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EXHIBIT 99.2
FOR IMMEDIATE RELEASE [OCEAN ENERGY LOGO]
October 20, 1999
CONTACT:
John T. Raymond
Vice President - Investor Relations
1001 Fannin, Suite 1600
Houston, Texas 77002
(713) 265-6161
OCEAN ENERGY ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
AND OPERATIONAL HIGHLIGHTS
On March 30, 1999, Ocean Energy, Inc. merged with and into Seagull Energy
Corporation and the resulting company was renamed Ocean Energy, Inc. The merger
was treated for accounting purposes as an acquisition of Seagull by Ocean Energy
in a purchase business transaction. As such, the financial results presented
here for the third quarter of 1998 represents Ocean Energy, Inc. on a
stand-alone basis.
THIRD QUARTER FINANCIAL RESULTS
HOUSTON - Ocean Energy, Inc. (NYSE: OEI) today announced net income available to
common shareholders for the third quarter of 1999 of $28.0 million, or $0.17 per
basic share on revenues of $214.4 million. By comparison, the net loss for the
third quarter of 1998 was $14.4 million, or a $0.14 per share loss on revenues
of $123.4 million.
THE COMPANY'S CASH FLOW FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL AS
REPORTED FOR THE FIRST NINE MONTHS OF 1999 WAS $214.7 MILLION, COMPARED TO
$172.8 MILLION FOR THE SAME PERIOD IN 1998.
AVERAGE DAILY PRODUCTION FOR THE THIRD QUARTER OF 1999 WAS 470 MILLION CUBIC
FEET (MMCF) OF GAS AND 78 THOUSAND BARRELS OF OIL, OR 156 THOUSAND BARRELS OF
OIL EQUIVALENT PER DAY (TBOEPD), COMPARED TO 112 TBOEPD FOR THE THIRD QUARTER OF
1998.
In the third quarter, lease operating expense (LOE), including severance tax,
totaled $54.7 million or $3.81 per barrel of oil equivalent (BOE) as compared to
$4.85 per BOE in the third quarter of 1998 and $4.38 per BOE in the second
quarter of 1999.
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The Company made significant progress on its asset rationalization program in
the third quarter with the closing of the Arkoma Basin and Gulf of Mexico asset
packages for total cash proceeds of $291 million. The previously announced sale
of the ENSTAR business unit for $290 million is anticipated to close by the end
of the year. These sales, when combined with first quarter activities in
aggregate, will generate estimated net cash proceeds in excess of $700 million,
which will be used to reduce debt. As a result, the Company estimates that debt
to total capitalization will be 58% at year-end as compared to 68% at the time
of the merger.
"The substantial improvement in the cost structure is consistent with our stated
objectives to further improve the Company's operating efficiency. Both G&A and
LOE savings are on target, and upon completion of the ENSTAR sale, the reduction
in debt is expected to result in a 30% improvement in interest expense per BOE
in 2000 as compared to the time of the merger," stated James T. Hackett, Ocean
Energy President and CEO.
THIRD QUARTER OPERATIONAL HIGHLIGHTS
Year to date, the Company has participated in over 277 wells with an overall
success rate of 78%. The Company has experienced an 82% development drilling
success rate and a 61% exploratory drilling success rate in 1999.
INTERNATIONAL
In Equatorial Guinea Block B, for the quarter, gross daily production averaged
approximately 100 thousand barrels of oil per day (tbopd), which, on a net
basis, equates to 21 tbopd. Currently, the Phase III Jade platform installation
is on schedule for late December with drilling to commence in the first quarter
of 2000. As a result, the Company anticipates achieving its projected 2000 gross
exit rate of 120 tbopd.
In Egypt, third quarter production averaged 11 tboepd. In the West Abu Gharadig
concession (OEI 30%) the Raml SW #2 was successfully drilled and is on
production with an initial rate of 2,500 bopd and the Company plans to drill two
additional wells by year-end. In the East Beni Suef concession (OEI 50%),
production resumed in late September towards a target rate of 2,000 bopd
(gross).
Offshore Pakistan, the Company is currently drilling the Pasni #1 exploratory
well (OEI 76%). This is OEI's first well in Pakistan, and it is scheduled to
reach targeted objectives during the fourth quarter.
The Company's other international producing areas, namely Cote d'Ivoire, Russia
and Indonesia, represent approximately 11% of daily production. These areas on a
combined basis produced approximately 17 tboepd, which is comparable with first
and second quarter results. Production levels have been maintained with minimal
capital expenditures.
GULF OF MEXICO
Recently, the Company has announced two discoveries in the deepwater Gulf of
Mexico. The Nansen prospect (OEI 50%) and the North Boomvang prospect (OEI 20%).
As previously reported, Ocean and its partners are proceeding on delineation
drilling on both discoveries.
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Activities continue on the Gulf of Mexico shelf Duke (NYSE: DUK) drilling
program. Through the third quarter, the Company has drilled six wells with a
success rate of 50% and expects to spud seven additional wells before the end of
this year.
In the Central Gulf region, the Company successfully drilled the Cobra
exploratory prospect (OEI 50%), another discovery in the Little Lake field,
which tested at 12.7 MMcfpd and 1,037 bopd. In the South Timbalier 219 and 211
blocks, the Schooner #1 (OEI 25%) and #2 (OEI 20%) exploratory wells were both
successfully drilled. Both wells will be completed and placed on production in
the first half of next year.
U.S. ONSHORE
This year, in the Bear Paw area, the Company has drilled 87 wells to date with
62 being producers. A total of 90 wells are planned for this year. Additional
compression and minor modifications are planned by year-end allowing for our
planned exit rate of 44 MMcfpd net.
The East Triangle coal bed methane project, located in the Powder River Basin of
Wyoming, is in the testing phase with 18 wells on production and nine wells
waiting to be placed on production. The pilot program will test 1,080 acres of
our 24,000 acres net holding. Upon successful dewatering results from the pilot
program we will continue with additional drilling.
In the Cook Inlet area of Alaska, the saltwater disposal well and two coal bed
methane pilot wells have been drilled and completed. Testing is underway on the
two pilot wells.
Additionally, Ocean has exercised a preferential right to purchase 50% of
Esenjay Exploration, Inc.'s (Nasdaq: ESNJ) working interest in two Wilcox
prospects in South Texas for $1.5 million. This purchase includes a four well
drilling commitment.
Ocean Energy, Inc. is an independent energy company engaged in the exploration,
development, production and acquisition of crude oil and natural gas. North
American operations are focused in the shelf and deepwater areas of the Gulf of
Mexico, the Permian Basin, Midcontinent and Rocky Mountain regions.
Internationally, the Company explores for and produces oil and gas in West
Africa (Cote d'Ivoire and Equatorial Guinea), Egypt, Russia and Indonesia. Ocean
Energy also has exploration programs underway in Angola, Pakistan, Yemen and
Bangladesh.
CERTAIN STATEMENTS IN THIS NEWS RELEASE REGARDING FUTURE EXPECTATIONS, PLANS FOR
ACQUISITIONS, DISPOSITIONS, AND OIL AND GAS RESERVES, EXPLORATION, DEVELOPMENT,
PRODUCTION AND PRICING MAY BE REGARDED AS "FORWARD LOOKING STATEMENTS" WITHIN
THE MEANING OF THE SECURITIES LITIGATION REFORM ACT. THEY ARE SUBJECT TO VARIOUS
RISKS, SUCH AS OPERATING HAZARDS, DRILLING RISKS, THE INHERENT UNCERTAINTIES IN
INTERPRETING ENGINEERING DATA RELATING TO UNDERGROUND ACCUMULATIONS OF OIL AND
GAS, THE RISK THAT THE PREVIOUSLY ANNOUNCED SALE OF ENSTAR DOES NOT CLOSE, AS
WELL AS OTHER RISKS DISCUSSED IN DETAIL IN THE COMPANY'S SEC FILINGS, INCLUDING
THE ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998. ACTUAL
RESULTS MAY VARY MATERIALLY.
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For further information, please contact Investor Relations by phone at (713)
265-6161, by mail send requests to Investor Relations, 1001 Fannin, Suite 1600,
Houston, Texas 77002 or at our web site at www.oceanenegy.com.
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OCEAN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Revenues ............................................ $ 214,393 $ 123,369 $ 516,293 $ 397,334
--------- --------- --------- ---------
Costs of Operations:
Operations and maintenance ..................... 54,672 50,048 165,278 135,460
Depreciation, depletion and amortization ....... 85,615 70,221 233,732 217,719
Provision for loss on sale of Canadian assets .. -- -- 28,500 --
Write-down of oil and gas properties ........... -- -- -- 218,392
General and administrative ..................... 4,955 4,628 18,038 13,646
--------- --------- --------- ---------
145,242 124,897 445,548 585,217
--------- --------- --------- ---------
Operating Profit (Loss) ............................. 69,151 (1,528) 70,745 (187,883)
Other (Income) Expense:
Interest expense ............................... 30,410 18,621 86,601 40,562
Merger expense ................................. 3,176 -- 43,828 39,000
Interest income and other ...................... (269) (1,286) (383) (2,094)
--------- --------- --------- ---------
33,317 17,335 130,046 77,468
--------- --------- --------- ---------
Income (Loss) Before Income Taxes ................... 35,834 (18,863) (59,301) (265,351)
Income Tax Expense (Benefit) ........................ 6,404 (4,446) (9,269) (87,955)
--------- --------- --------- ---------
Income (Loss) from Continuing Operations ............ 29,430 (14,417) (50,032) (177,396)
Loss from Discontinued Operations, net of
income taxes ................................... (625) -- (78) --
--------- --------- --------- ---------
Net Income (Loss) ................................... 28,805 (14,417) (50,110) (177,396)
Preferred Stock Dividend ............................ 819 -- 2,456 --
--------- --------- --------- ---------
Net Income (Loss) Available to Common
Shareholders ................................... $ 27,986 $ (14,417) $ (52,566) $(177,396)
========= ========= ========= =========
Basic Earnings (Loss) Per Common Share:
Income (Loss) from Continuing Operations ... $ 0.17 $ (0.14) $ (0.36) $ (1.76)
Discontinued Operations .................... -- -- -- --
--------- --------- --------- ---------
Income (Loss) to Common Shareholders ........ $ 0.17 $ (0.14) $ (0.36) $ (1.76)
======== ========= ========= =========
Diluted Earnings (Loss) Per Common Share:
Income (Loss) from Continuing Operations ... $ 0.16 $ (0.14) $ (0.36) $ (1.76)
Discontinued Operations .................... -- -- -- --
--------- --------- --------- ---------
Income (Loss) to Common Shareholders ....... $ 0.16 $ (0.14) $ (0.36) $ (1.76)
--------- --------- --------- ---------
Weighted Average Number of Common Shares Outstanding:
Basic ...................................... 166,680 100,924 145,670 100,544
========= ========= ========= =========
Diluted .................................... 170,629 100,924 145,670 100,544
========= ========= ========= =========
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OCEAN ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
ASSETS:
Current Assets .................................... $ 251,816 $ 153,781
Property, Plant and Equipment, Net ................ 2,164,632 1,581,639
Net Noncurrent Assets of Discontinued Operations .. 222,112 --
Other Assets ...................................... 267,761 271,540
---------- ----------
Total Assets ...................................... $2,906,321 $2,006,960
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest Payable .................................. $ 34,024 $ 36,206
Other Current Liabilities ......................... 253,336 200,140
Current Maturities of Long-Term Debt .............. 846 836
---------- ----------
Total Current Liabilities ..................... 288,206 237,182
Long-Term Debt .................................... 1,538,697 1,371,890
Other Noncurrent Liabilities ...................... 140,949 20,945
Shareholders' Equity .............................. 938,469 376,943
---------- ----------
Total Liabilities and Shareholders' Equity ........ $2,906,321 $2,006,960
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OCEAN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
------------------------
1999 1998
--------- ---------
Operating Activities:
Net loss ...................................................................... $ (50,110) $(177,396)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss from discontinued operations ........................................ 78 --
Depreciation, depletion and amortization ................................. 233,732 217,719
Provision for loss on sale of Canadian assets ............................ 28,500 --
Write-down of oil and gas properties ..................................... -- 218,392
Deferred income taxes .................................................... (24,702) (91,253)
Noncash merger expense ................................................... 21,047 --
Other .................................................................... 6,180 5,294
--------- ---------
214,725 172,756
Changes in operating assets and liabilities, net of acquisitions ......... (18,319) (24,427)
--------- ---------
Net cash provided by continuing operations ............................... 196,406 148,329
Net cash provided by discontinued operations ............................. 14,377 --
--------- ---------
Net Cash Provided By Operating Activities ................................ 210,783 148,329
--------- ---------
Investing Activities:
Capital expenditures .......................................................... (231,976) (669,798)
Capital expenditures of discontinued operations ............................... (5,040) --
Acquisition costs, net of cash acquired ....................................... (5,623) --
Proceeds from sales of property, plant and equipment .......................... 390,512 1,097
--------- ---------
Net Cash Provided By (Used In) Investing Activities ...................... 147,873 (668,701)
--------- ---------
Financing Activities:
Net proceeds (payments) from revolver and other borrowings .................... (410,824) 531,082
Proceeds from deferred revenue ................................................ 100,000 --
Deferred financing costs ...................................................... (6,406) (15,433)
Other ......................................................................... 1,745 7,583
--------- ---------
Net Cash Provided By (Used In) Financing Activities ...................... (315,485) 523,232
--------- ---------
Increase in Cash and Cash Equivalents .................................... 43,171 2,860
Cash and Cash Equivalents At Beginning of Period .............................. 10,706 11,689
--------- ---------
Cash and Cash Equivalents At End of Period .................................... $ 53,877 $ 14,549
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OCEAN ENERGY, INC.
OPERATIONAL INFORMATION
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------------
1999 1998 1999 1998
------- ------- -------- ---------
Financial Data (Dollars in Thousands):
Operating Profit (Loss):
Oil and Gas Operations ................................................ $76,398 $ 4,092 $ 94,892 $(171,257)
Corporate ............................................................. (7,247) (5,620) (24,147) (16,626)
Depreciation, Depletion and Amortization:
Oil and Gas Operations ................................................ 83,323 69,229 227,623 214,739
Corporate ............................................................. 2,292 992 6,109 2,980
Operations Data:
Net Daily Natural Gas Production (MMcf):
Domestic (1) ...................................................... 427.5 267.8 382.0 273.0
Canada (2) ........................................................ -- 24.9 14.0 25.7
Cote d'Ivoire (1) ................................................. 33.9 20.7 29.8 20.2
Egypt (1) ......................................................... 0.9 -- 0.7 --
Indonesia (1) ..................................................... 7.6 -- 4.4 --
------- ------- -------- ---------
Total ............................................................. 469.9 313.4 430.9 318.9
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Average Natural Gas Prices ($ per Mcf):
Domestic (1) ...................................................... $ 2.38 $ 1.84 $ 2.03 $ 2.00
Canada (2) ........................................................ $ -- $ 1.23 $ 1.54 $ 1.27
Cote d'Ivoire (1) ................................................. $ 1.77 $ 1.64 $ 1.73 $ 1.67
Egypt (1) ......................................................... $ 3.94 $ -- $ 3.32 $ --
Indonesia (1) ..................................................... $ 2.26 $ -- $ 2.14 $ --
Weighted Average .................................................. $ 2.34 $ 1.78 $ 2.00 $ 1.92
Average Natural Gas Prices Including Hedging Activities ($ per Mcf).... $ 2.36 $ 1.79 $ 2.01 $ 1.92
Net Daily Oil and NGL Production (Bbl):
Domestic (1) ...................................................... 36,522 36,942 38,340 40,419
Canada (2) ........................................................ -- 1,326 469 1,243
Cote d'Ivoire (1) ................................................. 5,046 3,487 4,839 2,613
Equatorial Guinea ................................................. 20,774 18,139 19,902 16,693
Egypt (1) ......................................................... 10,729 -- 7,447 --
Russia (1) ........................................................ 4,492 -- 2,896 --
Indonesia (1) ..................................................... 111 -- 72 --
------- ------- -------- ---------
Total ............................................................. 77,674 59,894 73,965 60,968
======= ======= ======== =========
Average Oil and NGL Prices ($ per Bbl):
Domestic (1) ...................................................... $ 18.99 $ 12.07 $ 15.07 $ 12.93
Canada (2) ........................................................ $ -- $ 12.08 $ 11.27 $ 12.05
Cote d'Ivoire (1) ................................................. $ 20.24 $ 11.52 $ 16.56 $ 13.33
Equatorial Guinea ................................................. $ 21.69 $ 11.70 $ 16.11 $ 12.38
Egypt (1) ......................................................... $ 20.06 $ -- $ 17.70 $ --
Russia (1) ........................................................ $ 12.82 $ -- $ 9.54 $ --
Indonesia (1) ..................................................... $ 16.87 $ -- $ 14.88 $ --
Weighted Average .................................................. $ 19.58 $ 11.93 $ 15.47 $ 12.78
Average Oil and NGL Prices
Including Hedging Activities ($ per Bbl) .......................... $ 15.74 $ 13.02 $ 13.84 $ 13.81
(1) The Company's Egyptian, Russian and Indonesian operations, and a
portion of its domestic and Ivoirian operations were acquired as a result
of the merger on March 31, 1999.
(2) The Company's Canadian operations were sold on April 15, 1999.