Coho Energy Announces Year End Proved Oil and Gas Reserves and Financial Results and Provides Update on Financial Restructuring.DALLAS--(BUSINESS WIRE)--March 31, 1999--Coho Energy, Inc. (Nasdaq:COHO) announced today year end financial results reporting year end proved oil and gas reserves of 111.1 million barrels of oil equivalent and a net loss of $203.3 million. The prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. and dramatic decline in crude oil prices during 1998 had a significant negative impact on the financial and operating results, specifically on cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , earnings, debt levels and proved reserve values. Proved Crude Oil and Natural Gas Reserves Coho's 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. at December December: see month. 31, 1998, were 100 million barrels of oil and 66.3 billion cubic feet of natural gas or 111.1 million barrels of oil equivalent ("BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip "). In taking account of the year's production of 6.4 million barrels of oil equivalent and the sale in December 1998 of the Company's Monroe Monroe. 1 Industrial city (1990 pop. 54,909), seat of Ouachita parish, SE La., on the Ouachita River; founded c.1785, inc. as a city 1900. The center of the great Monroe Natural Gas Field (discovered 1915), it has important chemical plants, as well as , La. gas field the proved reserves increased 13.5 million BOE or 14% over the year end 1997 volumes. The majority of the proved reserves increases were recorded 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). were a total of 17.5 million BOE were added through revisions to previous estimates (3 million BOE), extension and discoveries (8.1 million BOE) and purchase of reserves in place (6.4 million BOE). The balance of the changes to the reserve volumes were in 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 where negative revisions of 9.9 million BOE, primarily due to low year end oil prices, purchases of 0.5 million BOE and extensions and discoveries of 5.4 million BOE comprise the balance of the changes. Low year end prices for crude oil had a significant impact on the year end reserve value. Using future net cash flows of $549 million based on unescalated year end oil and gas prices and a 10% discount rate and other Securities and Exchange Commission mandated parameters the present value of the proved reserves was $269.3 million. The 49% decrease in present value from year end 1997 is a reflection of the sale of 94.1 billion cubic feet of natural gas in December for net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $61.5 million and realized oil and gas prices of $9.36 per barrel of crude oil and $2.10 per thousand cubic feet of natural gas. The year end 1998 realized prices are $5.70 per barrel lower for crude oil and $0.16 per thousand cubic feet lower for natural gas than year end 1997. Using a recent NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). crude oil price of $16.00 held constant for all future years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time same realized year end 1998 gas price and reflecting new recently negotiated crude sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. , the present value of the reserves would be $483.7 million and the proved reserve volumes would be 120.8 million BOE. Utilizing the same methodology of accounting for the year's production and the sale of assets, the Company would have increased reserves by 23.2 million BOE. Financial Results The low year end crude oil price negatively impacted the financial results for the year. For the year ended December 31, 1998, the Company reported a loss of $203.3 million ($7.94 per share) as compared with earnings of $6.3 million ($0.29 per share) in 1997. The loss is primarily due to a full cost ceiling test writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. during 1998 of $188 million ($175.6 net after taxes). The non-cash writedown, which is mandated by the Securities and Exchange Commission accounting rules, require companies using full cost accounting to value their oil and gas assets at the lower of net book value or a valuation based on oil and gas prices at a point in time, without escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. , for the life of the reserves. In addition to the ceiling test writedown, the Company recorded a $2.1 million charge in the fourth quarter for the cost of the unsuccessful equity transaction with a partnership comprised of Hicks Hicks , Edward 1780-1849. American painter of primitive works, notably The Peaceable Kingdom, of which nearly 100 versions exist. , Muse, Tate & Furst Equity Fund IV, LP and managed by Hicks, Muse, Tate & Furst Incorporated. Capital expenditures during the year were $70.1 million, comprised of $13.1 million on acquisitions, $51 million for development expenditures and $5 million on exploration efforts. During the fourth quarter capital expenditures were restricted due to low commodity prices. Of the $7.7 million of capital expenditures spent in the fourth quarter of 1998 approximately $1.5 million was expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. on acquisitions. Total net daily production in 1998 averaged 17,599 BOE, a 57% increase over 1997. Fourth quarter production was 14,939 BOE per day comprised of 12,073 barrels of oil and 17,194 thousand cubic feet of natural gas. Natural gas production in the fourth quarter partially reflects the sale of the Monroe field. Crude oil prices during the fourth quarter prompted the Company to shut in approximately 700 barrels of oil per day and to intentionally in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. not repair wells which required minor workovers. Update on Financial Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). In February February: see month. and March 1999 the Company made several announcements including, the non-completion of an equity issue to the Hicks, Muse, Tate & Furst partnership, the redetermination Noun 1. redetermination - determining again determination, finding - the act of determining the properties of something, usually by research or calculation; "the determination of molecular structures" of the Company's credit facility borrowing base and, as a result of the redetermination, the creation of an over advance and the receipt of a default notice from the Company's lenders for failure to make payment on the first of five installments due on the over advance. The year end financial statements reflect each of these announcements, including the recording of all of the Company's long term debt as a current liability. The Company is currently working to put into place a comprehensive plan to restructure its financial obligations. The alternatives being pursued include, but are not limited to, the conversion of a portion or all of the $150 million senior notes to equity, the raising of additional equity and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. refinancing Refinancing An extension and/or increase in amount of existing debt. the Company's revolving bank credit facility. There can be no assurances that the Company will be successful in resolving its liquidity problems through the alternatives set forth above in and out of court restructuring and may seek court protection while it is pursuing other financing and/or reorganization alternatives. Following the announcement by the Company about the default notice from the bank lenders, the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. halted trading of the common stock. The Nasdaq Stock Market requested additional information from the Company but Coho is unable to provide the information because it had not formalized for·mal·ize tr.v. for·mal·ized, for·mal·iz·ing, for·mal·iz·es 1. To give a definite form or shape to. 2. a. To make formal. b. its restructuring plan. On March 29, 1999 the Company received a letter from Nasdaq Stock Market that it has determined that the continued listing of the Company's common stock on the Nasdaq Stock Market is no longer warranted. The Company intends to request an oral hearing with the Nasdaq Stock Market, which, pursuant to Nasdaq's Marketplace Rules, will stay any delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. action pending a final decision by the Nasdaq Listing Qualifications Panel. -0-
COHO ENERGY, INC.
SUMMARY OF FINANCIAL RESULTS
(In Thousands, Except Per Share Data)
Three Months Twelve Months
Ended Ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
OIL PRODUCTION (BBL/D) 12,073 8,497 13,889 7,726
GAS PRODUCTION (MCF/D) 17,194 22,116 22,260 21,003
PRODUCTION (BOE/D) 14,939 12,183 17,599 11,227
Average Sales Price
$/BBL 8.88 15.98 10.40 16.31
$/MCF 1.91 2.52 1.98 2.23
OPERATING REVENUES
Net Oil and Gas
Production $ 12,930 $ 17,624 $ 68,759 $ 63,130
-------- -------- -------- --------
OPERATING EXPENSES
Oil & Gas Production 5,193 3,735 23,475 13,747
Taxes on Oil & Gas
Production 656 594 3,384 2,223
General & Administrative 2,988 2,115 7,750 7,163
Allowance for Bad Debt 894 -- 894 --
Unsuccessful Transaction
Costs 2,129 -- 2,129 --
Depletion & Depreciation 5,900 5,142 28,135 19,214
Writedown 115,000 -- 188,000 --
-------- -------- -------- --------
TOTAL OPERATING
EXPENSES 132,770 11,586 253,767 42,347
NET INTEREST EXPENSE 8,377 3,247 32,721 10,474
INCOME TAX EXPENSE
(BENEFIT) 4,049 1,089 (14,383) 4,021
-------- -------- -------- --------
NET EARNINGS (LOSS) $(132,266) $ 1,702 $(203,346) $ 6,288
-------- -------- -------- --------
-------- -------- -------- --------
BASIC EARNINGS (LOSS)
PER COMMON SHARE $ (5.17) $ 0.07 $ (7.94) $ 0.29
-------- -------- -------- --------
-------- -------- -------- --------
CASH FLOW FROM
OPERATING ACTIVITIES $ (10,249) $ 8,046 $ (3,949) $ 29,951
CASH FLOW PER COMMON
SHARE $ (0.40) $ 0.32 $ (0.15) $ 1.38
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 25,604 25,486 25,604 21,693
COHO ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31
(In Thousands)
1998 1997
---- ----
ASSETS
Current Assets 19,314 17,074
Property and Equipment 324,574 531,409
Other 6,180 6,645
--------- ---------
$ 350,068 $ 555,128
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities 407,611 19,095
Long Term Debt -- 369,924
Deferred Income Taxes -- 20,306
Commitments and Contingencies 3,700 3,700
--------- ---------
411,311 413,025
Shareholders' Equity (61,243) 142,103
--------- ---------
$ 350,068 $ 555,128
--------- ---------
--------- ---------
Common Shares Outstanding 25,604 25,604
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