Parallel Petroleum Announces Fourth Quarter and Year End 2004 Financial Results.MIDLAND, Texas Midland is the county seat of Midland CountyGR6 located on the Southern Plains of the western area of the U.S. State of Texas. As of the 2006 U.S. Census estimate, the city had a total population of 102,073. -- Parallel Petroleum Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :PLLL) today announced its financial results for the fourth quarter and year ended December December: see month. 31, 2004. In a separate press release dated March 15, 2005, Parallel announced its operations update. In a prior press release dated January January: see month. 11, 2005, the Company announced its 2004 year end reserves, operations update, and its $43.7 million 2005 capital investment budget. Fourth Quarter Results For the three months ended December 31, 2004, Parallel reported net income of $2.0 million, or $.07 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. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $5.3 million, after oil and gas hedge payments of $3.0 million. For the three months ended December 31, 2003, Parallel recorded net income of $1.0 million, or $.04 per diluted share, which included $1.7 million of operating income, after oil and gas hedge payments of $0.5 million. For the fourth quarter of 2004, Parallel's sales were 234 MBbls of oil and 695 MMcf of natural gas, or 349 MBOE MBOE Thousands of Barrels of Oil Equivalent MBOE Milford Board of Education . During this period, the average prices the Company received for its oil and natural gas on an unhedged/hedged basis, respectively, were $44.07/$32.68 per barrel and $6.99/$6.56 per Mcf, or $43.36/$34.90 per 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 . For the same period of 2003, oil sales were 157 MBbls at an average unhedged/hedged price of $26.87/$22.56 per barrel and natural gas sales were 874 MMcf at an average price of $5.02/$5.22 per Mcf, or 303 MBOE at $28.43/$26.77 per BOE. Year End Results For the twelve months ended December 31, 2004, Parallel reported net income of $5.6 million, or $.20 per diluted share. Operating income was $12.2 million, after oil and gas hedge payments of $8.4 million. For the twelve months ended December 31, 2003, Parallel recorded net income of $7.7 million, or $.31 per diluted share, which included $12.7 million of operating income, after oil and gas hedge payments of $2.6 million. For the twelve months ended December 31, 2004, Parallel's sales were 729 MBbls of oil and 2,690 MMcf of natural gas, or 1,177 MBOE. During this period, the average prices the Company received for its oil and natural gas on an unhedged/hedged basis, respectively, were $39.05/$28.82 per barrel and $5.85/$5.52 per Mcf, or $37.55/$30.45 per BOE. For the same period of 2003, oil sales were 629 MBbls at an average unhedged/hedged price of $29.11/$26.47 per barrel and natural gas sales were 3,356 MMcf at an average price of $5.40/$5.13 per Mcf, or 1,188 MBOE at $30.66/$28.50 per BOE. Net cash provided by operating activities for the twelve-month period ended December 31, 2004, was $17.7 million, compared to $19.5 million for the same period of 2003. The decrease was primarily related to increases in oil hedge payments, 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. and general and administrative expenses, of which the largest increase was in public reporting costs associated with Sarbanes-Oxley 404 compliance. Balance Sheet Review At December 31, 2004, current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. were $14.5 million, which included $4.8 million of cash. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. were $13.7 million, including current derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. obligations of $8.0 million, and 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. was $79.0 million. The Company's net 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. costs associated with its oil and gas properties and other equipment were $152.5 million. Parallel's 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. as of December 31, 2004 was $60.0 million, which includes $10.8 million of accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. comprehensive loss that is related to the Company's oil and gas hedges. Recent Equity Offering Parallel announced on February February: see month. 9, 2005, that it sold 5,750,000 shares of its common stock pursuant to a public offering at a price of $5.27 per share, resulting in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $28.0 million. The common shares were issued under Parallel's universal shelf registration statement on Form S-3. The Company applied the $28.0 million to its line of credit, thereby reducing long-term debt to approximately $50.0 million. Recent Non-Strategic Asset Divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). In January 2005, Parallel divested interests in 6 Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. assets, located in Howard County, Texas Howard County is a county located in the U.S. state of Texas. In 2000, its population was 33,627. Its county seat is Big Spring6. Howard County is named for Volney E. Howard, a U.S. Congressman from Texas. Geography According to the U.S. , to an unaffiliated third party. Net proceeds from the sale were approximately $2.5 million and resulted in a net reduction in the Company's production of approximately 60 BOE per day. These properties represented less than 0.2% of the Company's total proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. as of December 31, 2004. Parallel will continue to evaluate all portfolio assets for economic viability and strategic fit. First Quarter 2005 Expected Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , Non-cash Loss on "Ineffective Portion of Oil Hedges" As described in the "Hedging Information" table within this press release, the Company currently has approximately 2.1 million barrels of oil hedged for the next 48 months (through 2008) at NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices ranging from $28.46 to $49.60 per barrel. These hedges are directly related to the Fullerton Fullerton, city (1990 pop. 114,144), Orange co., S Calif., SE of Los Angeles; founded 1887, inc. 1904. The city is named for George H. Fullerton, head of a land company, who arranged to route the San Diego–Los Angeles–Santa Fe RR through the settlement in acquisitions in December 2002 and September 2004, and the Carm-Ann acquisition in September 2004. The Company's composite average differential between the hedged NYMEX price and the realized wellhead well·head n. 1. The source of a well or stream. 2. A principal source; a fountainhead. 3. The structure built over a well. wellhead Noun 1. price has historically been approximately $2.50 per barrel; however, the differential has recently increased to approximately $4.50 per barrel, because the majority of the Company's oil is West Texas Sour. (West Texas Sour oil has a higher differential from NYMEX price than West Texas Sweet oil.) Assuming that this composite average differential remains in the $4.50 range, the Company expects to record a pre-tax, non-cash loss of approximately $1.2 million on "ineffective portion of oil hedges" during the first quarter of 2005. Management Comments Larry C. Oldham, Parallel's President, commented, "As I commented in our Operations Update that was released on March 15, 2005, the cash infusion provided by our recent common stock offering combined with our existing bank facility and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. has given us the financial flexibility to accelerate our 2005 development activity." Oldham further commented, "Although our fourth quarter 2004 production volumes were up 28% over third quarter 2004 volumes, we expect first quarter 2005 production volumes to decrease approximately 5% compared to fourth quarter 2004 volumes. The expected decrease is due to asset sales, normal decline on existing production and the timing of new production associated with the Company's 2005 development activities. We anticipate production and reserve volumes to increase in future quarters as we continue to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale our drilling and exploitation activity levels." In a final comment, Oldham stated, "The expected increases in production and reserve volumes will reflect our execution of the 'acquire and exploit' business model that we implemented in June 2002. We believe our commitment to this model will yield consistent growth in production and reserves over time." Today's Earnings Conference Call and Webcast Information The Company's management will host a conference call to discuss its financial and operational results for the fourth quarter and year ended December 31, 2004, this afternoon, Wednesday, March 16, 2005, at 2:00 p.m. Eastern time (1:00 p.m. Central time). To participate in the call, dial 1-800-591-6923 or 1-617-614-4907, Participant Passcode 81315445, at least five minutes before the scheduled start time. The conference call will also be webcast with slides, and can be accessed live at Parallel's web site, www.plll.com. A replay of the conference call will be available at the Company's web site or by calling 1-888-286-8010 or 1-617-801-6888, Passcode 49322722. A written transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the conference call, and the supporting slide presentation, will be available on the Company's web site Presentation page at http://phx.corporate-ir.net/phoenix.zhtml?c=79538&p=irol-presentations Upcoming Presentations Parallel's President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Larry Oldham, will host breakfast meetings on Tuesday, April 5, 2005, and Wednesday, April 6, 2005, at 7:00 a.m. Central time at Howard Weil's 33rd Annual Energy Conference at the Sheraton New Orleans Sheraton New Orleans, located at 500 Canal Street in the Central Business District of New Orleans, Louisiana, is a 48-story, 479 feet (146 m)-tall skyscraper. Hotel, 500 Canal Street, New Orleans Canal Street is a major thoroughfare in the city of New Orleans, Louisiana. Forming the up-river boundary of the city's oldest neighborhood, the French Quarter (Vieux Carre), it formed the dividing line between the older French/Spanish Colonial era city and the newer American , Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. . Parallel's Howard Weil Energy Conference
presentation slides will be available on the Company's web site,
http://www.plll.com, prior to their breakfast meetings.
PARALLEL PETROLEUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(dollars in millions)
December 31, December 31,
2004 2003
---------------- -------------
ASSETS
Current assets $14.5 $23.6
Net property and equipment 152.5 94.0
Other assets, net 3.7 0.7
--------------- -------------
Total $170.7 $118.3
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $13.7 $7.2
Long-term debt, net 79.0 39.8
Deferred tax 6.5 5.8
Derivative obligations 9.5 2.7
Asset retirement obligations 2.0 1.6
Stockholders' equity 60.0 61.2
--------------- -------------
Total $170.7 $118.3
=============== =============
PARALLEL PETROLEUM CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT DATA
(in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- -------- --------- --------
Oil and gas revenues $12.1 $8.0 $35.8 $33.8
Total costs and expenses 6.8 6.3 23.6 21.1
------- ------- -------- -------
Operating income 5.3 1.7 12.2 12.7
------- ------- -------- -------
Total other expense, net (2.5) (0.6) (3.8) (2.0)
------- ------- -------- -------
Income before income taxes 2.8 1.1 8.4 10.7
Income tax expense, deferred (0.8) (0.1) (2.8) (3.0)
------- ------- -------- -------
Net income before cumulative
effect of change in accounting
principle 2.0 1.0 5.6 7.7
Cumulative effect on prior
years of a change in
accounting principle, net of
tax - - - (0.1)
------- ------- -------- -------
Net income 2.0 1.0 5.6 7.6
Cumulative preferred stock
dividend (0.2) (0.2) (0.6) (0.6)
------- ------- -------- -------
Net income available to common
stockholders $1.8 $0.8 $5.0 $7.0
======= ======= ======== =======
Net income per common share:
Basic - after accounting
change $0.07 $0.04 $0.20 $0.33
Diluted - after accounting
change $0.07 $0.04 $0.20 $0.31
Weighted average common shares
outstanding:
Basic 25.4 21.1 25.3 21.3
Diluted 28.6 24.1 28.4 24.2
PARALLEL PETROLEUM CORPORATION
SALES VOLUMES AND PRICE DATA
Three Months Ended Year Ended
December 31, December 31,
------------------- ---------------------
2004 2003 2004 2003
--------- --------- --------- -----------
Sales Volumes:
Oil (MBbls) 234 157 729 629
Natural gas (MMcf) 695 874 2,690 3,356
Equivalent barrels of oil
(MBOE) (a) 349 303 1,177 1,188
Equivalent barrels of oil
(BOE) per day 3,791 3,289 3,216 3,246
Average Sales Prices:
per Bbl (unhedged) (b) $44.07 $26.87 $39.05 $29.11
per Bbl (hedged) (c) $32.68 $22.56 $28.82 $26.47
per Mcf (unhedged) (b) $6.99 $5.02 $5.85 $5.40
per Mcf (hedged) (c) $6.56 $5.22 $5.52 $5.13
per BOE (unhedged) (b) $43.36 $28.43 $37.55 $30.66
per BOE (hedged) (c) $34.90 $26.77 $30.45 $28.50
(a) A BOE means one barrel of oil equivalent using the ratio of six
Mcf of gas to one barrel of oil. "MBOE" means one thousand BOE.
(b) Unhedged price is the actual price received at the wellhead for
our oil and natural gas.
(c) Hedged price is the actual price received at the wellhead for our
oil and natural gas plus or minus the settlements on our
derivatives.
PARALLEL PETROLEUM CORPORATION
HEDGING INFORMATION (a)
COSTLESS COLLARS: Houston Ship
------------------- NYMEX Channel
Barrels Oil Prices MMBTU of Gas Prices
of ----------------- Natural --------------
Period of Time Oil Floor Cap Gas Floor Cap
------------------- -------- -------- -------- -------- ------- ------
Apr 1, 2005 thru
Oct 31, 2005 - - - 428,000 $5.00 $7.26
Jan 1, 2005 thru
Dec 31, 2005 73,000 $36.00 $49.60 - - -
Jan 1, 2006 thru
Dec 31, 2006 70,800 $35.00 $44.00 - - -
SWAPS:
-------------------
NYMEX Houston
Volume Oil Volume Ship Channel
Hedged Swap Hedged Gas
Period of Time Bbl Oil Price MMBTU Swap Price
------------------- -------- -------- -------- ----------------
Jan 1, 2005 thru
Dec 31, 2005 620,500 $30.19 - -
Jan 1, 2005 thru
Mar 31, 2005 - - 180,000 $4.705
Jan 1, 2006 thru
Dec 20, 2006 448,000 $28.46 - -
Jan 1, 2007 thru
Dec 31, 2007 474,500 $34.36 - -
Jan 1, 2008 thru
Dec 31, 2008 439,200 $33.37 - -
INTEREST RATE
SWAPS:
-------------------
Notional Fixed
Amount Interest
Period of Time $MM Rates
------------------- -------- --------
Jan 1, 2005 thru
Dec 31, 2005 $50 3.36%
Jan 1, 2006 thru
Dec 31, 2006 $50 3.82%
Jan 1, 2007 thru
Dec 31, 2007 $50 4.30%
Jan 1, 2008 thru
Dec 30, 2008 $50 4.74%
(a) BNP Paribas is the counterparty in Parallel's derivative
instruments.
The Company Parallel Petroleum Corporation is headquartered in Midland, Texas and is an independent energy company primarily engaged in the acquisition, development, exploration and production of oil and gas using enhanced oil recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] techniques and 3-D seismic technology. Additional information on Parallel Petroleum Corporation is available at www.plll.com. This 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. subject to various risks and uncertainties that could cause the company's future plans, objectives and performance to differ materially from those in the forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "subject to," "anticipate," "estimate," "continue," "present value," "future," "reserves," "appears," "prospective," or other variations thereof or comparable terminology. Factors that could cause or contribute to such differences could include, but are not limited to, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the results of exploratory drilling activity, the company's growth strategy, changes in oil and natural gas prices, operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. , availability of drilling equipment, outstanding indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , changes in interest rates, dependence on weather conditions, seasonality, expansion and other activities of competitors, changes in federal or state environmental laws and the administration of such laws, and the general condition of the economy and its effect on the securities market. While we believe our forward-looking statements are based upon reasonable assumptions, these are factors that are difficult to predict and that are influenced by economic and other conditions beyond our control. Investors are directed to consider such risks and other uncertainties discussed in documents filed by the company with the Securities and Exchange Commission. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion