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Friday March 2, 4:30 pm Eastern Time
SOURCE: Edge Petroleum Corporation
Edge Petroleum Announces Fourth Quarter and Full Year 2000 Financial Results With Record Revenue and Earnings and a 190% Production Replacement With New Reserves
HOUSTON, March 2 /PRNewswire/ -- Edge Petroleum Corporation (Nasdaq: EPEX - news) today reported a net income of $4,435,849 or basic earnings per share of $0.48 and diluted earnings per share of $0.47 for the three months ended December 31, 2000. Operating income for the quarter was $4,450,603. This compares to a net loss for the same period a year ago of $3,259,740 or basic and diluted loss per share of $(0.36). The operating loss for the three months ended December 31, 1999 was $(3,223,943).
In the fourth quarter of 2000, a non-cash charge to compensation expense of $899,548 was recorded as required under FASB Interpretation (FIN) 44. Excluding this non-cash charge, net income for the three months ended December 31, 2000 was $5,335,397 or basic earnings per share of $0.58 and diluted earnings per share of $0.57.
Oil and natural gas revenues for the three months ended December 31, 2000 increased 162% from $3,698,446 in 1999 to $9,693,139. Production volumes for natural gas were 1,582 MMcf for the three months ended December 31, 2000, up 40% from the previous year. The average natural gas sales price for the three months ended December 31, 2000 was $5.69 per Mcf, as compared to $2.59 per Mcf in the preceding year. Production volumes for oil and condensate increased 17% to 25 MBbls for the three months ended December 31, 2000 compared to 21 MBbls for the preceding year. The average oil and condensate sales price for the three months ended December 31, 2000 was $30.41 per barrel, as compared to $22.43 per barrel in the prior year. Production volumes for NGL's decreased 95% to 907 Bbls for the three months ended December 31, 2000 as compared to 18,971 Bbls for the prior year as a result of high gas prices offsetting the value of gas processing.
Oil and natural gas operating expenses for the three months ended December 31, 2000 increased 47% from $379,791 in 1999 to $557,320. Theincrease is due to increased production volume, increased operating costs at older properties, primarily related to increased compression and an overall increase in oilfield service costs. Oil and natural gas operating expenses were $0.32 per Mcfe and $0.28 per Mcfe for the three-months ended December 31, 2000 and 1999, respectively.
Depletion, depreciation and amortization expense (``DD&A'') for the three months ended December 31, 2000 decreased 43% from $3,036,613 in 1999 to $1,785,427. Included within DD&A for the three-month periods ended December 31, 2000 and 1999 was $1.6 million and $2.9 million, respectively, representing depletion expense of oil and natural gas property, which decreased by 44%. Depletion on a unit of production basis for the quarters ended December 31, 2000 and 1999 was $0.93 per Mcfe and $2.09 per Mcfe, respectively. The 56% drop in depletion rate was largely due to significant reserve additions booked in December 2000, as noted below.
General and administrative expenses (``G&A'') for the three months ended December 31, 2000 increased 42% from $1,452,146 in 1999 to $1,953,846. Excluding the non-cash charge to compensation expense discussed above, G&A for the three months ended December 31, 2000 was $1,054,298, a decrease of 27% from the prior year period. G&A expenses on a unit of production basis for the three months ended December 31, 2000 and 1999 were $1.13 per Mcfe, $0.61 per Mcfe excluding the non-cash charge, and $1.06 per Mcfe, respectively.
Proved reserves grew 19% to 29.7 Bcfe at December 31, 2000 as compared to 24.9 Bcfe a year ago. New reserve additions of 11.8 Bcfe represent a 190% production replacement, at a finding cost of $0.91 per Mcfe.
The present value, using a 10% discount rate, of the future net cash flows of the Company's proved oil and natural gas reserves at the end of 2000 is approximately $172 million, as compared to $34 million a year ago. Prices used for the valuation for 2000 were $26.80 per barrel for oil and $10.27 per Mcf for natural gas, based upon December 31, 2000 market prices, adjusted for the Company's average basis and quality differentials. This compares to $24.21 per barrel and $2.43 per Mcf a year ago. Using a flat $5 per Mcf gas price, well below the current year to date plus forward futures average price for 2001, results in an adjusted PV 10% of approximately $84 million.
John W. Elias, Chairman, President & CEO, noted ``We are very pleased with our record financial results. Our efforts over the past two years to reduce unnecessary expenses and improve our financial flexibility have certainly paid off. We are also making good strides operationally with an expectation of even more significant physical growth this year and next as we implement a very impactive drilling program. During 2000, we did not begin our drilling program until very late in the second quarter, yet we achieved good reserve growth. The late start to drilling and mid-year asset sales in 1999 and early 2000 caused full year over year production comparisons to be unfavorable. However, the increase in fourth quarter 2000 production demonstrates the impact we can have with our drilling success.''
Providing a brief first quarter 2001 operations update, Elias further noted, ``We have drilled two wells, both successes, so far this year. A development well in Starr County, Texas (Edge W.I. 31.55%) has logged over 180 feet of pay, fault separated from the other wells and with much better apparent sand development. We plan to fracture stimulate this well in early March and it should be producing before the end of the month. We logged another apparent discovery at our Edge operated La Jolla prospect (Edge 50% W.I.) also in Texas. The well logged 25 feet of apparent pay. We expect to spud the first of seven currently planned wells on the O'Connor Ranch this March.''
For the year ended December 31, 2000, Edge reported a net income of $6,898,165, or basic earnings per share of $0.75 and diluted earnings per share of $0.74. Operating income for the year was $7,326,821. This compares to a net loss for the previous year of $(3,709,480) or basic and diluted loss per share of $(0.43). The operating loss for the year ended December 31, 1999 was $(3,631,268).
``The results for the year were after the impact of the FIN 44 charge of $899,548, or ($0.10) per share, the non-cash loss on the sale of our investment in Frontera Resources Corporation of $354,733, or ($0.04) per share and our hedge losses of $1,772,145, or ($0.19) per share,'' according to Chief Financial Officer, Michael G. Long.
Revenues for the year ended December 31, 2000 were a record $23,774,416 as compared to $14,485,995 for the prior year. Production volumes for natural gas decreased 8% to 5,206 MMcf for the year ended December 31, 2000 from 5,676 MMcf in the prior year. The average natural gas sales price for the year ended December 31, 2000 was $3.84 per Mcf, as compared to $2.07 per Mcf in the preceding year. Production volumes for oil and condensate decreased 13.5% to 97 MBbls for the year ended December 31, 2000 as compared to 112 MBbls for the preceding year. The average oil and condensate sales price for the year ended 2000 was $26.16 per barrel, as compared to $16.15 per barrel in the prior year. Production volumes for natural gas liquids (NGL's) increased 2% from 75 MBbls for the year-ended December 31, 1999 to 77 MBbls for the comparable 2000 period. The average price for NGL's was $16.37 per barrel for the year ended December 31, 2000 as compared to $12.16 per barrel for the prior year.
Oil and natural gas operating expenses before production taxes for the year ended December 31, 2000 increased 12.5% to $1,960,640 from $1,742,415 for the same period a year ago. Oil and natural gas operating expenses on unit of production basis were $0.31 per Mcfe for the year ended December 31, 2000 as compared to $0.26 per Mcfe in the preceding year. Long noted, ``The increased lifting costs were primarily a result of increased compression requirements and increased water production at several older properties plus generally rising oilfield service costs.''
Depletion, depreciation and amortization expense (``DD&A'') decreased 10% to $7,640,778 in 2000 from $8,511,826 in 1999. Included within DD&A for the years ended December 31, 2000 and 1999 was $7.0 million and $7.8 million, respectively, representing depletion expense of oil and natural gas properties. Depletion on a unit of production basis for the years ended December 31, 2000 and 1999 was $1.11 per Mcfe and $1.15 per Mcfe, respectively.
General and Administrative expenses (``G&A'') for the year ended December 31, 2000 increased 7% to $4,829,183 from $4,528,517 in the preceding year. Excluding the non-cash charge to compensation expense, G&A for the year ended December 31, 2000 was $3,929,635, a decrease of 13% compared to the prior year period. G&A expenses on a unit of production basis for the year ended December 31, 2000 and 1999 were $0.77 per Mcf, $0.63 per Mcfe excluding the compensation charge, and $0.67 per Mcf, respectively for both years.
During the year ended December 31, 2000, the Company reinvested $10.7 million in its drilling, seismic and land acquisition activities. Capital expenditures of $5.7 million were attributed to drilling, completion and other production operations. $3.2 million was attributable to increased land holdings and $1.8 million was attributable to increased seismic data and other geologic and geophysical expenditures.
Edge will be discussing its 2000 financial and operating results along with highlights of its 2001 activities at the 22nd Annual Raymond James and Associates Institutional Investors Conference on March 5-7 in Orlando, Florida. In conjunction with this appearance, Edge will broadcast its live conference presentation on March 7, 2001 at approximately 11:10 a.m., Eastern Standard Time. In order to listen, interested parties will need to register at the following web address: HTTP://webevents.broadcast.com/raymondjames/030501. Once listeners have completed the registration process, they will receive a confirmation email with their username and password. Listeners should go to this site at least 15 minutes before this event to register and download and install any necessary software, Microsoft Windows Media Player or RealPlayer. You can also preregister beginning today. For those unable to listen to the live broadcast, a replay will be available for 90 days by accessing the address above. There is no charge to access the event.
Edge Petroleum is a Houston-based independent energy company that emphasizes the integrated application of advanced 3-D seismic data integration and visualization techniques to improve its ability to effectively explore for natural gas and oil along the onshore Gulf Coast of the United States.
The information presented herein may contain predictions, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the company to meet its stated business goals.
EDGE PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Year Ended Three Months Ended
December 31, December 31,
2000 1999 2000 1999
OIL AND NATURAL
GAS REVENUE $23,774,416 $14,485,995 $9,693,139 $3,698,446
Oil and natural
expenses 1,960,640 1,742,415 557,320 379,791
ad valorem taxes 1,994,298 1,296,655 949,015 308,784
amortization 7,640,778 8,511,826 1,785,427 3,036,613
expenses 3,929,635 4,528,517 1,054,298 1,452,146
expense (A) 899,548 --- 899,548 ---
Other charge --- 1,688,227 --- 1,688,227
expense 22,696 349,623 (3,072) 56,828
expenses 16,447,595 18,117,263 5,242,536 6,922,389
INCOME (LOSS) 7,326,821 (3,631,268) 4,450,603 (3,223,943)
OTHER INCOME AND EXPENSE:
Loss on sale of
Frontera (354,733) --- --- ---
Interest expense (171,783) (130,067) (51,450) (43,835)
Interest income 97,860 51,855 36,696 8,038
NET INCOME (LOSS)
TAX BENEFIT 6,898,165 (3,709,480) 4,435,849 (3,259,740)
INCOME TAX BENEFIT --- --- --- ---
NET INCOME (LOSS) $6,898,165 $(3,709,480) $4,435,849 $(3,259,740)
BASIC EARNINGS (LOSS)
PER SHARE $0.75 $(0.43) $0.48 $(0.36)
(LOSS) PER SHARE $0.74 $(0.43) $0.47 $(0.36)
OF COMMON SHARES
OUTSTANDING 9,182,737 8,680,369 9,186,972 9,163,151
OF COMMON SHARES
OUTSTANDING 9,330,048 8,680,369 9,432,928 9,163,151
Cash flow from
operations (B) $15,945,890 $6,285,557 $5,553,060 $967,289
Cash flow from
per share $1.74 $0.72 $0.60 $0.11
Oil and condensate
production (MBbls) 97 112 25 21
Natural gas liquids
production (MBbls) 77 75 1 19
production (MMcf) 5,206 5,676 1,582 1,130
equivalent (Mmcfe) 6,249 6,799 1,735 1,370
Average oil and
($ per Bbl) $26.16 $16.15 $30.41 $22.43
gas liquids price
($ per Bbl) $16.37 $12.16 $(55.46) (C) $16.26
($ per Mcf) $3.84 $2.07 $5.69 $2.59
Pro Forma Information:
Pro forma net
income (loss) $7,797,713 $(3,709,480) $5,335,397 $(3,259,740)
Pro forma basic
per share $0.85 $(0.43) $0.58 $(0.36)
Pro forma diluted
per share $0.84 $(0.43) $0.57 $(0.36)
(A) Represents non-cash charge to compensation expense related to FASB
Interpretation (FIN) 44 requirements. Pro forma information
excludes the impact of this non-cash charge.
(B) Cash flow from operations is before changes in working capital.
(C) Price impacted by volume adjustment in the fourth quarter.
SOURCE: Edge Petroleum Corporation