Remington Oil and Gas Reports 4Q04 & Full Year Results
Remington Oil and Gas (NYSE: REM) announced record financial results for the fourth quarter and year ended December 31, 2004.
Three Months Ended Years Ended December 31, December 31, ($ in thousands, except income per share) 2004 2003 2004 2003 Total revenues $69,488 $47,746 $234,129 $183,052 Net income $19,370 $8,904 $60,996 $42,924 Basic net income per share $0.70 $0.33 $2.23 $1.61 Diluted income per share $0.67 $0.32 $2.14 $1.53 Cash flow provided by operations $60,091 $64,233 $188,582 $153,215 Production (Bcfe) 10.4 9.7 38.1 34.8
Revenues for the three months ended December 31, 2004, increased by $21.7 million to $69.5 million and for the full year revenues increased by $51.1 million to $234.1 million. Net income for the three months ended December 31, 2004, increased by $10.5 million to $19.4 million, or $0.67 diluted income per share, and net income for the year ended December 31, 2004, increased by $18.1 million to $60.1 million, or $2.14 diluted income per share. Cash flow from operations was $60.1 million and $188.6 million for the three months and full year ended December 31, 2004, respectively. The increases in net income and cash flow from operations year-over-year reflects the higher revenues principally from a 9.5% increase in production volumes, and a combination of a 34% increase in average oil prices to $39.37/Bbl and a 11% increase in average gas prices to $5.97/Mcfe. Oil and gas production for the three months ended December 31, 2004, increased by 7.2% to 10.4 Bcfe compared to 9.7 Bcfe for the same three months of 2003. For the full year 2004, oil and gas production increased by 9.5% to 38.1 Bcfe in 2004 compared to 34.8 Bcfe in 2003. Production for both the fourth quarter and the full year represent the highest volumes ever achieved for the given periods in the company's history.
The following table reflects our primary costs per Mcfe produced:
Three Months Ended Years Ended December 31, December 31, 2004 2003 2004 2003 Lease operating expense (LOE) $0.59 $0.61 $0.66 $0.60 General and administrative (G&A) $0.31 $0.29 $0.21 $0.24 Interest and financing $0.01 $0.03 $0.02 $0.05 Depreciation, depletion and amortization (DD&A) $2.08 $1.77 $1.91 $1.60
Lease operating expenses (LOE) were $0.59/mcfe produced for the quarter and $0.66 for the full year or 10% above full year 2003 levels. General and administrative expenses (G&A) were $0.31 per /Mcfe produced for the 4th quarter and $0.21 for the full year or 12.5% below full year 2003 levels. Interest and financing costs were $0.02 per Mcfe for the year or $0.03 below 2003 levels reflecting repayment of all the company's bank debt during 2004. Depletion, depreciation and amortization (DD&A) for the quarter was $2.08 per Mcfe produced versus $1.77 for the same quarter of 2003. For the year DD&A was $1.91 versus $1.60 for all of 2003. These increases reflect higher finding and development costs in the Gulf of Mexico. On an Mcfe basis commodity prices received in 2004 averaged $6.13 versus $5.25 in 2003.
Dry hole costs for 2004 were $12.8 million versus $24.0 million in 2003. Property impairment increased from $4.4 million in 2003 to $10.9 million in 2004. Included in the 2004 impairment is $1.1 million for unproved properties and $9.8 million on proved properties. As part of successful-efforts accounting, properties are evaluated individually for impairment. Impairment occurs when properties deplete sooner than predicted or capital costs exceed the future value of the properties.
Year-End 2004 Proved Reserves
Year-end 2004 proved reserves, as audited by Netherland, Sewell & Associates, Inc., were 16.9 million barrels of oil and 150.7 billion cubic feet of gas or 252.1 billion cubic feet of gas equivalents. This compares with 212.1 billion cubic feet of gas equivalents at year-end 2003. Proved developed reserves at year-end 2004 were 51.8% of the total reserves compared to 56% year-end 2003. As of March 4, 2005, our proved developed reserves were 60% of the total proved reserves. Gas accounted for 60% of these reserves and oil 40% at year-end 2004 compared to 67% gas and 33% oil year-end 2003. The following table reflects the capital invested and Proved reserve additions for the year ended December 31, 2004:
(Bcfe) Beginning Reserves 212.1 Production (38.1) Reserve Additions 79.7 Reserve Revisions (1.6) Ending Reserves 252.1 Capital Costs (MM$) 158.5
Financial and Operational Guidance for 2005
The following table reflects 2005 guidance for our estimates of our primary costs per Mcfe produced. Changes in this guidance may occur with operating results during the year.
$/Mcfe LOE 0.65 - 0.75 G&A 0.21 - 0.28 Financing 0.01 - 0.02 DD&A 2.00 - 2.15
Dry hole expense for 2005 is anticipated to be between $25 and
$30 million. Production guidance for the first six months of 2005 is
19.0-21.0 Bcfe. Based on historical winter weather patterns during the late
4th and 1st quarters, production volumes for the 1st quarter 2005 are
anticipated to be seasonally lower than 4th quarter 2004, while the 2nd
quarter volumes are expected to increase as new production is brought on line
from new discoveries made in 2004. The Company's objective for 2005 is to
increase production and reserves approximately 15% over 2004 levels from its
ongoing exploration and development program at economically attractive finding
and development costs.
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