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DEKALB ENERGY REPORTS EARNINGS OF $6.7 MILLION IN FIRST QUARTER; CITES STRONG NATURAL GAS MARKET AND ONE-TIME TAX BENEFIT

 CALGARY, Alberta, May 12 /PRNewswire/ -- DEKALB Energy Company (NASDAQ-NMS: ENRGB) said today that a strong natural gas market and production increases led to significantly improved operating results in the first quarter. Also positively impacting earnings was the adoption of Statement of Financial Accounting Standards (SFAS) 109 "Accounting for Income Taxes" as of Jan. 1, 1993. DEKALB recognized a one-time benefit of $5.3 million, equal to 55 cents per share, for the three months ended March 31, 1993. Including this tax benefit, the company reported first-quarter net earnings of $6.7 million, or 70 cents per share.
 In last year's first quarter, the company reported a net loss of $41.7 million, or $4.34 per share, due almost entirely to pretax writedowns of oil and gas assets in the United States and Canada totaling $53.3 million.
 "Our average Canadian natural gas price in the first quarter is up 44 percent over a year ago," said Bruce P. Bickner, chairman. "Due to strong gas prices, we brought curtailed gas production back on stream in the latter part of 1992. During the first quarter of 1993, we produced our Canadian gas at an average rate of 53 million cubic feet per day (MMCFD), net after royalty. Because we have worked in the past two years to reduce operating and administrative costs, we are now seeing benefits from the improved industry environment go straight to the bottom line."
 First-quarter results
 Operating revenues for the first quarter fell 39 percent to $11.8 million from $19.3 million in the same period last year. However, the decline was due to the company's sale of substantially all of its U.S. assets, effective July 1, 1992. At year end, DEKALB Energy moved its headquarters and its focus of operations to Canada.
 In Canada, gas revenues rose 47 percent to $6.9 million, compared with $4.7 million last year. The average Canadian gas price in the first quarter was $1.45 per thousand cubic feet (MCF), up sharply from $1.01 per MCF last year. Gas volumes also were much improved, up 22 percent to 4.8 billion cubic feet (BCF), excluding storage gas sales. In the first quarter of 1992, DEKALB sold 790 million cubic feet of natural gas that had been produced the previous year as part of the company's gas storage program, which has since been discontinued. "System purchasers -- to whom we commit a large portion of our reserves -- are buying gas at much higher rates of take than in the past, which has significantly boosted our sales volumes," Bickner added.
 Revenues from DEKALB processing plants also were higher in the first quarter, improving 10 percent over the same period of 1992. DEKALB has sought to increase outside production at its processing plants, where it processes more than half of its own gas.
 The company's average Canadian oil price for the first quarter of 1993 declined to $17.36 per barrel from $17.42 per barrel for the comparable period in 1992. Canadian oil volumes were flat at 173,000 barrels.
 Cash flows from continuing operations fell to $2.3 million, down from $10.0 million in the same period last year. The decline was due primarily to the reduction in revenue associated with the disposition of U.S. assets.
 The company, in the fourth quarter of 1992, predicted 1993 pretax income of approximately $8.5 million and cash flow of $22 million. This projection was based upon the assumptions of 1 million barrels of oil and liquids at an average West Texas Intermediate oil price of $21.00 per barrel, 16 BCF of gas in Canada at $1.25 per MCF and 2 BCF of gas in California at $2.00 per MCF. However, prices and the demand for natural gas experienced to date are higher than assumed.
 Operations
 To take advantage of strong gas demand and prices, DEKALB is now moving to increase gas deliverability by tying in new wells. "We estimate DEKALB has additional unconnected deliverability of 14 MMCFD that can be tied in gradually over the next two years," Bickner said. "In June, we will begin the first phase of connecting this gas, which has already been developed, and expect to tie in five new wells by the end of the third quarter." DEKALB is also installing additional gas compression equipment at one of its processing plants and on a major gas gathering system to handle increased demand.
 "Because the North American gas market has strengthened, we are now reexamining many of the gas prospects we had previously put in inventory," Bickner added. "Under today's market conditions, these plays are much more attractive, and we will now be drilling many of these prospects."
 FINANCIAL POSITION
 In February 1993, DEKALB repurchased $4.9 million of its public notes. At March 31, 1993, long-term debt was $64.8 million, compared with $69.7 million at December 31, 1992. DEKALB's total debt-to-total market capitalization ratio improved to 31.9 percent at March 31, 1993, compared with 39.9 percent at year end.
 DEKALB Energy Company is engaged in oil and gas exploration and production in Canada and California. The company's Class B Common Stock is traded on NASDAQ-NMS under the symbol ENRGB.
 DEKALB ENERGY COMPANY
 Condensed Consolidated Statement Of Operations
 (Unaudited - in thousands, except per share amounts)
 Three Months Ended March 1993 1992
 Operating revenues 11,827 19,268
 Operating expenses 7,443 70,904
 Income (loss) from operations 4,384 (51,636)
 Interest expense, net 1,162 2,614
 Other expense (income), net 58 (102)
 Earnings (loss) before income taxes
 and cumulative effect of change in
 accounting principle 3,164 (54,148)
 Income tax provision (benefit) 1,751 (12,421)
 Earnings (loss) before cumulative
 effect of change in accounting
 principle 1,413 (41,727)
 Cumulative effect of change in
 accounting principle 5,334 0
 Net earnings (loss) 6,747 (41,727)
 Earnings (loss) per share:
 Earnings (loss) before cumulative
 effect of change in accounting
 principle 0.15 (4.34)
 Earnings on cumulative effect of
 change in accounting principle 0.55 0.00
 Net earnings (loss) per share 0.70 (4.34)
 Weighted average common shares
 outstanding 9,638 9,616
 DEKALB ENERGY COMPANY
 Condensed Consolidated Balance Sheets
 (unaudited - in thousands)
 March 31 December 31
 1993 1992
 Cash and cash equivalents 13,008 18,872
 Receivables 7,459 10,116
 Other current assets 932 989
 Property, plant and equipment, net 184,546 182,130
 Other non-current assets 6,820 6,878
 Total assets 212,765 218,985
 Current Liabilities 13,440 18,957
 Deferred credits, primarily
 income taxes 30,450 34,716
 Long-term debt 64,825 69,725
 Total liabilities 108,715 123,398
 Shareholders' equity 104,050 95,587
 Total liabilities and
 shareholders' equity 212,765 218,985
 DEKALB ENERGY COMPANY
 Condensed Consolidated Statement Of Cash Flows
 (unaudited - in thousands)
 Three Months Ended March 1993 1992
 Net earnings (loss) from operations 6,747 (41,727)
 Adjustments to reconcile net earnings
 (loss) to net cash provided by
 operating activities:
 Depreciation, depletion and
 amortization 3,883 8,780
 Provision for the impairment of
 oil and gas properties 0 53,320
 Provision (benefit) for deferred
 income taxes 1,714 (12,672)
 Cumulative effect of change in
 accounting principle (5,334) 0
 Other 0 (244)
 7,010 7,457
 Changes in assets and liabilities (4,736) 2,555
 Cash flows from continuing operations 2,274 10,012
 Cash flows from discontinued operations 0 791
 Net cash flows from operating
 activities 2,274 10,803
 Net cash flows from investing
 activities (3,246) (5,596)
 Net cash flows from financing
 activities (4,976) (2,188)
 Net effect of exchange rates on cash 84 (15)
 Net increase (decrease) in cash and
 cash equivalents (5,864) 3,004
 Selected Operating Statistics
 Three Months Ended March 1993 1992
 Average Prices & Sales Volumes
 Oil and Condensate ($ per Bbl)
 Canada $17.36 $17.42
 United States $0.00 $16.35
 Total Company $17.36 $16.72
 Natural gas ($ per MCF)
 Canada $1.45 $1.01
 United States $1.93 $1.55
 Total Company $1.50 $1.21
 Oil, condensate and natural gas
 liquids (MBbls)
 Canada 236 245
 United States 0 387
 236 632
 Natural gas (MMCF)
 Canada 4,766 4,701
 United States 454 2,906
 5,220 7,607
 Oil, natural gas liquids and gas
 equivalents (MBbls) (A)
 Canada 1,030 1,028
 United States 76 871
 1,106 1,899
 (A) Gas converted to oil at 6,000 cubic feet per barrel.
 -0- 5/12/93
 /CONTACT: Kristin Lavelle, investor relations of DEKALB Energy Company, 403-261-1277/
 (ENRGB)


CO: DEKALB Energy Company ST: Alberta IN: OIL SU: ERN

LD -- NY008 -- 7374 05/12/93 08:33 EDT
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Date:May 12, 1993
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