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| Costilla Reports First Quarter Results Current Highlights |
Daily Production up 18 Percent From End of Year
Cash Flow of 21 Cents Per Share
East Texas Project Adds 4.2 MMCFD in Four Months
Migl-Mitchell #3 Approaching Total Depth of 17,500
MIDLAND, Tex., May 7 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq: COSE)
reported today operating results for the first quarter ended March 31, 1998,
and ongoing drilling successes and production highlights. The Company
reported cash flow of $2.1 million, or 21 cents per share, for the quarter
ended March 31, 1998, with a net loss of $7.6 million, or 76 cents per share,
including an extraordinary item of $0.3 million. This compares with cash flow
of $8.9 million, or 85 cents per share, and net income of $2.3 million, or 22
cents per share for the first quarter of 1997.
Earnings before income taxes, interest, depreciation, depletion, and
amortization, exploration and abandonments, and extraordinary items adjusted
EBITDA was $6.6 million, or 1.4 times interest expense for the first quarter
of 1998, compared with $11.5 million, or 4.5 times interest expense for the
three months ended March 31, 1997.
"Our excellent hedging position has strengthened our operating performance
in spite of weakened commodity prices," said Mike Grella, president and CEO of
Costilla. "And we continue to enjoy excellent successes in the field.
Costilla was producing about 11,000 BOE per day as we entered 1998. In just
four months, we have increased production to levels which exceeded 13,300 BOE
per day as we exited the last week of April."
Costilla also reported that it has improved its gas hedging position going
forward by replacing put options with a floor price of $2.15 per MMBTU with
new put options at a floor price of $2.40 per MMBTU, indexed to Houston Ship
Channel prices. The new contracts cover 40,000 MMBTU per day, or
approximately 100 percent of Costilla's current daily gas production. (One
MMBTU represents one million British thermal units, a volume of natural gas
approximately equivalent to one thousand cubic feet of gas, or One MCF.) The
new contracts cover production May 1, 1998 through October 31, 1998.
Approximately 100 percent of Costilla's oil production continues to be
hedged with a floor of $18.50 per barrel through August 1998, indexed to NYMEX
prices. The Company has historically received a gross wellhead sales price
for oil of approximately 82-90 percent of the NYMEX price.
Realizing prices of $15.37 per barrel of oil, including $2.75 per barrel
as a result of the floors, and $2.03 per MCF of natural gas, Costilla's oil
and gas revenues for the first quarter of 1998 were $15.3 million. This
compares with $19.6 million for the first three months of 1997, when net
commodity prices averaged $19.84, and $2.67, respectively.
The Company's average daily production for the first quarter was 12,400
barrels of oil equivalent (BOEPD), bringing total production for the quarter
to approximately 1,116,000 BOE. This compares with 1,095,000 BOE for the same
period of 1997, which included about 150,000 BOE of quarterly production from
two groups of properties that were divested in December 1997 and January 1998,
respectively. For the first quarter of 1998, the Company's production mix was
approximately 51 percent natural gas and 49 percent oil. During the month of
April, production averaged approximately 13,000 BOEPD, about 56 percent of
which was gas.
During the first quarter of 1998, Costilla participated in the drilling of
17 oil and gas wells, of which 11 were productive. An additional 17 wells
were being drilled or completed as the quarter ended.
Drilling continues on the Company's third Southwest Speaks well in Lavaca
County, Texas. Casing is currently being set to approximately 15,200 feet on
the Migl-Mitchell #3, with total depth of 17,500 expected to be reached in
mid-June, given the current rate of progress. Completion procedures are
currently underway on the Migl-Mitchell #2, while the Migl-Mitchell #1
continues to produce at a sustained rate in excess of 9 million cubic feet per
day (MMCFD), or about 1,500 BOEPD. Costilla owns a 100 percent working
interest, 72 percent net revenue interest, in each of the first three Migl
wells.
Significant results have been achieved in the drilling of the Company's
East Texas project, which includes the Hopewell prospect. Commencing in the
first quarter of 1998, Costilla has drilled four wells on the project without
a dry hole. Of the first three wells, two are dual zone completions producing
from both Cotton Valley and Travis Peak sands. These three wells have added
approximately 4.2 MMCFD, or about 700 BOEPD, to the Company's average daily
production. The fourth well is completing with production anticipated in mid-
May. The Company has identified more than 100 drilling locations on this
project located in Panola County and Harrison County, Texas, near the
Louisiana border.
Looking forward, Grella said, "While we are very flexible given our
diversified property base, our plans are to continue our focus on the South
and East Texas projects as we target high impact gas wells with potential to
add significantly to our cash flow. We have a substantial inventory of
identified drilling within these areas, and we believe this concentration
provides our shareholders optimum opportunity at this time."
Costilla Energy, Inc. is an independent energy company engaged in the
exploration, acquisition and development of oil and gas properties, with
operations primarily in the Permian Basin of Texas and New Mexico, South and
East Texas, and the Rocky Mountain regions. Headquartered in Midland, Texas,
the Company and its predecessors have been in business since 1988. The
Company's common stock is traded on the Nasdaq National Market under the
symbol COSE.
Certain statements in this news release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of Costilla Energy, Inc. to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among
others, the following: the volatility of oil and gas prices; the Company's
ability to replace its oil and gas reserves; the availability of capital
resources; the reliance upon estimates of proved reserves; operating hazards
and uninsured risks; competition; government regulation; and the ability of
the Company to implement its business strategy. Additional information is
available in the Company's filings with the Securities and Exchange
Commission, which are incorporated by this reference as though fully set forth
herein.
For additional information about Costilla Energy, Inc., free of charge via
fax, dial 1-800-PRO-INFO and use ticker symbol "COSE."
COSTILLA ENERGY, INC.
SUMMARY FINANCIAL AND OTHER DATA
(in thousands, except per share data)
Three months ended
March 31,
1998 1997
Production
Oil (MBBLS) 544 547
Gas (MMCF) 3,432 3,285
MBOE 1,116 1,095
Average Net Sales Price
Oil (per BBL) $15.37 $19.84
Gas (per MCF) $2.03 $2.67
Revenues
Oil $8,362 $10,856
Gas $6,983 $8,757
Net income (loss) $(7,639) $2,279
Per share $(0.76) $0.22
Cash Flow (a) $2,065 $8,876
Per share $0.21 $0.85
Adjusted EBITDA (b) $6,610 $11,494
Adjusted EBITDA/Interest 1.4x 4.5x
Weighted average shares 10,073 10,476
(a) Net income (loss) plus deferred taxes, depreciation, depletion and
amortization, impairment of oil and gas properties, exploration and
abandonments and extraordinary items.
(b) Net income (loss) plus income taxes, interest, depreciation,
depletion and amortization, impairment of oil and gas properties,
exploration and abandonments and extraordinary items.
Costilla Energy, Inc. Consolidated Statements of Operations
(in thousands, except per share data)
Three months ended
March 31,
1998 1997
Revenues:
Oil and gas sales $15,345 $19,613
Interest and other 205 795
Other 337 (30)
15,888 20,378
Expenses:
Oil and gas production 6,785 7,369
General and administrative 2,493 1,515
Exploration and abandonments 3,151 1,340
Depreciation, depletion and amortization 6,059 4,914
Interest 4,739 2,708
23,227 17,846
Income (loss) before federal income
taxes and extraordinary item (7,339) 2,532
Provision for federal income taxes
Current -- 62
Deferred -- 191
Income (loss) before
extraordinary item (7,339) 2,279
Extraordinary loss resulting from
early extinguishment of debt (299) --
Net loss (7,638) 2,279
Income (loss) per share:
Income (loss) before extraordinary item $(0.73) $0.22
Extraordinary loss resulting from
early extinguishment of debt (0.03) --
Net loss $(0.76) $0.22
Weighted average shares outstanding 10,073 10,476
COSTILLA ENERGY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
1998 1997
ASSETS
Current assets $19,904 $19,080
Net property, plant and equipment, at cost 190,589 167,940
Other assets 9,250 7,068
Total $219,743 $194,088
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $33,107 $30,591
Long-term debt, less current maturities 195,519 163,087
Other noncurrent liabilities 185 --
Stockholders' equity (9,068) 410
Total Liabilities and
Stockholders' Equity $219,743 $194,088
SOURCE Costilla Energy, Inc.
back to topCONTACT:
Mike Grella, President & Chief Executive
Officer of Costilla Energy, 915-683-3092; or Karl Plath, general,
312-640-6738, or Lisa Ferguson, analysts, 312-640-6788, both of
The Financial Relations Board
NOTE TO EDITORS: For additional information about Costilla
Energy, Inc., free of charge via fax, dial 1-800-PRO-INFO and use
ticker symbol "COSE."
