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AMERICAN EXPLORATION COMPANY ANNOUNCES 1992 RESULTS

 HOUSTON, April 1 /PRNewswire/ -- American Exploration Company (AMEX: AX) today announced a net loss for the fourth quarter of 1992 of $49.8 million ($0.72 per share) compared to a net loss of $8.4 million ($0.15 per share) for the fourth quarter of 1991. For the full year, American reported a net loss of $65.8 million ($1.02 per share), compared with a net loss of $24.3 million ($0.45 per share) for 1991. The major component of the loss for the quarter and year was the noncash writedown of properties which American is considering
selling in 1993. Operating cash flow before changes in working capital for the fourth quarter of 1992 was $3.7 million, net of severance and relocation charges totalling $1.4 million, compared to operating cash flow of $4.6 million for the same period last year. For the full year, cash flow from operations, before changes in working capital totalled $13.1 million compared to $18.9 million in 1991.
 Oil and gas revenues totaled $58.6 million in 1992 compared with $71.5 million in 1991. The decrease in oil and gas revenues was primarily due to lower oil and gas production. During the year, American produced 1.5 million barrels of oil and 19.8 billion cubic feet of gas, a decline of 18 percent and 21 percent, respectively, from 1991. A major component of this decline was the loss of production from properties sold since mid-1991, mostly to reduce debt. In addition, American delayed a number of projects in 1992 with the result that development drilling did not offset the normal production decline of its producing properties. Excluding production from properties sold, oil production and gas production decreased 6 percent and 14 percent, respectively, for 1992.
 The average gas price for 1992 was $1.59 per thousand cubic feet (Mcf) compared to $1.54 per Mcf for 1991. In the U.S., very weak gas prices in the first half of the year were offset by a recovery in the second half, resulting in a average price per Mcf of $1.88. In Canada, spot prices fell below $.80 per Mcf before strengthening in the fourth quarter, resulting in an average price for American Exploration of $1.01 per Mcf. The average oil price for 1992 of $18.16 per barrel was comparable to the 1991 price of $18.17 per barrel.
 Production and operating costs for 1992 totaled $17.2 million, 15 percent below 1991 costs of $20.4 million, mostly reflecting declines in production. Depreciation, depletion and amortization totalled $30.2 million in 1992, 14 percent below 1991 expenses of $35.2 million. The lower DD&A expense was also attributable to lower production, offset in part by a charge of $1.6 million relating to a depleted field.
 General and administrative expense decreased to $13.2 million in 1992 from $15.0 million in the prior year, reflecting ongoing efforts to improve efficiency. The 1992 amount includes $1.4 million relating to severance payments and costs associated with the consolidation of American's New York and California offices into Houston. Since the beginning of 1992, American has cut its full-time staff by 14 percent.
 Exploration expense during 1992 totaled $8.8 million, an increase from $5.7 million in 1991 due to an increased level of exploratory drilling activity. In addition, American incurred a noncash charge of $5.3 million during the year relating to the writeoff of unproved exploratory properties, mostly in the Gulf of Mexico.
 The largest component of the loss for 1992 is a noncash asset writedown of $39.3 million relating to properties which American is considering selling in 1993. The major portion of this charge relates to the possible sale of several gas and sulfur fields in Alberta, Canada. These properties produced 2.0 Bcf of natural gas and 16,000 long tons of sulfur in 1992 with operating cash flow of approximately $700,000. This sale is part of a strategy to refocus activities on properties which offer better returns in the near-term and to raise capital for the purpose of debt reduction and investment in development and exploration projects.
 American also recorded an extraordinary gain of $3.1 million in 1992 as a result of the restructuring of one of its debt subsidiaries. This debt subsidiary is one of three subsidiaries formed in the mid-1980's to enable institutional investors to invest in oil and gas property acquisitions through debt securities with economics similar to parallel equity partnerships. This transaction, together with other steps, enabled the company to reduce total debt by over $25 million in 1992. As a result, total interest charges in 1992 decreased by 21 percent to $10.8 million, including $3.3 million of capitalized interest, from $13.6 million in 1991, of which $3.5 million was capitalized.
 Commenting on the results for the year, Mark Andrews, American's chairman and CEO said, "American's losses reflect the fact that oil and gas prices have been well below projections made at the time of a number of acquisitions, the most noteworthy being Hershey Oil and Conquest Exploration. As a result, American has had significantly less cash flow than it expected, a problem compounded by our use of debt to finance a large portion of these acquisitions.
 "Recognizing the need to strengthen our financial position, the company has already taken a number of steps, including significant debt reductions, cuts in overhead expenses and the strengthening of the senior management and production teams. The company has reduced bank debt by over $50 million since mid-1991 through the sale of assets and issuance of securities.
 "Progress in reducing debt has caused short-term declines in production as certain properties have been sold to reduce debt and development projects have been delayed. Even so, American replaced close to 75 percent of reserves produced during 1992 through extensions, discoveries and revisions, and proved reserves at December 31, 1992, totaled 300.6 billion cubic feet of gas on an energy equivalent basis.
 "We are considering the sale of additional properties in 1993 and have taken noncash charges against 1992 results in anticipation of such sales. These sales will enable American to further reduce bank debt and focus the majority of its capital budget on domestic properties which have significant potential to increase production through development. Several projects have already been successfully completed in the first quarter. 1993 production will also be positively impacted by the company's recent gas discovery in South Louisiana where additional development drilling is planned in the third quarter.
 "Reduction of overhead costs has also been a major priority for the company. Since early 1991, American has reduced annual overhead costs by over $8 million from combined acquisition levels. Further substantial cuts are being implemented in 1993, including the consolidation of our New York and California offices into Houston.
 "During 1992, American incurred significant expenses related to its exploration activities. Although our exploration effort is still in the early stages, we are encouraged by results to-date both domestically and in Tunisia, where we have made a promising oil discovery. In 1993, we plan to continue our exploration activities but to increase the use of farmouts to reduce American's net share of expenditures and risk."
 American Exploration Company is an independent company with oil and gas production in the United States and Canada and exploratory activities focused in Texas, Louisiana, Tunisia and the Sultanate of Oman. American's common stock is traded on the American Stock Exchange under the symbol AX.
 AMERICAN EXPLORATION COMPANY
 Summarized Statements of Operations
 (in thousands, except for per share amounts)
 Periods Ended Three months Year
 Dec. 31 1992 1991 1992 1991
 Revenues:
 Oil and gas sales $15,410 $16,309 $58,560 $71,499
 Loss on property sales (247) (1,625) (1,309) (6,207)
 Other revenues 696 1,685 2,757 4,749
 Total revenues 15,859 16,369 60,008 70,041
 Costs and expenses:
 Production and operating 3,650 5,423 17,244 20,357
 Depreciation, depletion
 and amortization 10,115 9,026 30,193 35,163
 General and Administrative 5,189 3,351 13,215 15,033
 Taxes other than income 1,362 1,724 5,714 6,873
 Exploration 3,523 2,525 8,837 5,687
 Impairment 198 340 5,297 340
 Asset writedown 39,295 -- 39,295 --
 Total costs and expenses 63,332 22,389 119,795 83,453
 Loss from operations (47,473) (6,020) (59,787) (13,412)
 Interest expense and
 other, net (2,303) (2,819) (10,061) (12,616)
 Minority interest 25 493 949 1,771
 Loss before extraordinary
 item (49,751) (8,346) (68,899) (24,257)
 Extraordinary gain on
 extinguishment of debt -- -- 3,100 --
 Net loss (49,751) (8,346) (65,799) (24,257)
 Preferred stock expense -- (4) -- (114)
 Loss to common stock ($49,751) (8,350) (65,799) (24,371)
 Loss per common share ($0.72) (0.15) (1.02) (0.45)
 Summarized Statements of Cash Flows
 Year ended Dec. 31 1992 1991
 Operating Cash Flows:
 Before working capital $13,136 $18,875
 After working capital 14,237 21,505
 Summarized Balance Sheet Dec. 31, 1992 Dec. 31, 1991
 Assets:
 Current assets $51,179 $35,025
 Net property, plant and equipment 201,915 298,896
 Other assets 3,726 2,882
 Total assets $256,820 $336,803
 Liabilities and Stockholders' Equity:
 Current liabilities $ 48,457 $62,091
 Long-term debt 115,256 135,226
 Other liabilities 7,947 12,053
 Stockholders' equity 85,160 127,433
 Total liabilities and
 stockholders' equity $256,820 $336,803
 -0- 4/1/93
 /CONTACT: Frank Murphy of American Exploration, 212-230-0344/
 (AX)


CO: American Exploration Company ST: New York IN: OIL SU: ERN

LD-LR -- NY010 -- 1841 04/01/93 08:02 EST
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Date:Apr 1, 1993
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