Exhibit 99
The Exploration Company Reports 2002 Financial Results
SAN ANTONIO--(BUSINESS WIRE)--March 6, 2003--The Exploration
Company (Nasdaq:TXCO) today announced financial results for the year
ended Dec. 31, 2002.
Total revenues were $18.9 million, a 38% increase from $13.8
million reported in 2001. The company reported a net loss of $310,970
or $0.016 per share. In the prior year, TXCO reported a net loss of
$50,283 or $0.003 per share. EBITDA (earnings before interest, taxes,
depreciation, depletion, amortization and exploration expense) was
$9.22 million, $0.48 per share, an increase from $8.99 million, $0.52
per share, in 2001. The fractional net loss for 2002 was due primarily
to higher depletion rates caused by revisions to previous estimates of
oil and gas reserves as reported by Netherland, Sewell & Associates
Inc., independent reservoir engineers. Total assets at year end were
$53.0 million, a 78% increase from $29.8 million at year end 2001. All
share amounts are on a fully diluted basis.
The Company achieved reserve replacement of 255%. TXCO's year end
reserves rose 85% to a record 23.5 billion cubic feet equivalent
(Bcfe), up from 12.7 Bcfe at year end 2001. Production in 2002 totaled
4.37 Bcfe, a 47% increase from the 2.97 Bcfe produced in 2001. Average
realized product prices for the year fell to $3.67 per thousand cubic
feet equivalent (Mcfe), an 18.3% decline from $4.49 per Mcfe in 2001.
Management's Perspective
"Overall, the year just passed sets a firm foundation for
continued accelerated growth in 2003," said James E. Sigmon, TXCO
President and CEO. "We are prospect rich and have started this year
with a drilling program that targets a record 93 wells, exploiting our
expanding resource base. Our solid financial structure, strong cash
flows and low debt, create excellent upside potential for the company.
All in all, together with the strong commodity price environment we're
seeing today and with our partner, Blue Star, rigging up now to start
drilling on our Deep Jurassic project, I believe 2003 will be the
milestone year we have anticipated."
Sigmon highlighted a growing list of company achievements further
confirming his confidence in TXCO's continued success:
-- Drilled 29 new oil and gas producing wells in five separate
plays
-- Expanded gas gathering pipeline system from 10 miles to more
than 80 miles
-- Expanded core Maverick Basin lease block from 372,000 acres to
480,000 acres
-- Grew Maverick Basin 3-D seismic database from 310 square miles
to over 450 square miles
-- Continued strong cash flows from operations
About The Exploration Company
The Exploration Company is an independent oil and gas enterprise
with interests primarily in the Maverick Basin in Southwest Texas. Its
long-term business strategy is to acquire undeveloped mineral
interests and internally develop a multi-year drilling inventory. The
Company accounts for its oil and gas operations under the successful
efforts method of accounting and trades its common stock on the Nasdaq
Stock Market(sm) under the symbol "TXCO."
Statements in this press release which are not historical,
including statements regarding TXCO's or management's intentions,
hopes, beliefs, expectations, representations, projections,
estimations, plans or predictions of the future, are forward-looking
statements and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such statements
include those relating to production, cash flow, CAPEX, drilling
plans, including the timing, number and cost of wells to be drilled,
CBM projects or waterflood projects and expected response. It is
important to note that actual results may differ materially from the
results predicted in any such forward-looking statements. Investors
are cautioned that all forward-looking statements involve risks and
uncertainty, including without limitation, the costs of exploring and
developing new oil and natural gas reserves, the price for which such
reserves can be sold, environmental concerns affecting the drilling of
oil and natural gas wells, as well as general market conditions,
competition and pricing. More information about potential factors that
could affect the company's operating and financial results is included
in TXCO's annual report on Form 10-K for the year ended Dec. 31, 2001
and its Form 10-Q for the quarters ended March 31, June 30 and Sept.
30, 2002. These and all previously filed documents are on file at the
Securities and Exchange Commission and can be viewed on TXCO's Web
site at www.txco.com. Copies are available without charge, upon
request from the Company.
THE EXPLORATION COMPANY
Consolidated Balance Sheets
December 31, 2002 and 2001
Unaudited
2002 2001
----------- -----------
Assets
Current Assets:
Cash and equivalents $ 2,333,688 $ 2,019,164
Accounts receivable:
Joint interest owners 744,395 472,146
Oil and gas production 4,373,875 1,470,497
Prepaid expenses and other 503,176 273,603
------------ ------------
Total current assets 7,955,134 4,235,410
Property and Equipment, net - successful
efforts method of accounting for oil and
gas properties 39,327,867 19,893,740
Other Assets:
Deferred tax asset 5,232,718 5,232,718
Other 520,600 481,564
----------- -----------
Total other assets 5,753,318 5,714,282
----------- -----------
Total Assets $53,036,319 $29,843,432
=========== ===========
THE EXPLORATION COMPANY
Consolidated Balance Sheets
December 31, 2002 and 2001
Unaudited
2002 2001
------------ ------------
Liabilities And Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses $ 6,871,724 $ 4,122,669
Due to joint interest owners 1,894,144 1,368,785
Current portion of long-term debt 1,073,773 298,410
------------ ------------
Total current liabilities 9,839,641 5,789,864
Long-term debt, net of current portion 6,143,458 563,767
Minority interest in consolidated
subsidiaries 82,846 433,105
Stockholders' Equity:
Preferred stock; authorized
10,000,000 shares, issued and
outstanding zero shares -- --
Common stock, par value $0.01 per
share; authorized 50,000,000
shares; issued 20,109,516 and
17,496,849 shares, outstanding
20,009,716 and 17,397,049 201,095 174,968
Additional paid-in capital 58,216,504 44,017,983
Accumulated deficit (21,201,218) (20,890,248)
Less treasury stock, at cost, 99,800
shares (246,007) (246,007)
------------ ------------
Total stockholders' equity 36,970,374 23,056,696
------------ ------------
Total Liabilities and Stockholders'
Equity $ 53,036,319 $ 29,843,432
============ ============
THE EXPLORATION COMPANY
Consolidated Statements of Operations
Years Ended December 31, 2002, 2001 and 2000
Unaudited
2002 2001 2000
----------- ----------- -----------
Revenues
Oil and gas sales $16,049,798 $13,350,699 $13,841,138
Pipeline operations 2,596,955 -- --
Other operating income 311,611 408,221 520,219
----------- ----------- -----------
18,958,364 13,758,920 14,361,357
Costs and Expenses
Lease operations 4,238,921 2,406,688 1,157,291
Production taxes 973,078 959,143 990,789
Exploration expenses 1,567,098 2,986,036 3,056,466
Impairment and abandonments 1,246,495 2,652,705 3,126,715
Pipeline operations 2,467,554 -- --
Depreciation, depletion and
amortization 6,500,625 3,201,517 2,711,605
General and administrative 2,025,440 1,481,284 1,501,645
----------- ----------- -----------
Total costs and
expenses 19,019,211 13,687,373 12,544,511
----------- ----------- -----------
Income (loss) from operations (60,847) 71,547 1,816,846
Other Income (Expense)
Interest income 46,663 188,061 232,386
Interest expense (273,213) (128,373) (179,036)
Loan fee amortization (14,507) -- (12,000)
----------- ------------ -----------
(241,057) 59,688 41,350
----------- ----------- -----------
Income before income taxes
and minority interest (301,904) 131,235 1,858,196
Minority interest in income of
subsidiaries (84,066) (106,518) (238,061)
----------- ----------- -----------
Income before income taxes (385,970) 24,717 1,620,135
Income tax (expense) benefit,
net 75,000 (75,000) 5,141,800
----------- ----------- -----------
Net Income (Loss) $ (310,970) $ (50,283) $ 6,761,935
=========== =========== ===========
Earnings (Loss) Per Share
Basic $ (0.016) $ (.003) $ 0.39
Diluted $ (0.016) $ (.003) $ 0.39
Weighted average number of
common shares outstanding:
Basic 19,080,847 17,441,242 17,242,326
Diluted 19,080,847 17,441,242 17,343,957
THE EXPLORATION COMPANY
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 2002, 2001 and 2000
Unaudited
Common Stock
---------------------- Additional
Paid-in
Shares Amount Capital
------------ --------- ------------
Balance at December 31, 1999 15,938,516 $159,385 $40,651,444
Issuance of common stock for
cash, net of expenses of
$189,752 1,333,333 13,333 2,796,914
Issuance of common stock in
exchange for oil and
gas properties 150,000 1,500 439,125
Common stock warrants
exercised 50,000 500 99,500
Net income for the year -- -- --
------------ --------- ------------
Balance at December 31, 2000 17,471,849 174,718 43,986,983
Common stock options exercised 25,000 250 31,000
Purchases of treasury stock,
at cost -- -- --
Net loss for the year -- -- --
------------ --------- ------------
Balance at December 31, 2001 17,496,849 174,968 44,017,983
Common stock options exercised 113,000 1,130 171,625
Issuance of common stock for
cash, net of expenses of
$946,112 2,499,667 24,997 14,026,896
Net loss for the year -- -- --
------------ --------- ------------
Balance at December 31, 2002 20,109,516 $201,095 $58,216,504
=========== ======== ===========
Accumulated Treasury
Deficit Stock Total
------------- ---------- ------------
Balance at December 31, 1999 $(27,601,900) $ -- $13,208,929
Issuance of common stock for
cash, net of expenses of
$189,752 -- -- 2,810,247
Issuance of common stock in
exchange for oil and
gas properties -- -- 440,625
Common stock warrants
exercised -- -- 100,000
Net income for the year 6,761,935 -- 6,761,935
------------ ---------- -----------
Balance at December 31, 2000 (20,839,965) -- 23,321,736
Common stock options exercised -- -- 31,250
Purchases of treasury stock,
at cost -- (246,007) (246,007)
Net loss for the year (50,283) -- (50,283)
------------ ---------- -----------
Balance at December 31, 2001 (20,890,248) (246,007) 23,056,696
Common stock options exercised -- -- 172,755
Issuance of common stock for
cash, net of expenses of
$946,112 -- -- 14,051,893
Net loss for the year (310,970) -- (310,970)
------------- ---------- ------------
Balance at December 31, 2002 $(21,201,218) $(246,007) $36,970,374
============= ========== ============
THE EXPLORATION COMPANY
Consolidated Statements of Cash Flows
Years December 31, 2002, 2001 and 2000
Unaudited
2002 2001 2000
------------ ------------ -----------
Operating Activities
Net income (loss) $ (310,970) $ (50,283) $ 6,761,935
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Deferred income taxes -- -- (5,232,718)
Depreciation, depletion
and amortization 6,500,625 3,201,517 2,711,605
Impairments and
abandonments 1,246,495 2,652,705 3,126,715
Minority interest in
income of subsidiaries 84,066 106,518 238,061
Changes in operating
assets and liabilities:
Receivables (3,175,627) 1,462,023 (1,465,530)
Prepaid expenses and
other (229,573) (46,687) (104,441)
Accounts payable and
accrued expenses 3,274,414 1,238,229 494,211
------------ ------------ -----------
Net cash provided by
operating activities 7,389,430 8,564,022 6,529,838
Investing Activities
Purchases of property and
equipment (27,381,247) (13,675,327) (6,447,962)
Proceeds from sale of oil
and gas properties 200,000 2,005,133 --
Changes in minority
interests (434,325) (108,902) --
Other changes (39,036) (116,007) 8,843
------------ ------------ -----------
Net cash (used) by investing
activities (27,654,608) (11,895,103) (6,439,119)
Financing Activities
Proceeds from long-term debt 7,439,915 153,231 1,173,642
Payments on long-term debt (1,084,861) (486,244) (1,658,386)
Issuances of common stock,
net of expenses 14,224,648 31,250 2,910,247
Purchases of treasury
stock -- (246,007) --
------------ ------------ -----------
Net cash provided (used) by
financing activities 20,579,702 (547,770) 2,425,503
------------ ------------ -----------
Change in Cash and
Equivalents 314,524 (3,878,851) 2,516,222
Cash and Equivalents at
Beginning of Year 2,019,164 5,898,015 3,381,793
------------ ------------ -----------
Cash and Equivalents at End
of Year $ 2,333,688 $ 2,019,164 $ 5,898,015
============= ============ ===========
Supplemental Disclosures:
Cash paid for interest $ 273,213 $ 128,373 $ 179,036
Cash paid for income taxes -- 75,000 62,497
Common stock issued for
leasehold acquisition -- -- 440,625
THE EXPLORATION COMPANY
Selected Operating Data
Year Ended
Dec. 31, 2002 Dec. 31, 2001
--------------- --------------
EBITDA $9,215,968 $8,993,348
Net cash provided in operating
activities $7,389,430 $8,564,022
Debt to asset ratio 13.6% 2.9%
Production
Oil:
Production, in barrels 314,000 50,000
Average sales price per barrel $24.56 $23.55
Natural Gas:
Production, in Mcf 2,487,000 2,673,000
Average sales price per Mcf $3.35 $4.56
Equivalent Basis:
Production in Boe 728,500 495,500
Average sales price per Boe $22.03 $26.94
Production in Mcfe 4,371,000 2,973,000
Average sales price per Mcfe $3.67 $4.49
Average cost of production, per
Boe (Incl Prod & Sev Tax) $7.15 $6.79
Average cost of production, per
Boe excluding CBM activities $6.40 $5.93
Average cost of production, per
Mcfe (Incl Prod & Sev Tax) $1.19 $1.13
Average cost of production, per
Mcfe excluding CBM activities $1.07 $0.99
Depletion cost per Boe $8.36 $6.14
Depletion cost per Mcfe $1.39 $1.02
Reserves
Oil, barrels 1,479,000 294,000
Natural gas, Mcf 14,675,000 10,976,000
Natural gas equivalent, Mcfe 23,549,000 12,740,000
CONTACT: The Exploration Company, San Antonio
Roberto R. Thomae, 210/496-5300
bthomae@txco.com