Contango Announces Second Quarter Results.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--Feb. 11, 2003 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 a net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common stock for the three months ended Dec. 31, 2002 of $4.4 million, or $0.49 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 a net loss attributable to common stock for the three months ended Dec. 31, 2001 of $622,800, or $0.05 per basic and diluted share. Total revenues for the three months ended Dec. 31, 2002 were $7.5 million, compared to $3.8 million for the three months ended Dec. 31, 2001. 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, income 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, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. expense and expensed exploration expenditures) more than doubled to $5.2 million for the three months ended Dec. 31, 2002 from $2.3 million for the three months ended Dec. 31, 2001. The Company reported a net loss attributable to common stock for the six months ended Dec. 31, 2002 of $4.2 million, or $0.47 per basic and diluted share, compared to net income attributable to common stock for the six months ended Dec. 31, 2001 of $3.7 million, or $0.32 per basic share and $0.28 per diluted share. Total revenues for the six months ended Dec. 31, 2002 were $14.5 million, compared to $14.0 million for the six months ended Dec. 31, 2001. EBITDAX for the six months ended Dec. 31, 2002 was $10.8 million, down from EBITDAX for the six months ended Dec. 31, 2001 of $11.7 million. Kenneth R Peak, Contango's chairman and chief executive officer, said, "The SEC PV-10 of our 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. proved developed producing reserves as of Dec. 31, 2002 was $70.0 million, using year end prices of $4.58 per MMBtu and $31.20 per barrel barrel: see English units of measurement. for crude oil and in each case before adjusting for basis, transportation costs and btu content. We continue to focus on our strategy to grow our reserves and value through the exploration drill bit. In that regard, we have now invested $12.0 million in our offshore 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 exploration subsidiaries and an additional $3.6 million in acquiring and shooting seismic data onshore south Texas. Since our Company follows the successful efforts method of accounting, we have expensed $11.5 million of these investments during the first six months of this fiscal year, $9.4 million of which was expensed in the quarter ended Dec. 31, 2002." Mr. Peak continued, "In our offshore Gulf of Mexico exploration program, we have had three successful wells, three dry holes and are currently drilling a delineation well on our earlier discovery at Eugene Island Eugene Island is a submerged mountain 70-85 miles off the Louisiana coast in the Gulf of Mexico. The nearby oil field Eugene Island 330 is best known for its unusual depletion profile. According to the article "Sustainable Oil?" by Chris Bennett WorldNetDaily. 110. We expect to spud an exploration well at our Viosca Knoll 211 prospect prior to the end of this quarter. In our onshore exploration program, we have already identified six prospects, which we intend to drill prior to June June: see month. 30, 2003. Our liquidity remains strong, with $17.0 million borrowed under our bank credit facility and an additional $9.2 million available." Contango is a Houston-based, independent natural gas and oil company. The Company explores, develops, produces and acquires natural gas and oil properties primarily onshore in the Gulf Coast and offshore in the Gulf of Mexico. Additional information can be found on our Web page at www.mcfx.biz biz n. Informal Business. biz Noun Informal business Noun 1. . This news 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. within the meaning of the Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act. The statements reflect the Company's current views with respect to future events that involve risks and uncertainties including uncertainties 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 the Company's publicly available SEC reports. In light of these risks and uncertainties, the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. events described in this release might not occur.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------ ------------------------
2002 2001 2002 2001
------------ ----------- ------------ -----------
REVENUES:
Natural gas and
oil sales $7,714,265 $4,206,035 $14,731,758 $9,988,892
Gain (loss) from
hedging
activities (192,970) (429,232) (186,326) 4,054,427
------------ ----------- ------------ -----------
Total revenues 7,521,295 3,776,803 14,545,432 14,043,319
------------ ----------- ------------ -----------
EXPENSES:
Operating expenses 1,671,028 1,066,693 2,730,799 1,691,746
Exploration
expenses 9,368,212 1,633,223 11,908,144 2,522,836
Depreciation,
depletion and
amortization 2,187,751 1,533,723 4,576,510 3,113,205
General and
administrative
expense 659,751 426,094 1,073,093 805,911
------------ ----------- ------------ -----------
Total expenses 13,886,742 4,659,733 20,288,546 8,133,698
------------ ----------- ------------ -----------
INCOME (LOSS) FROM
OPERATIONS (6,365,447) (882,930) (5,743,114) 5,909,621
Interest expense (169,583) (45) (353,903) (9,362)
Interest income 9,903 94,161 21,165 134,934
Gain on sale of
assets and other - 64,873 36,150 118,920
------------ ----------- ------------ -----------
INCOME (LOSS)
BEFORE INCOME
TAXES (6,525,127) (723,941) (6,039,702) 6,154,113
Benefit (provision)
for income taxes 2,230,807 251,161 2,112,250 (2,156,158)
------------ ----------- ------------ -----------
NET INCOME (LOSS) (4,294,320) (472,780) (3,927,452) 3,997,955
Preferred stock
dividends 150,000 150,000 300,000 300,000
------------ ----------- ------------ -----------
NET INCOME (LOSS)
ATTRIBUTABLE
TO COMMON STOCK $(4,444,320) $(622,780) $(4,227,452) $3,697,955
============ =========== ============ ===========
NET INCOME (LOSS)
PER SHARE:
Basic $(0.49) $(0.05) $(0.47) $0.32
============ =========== ============ ===========
Diluted $(0.49) $(0.05) $(0.47) $0.28
============ =========== ============ ===========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 9,043,282 11,504,132 9,043,282 11,503,003
============ =========== ============ ===========
Diluted 9,043,282 11,504,132 9,043,282 14,325,108
============ =========== ============ ===========
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
PRODUCTION, PRICES, OPERATING EXPENSES AND EBITDAX
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- ----------------------
2002 2001 2002 2001
---------- --------- --------- ----------
Production:
Natural gas (thousand
cubic feet) 1,606,846 1,467,991 3,319,914 3,018,231
Oil and condensate
(barrels) 38,398 37,867 76,645 78,584
Total (thousand cubic
feet equivalent) 1,837,234 1,695,193 3,779,784 3,489,735
Natural gas (thousand
cubic feet per day) 17,466 15,956 18,043 16,403
Oil and condensate
(barrels per day) 417 412 417 427
Total (thousand cubic
feet equivalent per
day) 19,968 18,428 20,545 18,965
Average sales price:
Natural gas (per
thousand cubic feet) $4.21 $2.45 $3.84 $2.77
Oil and condensate (per
barrel) $24.63 $17.54 $25.85 $21.18
Total (per thousand
cubic feet equivalent) $4.20 $2.48 $3.90 $2.86
Operating expenses (per
thousand cubic feet
equivalent):
Production and
severance taxes $0.31 $0.17 $0.27 $0.19
Lease operating expense
(before taxes) 0.60 0.46 0.45 0.30
---------- --------- --------- ----------
Total operating
expenses $0.91 $0.63 $0.72 $0.49
Other expenses (per
thousand cubic feet
equivalent):
Depreciation, depletion
and amortization of
natural gas and oil
properties $1.17 $0.89 $1.19 $0.88
General and
administrative expense $0.36 $0.25 $0.28 $0.23
EBITDAX (1) $5,190,516 $2,348,889 $10,777,690 $11,664,582
(1) EBITDAX is defined as earnings before interest, income taxes,
depreciation, depletion and amortization, impairment expense and
expensed exploration expenditures.
The following table provides our pricing and notional volumes on
open commodity derivative contracts as of Feb. 10, 2003.
Strike Quantity
Description Term Price (1) (1)
----------------------------------------------------------------------
Natural gas swaps sold 03/2003 $4.62 8,000/day
Natural gas puts owned 03/2003 $4.00 10,000/day
Natural gas calls sold 03/2003 $5.25 2,000/day
Natural gas calls sold 03/2003 $5.50 4,000/day
Natural gas calls sold 03/2003 $5.50 2,000/day
Natural gas calls sold 03/2003 $6.00 5,000/day
Natural gas calls sold 04/2003 $5.75 6,000/day
Natural gas calls sold 04/2003 $6.00 4,000/day
Costless natural gas
collar 04/2003 - 10/2003 $4.50 - $6.00 10,000/day
Natural gas calls sold 05/2003 - 07/2003 $5.25 5,000/day
Natural gas calls sold 05/2003 - 07/2003 $5.50 5,000/day
Natural gas puts owned 11/2003 - 12/2003 $4.00 10,000/day
(1) Prices and quantities per MMbtu.
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