NEWS RELEASE
FOR IMMEDIATE RELEASE
FOR ADDITIONAL INFORMATION FROM INFINITY, INC., PLEASE CONTACT:
STANTON E. ROSS, PRESIDENT/CEO
(620) 431-6200
JAMES W. DEAN, VICE PRESIDENT, STRATEGIC & CORPORATE DEVELOPMENT
(720) 932-7800
WWW.INFINITY-RES.COM
INFINITY, INC. REPORTS 2004 THIRD QUARTER AND NINE MONTH FINANCIAL RESULTS
Record Quarterly and Nine Month Revenue
Positive Net Income for the Three and Nine Month Periods
Quarterly Revenue Increased 26% Over the Prior Year Period
DENVER and CHANUTE, Kan. - (PR Newswire) - November 16, 2004 - Infinity, Inc.
(NASDAQ: IFNY) today announced its financial results for the three months and
nine months ended September 30, 2004. Financial and operational tables follow
this commentary.
THREE MONTH RESULTS
Infinity reported revenue of $6.6 million for the three months ended September
30, 2004, a 26% increase over the $5.2 million reported in the prior year
period.
Oilfield services provided by Consolidated Oil Well Services, Inc.
("Consolidated") generated revenue of $4.8 million during the third quarter of
2004, a 32% increase over the $3.7 million in the prior year period.
Consolidated performed 1,448 cementing, acidizing and fracturing jobs during the
third quarter, a 24% increase over the 1,166 cementing, acidizing and fracturing
jobs in the prior year period. The increase in jobs performed was due to an
additional 318 cement jobs (59% increase), and 113 acidizing jobs (44%
increase), offset by 149 less fracturing jobs (40% decrease). The increase in
revenue was due primarily to the increase in cementing and acidizing jobs, an
increase in revenue per job, and the acquisition of substantially all of the
assets of Blue Star Acid Services, Inc. in late April, partially offset by a
decrease in fracturing jobs.
Exploration and production provided by Infinity Oil & Gas of Wyoming, Inc.
("Infinity-Wyoming") generated revenue of $1.8 million during the third quarter
of 2004, a 13% increase over the $1.6 million in the prior year period.
Infinity-Wyoming produced 317 million cubic feet of gas equivalent ("MMcfe")
during the third quarter of 2004 as compared to 316 MMcfe produced in the second
quarter of 2004 and 340 MMcfe produced in the prior year period. The slightly
higher third quarter production as compared to the second quarter was due to
partial quarter production from new wells brought on line during the third
quarter of 2004, mostly offset by natural production declines in producing
wells.
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Gross profit for the third quarter of 2004 was $3.5 million, a 28% increase over
the $2.8 million in the prior year period. The increase in gross profit from the
prior year period resulted primarily from the increase in revenue and gross
profit at Consolidated, as well as an increase in revenue and gross profit at
Infinity-Wyoming.
The net income for the third quarter of 2004 was $3.1 million (or $0.29 per
diluted and $0.33 per basic share). For the previous year period, the net loss
was $4.5 million (or $0.55 per basic and diluted share). The $7.6 million
increase in net income over the prior year period was due to: (i) a decrease in
amortization of loan costs of $4.3 million, partially offset by an increase in
depletion of oil and gas assets of $0.3 million; (ii) a gain of $2.8 million in
the third quarter of 2004 primarily due to the previously announced partial sale
of selected assets by Consolidated; (iii) a $0.6 million increase in
Consolidated gross profit and a $0.1 million increase in Infinity-Wyoming gross
profit, partially offset by a $0.1 million increase in operating expenses; and
(iv) a decrease in interest expense of $0.2 million due to less indebtedness and
generally lower interest rates.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the third quarter of 2004 were $2.2 million, a 44% increase over the $1.5
million in the prior year period. A reconciliation of net income to EBITDA, a
non-GAAP figure, is provided in the financial tables following this commentary.
NINE MONTH RESULTS
Infinity reported revenue of $15.2 million for the nine months ended September
30, 2004, a 10% increase over the $13.8 million in the prior year period.
For the first nine months of 2004, Consolidated generated revenue of $10.4
million, a 21% increase over the $8.5 million in the prior year period.
Consolidated performed 3,169 cementing, acidizing and fracturing jobs, a 15%
increase over the 2,745 cementing, acidizing and fracturing jobs in the
prior-year period. The increase in jobs performed was due to an additional 700
cement jobs (57% increase), and 13 acidizing jobs (2% increase), offset by 289
less fracturing jobs (35% decrease). The increase in revenue was due primarily
to the increase in cementing and acidizing jobs, an increase in revenue per job,
and the acquisition of substantially all of the assets of Blue Star Acid
Services, Inc. in late April, partially offset by a decrease in fracturing jobs.
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Infinity-Wyoming generated revenue of $4.8 million during the first nine months
of 2004, a 9% decrease from the $5.3 million in the prior year period.
Infinity-Wyoming produced 892 MMcfe during the first nine months of 2004 as
compared to 1,167 MMcfe produced in the prior year period. The decrease in first
nine months 2004 revenue versus the 2003 period was due to the 24% decline in
gas equivalent production from the prior year period that resulted primarily
from natural declines in wells producing in 2003 more than offsetting added
production from new wells brought on line in 2004.
Gross profit for the first nine months of 2004 was $7.7 million, an 11% increase
over the $6.9 million in the prior year period. A 19% increase in Consolidated's
gross profit accounted for increase in gross profit, as Infinity-Wyoming's gross
profit was essentially the same as the prior year period.
The net income for the first nine months of 2004 was $0.3 million (or $0.03 per
basic and diluted share). For the previous year period, the net loss was $5.4
million (or $0.67 per basic and diluted share). The $5.6 million increase in net
income over the prior year period was due to: (i) a decrease in amortization of
loan costs of $3.6 million, partially offset by an increase in depreciation,
depletion and amortization expense of $1.6 million due almost entirely to higher
oil and gas depletion; (ii) a gain of $2.7 million in the third quarter of 2004
primarily due to the previously announced partial sale of selected assets by
Consolidated; (iii) a $0.8 million increase in Consolidated gross profit,
partially offset by a $0.1 million increase in operating expenses; and (iv) a
decrease in interest expense of $0.2 million due to less indebtedness and
generally lower interest rates.
EBITDA for the first nine months of 2004 were $3.6 million, a 20% increase over
the $3.0 million in the prior year period, primarily due to an increase in gross
profit from Consolidated offset by a slight increase in operating expense during
the first nine months of 2004 as compared to the prior year period. A
reconciliation of net income to EBITDA, a non-GAAP figure, is provided in the
financial tables following this commentary.
CONFERENCE CALL REMINDER
The Company will host a conference call tomorrow morning, Tuesday, November 16,
2004, at 9:30 a.m. Eastern Standard Time to discuss the reported financial and
operating results in greater detail. The dial-in number for the call is
800-289-0544 (international participants should dial 913-981-5533). Parties
interested in participating in the conference call should dial in approximately
ten minutes prior to the start time. The call will also be broadcast live on the
Internet at http://www.vcall.com/CEPage.asp?ID=89944.
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A replay of the conference call will be available approximately two hours after
the completion of the call through November 29, 2004, by dialing 888-203-1112
(international callers should dial 719-457-0820) and entering the access code ID
#915000. The call will also be archived for two weeks at
http://www.vcall.com/CEPage.asp?ID=89944.
ABOUT INFINITY, INC.
Infinity, Inc., through its wholly-owned subsidiaries Infinity Oil & Gas of
Wyoming, Inc. and Infinity Oil and Gas of Texas, Inc., is an independent energy
company engaged in the exploration, development and production of natural gas
and oil and the operation and acquisition of natural gas and oil properties. The
Company's current operations are principally focused on the development and
expansion of its producing Wamsutter Arch (Pipeline) project and emerging
Labarge coal bed methane project, both of which are located in the Greater Green
River Basin in southwest Wyoming. Infinity Oil & Gas of Wyoming also holds
exploration and development rights in the Sand Wash and Piceance Basins
principally in northwest Colorado. Infinity Oil and Gas of Texas holds
leaseholds in the Fort Worth Basin of Texas. Infinity, Inc. provides oilfield
services through its wholly-owned subsidiary, Consolidated Oil Well Services,
Inc., with operations principally focused in the Mid-Continent region. The
Company's common stock is listed on the NASDAQ National Market under the symbol
"IFNY."
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INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPT. 30, 2004 DECEMBER 31, 2003
------------ ------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 2,414,788 $ 727,134
Accounts receivable, less allowance for doubtful accounts 3,642,058 1,766,642
Current portion of note receivable 1,584,938 16,311
Inventories 249,335 351,197
Prepaid expenses and other 646,330 206,314
Derivative asset -- 97,624
------------ ------------
Total current assets 8,537,449 3,165,222
Property and equipment, at cost, less accumulated depreciation 9,289,136 10,169,159
Oil and gas properties, using full cost accounting net of
accumulated depreciation, depletion, amortization and
ceiling writedown
Subject to amortization 27,849,851 23,446,343
Not subject to amortization 12,784,201 12,815,834
Intangible assets, at cost, less accumulated amortization 1,978,449 3,952,989
Note receivable, less current portion -- 1,580,742
Other assets, net 157,496 135,989
------------ ------------
Total assets $ 60,596,582 $ 55,266,278
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 337,288 $ --
Notes payable - related party 1,750,000 --
Current portion of long-term debt 1,607,221 1,762,777
Accounts payable 1,767,807 2,645,277
Accrued expenses 1,988,817 966,769
------------ ------------
Total current liabilities 7,451,133 5,374,823
Long-term liabilities
Production taxes payable 353,645 229,889
Asset retirement obligations 555,014 520,638
Long-term debt, less current portion 10,233,466 9,252,872
8% subordinated convertible notes payable 2,643,000 2,793,000
7% subordinated convertible notes payable 11,575,000 11,184,000
Note payable - related party -- 3,000,000
------------ ------------
Total liabilities 32,811,258 32,355,222
------------ ------------
Stockholders' equity
Common stock, par value $.0001, authorized 300,000,000
shares, issued and outstanding 9,422,284 (2004) and
8,204,032 (2003) shares 942 820
Additional paid-in-capital 37,438,334 32,720,904
Accumulated other comprehensive income -- 97,624
Accumulated deficit (9,653,952) (9,908,292)
------------ ------------
Total stockholders' equity 27,785,324 22,911,056
------------ ------------
Total liabilities and stockholders' equity $ 60,596,582 $ 55,266,278
============ ============
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INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPT. 30, ENDED SEPT. 30,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenue
Oil and gas service operations $ 4,842,799 $ 3,678,867 $ 10,382,429 $ 8,552,827
Oil and gas sales 1,762,824 1,562,639 4,835,676 5,296,729
------------ ------------ ------------ ------------
Total revenue 6,605,623 5,241,506 15,218,105 13,849,556
------------ ------------ ------------ ------------
Cost of revenue
Oil and gas service operations 2,358,669 1,823,966 5,636,335 4,556,122
Oil and gas production expenses 497,844 489,785 1,335,429 1,783,065
Oil and gas production taxes 206,980 163,444 558,192 589,793
------------ ------------ ------------ ------------
Total cost of revenue 3,063,493 2,477,195 7,529,956 6,928,980
------------ ------------ ------------ ------------
Gross profit 3,542,130 2,764,311 7,688,149 6,920,576
Operating expenses 1,352,075 1,259,893 4,178,225 4,028,375
Depreciation, depletion and amortization 1,161,334 848,723 3,523,162 1,928,250
------------ ------------ ------------ ------------
Operating income (loss) 1,028,721 655,691 (13,238) 963,851
Other income (expense)
Interest and other income 34,300 35,961 111,332 114,737
Amortization of loan costs (400,701) (4,658,145) (1,674,798) (5,302,269)
Interest expense and finance charges (327,874) (538,321) (917,088) (1,120,751)
Gain (loss) on sale of assets 2,786,786 (23,392) 2,748,132 (27,086)
------------ ------------ ------------ ------------
Total other income (expense) 2,092,511 (5,183,897) 267,578 (6,335,369)
------------ ------------ ------------ ------------
Net income (loss) before income taxes 3,121,232 (4,528,206) 254,340 (5,371,418)
Income tax expense (benefit) -- -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ 3,121,232 $ (4,528,206) $ 254,340 $ (5,371,418)
============ ============ ============ ============
Basic net income (loss) per common $ 0.33 $ (0.55) $ 0.03 $ (0.67)
============ ============ ============ ============
Diluted net income (loss) per common $ 0.29 $ (0.55) $ 0.03 $ (0.67)
============ ============ ============ ============
Weighted average basic shares outstanding
9,399,290 8,178,003 9,330,546 7,998,635
============ ============ ============ ============
Weighted average diluted shares outstanding
11,600,675 8,178,003 9,514,622 7,998,635
============ ============ ============ ============
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INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED)
FOR THE NINE MONTHS
ENDED SEPT. 30,
----------------------------
2004 2003
------------ ------------
Cash flows from operating activities
Net income (loss) $ 254,340 $ (5,371,418)
------------ ------------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation, depletion and amortization 3,523,162 1,928,250
Amortization of loan costs included in interest expense 1,674,798 5,302,269
Gain (loss) on sale of assets (2,748,132) 27,086
Change in assets and liabilities
(Increase) decrease in accounts receivable (1,835,416) (396,666)
(Increase) decrease in inventories 101,862 (41,593)
(Increase) decrease in prepaid expenses (81,383) (29,852)
Increase (decrease) in accounts payable (707,939) (1,444,817)
Increase in accrued expenses 1,429,114 666,788
------------ ------------
Net cash provided by operating activities 1,610,406 640,047
------------ ------------
Cash flows from investing activities
Proceeds from sale of property and equipment 4,489,550 44,211
Investment in oil and gas properties (6,349,150) (3,551,079)
Investment in other assets and intangibles (92,885) (685,545)
Purchase of property and equipment (1,818,699) (447,746)
Payments on note receivable 12,115 11,218
------------ ------------
Net cash used in investing activities (3,759,069) (4,628,941)
------------ ------------
Cash flows from financing activities
Proceeds from notes payable 295,000 11,452,861
Proceeds from borrowings on long-term debt 5,844,558 --
Proceeds from issuance of common stock 4,095,315 820,482
Equity issuance costs (30,256) --
Repayment of notes payable (485,876) --
Repayment of debt (5,882,424) (7,814,930)
------------ ------------
Net cash provided by financing activities 3,836,317 4,458,413
------------ ------------
Net increase in cash and cash equivalents 1,687,654 469,519
Cash and cash equivalents, beginning of period 727,134 867,017
------------ ------------
Cash and cash equivalents, end of period $ 2,414,788 $ 1,336,536
============ ============
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INFINITY, INC. AND SUBSIDIARIES
SELECTED OPERATING AND FINANCIAL DATA BY SUBSIDIARY (UNAUDITED)
FOR THE NINE MONTHS
FOR THE THREE MONTHS ENDED ENDED SEPT. 30,
----------------------------------------- ----------------------
SEPT. 30, JUNE 30, SEPT. 30,
2004 2004 2003 2004 2003
Consolidated
(Dollars in millions, before cash discounts)
Job type:
Cementing 854 945 536 1,923 1,223
Acidizing 369 267 256 715 702
Fracturing 225 165 374 531 820
Job revenue:
Cementing $2.8 $2.1 $1.3 $5.8 $3.1
Acidizing $0.5 $0.3 $0.4 $1.0 $1.0
Fracturing $1.8 $1.2 $2.1 $4.1 $4.8
Discounts and eliminations ($0.2) ($0.3) ($0.1) ($0.5) ($0.3)
Infinity-Wyoming Statistics (1)
(Dollars in thousands)
Production Volumes:
Natural gas (MMcf) 265.5 266.7 254.7 735.4 883.6
Oil and condensate (MBbls) 8.5 8.2 14.2 26.1 47.2
Natural gas equivalents (MMcfe; 6:1) 316.7 315.7 340.0 891.7 1,166.6
Financial Results:
Natural gas revenue $ 1,392.1 $ 1,385.8 $ 1,140.8 $ 3,821.6 $ 3,856.6
Oil and condensate revenue $ 370.6 $ 315.8 $ 421.8 $ 1,014.0 $ 1,440.1
Total revenue $ 1,762.8 $ 1,701.6 $ 1,562.6 $ 4,835.7 $ 5,296.7
Production expenses $ 310.1 $ 286.4 $ 318.1 $ 859.4 $ 1,169.6
Production taxes $ 207.0 $ 195.2 $ 163.4 $ 558.2 $ 589.8
Transportation expense $ 187.7 $ 188.4 $ 163.4 $ 476.0 $ 612.6
Financial Results, per Mcfe:
Natural gas revenue $ 5.24 $ 5.20 $ 4.48 $ 5.20 $ 4.36
Oil and condensate revenue $ 43.60 $ 38.51 $ 29.70 $ 38.85 $ 30.51
Natural gas equivalent revenue $ 5.57 $ 5.39 $ 4.60 $ 5.42 $ 4.54
Production expenses $ 0.98 $ 0.91 $ 0.94 $ 0.96 $ 1.00
Production taxes $ 0.65 $ 0.62 $ 0.48 $ 0.63 $ 0.51
Transportation expense $ 0.59 $ 0.60 $ 0.48 $ 0.53 $ 0.53
(1) Includes revenue, expense and operating data only from the Wamsutter
Arch Pipeline and Labarge fields.
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INFINITY, INC. AND SUBSIDIARIES
NON-GAAP DISCLOSURES: RECONCILIATION OF NET INCOME (LOSS) TO EBITDA (1)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPT. 30, ENDED SEPT. 30,
2004 2003 2004 2003
------------- ------------ ------------- ------------
Net income (loss) $ 3,121,232 $ (4,528,206) $ 254,340 $ (5,371,418)
Adjustments:
Depreciation, depletion, amortization 1,161,334 848,723 3,523,162 1,928,250
Amortization of loan costs 400,701 4,658,145 1,674,798 5,302,269
Interest expense and finance charges 327,874 538,321 917,088 1,120,751
Gain (loss) on sale of assets (2,786,786) 23,392 (2,748,132) 27,086
------------- ------------ ------------- ------------
EBITDA $ 2,224,355 $ 1,540,375 $ 3,621,256 $ 3,006,938
============ ============ ============ ============
(1) In this press release, the term "EBITDA" is used. EBITDA is
equivalent to earnings before interest, income taxes, depreciation,
depletion and amortization expenses, and gains and losses on the
sale of other assets. Infinity's management believes EBITDA is an
important financial measurement tool that provides information about
the Company's ability to service or incur indebtedness, and pay for
its capital expenditures. This information differs from measures of
performance determined in accordance with generally accepted
accounting principles (GAAP) and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with GAAP. This measure is not necessarily indicative of
operating profit or cash flow from operations as determined under
GAAP and may not be equivalent to similarly titled measures of other
companies.
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