[INFINITY LOGO] Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
FOR ADDITIONAL INFORMATION FROM INFINITY, INC., PLEASE CONTACT:
STANTON E. ROSS, PRESIDENT/CEO
(620) 431-6200
JAMES W. DEAN, VICE PRESIDENT, STRATEGIC & CORPORATE DEVELOPMENT
(720) 932-7800
www.infinity-res.com
- --------------------
INFINITY, INC. REPORTS FULL-YEAR AND FOURTH QUARTER 2003 RESULTS
Company Posts Records for Annual Revenues, Production and EBITDA
DENVER and CHANUTE, Kan. - (PR Newswire) - March 29, 2004 - Infinity, Inc.
(NASDAQ: IFNY) today announced its results for the three months and twelve
months ended December 31, 2003. Financial and operational tables for the three
months and twelve months follow this commentary.
TWELVE MONTH RESULTS
Infinity reported record revenue of $18.2 million for the year ended
December 31, 2003, a 67% increase over the $10.9 million in the prior year.
Gross profit for 2003 was $9.1 million, a 102% increase over the $4.5 million in
the prior year. The net loss for 2003 was $9.9 million (or $1.23 per basic and
diluted share), which included amortization of non-cash loan costs of $5.6
million and a non-cash ceiling writedown of oil and gas properties of $3.0
million related to year-end proved reserve revisions and 2004 decisions to
relinquish leases covering certain undeveloped acreage. For the previous year,
the net loss was $1.6 million (or $0.22 per basic and diluted share) which
included amortization of non-cash loan costs of $0.2 million.
EBITDA (earnings before interest, income taxes, depreciation, depletion and
amortization expenses, gains and losses on the sale of other assets, and ceiling
writedown of oil and gas properties) for 2003 was a record $3.9 million, as
compared to negative EBITDA of less than $0.1 million in the prior year. A
reconciliation of net income to EBITDA, a non-GAAP (generally accepted
accounting principles) financial measure, is provided in the financial tables
following this commentary. Net cash provided by operating activities for 2003
was a record $2.8 million, as compared to $0.1 million in the prior year.
THREE MONTH RESULTS
Infinity reported revenue of $4.4 million for the three months ended
December 31, 2003, a 28% increase over the $3.4 million in the prior year
period. Gross profit for the three months was $2.2 million, a 44% increase over
the $1.5 million
1
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
in the prior year period. The net loss for the three months was $4.6 million (or
$0.56 per basic and diluted share), which included amortization of non-cash loan
costs of $0.8 million and a non-cash ceiling writedown of oil and gas properties
of $3.0 million. For the previous year period, the net loss was $0.5 million (or
$0.07 per basic and diluted share), which included amortization of non-cash loan
costs of $0.2 million.
EBITDA for the three months was $0.9 million, a 618% increase over the $0.1
million in the prior year period. A reconciliation of net income to EBITDA is
provided in the financial tables following this commentary.
OPERATIONS
Oilfield services, provided by Consolidated Oil Well Services, Inc.
("Consolidated") generated revenue of $11.6 million in 2003, a 36% increase over
the $8.6 million in the prior year. For the fourth quarter of 2003, Consolidated
generated revenue of $3.1 million, a 15% increase over the $2.7 million in the
prior year period. Consolidated performed 3,682 cementing, acidizing and
fracturing jobs during 2003, a 34% increase over the 2,756 jobs in the prior
year. For the fourth quarter of 2003, Consolidated performed 937 cementing,
acidizing and fracturing jobs, a 16% increase over the 807 jobs in the prior
year period.
Existing and new operators continue to be increasingly active in the Cherokee
and Forest City Basins. As the largest oilfield service provider for those
areas, Infinity's management expects the Company to continue to benefit in 2004
from its customers' desire to maintain or grow production volumes by developing
their undeveloped acreage.
Infinity Oil & Gas of Wyoming, Inc. ("Infinity-Wyoming") achieved record
production during 2003 of 1.4 billion cubic feet of natural gas equivalent
(Bcfe), an increase of 58% over the 903 million cubic feet of natural gas
equivalent (MMcfe) produced in the prior year. Infinity-Wyoming produced 260
MMcfe during the fourth quarter of 2003, an increase of 21% over the 216 MMcfe
produced in the prior year period, but a decrease of 24% compared to the 340
MMcfe produced in the third quarter of 2003 due to (i) natural decline rates in
producing wells that have not been addressed to date with "re-works" or
workovers and (ii) delays in completing the six wells drilled during the fourth
quarter. Infinity-Wyoming also generated record revenue of $6.6 million during
2003, a 202% increase over the $2.2 million in the prior year. For the fourth
quarter of 2003, Infinity-Wyoming generated revenue of $1.3 million, a 73%
increase over the $0.7 million in the prior year period.
2
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
MANAGEMENT'S COMMENTS
Stanton E. Ross, Infinity President and Chief Executive Officer, said: "We are
very pleased to report a number of Company-record financial and operating
results. We continue to address a number of challenges with respect to our
natural gas and oil exploration and production ("E&P") projects and, as a
result, expect our E&P results to improve during 2004. With respect to
Consolidated, we expect another strong year in 2004 in terms of job activity and
resulting revenue and free cash flow generation."
Ross continued: "We believe our anticipated acquisition of acreage in the
Barnett Shale and our recent acquisition in the Rocky Mountains, together with
our continued work to develop and enhance production at the Company's Rocky
Mountain fields, provides us with a good balance of growth opportunities in
terms of geographic location and operational focus, in terms of both development
and exploration."
CONFERENCE CALL REMINDER
The Company will host a conference call on Tuesday, March 30, 2004, at 8:30 a.m.
Eastern Standard Time to discuss the reported financial and operating results in
greater detail. The dial-in number for the call is 800-915-4836 (international
participants should dial 973-317-5319).
Parties interested in participating in the conference call should dial in
approximately ten minutes prior to the 8:30 a.m. EST start time. The call will
also be broadcast live on the Internet at
http://www.vcall.com/CEPage.asp?ID=87650.
- ----------------------------------------
A replay of the conference call will be available approximately two hours after
the completion of the call through April 6, 2004, by dialing 800-428-6051
(international callers should dial 973-709-2089) and entering the access code
ID #346024. The call will also be archived for two weeks at
http://www.vcall.com/CEPage.asp?ID=87650.
- ----------------------------------------
ABOUT INFINITY, INC.
Infinity, Inc., through its wholly-owned subsidiary Infinity Oil & Gas of
Wyoming, Inc., is an independent energy company engaged in the exploration,
development, production, operation and acquisition of natural gas and oil
properties. The Company's current operations are principally focused on the
development and expansion of its producing Wamsutter Arch (Pipeline) project
3
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
and emerging Labarge coal bed methane project, which are located in the Greater
Green River Basin in southwestern Wyoming. Infinity Oil & Gas of Wyoming also
holds exploration and development rights in the Sand Wash and Piceance Basins of
northwest Colorado. Infinity, Inc. also provides oilfield services through its
wholly-owned subsidiary, Consolidated Oil Well Services, Inc., based in Chanute,
Kansas, with operations focused primarily in the Mid-Continent region. The
Company's common stock is listed on The NASDAQ National Market under the symbol
"IFNY."
FORWARD-LOOKING STATEMENTS
This press release includes statements that may constitute "forward-looking"
statements, usually containing the words "believe," "estimate," "project,"
"expect," "plan," "should" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, operating problems, the results of
drilling, the availability of third party financing at the times and on the
terms anticipated, the completion of transactions and transaction documents at
the times and on the terms anticipated, fluctuations in the prices of oil and
gas, uncertainties inherent in estimating quantities of oil and gas reserves and
projecting future rates of production and timing and costs of development
activities, operating risks, liquidity and capital requirements, the effects of
governmental regulation, adverse changes in the market for the Company's oil and
gas production, dependence upon third-party vendors, continued acceptance of the
company's oil field services in their marketplace, the effects of governmental
regulation, and other risks detailed in the Company's periodic report filings
with the Securities and Exchange Commission. You can find the Company's filings
with the Securities and Exchange Commission at www.infinity-res.com or at
www.sec.gov. By making these forward-looking statements, the Company undertakes
no obligation to update these statements for revisions or changes after the date
of this release.
4
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
------------ -----------
2003 2002
------------ -----------
ASSETS
Current assets
Cash and cash equivalents $ 727,134 $ 867,017
Accounts receivable, less allowance for
doubtful accounts of
$80,000 and $25,000 1,766,642 1,514,159
Inventories 351,197 340,217
Prepaid expenses and other 222,625 257,575
Derivative asset 97,624 -
------------ -----------
Total current assets 3,165,222 2,978,968
Property and equipment, at cost, less
accumulated depreciation and ceiling
writedown of oil and gas properties 10,169,159 10,315,068
Oil and gas properties, using full cost
accounting net of accumulated depreciation,
depletion, and amortization
Subject to amortization 23,446,343 19,107,427
Not subject to amortization 12,815,834 13,176,850
Intangible assets, at cost, less accumulated
amortization 3,952,989 5,299,881
Note receivable, less current portion 1,580,742 1,597,053
Other assets, net 135,989 655,022
------------ ------------
Total assets $ 55,266,278 $ 53,130,269
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,762,777 $ 2,227,195
Accounts payable 2,645,277 2,875,900
Accrued expenses 1,329,587 889,894
------------ ------------
Total current liabilities 5,737,641 5,992,989
Long-term liabilities
Production taxes payable 387,709 79,632
Long-term debt, less current portion 9,252,872 4,464,156
8% subordinated convertible notes payable 2,793,000 4,243,000
7% subordinated convertible notes payable 11,184,000 12,540,000
Note payable - related party 3,000,000 3,000,000
------------ ------------
Total liabilities 32,355,222 30,319,777
------------ ------------
Commitments and contingencies
Stockholders' equity
Common stock, par value $.0001, authorized
300,000,000 shares, issued and
outstanding 8,204,032 and 7,558,462 shares 820 756
Additional paid-in-capital 32,720,904 22,870,449
Accumulated other comprehensive income (loss) 97,624 (77,301)
(Accumulated deficit) retained earnings (9,908,292) 16,588
------------ ------------
Total stockholders' equity 22,911,056 22,810,492
------------ ------------
Total liabilities and stockholders' equity $ 55,266,278 $ 53,130,269
============ ============
5
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
For the Three Months Ended
December 31, For the Year Ended
December 31,
------------ --------------- -------------- --------------
2003 2002 2003 2002
------------ --------------- -------------- --------------
Revenue
Oil and gas service operations $ 3,081,630 $ 2,668,995 $ 11,634,457 $ 8,570,631
Oil and gas sales 1,292,552 745,439 6,589,281 2,367,713
------------ --------------- -------------- --------------
Total revenue 4,374,182 3,414,434 18,223,738 10,938,344
------------ --------------- -------------- --------------
Cost of sales
Oil and gas service operations 1,666,797 1,362,562 6,222,919 4,620,663
Oil and gas production expenses 378,601 455,312 2,161,666 1,582,816
Oil and gas production taxes 169,034 93,758 758,827 237,876
------------ --------------- -------------- --------------
Total cost of sales 2,214,432 1,911,632 9,143,412 6,441,355
------------ --------------- -------------- --------------
Gross profit 2,159,750 1,502,802 9,080,326 4,496,989
Operating expenses 1,282,705 1,415,232 5,311,080 4,647,062
Depreciation, depletion and amortization 1,145,997 851,816 3,074,247 1,782,586
Ceiling writedown of oil and gas
properties 2,975,000 - 2,975,000 -
------------ --------------- -------------- --------------
5,403,702 2,267,048 11,360,327 6,429,648
------------ --------------- -------------- --------------
Operating income (loss) (3,243,952) (764,246) (2,280,001) (1,932,659)
Other income (expense)
Interest income and other income 14,862 36,737 129,599 102,460
Amortization of non-cash loan costs (794,387) (167,977) (5,620,300) (204,172)
Amortization of cash loan costs (103,977) (26,034) (580,333) (30,508)
Interest expense (473,014) (85,257) (1,593,765) (602,350)
Gain (loss) on sale of other assets 47,006 (41,663) 19,920 (33,665)
------------ --------------- -------------- --------------
Total other income (expense) (1,309,510) (284,194) (7,644,879) (768,235)
------------ --------------- -------------- --------------
Net income (loss) before income taxes (4,553,462) (1,048,440) (9,924,880) (2,700,894)
Income tax (expense) benefit - 508,028 - 1,144,028
------------ --------------- -------------- --------------
Net income (loss) $ (4,553,462) $ (540,412) $ (9,924,880) $ (1,556,866)
============ =============== ============== ==============
Basic earnings (loss) per share $ (0.56) $ (0.07) $ (1.23) $ (0.22)
============ =============== ============== ==============
Diluted earnings (loss) per share $ (0.56) $ (0.07) $ (1.23) $ (0.22)
============ =============== ============== ==============
Weighted average basic shares 8,193,243 7,498,060 8,047,688 7,202,844
outstanding ============ =============== ============== ==============
Weighted average diluted shares 8,193,243 7,498,060 8,047,688 7,202,844
outstanding ============ =============== ============== ==============
6
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
For the Year Ended
December 31,
---------------- ----------------
2003 2002
---------------- ----------------
Cash flows from operating activities
Net income (loss) $ (9,924,880) $ (1,556,866)
---------------- ----------------
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Depreciation, depletion, amortization and ceiling writedown 12,249,880 2,017,266
Deferred income taxes - (1,144,028)
Loss (gain) on sale of other assets (19,920) 33,665
Change in assets and liabilities
(Increase) decrease in accounts receivable (252,483) 85,725
(Increase) decrease in inventories (10,980) 9,999
(Increase) decrease in prepaid expenses and other (12,234) (89,985)
Increase in accounts payable 32,758 284,657
Increase in accrued expenses 782,391 495,383
---------------- ----------------
12,769,412 1,692,681
---------------- ----------------
Net cash provided by operating activities 2,844,532 135,815
---------------- ----------------
Cash flows from investing activities
Purchase of property, equipment, and intangibles (1,097,474) (2,695,382)
Proceeds from the sale of investments and marketable securities - 750,000
Proceeds from sale of property and equipment, oil and gas properties and
other assets 104,911 235,000
Investment in oil and gas properties (5,736,038) (14,426,524)
Payments on note receivable 15,103 7,844
Increase in other assets (188,093) (88,547)
---------------- ----------------
Net cash used in investing activities (6,901,591) (16,217,609)
---------------- ----------------
Cash flows from financing activities
Proceeds from borrowings on long-term debt 11,452,861 21,749,993
Sale of common stock 824,234 1,947,205
Principal payments on long-term debt (8,359,919) (7,414,285)
---------------- ----------------
Net cash provided by financing activities 3,917,176 16,282,913
---------------- ----------------
Net increase (decrease) in cash and cash equivalents (139,883) 201,119
Cash and cash equivalents, beginning of period 867,017 665,898
---------------- ----------------
Cash and cash equivalents, end of period $ 727,134 $ 867,017
================ ================
7
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
INFINITY, INC. AND SUBSIDIARIES
SELECTED OPERATING AND FINANCIAL DATA BY SUBSIDIARY
For the Three Months Ended For the Year Ended
December 31 December 31,
------------ ------------- ------------- -------------
2003 2002 2003 2002
------------ ------------- ------------- -------------
Consolidated
(Dollars in thousands, before cash discounts)
Job type:
Cementing 517 323 1,740 1,002
Acidizing 229 173 931 773
Fracturing 191 311 1,011 981
Job revenues:(1)
Cementing $1,721.1 $1,598.4 $4,807.4 $3,376.6
Acidizing $370.9 $333.6 $1,405.1 $1,117.0
Fracturing $1,258.8 $3,132.1 $6,107.2 $6,537.0
Infinity-Wyoming Statistics (2)
(Dollars in thousands)
Production Volumes:
Natural gas (MMcf) 197.1 164.5 1,080.5 648.2
Oil and condensate (MBbls) 10.5 8.5 57.7 42.5
Natural gas equivalents (MMcfe; 6:1) 260.1 215.5 1,426.4 903.3
Financial Results:
Natural gas revenue $ 973.9 $ 493.2 $ 4,830.5 $ 1,273.7
Oil and condensate revenue $ 318.7 $ 253.4 $ 1,758.8 $ 910.7
Total revenue $ 1,292.6 $ 746.6 $ 6,589.3 $ 2,184.4
Production expenses $ 375.8 $ 436.2 $ 2,161.7 $ 1,301.1
Production taxes $ 164.4 $ 93.8 $ 758.8 $ 236.7
Financial Results, per Mcfe:
Natural gas revenue $ 4.94 $ 3.00 $ 4.47 $ 1.97
Oil and condensate revenue $ 30.37 $ 29.76 $ 30.51 $ 21.41
Natural gas equivalent revenue $ 4.97 $ 3.46 $ 4.62 $ 2.42
Production expenses $ 1.44 $ 2.02 $ 1.52 $ 1.44
Production taxes $ 0.63 $ 0.44 $ 0.53 $ 0.26
(1) Prior to eliminations of Inter-company sales of $2.1 million in 2002.
(2) Includes revenue, expense and operating data only from the Wamsutter Arch
Pipeline Field and Labarge project.
8
[INFINITY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
INFINITY, INC. AND SUBSIDIARIES
NON-GAAP DISCLOSURES: RECONCILIATION OF NET INCOME (LOSS) TO EBITDA (1)
For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------ ------------ ------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net income (loss) $ (4,553,462) $ (540,412) $ (9,924,880) $ (1,556,866)
Adjustments:
Depreciation, depletion, 5,019,361 1,045,827 12,249,880 2,017,266
amortization and ceiling
writedown of oil and gas
properties
Interest expense 473,014 85,257 1,593,765 602,350
Loss (gain) on sale of other (47,006) 41,663 (19,920) 33,665
assets
Income tax expense (benefit) - (508,028) - (1,144,028)
------------ ------------ ------------ ------------
EBITDA $ 891,907 $ 124,307 $ 3,898,845 $ (47,613)
============ ============ ============ ============
(1) In this press release, the term "EBITDA" is used. EBITDA is equivalent to
earnings before interest, income taxes, depreciation, depletion and amortization
expenses, gains and losses on the sale of other assets, and ceiling writedown of
oil and gas assets. Infinity's management believes EBITDA is an important
financial measurement tool that provides information about the Company's ability
to service or incur indebtedness, and pay for its capital expenditures. This
information differs from measures of performance determined in accordance with
generally accepted accounting principles (GAAP) and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP. This measure is not necessarily indicative of operating profit or
cash flow from operations as determined under GAAP and may not be titled to
similarly titled measures of other companies.
# # #
9