EXHIBIT 99
For Further Information Contact
Robert E. Phaneuf
For Immediate Release Vice President - Corporate Development
Wednesday, November 3, 1999 (918) 592-0101
VINTAGE PETROLEUM, INC. REPORTS RECORD RESULTS
FOR THIRD QUARTER
Tulsa, Oklahoma - Vintage Petroleum, Inc. today announced dramatically
improved third quarter 1999 income of $27.3 million, or $0.43 a share, including
a $2.0 million after-tax gain from the sale of certain non-strategic oil and gas
properties. The record high results posted in the third quarter compare to a
loss of $9.9 million, or $0.19 per share, in the same quarter last year. A
substantially higher average oil price coupled with an increase in the price of
gas, significant gains in oil and gas production and lower exploration costs
accounted for the return to profitability.
Oil and gas production for the quarter grew 15 percent to a record 7.0
million equivalent barrels (BOE) from 6.0 million BOE in last year's period.
The increase is attributable to the acquisitions made in the fourth quarter of
last year and the purchase of the El Huemul concession in Argentina in July of
this year. As a result, oil production for the quarter increased 14 percent to
a record 4.6 million barrels. Company production of natural gas increased 19
percent to a record 13.9 billion cubic feet (Bcf) compared to 11.8 Bcf in last
year's quarter.
Aiding the increase in production was a substantially higher average price
of oil resulting from reduced supplies on the market attributable to the strong
adherence by OPEC to its accord reached earlier in the year. The company's
average realized price of oil rose 71 percent over the same quarter last year to
$18.50 per barrel. The average realized price of gas increased 14
-More-
percent to $2.00 per Mcf compared to $1.76 per Mcf in the same quarter last
year.
Oil and gas sales rose 75 percent to a record $113.6 million principally
due to the impact of the higher average price of oil coupled with record oil and
gas production levels. Total revenues for the third quarter rose 72 percent to
$136.4 million, including a pre-tax gain from oil and gas property sales of $3.3
million.
Lease operating costs per BOE declined nearly 6 percent to $4.58 per BOE
compared to $4.88 per BOE in last year's third quarter. The decline results
primarily from the higher level of production and continued emphasis on cost
reduction measures initiated late last year. General and administrative
expenses also declined on a BOE basis, falling to $1.21 per BOE compared to
$1.30 per BOE in last year's third quarter. Exploration expense for the quarter
was $1.3 million composed of expenditures for seismic and other geological and
geophysical activities of $600,000 with the remaining $700,000 attributable to
leasehold impairments and unsuccessful exploratory drilling. In last year's
third quarter, exploration expense totaled $6.6 million consisting of $3.2
million of geological and geophysical activities and $3.4 million attributable
to leasehold impairments and dry hole costs. Interest expense rose 32 percent
to $15.2 million as a result of higher outstanding borrowings utilized to fund a
portion of capital spending, including acquisitions, in 1998.
For the quarter just ended, income before taxes was $36.4 million including
the impact of the $3.3 million pre-tax gain from non-strategic property sales
compared to a pre-tax loss of $16.3 million in last year's quarter. Net income
for the third quarter of 1999 was $27.3 million or $0.43 per share. Excluding
the after-tax gain from the sale of certain non-strategic oil and gas
properties, net income for the third quarter would be $25.3 million or $0.39 per
share. This compares to the third quarter of 1998 net loss of $9.9 million or
$0.19 per share. There were
-More-
64.1 million weighted average shares outstanding in the third quarter of 1999
compared to the 51.7 million outstanding in the same period a year ago. The 24
percent increase in outstanding shares is due primarily to the impact of shares
issued to acquire certain oil and gas properties in November 1998, the June 1999
equity offering and the dilutive effects of stock options and contingent shares
which may become issuable under the $20 stock price guarantee delivered in
connection with the November 1998 acquisition.
Cash flow from operations (before working capital changes) for the third
quarter increased to a record $57.9 million compared to $17.2 million in the
year-ago quarter.
Nine Months 1999 Summary
For the nine months, oil and gas sales rose to $240.9 million, 17 percent
above the $206.6 million in the nine months of 1998. The higher sales were
primarily the result of an improvement in the realized price of oil. Total
revenues increased by 16 percent to $295.0 million, compared to $254.2 million
for the same period last year.
The net income in the first nine months of 1999 was $14.3 million, or $0.25
per share, compared to the 1998 period's loss of $21.0 million, or $0.41 a
share. There were 57.9 million weighted average shares outstanding in the first
nine months of 1999 compared to 51.7 million in the year-ago period. The factors
attributable to this 12 percent increase in outstanding shares are the same
factors which were responsible for the increase in outstanding shares in the
third quarter 1999 compared to the third quarter 1998.
Cash flow from operations (before changes in working capital) for the nine
months of 1999 was $93.7 million, 45 percent above the $64.8 million in the
year-ago period.
-More-
Operational Update
Production
The State Tract 65-2 exploratory well in Galveston Bay was recently
successfully completed and is flowing to sales at a net daily rate of 7.0 MMcf
of gas and 75 barrels of oil. Coincident with the improved price of oil and the
acquisition of the El Huemul property in Argentina early in the third quarter,
the company resumed its Argentina drilling program in August. A mix of drilling
and workover exploitation activity is planned on both the El Huemul concession
as well as the company's previously existing San Jorge basin properties in the
fourth quarter and next year.
Bolivia and Brazil reached a significant milestone with the completion and
opening of the BTB pipeline early in the third quarter. Nevertheless, the
timing of the start-up of planned new power plants and other sources of
increasing gas demand in the Brazilian market from the current gross daily level
of approximately 100 MMcf to the BTB pipeline capacity of over 1 Bcf during the
next several years is uncertain. Delayed initial end-market demand from Brazil
and the termination of gas sales to Argentina resulted in the company's daily
Bolivian gas production during the third quarter averaging 19.8 MMcf, slightly
less than anticipated. For the fourth quarter, production appears likely to
average about 10 MMcf based on the current outlook for pipeline demand. If the
Brazilian demand build-up continues to be slower than anticipated during next
year, realized volumes could be less than Vintage's contracted average daily
volume of 32.1 MMcf but are expected to remain within the range bounded by its
contracted volume and an average daily volume of 19.3 MMcf supported by the
take-or-pay provision of the BTB gas contract. In addition to the BTB, Vintage
is actively pursuing other markets, such as new power projects and existing
domestic gas contracts approaching renewal, for the reserves not currently
-More-
contracted to Brazil. The company estimates that, by year-end 1999, its net
Bolivian gas production capacity will reach 70 MMcf per day.
In Ecuador, workovers, facility upgrades and other exploitation activities
are underway aimed at increasing net daily oil production by year-end to over
1,900 barrels from the third quarter level of 1,496 barrels. The project is
designed to coincide with additional pipeline capacity expected to occur with
the completion, by year-end 1999, of expansion work on the existing
Transecuadorian Pipeline.
Exploration
Exploration in Bolivia during the third quarter continued the active pace
of the first half of the year with the drilling of the NJL X-103 and NJL X-102
wells. Testing is underway of the Upper Devonian Los Monos and Iquiri
formations. During the fourth quarter, the company expects to spud another well
in a new fault block to the west, the NJL X-110, targeting the Los Monos and
Iquiri formations. In the first quarter of 2000, the company plans to initiate
a well to test the deeper, potentially significant, Middle Devonian Huamampampa
formation.
In Yemen, the staging of equipment is underway in preparation for spudding
the first of three consecutive wells in December of this year. The first well
scheduled for drilling will test the An-Naeem prospect, located in the Northwest
portion of the S-1 Damis block immediately adjacent to the Janna Hunt Halewah
field.
In the Cedar Point project just onshore of the company's Galveston Bay
production, the USX Hematite #1 is completing. The Limonite, a 10,900-foot
Lower Vicksburg well in the same vicinity, is planned for the fourth quarter.
Additional leads and prospects have been identified for potential drilling next
year in both this area and Galveston Bay.
-More-
Targets for 2000
Based on results to date, the revised 1999 non-acquisition capital budget
of $83 million, a preliminary non-acquisition budget of $128 million for the
year 2000, the company maintains its target to increase production from its
existing reserve base by 17 percent next year to 29 million BOE. Based on such
production targets and assumed NYMEX average reference prices for oil and gas of
$20 per barrel and $2.50 per Mcf, respectively, Vintage expects to generate cash
flow of approximately $185 million, or $2.85 per share.
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 targets or estimates of proved oil and gas
reserves, future production, 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 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 Nine Months Ended
September 30, September 30,
------------------------------- ---------------------------------
1999 1998 1999 1998
------------- -------------- ---------------- ------------
REVENUES:
Oil and gas sales $113,580 $ 64,915 $240,902 $206,584
Gas marketing 16,404 12,593 38,905 39,664
Oil and gas gathering 1,734 1,476 5,184 6,811
Other income 4,711 301 10,003 1,152
------------- -------------- ---------------- ------------
136,429 79,285 294,994 254,211
------------- -------------- ---------------- ------------
COSTS AND EXPENSES:
Lease operating, including production taxes 31,886 29,487 80,991 91,693
Exploration costs 1,322 6,569 9,523 18,939
Gas marketing 15,705 12,061 37,095 37,701
Oil and gas gathering 1,311 1,334 3,932 5,851
General and administrative 8,413 7,825 24,482 23,922
Depreciation, depletion and amortization 26,231 26,797 83,240 80,283
Interest 15,185 11,525 44,321 30,795
------------- -------------- ---------------- ------------
100,053 95,598 283,584 289,184
------------- -------------- ---------------- ------------
Income (loss) before income taxes 36,376 (16,313) 11,410 (34,973)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 2,749 (125) 2,796 (586)
Deferred 6,349 (6,263) (5,726) (13,372)
------------- -------------- ---------------- ------------
NET INCOME (LOSS) $ 27,278 $ (9,925) $ 14,340 $(21,015)
============= ============== ================ ============
EARNINGS (LOSS) PER SHARE:
Basic $.44 $(.19) $.25 $(.41)
============= ============== ================ ============
Diluted $.43 $(.19) $.25 $(.41)
============= ============== ================ ============
Weighted average common shares outstanding:
Basic 62,309 51,733 56,505 51,664
============= ============== ================ ============
Diluted 64,143 51,733 57,869 51,664
============= ============== ================ ============
-Table Follows-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
SUMMARY BALANCE SHEET DATA
--------------------------
(In thousands)
(Unaudited)
September 30, December 31,
1999 1998
--------------- -----------------
Total current assets $ 110,382 $ 84,142
Property, plant and equipment, net 973,818 898,242
Total assets 1,125,075 1,014,175
Total current liabilities 100,666 66,925
Long-term debt 652,190 672,507
Stockholders' equity 371,743 273,958
SUMMARY OPERATING DATA
----------------------
(Unaudited)
----------
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
----------- ------------- ------------ ------------
Production:
Oil (MBbls) -
U.S. 2,183 2,500 6,484 7,509
Argentina 2,287 1,552 5,330 4,637
Ecuador 138 - 381 -
Bolivia 28 30 58 99
Total 4,636 4,082 12,253 12,245
Gas (MMcf) -
U.S. 9,577 10,386 29,010 31,530
Argentina 2,547 - 2,921 -
Bolivia 1,817 1,372 3,345 4,036
Total 13,941 11,758 35,276 35,566
Total MBOE 6,959 6,042 18,132 18,172
Average price:
Oil (per Bbl) -
U.S. $ 17.50 (a) $ 11.08 $ 14.01 (a) $ 11.64
Argentina 19.72 10.43 15.32 11.18
Ecuador 14.28 - 10.74 -
Bolivia 16.95 10.24 14.53 11.49
Total 18.50 (a) 10.83 14.48 (a) 11.46
Gas (per Mcf) -
U.S. $ 2.41 $ 1.90 $ 1.98 $ 2.00
Bolivia .70 .73 .63 .81
Argentina 1.37 - 1.32 -
Total 2.00 1.76 1.80 1.86
(a) Includes the cost of hedging activities.
-30-