Exhibit 99.1
The Meridian Resource Corporation Announces
Second Quarter 2006 Financial Results
HOUSTON--(BUSINESS WIRE)--Aug. 8, 2006--The Meridian Resource
Corporation (NYSE:TMR) today announced its second quarter 2006
financial and operational results. A summary of the quarter's results
are:
-- Net Income equaled $2.8 million or $0.03 per share
-- Discretionary Cash Flow equaled $32.2 million, or $0.35 per
share
-- Production equaled 5.9 Bcfe, or 64.3 Mmcfe per day
-- Total Revenues equaled $46.5 million
-- Lease Operating Expense equaled $5.0 million
-- Depletion and Depreciation equaled $27.7 million
-- General & Administrative Expense equaled $4.4 million
-- Long Term Debt reduced to $65 million from $75 million
Net Income
Net income to common shareholders for the second quarter of 2006
was $2.8 million, or $0.03 per diluted common share, compared to $4.1
million, or $0.05 per share for the second quarter of 2005. Net income
for the second quarter of 2006 compared to the same period last year
was affected by increased operating and DD&A cost and lower production
volumes, partially offset by higher average realized prices. Net
income for the first six months of 2006 was down slightly to $10.2
million compared to $10.3 million for the same period of 2005.
Discretionary Cash Flow
Discretionary cash flow for the second quarter of 2006 was $32.2
million, or $0.35 per diluted common share, compared to $33.8 million,
or $0.37 per share for the second quarter of 2005. The slight decrease
in discretionary cash flow between the periods is primarily a result
of lower production volumes, offset by higher average realized prices.
In the second quarter of 2006, the Company received an average of 21%
more for its oil and natural gas compared to the second quarter of
2005. Discretionary Cash Flow for the first six months of 2006
increased by $4.3 million to $75.0 million compared to $70.7 million
for the same period of 2005.
Production Volumes
Production volumes for the second quarter of 2006 totaled 5.9
billion cubic feet of gas equivalent ("Bcfe") compared to 6.9 Bcfe for
the second quarter of 2005. Average daily production for the second
quarter was 64.3 million cubic feet of gas equivalent ("Mmcfe")
compared to 76.2 Mmcfe for the second quarter of 2005. The variance in
average daily production volumes between the two periods is due
primarily to natural production declines in the Biloxi Marshland and
Weeks Island fields, partially offset by net gains in the Ramos field
and numerous new discoveries brought online between the periods. Part
of the variance is also due to mechanical issues related to the BML
28-1 well and the BML 1-2 well. The BML 28-1 well has since been
repaired and is back online at a gross rate of 1.4 Mmcfe/d (0.9 net).
Production from the BML 1-2 well has been deferred until the proper
rig can be secured to complete the re-drilling of the well.
Additionally, the delay in pipeline tie-in of the Bayou Gentilly well
caused by Hurricanes destruction of a third party platform plus the
loss of rigs in the East Texas Austin Chalk play that prevented
completion of three wells during the first half of the year, also
contributed to the difference in production. Production volumes for
the first six months of 2006 were 12.3 Bcfe compared to 14.7 Bcfe for
the same period of 2005.
Total Revenues
Total revenues for the second quarter of 2006 were $46.5 million,
or $7.96 per Mcfe, an increase of 25% on an Mcfe basis compared to
total revenues of $44.1 million, or $6.36 per Mcfe, for the second
quarter of 2005. The variance between the two periods for total
revenues is due primarily to the higher average realized prices
between the two periods offset by lower volumes. Total Revenues for
the first six months of 2006 increased by $9.9 million to $104.0
million compared to $94.1 million for the same period of 2005.
Lease Operating Expenses
Lease operating expenses for the second quarter of 2006 were
slightly higher at $5.0 million compared to $4.1 million for the
second quarter of 2005. Lease operating expense increased between the
periods primarily due to an industry wide increase in service cost
including a marked increase in insurance for operations which
represented $0.7 million of the increase. Lease operating expenses for
the first six months of 2006 increased by $0.8 million to $9.6 million
compared to $8.8 million for the same period of 2005.
Severance and Ad Valorem Taxes
Severance and ad valorem taxes for the second quarter of 2006 were
$2.6 million compared to $1.9 million for the second quarter of 2005.
The variance is due primarily to an increase in oil prices and a
higher natural gas tax rate, partially offset by a decline in
production. The majority of Meridian's oil and natural gas production
comes from Louisiana. The severance tax rates for Louisiana are 12.5%
of gross oil revenues and $0.252 per Mcf for natural gas. In the first
half of 2005, the severance tax rate for natural gas was $0.208. This
increased to $0.252 in the first half of 2006. Starting in the third
quarter of 2006 the severance tax rate for natural gas will be $0.373
per Mcf.
Depletion and Depreciation
Depletion and depreciation for the second quarter of 2006 was
$27.7 million compared to $25.4 million for the second quarter of
2005. On a per Mcfe basis, depletion and depreciation for the second
quarter was $4.73 per Mcfe compared to $3.67 per Mcfe for the second
quarter of 2005. Depreciation and depletion expense on a per Mcfe
basis increased primarily due to the impact of negative reserve
revisions during 2005 and the rising costs in the industry for current
and projected capital expenditures. Depletion and depreciation for the
first six months of 2006 increased by $6.4 million to $57.2 million
compared to $50.7 million for the same period of 2005.
General and Administrative Expenses
General and administrative expenses for the second quarter of 2006
were basically flat at $4.4 million compared the second quarter of
2005. General and administrative expenses for the first six months of
2006 were up slightly to $9.5 million compared to $9.4 million the
same period of 2005.
Hedging Update
As previously announced, the Company recently entered into several
new hedging contracts to hedge a portion of its expected oil
production for 2006 and 2007. The additional oil hedge contracts were
also completed in the form of costless collars, and ranged between a
floor price of $60 and a ceiling price of $96.10 with monthly volumes
ranging between 3,000 and 5,000 barrels between September 2006 and
July 2007. The costless collars provide the Company with a lower limit
"floor" price and an upper limit "ceiling" price on the hedged
volumes. The floor price represents the lowest price the Company will
receive for the hedged volumes while the ceiling price represents the
highest price the Company will receive for the hedged volumes. The
costless collars are settled monthly based on the NYMEX futures
contract during each respective month. A schedule showing the
Company's complete hedging position is located below.
Conference Call Information
Meridian invites you to listen to its conference call which will
discuss the Company's financial and operational results on Tuesday
August 8th at 2:00 p.m. central time. To participate in this
conference call, dial 800-510-0146 (US/Canada) or 617-614-3449
(International) five to ten minutes before the scheduled start time
and reference Conference ID #16734518. The conference call will be
webcast and can be accessed on the Company's website at www.tmrc.com.
Additionally, a replay of the conference call will be available for
one week following the live broadcast by dialing 888-286-8010
(US/Canada) or 617-801-6888 (International) and referencing Conference
ID # 84349195.
Non-GAAP Financial Measure
In this press release, we refer to a non-GAAP financial measure we
call "discretionary cash flow." As used herein, discretionary cash
flow represents net income plus depletion and depreciation, deferred
taxes and other non-cash items included in the Consolidated Statements
of Operations prepared in accordance with GAAP. Management believes
this measure is a financial indicator of our Company's ability to
internally fund capital expenditures and service outstanding debt.
Management also believes this non-GAAP financial measure of cash flow
is useful information to investors because it is widely used by
professional research analysts in the valuation, comparison, rating
and investment recommendations of companies within the oil and gas
exploration and production industry. Discretionary cash flow should
not be considered an alternative to net cash provided by operating
activities or net income, as defined by GAAP.
The Meridian Resource Corporation is an independent oil and
natural gas company engaged in the exploration for and development of
oil and natural gas in Louisiana, Texas, and the Gulf of Mexico.
Meridian has access to an extensive inventory of seismic data and,
among independent producers, is a leader in using 3-D seismic and
other technologies to analyze prospects, define risk, target and
complete high-potential wells for exploration and development.
Meridian is headquartered in Houston, Texas, and has offices in Tulsa,
Oklahoma as well as a field office in Weeks Island, Louisiana.
Meridian stock is traded on the New York Stock Exchange under the
symbol "TMR".
Safe Harbor Statement and Disclaimer
Statements identified by the words "expects," "projects," "plans,"
and certain of the other foregoing statements may be deemed
"forward-looking statements." Although Meridian believes that the
expectations reflected in such forward-looking statements are
reasonable, these statements involve risks and uncertainties that may
cause actual future activities and results to be materially different
from those suggested or described in this press release. These include
risks inherent in the drilling of oil and natural gas wells, including
risks of fire, explosion, blowout, pipe failure, casing collapse,
unusual or unexpected formation pressures, environmental hazards,
adverse weather conditions and other operating and production risks
inherent in oil and natural gas drilling and production activities,
which may temporarily or permanently reduce production or cause
initial production or test results to not be indicative of future well
performance or delay the timing of sales or completion of drilling
operations; risks with respect to oil and natural gas prices, a
material decline in which could cause the Company to delay or suspend
planned drilling operations or reduce production levels; and risks
relating to the availability of capital to fund drilling operations
that can be adversely affected by adverse drilling results, production
declines and declines in oil and gas prices. These and other risks are
described in the Company's documents and reports, available from the
U.S. Securities and Exchange Commission, including the report filed on
Form 10-K for the year ended December 31, 2005.
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data)
(Unaudited)
Q2-06 Q2-05
------------------- -------------------
Three Months Ended Six Months Ended
------------------- -------------------
Jun. 30, Jun. 30, Jun. 30, Jun. 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Production:
Oil (Mbbl) 199 217 423 477
Natural Gas (Mmcf) 4,657 5,630 9,744 11,833
Mmcfe 5,850 6,931 12,282 14,696
Mmcfe (Daily Rate) 64.3 76.2 67.9 81.2
Average Prices:
Oil (per Bbl) $56.01 $31.14 $52.43 $32.70
Natural Gas (per Mcf) 7.29 6.63 8.29 6.65
Per Mcfe 7.71 6.36 8.38 6.42
Oil and Natural Gas Revenues $45,101 $44,086 $102,928 $94,218
Lease Operating Expenses 5,011 4,109 9,564 8,792
Per Mcfe 0.86 0.59 0.78 0.60
Severance and Ad Valorem Taxes 2,610 1,866 5,345 4,498
Per Mcfe 0.45 0.27 0.44 0.31
General and Administrative
Expense 4,405 4,371 9,516 9,384
Per Mcfe 0.75 0.63 0.77 0.64
Interest Expense 1,489 1,097 2,867 2,082
Per Mcfe 0.25 0.16 0.23 0.14
Discretionary Cash Flow (1) $32,218 $33,782 $75,038 $70,749
Per Mcfe 5.51 4.87 6.11 4.81
Net Earnings Applicable to $2,843 $4,126 $10,174 $10,253
Common Stockholders
Per Common Share (Basic) $0.03 $0.05 $0.12 $0.12
Per Common Share (Diluted) $0.03 $0.05 $0.11 $0.12
(1) See accompanying table for a reconciliation of discretionary cash
flow to net cash provided by operating activities as defined by
GAAP.
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share)
(Unaudited)
Q2-06 Q2-05
------------------- -------------------
Three Months Ended Six Months Ended
------------------- -------------------
Jun. 30, Jun. 30, Jun. 30, Jun. 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Oil and natural gas $45,101 $44,086 $102,928 $94,218
Interest and other 1,439 17 1,118 (71)
--------- --------- --------- ---------
Total revenues 46,540 44,103 104,046 94,147
--------- --------- --------- ---------
Operating costs and expenses:
Oil and natural gas operating 5,011 4,109 9,564 8,792
Severance and ad valorem taxes 2,610 1,866 5,345 4,498
Depletion and depreciation 27,671 25,405 57,170 50,727
General and administrative 4,405 4,371 9,516 9,384
Accretion expense 319 275 620 526
Hurricane damage repairs 404 2,403
--------- --------- --------- ---------
Total operating costs and
expenses 40,420 36,026 84,618 73,927
--------- --------- --------- ---------
Net earnings before interest
and income taxes 6,120 8,077 19,428 20,220
Other expenses:
Interest expense 1,489 1,097 2,867 2,082
Taxes on income:
Current 197 (333) 368 257
Deferred 1,591 3,016 6,019 6,726
--------- --------- --------- ---------
Net earnings 2,843 4,297 10,174 11,155
Dividends on preferred stock - 171 - 902
--------- --------- --------- ---------
Net earnings applicable to
common stockholders $2,843 $4,126 $10,174 $10,253
========= ========= ========= =========
Net earnings per share:
- Basic $0.03 $0.05 $0.12 $0.12
========= ========= ========= =========
- Diluted $0.03 $0.05 $0.11 $0.12
========= ========= ========= =========
Weighted average common shares
outstanding:
- Basic 86,950 85,277 86,900 82,291
- Diluted (giving effect to
anti-dilution) 92,140 90,770 92,346 87,914
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2006 Dec. 31
(unaudited) 2005
-------------- --------------
ASSETS
- ------
Cash and cash equivalents $39,334 $23,265
Other current assets 41,977 45,394
-------------- --------------
Total current assets 81,311 68,659
-------------- --------------
Property, equipment and other assets 484,327 487,143
-------------- --------------
Total assets $565,638 $555,802
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities $49,218 $51,721
Long-term debt, net of current
maturities 65,000 75,000
Other liabilities 58,545 51,516
Common stockholders' equity 392,875 377,565
-------------- --------------
Total liabilities and
stockholders' equity $565,638 $555,802
============== ==============
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
------------------- -------------------
Jun. 30 Jun. 30 Jun. 30 Jun. 30
2006 2005 2006 2005
--------- --------- --------- ---------
Reconciliation of
Discretionary Cash Flow
(Diluted) to Net Cash
Provided By Operating
Activities:
Discretionary Cash Flow
(Diluted) $32,218 $33,782 $75,038 $70,749
Adjustments to reconcile
discretionary cash flow to
net cash provided by
operating activities:
Net changes in working
capital (4,789) 2,847 498 (3,986)
--------- --------- --------- ---------
Net Cash Provided By Operating
Activities $27,429 $36,629 $75,536 $66,763
========= ========= ========= =========
The Meridian Resource Corporation
Summary of Natural Gas and Crude Oil Hedge Positions
Natural Gas Costless Collars
----------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Mmbtu/Qtr.) ($ / Mmbtu) ($ / Mmbtu)
- ---------------- ---------------- ---------------- ----------------
Q2 - '06 930,000 $8.00 $12.82
Q3 - '06 1,660,000 $8.00 $11.68
Q4 - '06 1,340,000 $8.00 $11.01
Q1 - '07 1,200,000 $8.00 $10.60
Q2 - '07 800,000 $8.00 $10.60
Crude Oil Costless Collars
--------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Bbls./Qtr.) ($ / Bbl.) ($ / Bbl.)
- ---------------- ---------------- ---------------- ----------------
Q2 - '06 58,000 $38.06 $48.06
Q3 - '06 56,000 $47.05 $67.63
Q4 - '06 58,000 $52.07 $78.57
Q1 - '07 53,000 $52.26 $79.00
Q2 - '07 48,000 $52.50 $79.53
Q3 - '07 27,000 $55.56 $80.01
Q4 - '07 18,000 $60.00 $82.00
Q1 - '08 18,000 $60.00 $82.00
Q2 - '08 16,000 $60.00 $82.00
Q3 - '08 5,000 $60.00 $82.00
CONTACT: The Meridian Resource Corporation, Houston
Lance L. Weaver, 281-597-7125
lweaver@tmrc.com
www.tmrc.com