costs 1,077 2,314 3,381 8,201
Gas marketing 24,400 11,596 41,927 21,390
Oil and gas gathering and processing 3,650 1,427 6,318 2,621
General and administrative 10,234 8,136 19,237 16,069
Depreciation, depletion and amortization 24,247 24,804 46,752 57,009
Interest 11,924 14,576 25,339 29,136
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113,054 88,111 215,476 183,531
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Income (loss) before income taxes 46,168 4,450 111,068 (24,966)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 10,542 19 26,468 47
Deferred 5,790 (752) 12,087 (12,075)
-------------- ----------------- ------------- ---------------
NET INCOME (LOSS) $ 29,836 $ 5,183 $ 72,513 $(12,938)
============== ================= ============= ===============
EARNINGS (LOSS) PER SHARE:
Basic $.48 $.10 $1.16 $(.24)
============== ================= ============= ===============
Diluted $.47 $.09 $1.14 $(.24)
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Weighted average common shares outstanding:
Basic 62,591 53,997 62,502 53,555
============== ================= ============= ===============
Diluted 63,932 55,857 63,568 53,555
============== ================= ============= ===============
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(a) Includes non-recurring charge of $25 million ($16.3 million after-tax).
-Table follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
SUMMARY BALANCE SHEET DATA
--------------------------
(In thousands)
(Unaudited)
June 30, December 31,
2000 1999
------------------ -----------------------
Total current assets $ 144,639 $ 154,491
Property, plant and equipment, net 988,754 971,352
Total assets 1,177,079 1,168,134
Total current liabilities 163,530 93,902
Long-term debt 479,173 625,318
Stockholders' equity 501,634 431,129
SUMMARY OPERATING DATA
----------------------
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- ----------------------------------
2000 1999 2000 1999
-------------- --------------- --------------- -------------
Production:
Oil (MBbls) -
U.S. 2,249 2,196 4,472 4,301
Argentina 2,274 1,492 4,492 3,043
Ecuador 244 125 549 243
Bolivia 25 17 44 30
Total 4,792 3,830 9,557 7,617
Gas (MMcf) -
U.S. 9,502 9,302 18,144 19,433
Argentina 2,205 304 3,688 374
Bolivia 1,459 845 2,585 1,528
Total 13,166 10,451 24,417 21,335
Total MBOE 6,987 5,571 13,627 11,173
Average price:
Oil (per Bbl) -
U.S. $ 22.33 (a) $ 14.33 (a) $ 23.32 (b) $ 12.24 (b)
Argentina 26.88 14.70 26.60 12.00
Ecuador 19.54 11.25 21.38 8.75
Bolivia 26.45 15.13 27.97 12.22
Total 24.37 (a) 14.37 (a) 24.77 (b) 12.03 (b)
Gas (per Mcf) -
U.S. $ 3.31 $ 1.94 $ 2.86 $ 1.77
Argentina 1.82 1.00 1.85 .99
Bolivia 1.38 .56 1.28 .54
Total 2.84 1.80 2.54 1.67
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/(a)/ The impact of oil hedges reduced the Company's U.S. and total average
oil prices per Bbl for the three months ended June 30, 2000, by $2.93
and $1.38, respectively. The impact of oil hedges increased the
Company's U.S. and total average oil prices for the three months ended
June 30, 1999, by $0.12 and $0.07, respectively.
/(b)/ The impact of oil hedges reduced the Company's U.S. and total average
oil prices per Bbl for the six months ended June 30, 2000, by $2.06 and
$0.96, respectively. The impact of oil hedges increased the Company's
U.S. and total average oil prices per Bbl for the six months ended June
30, 1999, by $0.06 and $0.04, respectively.
-Table follows-
Bolivia 1.38 .56 1.28 .54
Total 2.84 1.80 2.54 1.67
VINTAGE PETROLEUM, INC.
TARGETS FOR 2000
================================================================================
Revised
Oil production (MMBbls): 2000
Target
-----------
U.S. 9.3
Argentina 9.4
Other 1.4
Total 20.1
Gas production (Bcf):
U.S. 37.2
Argentina 7.8
Bolivia 7.8
Total 52.8
Total MMBOE 28.9
Net realized price as a percent
of NYMEX - Total Company:
(before impact of hedging)
Oil 88%
Gas 80%
DD&A per BOE (oil and gas only) $3.27
LOE per BOE $5.04
G&A per BOE $1.33
Non-Acquisition Capital Spending Budget ($ in millions) $ 172
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Cash Flow (before working capital changes): ($ in millions)
2000 Assumed NYMEX -$28.50 oil and $3.50 gas $ 315
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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 future acquisitions.
See "Growth Targets for 2000 Revised" and "Forward-Looking Statements" elsewhere
in the release.
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