St. Mary's Earnings Rose in 2006

St. Mary Land & Exploration Company late Thursday reported earnings for the year ended 2006 of $190.0 million, or $2.94 per diluted share.

Tony Best, President, commented:

"2006 was a record-setting year for the Company on several fronts, and we also set the table for significant future growth. We achieved record annual net income, discretionary cash flow, and production, both in absolute terms and on a per share basis. We exited 2006 with the highest quarterly production in our history for both oil and natural gas. We also ended 2006 with proved reserves of 927.6 BCFE, a 17 percent increase year on year. Most importantly, our activities in 2006 set up opportunities for growth in 2007 and beyond. We acquired oil and gas properties in the Sweetie Peck Field in the Permian Basin which provide another multi-year drilling program for the Company. We also advanced our cornerstone programs in the horizontal Arkoma, at Hanging Woman Basin, at Elm Grove Field, and at Northeast Mayfield. Finally, on the financial side, the Company repurchased 3.3 million shares of common stock in the second quarter at a discount to our assessed net asset value at the time and locked in the economic value by hedging a commensurate percentage of production."

FULL YEAR AND FOURTH QUARTER EARNINGS

St. Mary announces full year 2006 earnings of $190.0 million or $2.94 per diluted share. Full year 2005 earnings were $151.9 million or $2.33 per diluted share. Earnings for the 2006 period include a non-cash, after-tax gain of $4.4 million, or $0.07 per diluted share, related to the exchange of oil and gas properties that closed in the second quarter of 2006. The non-cash, after-tax charge related to the change in the Company's Net Profits Plan liability was $15.2 million, or $0.23 per diluted share, for 2006, as compared to $68.0 million, or $1.02 per diluted share, in 2005. The direction and magnitude of the change in the Net Profits Plan liability reflect commodity price movements during each respective measurement period. Revenues for the year were $787.7 million compared to $739.6 million for 2005. Discretionary cash flow(1) increased to $525.1 million in 2006 from $462.0 million in 2005. Net cash provided by operating activities was $467.7 million in 2006 compared to $409.4 million in the prior year.

Daily oil and gas production during 2006 averaged 254 million cubic feet of gas equivalent (MMCFE), an increase from 239 MMCFE/D in 2005. Average realized prices, inclusive of hedging activities, during the year were $7.37 per Mcf and $56.60 per barrel. The realized prices were 7 percent lower and 11 percent higher, respectively, than the realized prices in 2005. Average prices excluding hedging activities were $6.58 per Mcf and $59.33 per barrel during the year, which were 19 percent lower and 12 percent higher, respectively, than last year.

Earnings for the fourth quarter of 2006 were $43.5 million, down from $51.2 million for the same period the preceding year. The non-cash, after-tax charge related to the change in the Company's Net Profits Plan liability was $4.1 million, or $0.06 per diluted share, for the fourth quarter of 2006. The fourth quarter 2005 charge, net of tax, for the Net Profits Plan was $22.4 million, or $0.33 per diluted share. Revenues for the quarter were $202.7 million compared to $227.9 million for the corresponding period in 2005. Discretionary cash flow(1) decreased to $126.4 million in the fourth quarter of 2006 from $141.0 million in the same period of the preceding year. Net cash provided by operating activities was $150.2 million in the fourth quarter of 2006 compared to $107.2 million in the same period of the prior year.

Daily oil and gas production during the fourth quarter averaged 273 MMCFE, driven by record production for both natural gas and oil, an increase from 238 MMCFE/D in the fourth quarter of 2005. The Company has increased production each successive quarter over the last year. Average realized prices for the quarter, inclusive of hedging activities, were $7.20 per Mcf and $51.57 per barrel, 33 percent and 4 percent lower, respectively, than the realized prices in the fourth quarter of 2005. Average prices excluding hedging activities in the fourth quarter were $6.25 per Mcf and $52.39 per barrel, which are 46 percent and 6 percent lower, respectively, than the same period of last year.

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