Contango Reports Second Quarter Earnings.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--Feb. 13, 2004 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 December December: see month. 31, 2003 of $4.1 million, or $0.44 per basic share and $0.33 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 a net loss attributable to common stock for the three months ended December 31, 2002 of $4.4 million, or $0.49 per basic and diluted share. Natural gas and oil sales for the three months ended December 31, 2003 were $6.0 million. Natural gas and oil sales for the three months ended December 31, 2002 were $7.7 million. EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: was $10.4 million for the three months ended December 31, 2003, up from EBITDAX for the three months ended December 31, 2002 of $5.2 million. Net income attributable to common stock for the six months ended December 31, 2003 was $7.0 million, or $0.75 per basic share and $0.58 per diluted share, compared to a net loss attributable to common stock for the six months ended December 31, 2002 of $4.2 million, or $0.47 per basic and diluted share. Natural gas and oil sales for the six months ended December 31, 2003 were $14.2 million. Natural gas and oil sales for the six months ended December 31, 2002 were $14.7 million. EBITDAX was $18.4 million for the six months ended December 31, 2003, up from EBITDAX for the six months ended December 31, 2002 of $10.8 million. Contango also announced that the borrowing base on its existing secured revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. with Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Bank, FSB (FrontSide Bus) See system bus. FSB - front side bus has been increased from $19.0 million to $25.0 million effective February February: see month. 1, 2004. The Company currently has no borrowings under its bank line of credit. Kenneth R. Peak, Contango's chairman and chief executive officer, said, "We had a strong six months, with $7.0 million of net income and $18.4 million in EBITDAX. Since June June: see month. 30, 2003, we have reduced our debt from $22.35 million to no debt outstanding today and currently have $25.0 million of available bank loan capacity. Our current production rate is approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15,000 MMBtue per day, and at anticipated production levels and current commodity prices, we expect to have EBITDAX of approximately $1.5 to $2.0 million per month through June 2004. We have five separate 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. exploration prospects in various stages, expect to be carried in three to six offshore exploration projects in calendar year 2004 and our Freeport Freeport, city, Bahamas Freeport, city (1990 pop. 25,115), Grand Bahama Island, Bahamas. A popular resort area, it developed out of a 1955 agreement between the Bahamian colonial government and a private development company to create a free port and LNG LNG (liquefied natural gas): see under natural gas. project continues to move forward. We also are pursuing our first international exploration prospect venture in the Aquitaine Aquitaine (ăk`wĭtān, äkētĕn`), Lat. Aquitania, former duchy and kingdom in SW France. Julius Caesar conquered the Aquitani, an Iberian people of SW Gaul, in 56 B.C. Basin BASIN Boulder Area Sustainability Information Network (Boulder, Colorado) BASIN Brothers And Sisters In Need in France. We would expect this well to spud sometime this summer." 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 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 . Contango also owns a 10% partnership interest in a proposed LNG terminal in Freeport, Texas Freeport is a city in Brazoria County, Texas within the Houston–Sugar Land–Baytown Metropolitan Area and is situated in Southeast Texas. As of the 2000 U.S. Census, the city population was 12,708 and is about sixteen miles away from Angleton. . Additional information can be found on our Web page at www.mcfx.biz biz n. Informal Business. biz Noun Informal business Noun 1. . 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 Six Months Ended
December 31, December 31,
------------------------ -------------------------
2003 2002 2003 2002
----------- ------------ ------------ ------------
REVENUES:
Natural gas and
oil sales $5,980,308 $7,714,265 $14,232,812 $14,731,758
Gain (loss) from
hedging activities (24,071) (192,970) 58,171 (186,326)
----------- ------------ ------------ ------------
Total revenues 5,956,237 7,521,295 14,290,983 14,545,432
----------- ------------ ------------ ------------
EXPENSES:
Operating expenses 916,685 1,671,028 2,568,914 2,730,799
Exploration
expenses 2,131,885 9,368,212 3,487,998 11,908,144
Depreciation,
depletion and
amortization 1,618,899 2,187,751 3,412,735 4,576,510
Impairment of
natural gas and
oil properties 42,995 - 42,995 -
General and
administrative
expenses 768,473 659,751 1,145,580 1,073,093
----------- ------------ ------------ ------------
Total expenses 5,478,937 13,886,742 10,658,222 20,288,546
----------- ------------ ------------ ------------
INCOME (LOSS) FROM
OPERATIONS 477,300 (6,365,447) 3,632,761 (5,743,114)
Interest expense (115,235) (169,583) (279,645) (353,903)
Interest income 5,250 9,903 19,666 21,165
Gain on sale of
marketable
securities 65,023 - 710,322 -
Gain on sale of
assets and other 6,061,805 - 7,116,410 36,150
----------- ------------ ------------ ------------
INCOME (LOSS)
BEFORE INCOME
TAXES 6,494,143 (6,525,127) 11,199,514 (6,039,702)
(Provision) benefit
for income taxes (2,205,734) 2,230,807 (3,852,614) 2,112,250
----------- ------------ ------------ ------------
NET INCOME (LOSS) 4,288,409 (4,294,320) 7,346,900 (3,927,452)
Preferred stock
dividends 176,667 150,000 326,667 300,000
----------- ------------ ------------ ------------
NET INCOME (LOSS)
ATTRIBUTABLE
TO COMMON STOCK $4,111,742 $(4,444,320) $7,020,233 $(4,227,452)
=========== ============ ============ ============
NET INCOME (LOSS)
PER SHARE:
Basic $0.44 $(0.49) $0.75 $(0.47)
=========== ============ ============ ============
Diluted $0.33 $(0.49) $0.58 $(0.47)
=========== ============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 9,366,423 9,043,282 9,332,547 9,043,282
=========== ============ ============ ============
Diluted 12,936,563 9,043,282 12,641,092 9,043,282
=========== ============ ============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
PRODUCTION, PRICES, OPERATING EXPENSES, EBITDAX AND OTHER
Three Months Ended Six Months Ended
December 31, December 31,
------------------------ -------------------------
2003 2002 2003 2002
------------ ----------- ------------ ------------
Production:
Natural gas
(thousand cubic
feet) 1,045,505 1,606,846 2,408,357 3,319,914
Oil and condensate
(barrel) 22,160 38,398 57,766 76,645
Total (thousand
cubic feet
equivalent) 1,178,465 1,837,234 2,754,953 3,779,784
Natural gas
(thousand cubic
feet per day) 11,364 17,466 13,089 18,043
Oil and condensate
(barrels per day) 241 417 314 417
Total (thousand
cubic feet
equivalent per
day) 12,810 19,968 14,973 20,545
Average sales
price:
Natural gas (per
thousand cubic
feet) $5.08 $4.21 $5.20 $3.84
Oil and condensate
(per barrel) $30.10 $24.63 $29.57 $25.85
Total (per thousand
cubic feet
equivalent) $5.07 $4.20 $5.17 $3.90
Selected data per Mcfe:
Production and
severance taxes $0.22 $0.31 $0.31 $0.27
Lease operating
expenses $0.56 $0.60 $0.63 $0.45
General and
administrative
expenses $0.65 $0.36 $0.42 $0.28
Depreciation,
depletion and
amortization of
natural gas and oil
properties $1.35 $1.17 $1.22 $1.19
EBITDAX (1) $10,397,907 $5,190,516 $18,403,221 $10,777,690
(1) EBITDAX represents earnings before interest, income taxes,
depreciation, depletion and amortization, impairment expenses,
exploration expenses, including gain (loss) from hedging activities
and sale of assets. We have reported EBITDAX because we believe
EBITDAX is a measure commonly reported and widely used by investors as
an indicator of a company's operating performance and ability to incur
and service debt. We believe EBITDAX assists investors in comparing a
company's performance on a consistent basis without regard to
depreciation, depletion and amortization, impairment of natural gas
and oil properties and exploration expenses, which can vary
significantly depending upon accounting methods. EBITDAX is not a
calculation based on U.S. generally accepted accounting principles and
should not be considered an alternative to net income (loss) in
measuring our performance or used as an exclusive measure of cash flow
because it does not consider the impact of working capital growth,
capital expenditures, debt principal reductions and other sources and
uses of cash, which are disclosed in our statements of cash flows.
Investors should carefully consider the specific items included in our
computation of EBITDAX. While we have disclosed our EBITDAX to permit
a more complete comparative analysis of our operating performance and
debt servicing ability relative to other companies, investors should
be cautioned that EBITDAX as reported by us may not be comparable in
all instances to EBITDAX as reported by other companies. EBITDAX
amounts may not be fully available for management's discretionary use,
due to requirements to conserve funds for capital expenditures, debt
service, preferred stock dividends and other commitments.
A reconciliation of EBITDAX to income (loss) from operations for
the periods indicated is presented below.
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Income (loss) from
operations $477,300 $(6,365,447) $3,632,761 $(5,743,114)
Exploration
expenses 2,131,885 9,368,212 3,487,998 11,908,144
Depreciation,
depletion and
amortization 1,618,899 2,187,751 3,412,735 4,576,510
Impairment of
natural gas and
oil properties 42,995 - 42,995 -
Gain on sale of
marketable
securities 65,023 - 710,322 -
Gain on sale of
assets and other 6,061,805 - 7,116,410 36,150
------------ ------------ ------------ ------------
EBITDAX $10,397,907 $5,190,516 $18,403,221 $10,777,690
============ ============ ============ ============
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