Forcenergy Announces Second Quarter 2000 Results and Operational Update.Business Editors METAIRIE Met·ai·rie A community of southeast Louisiana, a suburb of New Orleans. Population: 145,800. , La.--(BUSINESS WIRE)--Aug. 9, 2000 Forcenergy Inc (Nasdaq:FORC FORC - Early system on IBM 704. Listed in CACM 2(5):16 (May 1959). ) today reported net income of $10.2 million, or $0.40 per common share (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. ), for the second quarter of 2000 compared to net income of $2.6 million, or $0.11 per common share, for the second quarter of 1999. Net income for the six months ended June June: see month. 30, 2000 was $22.5 million, or $.91 per common share (diluted), compared with a net loss of $(7.6) million, or $(.31) per common share for the same period last year. Discretionary cash flow Discretionary cash flow Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on. for the 2000 quarter was $45.0 million, or $1.77 per common share (diluted), compared to $34.0 million, or $1.37 per common share, reported for the 1999 quarter. Discretionary cash flow for the first half of 2000 was $91.7 million, or $3.71 per common share (diluted), compared to $54.5 million, or $2.20 per common share, reported for the first half of 1999. Revenues for the second quarter of 2000 increased 18% to $77.1 million, compared to $65.2 million for the 1999 quarter. Revenues for the first six months of 2000 were $154.1 million, 23% higher than the $124.9 million reported for the first six months of 1999. Average realized prices for crude oil and liquids increased 46%, to $21.16 per barrel compared to $14.45 received during the 1999 quarter. Realized natural gas prices increased 34%, to $2.85 per Mcf for the 2000 quarter compared to the $2.12 per Mcf received for the 1999 quarter. Average realized prices for the six-month period for crude oil and liquids increased 67%, to $21.43 per barrel compared to $12.82 per barrel received during the first six months of 1999. Realized natural gas prices received during the first six months increased 33%, to $2.77 per Mcf during 2000 compared to $2.08 per Mcf received during 1999. All unit prices reflect the effects of hedging. Production of crude oil and liquids averaged 19,363 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. for the 2000 quarter, for a total of approximately 1.76 million barrels produced, compared to 22,714 barrels per day, or a total of 2.07 million barrels produced, in the 1999 quarter. Natural gas production averaged 152,747 Mcf per day for the second quarter of 2000, for a total of 13.9 Bcf produced, compared with a daily average of 182,462 Mcf, and a total of 16.6 Bcf produced, in the 1999 quarter. Production of crude oil and liquids averaged 20,385 barrels per day for the first six months of 2000, for a total of approximately 3.71 million barrels produced, compared to 22,560 barrels per day, or a total of 4.1 million barrels produced, in the same period last year. Natural gas production averaged 147,038 Mcf per day, or a total of 26.8 Bcf produced, for the first half of 2000, compared with 189,962 Mcf per day, or 34.6 Bcf produced, for the first six months of 1999. Lease operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (LOE LOE Ley Orgánica de Educación (Spanish) LOE Level Of Effort LOE Limited Objective Experiment LOE Letter of Explanation LOE Language Other than English. ) for the 2000 quarter were $19.3 million compared with $23.1 million for the 1999 quarter. LOE for the first six months of 2000 were $39.3 million compared to $48.7 million for the 1999 period. On a BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip produced basis, LOE per barrel improved to $4.72 and $4.81 per BOE for the quarter and six month periods, respectively, compared to the 1999 rates of $4.81 and $4.94 for the quarter and six month periods, respectively, despite the lower production levels in 2000. 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 expense (DD&A) was $27.5 million, or $6.75 per BOE, in the 2000 quarter compared with $31.2 million, or $6.45 per BOE, reported for the 1999 quarter. DD&A was $55.2 million, or $6.75 per BOE, in the six months ended June 30, 2000, compared with $63.7 million, or $6.45 per BOE, reported for the same period in 1999. General and administrative expenses for the quarter and six months ended June 30, 2000 were $6.8 million and $10.0 million, respectively, compared with $3.6 million and $7.8 million reported for the same periods in 1999. The higher G&A expense was primarily due to reorganization-related 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 costs paid or 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. during the second quarter of 2000. Exclusive of the severance costs, 2000 G&A expenses would have been $3.2 million and $6.3 million for the quarter and six-month periods, respectively, both of which were lower than corresponding expenses in the 1999 periods. Interest and other income for the 2000 quarter was $900,000 compared with $1.4 million reported for the 1999 quarter. Interest and other income for the first half of 2000 was $2.1 million compared with $7.2 million reported for the 1999 period. Included in interest and other income for the first half of 1999 was a $5.5 million gain resulting from the termination of certain commodity price hedging agreements. Interest expense for the 2000 quarter was $4.4 million compared with $4.8 million incurred in the 1999 quarter. Interest expense for the first six months of 2000 was $9.7 million compared with $17.5 million reported for the 1999 period. The lower interest expense resulted from the reduction in the Company's long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. to $234.7 million at June 30, 2000, compared to $689.5 million outstanding at June 30, 1999. Liquidity/Capital Resources At July July: see month. 31, 2000, the Company had approximately $77.5 million of availability under its senior credit facility for use for general corporate purposes. Additionally, the company anticipates that its 2000 capital budget will be funded entirely by internally generated cash flow. Forcenergy's ratio of long-term debt to total book capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. (debt plus stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. )("leverage ratio") was 45% at June 30, 2000 compared to a ratio of 57% at December December: see month. 31, 1999. OPERATIONAL UPDATE 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 In the 2nd Quarter Forcenergy continued its successful 2000 drilling program with discoveries on two additional exploratory prospects. These wells bring the Company's drilling success rate to 93% on the 15 operated wells drilled since commencing its 2000 program in the 4th quarter of 1999. The Tomahawk tomahawk [from an Algonquian dialect of Virginia], hatchet generally used by Native North Americans as a hand weapon and as a missile. The earliest tomahawks were made of stone, with one edge or two edges sharpened (sometimes the stone was globe shaped). Prospect (FORC 100%WI) located at South Marsh Island Block 66 tested a new fault block identified from 3D seismic data. The OCS-G-1198 No. E-1 exploratory well was drilled to a total vertical depth of 10,987 feet and logged approximately 122 feet of net gas pay in multiple sands. At the Company's Kittyhawk The world's first 1.3" hard disk, introduced in 1992 by HP for portable computers. Prospect located on South Pelto Block 24, the OCS-G-21122 No. 1 exploratory well (FORC 100%WI) was successfully drilled and completed encountering 65 feet of net hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen pay in multiple sands. Structures have been installed on both projects, with pipeline hook-up hook-up Noun the linking of broadcasting equipment or stations to transmit a special programme and first production scheduled to commence late in the third quarter. Two previously announced discovery wells were completed during the second quarter and commenced production. The OCS-G-16314 No. A-18 well (FORC 55%WI) at Vermilion vermilion, vivid red pigment of durable quality. It is a chemical compound of mercury and sulfur and is known as red sulfide of mercury; it was formerly obtained by grinding pure cinnabar but is now commonly prepared synthetically. Block 381 was completed in the deepest of the four gas sands penetrated, and was placed on production in late June. This well is currently producing at a rate of 4,200 Mcf of natural gas and 320 barrels of 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. (BC) per day, net to the Company. At South Timbalier Block 72, the OCS-G-1244 No. 16 well (FORC 100%WI) commenced production in mid-June n. 1. the middle part of June. Noun 1. mid-June - the middle part of June period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" and is currently producing at a net rate of 6,500 MCF and 500 BC per day. Further activity includes the current drilling of two wells on a non-operated basis. In the High Island 195 Field, the Company owns a 23.47% working interest in the No. C-7 well, an 8,900 foot (vertical depth) development well. In the West Cameron Cam·er·on , Mount A peak, 4,342.6 m (14,238 ft) high, in the Rocky Mountains of central Colorado. 110 Field, the Company holds a 37.5% working interest in the No. 15 well, a 10,974 foot exploitation well. Both wells should be logged during the third quarter. The Company will continue an active program in the Gulf of Mexico during the remainder of the year consisting primarily of drilling on outside-operated projects and recompletions and workovers on operated properties. Cook Inlet Cook Inlet Inlet, Gulf of Alaska in the northern Pacific Ocean. Bounded by the Kenai Peninsula on the east, it extends northeast for 220 mi (350 km), narrowing from 80 to 9 mi (129 to 14 km). Anchorage is situated near its head. , Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States Operations are on schedule for the drilling of the initial test well on the Company's Redoubt re·doubt n. 1. A small, often temporary defensive fortification. 2. A reinforcing earthwork or breastwork within a permanent rampart. 3. A protected place of refuge or defense. Shoal Project. The Redoubt Shoal No.1 well (FORC 100%WI), scheduled to spud early in the fourth quarter, will be drilled from the Osprey osprey (ŏs`prē), common name for a bird of prey related to the hawk and the New World vulture and found near water in most parts of the world. Platform which was set in place in July. The 12,500 foot well will be the first in a scheduled 2 to 4 well program which will test the 50-100 mmboe in unrisked reserve potential for the project. The Company is currently drilling at 5,600 feet on the West McArthur McArthur may refer to: Places:
adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. drillsite to a bottomhole location approximately one and one-half miles offshore in the Cook Inlet. In the McArthur River Field the Company has participated in the successful drilling of two non-operated development wells with its 50% working interest partner. Both wells are expected to be placed on production in the 3rd quarter. Australia Forcenergy Australia Pty, Ltd. has completed drilling two additional coalbed methane Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries. wells and one conventional gas well at its PEL 238 project in New South Wales New South Wales, state (1991 pop. 5,164,549), 309,443 sq mi (801,457 sq km), SE Australia. It is bounded on the E by the Pacific Ocean. Sydney is the capital. The other principal urban centers are Newcastle, Wagga Wagga, Lismore, Wollongong, and Broken Hill. . Completion operations are on going on all three wells. The completion of the drilling phase for these wells has satisfied the Company's obligations under this 2.4 million acre concession. The Company will continue to monitor the de-watering of these wells during the remainder of the year. Future plans for the concession will be developed as results from the de-watering process are evaluated. TELECONFERENCE CALL Forcenergy will hold a teleconference call on Thursday, August 10, 2000 at 9:00 a.m. Central Daylight Time to review the second quarter results. If you would like to participate, please call toll-free 1-888-273-9890 (U.S.) or 1-651-224-7497 (International) and request the Forcenergy Second Quarter Earnings teleconference. A replay of the teleconference call will be available Thursday, August 10, 2000 through Thursday, August 17 and can be accessed by dialing toll-free 1-800-475-6701 (U.S.) or 1-320-365-3844 (International), access code 531726. Forcenergy Inc is an independent oil and gas company engaged in the exploration, acquisition, development, exploitation and production of oil and natural gas. Forcenergy's primary areas of operations are the Gulf of Mexico and Cook Inlet, Alaska. Certain statements in this news release regarding future expectations and plans for future activities may be regarded as "forward looking statements" 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. They are subject to various risks, such as commodity price fluctuations, adverse financial market conditions, operating hazards, drilling risks, the inherent uncertainties in interpreting engineering data relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the underground accumulations of oil and natural gas, as well as other risks discussed in detail in the Company's SEC filings, including the Annual Report and 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 year ended December 31, 1999. Actual results and outcomes may vary materially.
FORCENERGY INC
SUMMARY OPERATING DATA
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 % Change 2000 1999 % Change
Liquids Production
(MBbl):
Gulf of Mexico 705 894 (21)% 1,503 1,733 (13)%
Alaska 708 722 (2)% 1,474 1,478 (0.2)%
Onshore 349 451 (23)% 733 895 (18)%
Total 1,762 2,067 (15)% 3,710 4,106 (10)%
Liquid Prices:
Average field price
per Bbl of liquids:
Gulf of
Mexico $ 27.09 14.97 81% 27.51 13.63 102%
Alaska $ 24.15 13.21 83% 24.22 10.97 121%
Onshore $ 28.15 14.24 98% 27.12 12.66 114%
Total $ 26.12 14.19 84% 26.13 12.46 110%
Average price
per Bbl of
liquids
(net of
hedging) $ 21.16 14.45 46% 21.43 12.82 67%
Average NYMEX $ 28.80 17.55 64% 28.75 15.19 89%
Gas Production
(Mmcf):
Gulf of
Mexico 12,423 15,009 (17)% 24,094 31,287 (23)%
Onshore 1,477 1,595 (7)% 2,667 3,286 (19)%
Total 13,900 16,604 (16)% 26,761 34,573 (23)%
Gas Prices
Average field
price per
Mcf of gas:
Gulf of
Mexico $ 3.43 2.06 67% 3.02 1.91 58%
Onshore $ 3.38 2.05 65% 3.01 1.81 66%
Total $ 3.42 2.06 66% 3.02 1.90 59%
Average price
per Mcf of gas:
(net of
hedging) $ 2.85 2.12 34% 2.77 2.08 33%
Average NYMEX $ 3.43 2.14 60% 3.01 1.95 54%
Average net
daily
production:
Liquids (BBLS) 19,363 22,714 (15)% 20,385 22,560 (10)%
Gas (MCF) 152,747 182,462 (16)% 147,038 189,962 (23)%
Equivalent
(BOE) 44,821 53,124 (16)% 44,891 54,220 (17)%
Expenses per
BOE:
Lease
operating $ 4.72 $ 4.79 (1)% $ 4.81 $ 4.94 (3)%
General and
administrative,
net $ 1.67 $ 0.75 123% $ 1.22 $ 0.79 54%
(1) Net of effects of hedging
CONDENSED FINANCIAL DATA
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
STATEMENTS OF
OPERATIONS
Revenues $ 77,136 $ 65,157 $ 154,102 $ 124,895
Expenses:
Lease operating 19,254 23,142 39,322 48,706
Depletion,
depreciation and
amortization 27,528 31,194 55,155 63,668
Production taxes 1,515 1,145 3,250 1,990
General and
administrative,
net 6,812 3,628 9,962 7,839
55,109 59,109 107,689 122,203
Income (loss)
from operations 22,027 6,048 46,413 2,692
Interest and other 887 1,364 2,068 7,225
Interest expense,
net (4,404) (4,786) (9,724) (17,542)
Income tax
(provision)
benefit (6,953) -- (14,638) --
Net income
(loss) 11,557 2,626 24,119 (7,625)
Preferred stock
dividends (1,400) -- (1,571) --
Net income
(loss) available
to common
stockholders $ 10,157 $ 2,626 $ 22,548 $ (7,625)
Net income (loss)
per share:
Basic $ .42 $ .11 $ .94 $ (.31)
Diluted .40 .11 .91 (.31)
Weighted average
number of common
shares outstanding:
Basic 24,000 24,755 24,000 24,752
Diluted 25,430 24,755 24,715 24,752
CONDENSED STATEMENTS
OF CASH FLOWS
Net cash provided
by operating
activities $ 49,059 $ 44,656 $ 34,946 $ 53,845
Capital
expenditures (44,682) (9,992) (87,967) (25,195)
Acquisitions (699) (276) (957) (276)
Other net cash
provided by
investing activities (1,838) 3,955 (138) 5,464
Net cash provided
by financing
activities (1,395) 1 (39,503) 18,085
Net (decrease)
increase in cash 445 38,344 (93,619) 51,923
Cash at beginning
of period 2,442 15,269 96,506 1,690
Cash at end
of period $ 2,887 $ 53,613 $ 2,887 $ 53,613
Discretionary
cash flow $ 45,010 $ 34,034 $ 91,726 $ 54,516
Discretionary
cash flow
per share $ 1.77 $ 1.37 $ 3.71 $ 2.20
FORCENERGY INC
CONDENSED FINANCIAL DATA
((in thousands, except per share data) continued....)
(Unaudited)
CONDENSED BALANCE SHEETS
June 30, December 31,
2000 1999
Assets
Current assets $ 65,804 $ 156,700
Property and
equipment, net 544,818 512,000
Other assets 9,454 6,701
$ 620,076 $ 675,401
Liabilities and
Stockholders' Equity
Current liabilities $ 64,458 $ 120,928
Long-term debt 234,696 314,473
Redeemable preferred stock 30,589 --
Stockholders' equity 290,333 240,000
$ 620,076 $ 675,401
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