TXCO's net income in the third quarter was $599,820, substantially above the $58,466 reported by the Company for the third quarter of 2003. On a per-share basis, earnings rose to $0.021 from a fractional $0.003 in the prior-year period. Adjusted for a one-time, non-cash compensation charge of $237,333 for changes on a stock option and warrant, earnings per share on a pro forma basis would have been $0.029 per share for the quarter. All per-share amounts are on a fully diluted basis. Income from operations was $1.3 million, more than triple the $437,465 reported in the third quarter of 2003. Total quarterly revenues rose to a record $15.3 million, 63 percent higher than the $9.4 million reported for the year-earlier quarter. At Sept. 30, the Company's assets were a record $106 million, up 26 percent from $84.2 million at Sept. 30, 2003.
For the first nine months of 2004, TXCO's net income was $1.0 million, a 31 percent increase from $792,589 recorded in the same period of 2003. On a per-share basis year to date, earnings rose to $0.040 from $0.038 a year earlier. Adjusted for the same, one-time charge that impacted the quarter, earnings per share on a pro forma basis would have been $0.049 per share. The Company's revenues were a record $41.3 million, a 46 percent increase from $28.4 million for January-September 2003. Income from operations for this year's first nine months was approximately $3.3 million, more than double the $1.5 million of the 2003 period.
Gas production, commodity prices and gas gathering revenues were higher than in the year-earlier periods, offset partially by lower oil production. Exploration, lease operating and gas gathering expenses were higher while impairment and abandonment expenses declined. The Company exited the third quarter of 2004 producing 17.4 million cubic feet of gas equivalent per day (MMcfed), which further increased 14.4 percent to 19.9 MMcfed at Oct. 31.
For the first nine months of this year, net cash provided by operating activities was a record $15.4 million, compared with $11.3 million for the comparable 2003 period. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense -- was $13.7 million in the nine-month period this year, a 24 percent increase from $11.1 million a year earlier. Ebitda -- Ebitdax less exploration expense -- rose 25 percent to $12.3 million from $9.8 million in January-September 2003. See the Company's Web site at www.txco.com for a reconciliation of non-GAAP financial measures.
"We had an excellent third quarter," said P. Mark Stark, vice president, treasurer and CFO. "We are particularly encouraged by these strong financial results in light of the new capital structure put in place just over a year ago during the third quarter of 2003. "With our comparatively low debt, efficient cost structure and the upside potential in the ratio swap hedging agreement we recently put in place, TXCO should be able to take full financial advantage of our growing production and reserves," Stark added. "Further affirming our production and reserve growth was the significant increase in the borrowing base of the Company's senior credit facility. Coupled with the hedges put in place in early October, our borrowing base has now risen to $20.75 million from $12.3 million. We were hopeful to get this increase finalized prior to the end of the third quarter but it took longer than we anticipated. This will certainly make our balance sheet look better going forward."
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