Burlington Resources Reports 46 Percent Increase in Third-Quarter Earnings and 10 Percent Growth In Production.HOUSTON -- Burlington Resources Inc. (NYSE:BR)(TSX:B) today reported estimated earnings of $389 million, or $0.98 per diluted share, during the third quarter of 2004, a new quarterly earnings record for the company. The third-quarter earnings represent a 46 percent increase over the $267 million, or $0.67 per diluted share on a post-stock-split basis, earned during the third quarter of 2003. The higher quarterly earnings were attributable to a 10 percent increase in production and to higher commodity prices. Total production grew to 2,815 million cubic feet of natural gas equivalent per day (MMcfed), from 2,551 MMcfed during the prior year's third quarter. Net cash provided by operating activities increased to $930 million from $665 million during the prior year's quarter. Discretionary cash flow(1) increased to $814 million from $651 million during the prior year's quarter. During the first three quarters of 2004, net cash provided by operating activities totaled approximately $2.5 billion, while discretionary cash flow Discretionary cash flow Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on. also totaled approximately $2.5
billion."Burlington continues to perform very well, both operationally and financially. We are on track to deliver significant growth in 2004, while generating robust return on capital employed. This performance is consistent with our stated objectives of achieving both top-line growth and sector-leading returns to create value for our shareholders," said Bobby S. Shackouls, chairman, president and chief executive officer. "We maintain our commitment to these goals regardless of commodity price cycles." Natural gas production during the third quarter increased 1 percent to 1,906 million cubic feet per day (MMcfd), from 1,889 MMcfd during the prior year's quarter. Natural gas liquids (NGLs) production increased 6 percent to 66.5 thousand barrels per day (Mbd), from 63.0 Mbd during the prior year's quarter. Crude oil production increased 80 percent to 85.1 Mbd, from 47.3 Mbd during the prior year's quarter. Higher natural gas volumes were achieved from the Madden Field, South Louisiana, East Texas and the CLAM properties. Higher crude oil volumes were achieved from the Cedar Creek Anticline and Bakken areas in the Williston Basin, South Louisiana, offshore China, Algeria and Ecuador. As expected, natural gas production declined in Canada when compared to the prior year's third quarter, due to last winter's short drilling season, wet summer weather that hampered field operations, and a measured approach to capital investments in response to rising service costs and the strengthening Canadian dollar. However, Canadian natural gas production has flattened in recent months, and Burlington plans to accelerate development activity there during the balance of 2004 and 2005. This week, Burlington placed into service the Rivers Fields facilities in the East Irish Sea Irish Sea, arm of the Atlantic Ocean, c.40,000 sq mi (103,600 sq km), 130 mi (209 km) long and up to c.140 mi (230 km) wide, lying between Ireland and Great Britain. It is connected with the Atlantic by the North Channel and (on the south) by St. George's Channel. Ireland is on its west shore, Scotland, England, and Wales on the east. The principal islands in the sea are the Isle of Man, Anglesey, and Holyhead.. During the past three years Burlington has developed the Calder Field (one of the five Rivers Fields) and installed a production platform and 30-mile pipeline to shore, while constructing a major sour gas processing plant at Barrow-in-Furness Barrow-in-Furness Furness, peninsula, 15 mi (24 km) long and 4 mi (6.4 km) wide, Cumbria, NW England, between the estuary of the River Duddon and Morecambe Bay. The term is also applied to areas N of Morecambe Bay that are part of the Lake District. In the southwest are virtually extinguished iron mines, which gave rise to the great steelworks formerly centered on Barrow-in-Furness. Farming and tourism are the peninsula's primary industries. (–fûr`nĭs), city (1991 pop. 50,174) and district, Cumbria Cumbria, county (1991 pop. 486,900), 2,635 sq mi (6,826 sq km), extreme NW England. The county stretches from the Morecambe Bay to Soloway Firth along the Irish Sea coast. It includes the Lake District, comprised of a series of volcanic rock and slate mountain peaks and lake-filled valleys. It also includes the Carlisle plain and the Eden and Kent river valleys., NW England, on the tip of the Furness peninsula. The port of Barrow has c.300 acres (121 hectares) of docks, and shipbuilding is an important industry, although much reduced in scale now. in Cumbria, England. Sales volumes are expected to ramp up to an average of approximately 90 MMcfd as the plant reaches full capacity. It is anticipated that the Calder Field's initial production would be followed in future years by gas flow from the Crossans and Darwen Darwen (där`wĭn, dăr`ĕn), town (1991 pop. 30,833), Lancashire, NW England. Engineering and the manufacture of wallpaper, paint, and plastics are the major industries. The importance of textile production in Darwen has declined. fields. The new project is expected to increase Burlington's total East Irish Sea production to approximately 180 MMcfd by early 2005. Price realizations for natural gas during the third quarter were $5.29 per Mcf, compared to $4.68 per Mcf during the same quarter in 2003. Price realizations for NGLs were $26.26 per barrel, compared to $20.42 per barrel during the prior year's quarter. Crude oil price realizations were $40.13 per barrel, compared to $27.16 per barrel during the prior year's quarter. During the third quarter Burlington repurchased 4 million shares of its common stock, up from approximately 3.1 million shares repurchased during each of the year's first and second quarters on a post-stock-split basis. The third quarter's repurchases totaled $150 million at an average cost of $37.56 per share. Since resuming share repurchases in late 2000, the company has acquired approximately 57.6 million shares for $1.4 billion, or an average cost of $24.30 per share on a post-stock-split basis. At the end of the third quarter, Burlington's balance sheet included nearly $1.8 billion in cash and cash equivalents, an increase of approximately $500 million during the quarter. Outlook Production -- Burlington expects to achieve its stated long-term growth goals during 2004 and 2005. The guidance breakdown by geographic region and product for 2004 follows:
4th-Quarter 2004 Full-Year 2004
Estimate Estimate
------------------- -------------------
Gas (MMcfd)
U.S. 900 - 945 905 - 920
Canada 785 - 810 810 - 825
Other International 170 - 240 175 - 210
------------------- -------------------
Total 1,855 - 1,995 1,890 - 1,955
Natural Gas Liquids (Mbd)
U.S. 39.0 - 41.5 40.0 - 41.0
Canada 23.5 - 24.5 23.0 - 24.0
Other International 0.0 - 0.0 0.0 - 0.0
------------------- -------------------
Total 62.5 - 66.0 63.0 - 65.0
Crude Oil (Mbd)
U.S. 39.2 - 42.3 36.6 - 37.7
Canada 4.7 - 5.2 5.0 - 5.5
Other International 34.5 - 44.5 40.5 - 43.0
------------------- -------------------
Total 78.4 - 92.0 82.1 - 86.2
Total Equiv. Prod.
(MMcfed) 2,700 - 2,943 2,761 - 2,862
------------------- -------------------
------------------- -------------------
For 2005 the company expects to achieve total equivalent production of 2,800 to 3,100 MMcfed. North American Natural Gas Hedges -- As of Oct. 14, 2004, Burlington had hedged the following volumes of future North American natural gas production using costless price collars or fixed price contracts. All prices are weighted averages adjusted to a NYMEX equivalent price. Detailed information on natural gas hedging subsequent to the second quarter of 2005 as well as on the company's crude oil hedging is available on Burlington's Web site at www.br-inc.com/docs/hedge.pdf.
4th-Q. 2004 1st-Q. 2005 2nd-Q. 2005
----------- ----------- -----------
Costless collar volumes 443 MMcfd 331 MMcfd 115 MMcfd
Floor price $5.30/Mcf $5.92/Mcf $5.67/Mcf
Ceiling price $7.21/Mcf $8.05/Mcf $7.34/Mcf
Sell swap 39 MMcfd 39 MMcfd 39 MMcfd
Sales price $3.71/Mcf $3.70/Mcf $3.70/Mcf
Other 2004 Financial Parameters -- Estimated expenses for the fourth
quarter and full year are:
4th-Q. 2004 Full-Year 2004
------------------- -------------------
Operating costs(a) $0.57 to $0.61/Mcfe $0.54 to $0.58/Mcfe
Administrative costs $0.17 to $0.20/Mcfe $0.18 to $0.21/Mcfe
Transportation costs $0.43 to $0.47/Mcfe $0.41 to $0.45/Mcfe
Depletion, depreciation
& amortization $1.10 to $1.15/Mcfe $1.07 to $1.12/Mcfe
Interest expense $68 MM to $72 MM $275 MM to $285 MM
Exploration costs $70 MM to $90 MM $250 MM to $270 MM
(a) Formerly production and processing
In addition, Burlington anticipates an effective income tax rate of 32 to 36 percent for the full year of 2004. The breakdown between current and deferred taxes for the year could vary widely depending on commodity prices and other factors. An income statement, statistics and non-GAAP reconciliation tables for the third quarter accompany this release. Burlington will webcast a conference call to discuss its third-quarter 2004 earnings and operations. The call will take place on Thursday, October 21 at 1 p.m. Central time. All materials and information related to the conference call, this press release and a package of financial and statistical information may be accessed from the Burlington Resources Web site home page at www.br-inc.com by selecting the link entitled "3rd Qtr 2004 Conference Call Info Page," and then selecting the resource desired. Burlington Resources ranks among the world's largest independent oil and gas companies, and holds one of the industry's leading positions in North American natural gas reserves and production. Headquartered in Houston, Texas, the company conducts exploration, production and development operations in the U.S., Canada, the United Kingdom, Africa, China and South America. For additional information see the Burlington Resources Web site at www.br-inc.com.
(1) See the accompanying tables for a reconciliation of GAAP and
non-GAAP measures utilized in calculating discretionary cash flow.
FORWARD-LOOKING STATEMENTS This press release may contain projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any such projections or statements reflect the company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and actual results could differ materially from those projected. A discussion of important factors that could cause actual results to differ materially from those projected is included in the company's periodic reports filed with the Securities and Exchange Commission.
Burlington Resources Inc.
Reconciliation of GAAP to Non-GAAP Measure (a)
Discretionary Cash Flow
($ in Millions)
Below is a reconciliation of net cash provided by operating
activities to discretionary cash flow.
Third Quarter Nine
--------------- Months
2004 2003 2004
------- ------- ----------
Net cash provided by operating activities $930 $665 $2,474
Adjustments:
Working capital (125) 12 2
Changes in other assets and liabilities 9 (26) (25)
------- ------- ----------
Discretionary cash flow $814 $651 $2,451
------- ------- ----------
------- ------- ----------
(a) GAAP -- Generally Accepted Accounting Principles
Management believes that the non-GAAP measure of discretionary cash
flow is useful information for investors because it is used
internally and accepted by the investment community as a means of
measuring the company's ability to fund its capital and dividend
programs and to service its debt. Discretionary cash flow is also
useful because it is widely used by professional research analysts in
valuing, comparing ratings and providing investment recommendations
of companies in the oil and gas exploration and production industry.
Many investors use this published research in making investment
decisions.
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
THIRD QUARTER NINE MONTHS
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
(In Millions, Except per Share Amounts)
Revenues $1,411 $1,059 $4,052 $3,246
------ ------ ------ ------
Costs and Other Income - Net
Taxes Other than Income Taxes 67 47 188 141
Transportation Expense 112 100 329 301
Operating Costs 152 118 426 332
Depreciation, Depletion and
Amortization 284 239 831 669
Exploration Costs 55 55 177 175
Impairment of Oil and Gas
Properties - - - 30
Administrative 54 38 153 119
Interest Expense 71 66 211 193
Loss on Disposal of Assets - 2 10 2
Other Expense (Income) - Net (5) (2) 19 13
------ ------ ------ ------
Total Costs and Other Income
- Net 790 663 2,344 1,975
------ ------ ------ ------
Income Before Income Taxes and
Cumulative Effect of Change in
Accounting Principle 621 396 1,708 1,271
Income Tax Expense 232 129 586 398
------ ------ ------ ------
Income Before Cumulative Effect
of Change in Accounting
Principle 389 267 1,122 873
Cumulative Effect of Change in
Accounting Principle - Net - - - (59)
------ ------ ------ ------
Net Income $389 $267 $1,122 $814
------ ------ ------ ------
------ ------ ------ ------
Earnings per Common Share
Basic
Before Cumulative Effect of
Change in Accounting
Principle $0.99 $0.67 $2.85 $2.19
Cumulative Effect of Change in
Accounting Principle - Net - - - (0.15)
------ ------ ------ ------
Net Income $0.99 $0.67 $2.85 $2.04
------ ------ ------ ------
------ ------ ------ ------
Diluted
Before Cumulative Effect of
Change in Accounting
Principle $0.98 $0.67 $2.83 $2.18
Cumulative Effect of Change in
Accounting Principle - Net - - - (0.15)
------ ------ ------ ------
Net Income $0.98 $0.67 $2.83 $2.03
------ ------ ------ ------
------ ------ ------ ------
Basic Common Shares 392 398 393 399
------ ------ ------ ------
------ ------ ------ ------
Diluted Common Shares 395 401 396 402
------ ------ ------ ------
------ ------ ------ ------
This statement should be read in conjunction with the attached press
release.
BURLINGTON RESOURCES INC.
SALES VOLUMES AND PRICES
----------------------------------------------------------------------
2004
----------------------------
First Second Third
Quarter Quarter Quarter
----------------------------------------------------------------------
Sales Volumes
Gas (MMCF/Day)
U.S. 880 905 935
Canada 846 834 796
Other International 227 160 175
----------------------------------------------------------------------
Worldwide 1,953 1,899 1,906
----------------------------------------------------------------------
NGLs (MBBLS/Day)
U.S. 40.8 40.0 41.4
Canada 26.1 19.0 25.1
----------------------------------------------------------------------
Worldwide 66.9 59.0 66.5
----------------------------------------------------------------------
Oil (MBBLS/Day)
U.S. 32.1 35.9 39.3
Canada 5.8 5.3 5.0
Other International 44.5 43.0 40.8
----------------------------------------------------------------------
Worldwide 82.4 84.2 85.1
----------------------------------------------------------------------
Total Equivalent (MMCFE/D) 2,849 2,758 2,815
----------------------------------------------------------------------
----------------------------------------------------------------------
Average Realized Prices
Gas ($/MCF)
U.S. $5.52 $5.46 $5.28
Canada 5.53 5.76 5.68
Other International 3.69 3.12 3.40
----------------------------------------------------------------------
Combined including hedging 5.31 5.40 5.29
Hedging loss (gain) (0.01) 0.04 (0.02)
----------------------------------------------------------------------
Combined before hedging $5.30 $5.44 $5.27
----------------------------------------------------------------------
NGLs ($/BBL)
U.S. $19.98 $21.01 $24.19
Canada 25.36 29.69 29.68
----------------------------------------------------------------------
Combined $22.08 $23.81 $26.26
----------------------------------------------------------------------
Oil ($/BBL)
U.S. $31.70 $33.10 $37.15
Canada 32.78 35.26 40.68
Other International 27.62 35.73 42.63
----------------------------------------------------------------------
Combined including hedging 29.57 34.62 40.13
Hedging loss (gain) 0.32 0.77 1.51
----------------------------------------------------------------------
Combined before hedging $29.89 $35.39 $41.64
BURLINGTON RESOURCES INC.
SALES VOLUMES AND PRICES
----------------------------------------------------------------------
2003 Year Ended
---------------------------------------------
Third Fourth
Quarter Quarter 2003 2002 2001
----------------------------------------------------------------------
Sales Volumes
Gas (MMCF/Day)
U.S. 848 870 865 949 1,121
Canada 873 876 867 802 433
Other International 168 211 167 165 170
----------------------------------------------------------------------
Worldwide 1,889 1,957 1,899 1,916 1,724
----------------------------------------------------------------------
NGLs (MBBLS/Day)
U.S. 35.9 43.1 37.4 32.7 34.6
Canada 27.1 26.1 27.4 27.4 12.5
----------------------------------------------------------------------
Worldwide 63.0 69.2 64.8 60.1 47.1
----------------------------------------------------------------------
Oil (MBBLS/Day)
U.S. 30.0 30.7 29.3 35.4 44.0
Canada 5.2 4.9 5.1 7.8 11.9
Other International 12.1 22.9 12.1 5.9 7.3
----------------------------------------------------------------------
Worldwide 47.3 58.5 46.5 49.1 63.2
----------------------------------------------------------------------
Total Equivalent
(MMCFE/D) 2,551 2,723 2,567 2,571 2,386
----------------------------------------------------------------------
----------------------------------------------------------------------
Average Realized Prices
Gas ($/MCF)
U.S. $4.91 $4.38 $4.87 $3.39 $3.99
Canada 4.90 4.57 5.12 3.17 4.60
Other International 2.46 3.81 3.07 2.27 2.83
----------------------------------------------------------------------
Combined including
hedging 4.68 4.40 4.83 3.20 4.03
Hedging loss (gain) 0.04 0.03 0.09 (0.16) 0.48
----------------------------------------------------------------------
Combined before hedging $4.72 $4.43 $4.92 $3.04 $4.51
----------------------------------------------------------------------
NGLs ($/BBL)
U.S. $17.81 $18.96 $18.42 $13.23 $14.75
Canada 23.88 23.16 23.08 15.92 22.50
----------------------------------------------------------------------
Combined $20.42 $20.54 $20.40 $14.46 $16.79
----------------------------------------------------------------------
Oil ($/BBL)
U.S. $27.66 $27.09 $28.08 $23.16 $22.63
Canada 32.30 28.52 31.11 28.32 26.51
Other International 23.67 22.48 23.49 24.30 23.42
----------------------------------------------------------------------
Combined including
hedging 27.16 25.40 27.22 24.11 23.45
Hedging loss (gain) - - 0.09 (0.18) 1.10
----------------------------------------------------------------------
Combined before hedging $27.16 $25.40 $27.31 $23.93 $24.55
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