EXHIBIT 99.1
[MERIDIAN RESOURCE CORPORATION GRAPHIC] NEWS
THE MERIDIAN RESOURCE CORPORATION ANNOUNCES
FIRST QUARTER 2006 FINANCIAL RESULTS
Houston, Texas -- May 9, 2006 -- The Meridian Resource Corporation (NYSE: TMR)
today announced its first quarter 2006 financial and operational results. A
summary of the quarter's results are:
>> Net Income equaled $7.3 million or $0.08 per share
>> Discretionary Cash Flow equaled $42.8 million, or $0.46 per share
>> Production equaled 6.4 Bcfe, or 71.5 Mmcfe per day
>> Total Revenues equaled $57.5 million
>> Lease Operating Expense equaled $4.6 million
>> Depletion and Depreciation equaled $29.5 million
>> General & Administrative Expense equaled $5.1 million
NET INCOME
Net income to common shareholders for the first quarter of 2006 increased by
$1.2 million or 20% to $7.3 million, or $0.08 per diluted common share, compared
to $6.1 million, or $0.07 per share for the first quarter of 2005. Excluding the
$1.2 million after tax impact of un-reimbursed hurricane damage repairs, the
Company would have reported net income of $8.6, or $0.09 per diluted common
share. Net income for the first quarter compared to the same period last year
was affected by higher average realized prices offset in part by increased
operating cost, DD&A cost and lower production.
DISCRETIONARY CASH FLOW
Discretionary cash flow for the first quarter of 2006 increased by $5.8 million,
or 16%, to $42.8 million, or $0.46 per diluted common share, compared to $37.0
million, or $0.43 per share for the first quarter of 2005. The increase in
discretionary cash flow between the periods is in large part a result of
improved price realizations. The Company received 39% more for its oil and
natural gas compared to the first quarter of 2005. The pricing improvements were
also helped by the expiration of unfavorable hedges between the periods.
Sequentially, the discretionary cash flow was down compared to last quarter's
amount of $50.8 million primarily due to lower average realized prices offset in
part by increased production between the periods.
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
PRODUCTION VOLUMES
Production volumes for the first quarter of 2006 totaled 6.4 billion cubic feet
of gas equivalent ("Bcfe") compared to 7.8 Bcfe for the first quarter of 2005.
Average daily production for the first quarter was 71.5 million cubic feet of
gas equivalent ("Mmcfe") compared to 86.3 Mmcfe for the first quarter of 2005.
The variance in average daily production volumes between the two periods is due
in part to mechanical issues caused by the 2005 hurricanes on the BML 1-2 well
and the BML 28-1 well. Production from these wells have been deferred until the
mechanical issues can be resolved. Additional variance differences can be
attributed to new discoveries brought on between the comparable periods, offset
by natural production declines. Sequentially, production increased by 8% from
the average daily production of 66 Mmcf/d in the fourth quarter of last year.
TOTAL REVENUES
Total revenues for the first quarter of 2006 totaled $57.5 million, or $8.94 per
Mcfe, an increase of 15% compared to total revenues of $50 million, or $6.44 per
Mcfe, for the first quarter of 2005. The variance between the two periods for
total revenues is due to the impacts on production and revenues referenced
above. Sequentially, revenues are down from $64.7 million in the fourth quarter
of 2005 due to lower commodity prices between the two periods.
LEASE OPERATING EXPENSES
Lease operating expenses for the first quarter of 2006 were down slightly to
$4.6 million compared to $4.7 million for the first quarter of 2005. On a Mcfe
basis, lease operating expenses increased to $0.71 per Mcfe in the first quarter
of 2006 compared to $0.60 per Mcfe in the first quarter of 2005. The increase in
the per Mcfe rate was primarily attributable to the previously discussed lower
production between the two corresponding periods. Sequentially, lease operating
expenses increased from $3.6 million in the fourth quarter of 2005 primarily due
to operating expenses associated with new wells and an overall industry-wide
increase in service costs.
DEPLETION AND DEPRECIATION
Depletion and depreciation for the first quarter of 2006 was $29.5 million
compared to $25.3 million for the first quarter of 2005. On a per Mcfe basis,
depletion and depreciation for the first quarter was $4.59 per Mcfe compared to
$3.26 per Mcfe for the first quarter of 2005. Depreciation and depletion expense
on a per Mcfe basis increased primarily due to the impact of negative reserve
revisions during 2005 and the rising costs in the industry for current and
projected capital expenditures. Sequentially, depreciation and depletion expense
increased slightly compared to the fourth quarter of 2005 which was $26.9
million or $4.43 per Mcfe.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the first quarter of 2006 was $5.1
million or $0.79 per Mcfe compared to $5.0 million or $0.65 per Mcfe for the
first quarter of 2005. General and administrative expenses on a per Mcfe basis
increased primarily due to lower production rates between the two periods.
Sequentially, general and administrative expense increased slightly compared to
the fourth quarter of 2005 which was $4.7 million or $0.77 per Mcfe.
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
HEDGING UPDATE
As previously announced, the Company recently entered into several new hedging
contracts to hedge a portion of its expected oil and gas production. The
additional gas hedge contracts were completed in the form of costless collars,
and ranged between a floor price of $8.00 and a ceiling price of $10.60 for a
monthly volume of approximately 400,000 Mmbtu between June 2006 and May 2007.
The additional oil hedge contracts were also completed in the form of costless
collars, and ranged between a floor price of $60 and a ceiling price of $82 with
monthly volumes ranging between 5,000 and 6,000 barrels between August 2007 and
July 2008. 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 during each respective month. A schedule showing the
Company's complete hedging position is located below.
CONFERENCE CALL INFORMATION
Meridian invites you to listen to its conference call which will discuss the
Company's financial and operational results on Tuesday May 9th at 10:30 a.m.
central time. To participate in this conference call, dial 866-700-7101
(US/Canada) or 617-213-8837 (International) five to ten minutes before the
scheduled start time and reference Conference ID #82407787. 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 for one week
following the live broadcast by dialing 888-286-8010 (US/Canada) or 617-801-6888
(International) and referencing Conference ID # 88586178.
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 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 and other technologies to analyze prospects, define risk, target and
complete high-potential wells for exploration and development. Meridian is
headquartered in Houston, Texas, and has offices in Tulsa, Oklahoma as well as 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
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
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, 2005.
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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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data)
(Unaudited)
<Table>
<Caption>
Q1-06 Q1-05 Q4-05
------------------------------------
THREE MONTHS ENDED
------------------------------------
MAR. 31, MAR. 31, DEC. 31
2006 2005 2005
---------- ---------- ----------
Production:
Oil (Mbbl) 224 260 202
Natural Gas (Mmcf) 5,087 6,203 4,868
Mmcfe 6,432 7,765 6,075
Mmcfe (Daily Rate) 71.5 86.3 66.0
Average Prices:
Oil (per Bbl) $ 49.23 $ 33.99 $ 50.14
Natural Gas (per Mcf) 9.20 6.66 11.15
Per Mcfe 8.99 6.46 10.60
Oil and Natural Gas Revenues $ 57,827 $ 50,132 $ 64,373
Lease Operating Expenses 4,553 4,683 3,637
Per Mcfe 0.71 0.60 0.60
Severance and Ad Valorem Taxes 2,735 2,632 2,124
Per Mcfe 0.43 0.34 0.35
General and Administrative Expense 5,111 5,013 4,665
Per Mcfe 0.79 0.65 0.77
Interest Expense 1,378 985 1,448
Per Mcfe 0.21 0.13 0.24
Discretionary Cash Flow (1) $ 42,820 $ 36,967 $ 50,828
Per Mcfe 6.66 4.76 8.37
Net Earnings Applicable to Common $ 7,331 $ 6,127 $ 14,320
Stockholders
Per Common Share (Basic) $ 0.08 $ 0.08 $ 0.17
Per Common Share (Diluted) $ 0.08 $ 0.07 $ 0.16
</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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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share)
(Unaudited)
<Table>
<Caption>
Q1-06 Q1-05 Q4-05
--------------------------------------
THREE MONTHS ENDED
--------------------------------------
MAR. 31, MAR. 31, DEC. 31
2006 2005 2005
---------- ---------- ----------
Revenues:
Oil and natural gas $ 57,827 $ 50,132 $ 64,373
Interest and other (321) (88) 331
---------- ---------- ----------
Total revenues 57,506 50,044 64,704
---------- ---------- ----------
Operating costs and expenses:
Oil and natural gas operating
4,553 4,683 3,637
Severance and ad valorem taxes
2,735 2,632 2,124
Depletion and depreciation 29,499 25,322 26,902
General and administrative 5,111 5,013 4,665
Accretion expense 301 251 322
Hurricane damage repairs 1,999 -- 2,316
---------- ---------- ----------
Total operating costs and expenses 44,198 37,901 39,966
---------- ---------- ----------
Net earnings before interest and income taxes 13,308 12,143 24,738
Other expenses:
Interest expense 1,378 985 1,448
Taxes on income:
Current 171 590 35
Deferred 4,428 3,710 8,935
---------- ---------- ----------
Net earnings 7,331 6,858 14,320
Dividends on preferred stock -- 731 --
---------- ---------- ----------
Net earnings applicable to common stockholders $ 7,331 $ 6,127 $ 14,320
========== ========== ==========
Net earnings per share:
- Basic $ 0.08 $ 0.08 $ 0.17
========== ========== ==========
- Diluted $ 0.08 $ 0.07 $ 0.16
========== ========== ==========
Weighted average common shares outstanding:
- Basic 86,850 79,271 86,771
- Diluted 92,552 85,024 92,327
</Table>
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<Table>
<Caption>
MARCH 31,
2006 DEC. 31
(UNAUDITED) 2005
------------ ------------
ASSETS
Cash and cash equivalents $ 35,853 $ 23,265
Other current assets 37,802 45,394
------------ ------------
Total current assets 73,655 68,659
------------ ------------
Property, equipment and other assets 491,957 487,143
------------ ------------
Total assets $ 565,612 $ 555,802
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 47,073 $ 51,721
Long-term debt, net of current maturities 75,000 75,000
Other liabilities 56,176 51,516
Common stockholders' equity 387,363 377,565
------------ ------------
Total liabilities and stockholders' equity $ 565,612 $ 555,802
============ ============
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
Q1-06 Q1-05 Q4-05
-------------------------------------------
THREE MONTHS ENDED
-------------------------------------------
MAR. 31 MAR. 31 DEC. 31
2006 2005 2005
------------ ------------ ------------
RECONCILIATION OF DISCRETIONARY CASH FLOW (DILUTED) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
DISCRETIONARY CASH FLOW (DILUTED) $ 42,820 $ 36,967 $ 50,828
Adjustments to reconcile discretionary cash flow to net
cash provided by operating activities:
Interest on convertible sub-debt (net of tax) -- -- --
Net changes in working capital 5,287 (6,833) (13,181)
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 48,107 $ 30,134 $ 37,647
============ ============ ============
</Table>
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com
THE MERIDIAN RESOURCE CORPORATION
SUMMARY OF NATURAL GAS AND CRUDE OIL HEDGE POSITIONS
NATURAL GAS COSTLESS COLLARS:
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<Table>
<Caption>
CONTRACTED FLOOR CEILING
VOLUME PRICE PRICE
CONTRACT PERIOD (MMBTU/QTR.) ($ / MMBTU) ($ / MMBTU)
--------------- ------------ ----------- -----------
Q1 -- '06 1,690,000 $7.50 $11.25
Q2 -- '06 930,000 $8.00 $12.82
Q3 -- '06 1,660,000 $8.00 $11.68
Q4 -- '06 1,340,000 $8.00 $11.01
Q1 -- '07 1,200,000 $8.00 $10.60
Q2 -- '07 800,000 $8.00 $10.60
CRUDE OIL COSTLESS COLLARS:
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CONTRACTED FLOOR CEILING
VOLUME PRICE PRICE
CONTRACT PERIOD (BBLS./QTR.) ($ / Bbl.) ($ / Bbl.)
--------------- ------------ ---------- ----------
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 24,000 $55.00 $78.00
Q4 -- '07 18,000 $60.00 $82.00
Q1 -- '08 18,000 $60.00 $82.00
Q2 -- '08 16,000 $60.00 $82.00
Q3 -- '08 5,000 $60.00 $82.00
</Table>
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1401 Enclave Parkway, Suite 300 o Houston, Texas 77077 o
(281) 597-7000 o www.tmrc.com