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| Costilla Energy Announces Second Quarter Performance |
Company Records Cash Flow of $2.0 Million
Revenues Up, Hedging Strategy Yields Improved Prices
Production Rising With Continued Drilling Successes
Reserve Additions Replace 248 Percent of Production
MIDLAND, Texas, Aug. 5 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) reported increased revenues, rising production, and continued
drilling successes as it announced results of operations for the second
quarter of 1998 today. Costilla finished the quarter ended June 30th with
cash flow of $2.0 million, 20 cents per share, or 18 cents per share on an
assumed diluted basis, and a net loss of $9.0 million, or 90 cents per common
share. These results compare with cash flow of $4.6 million, 44 cents per
share, and a net loss of $2.4 million, or 23 cents per share, for the second
quarter of 1997.
The increase in the net loss of $6.6 million, from the second quarter of
1997 to the second quarter of 1998, is primarily due to an increase in
depreciation, depletion and amortization (DD&A) of $3.5 million, and an
increase in interest expense of $2.3 million. The increase in DD&A is mainly
attributable to the decline in oil prices and the related effect on reserves
of certain properties. For the second quarter of 1998, DD&A increased to
$8.3 million ($1.16 per MMCFE) from $6.1 million ($0.91 per MMCFE) in the
first quarter of 1998 due primarily to the continued decline in commodity
prices. The increase in interest expense is due to an increase in the average
outstanding indebtedness to $197.6 million in the second quarter of 1998, from
$104.3 in 1997, offset in part by a decrease in the effective annualized
interest rate in 1998 to 10.3 percent compared to 10.8 percent in 1997.
Revenues for the quarter rose to $16.8 million, a nine percent increase
over $15.4 million reported for the second quarter of 1997. Including
revenues derived from its hedging program of $4.46 per barrel of oil, and
11 cents per thousand cubic feet (MCF) of gas, the company realized net prices
of $15.42 per barrel of oil, and $2.15 per MCF of natural gas in the second
quarter of 1998, compared with second quarter 1997 oil and gas prices of
$17.46 and $1.96, respectively.
Costilla's second quarter adjusted EBITDA (earnings before taxes,
interest, depreciation, depletion and amortization, exploration and
abandonments, and extraordinary items), was reported at $6.8 million compared
with $6.8 million for the three months ended June 30, 1997.
"This was a very productive quarter for Costilla Energy," said Mike
Grella, president and CEO of the company. "Not only was our hedging program
effective in mitigating commodity price risks, our production growth gained
new momentum with our continued drilling successes in the field."
The company estimates that, through extensions and discoveries as a result
of drilling activities, it has replaced approximately 248 percent of
production during the first six months of 1998.
Costilla's total production for the second quarter of 1998, was up
12 percent, (up 20 percent in gas, up three percent in oil), to approximately
7.2 Billion cubic feet of natural gas equivalent (BCFE), or about 78 million
cubic feet of gas equivalent per day (MMCFEPD), from 6.4 BCFE, or 70 MMCFEPD
produced in the same quarter of 1997. The production increase includes
replacement of approximately 9.8 MMCFEPD from two groups of producing
properties the company sold in December 1997 and January 1998, respectively.
The company's production for the quarter ended June 30, 1998, was 31 percent
higher than the same quarter of 1997, when the second quarter of 1997 is
adjusted for volumes from these divested properties. The commodity mix of
production in the second quarter 1998 was approximately 58 percent gas,
42 percent oil, compared with 54 percent gas and 46 percent oil in the same
quarter of 1997.
Costilla Energy participated in drilling eleven wells during the second
quarter, with ten being productive -- a 91 percent rate of drilling success.
As the quarter closed, an additional 22 wells were in various stages of
drilling, evaluation, or completion. The company's current drilling pursuits
are concentrated on gas targets in its South and East Texas properties.
Costilla is currently producing 22.1 MMCFD of natural gas from two wells
in its Southwest Speaks project in Lavaca County, Texas. The Migl Mitchell
# 2 will be sidetracked to a higher structural position. The company is
presently completing its fourth well in the Speaks project with three
additional wells drilling. In the East Texas project, which the company
commenced in January, production is approximately 4.1 MMCFD from seven wells.
Six additional completions or new wells are in progress in this project.
Approximately 3.0 MMCFD is being produced from the company's Scott & Hopper
project in South Texas, with a new well currently drilling.
Highlights of the quarter included the investment of $50 million in
Costilla by affiliates of Enron Corp. through the purchase of 50,000 shares of
convertible preferred stock. The proceeds were used to reduce bank debt, and
to support Costilla's ongoing drilling program. As previously announced,
Costilla continues to repurchase shares of the company's stock on the open
market.
Costilla Energy, Inc. is an independent energy company actively 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. Additional information about Costilla Energy is on the Internet
at http://www.costillaenergy.com.
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 Six months ended
June 30, June 30,
1998 1997 1998 1997
Production
Oil (MBBLS) 505 489 1,049 1,037
Gas (MMCF) 4,130 3,437 7,562 6,721
MMCFE 7,160 6,371 13,856 12,943
Average Net Sales Price
Oil (per BBL) $15.42 $17.46 $15.39 $18.71
Gas (per MCF) $ 2.15 $ 1.96 $ 2.10 $ 2.30
Revenues
Oil $ 7,790 $ 8,544 $16,152 $19,400
Gas $ 8,880 $ 6,735 $15,863 $15,492
Net loss $(8,977) $(2,415) $(16,615) $ (134)
Per share - basic (a) $ (0.90) $ (0.23) $ (1.66) $ (0.01)
Cash Flow (b) $ 2,000 $ 4,643 $ 4,065 $13,519
Per share - basic $ 0.20 $ 0.44 $ 0.41 $ 1.29
Per share - diluted
as if preferred
stock converted $ 0.18 -- $ 0.38 --
Adjusted EBITDA (c) $ 6,806 $ 6,784 $13,416 $18,278
Adjusted EBITDA/Interest 1.4x 2.5x 1.4x 3.4x
Weighted average shares
- basic 9,981 10,459 10,027 10,468
Weighted average shares
- as if preferred
stock converted 11,223 10,651
(a) Earnings per share - diluted will not be presented in GAAP financial
statements since an assumed conversion of the preferred stock would be
anti-dilutive to the net loss reported.
(b) Net loss plus deferred taxes, depreciation, depletion and
amortization, impairment of oil and gas properties, exploration and
abandonments and extraordinary items.
(c) Net 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 Six months ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Oil and gas sales $16,670 $15,279 $32,015 $34,892
Interest and other 155 154 360 920
Other -- -- 337 --
16,825 15,433 32,712 35,812
Expenses:
Oil and gas production 7,441 6,794 14,226 14,163
General and
administrative 2,577 1,856 5,070 3,370
Exploration and
abandonments 2,078 1,774 5,228 3,115
Depreciation, depletion
and amortization 8,305 4,806 14,364 9,720
Interest 5,094 2,809 9,833 5,516
25,495 18,039 48,721 35,884
Income (loss) before
federal income taxes
and extraordinary
item (8,670) (2,606) (16,009) (72)
Provision for federal income taxes
Current -- -- -- 62
Deferred -- (191) -- --
Income (loss) before
extraordinary item (8,670) (2,415) (16,009) (134)
Extraordinary loss
resulting from early
extinguishment of debt -- -- (299) --
Net loss (8,670) (2,415) (16,308) (134)
Cumulative preferred
stock dividend $ 307 $ -- $ 307 $ --
Loss before extraordinary
item applicable to
common equity $(8,977) $(2,415) $(16,316) $ (134)
Net loss applicable
to common equity $(8,977) $(2,415) $(16,615) $ (134)
Loss per share:
Loss before
extraordinary item $ (0.90) $ (0.23) $ (1.63) $ (0.01)
Extraordinary loss
resulting from early
extinguishment of debt -- -- (0.03) --
Net loss $ (0.90) $ (0.23) $ (1.66) $ (0.01)
Weighted average shares
outstanding 9,981 10,459 10,027 10,468
COSTILLA ENERGY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
1998 1997
ASSETS
Current assets:
Cash $ 17,089 $ 3,615
Other current assets 12,474 15,465
Total current assets 29,563 19,080
Net property, plant and
equipment, at cost 199,466 167,940
Other assets 9,229 7,068
Total $238,258 $194,088
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 25,286 $ 30,591
Long-term debt, less current
maturities 182,441 163,087
Other noncurrent liabilities 313 --
Stockholders' equity 30,218 410
Total Liabilities and
Stockholders' Equity $238,258 $194,088
SOURCE Costilla Energy, Inc.
back to topRelated links:
Company News On-Call:
fax, 800-758-5804, ext. 126873
CONTACT:
Mike Grella, President & CEO, or Guy McCrary,
Manager of Investor Relations, both of Costilla Energy,
915-683-3092
