DELTA PETROLEUM CORPORATION
Roger A. Parker, President, CEO and Chairman
Kevin K. Nanke, CFO
Dave Donegan, VP Corporate Communications
370 Seventeenth Street, Suite 4300
Denver, Colorado 80202
DENVER, Colorado (September 13, 2005) -- Delta Petroleum Corporation (NASDAQ: DPTR); (FRANKFURT STOCK EXCHANGE: DPE), an independent energy exploration and development company, today reported its operating results for the quarter and fiscal year ended June 30, 2005.
For the three months ended June 30, 2005, total revenue from continuing operations increased 143% to $28.3 million, versus $11.7 million in the fourth quarter of the previous fiscal year. Net income rose to $1.4 million in the fourth quarter of FY2005, versus $586,000 in the corresponding period of the previous fiscal year. Production from continuing operations in the fourth quarter of FY2005 rose 89% to 3.9 Bcfe compared with 2.0 Bcfe in the quarter ended June 30, 2005. During the quarter, we anticipated collecting an additional .2 Bcfe relating to a under balanced gas position that was recorded in July. Average prices realized for the quarter ended June 30, 2005 approximated $50.57 per barrel for onshore oil production, $38.55 per barrel for offshore oil production and $6.01 per Mcfe for natural gas production. The Company experienced certain increases in expenses during the fourth quarter of FY2005 that were primarily related to increases in depreciation, depletion and amortization (“DD&A”) and exploration expense. In the Gulf Coast region, the acquisition of certain properties, the timing of related expenditures and reserve reductions primarily relating to our South Angleton field caused the depletion rate per Mcfe to increase for the period. In addition, the Company incurred higher than normal seismic expense primarily related to a 50-square mile 3-D shoot also in the Gulf Coast region.
For the fiscal year ended June 30, 2005, total revenue from continuing operations increased 161% to $94.7 million, compared with $36.4 million in the previous fiscal year. Net income rose 198% to $15.1 million, or $.37 per diluted share, versus net income of $5.1 million, or $0.17 per diluted share, in FY2004. EBITDAX (see reconciliation table at the end of this release) increased 144% to $52.7 million in FY2005, compared with $21.6 million in the previous fiscal year. Total proved reserves approximated 224.3 billion cubic feet equivalents (Bcfe) as of June 30, 2005, which represents a 34% increase when compared with 167.7 Bcfe as of June 30, 2004. The increase in reserves was due to acquisitions and increased drilling activity during the most recent fiscal year.
The increases in revenue and net income for the year ended June 30, 2005 were primarily due to a 91% increase in production from continuing operations and higher oil and natural gas prices. Production from continuing operations in FY2005 reached 13.8 Bcfe compared with total production from continuing operations of 7.2 Bcfe for the fiscal year ended June 30, 2004. Production increases reflect acquisitions and drilling development activities. Comparing the prices that the Company received for oil and gas for the year ended June 30, 2005 versus the prior year, the average realized price for onshore oil production increased 42% to $47.05 per barrel (Bbl), the average realized price for offshore oil production increased 51% to $33.37 per Bbl and the average realized price received for natural gas production increased 10% to $5.79 per Mcfe (thousand cubic feet equivalent).
FY2005 HIGHLIGHTS
· Acquired approximately $70 million in producing properties
· Divested approximately $20 million in non-core producing properties
· Acquired DHS Drilling Company which as of September has 10 rigs with depth ratings from 7,500 – 20,000 feet
· Acquired 280,284 acres of additional undeveloped leaseholds in various core areas plus 30,000 acres of leasehold option acreage surrounding the Newton Field
· Completed a $150 million Senior Unsecured Note offering providing liquidity to significantly increase drilling capital expenditures
· Increased drilling capital expenditures almost 170% to approximately $100 million
“Fiscal 2005 was a year in which Delta significantly expanded revenues, earnings, production, proved reserves, and the breadth and depth of its oil and gas property portfolio,” noted Roger Parker, Chief Executive Officer of Delta Petroleum Corporation. “We also regained a measure of control over our ability to drill wells on schedule, despite a very ‘tight’ rig environment, by acquiring DHS Drilling Company in April 2005.”
“While we continued to experience some ‘growing pains’ related to the rapid expansion in the Company’s activities, management believes Delta is well-positioned to achieve its strategic goals for the current and future years,” continued Parker.
OPERATIONS UPDATE
Production and Drilling Activity
Since the Company’s last operations update on July 25, 2005, Delta has completed or recompleted 7 wells. Those wells experienced an aggregate net initial production rate of 2.98 Mmcfe per day and are currently producing at an aggregate net rate of 3.48 Mmcfe per day as of September 1, 2005. The Company currently has 3 wells cased and waiting on completion.
In the Howard Ranch development project DHS Drilling Company Rig #1 is currently drilling at a depth of 15,900 feet on the Diamond State #36-13 and is expected to reach total depth within the next 30 days. Completion activity on the principal Lance sands in the Diamond State #36-31 is expected to start on September 16, 2005. Gas lift is being installed on the West Madden #6-27 well, which should resume production shortly. Delta recently started drilling the Gates Butte Unit #10-17 well with DHS Drilling Company Rig #7 and expects to reach total depth by mid-November (see the discussion below regarding the Howard Ranch area farmout transaction).
In the Piceance Basin DHS Drilling Company Rig #5 recently reached total depth on the Vega 34-14. The rig is now moving to drill the Vega # 10-23 and is expected to continuously drill in the unit for the foreseeable future.
In the Newton Field, since the July 25, 2005 update, 3 additional wells have been drilled and completed. Total field production is now 10.4 Mcfe per day. The Company is currently drilling the Burns #6.
In Washington County, Colorado Delta is currently permitting several locations and plan to begin drilling within 30 days.
SIGNIFICANT EVENTS SUBSEQUENT TO JUNE 30, 2005
On September 7, 2005 the Company entered into an agreement with Savant Resources, LLC (“Savant”) to purchase an undivided 50% working interest in approximately 145,000 net undeveloped acres in the Columbia River Basin in Washington and to purchase an interest in an entity that owns undeveloped acreage in the Piceance Basin in Colorado for an aggregate purchase price of $85 million (to close on or before September 30, 2005).
The majority of the acreage that Delta has agreed to acquire in the Columbia River Basin will consolidate its current leasehold position, and subsequent to the acquisition Delta expects to own a 100% working interest in approximately 350,000 net acres. The consummation of this acquisition will result in Delta having control of several large geologic structures that will be the focus of later drilling activity.
In the Piceance Basin the Company has agreed to acquire Savant’s 25% non-operated interest in an entity that owns approximately 6,314 gross acres located northwest of the Grand Valley Field targeting Mesaverde Williams Fork sands similar to those under development in the Vega Unit. This region is being extensively developed by numerous operators and the project interest that the Company is acquiring is in the initial stages of what will be a long term development program.
On August 19, 2005 Delta entered into a farmout and option agreement with another operator in the area of the Company’s Howard Ranch development project in the Wind River Basin of Wyoming. The agreement calls for the Company, as farmee, to fund 80% of the drilling of an initial test well in order to earn 50% of the well and 50% of the farmor’s acreage in a five section area (3,200 gross acres), plus 30% of the farmor’s acreage in an additional four sections. In addition, the Company has the option within one year to drill a well on the second four-section block. By paying 62.5% of the drilling and completion cost of the well on the second block the Company will earn a total of 50% working interest across all of the lands which are subject to the agreement. Total acreage that can be earned under this agreement approximates 2,220 net acres. On August 31, 2005 DHS Drilling Company Rig #7 began drilling the Gates Butte Unit 10-17 test well.
On September 2, 2005 the Company closed on its previously announced sale of the Deerlick Creek Field in Tuscaloosa County, AL. The property was sold for $30 million (subject to adjustments) with an effective date of July 1, 2005. The properties were producing approximately 2.8 net Mmcfe per day at the time of the sale.
The Company has identified several additional non-core properties that may be sold through the Oil and Gas Asset Clearinghouse (www.ogclearinghouse.com). These properties currently produce approximately 2.9 Mmcfe per day in the aggregate.
Delta will host an investor conference call on Wednesday September 14, 2005 at 10:00 a.m. EDT. Shareholders and other interested parties may participate in the conference call by dialing 888-889-5345 or for international/local participants by dialing 973-935-8516, ID Code 6485021, a few minutes before the call is scheduled to begin. The call will be archived through December 14, 2005 at http://phx.corporate-ir.net/playerlink.zhtml?c=117007&s=wm&e=1126077. The archive can also be accessed through the Company’s website www.deltapetro.com.
Delta Petroleum Corporation is an oil and gas exploration and development company based in Denver, Colorado. The Company’s core areas of operations are the Gulf Coast and Rocky Mountain Regions, which comprise the majority of its proved reserves, production and long term growth prospects. Its common stock is traded on NASDAQ under the symbol ``DPTR'' and on the Frankfurt Stock Exchange under the symbol ``DPE.''
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 the Company 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
SOURCE: Delta Petroleum Corporation
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, June 30,
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,241 $ 2,078 Marketable securities available for sale 1,764 912
Trade accounts receivable, net of
allowance for doubtful accounts 10,512 9,092
Prepaid assets 2,980 1,136
Inventory 5,062 1,350
Deferred tax asset 2,676 -
Derivative instruments 378 -
Other current assets 1,421 385
Total current assets 27,034 14,953
Property and Equipment:
Oil and gas properties, successful efforts method of accounting:
Unproved 101,935 136,467
Proved 365,306 136,425
Drilling equipment 40,031 3,965
Other 10,412 1,147
Total property and equipment 517,684 278,004
Less accumulated depreciation and depletion (44,134) (21,665)
Net property and equipment 473,550 256,339
Long-term assets:
Investment in LNG project 1,022 1,022
Deferred financing costs 5,825 131
Deferred tax assets 4,887 -
Derivative instruments 469 -
Other long-term assets 196 259
Total long-term assets 12,399 1,412
Total Assets $ 512,983 $ 272,704
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 3,477 $ 109
Accounts payable 38,151 12,326
Other accrued liabilities 5,281 1,855
Derivative instruments 7,241 -
Total current liabilities 54,150 14,290
Long-term Liabilities:
7% Senior Unsecured Notes 149,272 -
Credit facility 66,500 69,375
Asset retirement obligation 2,975 2,542
Derivative instruments 3,620 -
Other debt, net 229 255
Total long-term liabilities 222,596 72,172
Minority Interest 14,614 245
Commitments
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 42,017 000
shares at June 30, 2005 and 38,447,000 shares
at June 30, 2004 420 384
Additional paid-in capital 235,300 207,811
Unearned compensation (1,382) -
Accumulated other comprehensive (loss) income (5,225) 342
Accumulated deficit (7,490) (22,540)
Total stockholders' equity 221,623 185,997
Total Liabilities and Stockholders' Equity $ 512,983 $ 272,704
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
2005 2004
(In thousands, except per share amounts)
Revenue:
Oil and gas sales $ 26,636 $ 11,851
Drilling and trucking 2,164 -
Realized loss on derivative instruments, net (523) (193)
Total revenue 28,277 11,658
Operating expenses:
Lease operating expense 5,105 2,036
Transportation expense 290 66
Production taxes 1,713 773
Depreciation and depletion 9,155 3,037
Exploration expense 3,209 440
Dry hole costs 79 1,745
Drilling and trucking operations 1,580 232
Professional fees 752 254
General and administrative 4,614 2,432
Total operating expenses 26,497 11,015
Operating income 1,780 643
Other income and (expense):
Other income (182) 44
Minority interest 299 70
Interest and financing costs (3,586) (304)
Total other expense (3,469) (190)
Income (loss) from continuing operations (1,689) 453
Income taxes benefit:
Current - -
Deferred (3,325) -
Total income tax benefit (3,325) -
Net earnings from continuing operations 1,636 &n