HOUSTON, May 10 /PRNewswire/ -- KCS Energy, Inc. (NYSE: KCS) today
announced financial and operating results for the first quarter ended
March 31, 2000. Commenting on the Company's performance during the first
quarter, KCS President and Chief Executive Officer James W. Christmas said,
"We are pleased to report that the turnaround that began in 1999 has
continued. Revenue and cash flow increased significantly due to the sustained
strength in oil and gas prices while operating and administrative expenses
continued to trend down. In addition, we've continued to carry out our
capital program while reducing bank debt and increasing cash."
Financial Highlights
($ thousands except per share)
March 31, 2000
March 31, 1999
Revenue $36,007 $33,005
Operating Income $14,236 $7,946
Income (Loss) Before Reorganization Items $7,451 $(1,918)
Net Loss $(647) $(1,918)
Loss Per Share $(0.02) $(0.07)
Income before reorganization items for the quarter ended March 31, 2000
was $7.5 million compared to a loss of $1.9 million in the prior year's
quarter. After deducting $8.1 million of reorganization items, ($6.1 million
of which were non-cash charges), net loss for the quarter ended March 31, 2000
was $0.6 million, or $0.02 per share, compared to a net loss of $1.9 million,
or $0.07 per share, for the quarter ended March 31, 1999. EBITDAR (earnings
before interest, taxes, DD&A and reorganization items) for the quarter
increased 22% to $26.9 million reflecting a 45% increase in average realized
natural gas and oil prices and lower operating and administrative expenses,
partially offset by lower production from the Company's VPP program.
Operational Results
The positive operational trends for the Company continued in the first
quarter. The Company posted solid drilling results, continued to lower costs
and achieved better than anticipated production.
The Company participated in drilling 14 wells in the first quarter, of
which 9 were successful. Notably, the Willamette #1 in Bienville Parish of
North Louisiana tested at 10,500 thousand cubic feet per day (MCFPD) at 2,300
psi from Hosston aged sands. KCS has a 33% working interest (W.I.) in this
well. The McAlister #1-24 well in McClain County, Oklahoma tested at 264
barrels of oil per day and 158 barrels of water per day from the Oil Creek
sand. KCS has a 35.1% W.I. in this well. In addition, the Company
participated for a 7.5% W.I. in the Eugene Island 297 #3, a horizontal well
which tested at 10,500 MCFPD. This well is expected to be on production in
the third quarter.
The Company continued to make progress in reducing its costs. With the
exception of the fourth quarter of 1999, which was essentially flat to the
third quarter, the Company has reduced the sum of lease operating expenses
(LOE) and general & administrative (G&A) expenses in six consecutive quarters.
LOE and G&A were reduced by $0.7 million from the fourth quarter of 1999. LOE
was 12% lower and G&A was 15% lower than 1999 quarterly averages.
First quarter 2000 production was lower by 6,800 MCFPD equivalent (MCFEPD)
than the fourth quarter of 1999, but higher than expected at 142,300 MCFEPD,
primarily as a result of new wells being brought into production. VPP
production was down (as scheduled) by 10,200 MCFEPD, offset by production
increases from fourth quarter of 1999 drilling activity. VPP production is
anticipated to decrease another 5,000 MCFEPD in the second quarter of 2000.
Volumetric Production Payment Program Pays Out
Harry Lee Stout, head of the Company's VPP Program announced that the VPP
Program reached the significant milestone of reaching payout while still
having significant assets remaining. Through March 31, 2000, the Company
invested $210 million and had received back net production revenues of
approximately $211 million. Subsequent to the payout of the VPP program,
there remains an additional 12.5 BCFE of VPP reserves and 14 BCFE of reserves
that were converted from VPP into working interests assets.
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 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, Delaware (the "Bankruptcy Court"). On January 18, the Bankruptcy
Court entered an order for relief under Chapter 11 of the Bankruptcy Code with
respect to KCS Energy, Inc. Also on January 18, 2000, each of KCS Energy
Inc.'s subsidiaries filed voluntary petitions under Chapter 11 of the
Bankruptcy Code with the Bankruptcy Court.
On April 20, 2000, KCS reported that the restructuring agreement entered
into in December 1999 with holders of more than two-thirds in amount of the
senior subordinated notes and holders of a majority in amount of the senior
notes was terminated by the noteholders. On May 4, 2000, the Company's
exclusive period for filing a plan of reorganization was terminated by the
Bankruptcy Court. The Company is continuing to discuss the plan of
reorganization with the Creditor's Committee appointed in the bankruptcy cases
and with holders of its senior and senior subordinated notes and others with
the goal of achieving a consensus plan that will enable a timely conclusion of
the Chapter 11 cases.
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
(Amounts in Thousands March 31,
Except Per Share Data) 2000 1999
Oil and gas revenue $35,567 $32,342
Other revenue, net 440 663
Total revenue 36,007 33,005
Operating costs and expenses
Lease operating expenses 5,846 6,981
Production taxes 1,209 765
General and administrative expenses 2,094 3,208
Depreciation, depletion and amortization 12,622 14,105
Total operating costs and expenses 21,771 25,059
Operating income 14,236 7,946
Interest and other income, net -- 41
Interest expense (contractual interest for
the 2000 period was $9,217) (6,785) (9,905)
Income (loss) before reorganization items and
income taxes 7,451 (1,918)
Reorganization items (8,098) --
Loss before income taxes (647) (1,918)
Federal and state income taxes -- --
Net loss $(647) $(1,918)
Basic and diluted loss per share of common
stock $(0.02) $(0.07)
Weighted average shares of common stock
outstanding 29,267 29,258
KCS Energy, Inc.
Condensed Balance Sheets
March 31, December 31,
(Thousands of Dollars) 2000 1999
Assets
Cash $13,772 $10,584
Other current assets 29,567 29,512
Property, plant and equipment, net 237,050 236,967
Deferred charges and other assets 2,779 7,869
Total assets $283,168 $284,932
Liabilities and stockholders' deficit
Accounts payable and accrued liabilities $24,470 $24,602
Accrued interest on public debt -- 26,444
Short-term debt 99,595 381,819
Deferred credits and other liabilities 1,954 1,910
Liabilities subject to compromise:
Pre-petition accounts payables 2,070 --
Public debt 275,000 --
Accrued interest on public debt 30,569 --
Stockholders' (deficit) equity (150,490) (149,843)
Total liabilities and stockholders' deficit $283,168 $284,932
Condensed Statements of Cash Flow
Three Months Ended
March 31,
2000 1999
Net loss $(647) $(1,918)
DD&A 12,622 14,105
Other non-cash charges and credits, net 539 593
Reorganization items 8,098 --
20,612 12,780
Net changes in assets and liabilities 6,051 (11,228)
Net cash provided by operating activities
before reorganization items 26,663 1,552
Reorganization items (net of non-cash items) (1,966) --
Net cash provided by operating activities 24,697 1,552
Cash flow from investing activities:
Investment in oil and gas properties (12,563) (9,228)
Proceeds from sale of oil and gas properties -- 441
Other capital expenditures, net (140) (6)
Net cash used in investing activities (12,703) (8,793)
Cash flow from financing activities:
Net increase (decrease) in debt (7,500) 14,300
Other financing activities (1,306) (943)
Cash flow provided by (used by) financing
activities (8,806) 13,357
Increase in cash and cash equivalents $3,188 $6,116
EBITDAR * $26,858 $22,092
*Earnings before interest, taxes, DD&A, and reorganization items.
EBITDAR 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
March 31,
2000 1999
Production data:
Natural gas (MMcf) 10,733 14,742
Oil (Mbbl) 333 362
Liquids (Mbbl) 35 25
Total production (MMcfe) 12,948 17,064
Other data:
Average sales prices
Gas (per Mcf) $2.46 $1.93
Oil (per bbl) $25.84 $9.94
Liquids (per bbl) $15.17 $8.78
Total (per Mcfe) $2.75 $1.90
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, Marilynn Meek,
212-661-8030, Analysts, Beth Lewis, 617-369-9240, or Media, David
Closs, 212-661-8030, all of The Financial Relations Board
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