|
TXCO Resources Reports Record Results and Earnings
SAN ANTONIO – August 6, 2008 – TXCO Resources Inc. (Nasdaq:TXCO) today reported financial results for the quarter and half ended June 30, 2008. Highlights include record:
- Cash flow metrics;
- Net and operating income;
- Oil and gas sales;
- Total assets.
Second Quarter
TXCO's net income attributable to common stock for the second quarter was $8.7 million, equal to $0.24 per share, in contrast to a $1.3 million loss, or $0.04 per share, for second-quarter 2007, and 166 percent above first-quarter 2008 net income of $3.3 million, or $0.09 per share. All per-share amounts are on a diluted basis. Quarterly operating income rose to a record $17.3 million from the $914,000 reported for the year-earlier period and, sequentially, a 163 percent increase from $6.6 million in the first quarter.
Net cash provided by operating activities for the quarter was a record $33.8 million, sharply above the $6.5 million in the year-earlier quarter and net cash used of $9.9 million in first-quarter 2008. Ebitdax – earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense – rose to a record $34.2 million, triple the $11.3 million in the prior-year quarter and 73 percent above the first quarter’s $19.8 million. Ebitda – Ebitdax less exploration expense – was $33.6 million, compared to $11.0 million in the 2007 period and a 75 percent increase over the first quarter.
The Company’s total revenues rose to a record $48.7 million, more than double the $22.3 million reported for second-quarter 2007 and 51 percent higher than the $32.3 million in revenues for first-quarter 2008. Oil and gas sales revenues increased sharply due to higher volumes and higher realized prices. Gas gathering revenues also increased.
First Half
For the January-June 2008 period, net income available to common stockholders was a record $12.0 million, equal to $0.34 per share. In the year-earlier period, the Company reported a $3.2 million loss, or $0.10 per share. Operating income for the half rose to a record $23.9 million from a $1.7 million operating loss for the 2007 first half. Revenues were a record $81.0 million, up 141 percent from $33.6 million for the earlier period as oil and gas sales rose sharply. Gas gathering revenues rose by 34 percent. Assets at June 30 stood at a record $424.9 million, 20 percent above the $354.6 million reported at year-end 2007.
Operating cash flow for the six months was $23.9 million, more than triple the $7.5 million reported in the year-earlier period. Ebitdax rose to $54.0 million from $16.0 million for the 2007 first half, while Ebitda also increased sharply to $52.8 million from $15.4 million.
Midyear Reserves
At June 30, TXCO’s net proved reserves were estimated at 90.9 Bcfe before the third-quarter sale of approximately 3.7 Bcfe of proved reserves on 15 non-core properties located in South Texas and the Gulf of Mexico. First half oil and gas sales were 4.8 Bcfe. The Company’s proved reserves were 54 percent crude oil and 46 percent natural gas, while approximately 59 percent of TXCO’s oil and gas reserves were classified as proved developed. The Company’s proved reserves at year-end 2007 were estimated at 91.8 Bcfe.
Midyear proved reserve numbers are based on internal estimates prepared in accordance with Securities and Exchange Commission and Financial Accounting Standards Board requirements.
Management Perspective
“TXCO’s growth continued during the first half of 2008 as our higher oil and gas sales were accompanied by record commodity prices,” said CEO James E. Sigmon. “Moreover our lifting costs declined further, enhancing cash margins. In fact, our cash margins in the second quarter reached 57 percent, compared to 42 percent in the first quarter. With our improved margins and a growing inventory of drill-ready projects, we foresee an excellent second half in 2008,” he added. “Although worldwide oil and gas prices have declined in recent weeks, they remain at historic highs.”
Conference Call
TXCO has scheduled a conference call for 10 a.m. CDT (11 a.m. EDT) Thursday, August 7, to discuss financial results and current operations. The call will be broadcast live via the Company 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 56389675. A replay will be available through Saturday, August 9, at 800-642-1687 (U.S./Canada) and 706-645-9291 (international), same passcode, and for 30 days at http://www.txco.com/concall.html.
Also, the Company will present at EnerCom’s 13th Oil & Gas Conference, set for August 10-14 in Denver. TXCO is scheduled to present at 1:55 p.m. MDT (2:55 p.m. CDT) Monday, August 11. A webcast will be available via the Internet on TXCO’s web site, http://www.txco.com/presentation.html, and the conference web site, www.theoilandgasconference.com.
About TXCO Resources
TXCO Resources is an independent oil and gas enterprise with interests in the Maverick Basin, the 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.”
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 results, 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, 2007, and Form 10-Q for the quarter ended March 31, 2008. This 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)
|
($ in thousands) |
|
June 30,
2008 |
|
December 31,
2007 |
| Assets |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
|
|
| Cash and equivalents |
|
$4,569 |
|
$9,831 |
| Accounts receivable, net |
|
37,829 |
|
17,952 |
| Federal income tax receivable |
|
4,974 |
|
4,974 |
| Prepaid expenses and other |
|
2,085 |
|
2,989 |
| Accrued derivative asset - current |
|
163 |
|
- |
| Total Current Assets |
|
49,620 |
|
35,746 |
|
|
|
|
|
Property and Equipment, net - successful efforts method of accounting for oil and gas properties |
|
370,245 |
|
314,941 |
|
|
|
|
|
| Other Assets |
|
|
|
|
| Deferred financing fees |
|
3,449 |
|
2,613 |
| Other assets |
|
1,469 |
|
1,307 |
| Accrued derivative asset - non-current |
|
163 |
|
- |
| Total Other Assets |
|
5,081 |
|
3,920 |
|
|
|
|
|
| Total Assets |
|
$424,946 |
|
$354,607 |
TXCO RESOURCES INC.
Condensed Consolidated Balance Sheets
(Unaudited)
|
($ in thousands) |
June 30,
2008 |
|
December 31,
2007 |
| Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
|
| Accounts payable and accrued liabilities |
$45,257 |
|
$51,261 |
|
| Undistributed revenue |
4,691 |
|
2,401 |
|
| Notes payable |
322 |
|
399 |
|
| Derivative settlements payable |
1,500 |
|
475 |
|
| Preferred dividends payable |
1,420 |
|
397 |
|
| Accrued derivative obligation - short-term |
18,407 |
|
4,725 |
|
| Total Current Liabilities |
71,597 |
|
59,658 |
|
|
|
|
|
|
| Long-Term Liabilities |
|
|
|
|
| Long-term debt |
117,000 |
|
100,000 |
|
| Deferred income taxes |
6,586 |
|
12,007 |
|
| Accrued derivative obligation - long-term |
20,708 |
|
3,993 |
|
| Asset retirement obligation |
8,336 |
|
4,233 |
|
| Total Long-Term Liabilities |
152,630 |
|
120,233 |
|
|
|
|
|
|
| Stockholders' Equity |
|
|
|
|
Preferred stock, authorized 10,000,000 shares;
Series A & B, -0- shares issued and outstanding
Series C, -0- and 55,000 shares issued and outstanding
Series D, 55,000 and -0- shares issued and outstanding
Series E, 20,000 and -0- shares issued and outstanding |
1 |
|
1 |
|
Common stock, par value $.01 per share; authorized 100,000,000 shares; issued 35,590,580 and 34,269,038 shares, outstanding 35,423,727 and 34,150,619 shares |
356 |
|
343 |
|
Additional paid-in capital |
211,415 |
|
177,030 |
|
| Retained earnings |
15,539 |
|
3,561 |
|
| Accumulated other comprehensive loss, net of tax |
(25,601 |
) |
(5,754 |
) |
| Less treasury stock, at cost, 166,853 and 118,419 shares |
(991 |
) |
(465 |
) |
| Total Stockholders' Equity |
200,719 |
|
174,716 |
|
|
|
|
|
|
| Total Liabilities and Stockholders' Equity |
$424,946 |
|
$354,607 |
|
TXCO RESOURCES INC.
Condensed Consolidated Statements Of Operations
(Unaudited)
|
|
|
|
Three Months
Ended |
|
Three Months
Ended |
|
| (in thousands, except earnings per share data) |
|
June 30, 2008 |
|
June 30, 2007 |
|
| Revenues |
|
|
|
|
|
| Oil and gas sales |
|
$43,257 |
|
$19,136 |
|
| Gas gathering operations |
|
4,352 |
|
3,152 |
|
| Other operating income |
|
1,093 |
|
48 |
|
| Total Revenues |
|
48,702 |
|
22,336 |
|
|
|
|
|
|
|
| Costs and Expenses |
|
|
|
|
|
| Lease operations |
|
4,203 |
|
4,238 |
|
| Drilling operations |
|
574 |
|
- |
|
| Production taxes |
|
2,378 |
|
1,103 |
|
| Exploration expenses |
|
566 |
|
279 |
|
| Impairment and abandonments |
|
379 |
|
696 |
|
| Gas gathering operations |
|
4,394 |
|
3,356 |
|
| Depreciation, depletion and amortization |
|
15,013 |
|
8,669 |
|
| General and administrative |
|
3,873 |
|
3,081 |
|
| Total Costs and Expenses |
|
31,380 |
|
21,422 |
|
|
|
|
|
|
|
| Income from Operations |
|
17,322 |
|
914 |
|
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
| Interest expense |
|
(1,999 |
) |
(2,863 |
) |
| Interest income |
|
25 |
|
77 |
|
| Loan fee amortization |
|
(297 |
) |
(159 |
) |
| Total Other Income (Expense) |
|
(2,271 |
) |
(2,945 |
) |
|
|
|
|
|
|
| Income (loss) before income taxes |
|
15,051 |
|
(2,031 |
) |
| Income tax (benefit) expense -- current |
|
- |
|
16 |
|
deferred |
|
4,922 |
|
(733 |
) |
|
|
|
|
|
|
| Net Income (Loss) |
|
10,129 |
|
(1,314 |
) |
| Preferred dividends |
|
1,420 |
|
- |
|
| Net Income (Loss) Available to Common Stockholders |
|
$8,709 |
|
$(1,314 |
) |
|
|
|
|
|
|
| Earnings (Loss) Per Share |
|
|
|
|
|
| Basic |
|
$0.25 |
|
$(0.04 |
) |
| Diluted |
|
$0.24 |
|
$(0.04 |
) |
TXCO RESOURCES INC.
Condensed Consolidated Statements Of Operations
(Unaudited)
|
|
|
Six Months
Ended |
|
Six Months
Ended |
|
| (in thousands, except earnings per share data) |
|
June 30, 2008 |
|
June 30, 2007 |
|
| Revenues |
|
|
|
|
|
| Oil and gas sales |
|
$71,904 |
|
$27,861 |
|
| Gas gathering operations |
|
7,577 |
|
5,646 |
|
| Other operating income |
|
1,547 |
|
49 |
|
| Total Revenues |
|
81,028 |
|
33,556 |
|
|
|
|
|
|
|
| Costs and Expenses |
|
|
|
|
|
| Lease operations |
|
8,435 |
|
6,898 |
|
| Drilling operations |
|
1,006 |
|
- |
|
| Production taxes |
|
3,862 |
|
1,597 |
|
| Exploration expenses |
|
1,210 |
|
654 |
|
| Impairment and abandonments |
|
634 |
|
1,382 |
|
| Gas gathering operations |
|
7,781 |
|
6,237 |
|
| Depreciation, depletion and amortization |
|
26,287 |
|
13,585 |
|
| General and administrative |
|
7,905 |
|
4,885 |
|
| Total Costs and Expenses |
|
57,120 |
|
35,238 |
|
|
|
|
|
|
|
| Income (Loss) from Operations |
|
23,908 |
|
(1,682 |
) |
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
| Interest expense |
|
(4,233 |
) |
(3,140 |
) |
| Interest income |
|
97 |
|
103 |
|
| Loan fee amortization |
|
(587 |
) |
(169 |
) |
| Total Other Income (Expense) |
|
(4,723 |
) |
(3,206 |
) |
|
|
|
|
|
|
| Income (loss) before income taxes |
|
19,185 |
|
(4,888 |
) |
| Income tax (benefit) expense -- current |
|
- |
|
(5,250 |
) |
deferred |
|
4,803 |
|
3,568 |
|
|
|
|
|
|
|
| Net Income (Loss) |
|
14,382 |
|
(3,206 |
) |
| Preferred dividends |
|
2,404 |
|
- |
|
| Net Income (Loss) Available to Common Stockholders |
|
$11,978 |
|
$(3,206 |
) |
|
|
|
|
|
|
| Earnings (Loss) Per Share |
|
|
|
|
|
| Basic |
|
$0.35 |
|
$(0.10 |
) |
| Diluted |
|
$0.34 |
|
$(0.10 |
) |
TXCO RESOURCES INC.
Condensed Consolidated Statements Of Cash Flows
(Unaudited)
|
(in thousands, except earnings per share data) |
|
Six Months
Ended
June 30, 2008 |
|
Six Months
Ended
June 30, 2007 |
|
| Operating Activities |
|
|
|
|
|
| Net income (loss) |
|
$14,382 |
|
$(3,206 |
) |
Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities: |
|
|
|
|
|
| Depreciation, depletion and amortization |
|
26,874 |
|
13,754 |
|
| Impairment, abandonments and dry hole costs |
|
634 |
|
1,836 |
|
| Deferred tax expense |
|
4,803 |
|
3,568 |
|
| Excess tax benefits from stock-based compensation |
|
(1,453 |
) |
- |
|
| Non-cash compensation expense |
|
1,928 |
|
571 |
|
| Non-cash change in components of OCI |
|
- |
|
1,524 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
| Receivables |
|
(19,877 |
) |
(5,897 |
) |
| Prepaid expenses and other |
|
(681 |
) |
(4,752 |
) |
| Accounts payable and accrued expenses |
|
(2,664 |
) |
5,615 |
|
| Current income taxes receivable |
|
|
