Belco Reports Third Quarter 1998 Results; Announces $15.5 Million Mid-Continent Acquisition; Outlines Corporate Strategy.NEW YORK--(BUSINESS WIRE)--Oct. 29, 1998--Belco Oil & Gas Corp. (NYSE NYSE See: New York Stock Exchange :BOG bog, very old lake without inlet or outlet that becomes acid and is gradually overgrown with a characteristic vegetation (see swamp). Peat moss, or sphagnum, grows around the edge of the open water of a bog (peat is obtained from old bogs) and out on the surface. ) today announced its results for the third quarter ended September September: see month. 30, 1998. Third quarter 1998 average daily production increased 14% over the prior year third quarter to 166 million cubic feet equivalent (MMcfe MMcfe Millions of Cubic Feet Equivalent (Per Day; gas exploration) ). Oil and gas related revenues increased 53% from $22.6 to $34.5 million (including the effects of commodity price risk management activities) when compared to third quarter 1997. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , before changes in working capital, was $17.5 million or $0.56 per basic common share for the third quarter 1998. This compares to $28.8 million or $0.91 per basic common share for the prior year comparable period, with the decline primarily attributable to lower oil and gas prices and the greater emphasis this year on secondary oil recovery projects which have higher associated costs. Weighted average oil prices realized at the wellhead well·head n. 1. The source of a well or stream. 2. A principal source; a fountainhead. 3. The structure built over a well. wellhead Noun 1. declined by 32% to $12.87 per barrel during the quarter, compared to $18.94 per barrel realized in the prior year comparable period. Weighted average natural gas prices realized at the wellhead decreased by 7% to $1.74 per Mcf compared to $1.87 per Mcf realized in the prior year third quarter. Third quarter 1998 net income was $3.4 million compared to $6.7 million reported for the third quarter 1997. Net income per basic common share, after preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) , was $0.05 and $0.21 for the third quarter of 1998 and 1997, respectively. Basic weighted average common shares outstanding are 31.6 million shares for each period. For the nine months ended September 30, 1998, oil and gas revenues (including the effects of commodity price risk management activities) totaled $104.9 million, a 28% increase over revenues of $82.1 million reported for the first nine months of 1997. Operating cash flow for the first nine months of 1998, before changes in working capital, was $54.0 million or $1.71 per basic common share. For the first nine months of 1997, the comparable operating cash flow amount reported was $78.4 million or $2.48 per basic common share. The decline is primarily due to lower commodity prices realized during the first nine months of 1998 when compared to 1997, despite a 15% increase in Mcfe production over the prior year comparable period. Net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the nine month period was $10.5 million compared to $28.3 million in the first nine months of 1997. Net operating income per basic common share, after preferred dividends, was $0.22 compared to $0.90 for the first nine months of 1998 and 1997, respectively. Net operating income for 1998 is calculated before giving effect to the impact of non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. provisions of oil and gas properties and equity securities in the amount of $168.3 million ($110.3 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) which were announced earlier this year. Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. A. Belfer commented, "We are particularly pleased that Belco has maintained its operating profitability in each quarter in 1998 despite significantly lower prices when compared to 1997. We believe that the combination of our low cost structure, effective price risk management, largely discretionary capital expenditure budget, as well as the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. nature of most of the Company's debt has allowed us and will allow us to withstand the current depressed industry conditions. Further, our large acreage position, particularly in the Rocky Mountains Rocky Mountains, major mountain system of W North America and easternmost belt of the North American cordillera, extending more than 3,000 mi (4,800 km) from central N.Mex. to NW Alaska; Mt. Elbert (14,431 ft/4,399 m) in Colorado is the highest peak. , gives the Company exciting exploratory potential and our horizontal drilling a drilling machine having a horizontal drill spindle. See also: Horizontal , fracture fracture, breaking of a bone. A simple fracture is one in which there is no contact of the broken bone with the outer air, i.e., the overlying tissues are intact. In a comminuted fracture the bone is splintered. stimulation and waterflood Wa´ter`flood` n. 1. A flood of water; an inundation. expertise permits the Company to optimize optimize - optimisation operations on its existing property base. Looking ahead, not only does Belco have a promising opportunity set but also the Company has the resources to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. these opportunities through internally generated cash as well as the unused portion of our existing $150 million credit facility (about $125 million at 9/30/98), if necessary." $15.5 Million Mid-Continent Producing Property Acquisition Belco has agreed to acquire approximately 20 Bcfe of long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. reserves on producing properties in Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). and Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). , as well as certain undeveloped acreage and 3-D seismic data, for an estimated $15.5 million. The properties are currently producing approximately 6.8 MMcfe per day with 81% of the reserves natural gas. Belco expects to assume operations for 74% of the properties which comprise approximately 90% of the production and value. Laurence Laurence is the surname or the given name of several people: Surname
The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar from relatively low-risk infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. drilling as well as exploratory potential related to the acreage and seismic acquired." This transaction is expected to have an effective date of November November: see month. 1, 1998. Corporate Strategy Belco's corporate strategy for 1998 has had three key elements: 1) a reduced yet balanced drilling program spread out over the Company's four core areas in the Rocky Mountains of Wyoming, the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. , the Mid-Continent region and the Austin Chalk Trend; 2) an emphasis on acquisitions to capitalize on the current low commodity price environment, especially in areas where assets can be bought or controlled at attractive valuation in existing core areas. The above-mentioned transaction as well as the previously announced $37.5 million purchase of producing properties in the Permian Basin highlight this emphasis; and 3) a renewed effort with respect to cost control, despite the fact that Belco is already a low-cost producer in each area where it is active and has among the lowest general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. per Mcfe of any public energy company. The Company's current 1998 capital expenditure budget of approximately $120 million includes an estimated $10 million to be spent on acreage and seismic with the remaining $110 million divided roughly between drilling operations and producing property acquisitions. Belco is an independent energy company engaged in the exploration, development, acquisition and production of natural gas and oil. This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934. Although BOG 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 in the forward looking statements herein include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling 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. , risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the Company to meet its stated business goals. -0-
BELCO OIL & GAS CORP.
(dollars in thousands, except per share data)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30 ,
1998 1997 1998 1997
-------- -------- -------- --------
REVENUES:
Oil and gas sales $29,179 $27,163 $ 97,438 $ 89,742
Commodity price risk
management 5,299 (4,576) 7,469 (7,674)
Interest and other 212 1,058 637 2,326
-------- -------- -------- --------
Total revenues 34,690 23,645 105,544 84,394
-------- -------- -------- --------
COSTS AND EXPENSES:
Oil and gas operating
expenses 9,238 2,152 28,433 6,657
Depreciation, depletion
and amortization 13,666 10,491 42,461 32,190
General and administrative 1,222 807 3,620 2,476
Interest expenses 5,057 0 14,734 0
Impairment of oil and gas
properties 0 0 154,000 0
Impairment of equity
securities 240 0 14,340 0
-------- -------- -------- --------
Total costs and
expenses 29,423 13,450 257,588 41,323
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAXES 5,267 10,195 (152,044) 43,071
PROVISION (BENEFIT) FOR
INCOME TAXES 1,828 3,492 (52,244) 14,752
-------- -------- -------- --------
NET INCOME (LOSS) $ 3,439 $ 6,703 ($99,800) $ 28,319
======== ======== ======== ========
PREFERRED STOCK DIVIDENDS ($1,775) $ 0 ($3,630) $ 0
EARNINGS (LOSS) ON COMMON
STOCK $ 1,664 $ 6,703 $103,430) $ 28,319
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK, BASIC AND
FULLY DILUTED $ 0.05 $ 0.21 ($3.27) $ 0.90
AVERAGE NUMBER OF COMMON
SHARES USED IN COMPUTATION
BASIC AND FULLY DILUTED 31,613 31,582 31,602 31,582
CONSOLIDATED STATEMENT OF
CASH FLOWS DATA
Cash Flow from Operations,
before changes in working
capital $ 17,546 $ 28,820 $ 54,016 $ 78,404
Cash Flow from Operations,
before changes in working
capital (Per Common Share) $ 0.56 $ 0.91 $ 1.71 $ 2.48
CONSOLIDATED BALANCE SHEET DATA
September 30, 1998 December 31, 1997
------------------ -----------------
Total Assets $578,604 $697,109
Long-term Debt 290,540 352,090
Total Stockholders' Equity 189,417 184,648
The following table sets forth certain operations data of the
Company for the periods presented:
Three Months
Ended September 30, Variances
1998 1997 AMOUNT %
----------------------------------------------------------------------
Oil and Gas Sales (Unhedged)
(in thousands) $29,179 $27,163 $2,016 7%
Commodity Price Risk Management 5,299 (4,576) 9,875 216%
Weighted Average Sales Prices
(Unhedged):
Oil (per Bbl) $ 12.87 $ 18.94 ($6.07) (32%)
Gas (per Mcf) 1.74 1.87 (0.13) (7%)
Net Production Data:
Oil (MBbl) 1,058 263 795 302%
Gas (MMcf) 8,922 11,873 (2,953) (25%)
Gas equivalent (MMcfe) 15,270 13,450 1,820 14%
Data per Mcfe:
Oil and gas sales revenues
(Unhedged) $ 1.91 $ 2.02 ($ 0.11) (5%)
Commodity Price Risk
Management Activities-- 0.34 (0.34) 0.68 200%
Oil and gas operating
expenses (0.61) (0.16) (0.45) 281%
General and administrative (0.08) (0.06) (0.02) 33%
Depreciation, depletion
and amortization (0.90) (0.78) (0.12) 15%
Pre-tax operating profit (1) $ 0.66 $ 0.68 ($0.02) (3%)
======= ======= ======= ====
Nine Months
Ended September 30, Variances
1998 1997 AMOUNT %
----------------------------------------------------------------------
Oil and Gas Sales (Unhedged)
(in thousands) $97,438 $89,742 $7,696 9%
Commodity Price Risk Management 7,469 (7,674) 15,143 197%
Weighted Average Sales Prices
(Unhedged):
Oil (per Bbl) $ 13.69 $ 19.92 ($6.23) (31%)
Gas (per Mcf) 1.91 2.04 (0.13) 6%
Net Production Data:
Oil (MBbl) 3,238 716 2,522 352%
Gas (MMcf) 27,838 36,973 (9,135) (25%)
Gas equivalent (MMcfe) 47,266 41,269 5,997 15%
Data per Mcfe:
Oil and gas sales revenues
(Unhedged) $ 2.06 $ 2.17 ($0.11) (5%)
Commodity Price Risk
Management Activities-- 0.16 (0.18) 0.34 189%
Oil and gas operating
expenses (0.60) (0.16) (0.44) 275%
General and administrative (0.08) (0.06) (0.02) 33%
Depreciation, depletion
and amortization (0.90) (0.78) (0.12) 15%
Pre-tax operating profit (1) $ 0.64 $ 0.99 ($0.35) (35%)
====== ====== ======= =====
(1) Excluding ceiling test provision, impairment of equity securities and interest income and expenses. |
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