St. Mary Reports Results for Second Quarter 2006 and Updates Guidance.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 second quarter 2006. "We are pleased with our solid performance through the first half of 2006. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite increasing service and drilling costs, fierce competition for resources and decreasing natural gas prices, we had record net income and production for the six month period ended June June: see month. 30, 2006. For the quarter, we grew our production 3% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and 4% over the same period last year. We are reiterating our 2006 E&D capital expenditure budget of $477 million and we expect to have record production in 2006 through a combination of advancing the development of our asset base as well as bringing on several high impact wells in the second half of 2006, including the Paggi Broussard Broussard can refer to: People
SECOND QUARTER EARNINGS St. Mary announces second quarter 2006 earnings of $40.1 million or $0.61 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. Second quarter 2005 earnings were $38.3 million or $0.59 per diluted share. Earnings for the second quarter 2006 period include 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. gain of $4.0 million, or $0.06 per diluted share, for the gain recognized related to our previously announced Section 1031 exchange of oil and gas properties. The quarterly non-cash after-tax charge related to the Company's Net Profits Plan was $8.8 million, or $0.13 per diluted share, and $7.7 million, or $0.12 per diluted share, in 2006 and 2005, respectively. Revenues for the second quarter of 2006 were $193.4 million compared to $164.6 million for the second 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 $135.5 million in the second quarter of 2006 from $105.2 million in the same period of the preceding year. Net cash provided by operating activities decreased to $87.1 million in the second quarter of 2006 from $93.4 million in the comparable period for the year prior. The current period's net cash from operating activities was impacted by the timing of payments for drilling invoices and cash calls to partners. Daily oil and gas production during the second quarter 2006 averaged 248.3 million cubic feet of gas equivalent (MMCFE), an increase from 239.1 MMCFE in the comparable 2005 period. Average prices realized, inclusive of inclusive of prep. Taking into consideration or account; including. 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. activities, during the quarter were $6.96 per Mcf and $59.62 per barrel barrel: see English units of measurement. , 3% and 23% higher, respectively, than the realized prices in the second quarter of 2005. Average prices excluding hedging activities were $6.20 per Mcf and $63.68 per barrel during the quarter, which are 9% lower and 28% higher, respectively, than the same quarter last year. UPDATED GUIDANCE The Company's forecasts for the third quarter and the full year 2006 are shown below.
3rd Quarter Year
------------------ ------------------
Oil and gas production 24.0 - 26.0 BCFE 96.0 - 98.0 BCFE
Lease operating expenses,
including transportation $1.28 - $1.35/MCFE $1.29 - $1.34/MCFE
Production taxes $0.54 - $0.60/MCFE $0.55 - $0.61/MCFE
General and administrative
exp. $0.45 - $0.51/MCFE $0.44 - $0.50/MCFE
Depreciation, depletion, &
amort. $1.76 - $1.82/MCFE $1.72 - $1.78/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 third quarter of 2006 will be $6.00 to $7.00 per barrel of oil and $0.65 to $0.75 per MMbtu of gas. Operational updates for the second quarter 2006 were provided in the Company's July July: see month. 11, 2006, press release. INCREASE IN SHARES AVAILABLE FOR REPURCHASE re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. As of the end of June 2006, St. Mary had 526,818 shares authorized Shares authorized The maximum number of shares of stock of a company allowed in the articles of incorporation, which may be changed only by a shareholder vote. See: Issued and outstanding. shares authorized See authorized capital stock. for repurchase. Subsequent to the close of the quarter, the Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an increase in the number of shares available for repurchase under the plan by an additional 5,473,182 shares, bringing the total shares available for future repurchases to 6,000,000 shares. Management plans to continue to evaluate the repurchase of common stock as a part of the ongoing business plan. The Company evaluates the market price of our common stock relative to our assessment of net asset value per share. As previously announced, the St. Mary second quarter earnings teleconference call is scheduled for August 3, 2006 at 8:00 am (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 August 17 at 800-642-1687, conference number 2765160. 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 2765160. 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 August 17. INFORMATION ABOUT FORWARD LOOKING STATEMENTS 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," "evaluate," 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
June 30, 2006
(Unaudited)
PRODUCTION DATA
---------------
For the For the
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
------------------- ---------------------
2006 2005 Change 2006 2005 Change
--------- --------- ---------- ----------
Average
realized
price, net of
hedging:
Gas (per Mcf) $6.96 $6.77 3% $7.59 $6.50 17%
Oil (per Bbl) $59.62 $48.39 23% $56.96 $46.88 22%
Production:
Gas (MMcf) 14,023 13,184 6% 26,812 25,231 6%
Oil (MBbls) 1,429 1,428 0% 2,957 2,862 3%
MMCFE (6:1) 22,595 21,754 4% 44,556 42,401 5%
Daily
production:
Gas (Mcf per
day) 154,102 144,882 6% 148,132 139,398 6%
Oil (Bbls per
day) 15,698 15,695 0% 16,339 15,811 3%
MCFE per day
(6:1) 248,292 239,053 4% 246,168 234,261 5%
Margin analysis
per MCFE:
Average
realized
price, net
of hedging $8.09 $7.28 11% $8.35 $7.03 19%
Lease
operating
expense and
trans-
portation 1.37 0.96 43% 1.36 1.02 33%
Production
taxes 0.54 0.42 29% 0.54 0.45 20%
General and
admini-
strative
costs 0.46 0.34 35% 0.48 0.32 50%
--------- --------- ---------- ----------
Operating
margin $5.72 $5.56 3% $5.97 $5.24 14%
--------- --------- ---------- ----------
Depletion,
depreciation,
and
amortization $1.59 $1.56 2% $1.58 $1.51 5%
INCOME STATEMENT
--------------------------
(In thousands, except per
share amounts)
For the For the
Three Months Six Months
Ended Ended
June 30, June 30,
-------------------- ----------------------
2006 2005 2006 2005
---------- --------- ----------- ----------
Operating revenues:
Oil and gas production
revenue $177,957 $160,421 $362,022 $298,791
Oil and gas hedge gain
(loss) 4,875 (2,086) 9,980 (526)
Marketed gas and other
revenue 4,117 6,265 8,535 10,153
Gain (loss) on sale of
proved properties 6,432 (26) 6,432 (26)
---------- --------- ----------- ----------
193,381 164,574 386,969 308,392
---------- --------- ----------- ----------
Operating expenses:
Oil and gas production
expense 43,278 30,188 84,492 62,347
Depletion, depreciation,
amortization, and
abandonment liability
accretion 35,910 33,907 70,301 63,981
Exploration 15,319 9,699 26,106 16,782
Impairment of proved
properties - - 1,289 -
Abandonment and
impairment of unproved
properties 1,262 1,819 2,448 3,689
General and
administrative 10,429 7,481 21,215 13,467
Change in Net Profits
Plan liability 14,059 12,175 21,080 16,396
Marketed gas system and
other operating expense 3,248 6,310 9,006 9,949
Unrealized derivative
loss 4,791 241 5,261 1,370
---------- --------- ----------- ----------
128,296 101,820 241,198 187,981
---------- --------- ----------- ----------
Income from operations 65,085 62,754 145,771 120,411
Nonoperating income
(expense):
Interest income 540 98 1,364 180
Interest expense (1,549) (2,274) (2,928) (4,218)
---------- --------- ----------- ----------
Income before income taxes 64,076 60,578 144,207 116,373
Income tax expense -
current 3,143 14,484 18,918 24,907
Income tax expense -
deferred 20,853 7,833 34,683 18,102
---------- --------- ----------- ----------
Net income $40,080 $38,261 $90,606 $73,364
========== ========= =========== ==========
Basic weighted-average
common shares outstanding 57,082 56,960 57,157 57,095
========== ========= =========== ==========
Diluted weighted-average
common shares outstanding 66,950 66,769 67,145 66,847
========== ========= =========== ==========
Basic net income per
common share $0.70 $0.67 $1.59 $1.28
========== ========= =========== ==========
Diluted net income per
common share $0.61 $0.59 $1.38 $1.13
========== ========= =========== ==========
BALANCE SHEET
--------------------------
(In thousands)
June December
30, 31,
2006 2005
---------- ---------
Working capital $(16,369) $4,937
Long-term debt $150,933 $99,885
Stockholders' equity $571,859 $569,320
Common shares
outstanding, net of
treasury 54,781 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 For the
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- ----------------------
2006 2005 2006 2005
---------- --------- ----------- ----------
Discretionary cash flow(1) $135,466 $105,201 $258,165 $195,985
(Gain) loss on property
sales (6,432) 26 (6,432) 26
Exploration expense,
excluding exploratory dry
hole expense (11,924) (7,797) (22,465) (14,680)
Minority interest and
other (734) (1,365) (603) (319)
Changes in current assets
and liabilities (29,266) (2,620) (12,313) 4,564
---------- --------- ----------- ----------
Net cash provided by
operating activities $87,110 $93,445 $216,352 $185,576
========== ========= =========== ==========
Net cash used in investing
activities $(98,580) $(75,700) $(186,132) $(169,978)
========== ========= =========== ==========
Net cash used in financing
activities $(47,767) $(24,697) $(43,320) $(11,448)
========== ========= =========== ==========
(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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