DALLAS, Nov. 19 /PRNewswire-FirstCall/ -- National Energy Group, Inc.
(OTC Bulletin Board: NEGI) today announces results for the third quarter ended
September 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 $8.4 million and $1.8 million,
respectively, for the quarter ended September 30, 2002 and $24.3 million and
$5.8 million, respectively, for the nine months ended September 30, 2002.
For the Three Months Ended September 30, 2002
Net income of $2.5 million was recognized for the three months ended
September 30, 2002 compared with net income of $31.2 million for the
comparable 2001 period. The third quarter of 2002 includes $1.4 million in
deferred income tax expense while the third quarter of 2001 included a
$31.6 million deferred income tax benefit. Excluding the effects of these
amounts, net income of $3.9 million would have been recognized for the three
months ended September 30, 2002 compared to a net loss of $.4 million for the
same period in 2001.
Total revenues increased $.8 million (8.5%) to $10.2 million for the third
quarter of 2002 from $9.4 million for the third quarter of 2001. The increase
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 third quarter
of 2002 due to the LLC Contribution. The Company produced 115 Mbbls of oil
and 1,117 Mmcf of natural gas during the third quarter of 2001.
For the Nine Months Ended September 30, 2002
Net income of $6.8 million was recognized for the nine months ended
September 30, 2002 compared with net income of $35.5 million for the
comparable 2001 period. The nine months ended September 30, 2002 includes
$3.7 million in deferred income tax expense while the nine months ended
September 30, 2001 includes a $31.6 deferred income tax benefit. Excluding
the effects of these amounts, net income of $10.5 million would have been
recognized for the nine months ended September 30, 2002 compared to net income
of $3.9 million for the same period in 2001.
Total revenues decreased $6.0 million (16.6%) to $30.1 million for the
nine months ended September 30, 2002 from $36.1 million for the nine months
ended September 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 nine months
ended September 30, 2002 due to the LLC Contribution. The Company produced
428 Mbbls of oil and 4,333 Mmcf of natural gas during the nine months ended
September 30, 2001.
Oil and Gas 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 $75 million, together with a note receivable to Arnos Corp (an
affiliate of Gascon Partners) evidencing borrowings under the Company's
revolving credit facility. NEG Holding LLC conducts its oil and gas
operations through its affiliate, NEG Operating LLC. The Company manages all
of these oil and gas operations pursuant to a management agreement with NEG
Operating LLC.
National Energy Group, Inc. is a Dallas, Texas based company.
This press release may contain projections and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Any such projections or statements reflect the Company's
current views with respect to future events and financial performance. No
assurances can be given, however, that these events will occur or that such
projections will be achieved and actual results could differ materially from
those projected. A discussion of important factors that could cause actual
results to differ materially from those projected is included in the Company's
periodic reports filed with the Securities and Exchange Commission.
National Energy Group, Inc.
Summary Financial Results
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2001 2002 2001 2002
Production:
Oil (Mbls) (A) 115 --- 428 ---
Natural gas (Mmcf) (A) 1,117 --- 4,333 ---
Natural gas equivalent
(Mmcfe) (A) 1,807 --- 6,901 ---
Average Sales Price:
Oil ($/Bbls) $25.47 $--- $27.70 $---
Natural gas ($/Mcf) 3.15 --- 4.92 ---
Natural gas equivalent ($/Mcfe) 3.57 --- 4.81 ---
Results of Operations Data:
Revenues:
Oil and natural gas sales $6,449 $--- $33,176 $---
Accretion of Investment
in NEG Holding LLC 2,310 8,445 2,310 24,311
Management fee 652 1,783 652 5,817
Total revenue 9,411 10,228 36,138 30,128
Costs and expenses:
Lease operating 1,056 --- 3,875 ---
Oil and natural gas
production taxes 368 --- 1,695 ---
Depreciation, depletion
and amortization 1,609 --- 6,163 ---
General and administrative 1,411 1,631 4,066 5,315
Total costs and expenses 4,444 1,631 15,799 5,315
Operating income 4,967 8,597 20,339 24,813
Interest expense (5,136) (4,742) (16,540) (14,241)
Interest income and other, net (199) 4 (348) 17
Income (loss) before reorganization
items and income taxes (368) 3,859 3,451 10,589
Reorganization items:
Professional fees and other (27) --- 434 ---
Income (loss) before income taxes (395) 3,859 3,885 10,589
Income tax benefit (expense) 31,583 (1,351) 31,853 (3,705)
Income before extraordinary item 31,188 2,508 35,468 6,884
Extraordinary loss on
discharge of indebtedness --- --- (12) ---
Net income $31,188 $2,508 $35,456 $6,884
Cash Flow Data:
Cash flow from operations (B) $(1,192) $(5,095) $8,104 $(15,251)
EBITDA (C) $4,266 $152 $24,192 $502
Capital expenditures
(oil and natural gas) $4,856 $--- $27,364 $---
Per share data:
Income before extraordinary
item, basic and diluted $2.79 $.22 $3.17 $.62
Loss on discharge of
indebtedness, basic and
diluted $--- $--- $(.00) $---
Net income per common share,
basic and diluted $2.79 $.22 $3.17 $.62
Cash flow from operations (B) $(.11) $(.46) $.72 $(1.36)
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, September 30,
2001 2002
Assets
Cash, cash equivalents and
marketable securities $3,090 $3,740
Other current assets 1,375 730
Investment in NEG Holding LLC 97,654 111,123
Deferred tax asset 30,589 26,885
Total assets $132,708 $142,478
Liabilities and Stockholders'
Equity (Deficit):
Current liabilities $2,791 $6,689
Credit facility - affiliates 10,939 10,939
Senior notes - affiliates 148,637 148,637
Long-term interest
payable - affiliates 42,894 43,412
Deferred gain on senior
note redemption 9,851 8,322
Stockholders' deficit (82,404) (75,521)
Total liabilities and
stockholders' equity $132,708 $142,478
(A) The Company did not record any oil and gas sales during the three or
nine months ended September 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:
http://www.prnewswire.com/comp/122192.html
CONTACT:
Bob G. Alexander, or Philip D. Devlin, both
of National Energy Group, Inc., +1-214-692-9211, or fax,
+1-214-692-5055
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