DALLAS, Aug. 10 /PRNewswire-FirstCall/ -- National Energy Group, Inc.
(OTC Bulletin Board: NEGI) today announces results for the second quarter
ended June 30, 2005.
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 $10.6 million and
$3.2 million, respectively, for the quarter ended June 30, 2005. The income
from accretion of the preferred investment and management fees amounted to
$20.4 million and $6.5 million, respectively for the six months ended
June 30, 2005.
For the Three Months Ended June 30, 2005
Net income of $4.8 million was recognized for the three months ended
June 30, 2005, compared with net income of $3.2 million for the comparable
2004 period.
Total revenues increased $2.7 million (24.3%) to $13.8 million for the
second quarter of 2005 from $11.1 million for the second quarter of 2004.
The Company had no oil and natural gas production during the second
quarter of 2005 or 2004 due to the LLC Contribution.
For the Six Months Ended June 30, 2005
Net income of $9.1 million was recognized for the six months ended
June 30, 2005 compared with net income of $6.2 million for the comparable 2004
period.
Total revenues increased $5.3 million (24.4%) to $27.0 million for the six
months ended June 30, 2005 from $21.7 million for the comparable 2004 period.
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.
Subsequent Events
On July 8, 2005 we announced that we received an offer from AREP, the
holder of 50.1% of our outstanding shares, regarding a transaction pursuant to
which our existing shareholders, other than AREP, would receive $3.00 in cash
for each share of our common stock held by them. In the event of such
transaction, AREP and its subsidiaries would own 100% of our stock. On
July 11, 2005, our Board of Directors formed a special committee to be chaired
by one of our independent directors, which was charged with evaluating and
recommending a response to the AREP offer.
National Energy Group, Inc. (OTC Bulletin Board: NEGI) 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Results of Operations Data:
Revenues:
Accretion of Investment
in NEG Holding LLC $10,550 $8,219 $20,444 $16,124
Management fee 3,246 2,861 6,520 5,479
Interest income and
other, net 18 8 28 13
Total revenue 13,814 11,088 26,992 21,616
Costs and expenses:
Salaries and wages 1,875 1,705 3,945 3,217
Insurance 198 253 381 477
Rent and utilities 217 173 398 346
Other general and
administrative
expenses 616 618 1,238 1,141
Interest expense 3,485 3,485 6,970 6,970
Total costs and
expenses 6,391 6,234 12,932 12,151
Income before income
taxes 7,423 4,854 14,060 9,465
Income tax expense (2,598) (1,699) (4,921) (3,313)
Net income to common
shareholders $4,825 $3,155 $9,139 $6,152
Cash Flow Data:
Cash flow from
operations (A) $(3,637) $(4,023) $(7,402) $(7,825)
Per share data:
Net income per common
share, basic and
diluted $.43 $.28 $.82 $.55
Cash flow from
operations (A) $(.32) $(.36) $(.66) $(.69)
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)
June 30, December 31,
2005 2004
Assets
Cash, cash equivalents and marketable
Securities $4,149 $2,488
Other current assets 1,409 2,582
Investment in NEG Holding LLC 100,254 87,800
Deferred tax asset 14,320 19,242
Total assets $120,132 $112,112
Liabilities and Stockholders' Equity (Deficit):
Current liabilities $2,771 $2,871
Senior notes due to affiliate 148,637 148,637
Deferred gain on senior note redemption 2,717 3,737
Stockholders' deficit (33,993) (43,133)
Total liabilities and stockholders'
equity (deficit) $120,132 $112,112
(A) Cash flow from operations is shown before changes in working capital
accounts.
SOURCE National Energy Group, Inc.
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Related links:
http://www.negx.com
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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