|
TXCO Resources Reports Record Results for 2007
SAN ANTONIO – March 10, 2008 – TXCO Resources Inc. (Nasdaq:TXCO) today reported results for its year and quarter ended December 31, 2007. The Company set records for:
* Revenues.
* Oil and gas sales.
* Cash flow.
* Total assets.
* Proved reserves.
For the year, total revenues rose to a record $93.9 million, a 30 percent increase from $72.4 million in 2006. Oil and gas sales increased 45 percent from the prior year to $81.8 million. Assets rose to $354.6 million, nearly 150 percent above year-end 2006, including the second-quarter 2007 acquisition of Output Exploration LLC.
The Company reported net income attributable to common stock of $0.9 million, equal to $0.03 per share, compared with $7.2 million, $0.22 per share, in 2006. Operating income, $10.4 million, was essentially flat with the prior year.
Net cash provided by operating activities was $69.4 million, partially reflecting accrued acquisition costs, a 181 percent increase from $24.7 million in 2006. Ebitda – earnings before income taxes, interest expense, depreciation, depletion, amortization, impairment and abandonment expense – was a record $52.9 million, or $1.52 per share, a 42 percent increase from $37.3 million, or $1.12 per share, in 2006. Ebitdax – Ebitda plus exploration expense – also set a record of $54.2 million, or $1.56 per share, compared with $40.3 million, $1.21 per share in the prior year. All per-share amounts are on a diluted basis. See the accompanying table for a reconciliation of non-GAAP financial measures.
Fourth-Quarter Results
For the fourth quarter of 2007, TXCO had net income attributable to common stock of $1.8 million, or $0.05 per share, compared with a net loss of $4.4 million, $0.13 per share, in fourth-quarter 2006. TXCO’s revenues for the three months ended December 31, 2007, were more than double the same period in the prior-year period, $32.1 million compared with $15.3 million. Oil and gas sales also were more than double the 2006 quarter, $28.9 million versus $12.1 million. Oil and gas volumes increased to 2.4 bcfe, compared with 1.5 bcfe in fourth-quarter 2006.
Continuing Reserve Growth
Proved reserves increased sharply through both the Output acquisition and drilling. Net proved reserves at the end of 2007 were a record 91.8 bcfe, up from TXCO’s estimated proved reserves of 41.4 bcfe at year-end 2006. Combined with record 2007 oil and gas sales of 7.9 bcfe, gross reserve additions were 58.3 bcfe, including 18.5 bcfe via the drillbit, before acquisitions. Overall, TXCO had a 731 percent all-source reserve replacement rate. Estimated, pre-tax future net cash flows discounted at 10 percent (PV-10) for proved reserves at year-end 2007 were $373 million, based on adjusted commodity prices of $92.75 per barrel for crude oil and $6.445 per mmBtu for natural gas. TXCO’s year-end 2006 PV-10 stood at $92.7 million.
The Company’s reserve life index rose to 11.5 years, compared with seven years at year-end 2006. Its reserve mix at year end consisted of 54 percent oil and 46 percent gas, of which approximately 59 percent was proved developed.
All reserve estimates were prepared by the independent engineering firms of DeGolyer and MacNaughton and William M. Cobb & Associates Inc. in accordance with Securities and Exchange Commission and Financial Accounting Standards Board requirements.
Management Perspective
“We began 2008 as a different company following the landmark changes that followed our acquisition of Output Exploration during 2007,” said Chairman and CEO James E. Sigmon. “We continue to build on the valuable assets we gained in the Output transaction. I see more potential than ever before to create greater shareholder value through such exciting projects as the San Miguel oil sands, Pearsall gas resource play, Glen Rose Porosity oil play and Fort Trinidad Glen Rose shoals. I remain confident that we will see stronger continuing growth in production, reserves, profitability and shareholder value in 2008 and going forward.”
Conference Call and Webcast
TXCO has scheduled a conference call for 10 a.m. CDT (11 a.m. EDT) Tuesday, March 11, 2008, to discuss 2007 financial results and current operations. The call will be broadcast live via the Company’s Web site at http://www.txco.com/concall.html or by telephone at (877) 387-9209 in the U.S. and Canada and (706) 643-3820 for international callers. Passcode is 34954051. A replay will be available through Thursday, March 13, 2008, at (800) 642-1687 (U.S./Canada) and (706) 645-9291 (international) with the same passcode, and for 30 days at http://www.txco.com/concall.html.
Also, the Company will webcast its presentation at this week’s Dahlman Rose & Co. Energy Supply Chain Conference in New York and Boston. Mr. Sigmon’s New York presentation is scheduled to start at 10:30 a.m. CDT (11:30 a.m. EDT) Wednesday, March 12. The webcast will be available via TXCO’s Web site at http://www.txco.com/presentation.html, and will be archived for future reference.
About TXCO Resources
TXCO Resources, formerly The Exploration Company, is an independent oil and gas enterprise with interests in the Maverick Basin, the onshore Gulf Coast region and the Marfa Basin of Texas, and the Midcontinent region of western Oklahoma. It has a consistent record of long-term growth in its proved oil and gas reserves, leasehold acreage position, production and cash flow through its established exploration and development programs. TXCO’s business strategy is to build shareholder value by acquiring undeveloped mineral interests and internally developing a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. It accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on Nasdaq’s Global Select Market under the symbol “TXCO.”
Important Information
TXCO Resources filed a preliminary proxy statement with the Securities and Exchange Commission ("SEC") on March 10, 2008, in connection with the election of directors and other actions to be taken at the 2008 Annual Meeting of Stockholders. TXCO Resources will soon be filing with the SEC and mailing to its stockholders a definitive proxy statement and WHITE proxy card in connection with the 2008 Annual Meeting of Stockholders. As required by the SEC, you are urged to read the preliminary proxy statement and the definitive proxy statement (as well as any amendments or supplements thereto) relating to the 2008 Annual Meeting of Stockholders when they become available because they contain important information. After being filed with the SEC, you will be able to obtain the preliminary proxy statement and the definitive proxy statement (as well as any amendments or supplements thereto) and other relevant documents free of charge at the SEC's website, www.sec.gov. In addition, copies of the definitive proxy statement and other relevant documents will be made available for free to any TXCO stockholder who makes a request to TXCO's Corporate Secretary and Vice President-Capital Markets, Roberto R. Thomae, at (210) 496-5300 (ext. 214) or 777 East Sonterra Blvd., Suite 350, San Antonio, Texas 78258.
TXCO Resources and its directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies in connection with the 2008 Annual Meeting of Stockholders. Information regarding the names and interests of these persons in connection with the 2008 Annual Meeting of Stockholders was included in the preliminary proxy statement, filed with the SEC on March 10, 2008, as such information may be supplemented or amended by the definitive proxy statement. In addition, TXCO Resources files annual, quarterly and special reports, proxy and information statements, and other information with the SEC. These documents are available free of charge at the SEC’s website at www.sec.gov or from TXCO at www.txco.com.
Forward-Looking Statements
Statements in this press release that are not historical, including statements regarding TXCO’s or management’s intentions, hopes, beliefs, expectations, representations, projections, estimations, plans or predictions of the future, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include those relating to budget and drilling plans, capital expenditures, production levels, the timing, number and cost of wells to be drilled, new projects and expected response, and establishment of reserves. It is important to note that actual results may differ materially from the results predicted in any such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the costs of exploring and developing new oil and natural gas reserves, the price for which such reserves can be sold, environmental concerns affecting the drilling of oil and natural gas wells, as well as general market conditions, competition and pricing. TXCO undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. More information about potential factors that could affect the Company’s operating and financial results is included in TXCO’s annual report on Form 10-K for the year ended December 31, 2006, and its Form 10-Q for the quarter ended September 30, 2007. These and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO’s Web site at www.txco.com. Copies are available without charge, upon request from the Company.
(Financial Information and Selected Operational Tables Follow)
TXCO RESOURCES INC.
Condensed Consolidated Balance Sheets
(Unaudited) |
|
|
|
|
|
December 31 |
| (in thousands) |
|
2007 |
|
2006 |
| Assets |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
|
|
| Cash and equivalents |
|
$ |
9,831 |
|
$ |
3,882 |
| Accounts receivable: |
|
|
|
|
| Joint interest owners |
|
|
4,167 |
|
|
3,321 |
| Oil and gas sales |
|
|
13,785 |
|
|
5,811 |
| Federal income tax |
|
|
4,974 |
|
|
4,468 |
| Prepaid expenses and other |
|
|
2,989 |
|
|
887 |
| Total Current Assets |
|
|
35,746 |
|
|
18,369 |
|
|
|
|
|
Property and Equipment, net - successful efforts
method of accounting for oil and gas properties |
|
|
314,941 |
|
|
119,574 |
|
|
|
|
|
| Other Assets |
|
|
|
|
| Deferred tax asset |
|
|
- |
|
|
5,310 |
| Deferred financing fees |
|
|
2,613 |
|
|
60 |
| Other assets |
|
|
1,307 |
|
|
488 |
| Total Other Assets |
|
|
3,920 |
|
|
5,858 |
|
|
|
|
|
| Total Assets |
|
$ |
354,607 |
|
$ |
143,801 |
| |
TXCO RESOURCES INC.
Condensed Consolidated Balance Sheets
(Unaudited) |
|
|
|
|
|
|
December 31 |
|
| (in thousands, except shares and per share amounts) |
|
2007 |
|
|
2006 |
|
| Liabilities And Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
|
|
|
| Accounts payable, trade |
|
$ |
11,345 |
|
|
$ |
7,969 |
|
| Other payables and accrued liabilities |
|
|
39,916 |
|
|
|
6,433 |
|
| Undistributed revenue |
|
|
2,401 |
|
|
|
1,035 |
|
| Notes payable |
|
|
399 |
|
|
|
267 |
|
| Derivative settlements payable |
|
|
475 |
|
|
|
70 |
|
| Preferred dividends payable |
|
|
397 |
|
|
|
- |
|
| Accrued derivative obligation - short-term |
|
|
4,725 |
|
|
|
321 |
|
| Total Current Liabilities |
|
|
59,658 |
|
|
|
16,095 |
|
|
|
|
|
|
|
|
| Long-Term Liabilities |
|
|
|
|
|
|
| Long-term debt |
|
|
100,000 |
|
|
|
2,351 |
|
| Deferred income taxes |
|
|
12,007 |
|
|
|
- |
|
| Accrued derivative obligation - long-term |
|
|
3,993 |
|
|
|
- |
|
| Asset retirement obligation |
|
|
4,233 |
|
|
|
1,703 |
|
| Total Long-Term Liabilities |
|
|
120,233 |
|
|
|
4,054 |
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
| Stockholders' Equity |
|
|
|
|
|
|
Preferred stock; authorized 10,000,000 shares,
Series A, -0- shares issued and outstanding
Series B, -0- shares issued and outstanding
Series C, 55,000 shares issued and outstanding
|
|
|
1 |
|
|
|
- |
|
| Common stock, par value $0.01 per share; authorized
50,000,000 shares, issued 34,269,038 and 33,290,698 shares, and
outstanding 34,150,619 and 33,190,898 |
|
|
343 |
|
|
|
333 |
|
| Additional paid-in capital |
|
|
177,030 |
|
|
|
122,108 |
|
| Retained earnings |
|
|
3,561 |
|
|
|
2,619 |
|
| Accumulated other comprehensive loss, net of tax |
|
|
(5,754 |
) |
|
|
(1,162 |
) |
| Less treasury stock, at cost, 118,419 shares and 99,800 shares |
|
|
(465 |
) |
|
|
(246 |
) |
| Total Stockholders' Equity |
|
|
174,716 |
|
|
|
123,652 |
|
|
|
|
|
|
|
|
| Total Liabilities and Stockholders' Equity |
|
$ |
354,607 |
|
|
$ |
143,801 |
|
| |
TXCO RESOURCES INC.
Condensed Consolidated Statements of Operations
(Unaudited) |
|
|
|
|
|
|
Years Ended December 31 |
|
| (in thousands, except earnings per share data) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
| Revenues |
|
|
|
|
|
|
|
|
|
| Oil and gas sales |
|
$ |
81,753 |
|
|
$ |
56,520 |
|
|
$ |
38,533 |
|
| Gas gathering operations |
|
|
11,958 |
|
|
|
15,853 |
|
|
|
28,430 |
|
| Other operating income |
|
|
195 |
|
|
|
45 |
|
|
|
37 |
|
| Total Revenues |
|
|
93,906 |
|
|
|
72,418 |
|
|
|
67,000 |
|
|
|
|
|
|
|
|
|
|
|
| Costs and Expenses |
|
|
|
|
|
|
|
|
|
| Lease operations |
|
|
14,105 |
|
|
|
7,248 |
|
|
|
6,470 |
|
| Production taxes |
|
|
4,672 |
|
|
|
2,551 |
|
|
|
2,180 |
|
| Exploration expenses |
|
|
1,222 |
|
|
|
2,968 |
|
|
|
3,266 |
|
| Impairment and abandonments |
|
|
1,983 |
|
|
|
1,722 |
|
|
|
1,406 |
|
| Gas gathering operations |
|
|
13,257 |
|
|
|
16,255 |
|
|
|
28,312 |
|
| Depreciation, depletion and amortization |
|
|
36,202 |
|
|
|
23,840 |
|
|
|
12,597 |
|
| General and administrative |
|
|
12,058 |
|
|
|
7,298 |
|
|
|
5,439 |
|
| Total Costs and Expenses |
|
|
83,499 |
|
|
|
61,882 |
|
|
|
59,670 |
|
|
|
|
|
|
|
|
|
|
|
| Income from Operations |
|
|
10,407 |
|
|
|
10,536 |
|
|
|
7,330 |
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
329 |
|
|
|
550 |
|
|
|
89 |
|
| Interest expense |
|
|
(9,686 |
) |
|
|
(269 |
) |
|
|
(2,920 |
) |
| Loan fee amortization |
|
|
(554 |
) |
|
|
(216 |
) |
|
|
(132 |
) |
| Derivative mark-to-market gain (loss) |
|
|
- |
|
|
|
1,995 |
|
|
|
(2,128 |
) |
| Derivative settlements loss |
|
|
- |
|
|
|
(2,686 |
) |
|
|
(9,115 |
) |
| Gain (loss) on sale of assets |
|
|
1 |
|
|
|
(8 |
) |
|
|
24,540 |
|
| Total Other Income (Expense), Net |
|
|
(9,910 |
) |
|
|
(634 |
) |
|
|
10,334 |
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
|
497 |
|
|
|
9,902 |
|
|
|
17,664 |
|
| Income tax expense (benefit) -- |
current |
|
|
(5,301 |
) |
|
|
1,232 |
|
|
|
4,851 |
|
|
deferred |
|
|
4,458 |
|
|
|
1,429 |
|
|
|
(928 |
) |
|
|
|
|
|
|
|
|
|
|
| Net Income |
|
|
1,340 |
|
|
|
7,241 |
|
|
|
13,741 |
|
| Preferred dividends |
|
|
397 |
|
|
|
- |
|
|
|
- |
|
| Net Income Available to Common Stockholders |
|
$ |
943 |
|
|
$ |
7,241 |
|
|
$ |
13,741 |
|
|
|
|
|
|
|
|
|
|
|
| Earnings Per Share: |
|
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.03 |
|
|
$ |
0.23 |
|
|
$ |
0.48 |
|
| Diluted |
|
$ |
0.03 |
|
|
$ |
0.22 |
|
|
$ |
0.48 |
|
| Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
| Basic |
|
|
33,422 |
|
|
|
31,916 |
|
|
|
28,444 |
|
| Diluted |
|
|
34,740 |
|
|
|
33,247 |
|
|
|
28,885 |
|
| |
TXCO RESOURCES INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited) |
|
|
Years Ended December 31 |
|
| (in thousands) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
| Operating Activities |
|
|
|
|
|
|
|
|
|
| Net (loss) income |
|
$ |
1,340 |
|
|
$ |
7,241 |
|
|
$ |
13,741 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
| Depreciation, depletion and amortization |
|
|
36,756 |
|
|
|
24,056 |
|
|
|
12,597 |
|
| Impairments, abandonments and dry hole costs |
|
|
2,436 |
|
|
|
1,722 |
|
|
|
1,406 |
|
| (Gain) loss on sale of assets |
|
|
(1 |
) |
|
|
8 |
|
|
|
(24,540 |
) |
| Deferred tax expense (benefit) |
|
|
4,458 |
|
|
|
1,560 |
|
|
|
(928 |
) |
| Non-cash interest expense - redeemable preferred stock |
|
|
- |
|
|
|
- |
|
|
|
684 |
|
