HOUSTON, March 22 /PRNewswire/ -- KCS Energy, Inc. (NYSE: KCS) today
announced financial and operating results for the fourth quarter and year
ended December 31, 1999. Commenting on the Company's performance during the
year, KCS President and Chief Executive Officer James W. Christmas said, "1999
was a turnaround year for KCS from an operational standpoint. We had solid
drilling results, successfully implemented our cost-reduction and property
rationalization programs and returned to profitability."
Financial Highlights
($ thousands except per share)
3 mos. 1999 (a) 3 mos. 1998 (b)
Revenue $34,526 $32,203
Operating Income (Loss) $10,985 $(205,860)
Net Income (Loss) $1,283 $(253,922)
Earnings (Loss) Per Share $0.04 $(8.68)
12 mos. 1999 (a) 12 mos. 1998 (c)
Revenue $136,491 $129,452
Operating Income (Loss) $43,643 $(244,661)
Net Income (Loss) $4,340 $(296,520)
Earnings (Loss) Per Share $0.15 $(10.08)
(a) Includes $1.9 million, or $0.06 per share, of costs associated with
the Company's proposed restructuring transaction.
(b) Includes a $137.0 million after-tax non-cash ceiling writedown of oil
and gas assets and a $113.9 million reduction to zero in the book
value of net deferred tax assets. Together these charges accounted
for $250.9 million, or $8.58 per share.
(c) Includes $174.5 million after-tax non-cash ceiling writedowns of oil
and gas assets and a $113.9 million reduction to zero in the book
value of net deferred tax assets. Together these charges accounted
for $288.4 million, or $9.80 per share.
Net income for the year ended December 31, 1999 was $4.3 million, or $0.15
per share, compared to a net loss of $296.5 million, or $10.08 per share, for
the year ended December 31, 1998. The net loss in 1998 included
$174.5 million after-tax non-cash ceiling writedowns of oil and gas assets and
a $113.9 million reduction to zero in the book value of net deferred tax
assets. Excluding the effect of the 1998 non-cash asset writedowns, 1998 net
loss was $8.1 million, or $0.28 per share. EBITDA (earnings before interest,
taxes and DD&A) for the year increased 14% to $95.3 million, reflecting a 10%
increase in average realized natural gas and oil prices and lower operating
and administrative expenses, partially offset by $1.9 million of restructuring
costs.
Operations Summary
"In late 1998, the Company undertook three major operational initiatives,"
stated Senior Vice President and Chief Operating Officer William N. Hahne.
"We initiated efforts to (1) sell properties which were marginal or
non-strategic, (2) reduce expenses and (3) refocus the capital investment
program. The employees' efforts in these three areas have significantly
strengthened the Company."
Property Sales
In 54 separate transactions, the Company divested more than one-third of
its working interest wellbores, but less than 4% of its reserves. The Company
also sold a group of overriding royalties representing approximately 27% of
its Volumetric Production Payment (VPP) reserves. In total, the Company sold
reserves of 21.7 billion cubic feet equivalent (Bcfe) with net proceeds of
$27.7 million. "These non-core property sales have enabled us to reduce debt
and sharpen our focus," Mr. Hahne said.
Expense Reductions
General and administrative (G&A) expenses were down by approximately 13%,
or $1.5 million, from 1998 to 1999. Lease operating expenses (LOE) were also
down significantly, with a $3.8 million reduction, or 12.5%, between 1998 and
1999. Overall production costs (LOE and severance taxes) decreased from 57
cents per Mcfe in 1998 to 51 cents per Mcfe in 1999. The expense reductions
resulted from a combination of programs, including (1) closing the corporate
office in New Jersey, (2) personnel reductions, (3) field operating expense
initiatives, (4) property sales and (5) consolidation of the Worland, Wyoming
office into the Tulsa office.
Refocused Capital Program
In 1999, KCS directed $60 million of available capital to its three core
business units -- the Mid-Continent, Onshore Gulf Coast and Volumetric
Production Payments.
In the Mid-Continent region, the Company drilled 3 exploration wells and
54 development wells with 67% and 87% success rates, respectively. The
Mid-Continent business unit added 29.8 Bcfe of reserves at a finding and
development (F&D) cost of 82 cents per Mcfe. The Company explores the
Permian, Anadarko, Arkoma and North Louisiana basins in this business unit.
In the Gulf Coast region, the Company drilled 10 exploration wells and 8
development wells with 80% and 87% success rates, respectively. 20.0 Bcfe of
reserves were added in 1999 at an F&D cost of $1.16 per Mcfe. In addition,
the Gulf Coast prospect inventory was significantly strengthened as a result
of a portion of the capital expended during the year. This business unit
concentrated its capital in Onshore South Texas and the Mississippi salt
basin.
Total F&D cost for the working interest capital programs was 96 cents per
Mcfe.
As a result of capital restrictions, the Company was limited to three VPP
transactions in 1999, adding 6.1 Bcfe of reserves, investing $12.2 million.
Because the VPP reserves acquired are free from all future costs including LOE
and production taxes, the F&D cost per Mcfe is higher than the working
interest acquisitions at $1.99 per Mcfe.
Production
Production in 1999 was lower than 1998 by 1.6 Bcfe, or 2.7%, because of
asset sales. "Without asset sales and even with the lower capital program,
KCS would have been at record production for 1999," Hahne explained.
Production is expected to decline in the first quarter of 2000 as certain VPPs
expire, offset to some degree by successful drilling programs.
Bankruptcy Proceeding
As previously announced, KCS is currently in default under its bank credit
facilities and its senior and senior subordinated notes, and has been pursuing
a financial restructuring transaction which would significantly strengthen its
balance sheet. On December 28, 1999, the Company announced that it had
reached an agreement on a proposed restructuring with holders of more than
two-thirds of the senior subordinated notes and holders of a majority of the
senior notes. To effectuate this agreement, the parties agreed that the
Company would commence a case under Chapter 11 of the Bankruptcy Code by
January 18, 2000. On January 5, 2000, three holders of senior notes filed an
involuntary petition for relief against KCS Energy, Inc. (the parent company
only) under Chapter 11 of the Bankruptcy Code in the U. S. Bankruptcy Court in
Wilmington, Del. On January 18, the Bankruptcy Court signed an order granting
KCS relief under Chapter 11 of the Bankruptcy Code. Also on January 18, 2000,
each of KCS Energy Inc.'s subsidiaries filed with the Bankruptcy Court
voluntary petitions under Chapter 11 of the Bankruptcy Code. On January 18,
2000, the Company also filed a disclosure statement with the Court with
respect to a proposed plan of reorganization under Chapter 11 of the
Bankruptcy Code. The disclosure statement and plan have been amended in
subsequent filings with the Court. A hearing before the Court to consider the
adequacy of the disclosure statement is currently set for April 11, 2000. If
the Court approves the disclosure statement at the April 11 hearing, or
shortly thereafter, the Company intends to promptly begin soliciting votes to
accept or reject the plan of reorganization. However, there can be no
assurance at this time that the plan of reorganization proposed currently will
be confirmed by the Court.
KCS is an independent energy company engaged in the acquisition,
exploration and production of natural gas and crude oil with operations in the
Mid-Continent and Gulf Coast regions. The Company also purchases reserves
(priority rights to future delivery of oil and gas) through its Volumetric
Production Payment (VPP) program. For more information on KCS Energy, Inc.,
please visit the Company's web site at http://www.kcsenergy.com .
To receive KCS' latest news and other corporate developments via fax at no
cost, please call 1-800-PRO-INFO. Use company code KCS. See also
http://www.frbinc.com .
This press release contains forward-looking statements that involve a
number of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements are delays and difficulties in developing currently
owned properties, the failure of exploratory drilling to result in commercial
wells, delays due to the limited availability of drilling equipment and
personnel, fluctuations in oil and gas prices, general economic conditions and
the risk factors detailed from time to time in the Company's periodic reports
and registration statements filed with the Securities and Exchange Commission.
KCS Energy, Inc.
Condensed Income Statements
Three Months Ended Twelve Months Ended
(Amounts in Thousands December 31, December 31,
Except Per Share Data) 1999 1998 1999 1998
Oil and gas revenue $35,091 $31,182 $131,997 $123,491
Other revenue, net (565) 1,021 4,494 5,961
Total revenue 34,526 32,203 136,491 129,452
Operating costs
and expenses
Lease operating expenses 6,099 7,441 26,624 30,434
Production taxes 1,037 977 3,524 3,996
General and
administrative 2,534 2,862 9,847 11,327
Restructuring costs 1,886 -- 1,886 --
Depreciation, depletion
and amortization 11,985 15,946 50,967 59,888
Writedown of oil and
gas properties -- 210,837 -- 268,468
Total operating costs
and expenses 23,541 238,063 92,848 374,113
Operating income (loss) 10,985 (205,860) 43,643 (244,661)
Interest and other
income, net 257 (190) 702 (73)
Interest expense (9,959) (9,198) (40,005) (35,787)
Income (loss) before
income taxes 1,283 (215,248) 4,340 (280,521)
Federal and state
income taxes -- 38,674 -- 15,999
Net income (loss) $1,283 $(253,922) $4,340 $(296,520)
Basic and diluted
earnings (loss) per
share of common stock $0.04 $(8.68) $0.15 $(10.08)
Weighted average
shares outstanding 29,268 29,255 29,288 29,428
KCS Energy, Inc.
Condensed Balance Sheets
December 31, December 31,
(Thousands of Dollars) 1999 1998
Assets
Cash $10,584 $876
Other current assets 29,512 42,198
Property, plant and equipment, net 236,967 256,492
Deferred charges and other assets 7,869 9,312
Total assets $284,932 $308,878
Liabilities and stockholders' equity
Accrued interest on public debt $26,444 $12,647
Other current liabilities 24,602 37,204
Short-term debt 381,819 135,700
Deferred credits and
other liabilities 1,910 2,896
Long-term debt -- 274,635
Stockholders' equity (149,843) (154,204)
Total liabilities and
stockholders' equity $284,932 $308,878
Condensed Statements of Cash Flow
Twelve Months Ended
December 31,
1999 1998
Net income (loss) $4,340 $(296,520)
DD&A 50,967 59,888
Writedown of oil and gas properties -- 268,468
Other 2,862 21,243
58,169 53,079
Net changes in assets
and liabilities 13,294 (9,047)
Net cash provided by
operating activities 71,463 44,032
Cash flow from investing
activities:
Investment in oil and gas
properties (60,000) (163,396)
Net proceeds from sale of oil
and gas properties 27,718 6,962
Investment in other property,
plant and equipment 840 (2,082)
Net cash used in investing
activities (31,442) (158,516)
Cash flow provided by (used in)
financing activities (30,313) 110,558
Net increase (decrease) in cash
and cash equivalents $9,708 $(3,926)
EBITDA * $95,312 $83,622
* Earnings before interest, taxes and DD&A. EBITDA is not a measure of
financial performance or liquidity under generally accepted accounting
principles and should not be considered in isolation.
KCS Energy, Inc.
Supplemental Data
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
Production data:
Gas (MMcf) 11,582 13,705 50,471 50,070
Oil (Mbbl) 319 365 1,286 1,650
Liquids (Mbbl) 37 18 122 96
Total production (MMcfe) 13,717 16,006 58,919 60,547
Other data:
Average sales prices
Gas (per Mcf) $2.39 $1.98 $2.18 $2.08
Oil (per bbl) 21.46 10.71 16.04 11.41
Liquids (per bbl) 15.00 8.26 11.25 7.93
Total (per Mcfe) 2.56 1.95 2.24 2.04
SOURCE KCS Energy, Inc.
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Related links:
http://www.kcsenergy.com
CONTACT:
James W. Christmas, President and CEO of KCS
Energy, Inc., 713-877-8006; or General Info, Marianne Stewart,
212-661-8030, Analysts, Beth Lewis, 617-369-9240, or Media, Dave
Closs, 212-661-8030, all of The Financial Relations Board
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