3TEC Energy Corporation Reports Record Third Quarter 2000 Financial and Operating Results.Business Editors HOUSTON--(BUSINESS WIRE)--Nov. 14, 2000 3TEC Energy Corporation (Nasdaq:TTEN TTEN Thermoanaerobacter Tengcongensis ) announced today record financial and operating results for the quarter and nine months ended September September: see month. 30, 2000. Third Quarter 2000 Results 3TEC reported net income for the third quarter of 2000 of $8,322,000 ($.50 per fully-diluted share) compared to a net loss of $2,153,000 ($.21 per fully-diluted share) for the prior year period. For the quarter ended September 30, 2000, 3TEC reported cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $17,739,000 ($.95 per fully-diluted share) compared to $1,924,000 ($.19 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) in the same period in 1999. Total revenue increased 374% to $27,308,000 in the third quarter of 2000, compared to $5,763,000 in the third quarter of 1999. During the third quarter of 2000, 3TEC produced 4,642 Mmcf of gas and 267 Mbbls of oil. These volumes represent an increase of 373% and 130%, respectively, over the comparable period. On a gas equivalent basis, 3TEC produced 6,244 Mmcfe in the third quarter of 2000, an increase of 272% over the third quarter of 1999. The period-to-period increases were primarily due to production from property acquisitions. The price received on gas sold in the third quarter of 2000 was $4.26 per Mcf, compared to $2.35 per Mcf received in the third quarter of 1999. Oil prices in the third quarter of 2000 were $24.22 per barrel, compared to $19.10 per barrel received in the third quarter of 1999. The 2000 price includes the effect of 3TEC's oil production hedging, which had a net $4.40 per barrel downward adjustment. This oil price swap for approximately 69% of the company's daily production concluded at the end of October October: see month. and 3TEC is unhedged at this time for all of its future oil and gas production. The primary reasons for the company's improved operating results were the combined effects of a stronger hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen price environment, certain cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. objectives being realized and higher average daily production volumes. Quarter-to-quarter for 2000, net equivalent prices (oil and gas converted to gas at a ratio of 6:1) in the third quarter were up $0.56 per Mcfe, inclusive of inclusive of prep. Taking into consideration or account; including. the hedging loss on oil. Lower operating costs operating costs npl → gastos mpl operacionales per Mcfe were achieved for (i) lease operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. plus production taxes which decreased to $0.82 from $0.94, and (ii) general and administrative expenses which declined to $0.22 from $0.34. Average daily production for the quarter was 67.9 Mmcfe as compared to 63.7 Mmcfe for the second quarter. 3TEC's bank debt at September 30, 2000 was $55 million and its borrowing base under its existing credit facility has been increased to $140 million, effective November November: see month. 7, 2000. Total Debt (both senior and convertible subordinated)-to-Cap was 33% at third quarter end versus 39% at June June: see month. 30, 2000 due to strong free cash flow (cash flow from operations less capital expenditures) and the sale of certain non-core properties ($4.7 million in July July: see month. ). Nine Months Ended September 30, 2000 Results 3TEC reported net income for the nine months ended September 30, 2000 of $15,770,000 ($1.39 per fully-diluted share) compared to a net loss of $3,584,000 ($.39 per fully-diluted share) for the prior year period. For the nine months ended September 30, 2000, 3TEC reported cash flow from operations of $39,317,000 ($3.10 per fully-diluted share) compared to $2,847,000 ($.31 per fully-diluted share) in the same period in 1999. Total revenue increased 417% to $67,047,000 in the first nine months of 2000, compared to $12,967,000 in the first nine months of 1999. During the first nine months of 2000, 3TEC produced 17,475 Mmcfe, an increase of 251% over the first nine months of 1999. The increase was primarily due to production from property acquisitions. The price received on gas sold in the nine months ended September 30, 2000 was $3.56 per Mcf, compared to $2.01 per Mcf received in the nine months ended September 30, 1999. Oil prices in the first nine months of 2000 were $24.69 per barrel, compared to the $14.66 per barrel received in the first nine months of 1999. The 2000 price includes the effect of 3TEC's oil production hedging, which had a net $1.83 per barrel downward adjustment. The primary reasons for the improved results were increased production volumes, higher product prices and lower per Mcfe costs for lease operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , general and administrative expense and depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization. Operational Update 3TEC participated in the drilling of 14 wells in the third quarter, of which 12 have been completed as producers, one as an injector and one is currently waiting on pipeline hook-up hook-up Noun the linking of broadcasting equipment or stations to transmit a special programme . Through the first nine months of 2000, 3TEC has participated in the drilling of 44 wells, all of which have been successful. During the fourth quarter to date, 3TEC has participated in the drilling of 15 wells, of which 7 have been completed as producers and 8 are in various stages of completion operations. 3TEC anticipates an additional 5-10 wells may be drilled during the balance of the quarter. In the Bay de Chene Field, Lafourche Parish, Louisiana Lafourche Parish (French: Paroisse de Lafourche) is a parish located in the south of the U.S. state of Louisiana. The parish seat is Thibodaux. In 2000, its population was 89,974. Geography The parish has a total area of 3,813 km² (1,472 mi²). , 3TEC has participated in the drilling of two successful wells during the last 30 days. The company has a 50% working interest in these wells. 1. The Bay de Chene B-45 well was sidetracked from an existing wellbore to a depth of 10,050 feet and encountered 71 feet of net pay. The well was completed from the lower 19 feet of pay in the Miocene 9,950' sand and was placed on production on November 2, 2000 at a rate of 2.5 Mmcf per day and 120 barrels of condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. per day with 3,000 pounds per square inch Noun 1. pounds per square inch - a unit of pressure psi pressure unit - a unit measuring force per unit area (PSI) flowing tubing pressure. 2. The Bay de Chene A-135 well was drilled to a depth of 8,421 feet and logged 49 net feet of pay in the Miocene A-8 sand, an undrained reservoir in the fault block. Additionally, four other pay zones were evaluated containing a total of 48 feet of net pay in the well bore. Completion operations are in progress and sales from the well are anticipated to begin by November 30. Production from the State Lease 14217 No. 1-A well (Alpha) in the Breton Sound Breton Sound is a sound and a part of the coastline of the U.S. state of Louisiana; it is near Lake Pontchartrain. Two ships in the United States Navy have been named the USS Breton after this area. Block 34 Field, offshore Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. is expected to begin on
November 15, 2000. The well was completed in the Hollywood Hollywood.1 Community within the city of Los Angeles, S Calif., on the slopes of the Santa Monica Mts.; inc. 1903, consolidated with Los Angeles 1910. 6 formation and tested at a daily rate of 14.9 Mmcfe per day (8.9 Mmcf of natural gas, 1,000 barrels of condensate and 1,350 barrels of water.) 3TEC is the operator and has a 50% working interest in the well. The Amy Aycock Aycock is a surname, and may refer to:
No. 1 well in the Garden City Field, St. Mary Mary, the mother of Jesus Mary, in the Bible, mother of Jesus. Christian tradition reckons her the principal saint, naming her variously the Blessed Virgin Mary, Our Lady, and Mother of God (Gr., theotokos). Her name is the Hebrew Miriam. Parish was placed on production on October 11, 2000 and is currently producing 6.2 Mmcf of natural gas per day and 118 barrels of condensate per day with 4,950 PSI flowing tubing pressure. 3TEC is the operator of the well and has a 70% working interest. Management Comments Floyd Floyd is a variant spelling of the Welsh name Lloyd, which means grey, and may refer to: Places
Fourth Quarter 2000 and 2001 Outlook In the fourth quarter of 2000 and into 2001, 3TEC will seek to exit each quarter with period-over-period daily production increases based on its existing inventory of development and exploitation drilling. The company's target for the fourth quarter is an exit rate of 80 Mmcfe per day, increasing to 92 Mmcfe per day by the end of the second quarter in 2001. During this same period, 3TEC will attempt to achieve additional cost efficiencies and maximize operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. by attempting to reduce LOE LOE Ley Orgánica de Educación (Spanish) LOE Level Of Effort LOE Limited Objective Experiment LOE Letter of Explanation LOE Language Other than English. (before production taxes) and G&A per Mcfe to $0.45 and $0.20, respectively. While none of our production is currently hedged, we will continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. evaluate the use of derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. based on market dynamics and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. the capital structure of the company should a major acquisition be realized. The company will continue to deploy capital by funding exploratory and developmental drilling from cash flow and acquisitions from cash flow and debt (if needed). For 2001, 3TEC has tentatively ten·ta·tive adj. 1. Not fully worked out, concluded, or agreed on; provisional: tentative plans. 2. Uncertain; hesitant. targeted its capital expenditure program for drilling to be approximately $30 million, with an 80% developmental and 20% exploratory mix. It is possible 3TEC could add to its capital expenditure program if attractive additional drilling opportunities develop. If the company does not accomplish an acquisition in the fourth quarter of 2000 or in 2001, it expects to retire all of its bank debt in the second or third quarter of 2001, based on its expected free cash flow at current prices. In the quarter ended September 30, 2000, 3TEC recorded a current tax payable equal to 15% of its third quarter provision for income taxes. The current tax payable is expected to increase in the fourth quarter to as much as 50% of 3TEC's total income tax provision and this level is possible in 2001 as well. This is a change from past years due to higher oil and gas prices and certain expenses such as intangible drilling costs intangible drilling costs Expenses incurred while exploring for gas, geothermal, or oil reserves. These items may be expensed in the year incurred, or they may be capitalized and deducted throughout a period of years. and net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. from prior periods that are not large enough to offset the cash tax liability. 3TEC has scheduled a conference call for Tuesday Tuesday: see week. , November 14, 2000 at 11:00 A.M. Eastern Standard Time to review these operating results and other current activities. Interested parties may listen to the conference call live at 3TEC's website at www.3tecenergy.com. For those unable to participate on November 14, a replay will be available through November 29, 2000 by dialing 800/475-6701, passcode 548411. A replay of the conference call will also be available on the 3TEC website for 60 days following the call. 3TEC Energy Corporation is engaged in the acquisition, development, production and exploration of oil and natural gas, with properties geographically concentrated in East Texas and the Gulf Coast region. 3TEC also owns significant properties in the Permian and San Juan basins The San Juan Basin is a drainage basin and geologic structural basin in the Four Corners region of the Southwestern United States; its main portion covers around 4,600 square miles, encompassing much of northwestern New Mexico, northeastern Arizona, and parts of Colorado and Utah. and in the Mid-Continent region. The information contained in this press release may contain projections, estimates and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, environmental risks, drilling, producing and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. , including the risk that significant properties do not achieve projected results, risks related to exploration and development including risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the lack of economic drilling prospects, the inability of the Company to achieve expected efficiencies in controlling expenses, uncertainties about the estimates of reserves, government regulation, competition and the ability of the Company to meet its stated business goals.
3TEC Energy Corporation
Summary Consolidated Statements of Operations
(in thousands, except per share data)
Unaudited
For the Three Months For the Nine Months
Ended Sept. 30, Ended Sept. 30,
2000 1999 2000 1999
-------------------- -------------------
Revenues
Oil and gas sales and
plant income $26,741 $4,656 $66,001 $11,329
Gain on sale of properties 315 575 342 882
Other 252 532 704 756
----------------- -------------------
Total Revenues 27,308 5,763 67,047 12,967
----------------- -------------------
Costs and Expenses
Production
Lease Operations 3,483 1,177 11,305 3,857
Production, severance
and ad valorem tax 1,627 242 4,446 557
Gathering, transportation
and other 652 15 1,407 37
Geological and geophysical 39 47 202 188
Dryhole 0 392 29 455
General and administrative 1,402 1,112 4,467 3,048
Interest 1,684 718 5,953 1,739
Depreciation, depletion
and amortization 4,569 1,466 13,116 4,047
Impairment 0 1,688 0 1,688
Stock Compensation 0 730 0 730
Severance and compensation
plan payments 0 577 0 577
Other 0 272 0 482
----------------- -------------------
Total Costs and Expenses 13,456 8,436 40,925 17,405
----------------- -------------------
Income (Loss) Before
Income Tax Expense
(Benefit) and Minority
Interest 13,852 (2,673) 26,122 (4,438)
Minority Interest 86 (23) 189 (40)
Income Tax Expense
(Benefit) 4,681 (686) 8,817 (1,243)
----------------- -------------------
Net Income (Loss) 9,085 (2,010) 17,116 (3,155)
----------------- -------------------
Dividends to Preferred
Stockholders (763) (143) (1,346) (429)
----------------- -------------------
Net Income (Loss)
Available to Common
Stockholders $8,322 ($2,153) $15,770 ($3,584)
================= ===================
Net Income (Loss)
Per Common
Share - Basic $0.58 ($0.21) $1.76 ($0.39)
Net Income (Loss)
Per Common
Share - Diluted $0.50 ($0.21) $1.39 ($0.39)
Weighted Average Common
Shares Outstanding
Basic 14,439 10,352 8,980 9,138
Diluted 18,750 10,352 12,697 9,138
3TEC Energy Corporation
Summary Consolidated Balance Sheets
(dollars in thousands)
Sept. 30, Dec. 31,
2000 1999
(unaudited) (audited)
---------- --------
Assets
Current Assets $24,033 $15,771
Property, Plant and
Equipment, Net 201,929 131,774
Other Assets 2,452 1,699
------------------
Total Assets $228,414 $149,244
------------------
Liabilities and Stockholders'
Equity
Current Liabilities $15,486 $8,770
Long Term Debt 55,000 87,500
Subordinated Convertible
Notes 13,224 13,224
Deferred Income Taxes 8,406 291
Other Liabilities 350 258
Minority Interest 1,374 1,089
Stockholders' Equity 134,574 38,112
------------------
Total Liabilities and
Stockholders' Equity $228,414 $149,244
------------------
Selected Operating Data For the Three Months For the Nine Months
(Unaudited) Ended Sept. 30, Ended Sept. 30,
2000 1999 2000 1999
-------------------- -------------------
Oil Production (Mbbls) 267 116 867 367
Gas Production (Mmcf) 4,642 982 12,273 2,778
Gas Equivalents (Mmcfe) 6,244 1,680 17,475 4,980
Average Oil Price Per
Barrel (includes effect
of hedging) $24.22 $19.10 $24.69 $14.66
Average Gas Price Per
Mcf (includes effect
of hedging) $4.26 $2.35 $3.56 $2.01
Average Oil Price Per
Barrel (without effect
of hedging) $28.62 $19.10 $26.51 $14.66
Average Gas Price Per
Mcf (without effect
of hedging) $4.26 $2.35 $3.56 $2.01
Cash Flow From
Operations - M$(1) $17,739 $1,924 $39,317 $2,847
Cash Flow From
Operations - Per
Share (Diluted) $0.95 $0.19 $3.10 $0.31
EBITDAX - M$ $19,828 $2,641 $45,080 $4,586
EBITDAX - Per
Share (Diluted) $1.06 $0.26 $3.55 $0.50
Margin Analysis
($ Mcfe):
Average Equivalent
Sales Price 4.28 2.69 3.78 2.20
Lease Operating
Expenses 0.56 0.70 0.65 0.77
Production, Severance
and Ad Valorem Taxes 0.26 0.14 0.25 0.11
Gathering, Transportation
and Other 0.10 0.01 0.08 0.01
General and
Administrative
Expense 0.22 0.66 0.26 0.61
Operating Margin 3.14 1.18 2.54 0.70
(1) Cash Flow From Operations is equal to total revenue less gain on
sale of properties, lease operating expense, production, severance
and ad valorem tax, gathering, general and administrative expense,
interest on long term debt and cash income taxes.
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