DALLAS, Aug. 20 /PRNewswire-FirstCall/ -- National Energy Group, Inc.
(OTC Bulletin Board: NEGI) today announces results for the second quarter
ended June 30, 2002.
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. Following the contribution to the
LLC, the Company no longer directly owns oil and gas properties and will only
recognize income from accretion of the preferred investment and management
fees ("LLC Contribution"). The income from accretion of the preferred
investment and management fees amounted to $8.0 million and $2.0 million,
respectively, for the quarter ended June 30, 2002 and $15.9 million and
$4.0 million, respectively, for the six months ended June 30, 2002.
For the Three Months Ended June 30, 2002
Net income of $2.2 million was recognized for the three months ended
June 30, 2002 compared with net income of $.7 million for the comparable 2001
period. The second quarter of 2002 includes $1.2 million in deferred income
tax expense. Excluding the effects of these amounts, net income of
$3.4 million would have been recognized for the three months ended June 30,
2002 compared to net income of $.7 million for the same period in 2001.
Total revenues decreased $2.0 million (16.5%) to $10.1 million for the
second quarter of 2002 from $12.1 million for the second quarter of 2001. The
decrease in revenues was attributable to the change in revenue recognition as
a result of the LLC Contribution.
The Company had no oil and natural gas production during the second
quarter of 2002 due to the LLC Contribution. The Company produced 170 Mbbls
of oil and 1,654 Mmcf of natural gas during the second quarter of 2001.
For the Six Months Ended June 30, 2002
Net income of $4.4 million was recognized for the six months ended
June 30, 2002 compared with net income of $4.3 million for the comparable 2001
period. The six months ended June 30, 2002 includes $2.4 million in deferred
income tax expense. Excluding the effects of these amounts, net income of
$6.8 million would have been recognized for the six months ended June 30, 2002
compared to net income of $4.3 million for the same period in 2001.
Total revenues decreased $6.8 million (25.5%) to $19.9 million for the six
months ended June 30, 2002 from $26.7 million for the six months ended
June 30, 2001. The decrease in revenues was attributable to the change in
revenue recognition as a result of the LLC Contribution.
The Company had no oil and natural gas production during the six months
ended June 30, 2002 due to the LLC Contribution. The Company produced
437 Mbbls of oil and 3,711 Mmcf of natural gas during the six months ended
June 30, 2001.
Oil and Gas Drilling Operations
Concurrently with the LLC Contribution and as provided in the Plan of
Reorganization, in exchange for its initial 50% membership interest in NEG
Holding LLC, Gascon Partners contributed (i) its sole membership interest in
Shana National LLC, an oil and gas producing company; and (ii) cash in the
amount of $75 million, together with a note receivable to Arnos Corp (an
affiliate of Gascon Partners) evidencing borrowings under the Company's
revolving credit facility. The Company manages all of the oil and gas
operations of the NEG Holding LLC assets pursuant to a management agreement
with NEG Operating LLC, an affiliate of NEG Holding LLC.
National Energy Group, Inc. is a Dallas, Texas based holding company.
This press release may contain projections and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Any such projections or statements reflect the Company's
current views with respect to future events and financial performance. No
assurances can be given, however, that these events will occur or that such
projections will be achieved and actual results could differ materially from
those projected. A discussion of important factors that could cause actual
results to differ materially from those projected is included in the Company's
periodic reports filed with the Securities and Exchange Commission.
National Energy Group, Inc.
Summary Financial Results
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2001 2002 2001 2002
Production:
Oil (Mbls) (A) 170 --- 437 ---
Natural gas (Mmcf) (A) 1,654 --- 3,711 ---
Natural gas
equivalent (Mmcfe) (A) 2,671 --- 6,333 ---
Average Sales Price:
Oil ($/Bbls) $26.94 $--- $27.30 $---
Natural gas ($/Mcf) 4.53 --- 3.00 ---
Natural gas
equivalent ($/Mcfe) 4.52 --- 3.64 ---
Results of Operations Data:
Revenues:
Oil and natural
gas sales $12,077 $--- $26,726 $---
Accretion of
investment in
NEG Holding LLC --- 8,011 --- 15,866
Management fee --- 2,046 --- 4,035
Total revenue 12,077 10,057 26,726 19,901
Costs and expenses:
Lease operating 1,399 --- 2,817 ---
Oil and natural gas
production taxes 630 --- 1,327 ---
Depreciation, depletion
and amortization 2,388 --- 4,554 ---
General and
administrative 1,549 1,862 2,655 3,684
Total costs
and expenses 5,966 1,862 11,353 3,684
Operating income 6,111 8,195 15,373 16,217
Interest expense (5,696) (4,745) (11,404) (9,500)
Interest income and
other, net (274) 7 (150) 12
Income before reorganization
items and income taxes 141 3,457 3,819 6,729
Reorganization items:
Professional fees
and other 588 --- 461 ---
Income before income taxes 729 3,457 4,280 6,729
Income tax expense --- 1,209 --- 2,354
Income before
extraordinary charge 729 2,248 4,280 4,375
Extraordinary loss on
discharge of indebtedness --- --- (12) ---
Net income $729 $2,248 $4,268 $4,375
Cash Flow Data:
Cash flow from
operations (B) $3,476 $(5,064) $9,284 $(10,156)
EBITDA (C) $8,499 $185 $19,927 $351
Capital expenditures
(oil and natural gas) $9,452 $--- $22,508 $---
Per share data:
Income before
extraordinary item,
basic and diluted $.07 $.20 $.38 $.39
Loss on discharge of
indebtedness, basic and
diluted $--- $--- $(.00) $---
Net income per common
share, basic and
diluted $.07 $.20 $.38 $.39
Cash flow from
operations (B) $.31 $(.45) $.83 $(.91)
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)
December 31, June 30,
2001 2002
Assets
Cash, cash equivalents and marketable
securities $3,090 $3,453
Other current assets 1,375 998
Investment in NEG Holding LLC 97,654 102,678
Deferred tax asset 30,589 28,235
Total assets $132,708 $135,364
Liabilities and Stockholders'
Equity (Deficit):
Current liabilities $2,792 $2,690
Credit facility 10,938 10,938
Senior notes 148,637 148,638
Long-term interest payable 42,894 42,295
Deferred gain on senior note redemption 9,851 8,832
Stockholders' deficit (82,404) (78,029)
Total liabilities and
stockholders' equity $132,708 $135,364
(A) The Company did not record any oil and gas sales during the three or
six months ended June 30, 2002 due to the contribution of their oil
and natural gas assets in September 2001.
(B) Cash flow from operations is shown before changes in working capital
accounts and excludes the extraordinary loss on discharge of
indebtedness.
(C) EBITDA is earnings (including interest income and excluding
accretion of Investment in NEG Holding LLC, discontinued operations
and extraordinary items) before interest expense, income taxes,
depletion, depreciation and amortization. EBITDA is presented here
not as a measure of operating results, but rather as a measure of
the Company's operating performance. Management of the Company
believes that EBITDA may provide additional information about the
Company's ability to meet its future requirements for debt service,
capital expenditures and working capital. EBITDA should not be
construed as an alternative to operating income determined in
accordance with generally accepted accounting principles ("GAAP") as
an indicator of the Company's operating performance or as an
alternative to cash flows from operating activities (determined in
accordance with GAAP) as a measure of liquidity. EBITDA measures
presented herein may not be comparable to similarly titled measures
of other companies.
SOURCE National Energy Group, Inc.
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Company News On-Call:
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CONTACT:
Bob G. Alexander, or Philip D. Devlin, both
of National Energy Group, Inc., +1-214-692-9211
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