HOUSTON, Nov. 6, 2008 (GLOBE NEWSWIRE) -- The Meridian Resource Corporation (NYSE:TMR) today announced its third quarter 2008 financial and operational results. A summary of the quarter's results are:
* Net Income totaled $699 thousand, or $0.01 per share, which includes the impact of hurricane damage repairs. Excluding this expense, net income would have been $1.6 million or $0.02 per share for the quarter * Discretionary Cash Flow totaled $19.9 million * Production totaled 3.1 Bcfe, or an average of 33 Mmcfe per day * Oil & Gas Revenues totaled $36.8 million * Lease Operating Expense totaled $5.9 million * Depletion and Depreciation totaled $15.9 million * General & Administrative Expense totaled $5.9 million
Net Income
Net income to common shareholders for the third quarter of 2008 was $699 thousand or $0.01 per diluted common share, compared to net income of $750 thousand, or $0.01 per diluted common share for the third quarter of 2007. The variance between the two periods was due primarily to hurricane related expenses of $1.5 million; approximately one month of shut-in production in south Louisiana (estimated at 550 to 600 Mmcfe) caused by the back-to-back storms in the Gulf of Mexico; and expenses related to employee retention payments, offset by improved commodity prices and lower depletion and depreciation. Excluding the hurricane related expenses, the Company's net income would have been approximately $1.6 million, or $0.02 per share.
Production
Production volumes for the third quarter of 2008 totaled 3.1 billion cubic feet of gas equivalent ("Bcfe"), or an average of 33.3 million cubic feet of natural gas equivalent per day ("Mmcfe/d") compared to 4.2 Bcfe or 45.4 Mmcfe per day for the third quarter of 2007. The variance in production volumes between the two periods is due in large part to the impact of hurricanes Gustav and Ike which struck south Louisiana and the upper Texas coast. These storms forced the Company to temporarily shut-in production in its core operating areas. The Company sustained some physical damage from the storms, but more importantly, experienced delays in bringing production back on-line in several of its operating areas due primarily to lack of access to the fields and being shut-in by third party pipelines and processing facilities. The amount of delayed production for the third quarter related to the storms was estimated to be between 550 and 600 Mmcfe.
Oil and Gas Revenues
Oil and gas revenues (which include oil and gas hedging activities) for the third quarter of 2008 totaled $36.8 million, compared to $33.7 million for the third quarter of 2007, an increase of $3.1 million, or 9%. The variance between the two periods for oil and gas revenues was 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 $6.77 per Mcf in the third quarter of 2007 to $9.67 per Mcf for the same period in 2008. Crude oil prices increased from $69.92 per barrel in the third quarter of 2007 to $99.42 per barrel in the same period in 2008. Oil and gas revenues for the first nine months of 2008 were $122 million, up by $8.2 million, or 7% compared to the same period last year.
Lease Operating Expenses
Lease operating expenses for the third quarter of 2008 were $5.9 million, down by $1.1 million compared to $7.0 million for the third quarter of 2007. Third quarter 2008 expenses decreased primarily due to lower insurance costs and a decrease in workovers. Lease operating expenses for the first nine months of 2008 were down by $2.6 million, or 12% compared to the same period last year due primarily to decreased workovers, lower insurance costs, the sale of properties and fewer maintenance related activities.
Depletion and Depreciation
Depletion and depreciation for the third quarter of 2008 was $15.9 million down $1.7 million, or 10%, compared to $17.6 million for the third quarter of 2007. On a per Mcfe basis, depletion and depreciation for the third quarter was $5.19 per Mcfe compared to $4.21 per Mcfe for the third quarter of 2007. The difference between the two periods is due primarily to increased capital costs and lower production. Sequentially, depreciation and depletion expense was also down compared with the second quarter of 2008.
General and Administrative Expenses
General and administrative expenses for the third quarter of 2008 were $5.9 million compared to $4.1 million for the third quarter of 2007. The increase in general and administrative expenses between the periods was primarily due to expenses associated with a former employee's contract settlement, as well as the cost of a non-executive employee retention incentive plan. Sequentially, general and administrative expenses were up slightly compared to the second quarter of 2008 of $5.2 million.
Discretionary Cash Flow
Discretionary cash flow for the third quarter of 2008 was $19.9 million, compared to $20.2 million for the third quarter of 2007. Discretionary cash flow for the first nine months was $66.0 million, down by $5.2 million compared to the same period in 2007. Sequentially, discretionary cash flow was down slightly compared to $20.9 million for the second 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, November 6, 2008 at 2:00 p.m. Central time. To participate in this conference call, dial 888.679.8037 (U.S./Canada) or 617.213.4849 (International) five to ten minutes before the scheduled start time and reference Conference ID #47682622. 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 #82654643.
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.
Click here to join our email alert list http://www.b2i.us/irpass.asp?BzID=1440&to=ea&s=0
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data, Unaudited)
Q3-08 Q3-07
------------------ ------------------
Three Months Ended Nine Months Ended
------------------ ------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2008 2007 2008 2007
-------- -------- -------- --------
Production:
Oil (Mbbl) 174 185 546 635
Natural Gas (Mmcf) 2,017 3,067 7,159 10,357
Mmcfe 3,060 4,173 10,436 14,164
Mmcfe (Daily Rate) 33.3 45.4 38.1 51.9
Average Prices:
Oil (per Bbl) $99.42 $69.92 $95.10 $59.51
Natural Gas (per Mcf) 9.67 6.77 9.76 7.32
Per Mcfe 12.03 8.08 11.67 8.02
Oil and Natural Gas Revenues $36,806 $33,709 $121,788 $113,568
Lease Operating Expenses 5,927 6,964 19,151 21,719
Per Mcfe 1.94 1.67 1.84 1.53
Depletion and depreciation 15,870 17,574 51,498 58,184
Per Mcfe 5.19 4.21 4.93 4.11
Severance and Ad Valorem Taxes 2,551 2,127 8,125 7,590
Per Mcfe 0.83 0.51 0.78 0.54
General and Admin Expense 5,944 4,074 15,234 11,859
Per Mcfe 1.94 0.98 1.46 0.84
Interest Expense 1,399 1,530 3,922 4,607
Per Mcfe 0.46 0.37 0.38 0.33
Discretionary Cash Flow(1) $19,924 $20,212 $66,031 $71,205
Per Mcfe 6.51 4.84 6.33 5.03
Net Earnings Applicable to
Common Stockholders $699 $750 $5,101 $5,123
Per Common Share (Basic) $0.01 $0.01 $0.06 $0.06
Per Common Share (Diluted) $0.01 $0.01 $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)
Q3-08 Q3-07
------------------ ------------------
Three Months Ended Nine Months Ended
------------------ ------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Oil and natural gas $36,806 $33,709 $121,788 $113,568
Interest and other 177 474 379 1,235
-------- -------- -------- --------
Total revenues 36,983 34,183 122,167 114,803
-------- -------- -------- --------
Operating costs and expenses:
Oil and natural gas operating 5,927 6,964 19,151 21,719
Severance and ad valorem taxes 2,551 2,127 8,125 7,590
Depletion and depreciation 15,870 17,574 51,498 58,184
General and administrative 5,944 4,074 15,234 11,859
Accretion expense 482 574 1,580 1,701
Contract settlement -- -- 9,894 --
Hurricane damage repairs 1,462 -- 1,462 --
-------- -------- -------- --------
Total operating costs and
expenses 32,236 31,313 106,944 101,053
-------- -------- -------- --------
Earnings before interest and
income taxes 4,747 2,870 15,223 13,750
Other expenses:
Interest expense 1,399 1,530 3,922 4,607
Taxes on income:
Current 23 68 34 180
Deferred 2,626 522 6,166 3,840
-------- -------- -------- --------
Net Earnings applicable to
common stockholders $699 $750 $5,101 $5,123
======== ======== ======== ========
Net Earnings per share:
- Basic $0.01 $0.01 $0.06 $0.06
======== ======== ======== ========
- Diluted $0.01 $0.01 $0.05 $0.05
======== ======== ======== ========
Weighted average common shares
outstanding:
- Basic 92,349 89,312 91,035 89,298
- Diluted 94,143 95,022 94,653 94,869
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, 2008 Dec. 31, 2007
------------- -------------
ASSETS (unaudited)
------
Cash and cash equivalents $10,883 $13,526
Restricted cash 9,961 30
Other current assets 36,332 29,609
------------- -------------
Total current assets 57,176 43,165
------------- -------------
Property, equipment and other assets 472,135 440,610
------------- -------------
Total assets $529,311 $483,775
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities $69,925 $54,128
Long-term debt, net of current maturities 94,493 75,000
Other liabilities 35,622 29,217
Common stockholders' equity 329,271 325,430
------------- -------------
Total liabilities and stockholders'
equity $529,311 $483,775
============= =============
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(In thousands, Unaudited)
------------------ ------------------
Three Months Ended Nine Months Ended
------------------ ------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2008 2007 2008 2007
------------------ ------------------
Reconciliation of Discretionary
Cash Flow to Net Cash Provided
By Operating Activities:
Discretionary Cash Flow $19,924 $20,212 $66,031 $71,205
Adjustments to reconcile
discretionary cash flow to net
cash provided by operating
activities:
Net changes in working
capital 7,269 5,694 6,845 3,971
------------------ ------------------
Net Cash Provided By Operating
Activities $27,193 $25,906 $72,876 $75,176
================== ==================
THE MERIDIAN RESOURCE CORPORATION
Summary of Natural Gas
and
Crude Oil Hedge Positions
Natural Gas Costless Collars
----------------------------
Contracted Floor Ceiling
Contract Volume Price Price
Period (Mmbtu/Qtr) ($/Mmbtu) ($/Mmbtu)
------------ ------------ --------- ---------
Q3 - '08 1,230,000 $7.32 $11.23
Q4 - '08 1,070,000 $7.32 $11.16
Q1 - '09 780,000 $7.77 $11.07
Q2 - '09 660,000 $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)
------------ ------------ --------- ---------
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