Record Natural Gas Production, but Significantly Lower Energy Prices
Result in Loss
EDISON, N.J., May 11 /PRNewswire/ -- KCS Energy, Inc. (NYSE: KCS) today
announced financial and operating results for the first quarter ended March
31, 1998.
Financial Highlights
($thousands except per share)
3 mos. 1998 3 mos. 1997
Revenue $ 31,309 $ 39,879
Net Income (Loss):
Continuing Operations $ (140) $ 5,404
Discontinued Operations -- 5,389
Total Net Income (Loss) $ (140) $ 10,793
Earnings (Loss) per Share (Basic):
Continuing Operations $ (0.00) $ 0.20
Discontinued Operations -- 0.19
Total Earnings (Loss) per Share $ (0.00) $ 0.39
Significant Declines in Oil and Gas Prices Adversely Affect First Quarter
Financial Results
KCS Energy reported a net loss of $0.1 million, or $0.00 per share, on
total revenue of $31.3 million for the first three months of 1998. This
compares to net income from continuing operations of $5.4 million, or $0.20
per share, on revenue of $39.9 million for the same period last year. EBITDA
(earnings before interest, taxes, DD&A and other income) from continuing
operations decreased to $20.4 million for the first quarter of 1998 from
$28.4 million in the same period last year.
Commenting on the Company's first quarter 1998 performance, KCS President
and Chief Executive Officer James W. Christmas, said, "Dramatically lower oil
and gas prices was the most significant factor that impacted earnings and cash
flow. Our first quarter 1998 financial results were in line with our
expectations." Realized gas prices for the quarter declined 16% to $2.18 per
Mcf, compared to $2.59 per Mcf in the first quarter of 1997. Realized oil
prices in the quarter decreased 38% to $13.23 per barrel from $21.21 per
barrel during the same period in 1997. Had the Company realized the same
prices as it did during the 1997 quarter, revenue would have been
$38.9 million, net income from continuing operations would have been
approximately $2.5 million, or $0.09 per share, and EBITDA would have been
$27.8 million.
Record Natural Gas Production
The Company's natural gas production for the quarter was a record
126.0 million cubic feet per day, 6% higher than in the fourth quarter of
1997, while oil and liquids production declined to 4,300 barrels per day,
resulting in an overall increase in production of 4% from the fourth quarter
of 1997. Compared to the first quarter of 1997, overall production was down
4% to 13.7 Bcfe, compared to 14.2 Bcfe. "The benefits of our drilling program
and growth in the volumetric production payment (VPP) program are beginning to
be recognized and will continue to support production growth throughout 1998,"
Mr. Christmas said.
Drilling and Acquisition Program
KCS has a $160 million capital program planned for 1998. In the first
quarter, the Company invested $61.6 million, including $23.0 million for
development drilling, $34.4 million for the acquisition of proved reserves
under the VPP program and $4.2 million for lease acquisitions, seismic surveys
and exploratory drilling. The originally planned capital program has been
reallocated as a result of lower oil prices. The pace of new drilling in the
Rocky Mountain region has been de-emphasized in the near term while shifting
to completing and bringing on line the previously drilled wells in the
Manderson Field. "While the current low oil price environment has impacted
the timing and nature of development of this prospect, it has not dampened our
enthusiasm for the potential the area holds," Mr. Christmas said.
Several significant natural gas projects were completed since the
beginning of the year which will increase production in the second quarter and
beyond. Substantial volume increases were realized with initial production
from the Garden Banks 134#1 well, a subsea completion in 550' of water which
went on production April 18. KCS receives 73% of the hydrocarbon stream from
this well through the VPP program, which is currently on line at 15 MMcf per
day and 800 barrels of condensate per day. In South Louisiana, KCS has a
42.8% working interest in the Kemper #1 well in the Garden City Field at St.
Mary Parish, which tested at 9.0 MMcf per day. Development at the Langham
Creek Field in Harris County, Texas has continued with the drilling of two
additional wells which tested at a combined rate in excess of 7.0 MMcf per
day. KCS holds working interests ranging from 65% to 87.5% in these wells.
In addition, the Company continues to pursue strategic acquisitions and
divestitures. Some minor properties in the San Juan basin in Colorado were
sold for $4.7 million during the first quarter. On April 30, KCS acquired the
Dickinson Field near Galveston, Texas for $4.9 million. This recent natural
gas property acquisition offers KCS exciting recompletion potential and
synergy with existing assets.
"We believe this balanced approach emphasizing development drilling and
acquisitions, coupled with a high-potential exploration program and the
disposition of minor properties will enable us to increase production
significantly throughout the year," said Mr. Christmas.
Management Team Expanded
During the quarter, KCS expanded and strengthened its senior management
team with the addition of William Hahne as Senior Vice President and Chief
Operating Officer, a newly created position, and Paul Samett as Senior Vice
President and Chief Financial Officer, replacing Henry Jurand who retired at
the end of 1997.
"With a strengthened management team, a solid inventory of development
opportunities, a proven successful VPP program and a portfolio of
high-potential exploratory prospects, KCS is positioned to deliver significant
growth throughout the year," Mr. Christmas said.
KCS is an independent energy company engaged in the acquisition,
exploration, development and production of natural gas and crude oil with
operations in the Rocky Mountain, Mid-Continent and Gulf Coast regions. The
Company also owns oil and gas property interests in the Gulf of Mexico and
Michigan's Niagaran Reef trend. 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.
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) 1998 1997
Oil and gas revenue $ 29,706 $ 39,234
Other revenue, net 1,603 645
Total revenue 31,309 39,879
Operating costs and expenses
Lease operating expenses 7,276 6,689
Production taxes 1,050 1,774
General and administrative 2,599 3,049
Depreciation, depletion and amortization 12,828 14,651
Total operating costs and expenses 23,753 26,163
Operating income 7,556 13,716
Interest and other income, net 98 35
Interest expense (7,877) (5,186)
Income (loss) before income taxes (223) 8,565
Federal and state income taxes (benefit) (83) 3,161
Net income (loss) from continuing operations (140) 5,404
Net income (loss) from discontinued operations
Net loss from operations -- (72)
Net gain on disposition -- 5,461
Net income (loss) $ (140) $ 10,793
Basic and diluted earnings (loss)
per share of common stock
Continuing operations $ (0.00) $ 0.20
Discontinued operations -- 0.19
$ (0.00) $ 0.39
Weighted average shares of
common stock outstanding 29,441 27,340
KCS Energy, Inc.
Condensed Balance Sheets
March 31, December 31,
(Thousands of Dollars) 1998 1997
Assets
Cash $ 3,926 $ 4,802
Other current assets 42,739 46,867
Property, plant and equipment, net 471,426 426,333
Investments and other assets 27,408 24,412
Total assets $ 545,499 $ 502,414
Liabilities and stockholders' equity
Current liabilities $ 45,123 $ 64,024
Deferred credits and other liabilities 875 875
Long-term debt 354,568 292,445
Stockholders' equity 144,933 145,070
Total liabilities and stockholders' equity $ 545,499 $ 502,414
Condensed Statements of Cash Flow
Three Months Ended
March 31,
1998 1997
Net income (loss) $ (140) $ 10,793
DD&A 12,828 14,740
Gain on sale of discontinued operations -- (5,461)
Other 572 3,249
13,260 23,321
Net changes in assets and liabilities (14,185) (6,961)
Net cash provided by (used in)
operating activities (925) 16,360
Cash flow from investing activities:
Investment in oil and gas properties (61,577) (31,690)
Proceeds from sale of pipeline assets -- 27,907
Proceeds from sale of oil and gas properties 4,699 789
Investment in other property, plant and equipment (1,043) (581)
Net cash used in investing activities (57,921) (3,575)
Cash flow provided by (used in) financing
activities 57,970 (14,576)
(Decrease) in cash and cash equivalents $ (876) $ (1,791)
EBITDA (from continuing operations)(A) $ 20,384 $ 28,367
(A) Earnings before interest, taxes, DD&A, and other income. 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
March 31,
1998 1997
Production data:
Oil (Mbbl) 368 455
Liquids (Mbbl) 21 43
Natural gas (MMcf) 11,325 11,239
Total production (MMcfe) 13,659 14,227
Other data:
Average sales prices
Oil (per bbl) $ 13.23 $ 21.21
Liquids (per bbl) $ 8.95 $ 12.44
Gas (per Mcf) $ 2.18 $ 2.59
SOURCE KCS Energy, Inc.
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CONTACT:
Kathryn M. Kinnamon VP & Treasurer of KCS
Energy, 732-632-1770; or Beth Lewis, Analysts, 617-342-7003, or
Marianne Stewart, General Info, or Claudine Cornelis, Media,
212-661-8030, all of The Financial Relations Board
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