HOUSTON, Aug. 7, 2008 (PRIME NEWSWIRE) -- The Meridian Resource Corporation (NYSE:TMR) today announced its second quarter 2008 financial and operational results. A summary of the quarter's results are:
-- Net Income of $839 thousand, or $0.01 per share, which includes the
impact of a previously announced one time contract settlement.
Excluding this expense, Net Income would have been $6.5 million or
$0.07 per share
-- Discretionary Cash Flow totaled $20.9 million
-- Production totaled 3.6 Bcfe, or an average of 40 Mmcfe per day
-- Oil & Gas Revenues totaled $46.5 million
-- Lease Operating Expense totaled $7.2 million
-- Depletion and Depreciation totaled $17.9 million
-- General & Administrative Expense totaled $5.2 million
Net Income
Net income to common shareholders for the second quarter of 2008 was $839 thousand or $0.01 per diluted common share, compared to a net income of $2.7 million, or $0.03 per share for the second quarter of 2007. The variance between the two periods was due primarily to previously reported contract settlement, offset by improved commodity prices and lower depletion and depreciation. Excluding the one time impact of the contract settlement, the Company's net income was approximately $6.5 million, or $0.07 per share.
Production
Production volumes for the second quarter of 2008 totaled 3.6 billion cubic feet of gas equivalent ("Bcfe"), or an average of 40 million cubic feet of natural gas equivalent per day ("Mmcfe/d") compared to 4.7 Bcfe or 52 Mmcfe per day for the second quarter of 2007. The variance in production volumes between the two periods is due in part to natural production declines and the Biloxi Marshland field being shut-in for 35 days for pipeline maintenance by the natural gas transmission company that takes gas from this field. The amount of delayed production during this period was approximately 250 Mmcfe. Sequentially, production is relatively flat compared to the average daily production of 41 Mmcfe/d in the first quarter of 2008.
Oil and Gas Revenues
Oil and gas revenues (which include oil and gas hedging activities) for the second quarter of 2008 totaled $46.5 million, compared to $39.7 million for the second quarter of 2007, an increase of $6.8 million, or 17%. The variance between the two periods for oil and gas revenues is due primarily to the increases in realized commodity prices, partially offset by the reduced level of production referenced above. Natural gas prices increased between the periods from $7.77 per Mcf in the second quarter of 2007 to $11.09 per Mcf for the same period in 2008. Crude oil prices increased from $61.20 per barrel in the second quarter of 2007 to $98.96 per barrel in the same period in 2008. Sequentially, oil and gas revenues are up compared to $38.4 million in the first quarter of 2008, due primarily to an increase in both oil and natural gas prices.
Lease Operating Expenses
Lease operating expenses for the second quarter of 2008 were $7.2 million, up slightly compared to $7.0 million for the second quarter of 2007. Second quarter 2008 expenses increased due to higher saltwater disposal and compression expenses, compared to the second quarter 2007 which included a one time civil penalty expense arising from environmental litigation. Lease operating expenses for the first six months of 2008 were down by $1.5 million, or 10% compared to the same period last year due primarily to decreased workovers, lower insurance cost, sale of properties and fewer maintenance related activities.
Depletion and Depreciation
Depletion and depreciation for the second quarter of 2008 was $17.9 million down $1.7 million, or 9%, compared to $19.6 million for the second quarter of 2007. On a per Mcfe basis, depletion and depreciation for the second quarter was $4.91 per Mcfe compared to $4.14 per Mcfe for the second quarter of 2007. The difference between the two periods is due primarily to increased capital costs. Sequentially, depreciation and depletion expense was flat compared with the first quarter of 2008.
General and Administrative Expenses
General and administrative expenses for the second quarter of 2008 were $5.2 million compared to $3.9 million for the second quarter of 2007. The increase in general and administrative expenses between the periods was primarily due to increased legal fees, consulting services and other expenses associated with certain contract settlements. Sequentially, general and administrative expenses were up $1.1 million compared to the first quarter of 2008 of $4.1 million.
Discretionary Cash Flow
Discretionary cash flow for the second quarter of 2008 was $20.9 million, compared to $25.9 million for the second quarter of 2007. Sequentially, discretionary cash flow is down compared to $25.2 million for the first quarter of 2008.
Conference Call Information
Meridian invites you to listen to its conference call which will discuss the Company's financial and operational results on Thursday, August 7, 2008 at 2:00 p.m. Central time. To participate in this conference call, dial 888.679.8035 (U.S./Canada) or 617.213.4848 (International) five to ten minutes before the scheduled start time and reference Conference ID #62099093. 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 #62045035.
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, exploitation, acquisition and development of oil and natural gas in Louisiana, Texas 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 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, 2007.
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THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data, Unaudited)
Q2-08 Q2-07
----------------- -----------------
Three Months Six Months
Ended Ended
----------------- -----------------
Jun 30, Jun 30, Jun 30, Jun 30,
2008 2007 2008 2007
------- ------- ------- -------
Production:
Oil (Mbbl) 188 201 372 450
Natural Gas (Mmcf) 2,516 3,526 5,142 7,290
Mmcfe 3,645 4,734 7,376 9,991
Mmcfe (Daily Rate) 40.1 52.0 40.5 55.2
Average Prices:
Oil (per Bbl) $98.96 $61.20 $93.00 $55.17
Natural Gas (per Mcf) 11.09 7.77 9.79 7.55
Per Mcfe 12.77 8.39 11.52 7.99
Oil and Natural Gas Revenues $46,534 $39,716 $84,982 $79,859
Lease Operating Expenses 7,154 6,988 13,224 14,755
Per Mcfe 1.96 1.48 1.79 1.48
Depletion and depreciation 17,886 19,607 35,628 40,610
Per Mcfe 4.91 4.14 4.83 4.06
Severance and Ad Valorem
Taxes 2,996 2,619 5,574 5,463
Per Mcfe 0.82 0.55 0.76 0.55
General and Administrative
Expense 5,215 3,890 9,290 7,785
Per Mcfe 1.43 0.82 1.26 0.78
Interest Expense 1,372 1,538 2,523 3,077
Per Mcfe 0.38 0.32 0.34 0.31
Discretionary Cash Flow (1) $20,880 $25,854 $46,107 $50,993
Per Mcfe 5.73 5.46 6.25 5.10
Net Earnings Applicable to $839 $2,705 $4,402 $4,373
Common Stockholders
Per Common Share (Basic) $0.01 $0.03 $0.05 $0.05
Per Common Share (Diluted) $0.01 $0.03 $0.05 $0.05
(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)
Q2-08 Q2-07
------------------ ------------------
Three Months Ended Six Months Ended
------------------ ------------------
Jun 30, Jun 30, Jun 30, Jun 30,
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Oil and natural gas $46,534 $39,716 $84,982 $79,859
Interest and other 109 325 202 761
-------- -------- -------- --------
Total revenues 46,643 40,041 85,184 80,620
-------- -------- -------- --------
Operating costs and expenses:
Oil and natural gas operating 7,154 6,988 13,224 14,755
Severance and ad valorem
taxes 2,996 2,619 5,574 5,463
Depletion and depreciation 17,886 19,607 35,628 40,610
General and administrative 5,215 3,890 9,290 7,785
Accretion expense 531 574 1,098 1,127
Contract settlement 9,894 -- 9,894 --
-------- -------- -------- --------
Total operating costs and
expenses 43,676 33,678 74,708 69,740
-------- -------- -------- --------
Earnings before interest and
income taxes 2,967 6,363 10,476 10,880
Other expenses:
Interest expense 1,372 1,538 2,523 3,077
Taxes on income:
Current (96) (26) 11 112
Deferred 852 2,146 3,540 3,318
-------- -------- -------- --------
Net Earnings applicable to
common stockholders $839 $2,705 $4,402 $4,373
======== ======== ======== ========
Net Earnings per share:
- Basic $0.01 $0.03 $0.05 $0.05
======== ======== ======== ========
- Diluted $0.01 $0.03 $0.05 $0.05
======== ======== ======== ========
Weighted average common
shares outstanding:
- Basic 91,387 89,329 90,372 89,291
- Diluted 94,501 94,906 94,901 94,792
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Jun 30, Dec. 31,
2008 2007
-------- --------
ASSETS (unaudited)
Cash and cash equivalents $16,451 $13,526
Restricted cash 9,925 30
Other current assets 48,180 29,609
-------- --------
Total current assets 74,556 43,165
-------- --------
Property, equipment and other assets 459,623 440,610
-------- --------
Total assets $534,179 $483,775
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $78,950 $54,128
Long-term debt, net of current maturities 97,953 75,000
Other liabilities 39,838 29,217
Common stockholders' equity 317,438 325,430
-------- --------
Total liabilities and stockholders'
equity $534,179 $483,775
======== ========
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(In thousands, Unaudited)
----------------- -----------------
Three Months Six Months
Ended Ended
----------------- -----------------
Jun 30, Jun 30, Jun 30, Jun 30,
2008 2007 2008 2007
----------------- -----------------
Reconciliation of
Discretionary Cash Flow
to Net Cash Provided By
Operating Activities:
Discretionary Cash Flow $20,880 $25,854 $46,107 $50,993
Adjustments to reconcile
discretionary cash flow
to net cash provided by
operating activities:
Net changes in working
capital
2,037 1,262 (424) (1,723)
------------------ ------------------
Net Cash Provided By
Operating Activities $22,917 $27,116 $45,683 $49,270
================== ==================
THE MERIDIAN RESOURCE CORPORATION
Summary of Natural Gas
and
Crude Oil Hedge Positions
Natural Gas Costless Collars
-----------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Mmbtu/Qtr) ($/Mmbtu) ($/Mmbtu)
---------- ------------- ----------- -----------
Q2 - '08 1,410,000 $7.32 $11.27
Q3 - '08 1,230,000 $7.32 $11.23
Q4 - '08 1,070,000 $7.32 $11.16
Q1 - '09 790,000 $7.77 $11.07
Q2 - '09 650,000 $7.75 $10.99
Q3 - '09 570,000 $7.75 $11.02
Q4 - '09 520,000 $7.76 $11.02
Crude Oil Costless Collars
--------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Bbls/Qtr) ($/Bbl) ($/Bbl)
---------- ------------- ----------- -----------
Q2 - '08 77,000 $71.17 $95.25
Q3 - '08 64,000 $69.53 $93.84
Q4 - '08 52,000 $67.88 $92.03
Q1 - '09 36,000 $80.42 $115.38
Q2 - '09 31,000 $80.16 $114.96
Q3 - '09 26,000 $79.81 $114.38
Q4 - '09 22,000 $80.00 $114.99