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| Costilla Granted Extension of Bank Payment; Property Sales Being Negotiated; First Quarter Results Reported |
MIDLAND, Texas, May 17 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq: COSE) reported today that its banking group has extended until June 1st the $10.2 million mandatory principal payment due under the Company's present bank credit facility. The extension also provides for the sharing of proceeds from the sale of oil and gas properties that are presently being negotiated. Cadell S. Liedtke, Chairman of Costilla's Board of Directors said: "We have been working closely with our bankers and we are very encouraged by their cooperation and support. We are also very pleased with the industry's high level of interest in the properties we are marketing." As previously reported, Costilla is marketing certain of its oil and gas assets pursuant to the required reduction of its bank debt. The Company expects to announce shortly the execution of purchase and sale agreements related to the divestiture of its Rocky Mountain properties. "The planned sale of Rocky Mountain properties coupled with our recently announced transaction with Ballard Petroleum LLC will effectively end our activities in the Rockies and allow our team to focus their full attentions where we have been most successful strategically," said Henry G. Musselman, Chief Operating Officer of the Company. The Company also reported results for the first quarter ended March 31, 1999. Costilla's production for the quarter ended March 31, 1999 increased four percent over the comparable three months of 1998 to 6.9 Billion cubic feet of natural gas equivalent (Bcfe), an average of approximately 77.1 million cubic feet of natural gas equivalent (Mmcfe) per day, from 6.7 Bcfe, or about 74.4 Mmcfe per day. According to Musselman, "As intended, the gas component of our production has been steadily rising even with the sale of some gas producing properties during 1998." In the first quarter of 1999, Costilla's natural gas component of its total production was 69 percent compared with 48 percent in the first quarter of 1998. Gas production in the first quarter increased 39 percent over the same quarter of last year. Revenues from oil and gas sales for the quarter ended March 31, 1999 totaled approximately $12.8 million, including about $1.7 million derived from commodity price hedges, compared to $15.3 million, which included about $1.4 million from hedging for the quarter ended March 31, 1998. Lease operating expenses (LOE) of $6 million for the first quarter ended March 31, 1999 included approximately $380,000 attributable to workover expense on the T.B. Pruett GU #3 well, production from which has been restored to 1.7 Mmcf per day as a result. Without the non-recurring Pruett workover expense, LOE on a per unit basis would have been $0.81 per Mcfe, continuing a downward trend from $0.84 per Mcfe for the fourth quarter ended December 31, 1998, and $1.01 per Mcfe for the first quarter of 1998. General and administrative (G&A) expenses of $2.9 million for the quarter ended March 31, 1999 included a non-recurring bank fee of approximately $720,000. Without this item, the Company's G&A expenses were $2.2 million, about $0.32 per Mcfe, representing a reduction of about 14 percent from $0.37 per Mcfe for the same period in 1998. As recently announced, Costilla has taken additional measures to reduce G&A, the effect of which will be reflected in future reporting periods. During the quarter ended March 31, 1999, Costilla realized an average net price of $1.89 per thousand cubic feet of natural gas (Mcf), including $0.32 per Mcf from hedging, seven percent below the $2.03, net of a $0.02 per Mcf hedging cost, received for the first quarter of 1998. The Company sold oil during the first quarter of 1999 at an average net price per barrel of $10.38, including $0.57 per barrel from hedging, a 32 percent price drop from $15.37, which included $2.74 per barrel from hedging, in the quarter ended March 31, 1998. With negative cash flow(1) of $1.5 million, or $0.12 per share, the Company recorded a net loss applicable to common equity of $55.9 million, $4.36 per share, that included an expense item of $47.5 million related to the termination of the transaction to acquire assets from Pioneer Natural Resources Company (NYSE: PXD; Toronto). These results compare with cash flow of $2.1 million, or $0.21 per share, and a net loss applicable to common equity of $7.6 million, $0.76 per share, for the first quarter of 1998 which included an extraordinary loss of $299,000 related to the early extinguishment of debt. Adjusted EBITDA(2) was $3.3 million for the quarter ended March 31, 1999, compared with $6.6 million for the first quarter of 1998. "Our unsuccessful pursuit of the Pioneer properties was very costly to Costilla and our recovery will clearly take time," said Liedtke. "We are firmly committed to re-building our Company, and have initiated measures we believe will assist in achieving this goal. We have cut overhead expenses substantially and are actively marketing some of our oil and gas assets to address our short-term obligations. For the long-term, we intend to retain our interests in our key producing areas and the properties we believe hold significant exploration and development potential." Costilla Energy, Inc. is an independent oil and gas company with operations primarily in the Gulf Coast region of South Texas and the Permian Basin of West Texas and Southeastern New Mexico. 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. Additional information about Costilla is available on the Internet at http://www.costillaenergy.com. (1) Cash flow is the net loss for the period, plus deferred taxes, depreciation, depletion and amortization, impairment of oil and gas properties, exploration and abandonments, other non-cash items, and extraordinary items. (2) Adjusted EBITDA is earnings before income taxes, interest, depreciation, depletion and amortization, impairment of oil and gas properties, exploration and abandonments, other non-cash items and extraordinary items. 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. Costilla Energy, Inc. SUMMARY FINANCIAL AND OTHER DATA (in thousands, except per share data) Three months ended March 31, 1999 1998 Production Oil (MBBLS) 359 544 Gas (MMCF) 4,783 3,432 MMCFE 6,937 6,695 Average Net Sales Price Oil (per BBL) $ 10.38 $ 15.37 Gas (per MCF) $ 1.89 $2.03 Revenues Oil $ 3,725 $ 8,362 Gas $ 9,039 $ 6,983 Net loss applicable to common equity $ (55,928) $ (7,639) Per share $(4.36) $ (0.76) Cash Flow (A) $ (1,486) $ 2,065 Per share $ (0.12) $ 0.20 Adjusted EBITDA (B) $ 3,344 $ 6,610 Adjusted EBITDA/Interest 0.6x 1.4x Weighted average shares 12,814 10,073 (A) Net income (loss) plus deferred taxes, depreciation, depletion and amortization, impairment of oil and gas properties, exploration and abandonments, other non-cash items and extraordinary items. (B) Net income (loss) plus income taxes, interest, depreciation, depletion and amortization, impairment of oil and gas properties, exploration and abandonments, other non-cash items and extraordinary items. Costilla Energy, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three months ended March 31, 1999 1998 Revenues: Oil and gas sales $ 12,764 $ 15,345 Interest and other 11 205 Other (2) 337 12,773 15,887 Expenses: Oil and gas production 6,005 6,785 General and administrative 2,920 2,493 Exploration and abandonments 1,119 3,151 Depreciation, depletion and amortization 5,182 6,059 Loss on termination of purchase option 47,488 --- Interest 4,987 4,739 67,701 23,227 Loss before extraordinary item (54,928) (7,340) Extraordinary loss resulting from early extinguishment of debt --- (299) Net loss (54,928) (7,639) Cumulative preferred stock dividend $ 1,000 $ --- Loss before extraordinary item applicable to common equity $ (55,928) $ (7,340) Net loss applicable to common equity $ (55,928) $ (7,639) Loss per share: Loss before extraordinary item $ (4.36) $ (0.73) Extraordinary loss resulting from early extinguishment of debt --- (0.03) Net loss $ (4.36) $ (0.76) Weighted average shares outstanding 12,814 10,073 Costilla Energy, Inc. SUMMARY CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 1999 1998 ASSETS Current assets $ 12,928 $ 17,292 Net property, plant and equipment, at cost 122,877 185,553 Other assets 7,874 8,109 Total $ 143,679 $ 210,954 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 63,338 $ 75,626 Long-term debt, less current maturities 181,722 181,780 Stockholders' equity (101,381) (46,452) Total Liabilities and Stockholders' Equity $ 143,679 $ 210,954SOURCE Costilla Energy, Inc.
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