DELTA PETROLEUM CORPORATION
Roger A. Parker, President and CEO
Aleron H. Larson, Jr., Chairman
Kevin K. Nanke, CFO
Dave Donegan, VP Corporate Communications
(303) 293-9133
For the quarter
ended December 31, 2004, total revenue from continuing operations increased
168% to $20.5 million, compared with $7.6 million in the second quarter of the
previous fiscal year. Net income before
discontinued operations rose 1,032% to $4.8 million, or $0.11 per diluted
share, compared with $425,000, or $0.02 per diluted share, in the prior-year
quarter. EBITDAX (see reconciliation
table at the end of this release) increased 181% to $11.0 million in the most
recent quarter, versus $3.9 million in the quarter ended December 31, 2003.
Included in net income before discontinued operations for the current period
were certain unusual costs. These costs
include termination of an office lease ($241,000), options granted to
non-officer employees below market ($134,000), and the write-off of deferred
financing costs relating to a previous credit facility ($318,000).
For the six months ended December 31, 2004, total revenue from continuing operations increased 177% to $39.9 million, compared with $14.4 million in the first half of FY2004. Net income before discontinued operations increased 446% to $8.0 million, or $0.19 per diluted share, compared with net income from continuing operations of $1.5 million, or $0.06 per diluted share, in the corresponding period of the previous fiscal year. EBITDAX increased 213% to $23.8 million in the first half of FY2005, versus $7.6 million in the six months ended December 31, 2003.
“The increases in second quarter revenue and net income were primarily due to a 77% increase in production to approximately 3.0 billion cubic feet equivalents (Bcfe), along with higher oil and natural gas prices,” stated Roger Parker, President and Chief Executive Officer of Delta Petroleum Corporation. “While second quarter production trailed earlier projections due primarily to the timing of completion activities in the field and an unanticipated temporary production decline in a major value well, net daily production has since increased to approximately 55 million cubic feet equivalents (Mmcfe), compared with an average of 33.3 Mmcfe per day in the second quarter and 34.6 Mmcfe per day in the first quarter of fiscal year 2005.”
The average price realized for oil approximated $47.18 per barrel (Bbl) onshore and $30.46 per Bbl offshore during the second quarter of FY2005, compared with $29.76 per Bbl onshore and $19.94 per Bbl offshore in the year-earlier period. The average price realized for natural gas approximated $6.23 per thousand cubic feet (Mcf) in the quarter ended December 31, 2004, versus $4.59 per Mcf in the same period a year earlier.
Onshore production costs approximated $1.47 per Mcfe, while depletion, depreciation and amortization (“DDA”) expense approximated $1.11 per Mcfe, in the most recent quarter. These figures compared with production costs of $1.08 per Mcfe and DDA expense of $1.46 per Mcfe in the corresponding period of the previous fiscal year. The increase in production costs involved onshore assets and was related to (1) the recently-acquired Alpine Resources assets, which have higher production costs; (2) higher workover costs on non-operated properties; and (3) a temporary curtailment in the Newton Field.
Total production for the quarter ended December 31,
2004 approximated 3.0 Bcfe, compared with 1.7 Bcfe during the same period a
year earlier. Production averaged 33.3
Mmcfe per day, which represented a 77% increase over the prior-year quarter but
a 4.6% decrease when compared with the quarter ended September 30, 2004. Press releases issued within the past three
weeks referenced lower production guidance for FY2005 and a statement as to the
causes for such reduction in guidance, primarily related to production levels
in the
While executing its development plan for the
Newton Field, the Company encountered compressor inefficiencies that were
masked by production volumes from new completions. As a result, production averaged 1.7 million
cubic feet per day (Mmcfd) less than forecast during the second quarter. Management believes that a recently-implemented
automated data management system for the monitoring of production on a daily
basis, combined with a weekly review by senior management of all major value
properties, should identify future production variances quickly, allowing the
Company to take remedial action on a more timely basis. In the Newton Field, the Company recently
completed the Vastar #5 well, and the Pure Resources #1 well has been drilled
and is awaiting completion. Initial
flowback results on the Vastar #5 are very encouraging in terms of fluid rate,
flow pressure and the oil cut. The
In the South Angleton Field, the Company encountered a decline in the production from a major value well in excess of expectations, due to water encroachment from a lower zone channeling behind the casing. The well has since bridged off in the well bore and is currently shut in waiting on a rig to return the well to production. Management is currently evaluating alternatives to restore the well’s production, including the possibility of plugging back and sidetracking. This is viewed as an isolated situation and not a field-wide reserve recovery issue, as most of the wells in the field are in separate fault blocks.
During the quarter ended December 31, 2004, the Company entered into a new credit facility with JP Morgan/Bank One, NA (the agent bank); Bank of Oklahoma, N.A.; U.S. Bank National Association and Hibernia National Bank (participating banks). At December 31, 2004, the available borrowing base on the credit facility approximated $90 million, of which $83 million in borrowings were outstanding.
With the increase in the Company's drilling program
and the inability to tap into the
At December 31, 2004 the Company’s current ratio was 0.89-to-1. This reduction in current ratio is primarily related to costs recorded for drilling work in progress of approximately $8.4 million as of December 31, 2004.
On January 21,
2005 the Company completed the purchase of certain producing properties in the
The
Company will host an investor conference call at 1:00 p.m. Eastern time today,
Wednesday, February 9th.
Shareholders and other interested parties may participate in the
conference call by dialing 800-310-1961 or for international/local participants
by dialing 719-457-2692 and entering the conference ID 6866824, a few minutes
before 1:00 p.m. EST on February 9, 2005.
A replay of the conference call will be available two hours after the
completion of the conference call from February 9, 2005 until February 16, 2005
by dialing 888-203-1112 for participants in the US/Canada or for
international/local participants, call 719-457-0820 and enter the conference ID
6866824.
Delta Petroleum Corporation is an oil and gas exploration and development
company based in
Forward-looking
statements in this announcement are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
costs of exploring and developing new oil and natural gas reserves, the price
for which such reserves can be sold, environmental concerns effecting the
drilling of oil and natural gas wells, as well as general market conditions,
competition and pricing. Please refer to
the Company’s Securities and Exchange Commission filings for additional
information.
For further information contact Dave Donegan, Corporate Communications at (303) 293-9133 or via email at info@deltapetro.com
OR
RJ Falkner & Company, Inc., Investor Relations Counsel at (800) 377-9893 or via email at info@rjfalkner.com
SOURCE: Delta
Petroleum Corporation
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December
31, June 30,
2004 2004
(In
thousands)
ASSETS
Current Assets:
Cash
and cash equivalents $ 1,386 $ 2,078
Marketable
securities available for sale 1,255 912
Trade
accounts receivable, net 9,350 9,092
Prepaid
assets 4,285 1,136
Inventory
4,631 1,350
Other
current assets 226 385
Total
current assets 21,133 14,953
Property and Equipment:
Oil
and gas properties, successful efforts method of accounting
Undeveloped 144,217 136,467
Developed 179,045 136,425
Drilling
and trucking equipment 8,148 3,965
Other 2,100 1,147
Total
property and equipment 333,510 278,004
Less
accumulated depreciation and depletion (30,148) (21,665)
Net
property and equipment 303,362 256,339
Long term assets:
Investment
in LNG project 1,022 1,022
Deferred
financing costs 441 131
Partnership
net assets 142 259
Total
long term assets 1,605 1,412
$ 326,100 $ 272,704
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current
portion of long-term debt $ 128 $ 109
Accounts
payable 21,902 12,326
Other
accrued liabilities 1,588 1,855
Total
current liabilities 23,618 14,290
Long-term Liabilities:
Bank
debt, net 83,000 69,375
Asset
retirement obligation 2,689 2,542
Other
debt, net 236 255
Total
long-term liabilities 85,925 72,172
Minority Interest 273 245
Stockholders' Equity:
Preferred
stock, $.10 par value; authorized 3,000,000 shares,
none
issued - -
Common
stock, $.01 par value; authorized 300,000,000 shares,
issued
40,686,000 shares at December 31, 2004 and 38,447,000
at
June 30, 2004 407 384
Additional
paid-in capital 228,804 207,811
Accumulated
other comprehensive income 859 342
Accumulated
deficit (13,786) (22,540)
Total
stockholders' equity 216,284 185,997
Commitments $ 326,100 $ 272,704
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three
Months Ended
December
31,
2004 2003
(In
thousands except per share amounts)
Revenue:
Oil
and gas sales $ 20,441 $ 7,714
Drilling
and trucking 181 -
Realized
loss on derivative instruments, net (93) (68)
Total
revenue 20,529 7,646
Operating expenses:
Lease
operating expense 4,920 2,242
Depreciation
and depletion 3,678 2,240
Exploration
expense 747 138
Dry
hole costs 419 177
Drilling
and trucking operations 640 -
Professional
fees 501 308
General
and administrative 3,513 1,555
Total
operating expenses 14,418 6,660
Income from continuing operations 6,111 986
Other income and (expense):
Other
income (expense) (183) 15
Minority
interest 234 -
Interest
and financing costs (1,353) (576)
Total
other expense (1,302) (561)
Income before discontinued operations 4,809 425
Discontinued operations:
Income
(loss) from operations of properties sold, net - 255
Loss
on sale of properties - (28)
Net
income $ 4,809 $ 652
Basic income per common share:
Income
before discontinued operations $ 0.12 $ 0.02
Discontinued
operation - 0.01
Net
income $ 0.12 $ 0.03
Diluted income per common share:
Income
before discontinued operations $ 0.11 $ 0.02
Discontinued
operation - 0.01
Net
income $ 0.11 $ 0.03
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six
Months Ended
December
31,
2004 2003
(In
thousands except per share amounts)
Revenue:
Oil
and gas sales $ 39,657 $ 14,781
Drilling
and trucking 300 -
Realized
loss on derivative instruments, net (93) (380)
Total
revenue 39,864 14,401
Operating expenses:
Lease
operating expense 9,129 4,312
Depreciation
and depletion 8,659 3,792
Exploration
expense 1,283 268
Dry
hole costs 2,673 177
Drilling
and trucking operations 1,074 -
Professional
fees 847 612
General
and administrative 6,104 2,721
Total
operating expenses 29,769 11,882
Income from continuing operations 10,095 2,519
Other income and (expense):
Other
income (expense) (149) 35
Minority
interest 315 -
Interest
and financing costs (2,236) (1,085)
Total
other expense (2,070) (1,050)
Income before discontinued operations 8,025 1,469
Discontinued operations:
Income
(loss) from operations of properties sold, net 729 575
Loss
on sale of properties - (28)
Net
income $ 8,754 $ 2,016
Basic income per common share:
Income
before discontinued operations $ 0.20 $ 0.06
Discontinued
operation 0.02 0.03
Net
income $ 0.22 $ 0.09
Diluted income per common share:
Income
before discontinued operations $ 0.19 $ 0.06
Discontinued
operation 0.02 0.02
Net
income $ 0.21 $ .0.08
Delta Petroleum Corporation
Unaudited Reconciliation of Net Cash Provided by
Operating Activities to “EBITDAX”
Three
Months Ended Six Months Ended December 31, December 31,
2004 2003 2004 2003
(In thousands)
EBITDAX
Net cash provided by operating activities $ 16,966 1,371 $ 21,464 $ 6,323
Adjustments:
Changes in
other assets and liabilities (8,004) 1,995 (1,118) 331
Loss on sale
of properties -
(28) - (28)
Stock option
expense 76 (3) 76 (108)
Interest net
of financing amortization 987 437 1,793 819
Exploration
expense 747 138 1,283 268
Minority
interest 234 - 315 -
EBITDAX $ 11,006 $ 3,910 $ 23,813 $ 7,605
Note:
“EBITDAX” is a non-GAAP financial measure equal to net cash provided by
operating activities, the most directly comparable GAAP financial measure,
adjusted for changes in other assets and liabilities, stock option expense,
interest net of financing amortization, exploration costs and minority
interest. This reconciliation is
provided in accordance with applicable rules adopted by the Securities and
Exchange Commission. “EBITDAX” is not a
measure of performance under accounting principles generally accepted in the
United States of America and should not be considered in isolation or construed
as a substitute for net income or other operations data or cash flow data
prepared in accordance with accounting principles generally accepted in the
United States for purposes of analyzing our profitability or liquidity. In addition, not all funds depicted by
“EBITDAX” are available for management’s discretionary use but are subject to
contractual restrictions and functional requirements to pay debt service, fund
necessary capital expenditures and meet other commitments as described in more
detail in the Company’s Form 10-Q for the three and six months ended December
31, 2004 as filed with the Securities and Exchange Commission. “EBITDAX” as calculated above may not be
comparable to similarly titled measures reported by other companies. We
believe it is common practice in our industry for investment bankers and other
investors to use various multiples of current or projected EBITDA for purposes
of estimating current or prospective enterprise value and as one of many
measures of performance. Some investment
analysts track the relationship of EBITDA to total debt as one measure of
financial strength.