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EXHIBIT 99.4
TUESDAY, FEBRUARY 10, 1998 CONTACT: JEANNE BUCHANAN
(713) 653-5095
UNITED MERIDIAN POSTS RECORD NET INCOME, CASH FLOW ON INCREASED PRODUCTION
VOLUME IN FOURTH QUARTER AND FULL-YEAR 1997
Houston, TX - For the sixth consecutive year, United Meridian Corporation (UMC)
achieved record production volumes, pushing 1997 financial results to all-time
highs.
FULL-YEAR 1997 RESULTS
On a greater number of shares outstanding, net income in 1997 rose 14% to a
record $19.8 million, or $.56 per share, on total revenues of $264.9 million.
An 85% increase in oil production, sharp declines in operating costs on a
barrel equivalent basis, and good control of other cash costs drove
discretionary cash flow up 37% to an all-time high $165.2 million, or $4.64 per
share.
By comparison, full-year 1996 net income totaled $17.4 million, or $.53 per
share, on total revenues of $236.4 million, which included a $29 million
pre-tax gain on the sale of properties. Discretionary cash flow for 1996 was
$121 million, or $4.02 per share.
"UMC chalked up another year of record financial and operating results,
including net income and cash flow," said John B. Brock, UMC chairman and chief
executive officer. "Our production growth has now averaged 30% over the past
five years. And we exited the year producing 19% more than we averaged during
1997. By continuing to invest in high-impact drilling projects, we expect
similar production growth in 1998 and beyond,
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providing a substantial foundation for increased profitability, cash flow and
shareholder value following our planned merger with Ocean Energy in March.
"We ended 1997 with the highest level of reserves in company history. Total
proved reserves increased 36% and we replaced 366% of our production at low
finding costs," Brock continued. "Looking at 1998, our aggressive drilling
program is designed to continue capturing the upside potential of our
exploration inventory, with particular emphasis in the Gulf of Mexico and
offshore West Africa. At the same time, we will continue to add high-impact
properties to our core areas, illustrated by our newly awarded block in Angola
located in the heart of the West Africa deepwater play."
UMC increased 1997 production volumes to 17.3 million barrels of oil equivalent
(MMBOE), 27% higher than the 13.6 MMBOE produced a year ago. Reflecting a full
year of production from Equatorial Guinea's Block B, crude oil volumes averaged
22,300 barrels a day compared to 12,000 barrels averaged in 1996. Increased
production helped to offset the effect of lower oil prices during the year,
particularly in the fourth quarter. UMC oil sales averaged $17.87 per barrel,
down $3.07 a barrel from 1996 price realizations.
Daily gas production averaged 150 million cubic feet (MMCF) in 1997 versus 152
MMCF averaged in 1996. Improved volume in the fourth quarter helped to offset
the loss of gas production associated with properties sold earlier in the year.
The company received $2.04 per thousand cubic feet (MCF) of gas in 1997 versus
$2.07 per MCF in 1996.
Accompanying the record production in 1997 was a 12% decline in operating costs
(production, general and administrative, and depreciation, depletion and
amortization) on a unit-of-production basis. Year-over-year, production costs
(including ad valorem taxes) fell from $3.76 per barrel of oil equivalent (BOE)
to $3.27 per BOE. UMC reduced general and administrative expense by 15% to
$.79 per BOE. Depreciation, depletion and amortization expense was $5.58 per
BOE compared to $6.23 per BOE in 1996.
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UMC's capital expenditures during 1997 totaled $370 million compared to $190
million in 1996. Of this amount, $103 million and $180 million were allocated
to exploration and development activities, respectively. The company spent $63
million to acquire interests in producing properties. International spending
totaled $188 million, or 51% of total capital expenditures.
To help fund its aggressive capital program, UMC used cash on hand at the
beginning of the year and drew on its bank revolver, increasing total long-term
debt from $157 million in 1996 to $283 million at the end of 1997, including
$150 million in subordinated debt. UMC did increase the capacity of its
revolver to $300 million during the fourth quarter, leaving approximately $170
million of unused capacity at year end. Total debt represents 38% of UMC's
total book capitalization.
FOURTH QUARTER 1997 RESULTS
On the strength of robust oil and gas production, UMC recorded respective 51%
and 27% improvements in net income and discretionary cash flow during fourth
quarter 1997, both record quarterly results. On a greater number of shares
outstanding, net income totaled $8.5 million, or $.24 per share, compared to
$5.6 million, or $.17 per share, in the prior-year period. Discretionary cash
flow of $50.7 million compared to $40 million a year ago.
Helping to mitigate the impact of falling oil prices, daily oil production
during the quarter climbed 67% to average 27,700 barrels compared to 16,600
barrels in fourth quarter 1996. UMC received an average $17.31 a barrel, off
$5.55 a barrel from year-ago realizations.
For the fourth quarter, daily gas production increased 18% from an average 143
MMCF to 169 MMCF, reflecting the results of the successful development drilling
program and
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the acquisition of partnership and other interests in the third quarter. The
company realized $2.27 per MCF versus $2.29 per MCF in fourth quarter 1996.
United Meridian Corporation is a Houston-based independent energy company
engaged in the exploration, exploitation and acquisition of crude oil and
natural gas properties in the United States and Canada. UMC has exploration
and development activities in West Africa's Cote d'Ivoire and Equatorial
Guinea, and was recently awarded a block offshore Angola. UMC also has
exploration programs underway in Pakistan and Bangladesh. The company's common
stock is traded on the New York Stock Exchange under the symbol UMC.
Financials follow.
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CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
For the three months For the twelve months
ended December 31, ended December 31,
------------------------- ------------------------
1997 1996 1997 1996
---------- --------- --------- ---------
Revenues:
Gas sales.......................................................... $ 35,156 $ 30,125 $ 111,663 $ 114,498
Oil sales ......................................................... 44,161 35,001 145,351 92,031
Gain on sale of assets ............................................ 1,954 3,624 4,851 29,021
Other ............................................................. 674 95 3,000 854
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81,945 68,845 264,865 236,404
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Costs and expenses:
Production costs .................................................. 17,258 16,079 56,492 51,298
General and administrative ........................................ 4,851 3,168 13,580 12,727
Exploration, including dry holes and impairments .................. 8,300 17,509 38,845 40,325
Depreciation, depletion and amortization .......................... 28,523 22,086 96,418 84,979
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58,932 58,842 205,335 189,329
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Income from operations ............................................... 23,013 10,003 59,530 47,075
Other expenses and deductions:
Interest and debt expense ......................................... (6,680) (5,991) (21,749) (22,811)
Other ............................................................. 359 (798) 1,681 (844)
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Income before income taxes ........................................... 16,692 3,214 39,462 23,420
Income tax benefit (provision):
Current ........................................................... (1,265) (115) (6,220) (785)
Deferred .......................................................... (6,962) 2,516 (13,455) (5,231)
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Net income............................................................ $ 8,465 $ 5,615 $ 19,787 $ 17,404
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Basic EPS............................................................. $ 0.24 $ 0.17 $ 0.56 $ 0.53
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Weighted average number of common shares
outstanding ................................................... 35,784 33,515 35,590 30,120
========== ========= ========= =========
Diluted EPS........................................................... $ 0.23 $ 0.16 $ 0.54 $ 0.51
========== ========= ========= =========
Weighted average number of common shares
outstanding, including common share equivalents ................ 36,943 35,335 36,662 31,428
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Cash flows from operations before
changes in working capital ........................................ $ 50,712 $ 40,011 $ 165,230 $ 121,045
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OTHER OPERATING DATA
For the three months For the twelve months
ended December 31, ended December 31,
------------------------- -------------------------
1997 1996 1997 1996
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Production:
Oil (Mbbls)
U.S ............................................. 641 451 2,214 2,022
Canada .......................................... 117 109 439 511
Cote d'Ivoire ................................... 209 233 1,027 894
Equatorial Guinea ............................... 1,583 738 4,453 967
---------- ---------- ---------- ----------
Total ........................................ 2,550 1,531 8,133 4,394
Natural Gas (MMcf)
U.S ............................................. 11,967 11,177 42,238 47,719
Canada .......................................... 2,220 1,427 7,630 5,339
Cote d'Ivoire ................................... 1,327 573 4,939 2,387
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Total ........................................ 15,514 13,177 54,807 55,445
Average Daily Production:
Oil (Mbbls)
U.S ............................................. 6.9 4.9 6.1 5.5
Canada .......................................... 1.3 1.2 1.2 1.4
Cote d'Ivoire ................................... 2.3 2.5 2.8 2.5
Equatorial Guinea ............................... 17.2 8.0 12.2 2.6
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Total ........................................ 27.7 16.6 22.3 12.0
Natural gas (MMcf)
U.S ............................................. 130.1 121.5 115.7 130.4
Canada .......................................... 24.1 15.5 20.9 14.6
Cote d'Ivoire ................................... 14.4 6.2 13.6 6.5
---------- ---------- ---------- ----------
Total ........................................ 168.6 143.2 150.2 151.5
Average Sales Prices:
Oil ($ per barrel)
U.S ............................................. $ 17.39 $ 23.62 $ 17.96 $ 20.91
Canada .......................................... $ 17.44 $ 22.40 $ 17.97 $ 19.43
Cote d'Ivoire ................................... $ 17.56 $ 23.83 $ 18.35 $ 20.56
Equatorial Guinea ............................... $ 17.24 $ 22.15 $ 17.71 $ 22.17
Total ........................................ $ 17.31 $ 22.86 $ 17.87 $ 20.94
Natural gas ($ per Mcf)
U.S ............................................. $ 2.46 $ 2.38 $ 2.18 $ 2.15
Canada .......................................... $ 1.44 $ 1.72 $ 1.40 $ 1.44
Cote d'Ivoire ................................... $ 1.86 $ 1.95 $ 1.81 $ 1.80
Total ........................................ $ 2.27 $ 2.29 $ 2.04 $ 2.07
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CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except percentages)
December 31, December 31,
1997 1996
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Cash and cash equivalents .............................................................. $ 11,689 $ 54,942
Other current assets ................................................................... 96,475 101,219
Property and equipment
net of accumulated depreciation, depletion and
amortization ........................................................................ 740,972 524,189
Other assets ........................................................................... 35,889 37,943
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Total assets ........................................................................... $885,025 $718,293
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Current liabilities .................................................................... $106,712 $ 98,392
Long-term debt ......................................................................... 282,646 156,832
Other liabilities ...................................................................... 36,268 30,833
Equity ................................................................................. 459,399 432,236
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Total liabilities and equity ........................................................... $885,025 $718,293
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Ratio of total debt to total book capitalization ....................................... 38% 27%
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Total debt ............................................................................. $283,557 $157,731
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