Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Total revenues $58,384 $46,003 $104,545 $88,340 Net income $14,988 $12,264 $25,987 $23,951 Basic net income per share $0.55 $0.46 $0.96 $0.91 Diluted income per share $0.53 $0.44 $0.92 $0.86 Cash flow provided by operations $48,133 $38,212 $77,595 $63,216 Production Bcfe 9.4 8.5 17.5 15.6
Oil and gas production for the three months ended June 30, 2004, increased by 11% to 9.4 Bcfe compared to 8.5 Bcfe for the same three months of 2003. For the six months oil and gas production increased by 12% to 17.5 Bcfe in 2004 compared to 15.6 Bcfe in 2003.
Net income for the three months ended June 30, 2004, increased by $2.7 million to $15.0 million, or $0.53 diluted income per share, and net income for the six months ended June 30, 2004, increased by $2.0 million to $26.0 million, or $0.92 diluted income per share. Net income in the second quarter was decreased by a $4.8 million pre-tax property impairment charge, $4.5 million of which was associated with the unsuccessful completion of the Fleishaker #2 well at the Tatum Dome prospect in Mississippi. Cash flow from operations increased by $9.9 million, or 26%, and by $14.4 million, or 23%, for the three and six months ended June 30, 2004, compared to the same periods in 2003 respectively. The increases in net income and cash flow from operations reflect primarily the higher revenues from increased production.
Results versus Guidance
The Company provided production guidance of 17.5 Bcfe to 18.5 Bcfe for the first six months of the year. Actual production was 8.1 Bcfe in the first quarter and 9.4 Bcfe in the second quarter for a combined total of 17.5 Bcfe for the first six months of 2004. This was 12% above the first six months of 2003. Total annual production for 2004 is expected to be approximately 40 Bcfe, or 15% above the 34.8 Bcfe produced in 2003.
DD&A was forecast to be between $1.80 and $1.95 per Mcfe produced for the year. Second quarter DD&A was $17.6 million or $1.87 per Mcfe produced. For the first six months of 2004 DD&A was $32.8 million or $1.87 per Mcfe produced. DD&A in the second quarter and for the first six months of 2003 was $1.50 and $1.51, respectively, per Mcfe produced. This increase of $0.36 per Mcfe produced, or 24%, represents the impact of increased finding and development costs over the past few years.
Lease operating expenses (LOE) were $6.0 million or $0.64 per Mcfe produced for the second quarter of 2004. For the first six months LOE was $12.1 million or $0.69 per Mcfe produced. Annual guidance is for LOE to be between $0.60 and $0.70 per Mcfe produced.
G&A expense was $1.6 million or $0.17 per Mcfe produced for the second quarter. For the first six months, G&A was $3.5 million or $0.20 per Mcfe produced. Guidance was for annual G&A expense to be between $0.21 and $0.28 per Mcfe produced. Included in the G&A is $371,000 in the first quarter and $732,000 for the first six months for stock-based compensation. This is $0.04 per Mcfe produced in both periods. Interest and financing costs were $250,000 for the quarter and $478,000 for the first six months or $0.03 per Mcfe produced. Guidance was for interest costs to be between $0.03 and $0.05 per Mcfe produced for the year.
Dry hole costs for the second quarter were $1.1 million and $6.8 million for the first six months. Annualized guidance for dry hole expense is between $20 million and $24 million. Geological and geophysical costs, which are included in exploration costs on the income statement, were $3.7 million in the second quarter reflecting the initial payment on the purchase of 1,400 blocks of deeper water 3-D data and costs associated with prior seismic agreements. It is anticipated that $2.5 to $3.0 million of geophysical costs will be incurred in each of the remaining quarters of 2004 associated with the same programs.
James A. Watt, Chairman and Chief Executive Officer said, "This was an excellent quarter for Remington. Our balance sheet is in excellent shape, and we have dramatically expanded our seismic data base to generate new prospects for future drilling."
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