Warren Reports Third Quarter Net Earnings Increased 27%
Warren Resources announced 2007 third quarter financial and operating results. The Company reported that net earnings increased 27% to $3.0 million or $0.05 per diluted common share for the third quarter ended September 30, 2007. This compares to net earnings of $2.4 million or $0.04 per diluted common share for the third quarter of 2006.
Warren's oil and gas revenues increased 99% to $16.8 million for the third quarter of 2007 compared to $8.4 million in the same period last year. This increase resulted from an 85% increase in oil and gas production in the third quarter of 2007 compared to the third quarter of 2006. The third quarter production increase was primarily due to a 111% increase in oil production from one of the Company's core assets, the Wilmington Townlot Unit ("WTU") in California. This growth was achieved despite WTU production being temporarily reduced by Warren during September and October as discussed in more detail below.
Third Quarter 2007 Financial Highlights
Total revenues increased 81% to $17.2 million for the third quarter of 2007 as compared to the same period of last year. The Company reported the highest quarterly production in its history. Production for the third quarter of 2007 increased to a record 1.8 billion cubic feet equivalent ("Bcfe") from 0.9 Bcfe in the third quarter of 2006.
The average realized price per barrel of oil was $66.75 for the third quarter of 2007 compared to $60.82 for the same period of last year. Additionally, the average realized price per Mcf of gas was $4.22 for the third quarter of 2007 compared to $5.28 for the third quarter of 2006.
Total expenses increased 100% to $14.1 million during the third quarter of 2007 compared to the same period in 2006. Production and exploration expense and DD&A expense increased 118% and 104%, respectively, primarily due to increased production and increases in the costs of goods and services. As the Company used more borrowings under its secured credit facility to fund capital expenditures, interest expense increased to $630 thousand in the third quarter of 2007 compared to $98 thousand in 2006.
Cash flow from operations increased 130% to $17.7 million for the first nine months of 2007 compared to $7.7 million for the first nine months of 2006.
"We are extremely pleased that we were able to continue our strong organic growth in production, revenues, earnings and cash flow during the third quarter. Additionally, we are very excited about the commencement of full-scale drilling activities in our Sun Dog Unit in the Atlantic Rim coalbed methane project with Anadarko Petroleum Corporation," stated Norman F. Swanton, Warren's Chairman and CEO.
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