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| Costilla's Third Quarter Highlighted by Pioneer Acquisition Agreement; Revenues Strengthened by Hedging Strategy; LOE Per Unit Cut 12 Percent; New Gas Hedges Announced |
MIDLAND, Texas, Nov. 13 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq: COSE) today reported results for the quarter ended September 30, 1998. Costilla's third quarter was highlighted by the company's announcement of an agreement to acquire certain domestic oil and gas properties from Pioneer Natural Resources (NYSE: PXD; Toronto). The company recently mailed to its stockholders a proxy with respect to this transaction which discloses that funding for the purchase price of the pending transaction will be provided by a combination of proceeds from the private placement of new stock in the company and a new bank credit facility. The purchase and sale agreement provides for a mid-December closing with an October 1, 1998 effective date. Oil and gas revenues for the quarter ended September 30, 1998, were $16.8 million, strengthened by $3.2 million in revenues from hedges on gas and oil production. Revenues for the quarter ended September 30, 1997 were $19.3 million, including $2.7 million of revenues for gas imbalances. The company realized average net prices for the third quarter of $2.06 per MCF for natural gas and $14.96 per BO, including 22 cents per MCF and $4.58 per barrel, respectively, as a result of the company's commodity price hedges. For the quarter ended September 30, 1997, the company realized net prices averaging $2.03 per MCF of gas and $16.91 per BO, after hedging costs of three cents per MCF and 37 cents per barrel, respectively. Lease operating expense per MCFE improved by 12 percent to $.92 for the quarter ended September 30, 1998, in comparison with $1.05 for the third quarter of 1997 (excluding the impact of volumes from gas imbalances) which is attributable to lower operating costs on new wells and the company's continued cost-containment efforts. Costilla produced 4.8 billion cubic feet of natural gas (BCF) and 461 thousand barrels of oil (MBO) during the third quarter ended September 30, 1998, or a total of approximately 7.6 BCFE on a gas equivalent basis. This compares with volumes of 4.8 BCF and 565 MBO, a total of about 8.2 BCFE for the third quarter of 1997, which included approximately 1.6 BCFE in additional production due to gas imbalances, and approximately 900 MMCFE of quarterly production from two groups of properties that were subsequently sold by the company in December 1997 and January 1998. With these adjustments, average daily production for the third quarter ended September 30, 1997, would have been approximately 62 MMCFEPD, compared with 82.6 MMCFEPD for the third quarter of the current year. The company reported cash flow of $2.6 million, or 26 cents per share, 18 cents per share on an assumed diluted basis, for the quarter ended September 30, 1998, posting a net loss of $8.2 million, or 83 cents per share. These results compare with cash flow of $7.5 million, 73 cents per share, and a net loss of $67,000, or one cent per share for the third quarter ended September 30, 1997, which included non-recurring revenues for gas imbalances of $2.7 million. Without the gas imbalance revenues, the company's results for the quarter ended September 30, 1997 would have been cash flow of 46 cents per share and a net loss of 27 cents per share. Third quarter adjusted EBITDA (earnings before taxes, interest, depreciation, depletion and amortization, exploration and abandonments, and extraordinary items) was reported at $7.2 million. This compares with $10.3 million for the third quarter of 1997, or $7.6 million excluding the gas imbalance revenues reported. The company also announced that it has entered into fixed price swap contracts covering 25,000 MMBTU of gas per day for a period of three years, beginning January 1, 1999, at prices of $2.60 per MMBTU for the months of November through March, and $2.25 per MMBTU for the months of April through October, resulting in a blended price of $2.40 per MMBTU. The referenced gas prices are based upon the price at which gas trades on the NYMEX. (One MMBTU represents one million British thermal units, a volume of gas approximately equivalent to one thousand cubic feet of natural gas, or One MCF.) 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. 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 Nine months ended September 30, September 30, 1998 1997 1998 1997 Production Oil (MBBLS) 461 565 1,510 1,601 Gas (MMCF) 4,814 4,824 12,376 11,545 MBOE 1,263 1,369 3,573 3,525 MMCFE 7,580 8,214 21,436 21,151 Average Net Sales Price Oil (per BBL) $14.96 $16.91 $15.26 $18.08 Gas (per MCF) $2.06 $2.03 $2.08 $2.19 Revenues Oil $6,897 $9,552 $23,049 $28,951 Gas $9,912 $9,787 $25,775 $25,280 Net loss $(8,239) $(67) $(24,854) $(201) Per share -basic (a) $(0.83) $(0.01) $(2.49) $(0.02) Cash Flow (b) $2,558 $7,518 $6,621 $21,037 Per share -basic $0.26 $0.73 $0.66 $2.02 Per share-diluted as if preferred stock converted $0.18 --- $0.56 --- Adjusted EBITDA (c) $7,190 $10,254 $20,606 $28,532 Adjusted EBITDA/ Interest 1.6x 3.2x 1.4x 3.4x Weighted average shares-basic 9,870 10,340 9,974 10,425 Weighted average shares-as if preferred stock converted 13,905 --- 11,748 --- (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 Nine months ended September 30, September 30, 1998 1997 1998 1997 Revenues: Oil and gas sales $ 16,809 $ 19,339 $ 48,824 $ 54,231 Interest and other 150 (38) 510 882 Other --- --- 337 --- 16,959 19,301 49,671 55,113 Expenses: Oil and gas production 6,982 6,875 21,208 21,038 General and administrative 2,786 2,172 7,857 5,543 Exploration and abandonments 2,108 634 7,336 3,748 Depreciation, depletion and amortization 7,533 6,038 21,896 15,758 Interest 4,789 3,340 14,622 8,856 24,198 19,059 72,919 54,943 Income (loss) before federal income taxes and extraordinary item (7,239) 242 (23,248) 170 Provision for federal income taxes Current --- --- --- 62 Deferred --- 90 --- 90 Income (loss) before extraordinary item (7,239) 152 (23,248) 18 Extraordinary loss resulting from early extinguishment of debt --- (219) (299) (219) Net loss (7,239) (67) (23,547) (201) Cumulative preferred stock dividend $ 1,000 $ --- $ 1,307 $ --- Loss before extraordinary item applicable to common equity $(8,239) $ 152 $(24,555) $ 18 Net loss applicable to common equity $(8,239) $ (67) $(24,854) $(201) Loss per share: Loss before extraordinary item $(0.83) $0.01 $(2.46) $0.00 Extraordinary loss resulting from early extinguishment of debt --- (0.02) (0.03) (0.02) Net loss $(0.83) $(0.01) $(2.49) $(0.02) Weighted average shares outstanding 9,870 10,340 9,974 10,425 COSTILLA ENERGY, INC. SUMMARY CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 31, 1998 1997 ASSETS Current assets: Cash $6,361 $3,615 Other current assets 12,635 15,465 Total current assets 18,996 19,080 Net property, plant and equipment, at cost 235,415 167,940 Other assets 8,820 7,068 Total $263,231 $194,088 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $36,457 $30,591 Long-term debt, less current maturities 207,362 163,087 Other noncurrent liabilities --- --- Stockholders' equity 19,412 410 Total Liabilities and Stockholders' Equity $263,231 $194,088SOURCE Costilla Energy, Inc.
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CONTACT:
Mike Grella, President & CEO, or Guy McCrary,
Manager, Investor Relations, 915-683-3092, both of Costilla
Energy, Inc.
