EXHIBIT 99.1
(MERIDIAN RESOURCE CORPORATION LOGO) NEWS
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THE MERIDIAN RESOURCE CORPORATION ANNOUNCES
THIRD QUARTER 2005 FINANCIAL RESULTS
Houston, Texas -- Nov. 9, 2005 -- The Meridian Resource Corporation (NYSE: TMR)
today announced net income applicable to common shareholders of $3.3 million, or
$0.04 per diluted common share for the third quarter of 2005, compared to net
income of $7.8 million, or $0.09 per diluted common share for the corresponding
period of 2004. For the first nine months of 2005, the Company reported net
income of $13.5 million or $0.15 per diluted common share compared to $20.8
million or $0.27 per diluted common share for the corresponding period of 2004.
Average daily production volumes totaled 54.5 million cubic feet of gas
equivalent ("Mmcfe") for the third quarter of 2005, compared to 105.1 Mmcfe for
the corresponding period of 2004. For the first nine months of 2005 average
daily production volumes totaled 72.2 Mmcfe per day compared to 99.5 Mmcfe per
day for the corresponding period of 2004. The variance in production between
these periods is due to several factors, including: i) hurricane related
production shut-ins; ii) hurricane related delays in tying in new production;
iii) hurricane related delays in drilling additional wells; iv) mechanical
issues on higher rate wells, subsequently corrected; and v) natural production
declines. The Company's production has improved to levels higher than those seen
prior to the storms, and currently stands at approximately 105% of pre-storm
levels. This level of production does not include upcoming production
restoration, or production additions from String of Pearls, Hornets Nest, Turtle
Shell or Bayou Gentilly.
The primary factor for the difference in production is the shut-in of over 50%
of the Company's production because of the damage and delays caused to the
Company's production facilities in the BML project area by Hurricanes Katrina
and Rita. The wells were shut-in for the last part of August, all of September
and much of October (4thQtr). The company marshaled its dedicated employees and
resources, and immediately began the job of repairing facilities and restoring
production. Through diligence and perseverance, production was, for the most
part, restored in relatively short order.
Prior to the storms, the Company was on track to tie-in new production from the
Avoca 6-1 and Avoca 8-1 (previously named Avoca 5-2) wells, as well as the
Apache Minerals #1 well in the Bayou Gentilly prospect area. Construction on the
pipeline and facilities experienced lengthy delays because of the severe
shortage of crews and equipment caused by the storms. The two Avoca wells have
now been connected to their facilities and are producing at a rate of 6.6
Mmcfe/d gross, 4.2 Mmcfe/d net. The Apache Minerals #1 well was tested in August
(4 Mmcf/d net, estimated), and was also on track to have its production tied-in
prior to the arrival of the storm. Third party production facilities where
production was scheduled to tie-in, were heavily damaged by the storm. The
Company is still working with the third party to arrange for delivery of
production.
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During the third quarter the company lost the use of the Coastal Rig #20 due to
damage caused by Hurricane Katrina. This rig was in route to drill another well
in the BML project area when it sustained damage from the storm. Therefore the
drilling program for the Company has been delayed in the BML project area until
the rig can be repaired and placed back into service, which is estimated to be
in December of this year.
Other causes of lower production for the two time periods were related to
mechanical issues which the company has either resolved or is in the process of
resolving. The SL 16049 well in the Ramos Complex area went off-line earlier in
the year because of heavy scaling in the tubing. This well was recompleted in
another zone with a production rate of approximately 11.4 Mmcfe/d gross, 5.1
Mmcfe/d net. As previously announced, the Thibodeaux #3 well experienced
mechanical problems and was shut-in during the third quarter of last year. The
well was recompleted in a different zone, however the overall production rate on
the well decreased. The BML 1-2 well also went off-line earlier in the year, due
to down hole mechanical troubles. This well was in the process of being worked
over by means of a sidetrack, when the rig that was drilling the well tipped
over during the evacuation of Hurricane Dennis. Delays in moving the rig to dry
dock for repairs were subsequently caused by Hurricanes Katrina and Rita;
however the rig was recently removed and another rig has been contracted to
resume operations in the near term.
For the three months ended September 30, 2005, oil and gas revenues totaled
$36.7 million, or $7.32 per Mcfe compared to oil and gas revenues of $53.0
million, or $5.48 per Mcfe, for the corresponding period of 2004. Oil and gas
revenues totaled $130.9 million, or $6.64 per Mcfe, for the nine months ended
September 30, 2005 compared to $149.2 million, or $5.47 per Mcfe, for the
corresponding period of 2004. The increase in revenue per unit is largely due to
the increase in commodity prices between the periods, offset in part to the
settlement of the Company's hedging contracts.
Discretionary cash flow totaled $26.8 million for the third quarter of 2005,
compared to $43.7 million for the corresponding period of 2004. For the first
nine months of 2005 discretionary cash flow totaled $97.5 million compared to
$118.7 million for the same period last year. The decrease in discretionary cash
flow is due primarily to the lower production volumes explained above, and are
in part, offset by higher commodity price realizations between the periods.
Lease operating expenses totaled $3.4 million for the third quarter of 2005,
compared to $3.1 million for the corresponding period of 2004. On a per unit
basis, lease operating expenses were $0.68 per Mcfe for the third quarter
compared to $0.32 per Mcfe for the corresponding period of 2004. The increase in
per unit cost is a reflection of lower production volumes between the two
periods, as explained above. For the first nine months of 2005 lease operating
expenses totaled $12.2 million compared to $8.8 million for the same period last
year. The increase in lease operating expenses between the reported periods is
primarily due to the increase in wells and production facilities in the Biloxi
Marshland project area.
Severance and ad valorem taxes totaled $2.2 million for the third quarter of
2005 and was unchanged compared to the corresponding period of 2004. For the
first nine months of 2005, severance and ad valorem taxes totaled $6.7 million
compared to $7.0 million for the same period last year. The decrease in
severance and ad valorem taxes between the periods is primarily due to lower oil
and gas production volumes, partially offset by an increase in oil prices and a
higher natural gas tax rate.
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General and administrative expenses totaled $4.0 million for both the third
quarter of 2005, and for the corresponding period of 2004. For the first nine
months of 2005 general and administrative expenses totaled $13.3 million
compared to $10.7 million for the same period last year. The increase in general
and administrative expenses is primarily due to an increase in professional
services, accounting fees and increased operating activities.
Interest expense totaled $1.2 million for the third quarter of 2005, compared to
$1.6 million for the corresponding period of 2004. For the first nine months of
2005 interest expense totaled $3.3 million compared to $5.6 million for the same
period last year. The decrease in interest expense is due to lower outstanding
borrowings.
Depletion and depreciation expense totaled $19.7 million, or $3.94 per Mcfe, for
the third quarter of 2005 compared to $28.4 million, or $2.94 per Mcfe, for the
corresponding period of 2004. This decrease is primarily the result of a
decrease in production, partially offset by an increase in the depletion rate
compared to the same period last year. During the third quarter, the Company
revised its earlier reserve estimates associated with the Thibodaux #3 well
based on the well's performance resulting in an increase in the per unit rate
between the periods. For the first nine months of 2005, depletion and
depreciation expense totaled $70.5 million, or $3.58 per Mcfe, compared to $77.4
million, or $2.84 per Mcfe, for the same period last year.
HEDGING UPDATE
During the third quarter, the Company added a series of hedging contracts to
hedge a portion of its expected natural gas production for 2006. The additional
hedge contracts were completed in the form of costless collars, and ranged
between a floor price of $8.00 and a ceiling price of $14.50 with monthly
volumes ranging between 140,000 and 180,000 Mmbtu. The costless collars provide
the Company with a lower limit "floor" price and an upper limit "ceiling" price
on the hedged volumes. The floor price represents the lowest price the Company
will receive for the hedged volumes while the ceiling price represents the
highest price the Company will receive for the hedged volumes. The costless
collars are settled monthly based on the NYMEX futures contract. A complete
schedule of Meridian's hedges on natural gas and crude oil is listed in the
table at the end of this release
CONFERENCE CALL INFORMATION
Meridian invites you to listen to its conference call which will discuss these
results on November 10th at 10:30 a.m. central time. To participate in this
conference call, dial 866-383-8009 (US/Canada) or 617-597-5342 (International)
five to ten minutes before the scheduled start time and reference Conference ID
#48729651. The conference call will be webcast and can be accessed on the
Company's website at www.tmrc.com. Additionally, a replay of the conference call
will be available following the live broadcast by dialing 888-286-8010
(US/Canada) or 617-801-6888 (International) and referencing Conference ID #
95842992.
NON-GAAP FINANCIAL MEASURE
In this press release, we refer to a non-GAAP financial measure we call
"discretionary cash flow." As used herein, discretionary cash flow represents
net income plus depletion and depreciation, deferred taxes and other non-cash
items included in the Consolidated Statements of Operations prepared in
accordance with GAAP. Management believes this measure is a financial indicator
of our Company's ability to internally fund capital expenditures and service
outstanding debt. Management also believes this non-GAAP financial measure of
cash flow is
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useful information to investors because it is widely used by professional
research analysts in the valuation, comparison, rating and investment
recommendations of companies within the oil and gas exploration and production
industry. Discretionary cash flow should not be considered an alternative to net
cash provided by operating activities or net income, as defined by GAAP.
The Meridian Resource Corporation is an independent oil and natural gas company
engaged in the exploration for and development of oil and natural gas in
Louisiana, Texas, and the Gulf of Mexico. Meridian has access to an extensive
inventory of seismic data and, among independent producers, is a leader in using
3-D seismic technology to analyze prospects, define risk, and target
high-potential wells for exploration and development. Meridian is headquartered
in Houston, Texas, and has a field office in Weeks Island, Louisiana. Meridian
stock is traded on the New York Stock Exchange under the symbol "TMR."
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SAFE HARBOR STATEMENT AND DISCLAIMER
Statements identified by the words "expects," "projects," "plans," and certain
of the other foregoing statements may be deemed "forward-looking statements."
Although Meridian believes that the expectations reflected in such
forward-looking statements are reasonable, these statements involve risks and
uncertainties that may cause actual future activities and results to be
materially different from those suggested or described in this press release.
These include risks inherent in the drilling of oil and natural gas wells,
including risks of fire, explosion, blowout, pipe failure, casing collapse,
unusual or unexpected formation pressures, environmental hazards, adverse
weather conditions and other operating and production risks inherent in oil and
natural gas drilling and production activities, which may temporarily or
permanently reduce production or cause initial production or test results to not
be indicative of future well performance or delay the timing of sales or
completion of drilling operations; risks with respect to oil and natural gas
prices, a material decline in which could cause the Company to delay or suspend
planned drilling operations or reduce production levels; and risks relating to
the availability of capital to fund drilling operations that can be adversely
affected by adverse drilling results, production declines and declines in oil
and gas prices. These and other risks are described in the Company's documents
and reports, available from the U.S. Securities and Exchange Commission,
including the report filed on Form 10-K for the year ended December 31, 2004.
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FOR MORE INFORMATION CONTACT:
Lance L. Weaver at (281) 597-7125, lweaver@tmrc.com
Meridian Resource Corporation Website: www.tmrc.com
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THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data)
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30,
--------------------------- ------------------------
2005 2004 2005 2004
----------- ----------- ----------- ---------
Production:
Oil (Mbbl) 203 320 680 977
Natural Gas (Mmcf) 3,790 7,753 15,623 21,409
Mmcfe 5,010 9,671 19,706 27,269
Mmcfe (Daily Rate) 54.5 105.1 72.2 99.5
Average Prices:
Oil (per Bbl) $ 43.92 $ 30.26 $ 36.03 $ 27.61
Natural Gas (per Mcf) 7.32 5.58 6.81 5.71
Per Mcfe 7.32 5.48 6.64 5.47
Oil and Natural Gas Revenues $ 36,664 $ 52,951 $ 130,882 $149,156
Oil and Natural Gas Operating 3,431 3,057 12,223 8,811
Per Mcfe
0.68 0.32 0.62 0.32
Severance and Ad Valorem Taxes 2,189 2,176 6,687 7,005
Per Mcfe
0.44 0.23 0.34 0.26
General and Administrative Expense 3,961 4,028 13,345 10,723
Per Mcfe
0.79 0.42 0.68 0.39
Interest Expense 1,194 1,624 3,276 5,594
Per Mcfe
0.24 0.17 0.17 0.21
Discretionary Cash Flow (1) $ 26,758 $ 43,681 $ 97,507 $118,704
Per MCFE
5.34 4.52 4.95 4.35
Net Earnings Applicable to Common $ 3,276 $ 7,786 $ 13,529 $ 20,818
Stockholders
Per Common Share (Basic) $ 0.04 $ 0.10 $ 0.16 $ 0.30
Per Common Share (Diluted) $ 0.04 $ 0.09 $ 0.15 $ 0.27
</Table>
(1) See accompanying table for a reconciliation of discretionary cash flow to
net cash provided by operating activities as defined by GAAP.
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THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share)
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30,
------------------------ -----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues:
Oil and natural gas $ 36,664 $ 52,951 $ 130,882 $ 149,156
Interest and other 181 86 110 176
--------- --------- --------- ---------
Total revenues 36,845 53,037 130,992 149,332
--------- --------- --------- ---------
Operating costs and expenses:
Oil and natural gas operating 3,431 3,057 12,223 8,811
Severance and ad valorem taxes 2,189 2,176 6,687 7,005
Depletion and depreciation 19,725 28,387 70,452 77,440
General and administrative 3,961 4,028 13,345 10,723
Accretion expense 272 147 798 414
Insurance cost-hurricane damage 750 -- 750 --
Write-down of securities held -- 195 -- 195
--------- --------- --------- ---------
Total operating costs & expenses 30,328 37,990 104,255 104,588
--------- --------- --------- ---------
Net earnings before interest and income taxes 6,517 15,047 26,737 44,744
Other expenses:
Interest expense 1,194 1,624 3,276 5,594
Debt conversion expense -- -- -- 1,188
Taxes on income:
Current (860) (600) (603) 1,500
Deferred 2,907 5,500 9,633 12,500
--------- --------- --------- ---------
Net earnings 3,276 8,523 14,431 23,962
Dividends on preferred stock -- 737 902 3,144
--------- --------- --------- ---------
Net earnings applicable to common stockholders $ 3,276 $ 7,786 $ 13,529 $ 20,818
========= ========= ========= =========
Net earnings per share:
- Basic $ 0.04 $ 0.10 $ 0.16 $ 0.30
========= ========= ========= =========
- Diluted $ 0.04 $ 0.09 $ 0.15 $ 0.27
========= ========= ========= =========
Weighted average common shares outstanding:
- Basic 86,683 76,678 83,771 69,690
- Diluted 92,134 83,359 89,337 76,852
</Table>
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THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<Table>
<Caption>
SEPT. 30, 2005 DECEMBER 31,
(UNAUDITED) 2004
-------------- -----------
ASSETS
Cash and cash equivalents $ 15,774 $ 24,297
Other current assets 22,763 36,622
-------------- -----------
Total current assets 38,537 60,919
-------------- -----------
Property, equipment and other assets 484,443 451,473
-------------- -----------
Total assets $ 522,980 $ 512,392
============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 61,664 $ 58,681
Long-term debt, net of current maturities 75,129 75,129
Other liabilities 34,535 30,952
Redeemable convertible preferred stock -- 31,589
Common stockholders' equity 351,652 316,041
-------------- -----------
Total liabilities and stockholders' equity $ 522,980 $ 512,392
============== ===========
</Table>
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THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30,
---------------------- ----------------------
2005 2004 2005 2004
-------- -------- -------- --------
RECONCILIATION OF DISCRETIONARY CASH FLOW (DILUTED) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
DISCRETIONARY CASH FLOW (DILUTED) $ 26,758 $ 43,681 $ 97,507 $118,704
Adjustments to reconcile discretionary cash flow to net
cash provided by operating activities:
Interest on convertible sub-debt (net of tax) -- -- -- (270)
Net changes in working capital 2,911 9,073 (1,075) 8,627
-------- -------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 29,669 $ 52,754 $ 96,432 $127,061
======== ======== ======== ========
</Table>
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THE MERIDIAN RESOURCE CORPORATION
SUMMARY OF NATURAL GAS AND CRUDE OIL HEDGE POSITIONS
AS OF SEPTEMBER 30, 2005
<Table>
<Caption>
NATURAL GAS COSTLESS COLLARS:
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CONTRACTED FLOOR CEILING
VOLUME PRICE PRICE
CONTRACT PERIOD (MMBTU/QTR.) ($ / MMBTU) ($ / MMBTU)
--------------- ------------ ----------- -----------
Q4 -- '05 1,640,000 $7.29 $10.54
Q1 -- '06 1,690,000 $7.50 $11.25
Q2 -- '06 530,000 $8.00 $14.50
Q3 -- '06 460,000 $8.00 $14.50
Q4 -- '06 140,000 $8.00 $14.50
</Table>
<Table>
<Caption>
NATURAL GAS SWAP AGREEMENT:
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CONTRACTED AVERAGE
VOLUME STRIKE
CONTRACT PERIOD (MMBTU/QTR.) ($ / MMBTU)
--------------- ------------ -----------
Q4 -- '05 350,000 $6.34
</Table>
<Table>
<Caption>
CRUDE OIL COSTLESS COLLARS:
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CONTRACTED FLOOR CEILING
VOLUME PRICE PRICE
CONTRACT PERIOD (BBLS./QTR.) ($ / Bbl.) ($ / Bbl.)
--------------- ------------ ---------- ----------
Q4 -- '05 68,000 $37.79 $47.79
Q1 -- '06 62,000 $37.82 $47.82
Q2 -- '06 58,000 $38.06 $48.06
Q3 -- '06 51,000 $45.78 $64.84
Q4 -- '06 46,000 $50.00 $74.00
Q1 -- '07 41,000 $50.00 $74.00
Q2 -- '07 36,000 $50.00 $74.00
Q3 -- '07 12,000 $50.00 $74.00
</Table>
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