Coho Energy Announces Financial Results for Second Quarter 2001.Business Editors DALLAS--(BUSINESS WIRE)--August 14, 2001 Coho Energy, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CHOH CHOH Chesapeake and Ohio Canal National Historic Park (US National Park Service) ) announced today its financial and operating results for the quarter ended June June: see month. 30, 2001. Daily barrel of oil equivalent The barrel of oil equivalent (bboe, sometimes BOE) is a unit of energy based on the approximate energy released by burning one barrel of crude oil. The US Internal Revenue Service defines it as equal to 5.8 × 106 BTU [1]. 5. production ("BOEPD BOEPD Barrels of Oil Equivalent Per Day ") has increased slightly from 10,854 BOEPD for the three months ended June 30, 2000 to 10,980 for the three months ended June 30, 2001. Cash flow provided by operating activities (before working capital adjustments) was $8.9 million for the current three month period as compared to cash flow provided by operating activities of $10.2 million for the same three-month period in 2000. Earnings before interest, taxes, depreciation, amortization, and reorganization costs, loss on standby standby Medtalk adjective Referring to the immediate availability of a certain specialist–anesthesiologist, surgeon, who can be deployed in a medical emergency. Cf Concurrent. loan embedded Inserted into. See embedded system. derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. , accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. effect of an accounting change and extraordinary item were $10.3 million for the current three-month period compared to $15.2 million for the same period in 2000. For the three months ended June 30, 2001, the Company reported a loss of $2.5 million, or $0.13 per share, as compared with a loss of $2.3 million, or $0.12 per share, in the same period in 2000. During the second quarter of 2001, the Company recognized a loss of $640,000 related to the change in the fair value of its standby loan embedded derivative and a loss of $1.3 million related to the ineffective portion of its cash flow hedges A cash flow hedge is a hedge of the exposure to the variability of cash flow that
The Company adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 133 effective January 1, 2001. The statement required the Company to recognize all derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. on the balance sheet as either an asset or liability based on fair value on January 1, 2001. The changes in fair value for the effective portion of these hedge 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. will be recognized in other comprehensive income until the hedged item is recognized in earnings, at which time the changes in fair value previously recognized in other comprehensive income will be reclassified to earnings. Subsequent changes in fair value for the ineffective portion of derivatives qualifying as hedges and for derivatives that are not hedges must be adjusted to fair value through earnings. The Company has entered into certain arrangements that fix a minimum and maximum price range for a portion of its future crude oil and natural gas production. These hedge arrangements qualify as cash flow hedges under SFAS No. 133 whereby the fair value of the cash flow hedges is recorded on the balance sheet as an asset or liability and the subsequent changes in the fair value for the effective portion of the hedge are recognized in other comprehensive income, which is included in shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . The fair value of these hedges as of June 30, 2001 was a net liability of $6.0 million, including $6.7 million of accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. reflected in current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. , $485,000 of accrued unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. reflected in current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. and $175,000 of accrued unrealized gains reflected in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . As of June 30, 2001, the Company had issued senior subordinated notes with principal amounts aggregating $83.2 million. These senior subordinated notes, herein referred to as the "standby loan", bear interest at a minimum annual rate of 15% plus additional contingent interest contingent interest n. an interest in real property which, according to the deed (or a will or trust), a party will receive only if a certain event occurs or certain circumstances happen. , after March 31, 2001, in an amount equal to 1/2% for every $.25 that the actual price for the Company's crude oil and natural gas production exceeds $15 per barrel of oil equivalent up to a maximum of 10% additional interest per year. Any time the average realized price exceeds $20 per barrel of oil equivalent, the Company will have to pay the 10% maximum additional interest. This additional contingent interest feature of the standby loan is considered to be an embedded derivative under SFAS No. 133 whereby the fair value of the additional contingent interest is recorded as a liability on the balance sheet and the subsequent changes in fair value are recognized through earnings. The fair market value of the estimated future contingent interest payments of $21.0 million as of June 30, 2001 is recorded as long term accrued derivative liabilities on the balance sheet. A loss on standby loan embedded derivative of $640,000 was recognized during the three months ended June 30, 2001 related to the change in the fair market value of this derivative during the three-month period. Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. decreased 14% from $23.9 million during the second quarter of 2000 to $20.5 million during the second quarter of 2001, even though there was an overall increase in production, primarily due to a 17% decrease in the price received for crude oil. Of this 17% decrease, 8% was attributable to crude oil hedging losses of $2.0 million during the current three-month period and 9% was attributable to decreases in the actual prices received from the sale of our crude oil during the current quarter in 2001 as compared to the same quarter in 2000. Production expenses increased 6% from $5.8 million during the second quarter of 2000 to $6.2 million during the second quarter of 2001 primarily due to increases in crude oil production and increases in electrical and well repair costs. During the three months ended June 30, 2001, the Company drilled six wells, including two Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by wells and four Oklahoma wells. Five of the six wells were productive wells. The Company suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. drilling on one of the Oklahoma wells because high pressure water flow was encountered. The Company plans to re-enter re·en·ter also re-en·ter v. re·en·tered, re·en·ter·ing, re·en·ters v.tr. 1. To enter or come in to again. 2. To record again on a list or ledger. v.intr. the well at a later date with suitable drilling equipment and continue the completion. Our 2001 annual capital expenditure budget was decreased mid-year from $40 million to $35 million, with $11.7 remaining to be spent during the last six months of 2001 which will be funded by working capital from operations and borrowings under the credit facility to the extent available. The Company has no material capital commitments related to budgeted capital expenditures and is consequently able to adjust the level of expenditures based on available cash flow. Coho Energy, Inc. is a Dallas-based oil and gas producer focusing on exploitation of underdeveloped un·der·de·vel·oped adj. Not adequately or normally developed; immature. oil properties in Oklahoma and Mississippi.
COHO ENERGY, INC.
SUMMARY OF FINANCIAL RESULTS
(In thousands, Except per Share, Production and Average Price Data)
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- --------------------
2001 2000 2001 2000
--------- --------- --------- ---------
OIL PRODUCTION (Bbl/day) 10,069 9,650 10,226 9,914
GAS PRODUCTION (Mcf/day) 4,472 5,927 4,529 5,638
PRODUCTION (BOE/day) 10,815 10,637 10,980 10,854
Average Sales Price
Crude Oil per Bbl (a) $ 20.47 $ 24.61 $ 20.15 $ 24.40
Natural Gas per Mcf (a) $ 4.73 $ 3.05 $ 4.32 $ 3.60
OPERATING REVENUES
Oil and Gas Production $ 41,145 $ 46,504 $ 20,534 $ 23,858
--------- --------- --------- ---------
OPERATING EXPENSES
Oil and Gas Production 12,048 11,243 6,158 5,783
Taxes on Oil and Gas
Production 2,706 2,606 1,262 1,334
General and Administrative 2,837 3,705 1,514 1,542
Loss on Derivatives 1,587 -- 1,307 --
Allowance for Bad Debt -- 765 -- --
Depletion and Depreciation 8,410 7,396 4,295 3,770
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 27,588 25,715 14,536 12,429
NET INTEREST EXPENSES (18,076) (17,163) (8,770) (9,102)
LOSS ON STANDBY LOAN
EMBEDDED DERIVATIVE (2,980) (3,960) (640) (3,960)
REORGANIZATION COSTS 2,150 (12,182) 950 (682)
INCOME TAX (EXPENSE) BENEFIT -- -- -- --
ACCUMULATED EFFECT OF AN
ACCOUNTING CHANGE 9,180 -- -- --
EXTRAORDINARY ITEM - loss on
extinguishments of
indebtedness -- (4,428) -- --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 3,831 $(16,944) $ (2,462) $ (2,315)
========= ========= ========= =========
BASIC AND DILUTED INCOME
(LOSS) PER COMMON SHARE $ 0.20 $ (1.73) $ (0.13) $ (0.12)
CASH FLOW FROM OPERATING
ACTIVITIES (before working
capital adjustments) $ 16,484 $ 5,610 $ 8,862 $ 10,198
CASH FLOW PER COMMON
SHARES - BASIC $ .88 $ 0.57 $ 0.47 $ 0.55
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES - BASIC 18,714 9,770 18,714 18,701
(a) The average sales price per Bbl of crude oil is net of hedging
losses of $2.10 and $2.39 per Bbl for the three and six months
ended June 30, 2001, respectively, and $.18 and $.09 per Bbl for
the three and six months ended June 30, 2000, respectively. The
average sale price per Mcf of natural gas is net of hedging
losses of $0.50 and $1.39 per Mcf for the three months ended June
30, 2001, respectively, and $0.04 and $0.02 per Mcf for the three
and six months ended June 30, 2000, respectively.
ASSETS COHO ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2001 2000
-------- ---------
ASSETS
Current Assets $18,488 $19,703
Property and Equipment 332,522 317,667
Other 26,586 29,421
-------- --------
$377,596 $366,791
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $22,639 $ 22,350
Long Term Debt 272,081 282,412
Long Term Accrued Derivative
Liabilities 21,403 -
-------- ---------
316,123 304,762
-------- ---------
Commitments and Contingencies 520 520
Shareholders' Equity 60,953 61,509
-------- ---------
$377,596 $366,791
======== =========
Common Shares Outstanding
- Basic 18,714 18,714
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