Oil and Gas Production Revenues Increased 255%
LEXINGTON, Ky., Aug. 15 /PRNewswire-FirstCall/ -- NGAS Resources, Inc.
(Nasdaq: NGAS) announced Monday that total revenues for the three months ended
June 30, 2005 increased 37 percent to $11.4 million, compared to $8.3 million
during the same quarter last year. The increase was driven by higher natural
gas production and prices. Production volumes during the second quarter of
2005 increased 140 percent to 437.0 Mmcfe, compared to 182.3 Mmcfe during the
year-earlier quarter. The Company's average natural gas sales price increased
45 percent to $7.97 per Mcf from $5.50 in the second quarter of 2004.
Earnings (loss) per fully diluted share were ($0.03) for second quarter of
2005 compared to $0.01 in second quarter 2004.
Operational and Financial Highlights for 2Q 2005:
- Total production volumes were up 140% to 437.0 Mmcfe
- Average daily production was 4,800 Mcfe
- 27 gross (7.166125 net) wells were drilled
- 47.4 miles of pipeline added to gathering system
- Average natural gas prices in the quarter were $7.97/Mcf versus
$5.50 in 2Q 2004.
- Oil and gas revenues increased 255% to $3.5 million, from $986 thousand
in 2Q 2004
- Discretionary cash flow/share was $0.03 compared to $0.04 in 2Q 2004
- Capital expenditures totaled $7.3 million
"Ongoing drilling success coupled with last year's acquisition of the
Stone Mountain Energy assets enabled us to deliver another record quarter of
production growth, with an increase of 140 percent," commented William S.
Daugherty, President and CEO of NGAS. Mr. Daugherty added, "I am also pleased
with the significant progress we made on the extension of our gathering
system, adding 47 miles of pipeline during the quarter. As a result, the
construction of the main pipeline from our key Leatherwood Field is complete.
We are now working on the installation of compression and dehydration units
and connecting previously drilled wells to the system. Production from this
field is targeted to commence late in the third quarter 2005, contributing to
significant additional increases in production before year-end."
Twenty-seven wells were drilled in the quarter, with 7.166 wells net to
the company. Contract drilling revenue of $7.6 million increased 8.5 percent
over the prior year. Contract drilling margins in the quarter, however, were
negatively impacted by cost overruns associated with downhole problems on
three wells.
"Although contract drilling margins were significantly below our
expectations, long term, we are still targeting margins around 25 percent,"
said Michael P. Windisch, CFO.
Operational and Financial Highlights for the Six Months Ended June 30,
2005:
- Record production of 833.9 Mmcfe
- 76 miles of pipeline added to gathering system
- 84 wells drilled
- Record revenues of $31.4 million
- Capital expenditures of $14.6 million
Mr. Daugherty concluded, "This is an exciting period for us. We plan to
drill up to 170 gross wells this year and expect average daily production to
reach 7,000 Mcfe by year-end. We will also significantly extend our gathering
system, increase our lease position and continue to seek strategic
acquisitions. As a result, we expect production and reserve volumes to
increase in future periods as we continue the execution of our business plan.
To date, we have invested $14.6 million, or almost half of our $30 million
capital expenditure budget for 2005. With these initiatives, as well as the
groundwork we laid in 2004, we have further strengthened our position for
playing a significant role in the development of the southern Appalachian
Basin natural gas resources."
A conference call will be held at 10:00 a.m. (ET) on Tuesday, August 16,
2005 to discuss 2Q 2005 results. The conference call will have a live
simulcast on the Internet and can be accessed by logging onto
http://viavid.net/dce.aspx?sid=000027DC. A slide presentation, which
highlights management's discussion points, will be available on the website.
A replay of the conference call will be available on the Company's website for
30 days.
About NGAS Resources, Inc.
NGAS Resources is an independent energy company focused on natural gas
development drilling and reserve growth in the southern Appalachian Basin.
The Company's financial information for the three months and six months ended
June 30, 2005 and 2004 is provided below. Additional information, including
the Company's report on Form 10-Q for 2Q 2005, can be accessed on its website
at http://www.ngas.com.
This release includes forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act relating to matters such as
anticipated operating and financial performance and prospects. Actual
performance and prospects may differ materially from anticipated results due
to economic conditions and other risks, uncertainties and circumstances partly
or totally outside the control of the company, including risks of production
variances from expectations, volatility of product prices, the level of
capital expenditures required to fund drilling and the ability of the company
to implement its business strategy. These and other risks are described in
the company's periodic reports filed with the United States Securities and
Exchange Commission.
NGAS Resources, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. funds)
June 30, December 31,
2005 2004
(Unaudited)
ASSETS
Current assets:
Cash $15,446,431 $11,849,372
Accounts receivable 4,477,097 2,281,715
Prepaid expenses and other
current assets 3,087,087 2,152,174
Loans to related parties 119,920 142,718
Total current assets 23,130,535 16,425,979
Bonds and deposits 371,695 124,650
Oil and gas properties 80,379,629 68,156,790
Property and equipment 2,925,210 2,668,908
Loans to related parties 256,170 357,175
Investments -- 55,454
Deferred financing costs 1,256,566 1,024,810
Goodwill 313,177 313,177
Total assets $108,632,982 $89,126,943
LIABILITIES
Current liabilities:
Accounts payable 4,363,208 3,381,726
Accrued liabilities 5,766,697 3,537,576
Customers' drilling deposits 19,934,725 12,652,001
Long term debt, current portion 33,579 121,247
Total current liabilities 30,098,209 19,692,550
Future income taxes 2,661,302 2,053,432
Long term debt 31,342,195 25,870,498
Deferred compensation 587,011 368,935
Total liabilities 64,688,717 47,985,415
SHAREHOLDERS' EQUITY
Capital stock
Authorized:
5,000,000 Preferred shares,
non-cumulative, convertible
100,000,000 Common shares
Issued:
16,314,913 Common shares (December 31,
2004 - 15,605,208) 57,394,421 54,929,887
21,100 Common shares held
in treasury, at cost (23,630) (23,630)
Paid-in capital -
options and warrants 1,937,718 1,796,504
To be issued:
9,185 Common shares
(December 31, 2004 - 10,070) 45,925 50,350
59,354,434 56,753,111
Deficit (15,410,169) (15,611,583)
Total shareholders' equity 43,944,265 41,141,528
Total liabilities and
shareholders' equity $108,632,982 $89,126,943
NGAS Resources, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(U.S. funds) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
REVENUE
Contract drilling $7,639,000 $7,040,250 $24,316,000 $21,366,375
Oil and gas
production 3,507,703 986,724 6,383,491 1,778,013
Gas transmission
and compression 289,016 300,195 746,474 748,663
Total revenue 11,435,719 8,327,169 31,445,965 23,893,051
DIRECT EXPENSES
Contract drilling 6,618,260 5,236,941 18,988,065 15,341,589
Oil and gas
production 890,694 392,379 1,649,515 670,087
Gas transmission
and compression 235,084 114,326 627,868 514,192
Total direct
expenses 7,744,038 5,743,646 21,265,448 16,525,868
OTHER INCOME (EXPENSES)
Selling, general
and
administrative (2,511,910) (1,744,546) (6,018,735) (4,930,064)
Options, warrants
and deferred
compensation (239,090) (202,972) (491,698) (233,046)
Depreciation,
depletion and
amortization (1,001,533) (255,475) (2,048,088) (508,604)
Interest expense (555,001) (107,535) (1,063,754) (196,703)
Interest income 48,386 81,344 86,126 168,206
Other, net 21,184 104,483 164,916 112,229
Total other
income
(expenses) (4,237,964) (2,124,701) (9,371,233) (5,587,982)
INCOME (LOSS) BEFORE
INCOME TAXES (546,283) 458,822 809,284 1,779,201
INCOME TAX EXPENSE
(BENEFIT)
Current -- 38,743 -- 149,159
Future (10,631) 211,696 607,870 654,418
(10,631) 250,439 607,870 803,577
NET INCOME (LOSS) (535,652) 208,383 201,414 975,624
DEFICIT,
beginning of
period (14,874,517) (16,456,043) (15,611,583) (17,223,284)
DEFICIT,
end of period $(15,410,169) $(16,247,660) $(15,410,169) $(16,247,660)
NET INCOME (LOSS)
PER SHARE
Basic $(0.03) $0.02 $0.01 $0.08
Diluted $(0.03) 0.01 $0.01 $0.06
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 16,005,158 13,877,212 15,848,386 12,964,698
Diluted 16,005,158 16,706,462 16,749,736 16,005,368
NGAS Resources, Inc.
Discretionary Cash Flow Reconciliation
Discretionary cash flow represents net income, as determined under
generally accepted accounting principles ("GAAP"), with certain non-cash items
added back. Although a non-GAAP measure, discretionary cash flow is widely
accepted as a financial indicator of an oil and gas company's ability to
generate cash that can be used to internally fund exploration and development
activities and to service debt. This measure may also used in the valuation,
comparison, rating and investment recommendations for companies in the oil and
gas exploration and production industry. Discretionary cash flow is not a
measure of financial performance under GAAP and should not be considered as an
alternative to cash flows from operating, investing, or financing activities
or as an indicator of cash flows or measure of liquidity.
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
NET INCOME (LOSS) $(535,652) $208,383 $201,414 $975,624
DD&A* 1,001,533 255,475 2,048,088 508,604
DEFERRED TAXES -- 211,696 607,870 654,418
DISCRETIONARY
CASH FLOW $ 465,881 $675,554 $ 2,857,372 $ 2,138,646
* Represents non-cash charges for depreciation, depletion and
amortization.
SOURCE NGAS Resources, Inc.
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Related links:
http://www.ngas.com
http://viavid.net/dce.aspx?sid=000027DC
CONTACT:
Investor Relations, Michael P. Windisch, CFO,
+1-859-263-3948, or fax, +1-859-263-4228, or ngas@ngas.com
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