Exhibit 99.3
For Further Information Contact
Robert E. Phaneuf
For Immediate Release Vice President - Corporate Development
Thursday, May 3, 2001 (918) 592-0101
VINTAGE PETROLEUM ANNOUNCES COMPLETION OF
ACQUISITION OF GENESIS, REVISION TO THE CAPITAL
BUDGET AND REVISED TARGETS FOR 2001
Tulsa, Oklahoma - Vintage Petroleum, Inc. announced today that it has
completed the acquisition of Genesis Exploration Ltd. for total consideration of
$593 million, including transaction costs and the assumption of the estimated
net indebtedness of Genesis at closing. "For several years we have sought a
significant exposure to the hydrocarbon-rich provinces of Canada," said S. Craig
George, Vintage CEO. "With the Genesis acquisition following on the heels of
our 2000 acquisition of Cometra Energy (Canada) Ltd., we have not only added
significant reserves and production to a new core area, but also markedly
enhanced our ability to grow from our expanded North American exploration
program. At the same time, this acquisition accomplishes a better balance
between our geographical mix of production from North America and international
areas and also improves our balance between proved oil and gas reserves," added
Mr. George.
Assets
Vintage estimates that it acquired 62.2 million barrels of oil equivalent
(BOE) of proved reserves in the transaction with Genesis consisting of
approximately 27.7 million barrels of oil and 207.2 Bcf of gas. Proved
undeveloped reserves of oil and gas account for 33 percent of total proved BOE
of reserves. In addition, the company estimates that it acquired 36.9 million
BOE of probable reserves, representing upside potential which may be realized
through the 2001 work program and
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beyond. The reserves acquired in the Genesis transaction are located primarily
in the provinces of Alberta and Saskatchewan with a significant exploration
exposure in the Northwest Territories.
When added to Vintage's year-end 2000 proved reserves of 489 million BOE,
the estimated proved reserves of Genesis raised total company proved reserves to
approximately 551 million BOE, or 8.8 BOE per Vintage common share. North
America now accounts for 44 percent of the combined total proved reserves and
international makes up the remaining 56 percent, with oil accounting for 63
percent and gas accounting for 37 percent of the combined total proved reserves.
On a production basis, North America comprises approximately 60 percent of total
combined production, with North American production split approximately 51
percent oil and 49 percent gas.
In addition to reserves, Vintage acquired over one million net undeveloped
acres principally located in the areas of Alberta and Saskatchewan with a
significant portion, aggregating to 440,000 net acres, in the Northwest
Territories. Also, the Genesis acquisition brings with it over 600 square miles
of 3-D seismic and over 15,000 miles of 2-D seismic. The company estimates the
acquisition cost of proved reserves was approximately $8.50 per BOE, exclusive
of $54 million allocated to undeveloped acreage and $10 million allocated to
facilities.
Production
Current net daily production, after estimated royalties, from Genesis
properties is about 17,800 BOE, composed of approximately 71 MMcf of gas and
6,060 barrels of oil. Vintage estimates that production will grow in successive
quarters throughout the year with a net daily production target averaging 23,800
BOE in the fourth quarter, composed of approximately 97 MMcf of gas and 7,700
barrels of oil. The anticipated increase in production is fueled by an
aggressive work program consisting of over 200 total exploration and
exploitation projects targeted to occur during the remainder of the year,
concentrated in the West Central, Grouard,
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and Sturgeon Lake areas of Alberta. Capital of $58 million has been budgeted for
the work activity planned for the remaining eight months of 2001.
2001 Capital Budget Revised
As a result of the acquisition of Genesis and its ongoing work program,
Vintage's projected 2001 capital spending has been increased to $871 million.
Vintage's non-acquisition portion of estimated capital spending for the year has
been revised to $278 million, as shown in the accompanying table, compared to
the previous $285 million of non-acquisition spending. In the revised non-
acquisition spending plan, approximately $198 million is targeted to be spent on
lower-risk exploitation while $80 million is targeted to be spent for higher-
impact exploration projects, primarily in North America. Vintage plans to
continue the Genesis program, increasing the total Canadian non-acquisition
budget to approximately $69 million, while reducing planned spending primarily
in the United States, Argentina, and Yemen by $65 million to provide additional
funds for reducing debt.
2001 Growth Targets Revised
Based upon Vintage's first quarter results, the acquisition of Genesis
reserves and production, anticipated growth in production based upon the
revisions to the non-acquisition capital budget, the company's outlook for oil
and gas prices during the remainder of the year, as well as other items, Vintage
is also revising its operating and financial targets for 2001. The company is
targeting total production of approximately 36.7 million BOE, as described in
the accompanying table, 13 percent above the previous target of 32.5 million BOE
prior to the acquisition. Based upon estimated production and cost targets, per
BOE lease operating costs and general and administrative costs are targeted to
average a combined level of $7.03 per BOE for the year, up slightly compared
with the previous combined target for the year. Additionally, based on assumed
NYMEX commodity price levels of $26.50 per barrel for oil and $5.57 per
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MMBtu for gas, as well as other expectations, the revised target for 2001 cash
flow (before all exploration expenses and working capital changes) is $464
million, or $7.20 a share, based on 64.4 million weighted average shares
outstanding.
"Based on our revised outlook for the remainder of the 2001 year, we expect
to grow the company from the addition of reserves and production associated with
the acquisition, and also grow meaningfully from internally generated
exploitation and exploration prospects. Further, we expect to generate free
cash flow which, along with targeted asset sales of $35 million, can be applied
toward the reduction of debt in order to return to our target net debt-to-
capitalization ratio of the low-to-mid 50s by year-end 2001," said S. Craig
George.
Financial
Vintage ended the first quarter at a historically low net debt-to-
capitalization ratio of 33 percent. Long-term debt was $399.3 million, composed
entirely of senior subordinated notes, and the unused availability under the
company's recently increased $625 million bank credit facility was approximately
$616 million (net of $9 million of letters of credit). After closing the
Genesis acquisition, Vintage has long-term debt totaling $961 million, with $562
million drawn under the company's revolving credit facility. The company's net
debt-to-capitalization at the end of the first quarter pro forma for the Genesis
acquisition increases to approximately 57 percent. Based upon the company's
expectations of production, prices, costs, the revised capital budget as well as
other factors during the remainder of the year, Vintage estimates that excess
cash flows over planned capital spending, proceeds from targeted property sales
and earnings are expected to reduce the net debt-to-capitalization ratio to a
level well within Vintage's targeted range of the low-to-mid 50s percent by
year-end 2001.
Hedging
The company actively reviews its hedging policy. At the present time, it
has entered into hedging arrangements through swaps on a portion of its oil
production. Vintage has hedged 1.375 million barrels over the remaining three
quarters of 2001 at an average NYMEX price of $29.61 per barrel. Through the
Genesis acquisition, Vintage acquired a floor of $26.00 per barrel on 490,000
barrels over the remaining three quarters of 2001.
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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 the acquisition of Genesis Exploration Ltd.,
operating and financial targets, estimates of capital expenditures, estimates of
proved and probable oil and gas reserves, future production, costs, cash flow,
NYMEX reference prices, company realized prices, exploration drilling,
exploitation activities, upside reserve potential which may be realized through
such future 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
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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.
REVISED TARGETS FOR 2001
Revised
2001
Oil production (MMBbls): Target(c)
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U.S. 8.8
Canada 2.0
Argentina 11.1
Ecuador and Other 1.5
Total 23.4
Gas production (Bcf):
U.S. 34.6
Canada 27.0
Argentina 10.5
Bolivia 7.8
Total 79.9
Total MMBOE 36.7
Assumed NYMEX(a) prices:
Oil $26.50
Gas $5.57
Net realized price (before impact of hedging) as a
percent of NYMEX(a) - Total Company:
Oil 83%
Gas 76%
DD&A per BOE (oil and gas only) $ 4.36
LOE per BOE $ 5.74
G&A per BOE $ 1.29
Non-Acquisition Capital Spending Budget (in millions) $278
Cash Flow (before all exploration expenses and working
capital changes) (in millions): $464
EBITDAX(b) (in millions): $618
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MMBbls - million barrels
Bcf - billion cubic feet
MMBOE - million barrels of oil equivalent
(a) NYMEX
Oil - Average of the daily settlement price per barrel 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.
(b) EBITDAX: Earnings before interest, taxes, DD&A and exploration expenses.
(c) Targets do not reflect any future year 2001 acquisitions.
See "2001 Growth Targets Revised" and Forward-Looking Statements elsewhere in
the release.
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