Exhibit 99.2
For Immediate Release For Further Information Contact
Thursday, May 3, 2001 Robert E. Phaneuf
Vice President - Corporate Development
(918) 592-0101
VINTAGE PETROLEUM, INC. REPORTS 83 PERCENT INCREASE
IN FIRST QUARTER NET INCOME
Tulsa, Oklahoma - Vintage Petroleum, Inc. today announced 2001 first
quarter net income of $70.7 million, or $1.10 per share. This compares to net
income of $38.3 million, or $0.60 per share, in the same quarter last year which
has been restated to include the SEC mandated change in inventory policy. A
significantly improved price for gas and a 15 percent increase in oil and gas
production from the first quarter of 2000 resulted in a 48 percent increase in
oil and gas revenues over the year-ago quarter.
Oil and gas production for the quarter rose 15 percent to 7.3 million
equivalent barrels (BOE) from 6.4 million BOE in last year's period. Oil
production during the first quarter of 2001 grew 13 percent over the same
quarter last year to 5.1 million barrels and natural gas posted an 18 percent
increase to 13.3 Bcf over the same period. Most of the increase in total
production is attributable to acquisitions made in Canada and Argentina
subsequent to the first quarter 2000, development drilling in Argentina and an
improvement in Bolivia market takes.
The average price received for gas was substantially higher than the
average price received in the year-ago quarter. The average price of gas rose
166 percent to $5.86 per Mcf in the quarter compared to $2.20 per Mcf in the
first quarter last year. The average realized price of oil, inclusive of the
impact of hedges, remained nearly the same as in last year's quarter at $25.38
per barrel.
The combination of a higher average price for gas and a 15 percent increase
in production resulted in oil and gas sales rising to $206.9 million, a 48
percent increase over the $139.5 million in
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last year's quarter. The effect of higher production and average gas prices also
translated into substantially higher total revenues of $275.5 million compared
to $162.4 million in the year-ago quarter.
Lease operating costs per BOE rose 17 percent to $6.56 per BOE compared to
$5.59 per BOE in last year's first quarter. These increases resulted from
higher costs for oilfield services, increased lease power and fuel costs, and
certain repair costs. General and administrative expense was $1.64 per BOE
compared to $1.41 per BOE in the prior year's quarter primarily as a result of
additional personnel costs associated with increased oil and gas capital
expenditure levels. Exploration expense at $2.2 million stayed nearly level
with last year's $2.3 million. Depreciation, depletion and amortization expense
on a per BOE basis increased 11 percent to $3.78 compared to $3.40 in last
year's quarter. Interest expense declined 19 percent to $10.9 million from
$13.4 million in response to lower outstanding borrowings.
Cash flow before all exploration expenses and working capital changes for
the first quarter was $116.6 million compared to $70.0 million in the year-ago
quarter.
Exploration and Exploitation Update
North America
The company continues to meet with success in its Mid-Continent program.
The Colt 1-12 exploratory well in the Mid-Continent area of the United States
has successfully extended the Marlow/Velma field approximately two miles to the
southeast of the successful Hoxbar Granite Wash wells drilled in 2000. The Colt
1-12 was drilled to a depth of 13,000 feet and tested at a net daily rate of 2.2
MMcf (5.0 MMcf, gross). Development work continues on this play with three
recently drilled wells that are not yet completed: the Defender 2-24, the
Machete 1-34 and the Pistol 2-6. The Defender 2-24 and the Pistol 2-6 are
offset wells to two successful exploratory wells in the Hoxbar Granite Wash
program of 2000, the Defender 1-24 and the Pistol 1-6. This exploratory and
development program is scheduled to continue throughout 2001.
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Activity continues to build in the company's Galveston Bay program. The
State Tract 224 #1 exploratory well in the Red Fish Reef area of Galveston Bay
will be drilled after the completion of the State Tract 77 #2 development well
which is currently drilling. The 17,000-foot exploratory well in the Little
Temple/Little Lake area of Southern Louisiana is still planned for the third
quarter of 2001.
The company has established a successful drilling program in Canada on
prospects developed through its 2000 acquisition of Cometra Energy (Canada) Ltd.
Two wells in the Malmo area of Canada were drilled and encountered significant
hydrocarbon pay in a separate Devonian reef seismic feature. Both of these
wells are scheduled to go on production in July when necessary pipeline and
surface facilities are completed.
The successful Milo West discovery well in British Columbia has been
drilled, tested and tied in ready for production. In the Milo Pine Point "A"
gas pool, two additional development wells have been completed and placed on
production. The third development well was temporarily suspended due to the end
of the winter drilling season. This increases the active well count in the Milo
area from two to five wells and raises the current net daily gas production to a
total of 6.6 MMcf (23 MMcf, gross). Current allocated pipeline capacity limits
total production to the gross rate of 23 MMcf per day. Plans for the next
winter work season include completion of the suspended Milo development well,
the possible drilling of a new development well in the Milo West field,
additional exploration prospecting and a planned facility expansion, allowing
for increased production from Vintage wells in the Milo area.
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International
Trinidad
The first of two exploration wells operated by Vintage has spud in the
onshore Central Block of the Southern Basin in Trinidad. The Carapal Ridge No.
1 was spud in April and is drilling to a projected total depth of 9,000 feet to
test the prolific Miocene-aged Herrera turbidite sandstone formation. The
structural play was developed from analysis of a complex fold and thrust fault
system using new 3-D seismic information.
The Corosan No. 1 will spud immediately after the Carapal Ridge to test a
separate structural closure also targeting the Herrera formation. Completion
and testing operations will commence after the wells are logged and cased.
Estimated time to drill, case and test both wells is between three and four
months. A third well is planned for late 2001 or early 2002 based on analysis
of the first two wells. Target reserve sizes for each of these wells is
approximately 10 million barrels of oil equivalent. Vintage, as operator, owns
a 45 percent working interest during the exploration phase and a 36 percent
working interest during development.
South America
Vintage added a third drilling rig in April to expand its successful
drilling campaign in the San Jorge Basin in Argentina. The development plans
for 2001 call for the drilling of 75 wells in the basin. Further, plans call
for a fourth rig to initiate at mid-year the drilling of six horizontal wells in
the Cuyo Basin. In Bolivia, the focus will continue to be the monetization of
the existing reserves through the continued development of new markets.
Vintage drilled the Nantu 4 development well in Ecuador during the first
quarter. The well is producing 130 barrels per day of 20 degree gravity crude
oil net to Vintage's interest and will be produced into the SOTE pipeline under
Vintage's current allowable of 4,050 barrels of oil per day. In addition, the
company is initiating a 3-D seismic shoot covering 120 square miles (300 square
kilometers) on a portion of its Blocks 14, 17 and Shiripuno. The seismic
acquisition is designed to
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refine drilling prospects in preparation for the initiation of a drilling
program planned to commence in 2002 to build deliverability concomitant with the
anticipated opening of the OCP pipeline targeted in 2003.
Yemen
The government of Yemen has given approval to proceed with additional 3-D
seismic work. This work is scheduled to begin in the second half of 2001 and
will cover at least 160 square miles (200 square kilometers) on trend with the
Dhahab and Al-Nasr fields that are currently producing oil at a combined daily
rate in excess of 50,000 barrels.
Vintage to Webcast Conference Call
The company's first quarter conference call to review financial and
operating results, the Genesis acquisition, revision to the capital budget and
revised targets for 2001 will be broadcast on a listen-only basis over the
internet on Thursday, May 3 at 3 p.m. central time. Interested parties may
access the live webcast by visiting the Vintage Petroleum, Inc. website at
www.vintagepetroleum.com and selecting the "microphone icon" or accessing the
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call at www.streetevents.com and selecting "Individual Investor Center" in the
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upper right hand corner of the page. A replay of the call will be available for
7 days at www.vintagepetroleum.com and at www.streetevents.com following the
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completion of the call. To listen to the event, participants will need a
multimedia computer with speakers and the Real Player plug-in installed. For
best results, download from www.real.com and test the software at least one day
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prior to the call. Vintage Petroleum, Inc. is unable to provide technical
support for downloading software.
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 estimates of proved oil and gas reserves, future
production and costs, exploration drilling, including targeted reserve sizes,
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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 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
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
--------------------------------------
2001 2000
----------------- ----------------
REVENUES:
Oil and gas sales $206,879 $139,524
Gas marketing 59,323 18,462
Oil and gas gathering 8,109 3,418
Other income 1,179 987
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275,490 162,391
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COSTS AND EXPENSES:
Lease operating, including production taxes 47,856 35,575
Exploration costs 2,203 2,304
Gas marketing 57,326 17,527
Oil and gas gathering 8,355 2,668
General and administrative 11,979 9,003
Depreciation, depletion, and amortization 27,591 21,613
Interest 10,917 13,415
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166,227 102,105
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Income before income taxes and cumulative effect
of change in accounting principle 109,263 60,286
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PROVISION FOR INCOME TAXES:
Current 22,238 14,228
Deferred 16,327 6,352
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38,565 20,580
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Income before cumulative effect of change in
Accounting principle 70,698 39,706
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, net of income taxes of $644 - (1,422)
----------------- ----------------
NET INCOME $ 70,698 $ 38,284
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BASIC INCOME PER SHARE:
Income before cumulative effect of change in accounting principle $ 1.12 $ .63
Cumulative effect of change in accounting principle - (.02)
----------------- ----------------
Net income $ 1.12 $ .61
================= ================
DILUTED INCOME PER SHARE:
Income before cumulative effect of change in accounting principle $ 1.10 $ .62
Cumulative effect of change in accounting principle - (.02)
----------------- ----------------
Net income $ 1.10 $ .60
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Weighted Average Common Shares Outstanding:
Basic 62,898 62,412
================= ================
Diluted 64,055 63,788
================= ================
-Table Follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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(In thousands, except shares
and per share amounts)
(Unaudited)
A S S E T S
March 31, December 31,
2001 2000
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CURRENT ASSETS:
Cash and cash equivalents $ 61,717 $ 19,506
Accounts receivable -
Oil and gas sales 110,756 146,770
Joint operations 7,802 6,267
Derivative financial instruments 4,644 -
Prepaids and other current assets 16,794 13,946
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Total current assets 201,713 186,489
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PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, successful efforts method 1,759,632 1,734,003
Oil and gas gathering systems and plants 19,644 19,252
Other 20,989 19,636
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1,800,265 1,772,891
Less accumulated depreciation, depletion and amortization 695,682 667,837
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1,104,583 1,105,054
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OTHER ASSETS, net 48,381 46,854
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$1,354,677 $1,338,397
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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 $ 57,427 $ 60,519
Accounts payable - trade 30,858 43,225
Current income taxes payable 62,745 43,187
Short-term revolving debt 5,629 3,400
Other payables and accrued liabilities 48,348 61,961
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Total current liabilities 205,007 212,292
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LONG-TERM DEBT 399,257 464,229
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DEFERRED INCOME TAXES 51,443 33,252
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OTHER LONG-TERM LIABILITIES 3,731 3,767
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STOCKHOLDERS' EQUITY, per accompanying statement:
Preferred stock, $.01 par, 5,000,000 shares authorized,
zero shares issued and outstanding - -
Common stock, $.005 par, 160,000,000 shares authorized,
62,961,966 and 62,801,416 shares issued and outstanding, respectively 315 314
Capital in excess of par value 321,018 319,893
Retained earnings 372,258 303,449
Accumulated other comprehensive income 1,648 1,201
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695,239 624,857
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$1,354,677 $1,338,397
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-Table Follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
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SUMMARY OPERATING DATA
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(Unaudited)
Three Months Ended
March 31,
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2001 2000
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Production:
Oil (MBbls) -
U.S. 2,185 2,223
Argentina 2,476 (a) 1,921 (b)
Ecuador 337 (a) 329 (b)
Bolivia 23 (a) 18 (b)
Canada 59 -
Total 5,080 (a) 4,491 (b)
Gas (MMcf) -
U.S. 8,561 8,642
Argentina 2,042 1,483
Bolivia 1,867 1,126
Canada 830 -
Total 13,300 11,251
Total MBOE 7,297 6,366
Average price:
Oil (per Bbl) -
U.S. $ 25.68 (c) $ 24.32 (d)
Argentina 26.05 (c) 27.24
Ecuador 17.98 23.94
Bolivia 30.66 27.55
Canada 26.39 -
Total 25.38 (c) 25.55 (d)
Gas (per Mcf) -
U.S. $ 7.85 $ 2.36
Argentina 1.45 1.90
Bolivia 1.97 1.39
Canada 4.89 -
Total 5.86 2.20
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(a) Total production for the three months ended March 31, 2001, before the
impact of changes in inventories was 5,163 MBbls (Argentina - 2,544 MBbls,
Ecuador - 350 MBbls, Bolivia - 25 MBbls).
(b) Total production for the three months ended March 31, 2000, before the
impact of changes in inventories was 4,765 MBbls (Argentina - 2,218 MBbls,
Ecuador - 305 MBbls, Bolivia - 19 MBbls).
(c) Reflects the impact of oil hedges which increased the Company's first
quarter 2001 U.S., Argentina and total average oil prices per Bbl by $0.62,
$1.88 and $1.19, respectively.
(d) Reflects the impact of oil hedges which decreased the Company's first
quarter 2000 U.S. and total average oil prices per Bbl by $1.18 and $0.58,
respectively.
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