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| Costilla Reports 4th Quarter, 1997 Results |
-- Production for the Year Up 39%
-- Annual Revenues Increase 39%
-- 270% Reserve Replacement Rate
-- 84% Success Rate for 1997 Drilling
-- Migl-Mitchell #1 Doubles Production
-- Migl #2 Testing New Fault Block
-- Company Completes Repurchase of 500,000 Shares
MIDLAND, Texas, Feb. 27 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) reported today a net loss of $36.3 million, or $3.54 per share,
for the fourth quarter ended December 31. These results include a $ 28.2
million non-cash charge related to the Statement of Financial Accounting
Standard No.121, Impairment of Long-lived Assets. This compares with a net
loss for the fourth quarter of 1996 of $3.1 million, or $0.30 per share,
including extraordinary items of $3.3 million. For the year, Costilla
incurred a net loss of $36.5 million, or $3.51 per share, compared with a net
loss in 1996 of $8.4 million, or $1.29 per share, including extraordinary
items of $5.0 million.
Cash flow for the fourth quarter was $5.7 million, or 56 cents per share,
compared with $7.9 million, or 77 cents per share, for the fourth quarter of
1996. Adjusted EBITDA was $9.5 million, or 2.4 times interest expense,
compared to $10.8 million, or 4.0 times interest expense for the fourth
quarter of 1996. For the year ended December 31, 1997 cash flow was $26.8
million, or $2.58 per share. Adjusted EBITDA for 1997 was $38.1 million, or
3.1 times interest expense.
The Company's average oil price in the fourth quarter of 1997 dropped
$5.22 per barrel, to $16.91 from $22.13 compared to the fourth quarter of
1996, a 24 percent decrease. Revenues for the fourth quarter of 1997 totaled
$21.4 million, which included a $3.2 million gain on the previously announced
sale of properties to Concho Resources Inc. Revenues for the comparable
quarter of 1996 were $20.1 million, including a $1 million gain on a sale of
assets. For the 12 months ended December 31, 1997, Costilla reported revenues
of $76.5 million, a 39 percent increase over the prior year's total revenues
of $55.0 million.
Costilla's proved oil and gas reserves at January 1, 1998 were 39.7
million barrels of oil equivalent (MMBOE), compared with 37.0 MMBOE at
January 1, 1997. Including the previously announced Manti Resources property
acquisition, and excluding the sale of certain non-operated properties in
Oklahoma, transactions closed in January of 1998, the Company's reserves at
January 1, 1998 would have been 40.3 MMBOE. Using commodity prices effective
at January 1, 1997, the Company's reserves at January 1, 1998 would have been
45.3 MMBOE, including the Manti acquisition, representing a 22 percent growth
in reserves.
The SEC PV-10 value of the Company's reserves at January 1, 1998, was
$196.7 million, or $202.4, with the transactions closed in January, compared
with $311.8 million for the prior year. Using commodity prices in effect at
January 1, 1997, the Company's reserves at January 1, 1998 would have had an
SEC PV-10 value of $432.1 million, including the Manti acquisition.
For the fourth quarter of 1997, the Company's actual production was
1,251,000 barrels of oil equivalent (BOE), comprised of 613,000 barrels of oil
and 3.8 million cubic feet of gas, or a daily rate of 13,594 BOE. After
decreases resulting from prior production estimates and gas imbalances,
primarily on outside operated properties, the Company's reported production
was 1,100,000, a daily rate of 11,948 BOE. As a result of the Company's sale
of producing properties in January 1998, the Company has reduced its interests
in non-operated properties by approximately 1,600 wells.
As a result of the sale of properties, production levels at the beginning
of 1998 were approximately 11,000 BOEPD. The Company has since added
approximately 1,850 BOEPD to production, bringing the current daily production
to approximately 12,850 BOEPD. Average daily production for January and
February is 11,800.
Total production for 1997 was approximately 4.6 MMBOE, a 39 percent
increase over 1996 production of 3.3 MMBOE.
During the fourth quarter of 1997, the Company participated in the
drilling of 22 wells, of which 19 were productive. Wells drilling or
completing on January 1 totaled 9. All of these wells are located in
Costilla's core operating areas in the Permian Basin, South and East Texas and
the Rocky Mountains. In the year ended December 31, 1997 Costilla
participated in the drilling of 122 oil and gas wells of which 101 were
productive_an 83 percent success rate in drilling. In each of the past two
years, Costilla has achieved a better than 80 percent rate of drilling
success.
During 1997, the Company added 12,564,000 barrels to its reserves through
extensions and discoveries. This represents a 270 percent replacement of
Costilla's 1997 production.
Costilla reported that, with additions to pipeline capacity, it has
doubled daily production from the Migl-Mitchell #1 to a rate of approximately
10.5 million cubic feet per day (MMCFD) of natural gas, or about 1,750 BOEPD.
The absolute open flow rate of this well has been tested at 116 MMCFD.
Additional pipeline capacity is anticipated in mid-March.
The Company's second well in the Southwest Speaks field, the Migl-Mitchell
#2, is currently drilling at a depth of 15,000 feet. This well is being
drilled to test a separate fault block in the Southwest Speaks Field and has
encountered 480 feet of gross pay sands. Based on current estimates the well
should be completed in early March. Immediately following the completion of
the Migl-Mitchell # 2, the Migl-Mitchell #3 will commence drilling. The
Company owns a 100 percent working interest in its Southwest Speaks prospect
located in Lavaca County, Texas.
The Cotton Valley Pinnacle Reef well McMahon #4 in Freestone County, Texas
in which the Company holds a 26 percent working interest has been completed.
Production is anticipated to commence within the next 10 days.
Costilla also announced the recent completion of the Caldwell B#1, which
is currently flowing at the rate of approximately 2.1 MMCFD, plus 25 barrels
of condensate per day, or a total of about 375 BOEPD. The well is producing
from a Cotton Valley sand at a depth of approximately 8,500 feet. The Company
expects additional production following a dual completion of the well in a
Travis Peak sand at a depth of about 7,800 feet. The Caldwell B#1 is located
in Panola County, Texas on the Hopewell project in which the Company has 100
percent working interest in 6,748 acres. The Company has identified
significant drilling potential on the Hopewell prospect.
The recently drilled State 3 #1 is producing at a rate of approximately
400 barrels of oil per day. The Company owns a 42.58 percent working interest
in this Lea County, New Mexico well. The producing zone is the Strawn
formation at a depth of approximately 11,500 feet.
The Scott & Hopper 1-5, located on the Company's Brooks County prospect in
South Texas, is expected to be completed and ready for production in early
March. The Company estimates potential reserves for this well to be in excess
of 3 billion cubic feet.
Production has been increased from the Company's recently acquired Pita
Field, part of the Manti acquisition, also located in Brooks County, Texas.
Production is up 53 percent, to 475 BOEPD, from 310 BOEPD, since the property
was acquired in mid-January.
Costilla also reported that it has completed its previously announced plan
to repurchase 500,000 shares of the Company's outstanding common stock. The
repurchase was authorized and initiated in mid-1997. In addition, Mike
Grella, President and CEO of the Company purchased 296,000 share of Costilla
during 1997.
Following completion of the Company's stock repurchase, 9,981,000 shares
are presently outstanding.
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. Information about Costilla Energy is now 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. These factors are discussed in
more detail in the Company's prospectus for its initial public offering of
common stock.
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Years ended
December 31, December 31,
1997 1996 1997 1996
Revenues:
Oil and gas sales $18,069 $19,133 $72,300 $53,919
Interest and other 89 (56) 552 40
Other 3,230 994 3,649 1,067
21,388 20,071 76,501 55,026
Expenses:
Oil and gas production 8,992 7,044 30,029 21,774
General and administrative 2,865 1,298 8,407 5,238
Exploration and abandonments 2,840 1,543 6,588 2,550
Depreciation, depletion and
amortization 10,650 4,357 26,409 12,430
Impairment of oil and gas
properties 28,189 -- 28,189 --
Interest 4,122 2,851 12,979 11,281
57,658 17,093 112,601 53,273
Income (loss) before federal
income taxes and extraordinary
item (36,270) 2,978 (36,100) 1,753
Provision for federal income taxes
Current -- 160 62 176
Deferred -- 1,042 90 1,042
Income (loss) before
extraordinary item (36,270) 1,776 (36,252) 535
Extraordinary loss
resulting from early
extinguishment of debt,
net of deferred tax benefit -- (3,335) (219) (4,975)
Net loss (36,270) (1,559) (36,471) (4,440)
Preferred return and accretion
of redeemable members' capital $-- $(1,510) $-- $(3,930)
Income (loss) before
extraordinary item applicable
to common equity $(36,270) $266 $(36,252) $(3,395)
Net loss applicable to
common equity $(36,270) $(3,069) $(36,471) $(8,370)
Income (loss) per share:
Income (loss) before
extraordinary item $(3.54) $0.03 $(3.49) $(0.52)
Extraordinary loss resulting
from early extinguishment
of debt, net of deferred
tax benefit -- (0.33) (0.02) (0.77)
Net loss $(3.54) $(0.30) $(3.51) $(1.29)
Weighted average shares
outstanding 10,260 10,263 10,383 6,473
COSTILLA ENERGY, INC.
SUMMARY FINANCIAL AND OTHER DATA
(in thousands, except per share data)
Three months ended Years ended
December 31, December 31,
1997 1996 1997 1996
Production
Oil (MBBLS) 574 515 2,175 1,726
Gas (MMCF) 3,153 3,003 14,698 9,205
MBOE 1,100(c) 1,016 4,625 3,260
Average Net Sales Price
Oil (per BBL) $16.91 $22.13 $17.77 $19.87
Gas (per MCF) $2.65 $2.58 $2.29 $2.13
Revenues
Oil $9,700 $11,399 $38,651 $34,306
Gas $8,369 $7,734 $33,649 $19,614
Net income (loss) $(36,270) $(3,069) $(36,471) $(8,370)
Per share $(3.54) $(0.30) $(3.51) $(1.29)
Cash Flow(a) $5,713 $7,950 $26,750 $16,727
Per share $0.56 $0.77 $2.58 $2.58
Adjusted EBITDA(b) $9,532 $10,823 $38,065 $27,108
Adjusted EBITDA/Interest 2.4x 4.0x 3.1x 2.6x
Weighted average shares 10,260 10,263 10,383 6,473
(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.
(c) Actual production before adjustments for production estimates and gas
imbalances was 1,251,000 BOE.
COSTILLA ENERGY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
1997 1996
ASSETS
Current assets $19,080 $30,409
Net property, plant and equipment, at cost 168,671 126,944
Other assets 7,068 5,437
Total $194,819 $162,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $38,121 $20,089
Long-term debt, less current maturities 156,287 100,262
Other noncurrent liabilities -- 1,870
Stockholders' equity 411 40,569
Total Liabilities and Stockholders'
Equity $194,819 $162,790
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, for Costilla Energy
