Belco reports record third quarter net income, revenues and cash flow.NEW YORK--(BUSINESS WIRE)--Nov. 8, 1996--Belco Oil & Gas Corp. (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 financial results for the third quarter ended Sept. 30, 1996. Total revenues increased 35 percent to $28.0 million from $20.7 million for the comparable period of 1995. Pro-forma net income increased 25 percent to $9.8 million or $0.31 per common share based on 31.5 million common shares outstanding, over pro-forma net income of $7.8 million or $0.31 per common share for the third quarter of 1995 based on 25 million common shares outstanding. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta net 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), totaled $25.4 million, a 37 percent increase over third quarter 1995 pre-tax cash flow (before changes in working capital) of $18.5 million. Newly drilled wells in the Navasota Nav·a·so·ta A river of east-central Texas flowing about 209 km (130 mi) southward to the Brazos River. River and Independence areas of the company's Giddings Field, Texas operations, coupled with higher average prices realized for both oil and natural gas were responsible for the increase in revenues and profitability. For the nine months ended Sept. 30, 1996, total revenues increased 58 percent to $88.2 million over the first nine months of 1995. Pre-tax income increased 68 percent to $50.0 million, over pre-tax income of $29.8 million for the prior comparable period. During the first quarter, 1996, the company was required to record a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. in the amount of $29.9 million to establish deferred tax liability accounts on its balance sheet as a result of a combination of predecessor entities consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. on March 29, 1996 in connection with its initial public offering. On a pro-forma basis, net income for the nine month period totaled $33.0 million or $1.12 per common share based on 29.5 million shares outstanding compared to $20.0 million or $0.80 per common share based on 25 million shares outstanding for the first nine months of 1995. Net operating cash flow (pre-tax) before changes in working capital for the first nine months of 1996 increased 58 percent to $78.4 million from $49.6 million for the comparable period of the prior year. Production Increases Over Prior Period Comparable Third quarter oil and natural gas production totaled 13.4 Bcfe (billion cubic feet of natural gas equivalent), a 27 percent increase over the 10.6 Bcfe produced in the third quarter of 1995. Daily production totaled 146 MMcfe MMcfe Millions of Cubic Feet Equivalent (Per Day; gas exploration) (million cubic feet of natural gas equivalent). Realized average gas equivalent prices (including price risk management activities) totaled $2.01 per Mcfe in the third quarter, an increase of 2.6 percent over the prior period comparable realized prices of $1.96. Production for the first nine months of 1996 increased 38 percent to 42.7 Bcfe. Success in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. As previously reported, Belco's first Louisiana well, the Turner, ET AL 21 No. 1, located in St. Landry Parish tested at flow rates of 4,800 barrels of oil per day and 6 million cubic feet of gas per day. At a vertical depth of 17,000 feet the Turner is the world's deepest horizontal well drilled to date. Belco holds oil and gas leases and options to lease covering approximately 59,000 net acres in this prospect area and is currently drilling the Turner No. 22, an opposing lateral lateral /lat·er·al/ (-il) 1. denoting a position farther from the median plane or midline of the body or a structure. 2. pertaining to a side. lat·er·al adj. 1. well located approximately one mile to the east of the first well. Belco's second Louisiana well, the Roy O. Martin `A' No. 1, located in Avoyelles Parish, tested at flow rates of 2,500 barrels of oil per day and 2.7 million cubic feet of gas per day. Both wells began flowing to sales in the fourth quarter and therefore did not contribute to third quarter results. Belco has increased its land position in Louisiana to approximately 350,000 net acres, an increase of 100,000 net acres since its second quarter report. Continued Success in Texas Giddings Field -- Belco continued the successful development of its Giddings Field acreage position, particularly in the Navasota and Independence areas, although the pace of drilling for the quarter was somewhat slower as certain wells took longer than expected to drill and complete. Wells such as the Blackburn, Boatwright and Wichman (52 percent, 48 percent and 30 percent working interest, respectively) each came on line at rates in excess of 10MMcfd. On Oct. 31, Belco commenced drilling the Zapalac well in Fayette County Fayette County is the name of eleven counties in the United States:
Wedge wedge, piece of wood or metal thick at one end and sloping to a thin edge at the other; an application of the inclined plane. It is employed in separating two objects from each other or in separating one part of a solid object from an adjoining part, as in splitting Prospect -- While drilling results on the company's 40,000-plus acre Wedge Prospect in Walker County thus far have been unsuccessful (with one non-commercial and one inconclusive INCONCLUSIVE. What does not put an end to a thing. Inconclusive presumptions are those which may be overcome by opposing proof; for example, the law presumes that he who possesses personal property is the owner of it, but evidence is allowed to contradict this presumption, and show who is well), Belco plans to drill a third well in a 50/50 joint venture with another operator to test a separate portion of this block before year-end. Belco currently has eight rigs operating in the Giddings Field which it expects to keep running for the remainder of the year. Drilling to Commence in Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). Belco has commenced the drilling of the first well in what is anticipated to be a nine well program (seven re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the and two grass roots grass roots pl.n. (used with a sing. or pl. verb) 1. People or society at a local level rather than at the center of major political activity. Often used with the. 2. The groundwork or source of something. wells) program on its approximately 250,000-plus net acre position in the Central Basin, Mich., where the company holds a 35-50 percent interest. If initial drilling results are successful, Belco would anticipate a four-five rig program to commence in the second half of 1997. This area has the potential to become a core area for Belco's operations servicing a market which currently commands premium gas prices. 3-D Seismic Programs Belco and its joint venture partner continue to move ahead with the previously announced 50-plus square mile 3-D seismic survey in the Frio/Wilcox play in South Texas. Exploration drilling is expected to commence in the second quarter of 1997. Belco's review of 3-D seismic to date in the Cotton Valley has not been encouraging and, consequently, Belco does not plan further drilling on this prospect at this time. Increased Holdings in Moxa moxa (mok´sah) [Japanese] the dried leaves of Artemisia vulgaris, burned on or near acupoints in moxibustion. mox·a n. Arch Belco did not participate in the drilling of any new wells in this area during the third quarter 1996 due to the relatively low Rocky Mountain gas prices compared with gas prices in other areas of Belco's activities. Belco did, however, add to its proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. in wells in which the company already held working interests through a $7.9 million purchase. Belco Continues its Low Cost Structure Belco's production and 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. increased 29 percent from $1.51 million for the third quarter of 1995 to $1.95 million for the third quarter 1996; however on an Mcfe basis, these costs remained flat at $0.14. The company's G&A costs of $688,000 for the third quarter 1996 were virtually unchanged when compared to $687,000 for the prior period comparable, while on an Mcfe basis, G&A costs decreased from $0.06 to $0.05. Belco increased its 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 provision to $10.6 million or $0.79 per Mcfe in the third quarter 1996 in order to retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin increase DD&A for the calendar year to an average of $0.70 per Mcfe. The increase is primarily due to additional expenses related to the previously announced unsuccessful initial well drilled in the Cotton Valley and other exploration costs. The resulting 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. of $1.03 per Mcfe for the third quarter 1996 and $1.13 per Mcfe for the nine months ended Sept. 30, 1996 makes Belco one of the most profitable companies in the industry. Belco Oil & Gas Corp., headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , is an independent energy company engaged in the exploration, development 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 1933 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1996 1995 1996 1995
REVENUES:
Oil and gas sales $27,284 $16,275 $83,930 $47,349
Commodity Price Risk
Management (220) 4,445 2,413 8,507
Interest and other 963 8 1,849 29
Total revenues 28,027 20,728 88,192 55,885
COSTS AND EXPENSES:
Oil and gas operating
expenses 1,947 1,513 5,826 4,424
Depreciation, depletion and
amortization 10,571 6,815 29,891 19,800
General and administrative 688 687 2,444 1,838
Total costs and expenses 13,206 9,015 38,161 26,062
INCOME BEFORE INCOME TAXES 14,821 11,713 50,031 29,823
PROVISION FOR INCOME TAXES 5,039 0 41,143(a) 0
NET INCOME $9,782 $11,713 $8,888(a) $29,823
PRO FORMA NET INCOME
Income before income
taxes $14,821 $11,713 $50,031 $29,823
Pro forma provision for
income taxes 5,039 3,865 17,011 9,842
Pro forma net income $9,782 $7,848 $33,020 $19,981
PRO FORMA NET INCOME PER
COMMON SHARE $ 0.31 $ 0.31 $ 1.12 $ 0.80
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 31,500 25,000 29,476 25,000
(a) Includes a one-time non-cash deferred tax charge of $29.9
million recognized as a result of the Combination consummated
on March 29, 1996 in connection with the company's Initial
Public Offering and discussed in the Belco Oil & Gas Corp.
Prospectus dated March 25, 1996. Historical income per share,
including the effect of the deferred tax charge, was $0.30 for
the nine months ended Sept. 30, 1996. The pro forma amounts
present the company as if a taxable corporation for all
periods and is based on the average number of shares outstanding
during the period assuming the Combination.
-0-
The following table sets forth certain operations data of the
company for the periods presented:
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30
1996 1995 1996 1995
Oil and Gas Sales (Unhedged)
(in thousands) $27,284 $16,275 $83,930 $47,349
Commodity Price Hedging (220) 4,445 2,413 8,507
Weighted Average Sales Prices
(Unhedged):
Oil (per Bbl) $22.17 $17.86 $20.36 $17.86
Gas (per Mcf) 1.90 1.39 1.84 1.39
Net Production Data:
Oil (MBbl) 161 253 575 734
Gas (MMcf) 12,465 9,065 39,252 26,533
Gas equivalent (MMcfe) 13,430 10,583 42,701 30,937
Data per Mcfe:
Oil and gas sales revenues
(Unhedged) $2.03 $1.54 $1.97 $1.53
Commodity Price Hedging (0.02) 0.42 0.06 0.27
Oil and gas operating expenses (0.14) (0.14) (0.14) (0.14)
General and administrative (0.05) (0.06) (0.06) (0.06)
Depreciation, depletion and
amortization (0.79) (0.64) (0.70) (0.64)
Interest income (Net) 0.07 -- 0.04 --
Pre-tax operating profit $1.10 $1.11 $1.17 $0.96
CONTACT: Belco Oil & Gas Corp., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Laurence D. Belfer, Executive VP, COO (Cell Of Origin) See mobile positioning. , 212/644-0561 or Myra E. Turoff, Investor Relations Investor relations The process by which the corporation communicates with its investors. , 212/508-9539 |
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