Contour Reports 2001 Financial Results.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--March 7, 2002 CONTOUR ENERGY CO. ("Contour" or the "Company") today announced fourth quarter and full year cash flows from operations before working capital changes ("cash flows") of $3.7 million or $0.25 per common share and $40.7 million, or $3.01 per common share on revenues of $17.6 million and $94.0 million, respectively. This compares to cash flows of $9.4 million and $22.9 million, respectively, for the corresponding periods in 2000. Current quarter cash flows reflect the steep decline in commodity prices from the prior year quarter. The Company also reported a net loss applicable to common shares for the fourth quarter and full year 2001 of ($26.0) million, or ($1.78) per share, and ($20.9) million, or ($1.54) per share, respectively. Both periods were heavily impacted by application of Statement of Financial Accounting Standards No. 133 - Accounting for Derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. and 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 ("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 133"). For the fourth quarter and full year 2001, the Company recognized non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. totaling ($12.1) million and ($10.2) million, respectively, related to SFAS 133. Excluding these non-cash charges and before preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends, the Company reported a net loss of ($13.8) million, or ($0.94) per common share and a net loss of ($8.0) million, or ($0.59) per common share, for the fourth quarter and full year, respectively. The SFAS 133 items are related to Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh contracts and include 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. on hedge contracts of ($2.1) million and ($0.2) million in the fourth quarter and full year, respectively, and a $10.0 million expense for the 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. of derivative assets in the fourth quarter and full year. All of the above SFAS 133 expenses were non-cash charges to income. Furthermore, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $12.3 million, representing deferred revenues related to the hedge positions are reflected in the Company's December December: see month. 31, 2001 Balance Sheet as accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as . This amount will be reclassified to earnings in 2002 monthly, as the hedge transactions were originally scheduled to occur. In addition to the FAS 133 items, results were also impacted by the completion of the preferred stock reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. during the fourth quarter 2001. The reclassification resulted in reported preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) of $0.1 million and $2.8 million for the fourth quarter and full year 2001, respectively, compared to $0.9 million and $3.6 million, respectively, for the same periods in 2000. The reclassification resulted in extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of the preferred stock and all 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. and future dividends. A total of 4.1 million common shares were issued coincident co·in·ci·dent adj. 1. Occupying the same area in space or happening at the same time: a series of coincident events. See Synonyms at contemporary. 2. with the reclassification. Oil and gas revenues of $17.6 million and $94.0 million for the fourth quarter and full year 2001 include $1.3 million of uncollected hedging gains. This compares to the fourth quarter and full year 2000 of $22.0 million and $73.4 million, respectively. The drop in fourth quarter revenues reflects the worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension commodity price environment. Production volumes in the fourth quarter 2001 averaged approximately 60 Mmcfe per day, a fifteen percent increase over fourth quarter 2000 volumes. Full year production volumes averaged more than 61 Mmcfe per day, about nine percent higher than average daily production volumes for the full year 2000. Included in 2001 production volumes is approximately 26 Mmcf per day attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Company's volumetric volumetric /vol·u·met·ric/ (vol?u-met´rik) pertaining to or accompanied by measurement in volumes. vol·u·met·ric adj. Of or relating to measurement by volume. overriding royalty interest overriding royalty interest A third-party interest in royalty income derived from oil and gas rights. that has decreased to about 21 Mmcf per day, as scheduled, for 2002. Realized prices in the fourth quarter 2001 averaged $3.23 per Mcf of natural gas and $20.59 per Bbl of oil and other liquids. This includes hedging gains of $0.74 per Mcf of natural gas. These compare to fourth quarter 2000 prices of $4.50 per Mcf of natural gas and $32.29 per Bbl of oil and other liquids. For the full year, natural gas averaged $4.25 per Mcf, including hedging losses of $0.15 per Mcf of natural gas, and oil and other liquids averaged $24.10 per Bbl. These compare to 2000 prices of $3.39 per Mcf of natural gas and $27.39 per Bbl of oil and other liquids. Production expenses for the fourth quarter and year to date 2001 were $0.70 and $0.67 per Mcfe, respectively, compared to $0.87 and $0.68 per Mcfe in the corresponding periods of 2000. These decreases are primarily related to reductions in the Company's lifting costs which were partially offset by higher insurance costs and an increase in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. state severance taxes severance taxn. A tax imposed by a state on the extraction of natural resources, such as oil, coal, or gas, that will be used in other states. . Exploration expenses for the fourth quarter and year 2001 were $9.3 million and $19.8 million, respectively, compared to $2.1 million and $8.0 million, respectively, in 2000. These increases were primarily attributable to an expanded exploration program and higher dry hole expense. General and administrative expenses totaled $1.8 million and $8.2 million in the fourth quarter and full year 2001, respectively, compared to $1.4 million and $7.1 million in the corresponding periods last year. The 2001 expenses include $2.1 million for employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payments, payments under the Company's unit performance plan, and cost of the preferred stock reclassification, partially offset by a higher overhead allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as to exploration expense compared to 2000. The Company also recorded a $2.4 million impairment in the fourth quarter 2001 for undeveloped oil and gas properties in areas in which the Company has no immediate drilling plans. No impairments were recorded for proved oil and gas reserves in the current year. Contour Energy Co. is engaged in the exploration, development, acquisition and production of oil and natural gas. Natural gas represents nearly 91% of the Company's equivalent production. Contour Energy Co. common stock is traded on the OTC Bulletin Board OTC Bulletin Board An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system. under the symbol CONC. As used in this Report, Mcf means thousand cubic feet, Mmcf means million cubic feet, Bcf means billion cubic feet, Bbl means barrel barrel: see English units of measurement. or 42 U.S. gallons liquid volume, Mbbl means thousand barrels, Mcfe means thousand cubic feet of natural gas equivalent using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. and natural gas liquids, Mmcfe means million cubic feet of natural gas equivalent, Bcfe means billion cubic feet of natural gas equivalent, and Mmbtu means million British thermal units British thermal unit, abbr. Btu, unit for measuring heat quantity in the customary system of English units of measurement, equal to the amount of heat required to raise the temperature of one pound of water at its maximum density [which occurs at a temperature of 39. . This Report includes various other capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. terms that are defined when first used. Cautionary Statement as to 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. Information Statements made herein (as well as information included in oral or other written statements made or to be made by the Company or its representatives) that are forward-looking in nature are intended to be "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 Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc matters such as anticipated operating and financial performance, business prospects, future reserves, cash flow and value, developments and results of the Company. Actual performance, prospects, reserves, cash flow and value, developments and results may differ materially from any or all anticipated results due to economic conditions and other risks, uncertainties and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or partly or totally outside the control of the Company, including rates of inflation, natural gas prices, uncertainty of reserve estimates, rates and timing of future production of oil and gas, exploratory and development activities, acquisition risks, changes in the level and timing of future costs and expenses related to drilling and operating activities and those risk factors described on pages 14, 15 and 16 of the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2000. Words such as "anticipated", "expect", "estimate", "project" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include the risk factors described in the Company's Form 10-K mentioned above.
Contour Energy Co.
Condensed Statements of Operations
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
(Unaudited)
------------------ -------------------
2001 2000 2001 2000
------ ------ ------ ------
Oil and gas revenues $17,622 $22,038 $94,013 $73,360
Interest and
other income 793 537 1,935 1,618
Unrealized loss on
derivative instruments (2,142) -- (206) --
Gain on sale of
properties -- -- 6 7,310
Total revenues 16,273 22,575 95,748 82,288
Production expenses (a) 3,897 4,195 14,873 14,025
Exploration expenses 9,274 2,131 19,833 8,034
General and
administrative
expenses 1,795 1,391 8,173 7,112
Interest and other
debt expenses 8,622 8,481 34,386 34,402
Depreciation,
depletion and
amortization 6,230 4,982 24,283 25,100
Impairment of
derivative instruments 9,981 -- 9,981 --
Impairment of oil
and gas properties 2,360 5,156 2,360 5,156
Net loss (25,886) (3,761) (18,141) (11,541)
Cumulative
preferred stock
dividends (66) (896) (2,754) (3,584)
Net loss applicable
to common
shareholders $( 25,952) $(4,657) $(20,895) $(15,125)
Basic and
diluted loss
per common share $(1.78) $(.35) $(1.54) $(1.14)
Average common
shares outstanding 14,593 13,211 13,559 13,212
(a) Includes lifting costs, severance and ad valorem taxes, and
transportation and compression expenses.
Contour Energy Co.
Condensed Balance Sheets
(In thousands)
December 31, December 31,
2001 2000
------------ -----------
Assets:
Current assets $40,034 $45,302
Restricted cash 6,400 5,200
Property and equipment, net 129,520 136,737
Other assets 5,579 7,636
--------- ---------
Total assets $181,533 $194,875
========= =========
Liabilities and Stockholders' Deficit:
Current liabilities (excluding
current portion of long-term debt) $27,061 $25,921
Current portion of long-term debt 4,200 --
Long-term debt 253,856 256,798
Stockholders' deficit (103,584) (87,844)
--------- ---------
Total Liabilities and
Stockholders' Deficit $181,533 $194,875
========= =========
Contour Energy Co.
Condensed Statements of Cash Flows
(In thousands)
Year Ended December 31,
----------------------
2001 2000
-------- --------
Operating Activities:
Net loss $(18,141) $(11,541)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Gain on sale of properties (6) (7,310)
Non-cash derivative charges 8,846 --
Depreciation, depletion and
amortization 24,283 25,100
Impairment of oil and gas
properties 2,360 5,156
Exploration expenses 19,833 8,034
Accretion and amortization of
debt expenses and other expenses 3,574 3,428
-------- --------
Cash flow from operations before
changes in operating assets and
liabilities 40,749 22,867
Net changes in operating assets
and liabilities 12,985 (6,491)
-------- --------
Net cash provided by operating
activities 53,734 16,376
-------- --------
Investing Activities:
Expenditures for exploration
and development activities (39,266) (25,766)
Restricted cash investment (1,200) 2,300
Proceeds from sale of properties 6 23,806
-------- --------
Net cash (used in) provided
by investing activities (40,460) 340
-------- --------
Financing Activities:
Redemption of preferred stock (9,910) --
Retirement of notes -- (8,650)
Other -- (5)
-------- --------
Net cash used in financing
activities (9,910) (8,655)
-------- --------
Increase in cash and cash
equivalents 3,364 8,061
Cash and cash equivalents,
beginning of period 18,431 10,370
-------- --------
Cash and cash equivalents,
end of period $21,795 $18,431
======== ========
Contour Energy Co.
Summary Production Information
(Unaudited)
Three Months
Ended Year Ended
December 31, December 31,
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
Average Sales Price per
Unit (including the
effects of hedging):
Oil and other liquid
hydrocarbons (per Bbl)(a) $20.59 $32.29 $24.10 $27.39
Natural gas (per Mcf)(a) 3.23 4.50 4.25 3.39
Natural gas equivalent
(per Mcfe)(a) 3.25 4.61 4.23 3.55
Average Daily Production:
Oil and other liquid
hydrocarbons (Mbbls) 0.9 1.1 0.9 1.3
Natural gas (Mmcf) 54.6 45.4 55.5 48.6
Natural gas equivalent
(Mmcfe) 59.8 52.1 61.1 56.2
Net Production Data:
Oil and other liquid
hydrocarbons (Mbbls) 79 102 340 467
Natural gas (Mmcf) 5,026 4,176 20,253 17,773
Natural gas equivalent
(Mmcfe) 5,497 4,791 22,291 20,574
Cost per Mcfe:
Lifting costs $.41 $.67 $.42 $.51
Transportation and
compression expenses .12 .09 .11 .10
Severance and ad valorem
taxes .17 .11 .14 .07
General and administrative
expenses .33 .29 .37 .35
Depreciation, depletion
and amortization (oil and
gas activities) 1.12 1.01 1.08 1.20
Interest expense, excluding
accretion and amortization 1.40 1.59 1.38 1.50
(a) 2001 price calculations include $1.2 million and $0.1 million of
natural gas and crude oil uncollected hedge gains, respectively.
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