EXHIBIT 99.1
BELDEN & BLAKE CORPORATION
NEWS RELEASE
5200 Stoneham Road o North Canton, Ohio 44720 o (330) 499-1660 o
FAX (330) 497-5463
CONTACT: Robert W. Peshek FOR IMMEDIATE RELEASE
Senior Vice President and CFO August 12, 2004
e-mail: bpeshek@beldenblake.com
BELDEN & BLAKE CORPORATION ANNOUNCES
2004 SECOND QUARTER AND SIX-MONTH RESULTS
NORTH CANTON, OH -- Belden & Blake Corporation (the "Company") today
reported income from continuing operations of $2.6 million for the second
quarter of 2004, compared to income from continuing operations of $2.5 million
for the second quarter of 2003. Total revenues increased $2.0 million to $25.7
million in the second quarter of 2004 compared to $23.7 million during the same
period in 2003.
On July 7, 2004, the Company, Capital C Energy Operations, L.P., a
Delaware limited partnership ("Capital C"), and Capital C Ohio, Inc., an Ohio
corporation and a wholly owned subsidiary of Capital C ("Merger Sub"), completed
a merger pursuant to which Merger Sub was merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a wholly owned subsidiary of
Capital C. Capital C is an affiliate of Carlyle/Riverstone Global Energy and
Power Fund II, L.P. The transaction will be accounted for as a purchase in the
third quarter of 2004.
Prior to the Merger, the Company disposed of substantially all of its
Trenton Black River ("TBR") assets for approximately $68.4 million in cash on
June 25, 2004. The Company also sold its Arrow Oilfield Services ("Arrow")
assets in the second quarter of 2004 for approximately $4.2 million. The
dispositions of the TBR and Arrow assets are classified as discontinued
operations.
Substantially concurrent with the closing of the Merger, the Company
redeemed its $225 million 9 7/8% Senior Subordinated Notes and issued $192.5
million 8.75% Senior Secured Notes due 2012. The Company also replaced its
credit facility with a new senior secured credit agreement providing for a $100
million term facility, a $30 million revolving credit facility and a $40 million
letter of credit facility. The Company also entered into a substantial long-term
hedging arrangement on its oil and gas production through December 31, 2013 with
J. Aron & Company.
During the quarter ended June 30, 2004, natural gas volumes from
continuing operations increased seven percent to 3.8 Bcf from 3.6 Bcf in the
second quarter of 2003 resulting in an increase in gas sales revenues of
approximately $1.2 million. The gas volume increase was primarily due to the
production from wells drilled in 2003 and 2004 and enhancements conducted on
existing wells to capitalize on the high commodity price environment. Oil
volumes decreased 10,000 barrels from 102,000 barrels in the second quarter of
2003 to 92,000 barrels in the second quarter of 2004. The average price realized
for the Company's natural gas in the second quarter of 2004 was $5.17 per Mcf
(thousand cubic feet) -- which is consistent with prices received for the
Company's natural gas during the same time period in 2003. As a result of the
Company's hedging activities, gas sales revenues were decreased by $1.28 per Mcf
in the second quarter of 2004 and decreased by $0.68 per Mcf in the second
quarter of 2003. Average oil prices during the second quarter increased $8.35
per barrel, to $34.94 per barrel compared to the same period in 2003. The higher
price received resulted in increased oil sales revenues by approximately
$770,000 over the 2003 second-quarter period.
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Income from continuing operations for the six months ended June 30,
2004, increased $1.7 million to $4.9 million versus income from continuing
operations of $3.2 million in the first six months of 2003. This increase was
primarily due to higher oil and gas revenues compared to the same period in
2003.
Cash flow from continuing operations was $18.6 million for the six
months ended June 30, 2004, compared to $9.6 million for the same period in 2003
due to increased oil and gas revenues of $4.6 million and changes in working
capital items of $5.8 million. Revenues from continuing operations for the first
six months of 2004 increased nine percent to $50.8 million compared to $46.6
million for the same period in 2003.
During the six months ended June 30, 2004, the Company produced 7.7 Bcf
(billion cubic feet) of natural gas from continuing operations compared to its
natural gas production of 7.0 Bcf for the comparable period in 2003. This
increase resulted in additional gas sales revenues of approximately $3.3
million. Oil volumes decreased 14,000 barrels to 189,000 barrels in 2004
compared to the same period in 2003. The average price paid for the Company's
natural gas during the six months of 2004 increased $0.10 per Mcf to $5.07 per
Mcf compared to 2003. As a result of the Company's hedging activities, gas sales
revenues were decreased by $1.10 per Mcf in the first six months of 2004 and
decreased by $1.21 per Mcf in the first six months of 2003. Average oil prices
increased $5.13 per barrel to $33.46 per barrel compared to the same period a
year ago resulting in increased oil sales revenues of approximately $1.0
million.
During the first six months of 2004, the Company spent approximately
$11 million on its drilling and other capital expenditures related to continuing
operations. The Company drilled 41 gross (37.4 net) development wells, all of
which were successfully completed as producers in the target formation. The cost
excludes approximately $300,000 related to 2 gross (1.2 net) shallow exploratory
wells in progress as of June 30, 2004. If these wells are determined to be dry
holes, the cost will be charged to exploratory dry hole expense in subsequent
periods.
The operational outlook for the remainder of the year is based on the
Company's focus on low-risk drilling in the highly developed or blanket
formations of the Appalachian and Michigan Basins. In the second half of 2004,
the Company plans to spend approximately $12.5 million on its drilling and other
capital expenditures related to continuing operations. The Company plans to
drill 61 wells primarily in the Medina, Clarendon, Coalbed Methane and Antrim
formations in the Company's area of operations during the second half of the
year. The Company intends to finance its remaining 2004 capital expenditures
through its cash on hand and available cash flow.
The following table includes estimates of continuing operations for the
third and fourth quarters of the year with respect to production volumes,
associated operating expenses and general and administrative expenses. The
estimates are based on current expectations and currently available information
as of August 6, 2004. These forward-looking statements are subject to a number
of risks and uncertainties which may cause the Company's actual results to
differ materially from the following estimates.
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ESTIMATED
- -----------------------------------------------------------------------------------------------------------------
QUARTER ENDING YEAR ENDING
- ----------------------------------------------------------------------------------------------------------------
(unaudited, dollars in millions March 31, June 30, September 30, December 31, December 31,
except as noted) 2004 2004 2004 2004 2004
- -----------------------------------------------------------------------------------------------------------------
Production
- -----------------------------------------------------------------------------------------------------------------
Gas (Mmcf) 3,879 3,818 3,760 - 3,874 3,812 - 3,929 15,269 - 15,500
- -----------------------------------------------------------------------------------------------------------------
Oil (Mbbls) 97 92 98 - 102 102 - 106 389 - 397
- -----------------------------------------------------------------------------------------------------------------
Total production (Mmcfe) 4,458 4,370 4,348 - 4,486 4,424 - 4,565 17,603 - 17,882
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Production expense per Mcfe $1.21 $1.27 $1.14 - 1.18 $1.13 - 1.17 $1.19 - 1.21
- -----------------------------------------------------------------------------------------------------------------
Production taxes per Mcfe $0.15 $0.15 $0.15 - 0.16 $0.15 - 0.16 $0.15 - 0.16
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Exploration expense $ 1.3 $ 1.4 $ 1.4 - 1.5 $ 1.2 - 1.3 $ 5.3 - 5.5
- -----------------------------------------------------------------------------------------------------------------
General and
administrative expense $ 1.2 $ 1.3 $ 1.1 - 1.2 $ 1.1 - 1.2 $ 4.7 - 4.9
- -----------------------------------------------------------------------------------------------------------------
Commenting on the Company's six-month results, Frost Cochran, President
and Chief Executive Officer said, "We are pleased with the operational and
financial performance of Belden & Blake through the first half of the year. The
Company stayed focused on its operations while completing a complex and unique
merger with Capital C. This is reflected in these positive second quarter
results. With plenty of liquidity, capital and commodity price stability, the
Company is well positioned to capitalize on its extensive low-risk drilling
inventory for many years to come. We are excited about the future of our
organization."
The Company will host a conference call on Friday, August 13 at 10:00
a.m. ET to review its results. To participate, please dial (888) 396-2369 about
5-10 minutes prior to the start of the call and enter the Participant Passcode
of 77882579. A simultaneous webcast of the call may be accessed through CCBN's
Investor Distribution Network for both institutional and individual investors.
Individual investors can listen to the call through CCBN's individual investor
center at www.fulldisclosure.com or by visiting any of the investor sites in
CCBN's Individual Investor Network. Institutional investors can access the call
via CCBN's password-protected event management site, StreetEvents
(www.streetevents.com). The webcast will be archived for replay for 60 days. A
telephonic replay of the call will be available through August 20 at (888)
286-8010. The conference Passcode for the replay is 84637479.
The information in this release includes forward-looking statements
that are made pursuant to Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, and the business
prospects of Belden & Blake are subject to a number of risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from the forward-looking statements contained herein. These risks and
uncertainties include, but are not limited to, the Company's access to capital,
the market demand for and prices of oil and natural gas, the Company's oil and
gas production and costs of operation, results of the Company's future drilling
activities, the uncertainties of reserve estimates and environmental risks.
These and other risks are described in the Company's 10-K and 10-Q reports and
other filings with the Securities and Exchange Commission.
Belden & Blake Corporation engages in the exploitation, development and
production of natural gas and oil, and the gathering of natural gas in the
Appalachian and Michigan Basins (a region which includes Ohio, Pennsylvania, New
York, and Michigan).
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BELDEN & BLAKE CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
2004 2003
--------- ---------
(UNAUDITED)
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ 45,616 $ 1,428
Accounts receivable, net 17,731 14,270
Inventories 701 780
Deferred income taxes 9,859 6,853
Other current assets 1,912 2,353
Fair value of derivatives 733 319
Assets of discontinued operations 3,721 22,230
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TOTAL CURRENT ASSETS 80,273 48,233
PROPERTY AND EQUIPMENT, AT COST
Oil and gas properties (successful efforts method) 463,403 452,167
Gas gathering systems 15,255 15,264
Land, buildings, machinery and equipment 13,076 13,173
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491,734 480,604
Less accumulated depreciation, depletion and amortization 258,539 250,162
--------- ---------
PROPERTY AND EQUIPMENT, NET 233,195 230,442
FAIR VALUE OF DERIVATIVES 528 755
OTHER ASSETS 5,371 5,881
--------- ---------
$ 319,367 $ 285,311
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LIABILITIES AND SHAREHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES
Accounts payable $ 3,931 $ 4,873
Accrued expenses 17,839 12,726
Current portion of long-term liabilities 665 729
Fair value of derivatives 23,182 14,765
Liabilities of discontinued operations 4,378 3,811
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TOTAL CURRENT LIABILITIES 49,995 36,904
LONG-TERM LIABILITIES
Bank and other long-term debt 23,954 47,503
Senior subordinated notes 225,000 225,000
Other 4,264 4,108
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253,218 276,611
FAIR VALUE OF DERIVATIVES 9,853 9,723
DEFERRED INCOME TAXES 34,726 19,413
SHAREHOLDERS' DEFICIT
Common stock without par value; $.10 stated value per share;
authorized 58,000,000 shares; issued 10,675,428 and 10,610,450
shares (which includes 221,888 and 214,593 treasury shares,
respectively) 1,045 1,040
Paid in capital 108,640 107,633
Deficit (117,085) (150,656)
Accumulated other comprehensive loss (21,025) (15,357)
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TOTAL SHAREHOLDERS' DEFICIT (28,425) (57,340)
--------- ---------
$ 319,367 $ 285,311
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BELDEN & BLAKE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2004 2003 2004 2003
------- -------- -------- --------
REVENUES
Oil and gas sales $22,945 $ 21,250 $ 45,307 $ 40,677
Gas gathering and marketing 2,474 2,244 5,057 5,495
Other 329 240 458 400
------- -------- -------- --------
25,748 23,734 50,822 46,572
EXPENSES
Production expense 5,545 4,766 10,951 9,322
Production taxes 648 656 1,300 1,329
Gas gathering and marketing 2,300 1,929 4,533 5,236
Exploration expense 1,369 1,589 2,717 3,241
General and administrative expense 1,265 1,096 2,500 2,270
Franchise, property and other taxes 45 49 115 105
Depreciation, depletion and amortization 4,535 4,121 9,089 8,151
Accretion expense 100 80 195 162
Derivative fair value (gain) loss 11 (451) (321) (174)
------- -------- -------- --------
15,818 13,835 31,079 29,642
------- -------- -------- --------
OPERATING INCOME 9,930 9,899 19,743 16,930
OTHER EXPENSE
Interest expense 6,112 6,036 12,184 11,941
------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 3,818 3,863 7,559 4,989
Provision for income taxes 1,240 1,406 2,615 1,813.
------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 2,578 2,457 4,944 3,176
Income (loss) from discontinued operations, net of tax 28,941 (845) 28,627 (1,193)
------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 31,519 1,612 33,571 1,983
Cumulative effect of change in accounting principle, net of tax -- -- -- 2,397
------- -------- -------- --------
NET INCOME $31,519 $ 1,612 $ 33,571 $ 4,380
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BELDEN & BLAKE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
SIX MONTHS ENDED JUNE 30,
-------------------------
2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 4,944 $ 3,176
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Depreciation, depletion and amortization 9,089 8,151
Accretion 195 162
Loss on disposal of property and equipment 375 610
Amortization of derivatives and other noncash hedging activities (549) 416
Exploration expense 2,717 3,241
Deferred income taxes 2,896 1,813
Stock-based compensation 1,097 36
Change in operating assets and liabilities, net of
effects of acquisition and disposition of businesses:
Accounts receivable and other operating assets (4,486) (5,506)
Inventories 79 (102)
Accounts payable and accrued expenses 2,237 (2,371)
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NET CASH PROVIDED BY CONTINUING OPERATIONS 18,594 9,626
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net of cash acquired -- (4,628)
Disposition of businesses, net of cash -- 100
Proceeds from property and equipment disposals 247 118
Exploration expense (2,717) (3,241)
Additions to property and equipment (11,228) (6,556)
Decrease (increase) in other assets 1,218 (83)
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NET CASH USED IN INVESTING ACTIVITIES (12,480) (14,290)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit 140,679 105,198
Repayment of long-term debt and other obligations (164,335) (88,158)
Debt issue costs 131 --
Proceeds from stock options exercised 111 61
Repurchase of stock options (283) (48)
Purchase of treasury stock (29) (25)
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NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (23,726) 17,028
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
FROM CONTINUING OPERATIONS (17,612) 12,364
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
FROM DISCONTINUED OPERATIONS 61,800 (12,304)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,428 1,715
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 45,616 $ 1,775
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