HADSON ENERGY RESOURCES ANNOUNCES FOURTH QUARTER
AND ANNUAL FINANCIAL RESULTS AND YEAR-END RESERVE ESTIMATES
OKLAHOMA CITY, Feb. 21 /PRNewswire/ -- Hadson Energy Resources Corporation (NASDAQ: HERC) today announced a net loss for the quarter ended Dec. 31, 1991 of $6.2 million, or $1.01 per share, on total revenue of $11.2 million. This compares with net earnings of $3.7 million, or $.60 per share, on total revenue of $12.5 million for the fourth quarter of 1990. The current period loss resulted from a $10 million provision to impair the carrying value of domestic oil and gas properties in accordance with the full cost ceiling limitation prescribed by the Securities and Exchange Commission. This charge was in response to the significant decline in gas prices realized subsequent to Dec. 31, 1991.
For the year ended Dec. 31, 1991, the company reported a net loss of $2 million, or $.33 per share, on total revenue of $42.6 million. This compares with net earnings of $6.7 million, or $1.15 per share, on total revenue of $39.3 million for 1990. Net earnings for the quarter and the year ended Dec. 31, 1991, were $1.4 million and $5.6 million, respectively, prior to the impairment provision.
Continued Strength In Operating Cash Flows
Despite substantially higher oil and gas production levels in the fourth quarter of 1991 as compared to the fourth quarter of 1990, cash flows provided by operating activities (before change in non-cash working capital) were $7.1 million ($1.15 per share) for the current quarter compared to $7.8 million ($1.27 per share) for the same quarter of 1990, a decrease of 9 percent. The higher earnings and cash flows experienced in the fourth quarter of 1990 were principally attributable to higher average oil prices which escalated in response to Iraq's invasion of Kuwait.
For the year ended Dec. 31, 1991, cash flows provided by operating activities, as defined, were $26.4 million ($4.31 per share) as compared to $24.3 million ($4.17 per share) for the comparable period of 1990, an increase of 9 percent.
Continued Increases In Oil and Gas Production
The company reported significant growth in oil production in relation to the prior year. Domestic oil production increased 208 percent to approximately 1,200 barrels per day as compared to 400 barrels per day for the fourth quarter of 1990, principally as the result of the acquisition of Baruch-Foster Corporation in December 1990. Internationally, average production from the Harriet Field located offshore Western Australia improved by 7 percent to 15,100 barrels per day (3,400 barrels per day, net to the company) compared to 14,100 barrels per day (3,200 barrels per day, net) during the fourth quarter of 1990. Domestic gas production increased to 13.1 million cubic feet per day as compared to 11.3 million cubic feet per day for the prior year quarter.
For the year, the company produced a total of 1.6 million barrels of oil and 4.8 billion cubic feet of gas compared to a total of 1.2 million barrels of oil and 4.6 billion cubic feet of gas for 1990.
Significantly Lower Oil and Gas Prices
The average oil prices received by the company domestically and internationally for the current quarter were $21.58 and $21.10 per barrel, respectively, as compared to $35.66 and $30.57 for the same period of 1990. The higher average prices in 1990 were primarily attributable to Iraq's invasion of Kuwait. Prices decreased significantly shortly after the outbreak of war in early 1991. The average domestic oil price for the quarter was enhanced $2.05 per barrel through an oil price hedging agreement which was in effect for calendar 1991. The average gas price realized by the company for the quarter declined significantly to $1.81 per thousand cubic feet as compared to the $2.00 per thousand cubic feet received for the prior year quarter.
Average prices were also down significantly for the full year. For the year ended Dec. 31, 1991, the average oil prices received domestically and internationally were $21.56 and $21.26 per barrel, respectively, as compared to $23.49 and $26.97 for 1990. Domestic oil prices in 1991 were increased $2.22 per barrel as a result of the hedging agreement mentioned previously. Gas prices fell by 8 percent to $1.50 per thousand cubic feet as compared to $1.63 for 1990.
Lower Year-End Reserve Position
The company reported proved reserves of 21 million net equivalent barrels at December 31, 1991, a decrease of 7 percent in relation to the prior year balance of 22.6 million net equivalent barrels. This year- end balance is comprised of 9.1 million barrels of oil and 71.4 billion cubic feet of gas and is split almost equally between the United States and Australia on an equivalent barrel basis.
William C. Rankin, vice president and chief financial officer, stated, "We are generally pleased with overall financial performance and the continued growth in cash flows, although disappointed by the loss resulting from the full cost write-down. The decline in domestic gas prices and the resultant impairment provision recorded this quarter are indicative of how difficult these times are for the domestic oil and gas industry. Our cumulative cost per equivalent barrel prior to the adjustment was at a level which historically represented a favorable overall finding cost. These pricing conditions underscore the importance and role that producing property acquisitions will play in our domestic strategy until such time that pricing levels justify a higher level of exploration and development drilling in the United States.
"The majority of our 1991 capital expenditure program was devoted to exploitation of the company's existing asset base. While this did not result in production replacement, the positive aspects can be seen in the level of the company's cash flows and production volumes which have continued to grow. Year-end reserves include only nominal quantities related to two Australian oil discoveries previously announced. We believe that when all results are evaluated, 1991 will have been a successful year for finding oil and gas. We are confident that reserve growth will be restored in the coming year."
Hadson Energy Resources Corporation is an energy company engaged in international and domestic crude oil and natural gas exploration, development and production.
HADSON ENERGY RESOURCES CORPORATION
(In millions, except per share amounts)
Periods ended: Three months Year
Dec. 31: 1991 1990 1991 1990
Revenue $11,222 $12,502 $42,559 $39,343
Net earnings (loss) $(6,162) $ 3,685 $(2,015) $ 6,692
Net earnings (loss)
per share $ (1.01) $ .60 $ (.33) $ 1.15
Cash flows from opers. $ 7,075 $ 7,769 $26,397 $24,347
Weighted average shares
outstanding 6,128 6,127 6,128 5,839
Domestic oil (MBbls) 111 36 440 179
Domestic gas (MMcf) 1,209 1,035 4,850 4,598
International oil (MBbls) 313 292 1,175 979
Domestic oil (per Bbl) $21.58 $35.66 $21.56 $23.49
Domestic gas (per Mcf) $ 1.81 $ 2.00 $ 1.50 $ 1.63
(per Bbl) $21.10 $30.57 $21.26 $26.97
Domestic oil (MBbls) 3,627 3,575
Domestic gas (MMcf) 43,720 47,578
Australia oil (MBbls) 5,486 6,497
Australia gas (MMcf) 27,632 27,632
/CONTACT: William C. Rankin, vice president and chief financial officer of Hadson Energy Resources, 405-235-9531; or Warren M. Shimmerlik of Shimmerlik Corporate Communications, 212-237-2820, for Hadson Energy/
(HERC) CO: Hadson Energy Resources Corporation ST: Oklahoma IN: OIL SU: ERN TS -- NY009 -- 1293 02/21/92 09:31 EST