Three Months Ended March 31, 2004 2003 (In thousands, except per share data) Revenues $46,163 $42,337 Net income $11,001 $11,687 Weighted average diluted shares 28,161 27,970 Diluted income per share $0.39 $0.42 Production Bcfe 8.1 7.1 Average gas price $5.74 $6.36 Average oil price $33.76 $32.05
Results versus 1st Quarter 2003
Total revenues and net cash flow increased during the first quarter of 2004 because of higher gas production and increased average oil prices, partially offset by lower gas prices and slightly lower oil production when compared to the first quarter of 2003. Net income decreased slightly because of higher operating costs and depreciation, depletion, and amortization expenses in 2004 compared to 2003. Gas sales revenue increased by $3.5 million, or 12%, and oil sales revenue increased by $290,000, or 2%. Total gas production increased by 24% primarily from new properties in the Gulf of Mexico. Average oil prices increased from $32.05 per barrel to $33.76 per barrel, while average gas prices decreased from $6.36 per Mcf in 2003 to $5.74 per Mcf in 2004.
Operating costs and expenses were $0.75 per Mcfe in 2004 compared to $0.62 per Mcfe in 2003 primarily due to workover costs to replace tubing on Eugene Island 148. Exploration expenses decreased primarily because of lower dry hole costs for wells drilled in the Gulf of Mexico during the first quarter of 2004. Depreciation, depletion, and amortization increased from $1.52 per Mcfe to $1.88 per Mcfe in 2004 reflecting increased finding and development costs in the Gulf of Mexico.
General and administrative expenses did not change significantly at $0.24 per Mcfe for both of the quarters ending March 31, 2004 and 2003. General and administrative expense includes stock based compensation expense consisting of the amortized compensation cost related to stock grants and directors fees paid in common stock. Interest and financing costs decreased to $0.03 per Mcfe, or by 50%, due to lower outstanding debt in 2004. At the end of the quarter our bank debt was reduced to $10.0 million from $37.4 million in the first quarter of 2003.
Results versus Guidance
In early January, Remington provided production guidance of 17.5 - 18.5 Bcfe for the first six months of 2004. The 8.1 Bcfe for the first quarter falls within that guidance as weather downtime is normally high during this time. Production was negatively affected by a major rig workover to replace production tubing at our Eugene Island 148 field. Production has been restored in the well. DD&A for the quarter was $1.88/Mcfe versus full-year guidance of $1.80 - $1.95/Mcfe. LOE was $0.75 versus full-year guidance of $0.60 - $0.70 reflecting the added costs of the Eugene Island 148 workover. G&A and interest costs were $0.24/Mcfe and $0.03/Mcfe, respectively, for the quarter versus full-year guidance of $0.21 - $0.28/Mcfe and $0.03 - $0.05/Mcfe. Dry hole costs were estimated at $20-$24 million for the year versus $5.6 million for the quarter.
James A. Watt, President and Chief Executive Officer stated, "Production is forecast to increase in the second quarter as several recent discoveries come on line. So far this year the majority of our drilling operations have been for wells that will add production in 2004. We will now concentrate on wells that will add new reserves and establish production for 2005 and beyond."
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