St. Mary Reports Quarterly Results and Updates Guidance.DENVER -- St. Mary Land & Exploration Company (NYSE NYSE See: New York Stock Exchange : SM) today reports earnings for the first quarter 2007 of $40.0 million, or $0.63 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. Tony Best, President and 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. , commented, "Our first quarter financial results reflected record quarterly production and 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. as well as increased lease operating costs operating costs npl → gastos mpl operacionales . Realized prices were 11 percent higher than we had budgeted at the beginning of the year, and as a result, our revenues, discretionary cash flow, and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were all stronger than anticipated. The strong volumes and realized prices were reduced by lease operating costs higher than what we have seen in prior periods. Oil properties are more labor intensive Labor Intensive A process or industry that requires large amounts of human effort to produce goods. Notes: A good example is the hospitality industry (hotels, restaurants, etc), they are considered to be very people-oriented. See also: Capital Intensive, Trading Dollars and our well servicing vendors are experiencing the same personnel constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. and compensation inflation as other segments of the petroleum industry. In addition, unexpected workover operations also adversely affected our lease operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. . Exploration expense was negatively impacted by exploratory dry holes that were recognized during the quarter. The first quarter of 2007 was by most financial measures a solid quarter, and we know there are areas where we can and will improve our performance. "As noted in our previously issued operations update, we continue to press ahead in every region with our 2007 capital program. We regularly review our program allocation on a consolidated basis as well as at the regional level to consider in the most current information on commodity prices, drilling and completion costs, and program performance." FIRST QUARTER EARNINGS St. Mary announces first quarter 2007 earnings of $40.0 million or $0.63 per diluted share. First quarter 2006 earnings were $50.5 million or $0.76 per diluted share. The non-cash, after-tax charge related to the quarterly change in the Company's Net Profits Plan liability was $3.1 million, or $0.05 per diluted share, for the first quarter of 2007. The first quarter of 2006 charge, net of tax, for the Net Profits Plan was $4.4 million, or $0.07 per diluted share. For the first quarter of 2007, the non-cash, after-tax charge related to unrealized derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. loss was $2.5 million, or $0.04 per diluted share. The first quarter 2006 charge, net of tax, was $296 thousand and had no impact on diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . While revenues for the Company increased meaningfully year over year, these gains were negated by cost increases in several categories as described below. Revenues for the first quarter of 2007 were $221.0 million compared to $193.6 million for the first quarter of 2006. The increase was primarily a result of a 16 percent increase in production volumes between the two periods, diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. by a slight decrease in realized equivalent price. Oil and gas production expenses increased to $52.3 million in the quarter from $41.2 million in the same period last year, driven by a significant increase in lease operating costs. Factors impacting this year's increase in lease operating costs include several significant unplanned workovers in the North Rockies region and inflation in well servicing costs. DD&A expense also increased significantly year over year to $49.0 million in the first quarter of 2007 from $34.4 million for the same period last year. This increase reflects the higher per MCFE MCFE MATLAB Central File Exchange costs the industry has experienced in recent years to acquire and develop producing assets. Lastly, exploration expense nearly doubled in the first quarter of 2007 to $20.8 million compared to the $10.8 million in the first quarter of 2006. The majority of the difference is due to the recognition of expense for exploratory dry holes in 2007. Discretionary cash flow(1) increased to $144.2 million in the first quarter of 2007 from $122.7 million in the same period the preceding year. Net cash provided by operating activities was $126.1 million in the first quarter of 2007 compared to $129.2 million in the comparable period for the prior year. Daily oil and gas production during the first quarter 2007 averaged 283 million cubic feet of gas equivalent (MMCFE), an increase from 244 MMCFE in the comparable 2006 period. Average prices realized during the first quarter, inclusive of inclusive of prep. Taking into consideration or account; including. hedging activities, were $8.04 per Mcf and $52.62 per barrel, 3% lower for both natural gas and oil than the realized prices in the first quarter of 2006. Average prices excluding hedging activities were $6.82 per Mcf and $52.61 per barrel during the quarter, which were 10% lower and 8% lower, respectively, than the same quarter last year. UPDATED GUIDANCE The Company's guidance for the second quarter of 2007 is shown below. Guidance for the full year of 2007 was provided in our April 18, 2007 press release and remains unchanged.
2nd Quarter
-----------
Oil and gas production 25.0 - 27.0 BCFE
Lease operating expenses,
including transportation $1.30 - $1.38/MCFE
Production taxes $0.54 - $0.60/MCFE
General and administrative exp. $0.52 - $0.56/MCFE
Depreciation, depletion, & amort. $1.95 - $2.05/MCFE
St. Mary estimates the basis differential (the difference between estimated realized oil and gas prices, before hedging, and the applicable NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices) for the second quarter of 2007 will be $6.00 to $6.50 per barrel of oil and $0.65 to $0.75 per Mcf of gas. The gas differential range is wider than that of the first quarter of 2007 as a result of basis expansion in bid week prices in the Rockies seen in the first two months of the second quarter. In April of 2007, the Company issued $287.5 million of 3.50% Senior Convertible Notes. Unlike the 5.75% Senior Convertible Notes that were called and subsequently converted in March 2007, the 3.50% Senior Convertible Notes allow for net share settlement. For financial accounting purposes, the potentially dilutive securities associated with these notes will be accounted for using the treasury stock method rather than the if-converted method used for the 5.75% Senior Convertible Notes. Under the treasury stock method, the securities associated with the 3.50% Senior Convertible Notes will not factor into the calculation of diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. until the $54.42 per share conversion price has been reached. An operational update for the first quarter 2007 was provided in the Company's April 18, 2007 press release. Management will review this update on the first quarter earnings call scheduled for May 4, 2007 at 8:00 a.m. (MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → ). EARNINGS CALL INFORMATION As previously announced, the St. Mary first quarter earnings teleconference call is scheduled for May 4, 2007 at 8:00 a.m. (MDT). The call participation number is 888-424-5231. A replay of the conference call will be available two hours after the completion of the call, 24 hours per day through May 18 at 800-642-1687, conference number 5572826. International participants can dial 706-634-6088 to take part in the conference call, and can access a replay of the call at 706-645-9291, conference number 5572826. In addition the call will be broadcast live at St. Mary's website at www.stmaryland.com, and this press release and financial highlights attachment will be available before the call at www.stmaryland.com under "News--Press Releases." An audio recording of the conference call will be available at that site through May 18. INFORMATION ABOUT 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. This release contains forward-looking statements within the meaning of securities laws, including forecasts and projections. The words "will," "should," "believe," "budget," "anticipate," "intend," "estimate," "forecast," "plan," and "expect" and similar expressions are intended to identify forward looking statements. Although St. Mary believes the expectations and forecasts reflected in these statements are reasonable, it can give no assurance that they will prove to be correct. These statements involve known and unknown risks, which may cause St. Mary's actual results to differ materially from results expressed or implied by the forward looking statements. These risks include such factors as the volatility and level of oil and natural gas prices, unexpected drilling conditions and results, unsuccessful exploration and development drilling, the availability of economically attractive exploration and development and property acquisition opportunities and any necessary financing, the risks of various exploration and hedging strategies, lower prices realized on oil and gas sales resulting from our commodity price risk management activities, production rates and reserve replacement, the imprecise im·pre·cise adj. Not precise. im  pre·cise ly adv. nature of estimating oil and gas reserves,
uncertainties in projecting future rates of production from drilling
activities and acquisitions, drilling and operating service
availability, uncertainties in cash flow, the financial strength of
hedge contract counterparties CounterpartiesThe parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. , the negative impact that lower oil and natural gas prices could have on our ability to borrow, our ability to compete effectively against other independent and major oil and natural gas companies, 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. , environmental matters, the potential impact of government regulations, the use of management estimates, and other such matters discussed in the "Risk Factors" section of St. Mary's 2006 Annual Report on Form 10-K/A and subsequent Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. filed with the SEC. Although St. Mary may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws. (1) Discretionary cash flow is computed as net income plus 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 , amortization, ARO accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the , impairments, deferred taxes, exploration expense, stock-based compensation expense, and non-cash changes in the Net Profits Plan liability less the effect of unrealized derivative loss. See the attached financial highlights for a reconciliation of discretionary cash flow to net cash provided by operating activities, a presentation of other cash flow information, and a statement indicating why management believes the presentation of the non-GAAP measure of discretionary cash flow provides useful information to investors. [TABLE OMITTED] |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion