Burlington Resources Reports Third-Quarter Earnings of $73 Million and Higher Production.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Oct. 18, 2001 Integration Planning Begins On Proposed Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Hunter Acquisition; Development Projects Announced in Algeria Algeria (ăljēr`ēə), Arab. Al Djazair, Fr. Algérie, officially People's Democratic Republic of Algeria, republic (2005 est. pop. and 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. Burlington Resources Burlington Resources, is an American oil and gas company. Their headquarters are in Houston, Texas. Based in Houston, Texas, BR has major offices located in Calgary, London, Farmington, Midland and Fort Worth. Inc. (NYSE NYSE See: New York Stock Exchange :BR) today reported estimated net income of $73 million for the third quarter of 2001, or $0.36 per 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, compared to net income of $200 million or $0.93 per diluted share during the same quarter of 2000. For the year's first nine months, net income increased to $640 million or $3.05 per diluted share, compared to $371 million or $1.71 per diluted share during the same period last year. Total production during the third quarter increased by 2 percent to 2,326 million cubic feet of natural gas equivalent per day, or by 8 percent per diluted share. The production increase was more than offset by significantly lower commodity prices. 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. (cash flow before changes in working capital) during the third quarter was $396 million or $1.93 per diluted share, compared to $440 million or $2.03 per diluted share during the same quarter last year. During the first nine months of 2001, discretionary cash flow increased to $1.63 billion, or $7.74 per diluted share, from $1.19 billion or $5.47 per diluted share during the same period last year. Burlington Burlington, town, Canada Burlington, town (1991 pop. 129,575), SE Ont., Canada, on Lake Ontario. First settled (1798) by Mohawk Loyalist Joseph Brandt, Burlington's economy was built on the shipment of wheat, lumber, and quarried rock by waterway. repurchased 6.1 million shares of its common stock during the quarter at an average price of $38.66. Repurchases under a standing $1 billion authorization The right or permission to use a system resource; the process of granting access. See access control. currently total 16.3 million shares repurchased for $694 million, representing about 8 percent of the shares outstanding when the program began in late 2000. As a result, shares outstanding declined to approximately 200.8 million at the end of the quarter, compared to 215.4 million at the same time last year. "We recorded very solid performance during the quarter considering the downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in commodity prices," said Bobby S. Shackouls, Burlington Resources chairman, president and chief executive officer. "We benefited from our diverse production base and high cash flow generation, while continuing a strong capital investment program focused on areas offering 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. potential. And as we begin the fourth quarter, we are excited about the opportunities offered by the pending addition of Canadian Hunter." During the third quarter, Burlington's natural gas production averaged 1,929 million cubic feet per day (MMcfd), up from the prior year's quarterly average of 1,849 MMcfd. This is an increase of 4 percent on an absolute basis, or 10 percent per diluted share. Increases were realized in the East Irish Sea and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Oil production averaged 66.2 thousand barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. (Mbd), compared to 73.4 Mbd during the prior year's quarter, with a decline in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . Production of both commodities met expectations. Natural gas price realizations averaged $2.75 per thousand cubic feet (Mcf) during the quarter, compared to $3.37 during the prior year's quarter. Oil price realizations of $23.92 per barrel were down from $27.12 realized during the prior year's quarter. Exploratory results during the third quarter included four discoveries among 13 wells drilled, bringing year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. results to 14 productive wells among 42 drilled. Two of the recent successes were in Canada, with one each in Algeria and Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. . Exploration expenses
were $79 million during the third quarter, compared to $28 million
during the prior year's quarter. Included in this quarter's
expense was an $18-million pre-tax pre-tax adj → anterior al impuestopre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge related to sub-leasing a portion of a long-term contract on a deepwater Deepwater or Deep Water may refer to:
tr.v. de-em·pha·sized, de-em·pha·siz·ing, de-em·pha·siz·es To decrease the emphasis on; minimize the importance of. de-em its company-operated deepwater drilling program. Meanwhile, after the quarter ended Burlington announced the proposed $2.1-billion acquisition of Canadian Hunter Exploration Ltd. Preliminary planning work has begun on integrating Burlington's Canadian operations with those of Canadian Hunter after the transaction's expected close later this year. A commitment was also made to develop oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally in the MLN MLN Million MLN Modern Language Notes (literary journal) MLN Management & Leadership Network (Northern Ireland) MLN Missouri League for Nursing MLN Main Listed Number field on Algeria's block 405a, where contracts are being finalized See finalization. for construction of facilities capable of accommodating 37.5 Mbd of production beginning in mid- mid- pref. Middle: midbrain. 2003. Additional development is planned for nearby satellite fields in the future. In other news, Burlington successfully bid on a new Algerian exploration block, 402d. In the East Irish Sea agreements were signed for development of sour natural gas reserves in the Rivers fields, with start-up Start-up The earliest stage of a new business venture. planned in 2004. The fields contain estimated recoverable reserves of 350-to-400 billion cubic feet, with anticipated peak production of 120 MMcfd. A $262-million project will entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary installation of subsea Subsea is a general term frequently used to refer to equipment, technology, and methods employed to explore, drill, and develop oil and gas fields that exist below the ocean floors. This may be in "shallow" or "deepwater". wellheads and an unmanned platform, and construction of an onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. processing facility. The gas will flow to market through a pipeline to Barrow-in-Furness Barrow-in-Furness (–fûr`nĭs), city (1991 pop. 50,174) and district, Cumbria, NW England, on the tip of the Furness peninsula. The port of Barrow has c. in Cumbria, England. Remaining Year Outlook The remaining year outlook does not include the impact of the proposed Canadian Hunter acquisition or any divestitures contemplated for the future. The company expects fourth-quarter 2001 natural gas production to range from 1,800-to-1,950 MMcfd. Fourth-quarter 2001 oil production is estimated to range from 60-to-68 Mbd. Full-year 2001 average gas production is estimated to range from 1,900-to-1,950 MMcfd, with oil production expected to average 65-to-68 Mbd. The geographic breakdown follows:
4th-Quarter 2001 Full-Year 2001
Estimate Estimate
Gas (MMcfd)
U.S. 1,220 - 1,300 1,270 - 1,295
Canada 430 - 470 465 - 480
Other International 150 - 180 165 - 175
--------------- ---------------
Total 1,800 - 1,950 1,900 - 1,950
Oil (Mbd)
U.S. 40.5 - 43.0 42.0 - 43.0
Canada 13.5 - 17.0 16.0 - 17.0
Other International 6.0 - 8.0 7.0 - 8.0
--------------- ---------------
Total 60.0 - 68.0 65.0 - 68.0
The company has hedged a portion of its North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. natural gas production. During the fourth quarter, 76 MMcfd is hedged at a $2.65 NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). Henry Hub-equivalent price, and 430 MMcfd is hedged with collars at a floor price of $4 per Mcf with full participation up to a price of $8 per Mcf. Preliminary estimates for exploration expense are $50-to-$80 million for the fourth quarter of 2001 and $250-to-$280 million for the entire year, including estimated dry hole expense. Actual dry hole expense could differ based on timing and results of wells. On a gas equivalent per unit basis, fourth-quarter total cash costs, excluding production taxes, are anticipated to rise slightly over the third quarter, in the range of $1.07-to-$1.10 per Mcfe. Production taxes will vary with changes in commodity prices. 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 (DD&A) expense is expected to be comparable to the third quarter, averaging $.82 to $.86 per Mcfe for the fourth quarter and full-year 2001. 2002 Outlook Assuming the successful closing of the proposed Canadian Hunter acquisition by year-end 2001, Burlington is providing the following guidance for pro-forma 2002. This guidance includes the impact of planned divestitures, the timing and amount of which could be material to these estimates. For the full year, natural gas production is estimated to range from 2,000-to-2,250 MMcfd, and oil production to range from 50-to-60 Mbd. Full-year cash costs on a unit basis, excluding production taxes, are expected to be flat compared to 2001. DD&A expense on a unit basis is expected to increase slightly to $.84-to-$.86 per Mcfe. We expect pre-tax interest expense to range from $300-to-$325 million for the year. Full-year exploration expense is expected to be below the levels experienced in 2001. Headquartered in Houston, Burlington Resources is one of the world's largest independent oil and gas companies, with natural gas comprising approximately 80 percent of its reserves. The company has properties in the U.S., Canada, the United Kingdom, South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , Africa and China. Additional information is available on the Burlington Resources Web site at www.br-inc.com. A financial statement and a statistical table are attached. 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. 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 a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . 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.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
THIRD QUARTER NINE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
(In Millions, Except per Share Amounts)
Revenues $655 $760 $2,715 $2,148
------ ------ ------ ------
Costs and Expenses
Production Taxes 23 31 130 102
Transportation Expense 64 65 191 180
Production and Processing 127 110 368 349
Depreciation, Depletion
and Amortization 183 171 527 522
Exploration Costs 79 28 201 174
Administrative 36 37 119 115
------ ------ ------ ------
Total Costs and Expenses 512 442 1,536 1,442
------ ------ ------ ------
Operating Income 143 318 1,179 706
Interest Expense 41 48 132 151
Other Expense (Income) - Net (4) (3) 4 7
------ ------ ------ ------
Income Before Income Taxes 106 273 1,043 548
Income Tax Expense 33 73 406 177
------ ------ ------ ------
Net Income Before Cumulative
Effect of Change in Accounting
Principle 73 200 637 371
Cumulative Effect of Change in
Accounting Principle - Net -- -- 3 --
------ ------ ------ ------
Net Income $73 $200 $640 $371
====== ====== ====== ======
Earnings per Common Share
Basic
Before Cumulative Effect of
Change in Accounting Principle $.36 $.93 $3.05 $1.72
Cumulative Effect of Change in
Accounting Principle - Net -- -- .01 --
------ ------ ------ ------
Net Income $.36 $.93 $3.06 $1.72
====== ====== ====== ======
Diluted
Before Cumulative Effect of
Change in Accounting Principle $.36 $.93 $3.04 $1.71
Cumulative Effect of Change in
Accounting Principle - Net -- -- .01 --
------ ------ ------ ------
Net Income $.36 $.93 $3.05 $1.71
====== ====== ====== ======
Basic Common Shares 204 216 209 216
====== ====== ====== ======
Diluted Common Shares 205 217 210 217
====== ====== ====== ======
This statement should be read in conjunction with the attached press
release.
BURLINGTON RESOURCES INC.
SALES VOLUMES AND PRICES
2001 2000 Total Year
-------------------- ------------- --------------------
First Second Third Third Fourth
Quarter Quarter Quarter Quarter Quarter 2000 1999 1998
---------------------------------------------------------
Daily Sales
Gas (MMCF/Day)
Domestic 1,360 1,314 1,270 1,382 1,380 1,441 1,487 1,580
Canada 479 487 466 387 403 397 429 430
Other
Inter-
national 170 144 193 80 128 122 88 67
------ ------ ------ ------ ------ ------ ------ ------
Total 2,009 1,945 1,929 1,849 1,911 1,960 2,004 2,077
------ ------ ------ ------ ------ ------ ------ ------
Oil (MBBLS/Day)
Domestic 45.5 44.7 42.7 48.8 45.9 51.6 57.3 66.2
Canada 16.3 17.8 16.6 16.8 15.8 17.0 19.4 21.8
Other
Inter-
national 8.0 7.1 6.9 7.8 8.0 9.6 13.2 16.5
------ ------ ------ ------ ------ ------ ------ ------
Total 69.8 69.6 66.2 73.4 69.7 78.2 89.9 104.5
------ ------ ------ ------ ------ ------ ------ ------
Average Prices
Gas ($/MCF)
Domestic $5.04 $3.99 $2.84 $3.26 $4.47 $3.25 $2.49 $2.19
Canada 6.96 4.88 2.93 4.05 6.04 3.96 1.76 2.12
Other
Inter-
national 2.94 2.50 1.74 2.31 2.58 2.16 1.93 2.56
------ ------ ------ ------ ------ ------ ------ ------
Combined
including
hedging $5.32 $4.10 $2.75 $3.37 $4.68 $3.32 $2.33 $2.19
Hedging
loss (gain) 1.60 .66 (.23) .62 .76 .40 (.05) (.06)
------ ------ ------ ------ ------ ------ ------ ------
Combined
before
hedging
loss (gain) $6.92 $4.76 $2.52 $3.99 $5.44 $3.72 $2.28 $2.13
------ ------ ------ ------ ------ ------ ------ ------
Oil ($/BBL)
Domestic $25.24 $23.18 $22.79 $25.37 $23.96 $24.18 $16.70 $13.34
Canada 30.71 28.79 26.87 31.13 31.29 27.80 18.36 12.44
Other
Inter-
national 24.48 26.66 23.82 29.43 30.74 27.73 17.00 13.16
------ ------ ------ ------ ------ ------ ------ ------
Combined
including
hedging 26.43 $24.92 $23.92 $27.12 $26.39 $25.40 $17.12 $13.13
Hedging
loss (gain) 1.72 1.62 1.43 2.33 2.63 2.46 .19 (.52)
------ ------ ------ ------ ------ ------ ------ ------
Combined
before
hedging
loss (gain) $28.15 $26.54 $25.35 $29.45 $29.02 $27.86 $17.31 $12.61
------ ------ ------ ------ ------ ------ ------ ------
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