Contango Announces First Quarter Fiscal Year 2003 Results.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Nov. 11, 2002 Contango Contango When the futures price is above the expected future spot price. Consequently, the price will decline to the spot price before the delivery date. Notes: This is the opposite of backwardation. Oil & Gas Company (AMEX AMEX See: American Stock Exchange :MCF MCF malignant catarrhal fever. ) reported net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common stock for the three months ended Sept. 30, 2002 of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $217,000, or $0.02 per basic and 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 attributable to common stock for the three months ended Sept. 30, 2001 of approximately $4.3 million, or $0.38 per basic share and $0.31 per diluted share. Total revenues for the three months ended Sept. 30, 2002 were approximately $7.0 million, compared to approximately $10.3 million for the three months ended Sept. 30, 2001. Included in total revenues for the three months ended Sept. 30, 2001 was approximately $4.5 million in gains from hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. activities. EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: (earnings before interest, taxes, 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, and expensed exploration expenditures) for the three months ended Sept. 30, 2002 was approximately $5.6 million. Net natural gas production for the three months ended Sept. 30, 2002 was 18.6 MMcfd, compared to 16.6 MMcfd for the three months ended Sept. 30, 2001. Net oil production for the three months ended Sept. 30, 2002 was 416 barrels of oil per day, compared to 457 barrels of oil per day for the three months ended Sept. 30, 2001. The average price received for natural gas for the three months ended Sept. 30, 2002 was $3.49 per Mcf, compared to $3.11 per Mcf for the three months ended Sept. 30, 2001. The average price received for oil for the three months ended Sept. 30, 2002 was $27.07 per barrel barrel: see English units of measurement. , compared to $24.74 per barrel for the three months ended Sept. 30, 2001. Kenneth R. Peak, Contango's chairman and chief executive officer, stated, "Although this quarter's production and commodity prices were higher than last year's, this quarter's profits were down significantly. The principal reasons were last year's hedging gains of $4.5 million and this year's seismic expense of $2.2 million. We have not hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. our natural gas production the last several months because we think gas prices have a higher probability probability, in mathematics, assignment of a number as a measure of the "chance" that a given event will occur. There are certain important restrictions on such a probability measure. of going up than down, and we have in fact benefited from the last several months of exceptionally strong prices." Mr. Peak continued, "As a small E&P company that follows successful efforts accounting, our earnings will vary widely depending on seismic and dry hole expenses incurred in any given quarter. Given our business model of value creation through exploration, seismic and dry hole expenses will continue to be incurred as we seek to grow Contango. Contango and its exploration partner, JEX JEX Joint Exercise , are jointly budgeting about $8.5 million in seismic expenditures for fiscal year 2003. Our share is $8.0 million. This level of seismic expenditures represents a major commitment by Contango to generate prospects in a prospect-starved industry. If our south Texas seismic program is successful in identifying prospects, we would expect to be drilling in the March-May timeframe of 2003. The principal driver of our decision to put our STEP properties up for sale is to prepare for what we expect will be an aggressive exploration program in 2003." Contango is an independent natural gas and oil company that explores for, develops, produces and sells natural gas and crude oil. Contango's exploration and production efforts are currently focused 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. on the Gulf Coast and offshore 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 . This press release contains 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. that involve risks and uncertainties, and actual events or results may differ materially from Contango's expectations. The statements reflect Contango's current views with respect to future events that involve risks and uncertainties, including those related to successful negotiations with other parties, oil and gas exploration risks, price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , production levels, closing of transactions, capital availability, operational and other risks, uncertainties and factors described from time to time in Contango's publicly available reports filed with the Securities and Exchange Commission.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Sept. 30,
---------------------------
2002 2001
------------ ------------
REVENUES:
Natural gas and oil sales $7,017,493 $5,782,857
Gain from hedging activities 6,644 4,483,659
------------ ------------
Total revenues 7,024,137 10,266,516
------------ ------------
EXPENSES:
Operating expenses 1,059,771 625,053
Exploration expenses 2,539,932 889,613
Depreciation, depletion and amortization 2,388,759 1,579,482
General and administrative expense 413,342 379,817
------------ ------------
Total expenses 6,401,804 3,473,965
------------ ------------
INCOME FROM OPERATIONS 622,333 6,792,551
Interest expense (184,320) (9,317)
Interest income 11,262 40,773
Gain on sale of assets and other 36,150 54,047
------------ ------------
INCOME BEFORE INCOME TAXES 485,425 6,878,054
Provision for income taxes 118,557 2,407,319
------------ ------------
NET INCOME 366,868 4,470,735
Preferred stock dividends 150,000 150,000
------------ ------------
NET INCOME ATTRIBUTABLE TO COMMON STOCK $216,868 $4,320,735
============ ============
NET INCOME PER SHARE:
Basic $0.02 $0.38
============ ============
Diluted $0.02 $0.31
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 9,043,282 11,502,332
============ ============
Diluted 9,820,496 14,414,119
============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
PRODUCTION, PRICES AND OPERATING EXPENSES
Three Months Ended
Sept. 30,
-------------------------
2002 2001
--------- ---------
Production:
Natural gas (thousand
cubic feet) 1,713,068 1,526,435
Oil and condensate
(barrels) 38,247 42,037
Total (thousand cubic
feet equivalent) 1,942,550 1,778,657
Natural gas (thousand cubic
feet per day) 18,620 16,592
Oil and condensate (barrels
per day) 416 457
Total (thousand cubic feet
equivalent per day) 21,116 19,334
Average sales price:
Natural gas (per thousand
cubic feet) $3.49 $3.11
Oil and condensate (per
barrel) $27.07 $24.74
Total (per thousand
cubic feet equivalent) $3.61 $3.26
Operating expenses (per
thousand cubic feet equivalent):
Production and severance taxes $0.25 $0.22
Lease operating expense
(before taxes) 0.30 0.13
--------- ---------
Total operating expenses $0.55 $0.35
Other expenses (per thousand
cubic feet equivalent):
Depreciation, depletion
and amortization of natural
gas and oil properties $1.21 $0.88
General and administrative
expense $0.21 $0.21
Mcf -- thousand cubic feet
Bbl -- barrel
Mcfe -- thousand cubic feet of natural gas equivalent (computed on
an energy equivalent basis of one Bbl equals six Mcf)
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