HOUSTON, Aug. 8, 2007 (PRIME NEWSWIRE) -- The Meridian Resource Corporation (NYSE:TMR) today announced its second quarter 2007 financial and operational results. A summary of the quarter's results are:
-- Net Income totaled $2.7 million, or $0.03 per share -- Discretionary Cash Flow totaled $25.9 million -- Production totaled 4.7 Bcfe, or 52.0 Mmcfe per day -- Revenues totaled $40 million -- Lease Operating Expense totaled $7.0 million -- Depletion and Depreciation totaled $19.6 million -- General & Administrative Expense totaled $3.9 million
Net Income
Net income to common shareholders for the second quarter of 2007 was $2.7 million or $0.03 per diluted common share, essentially in-line with the $2.8 million, or $0.03 per share for the second quarter of 2006. Sequentially, net income was up by $1 million compared to $1.7 million for the first quarter of 2007. The increase in net income between the periods is due to a combination of increased price realizations and lower depletion and depreciation expense, offset by lower production between the periods. Net income for the first six months of 2007 was $4.4 million compared to $10.2 million for the same period of 2006.
Discretionary Cash Flow
Discretionary cash flow for the second quarter of 2007 was $25.9 million, compared to $32.2 million for the second quarter of 2006. The decrease in discretionary cash flow between the periods is due in part to lower net production, offset by higher average price realizations. Sequentially, discretionary cash flow is up slightly compared to $25.1 million for the first quarter of 2007. Discretionary cash flow for the first six months of 2007 was $51.0 million compared to $75.0 million for the same period of 2006.
Production
Production volumes for the second quarter of 2007 totaled 4.7 billion cubic feet of gas equivalent ("Bcfe"), or 52 Mmcfe per day compared to 5.9 Bcfe or 64.3 Mmcfe per day for the second quarter of 2006. The variance in production volumes between the two periods is due for the most part to natural production declines and mechanical issues in the Weeks Island field, offset by new discoveries brought online since the second quarter of 2006. Production volumes for the first six months of 2007 were 10.0 Bcfe compared to 12.3 Bcfe for the same period of 2006.
Revenues
Oil and gas revenues for the second quarter of 2007 totaled $39.7 million, or $8.39 per Mcfe, compared to oil and gas revenues of $45.1 million, or $7.71 per Mcfe, for the second quarter of 2006. The variance between the two periods for oil and gas revenues is due primarily to an increase in realized commodity prices offset in part by the reduced level of production referenced above. Natural gas prices rose to $7.77 per Mcf up from $7.29 per Mcf in the same quarter last year, after giving effect to the Company's commodity hedge program. Crude oil and condensate prices also rose to $61.20 per barrel, up 9% from $56.01 per barrel during the second quarter of 2006, after giving effect to the Company's commodity hedge program. Sequentially, oil and gas revenues are in-line with the $40.1 million received in the first quarter of 2007. Oil and gas revenues for the first six months of 2007 were $79.9 million compared to $102.9 million for the same period of 2006.
Lease Operating Expenses
Lease operating expenses for the second quarter of 2007 were $7.0 million compared to $5.0 million for the second quarter of 2006. The difference in lease operating expenses between the two periods was primarily a result of significant increases in insurance premiums for the Company's operations and facilities located in the coastal Gulf of Mexico region and the addition of new production in East Texas, south Louisiana and from the Vintage acquisition. Additionally, expenses rose in the Biloxi Marshland area due to increased compression and salt water disposal cost and a one time civil penalty expense arising from the Weeks Island pipeline operations. Although the Company's insurance costs increased for the period from May 2006 through April 2007, we anticipate those costs to moderate during 2007. We continue to ensure our assets with improved coverage as a safeguard against losses for the Company in the event of another hurricane. Sequentially, lease operating expenses were down by $800 thousand, or 10% compared to $7.8 million for the first quarter of 2007. This decrease is due primarily to a combination of reduced operating costs at Bayou Gentilly and Ramos field from the first quarter and the sale of the Umbrella Point property. Lease operating expenses for the first six months of 2007 were $14.8 million compared to $9.6 million for the same period of 2006.
Depletion and Depreciation
Depletion and depreciation for the second quarter of 2007 was $19.6 million down $8.1 million, or 29% compared to $27.7 million for the second quarter of 2006. On a per Mcfe basis, depletion and depreciation for the second quarter was $4.14 per Mcfe compared to $4.73 per Mcfe for the second quarter of 2006. The difference between the two periods primarily reflects the impact of the ceiling test write down taken by the Company in the third quarter of 2006. Sequentially, depreciation and depletion expense was down by $1.4 million compared with the first quarter of 2007.
General and Administrative Expenses
General and administrative expenses for the second quarter of 2007 were $3.9 million, or $0.82 per Mcfe, compared to $4.4 million, or $0.75 per Mcfe for the second quarter of 2006. The decrease in general and administrative expenses between the periods was primarily due to reductions in contract and consulting services, legal services and a decrease in office rent (resulting from a new lease agreement). Sequentially, general and administrative expenses were in-line with the first quarter of 2007 at $3.9 million.
Share Repurchases
In March 2007, the Company's Board of Directors authorized a new share repurchase program. Under the program, the Company may repurchase in the open market up to $5 million worth of common shares per year over the next three years. Since the Company last reported earnings on May 8th of 2007, Meridian has repurchased 100,000 common shares at a cost of $305,000.
Conference Call Information
Meridian invites you to listen to its conference call which will discuss the Company's financial and operational results on Wednesday August 8, 2007 at 2:00 p.m. Central Time. To participate in this conference call, dial 800-510-0178 (U.S./Canada) or 617-614-3450 (International) five to ten minutes before the scheduled start time and reference Conference ID #93319616. The conference call will be webcast and can be accessed on the Company's website at www.tmrc.com. Additionally, a replay of the conference call will be available for one week following the live broadcast by dialing 888-286-8010 (U.S./Canada) or 617-801-6888 (International) and referencing Conference ID #54968846.
Non-GAAP Financial Measure
In this press release, we refer to a non-GAAP financial measure we call "discretionary cash flow." As used herein, discretionary cash flow represents net income plus depletion and depreciation, deferred taxes and other non-cash items included in the Consolidated Statements of Operations prepared in accordance with GAAP. Management believes this measure is a financial indicator of our Company's ability to internally fund capital expenditures and service outstanding debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income, as defined by GAAP.
The Meridian Resource Corporation is an independent oil and natural gas company engaged in the exploration for and development of oil and natural gas in Louisiana, Texas, Oklahoma, Kentucky and the Gulf of Mexico. Meridian has access to an extensive inventory of seismic data and, among independent producers, is a leader in using 3-D seismic and other technologies to analyze prospects, define risk, target and complete high-potential wells for exploration and development. Meridian is headquartered in Houston, Texas, and has offices in Tulsa, Oklahoma as well as a field office in Weeks Island, Louisiana. Meridian stock is traded on the New York Stock Exchange under the symbol "TMR."
Safe Harbor Statement and Disclaimer
Statements identified by the words "expects," "projects," "plans," and certain of the other foregoing statements may be deemed "forward-looking statements." Although Meridian believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this press release. These include risks inherent in the drilling of oil and natural gas wells, including risks of fire, explosion, blowout, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks inherent in oil and natural gas drilling and production activities, which may temporarily or permanently reduce production or cause initial production or test results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations; risks with respect to oil and natural gas prices, a material decline in which could cause the Company to delay or suspend planned drilling operations or reduce production levels; and risks relating to the availability of capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and declines in oil and gas prices. These and other risks are described in the Company's documents and reports, available from the U.S. Securities and Exchange Commission, including the report filed on Form 10-K for the year ended December 31, 2006.
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THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data, Unaudited)
Q2-07 Q2-06
-------------------- --------------------
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
-------- -------- -------- --------
Production:
Oil (Mbbl) 201 199 450 423
Natural Gas (Mmcf) 3,526 4,657 7,290 9,744
Mmcfe 4,734 5,850 9,991 12,282
Mmcfe (Daily Rate) 52.0 64.3 55.2 67.9
Average Prices:
Oil (per Bbl) $ 61.20 $ 56.01 $ 55.17 $ 52.43
Natural Gas (per Mcf) 7.77 7.29 7.55 8.29
Per Mcfe 8.39 7.71 7.99 8.38
Oil and Natural Gas
Revenues $ 39,716 $ 45,101 $ 79,859 $102,928
Lease Operating
Expenses 6,988 5,011 14,755 9,564
Per Mcfe 1.48 0.86 1.48 0.78
Depletion and
depreciation 19,607 27,671 40,610 57,170
Per Mcfe 4.14 4.73 4.06 4.65
Severance and Ad
Valorem Taxes 2,619 2,610 5,463 5,345
Per Mcfe 0.55 0.45 0.55 0.44
General and
Administrative Expense 3,890 4,405 7,785 9,516
Per Mcfe 0.82 0.75 0.78 0.77
Interest Expense 1,538 1,489 3,077 2,867
Per Mcfe 0.32 0.25 0.31 0.23
Discretionary Cash
Flow (1) $ 25,854 $ 32,218 $ 50,993 $ 75,038
Per Mcfe 5.46 5.51 5.10 6.11
Net Earnings Applicable
to Common Stockholders $ 2,705 $ 2,843 $ 4,373 $ 10,174
Per Common Share
(Basic) $ 0.03 $ 0.03 $ 0.05 $ 0.12
Per Common Share
(Diluted) $ 0.03 $ 0.03 $ 0.05 $ 0.11
(1) See accompanying table for a reconciliation of discretionary cash
flow to net cash provided by operating activities as defined by
GAAP.
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share, Unaudited)
Q2-07 Q2-06
-------------------- --------------------
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
-------- -------- -------- --------
Revenues:
Oil and natural gas $ 39,716 $ 45,101 $ 79,859 $102,928
Interest and other 325 1,439 761 1,118
-------- -------- -------- --------
Total revenues 40,041 46,540 80,620 104,046
-------- -------- -------- --------
Operating costs and
expenses:
Oil and natural gas
operating 6,988 5,011 14,755 9,564
Severance and ad
valorem taxes 2,619 2,610 5,463 5,345
Depletion and
depreciation 19,607 27,671 40,610 57,170
General and
administrative 3,890 4,405 7,785 9,516
Accretion expense 574 319 1,127 620
Hurricane damage
repairs -- 404 -- 2,403
-------- -------- -------- --------
Total operating costs
and expenses 33,678 40,420 69,740 84,618
-------- -------- -------- --------
Earnings before
interest and income
taxes 6,363 6,120 10,880 19,428
Other expenses:
Interest expense 1,538 1,489 3,077 2,867
Taxes on income:
Current (26) 197 112 368
Deferred 2,146 1,591 3,318 6,019
-------- -------- -------- --------
Net Earnings applicable
to common stockholders $ 2,705 $ 2,843 $ 4,373 $ 10,174
======== ======== ======== ========
Net Earnings per share:
- Basic $ 0.03 $ 0.03 $ 0.05 $ 0.12
======== ======== ======== ========
- Diluted $ 0.03 $ 0.03 $ 0.05 $ 0.11
======== ======== ======== ========
Weighted average
common shares
outstanding:
- Basic 89,329 86,950 89,291 86,900
- Diluted 94,906 92,140 94,792 92,346
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, Dec. 31,
2007 2006
-------- --------
ASSETS (unaudited)
------
Cash and cash equivalents $ 33,627 $ 32,706
Other current assets 37,031 36,380
-------- --------
Total current assets 70,658 69,086
-------- --------
Property, equipment and other assets 407,724 398,809
-------- --------
Total assets $478,382 $467,895
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities $ 54,207 $ 50,539
Long-term debt, net of current maturities 75,000 75,000
Other liabilities 26,188 21,559
Common stockholders' equity 322,987 320,797
-------- --------
Total liabilities and stockholders' equity $478,382 $467,895
======== ========
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(In thousands, Unaudited)
-------------------- --------------------
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
-------------------- --------------------
Reconciliation of
Discretionary Cash Flow
(Diluted) to Net Cash
Provided By Operating
Activities:
Discretionary Cash Flow
(Diluted) $ 25,854 $ 32,218 $ 50,993 $ 75,038
Adjustments to
reconcile discretionary
cash flow to net cash
provided by operating
activities:
Net changes in
working capital 2,582 (5,379) (3,475) (92)
-------------------- --------------------
Net Cash Provided By
Operating Activities $ 28,436 $ 26,839 $ 47,518 $ 74,946
==================== ====================
The Meridian Resource Corporation
Summary of Natural Gas
and
Crude Oil Hedge Positions
Natural Gas Costless Collars
----------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Mmbtu/Qtr) ($/Mmbtu) ($/Mmbtu)
---------- ------------ ----------- -----------
Q2 - '07 1,600,000 $ 7.50 $11.05
Q3 - '07 1,350,000 $ 7.00 $11.50
Q4 - '07 1,110,000 $ 7.00 $11.50
Q1 - '08 1,010,000 $ 7.15 $11.95
Q2 - '08 880,000 $ 7.16 $11.94
Q3 - '08 740,000 $ 7.16 $11.95
Q4 - '08 610,000 $ 7.16 $11.95
Crude Oil Costless Collars
--------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Bbls/Qtr) ($/Bbl) ($/Bbl)
---------- ------------ ----------- -----------
Q2 - '07 48,000 $52.50 $79.53
Q3 - '07 45,000 $60.22 $84.24
Q4 - '07 43,000 $64.16 $87.01
Q1 - '08 47,000 $62.34 $86.05
Q2 - '08 41,000 $63.17 $86.55
Q3 - '08 25,000 $59.40 $84.95
Q4 - '08 15,000 $55.00 $83.00