First Quarter 2006 Financial Results
Bois d'Arc reported net income of $16.8 million, 26 cents per diluted share, for the three months ended March 31, 2006 as compared to 2005's first quarter pro forma net income of $11.0 million, or 21 cents per diluted equivalent unit. Earnings for the first quarter of 2005 are pro forma to give effect to income taxes as if the Company has been taxed as a corporation. Bois d'Arc's first quarter 2006's oil and gas sales increased 42% to $61.8 million over 2005's first quarter sales of $43.5 million as a result of increased production and higher oil and natural gas prices. Operating cash flow (before changes in working capital accounts) generated by Bois d'Arc in 2006's first quarter of $44.3 million was 46% higher than 2005's first quarter cash flow of $30.2 million. EBITDAX or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $47.7 million in 2006's first quarter, a 36% increase over 2005's first quarter EBITDAX of $35.1 million.
Bois d'Arc's production in the first quarter of 2006 totaled 7.0 billion cubic feet equivalent of natural gas ("Bcfe"), as compared to production of 6.2 Bcfe in the first quarter of 2005. The higher production rate this quarter was achieved despite having certain properties which were capable of producing 18.1 Mmcfe per day, or 1.6 Bcfe, in the quarter shut-in waiting on certain third party pipelines and processing facilities to return to service after last year's hurricane activity. Lifting costs in the first quarter of 2006 included $1.9 million for the cost of repairs related to damage caused by the 2005 hurricanes.
The Company's realized natural gas price averaged $8.39 per Mcf in 2006's first quarter as compared to $6.61 per Mcf in 2005's first quarter. Realized oil prices in the first quarter of 2006 averaged $60.95 per barrel as compared to $47.63 per barrel for 2005.
First Quarter 2006 Drilling Results
Bois d'Arc is off to a strong start in 2006 with successful results from its exploration program. Since the beginning of 2006, Bois d'Arc has drilled five (4.5 net) successful wells out of a total of six (5.2 net) drilled for an 86% success rate.
During the first quarter of 2006 Bois d'Arc drilled its fifth well to delineate and extend the "Laker" prospect discovery made last year at Ship Shoal block 111. The OCS-G-00066 #A-8 was drilled in the adjacent Ship Shoal block 112 to a depth of 13,177 feet. This well was designed to test a new fault block on the northeast flank of the Ship Shoal 111 salt mass. The well encountered 52 feet of net pay in two well developed sands.
Bois d'Arc drilled a successful extension well in Ship Shoal block 99. The OCS-G-13912 #4 was drilled to a depth of 13,243 feet and encountered 37 feet of net pay in four commercial reservoirs. Bois d'Arc's exploratory well drilled to test the "Pickle" prospect at Eugene Island block 166 was successful. The OCS-G 22664 #1 was drilled to a depth of 16,902 feet and encountered 42 feet of net pay in two sands.
Bois d'Arc also drilled a well to test its "Coaster" and "Steelhead" prospects in Ship Shoal blocks 96 and 111. The "Coaster" prospect was non- productive and the well was sidetracked to test the primary target, the "Steelhead" prospect. The OCS-G 24924 #1 ST was drilled to a depth of 13,496 feet and encountered 35 feet of net pay in the objective sand and appears to have proven the reserves targeted for the prospect.
The fifth successful well is the OCS-G 18054 #54 ST which was drilled to test the "Sockeye" prospect at South Pelto 22. This well has been drilled to a depth of 17,593 feet after re-entering and sidetracking an existing temporarily abandoned well bore. The well has proved up its targeted objective. Bois d'Arc is currently setting a drilling liner and plans to deepen this well to test other potential reservoirs.
One unsuccessful well was drilled at South Timbalier block 11. The OCS-G 13925 #1 was drilled to a depth of 10,792 feet and encountered two targeted sands which were found to be wet. The dry hole cost of $2.8 million was included as exploration expense in the first quarter of 2006.
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