HOUSTON, April 25 /PRNewswire-FirstCall/ -- Ocean Energy, Inc. (NYSE: OEI)
today announced first quarter earnings of $20 million or $0.11 per fully
diluted share on revenues of $220 million. This compares to net income of
$123 million or $0.70 per fully diluted share on revenues of $403 million for
the first quarter of 2001.
Discretionary cash flow (income from continuing operations before DD&A,
deferred taxes and other non-cash operating activities) for the first quarter
was $123 million or $0.68 per fully diluted share, compared to $292 million or
$1.65 per fully diluted share for the first quarter of 2001.
Average daily production for the first quarter was 143 thousand barrels of
oil equivalent (BOE) per day, the same rate reported in the first quarter of
2001 reflecting a reduction in capital spending in the second half of 2001 and
associated normal flow-rate decline. Production increased toward the end of
the first quarter and is anticipated to result in increased average production
throughout the year.
"Despite a decrease in revenues due to lower commodity prices, we continue
to maintain financial discipline while conducting an active and successful
drilling program," said James T. Hackett, chairman, president and chief
executive officer. "Our oil and gas production volumes are expected to grow
steadily throughout the year as we continue to complete and bring on line our
major development projects in the Gulf of Mexico and in West Africa. We also
expect earnings and cash flow to rise next quarter due to production growth
and the higher current commodity environment."
Operational accomplishments year-to-date included:
-- Continued development of deepwater Gulf of Mexico discoveries --
Production from Ocean's first major deepwater discovery began in
January. The Nansen field in the East Breaks complex is currently
producing more than 20 thousand barrels of oil and 20 million cubic
feet of gas per day (MMcfpd). During the second quarter, the company
is scheduled to complete two natural gas wells including a subsea
tieback of its initial Navajo discovery that should increase
production at Nansen by approximately 80 MMcfpd. Additional well
completions will occur throughout the next several quarters adding
further to production at this field. The installation of the topsides
on a second truss spar in the neighboring Boomvang field is underway
after three months of weather delays. First production is slated to
begin in the third quarter of 2002. Ocean holds a 50 percent working
interest in the Nansen and Navajo fields and a 20 percent working
interest in the Boomvang field.
-- New discoveries in deepwater Gulf of Mexico and an expanded acreage
position in the region -- Two Nansen area satellite discoveries,
Northwest Navajo and West Navajo, were announced during the first
quarter. The company also reported a discovery in Atwater Valley
Block 37. The 21,268-foot Merganser discovery well encountered more
than 150 feet of natural gas pay in three zones. Reserves are
estimated in the range of 200 billion to 400 billion cubic feet of
natural gas equivalent. Ocean holds a 50 percent working interest in
the well. Ocean now ranks sixth in the industry in Gulf of Mexico
deepwater leasehold with 350 blocks following a property swap in the
northeast section of the Atwater Valley discovery area near the
Merganser discovery and the acquisition of interests in 17 blocks
during the Central Gulf Lease Sale 182 held in March.
-- Strengthening of West Africa program with continued exploitation of
Zafiro field and the addition of an exploratory block in Equatorial
Guinea -- Average production from the Zafiro field in Block B during
the first quarter was 150 thousand gross barrels of oil (BOPD) per
day. The field is currently producing approximately 160 thousand BOPD
as the debottlenecking of facilities continues, with a targeted 2002
exit rate of approximately 185 thousand BOPD. Ocean holds a
23.75 percent working interest in the area. Ocean also expanded its
position in Equatorial Guinea by entering into a production-sharing
contract covering Corisco Bay Block N, a 678,000-acre concession in
the Rio Muni Basin offshore the country's mainland. Ocean's
subsidiary, Ocean Equatorial Guinea Corporation, holds a 30 percent
participating working interest in the block. Ocean now holds more
than two million gross offshore acres in Equatorial Guinea, in
addition to its interests in Angola and Cote d'Ivoire.
Ocean Energy, Inc.
Condensed Consolidated Statements of Operations
(Amounts in Thousands Except Per Share Data)
(Unaudited)
Three Months Ended
March 31,
2002 2001
Revenues $220,329 $403,255
Costs of Operations:
Operating expenses 75,644 74,564
Depreciation, depletion and
amortization 83,204 82,455
General and administrative 9,393 6,141
168,241 163,160
Operating Profit 52,088 240,095
Interest Expense 14,368 16,944
Other Expense (Income) 507 (1,182)
Income Before Income Taxes 37,213 224,333
Income Tax Expense 16,746 100,949
Net Income 20,467 123,384
Preferred Stock Dividend 813 813
Net Income Available to Common
Stockholders $19,654 $122,571
Earnings Per Share:
Basic $0.11 $0.73
Diluted $0.11 $0.70
Weighted Average Number of Common
Shares Outstanding:
Basic 172,103 168,279
Diluted 180,333 177,011
Ocean Energy, Inc.
Condensed Consolidated Balance Sheets
(Amounts in Thousands)
(Unaudited)
March 31, December 31,
2002 2001
Assets:
Current Assets $264,905 $254,728
Property, Plant and Equipment, Net 3,217,629 3,149,286
Other Assets 62,801 65,164
Total Assets $3,545,335 $3,469,178
Liabilities and Stockholders' Equity:
Current Liabilities $366,523 $375,294
Long-Term Debt 1,361,170 1,282,981
Other Noncurrent Liabilities 345,155 338,467
Stockholders' Equity 1,472,487 1,472,436
Total Liabilities and Stockholders' Equity $3,545,335 $3,469,178
Ocean Energy, Inc.
Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
2002 2001
Operating Activities:
Net income $20,467 $123,384
Effects of DD&A, deferred taxes and other
non-cash operating activities 102,478 168,346
Changes in operating assets and
liabilities, net of acquisitions (89,302) (42,833)
Net Cash Provided by Operating Activities 33,643 248,897
Investing Activities:
Oil and gas capital expenditures (145,892) (303,050)
Other (5,112) (3,679)
Net Cash Used in Investing Activities (151,004) (306,729)
Financing Activities:
Net proceeds from (payments on) borrowings 124,348 60,374
Other 3,729 11,970
Net Cash Provided by Financing Activities 128,077 72,344
Increase in Cash and Cash Equivalents 10,716 14,512
Cash and Cash Equivalents at Beginning of Period 20,006 23,039
Cash and Cash Equivalents at End of Period $30,722 $37,551
Ocean Energy, Inc.
Operational Information
(Unaudited)
Three Months Ended
March 31,
2002 2001
Operations Data:
Wells Drilled:
Gross 37 99
Net 20 32
Success Rate 86 % 90 %
Net Daily Oil and NGL Production (MBbl):
Domestic 28,103 27,045
Equatorial Guinea 30,472 27,571
Egypt 10,833 8,308
Other International 7,979 8,527
Total 77,387 71,451
Average Oil and NGL Prices ($ per Bbl) (*):
Domestic $18.31 $26.73
Equatorial Guinea $19.48 $21.85
Egypt $19.46 $23.38
Other International $12.35 $18.76
Weighted Average $18.32 $23.51
Average Oil and NGL Prices
Including the Impact of
Financial Derivatives ($ per Bbl) $18.42 $20.44
Net Daily Natural Gas Production (Mcf):
Domestic 365,592 403,183
International 27,826 27,711
Total 393,418 430,894
Average Natural Gas Prices ($ per Mcf) (*):
Domestic $2.38 $7.37
International $2.62 $3.22
Weighted Average $2.40 $7.11
Average Natural Gas Prices
Including the Impact of
Financial Derivatives ($ per Mcf) $2.60 $7.01
(*) All price information excludes the impact of financial derivatives,
unless otherwise stated.
Guidance on Year 2002 Estimates
The tables following this narrative set forth the Company's current
estimates of its operating statistics for the second quarter of 2002 and full
year ending December 31, 2002. These estimates are based on the Company's
historical operating performance and trends, estimates of oil and gas reserves
as of December 31, 2001 and the Company's planned capital and operating budget
for 2002. The 2002 estimates listed below differ from the full year estimates
in the Company's January 24, 2002 Earnings Press Release due to revisions
based on actual results year-to-date.
2002 Estimated Production (A)
Second Full Year
Quarter
Oil and NGL Production 7.4 MMBbls 32.9 MMBbls
Oil Price Differentials (B) $(3.75)-(4.75) $(3.75) - (4.75)
Gas Production 37.5 Bcf 157 Bcf
Gas Price Differentials (B) $(0.10)- (0.20) $(0.10) - (0.20)
Daily Production 150 MBOE 162 MBOE
(A) These estimates represent the approximate mid-point of the range of
the Company's estimates of the above information. Actual results may
differ materially from these estimates.
(B) For purposes of the 2002 estimates, the Company has assumed price
differentials due to location, quality and other factors, excluding
the effects of derivative financial instruments. Gas price
differentials are stated as premiums (discounts) from Henry Hub
pricing and oil price differentials are stated as premiums (discounts)
from NYMEX pricing.
Oil and gas prices have fluctuated significantly in recent years in
response to numerous economic, political and environmental factors, and the
Company expects that commodity prices will continue to fluctuate significantly
in the future. Changes in commodity prices could significantly affect the
Company's expected operating results. In addition to directly affecting
revenues, price changes can affect expected production because production
estimates necessarily assume that oil and gas can profitably be produced at
the assumed pricing levels. In addition to the above pricing assumptions, the
2002 estimates were prepared assuming that demand, curtailment, producibility
and general market conditions for the Company's oil and gas for 2002 will be
substantially similar to those experienced during the year ended
December 31, 2001 and first three months of 2002. No material assumptions
concerning acquisition or divestment activities are included.
For purposes of the 2002 estimates, a $1.00 per Bbl change in the
forecasted average price of oil and a $0.10 per Mcf change in the forecasted
average price of natural gas will result in changes in the Company's estimated
net income for the remainder of 2002 of $11 million ($0.06 per diluted share)
and $6 million ($0.03 per diluted share), respectively, in each case including
a $0.5 million change in production taxes.
From time to time, the Company has utilized and expects to continue to
utilize derivative financial instruments with respect to a portion of its oil
and gas production to achieve a more predictable cash flow by reducing its
exposure to price fluctuations. Certain of these derivative financial
instruments have been designated and qualify as cash flow hedges. The Company
utilizes additional financial instruments that have not been designated as
cash flow hedges even though they do protect the Company from changes in
commodity prices. These additional financial instruments are marked to market
quarterly with the resulting changes in fair value recorded in revenues and
are not expected to have a material effect on the Company's financial results
for the year.
As of the date of this release, the Company had the following volumes
under derivative contracts related to its oil and gas producing activities:
Weighted
Production Instrument Daily Average
Period Type Volumes Price
Crude Oil:
April - Dec. 2002 Collar 35 MBbl $22.36 - 27.03
April - May 2002 Basis Swap 20 MBbl $1.29
Jan. - Dec. 2003 3-way Collar(A) 10 MBbl $19.00 - 23.00 - 27.35
Natural Gas:
April - October 2002 Collar 155 BBtu $3.00 - 4.00
April - December 2002 Collar 140 BBtu $2.82 - 4.07
Jan. - Dec. 2003 3-way Collar(A) 50 BBtu $2.50 - 3.50 - 4.52
Gas Swap of Related Trust:
April - December 2002 Swap 13.5 BBtu $4.12
January - December 2003 Swap 11.1 BBtu $3.60
January - December 2004 Swap 9.6 BBtu $3.41
January - December 2005 Swap 8.3 BBtu $3.28
(A) A "3-way collar" combines a sold call, a purchased put and a sold put.
The purchased put and sold put establish a floating minimum price
("floating floor") and the sold call establishes a maximum price
("ceiling price") the Company will receive for the volumes under
contract.
The Company has also entered into interest rate swap agreements relating
to its 7 5/8% senior notes due July 2005 and its 7 7/8% senior notes due
August 2003. Under the terms of the agreements, the counterparties pay the
Company a weighted average fixed annual rate of 7.74 percent on the notional
amounts and the Company pays the counterparties a variable annual rate equal
to the six-month LIBOR rate plus a weighted average rate of 2.73 percent.
These swap agreements have been designated as fair value hedges pursuant to
SFAS No. 133 and remain in effect through the maturity dates of the related
notes.
2002 Estimates of Operating Costs (A)
Second Quarter Full Year
Operating costs/BOE:
Lease operating expense, excluding
production taxes $ 5.05 $ 5.00
Production taxes 0.65 0.65
General and administrative expense 0.65 0.65
Interest expense 1.15 1.20
Depreciation, depletion and amortization 6.50 6.50
$ 14.00 $ 14.00
Effective tax rate 44% to 48% 44% to 48%
(75% - 80% deferred)
Preferred dividends $0.8 million $3.3 million
Common dividends (B) $0.04 per share $0.16 per share
(A) These estimates represent the approximate mid-point of the range of
the Company's estimates of the above information. Actual results may
differ materially from these estimates.
(B) The declaration of common stock dividends is discretionary and will
be subject to determination by the Company's Board of Directors.
2002 Estimated Capital Expenditures
Gulf of Mexico International U.S. Onshore Total
$300 to $350 $250 to $275 $50 to $75 $600 to $700
million million million million
Approximately 45 percent to 55 percent of the capital spending program is
estimated to be spent for exploratory projects. The spending will be funded
out of Ocean's discretionary cash flow based on anticipated commodity prices,
and is subject to change if market conditions shift or new opportunities are
identified.
The Company capitalizes interest expense and certain employee-related
costs that are directly attributable to oil and gas operations. The estimated
capital expenditures for 2002 include forecasted capitalized interest of
$44 million and forecasted capitalized employee-related costs of $67 million.
Defined Terms
Natural gas is stated in billion cubic feet ("Bcf"), million cubic feet
("MMcf"), or thousand cubic feet ("Mcf"). Oil, condensate and natural gas
liquids ("NGL") are stated in millions of barrels ("MMBbls") or thousand
barrels ("MBbls"). MBOE and BOE represent one thousand barrels and one barrel
of oil equivalent, respectively, with six Mcf of gas converted to one barrel
of oil equivalent. BBtu represents one billion British Thermal Units.
A conference call and webcast are scheduled for today at 9 a.m. Central/
10 a.m. Eastern to discuss first quarter performance and second quarter and
full-year 2002 guidance. To join the call from the United States, dial
1-888-709-9420. From international locations, dial 1-773-756-4799. The call
passcode is OEI and the call leader is James Hackett, chairman of the board,
president and chief executive officer. For the webcast, which features slides
in addition to the audio from the call, visit the webcasts page within the
investor relations section of the company Web site at http://www.oceanenergy.com .
The webcast will be archived on the company Web site through May 15. The
audio portion of the call will also be available for playback by phone during
this time period by dialing 1-800-427-2733 (U.S. and Canada) or 1-402-220-2265
(international).
Ocean Energy, Inc. is an independent energy company engaged in the
exploration, development, production, and acquisition of crude oil and natural
gas. North American operations are focused in the shelf and deepwater areas
of the Gulf of Mexico, the Rocky Mountains, Permian Basin, Arklatex, Anadarko,
East Texas and the Gulf Coast regions. Internationally, Ocean holds a leading
position among U.S. independents in West Africa with oil and gas activities in
Equatorial Guinea, Angola and Cote d'Ivoire. The company also conducts
operations in Egypt, Russia, Brazil, Pakistan, and Indonesia.
Certain statements in this news release regarding future expectations,
plans for acquisitions, dispositions, and oil and gas reserves, exploration,
development, production and pricing may be regarded as "forward-looking
statements" within the meaning of the Securities Litigation Reform Act. They
are subject to various risks, such as operating hazards, drilling risks, the
inherent uncertainties in interpreting engineering data relating to
underground accumulations of oil and gas, as well as other risks discussed in
detail in the company's periodic reports and other documents filed with the
SEC. Actual results may vary materially.
SOURCE Ocean Energy, Inc.
 back to top
Related links:
http://www.oceanenergy.com
Company News On-Call:
http://www.prnewswire.com/comp/913463.html
CONTACT:
financial, Bruce Busmire, +1-713-265-6161, or
media, Janice Aston White, +1-713-265-6164, both of Ocean Energy,
Inc.
|
