DALLAS, March 16 /PRNewswire-FirstCall/ -- National Energy Group, Inc.
(OTC Bulletin Board: NEGI) today announces results for the fourth quarter
ended December 31, 2004.
Results of Operations
On September 12, 2001 as provided in the Company's Joint Plan of
Reorganization, the Company contributed all its operating assets and oil and
gas properties excluding cash of $4.3 million to NEG Holding LLC in exchange
for an initial 50% membership interest (the "LLC Contribution"). Following
the LLC Contribution, the Company no longer directly owns oil and gas
properties and will only recognize income from accretion of the preferred
investment and fees attributable to the management and operation of NEG
Holding LLC's oil and gas properties. The income from accretion of the
preferred investment and management fees amounted to $9.4 million and
$3.4 million, respectively, for the quarter ended December 31, 2004 and
$34.4 million and $11.6 million, respectively, for the year ended December 31,
2004.
For the Three Months Ended December 31, 2004
Net income of $4.5 million was recognized for the three months ended
December 31, 2004 compared with net income of $8.0 million for the comparable
2003 period.
Total revenues increased $3.1 million (32.0%) to $12.8 million for the
fourth quarter of 2004 from $9.7 million for the fourth quarter of 2003.
The Company had no oil and natural gas production during the fourth
quarter of 2004 or 2003 due to the LLC Contribution.
For the year Ended December 31, 2004
Net income of $14.3 million was recognized for the year ended December 31,
2004 compared with net income of $15.6 million for the comparable 2003 period.
The year ended December 31, 2004 includes $6.6 million in deferred income tax
expense while the twelve months ended December 31, 2003 includes a
$0.2 million deferred income tax expense.
Total revenues increased $7.9 million (20.7%) to $46.0 million for the
year ended December 31, 2004 from $38.1 million for the year ended
December 31, 2003.
The Company had no oil and natural gas production during the year ended
December 31, 2003 or 2004.
Oil and Gas Operations
NEG Holding LLC conducts its oil and gas operations through its affiliate,
NEG Operating LLC. The Company manages all of these oil and gas operations
pursuant to a management agreement with NEG Operating LLC. The Company also
manages the assets of TransTexas Gas Corporation and Panaco, Inc.
National Energy Group, Inc. is a Dallas, Texas based company.
This press release may contain projections and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Any such projections or statements reflect the Company's
current views with respect to future events and financial performance. No
assurances can be given, however, that these events will occur or that such
projections will be achieved and actual results could differ materially from
those projected. A discussion of important factors that could cause actual
results to differ materially from those projected is included in the Company's
periodic reports filed with the Securities and Exchange Commission.
National Energy Group, Inc.
Summary Financial Results
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2003 2004 2003 2004
Results of Operations Data:
Revenues:
Accretion of
Investment in
NEG Holding LLC $7,468 $9,376 $30,141 $34,432
Management fees
from affiliates 2,270 3,443 7,967 11,563
Interest income
and other, net 8 11 34 39
Total revenue 9,746 12,830 38,142 46,034
Costs and expenses:
General and
administrative 2,052 3,506 7,231 11,145
Interest expense 3,485 3,485 15,115 13,940
Total costs and
expenses 5,537 6,991 22,346 25,085
Income before income
taxes 4,209 5,839 15,796 20,949
Income tax (expense)
benefit 3,830 (1,375) (225) (6,664)
Net income to common
shareholders $8,039 $4,464 $15,571 $14,285
Cash Flow Data:
Cash flow from
operations (A) $(4,420) $(3,859) $(17,035) $(15,521)
Per share data:
Net income per
common share, basic
and diluted $.72 $.40 $1.39 $1.28
Cash flow from
operations (A) $(.39) $(.34) $(1.52) $(1.39)
Shares used in per
share computations:
Earnings per share,
basic and diluted 11,191 11,191 11,191 11,191
Cash flow per share,
basic and diluted 11,191 11,191 11,191 11,191
National Energy Group, Inc.
Condensed Balance Sheet
(In thousands)
December 31, December 31,
2003 2004
Assets
Cash, cash equivalents and marketable
securities $3,159 $2,488
Other current assets 1,230 2,582
Investment in NEG Holding LLC 69,346 87,800
Deferred tax asset 25,949 19,242
Total assets $99,684 $112,112
Liabilities and Stockholders' Equity (Deficit):
Current liabilities $2,690 $2,871
Senior notes due to affiliate 148,637 148,637
Deferred gain on senior note redemption 5,775 3,737
Stockholders' deficit (57,418) (43,133)
Total liabilities and stockholders'
equity (deficit) $99,684 $112,112
(A) Cash flow from operations is shown before changes in working capital
accounts.
The following is National Energy Group, Inc.'s estimate of NEG Holding
LLC's pro forma 2005 projected net earnings and EBITDA.
NEG Holding LLC
Reconciliation of Projected Net Earnings to Projected EBITDA
For the Year Ended December 31, 2005
(in thousands)
NEG
Holding LLC
Net Earnings $59,348
Interest expense 2,097
Income tax benefit (expense) ---
Depreciation, depletion and amortization 27,485
Accretion of asset retirement obligation 300
EBITDA $89,230
SOURCE National Energy Group, Inc.
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CONTACT:
Bob G. Alexander, Philip D. Devlin or Randall
D. Cooley, all of National Energy Group, Inc., +1-214-692-9211,
or fax, +1-214-692-5055
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