St. Mary Reports Record Results for First Quarter 2006 and Updates Guidance, Announces Appointment of President and Chief Operating Officer.DENVER Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. -- St. Mary Mary, the mother of Jesus Mary, in the Bible, mother of Jesus. Christian tradition reckons her the principal saint, naming her variously the Blessed Virgin Mary, Our Lady, and Mother of God (Gr., theotokos). Her name is the Hebrew Miriam. Land & Exploration Company (NYSE NYSE See: New York Stock Exchange :SM) today reports earnings for the first quarter 2006. The Company also announces that Tony Best will be joining St. Mary as President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "The first quarter of 2006 was another strong quarter for St. Mary. With the continuing development on our resource programs and other properties, we are projecting record earnings for 2006," commented Mark Hellerstein, Chairman, 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. . "Moreover, we are excited to welcome Tony Best to our management team. Tony has the background and experience to lead St. Mary's continued growth." First Quarter Earnings and Updated Guidance St. Mary announces first quarter 2006 earnings of $50.5 million or $0.76 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. First quarter 2005 earnings were $35.1 million or $0.54 per diluted share. Earnings for these two periods included a non-cash after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. expense related to the change of the estimated liability for future payment under the Company's Net Profits plan of $4.4 million, or $0.07 per diluted share, and $2.7 million, or $0.04 per diluted share, respectively. Revenues for the first quarter of 2006 were $193.6 million compared to $143.8 million for the first quarter of 2005. 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. (1) increased to $122.7 million in the first quarter of 2006 from $90.8 million in the first quarter of 2005. Net cash provided by operating activities increased to $129.2 million in the first quarter of 2006 from $92.1 million in the first quarter of 2005. Daily oil and gas production during the first quarter 2006 averaged 244.0 million cubic feet of gas equivalent (MMCFE), up from 229.4 MMCFE in the comparable 2005 period. Average prices realized during the quarter were $8.28 per Mcf and $54.47 per barrel barrel: see English units of measurement. , 33% and 20% higher, respectively, than the realized prices in the first quarter of 2005. The Company's forecasts for the second quarter and the full year 2006 are shown below.
2nd Quarter Year
------------------ -------------------
Oil and gas production 22.5 - 24.0 BCFE 96.0 - 98.0 BCFE
Lease operating expenses,
including transportation $1.28 - $1.35/MCFE $1.26 - $1.33/MCFE
Production taxes $0.53 - $0.59/MCFE $0.55 - $0.61/MCFE
General and administrative
exp. $0.47 - $0.51/MCFE $0.44 - $0.49/MCFE
Depreciation, depletion, &
amort. $1.71 - $1.78/MCFE $1.81 - $1.89/MCFE
St. Mary estimates the basis differential (the difference between estimated realized oil and gas prices, before 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. , and the applicable NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices) for the second quarter of 2006 will be $6.50 to $7.50 per barrel of oil and $0.60 to $0.70 per MMbtu of gas. Operational updates for the first quarter 2006 were provided in the Company's April 6, 2006, press release. Tony Best to Join St. Mary as President and Chief Operating Officer St. Mary announces today that Tony Best, 56, will be joining St. Mary in June June: see month. 2006 as President and Chief Operating Officer. Mr. Best Mr. B may refer to:
adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. U.S. assets. Prior to working with Pure Resources, Mr. Best served as President of ARCO ar·co adv. & adj. Music With a bow. Used chiefly as a direction to indicate the resumption of bowing after a pizzicato passage. Adj. 1. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . In his career with ARCO, he also held several other key positions, including President ARCO Permian, Vice President of External Affairs for ARCO 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 and Prudhoe Bay Prudhoe Bay, inlet of the Beaufort Sea and Arctic Ocean, N Alaska, in the Alaska North Slope region, east of the Colville River delta. In 1968 one of the largest oil reserves in North America was discovered in Prudhoe Bay. Field Manager. Mr. Best has a BS degree in mechanical engineering from Texas A&M University and an MS in engineering management from the University of Alaska. St. Mary also announces that Mark Hellerstein, Chairman of the Board and CEO, has advised the Board of Directors that after 14 years with St. Mary he would like at some point in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future to pursue other interests. By bringing in a President of Mr. Best's caliber, St. Mary has positioned itself to allow for an orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. transition and the Board expects Mr. Best to become the Company's CEO within the next year. If Mr. Best is appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. CEO, Mr. Hellerstein has indicated that he would agree to remain as Chairman of the Board. As previously announced, the St. Mary first quarter earnings teleconference call is scheduled for May 4 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) → ). 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 12 at 800-642-1687, conference number 7667868. 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 7667868. 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 See attach a file. 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 12. 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," "believe," "budget," "anticipate," "intend," "estimate," "forecast," "plan," and "expect" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, which may cause St. Mary's actual results to differ materially from results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the forward-looking statements. These risks include such factors as the volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the and level of oil and natural gas prices, unexpected drilling conditions and results, the risks of various exploration and hedging strategies, the uncertain nature of the expected benefits from the acquisition of oil and gas properties, production rates and reserve replacement, the imprecise im·pre·cise adj. Not precise. im  pre·cise ly adv. nature of oil and gas
reserve estimates, 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 availability of economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: attractive exploration and development and property acquisition opportunities and any necessary financing, competition, 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 2005 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. 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, amortization, ARO accretion, 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.
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2006
(Unaudited)
PRODUCTION DATA
--------------- For the Three Months
Ended March 31, Percent
-------------------
2006 2005 Change
--------- --------
Average realized price, net of hedging:
Gas (per Mcf) $ 8.28 $ 6.22 33%
Oil (per Bbl) $ 54.47 $ 45.37 20%
Production:
Gas (MMcf) 12,789 12,047 6%
Oil (MBbls) 1,529 1,433 7%
MMCFE (6:1) 21,962 20,647 6%
Daily production:
Gas (Mcf per day) 142,096 133,852 6%
Oil (Bbls per day) 16,987 15,927 7%
MCFE per day (6:1) 244,020 229,416 6%
Margin analysis per MCFE:
Average realized price, net of hedging $ 8.61 $ 6.78 27%
Lease operating expense and
transportation 1.33 1.07 24%
Production taxes 0.55 0.49 12%
General and administrative costs 0.49 0.29 69%
--------- --------
Operating margin $ 6.24 $ 4.93 27%
--------- --------
Depletion, depreciation, and
amortization $ 1.57 $ 1.46 8%
INCOME STATEMENT
----------------
(In thousands, except per share amounts) For the Three Months
Ended March 31,
---------------------
2006 2005
--------- ---------
Operating revenues:
Oil and gas production revenue $ 184,065 $ 138,370
Oil and gas hedge gain 5,105 1,560
Marketed gas and other revenue 4,418 3,888
--------- ---------
193,588 143,818
--------- ---------
Operating expenses:
Oil and gas production expense 41,214 32,159
Depletion, depreciation, amortization, and
abandonment liability accretion 34,391 30,074
Exploration 10,787 7,083
Impairment of proved properties 1,289 -
Abandonment and impairment of unproved
properties 1,186 1,870
General and administrative 10,786 5,986
Change in Net Profits Plan liability 7,021 4,221
Marketed gas system and other operating
expense 6,228 4,768
--------- ---------
112,902 86,161
--------- ---------
Income from operations 80,686 57,657
Nonoperating income (expense):
Interest income 824 82
Interest expense (1,379) (1,944)
--------- ---------
Income before income taxes 80,131 55,795
Income tax expense -- current 15,775 10,423
Income tax expense -- deferred 13,830 10,269
--------- ---------
Net income $ 50,526 $ 35,103
========= =========
Basic weighted-average shares outstanding 57,233 57,231
========= =========
Diluted weighted-average shares outstanding 67,334 67,047
========= =========
Basic net income per common share $ 0.88 $ 0.61
========= =========
Diluted net income per common share $ 0.76 $ 0.54
========= =========
BALANCE SHEET
-------------
(In thousands) March 31, December 31,
2006 2005
--------- ------------
Working capital $ 43,140 $ 4,937
Long-term debt $ 99,909 $ 99,885
Stockholders' equity $ 634,155 $ 569,320
Shares outstanding, net of treasury 56,972 56,762
PROVED RESERVES
---------------
December 31,
2005
------------
Oil (MBbls) 62,903
Gas (MMcf) 417,075
------------
MMCFE (6:1) 794,493
============
CASH FLOW
---------
(In thousands)
Reconciliation of Discretionary Cash Flow
to Net Cash Provided by Operating Activities:
For the Three Months
Ended March 31,
----------------------
2006 2005
--------- ----------
Discretionary cash flow (1) $ 122,699 $ 90,784
(Gain) loss on property sales - -
Exploration expense, excluding exploratory dry
hole expense (10,541) (6,883)
Minority interest and other 131 1,046
Changes in working capital 16,953 7,184
--------- ----------
Net cash provided by operating activities $ 129,242 $ 92,131
========= ==========
Net cash used in investing activities $ (87,552) $ (94,278)
========= ==========
Net cash provided by financing activities $ 4,447 $ 13,249
========= ==========
(1) Discretionary cash flow is computed as net income plus
depreciation, depletion, amortization, ARO accretion, 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. The non-GAAP
measure of discretionary cash flow is presented since management
believes that it provides useful additional information to
investors for analysis of St. Mary's ability to internally
generate funds for exploration, development, and acquisitions. In
addition, discretionary cash flow is widely used by professional
research analysts and others in the valuation, comparison, and
investment recommendations of companies in the oil and gas
exploration and production industry, and many investors use the
published research of industry research analysts in making
investment decisions. Discretionary cash flow should not be
considered in isolation or as a substitute for net income, income
from operations, net cash provided by operating activities or
other income, profitability, cash flow, or liquidity measures
prepared under GAAP. Since discretionary cash flow excludes some,
but not all, items that affect net income and net cash provided by
operating activities and may vary among companies, the
discretionary cash flow amounts presented may not be comparable to
similarly titled measures of other companies.
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