Delta Petroleum announced its financial and operating results for the fourth quarter and full year 2009.
John Wallace, Delta's President and COO stated, "We are pleased to report our financial results for the full year 2009 and for the fourth quarter of 2009. Clearly, 2009 proved to be a very challenging year for Delta beginning with the drop in natural gas prices during the first half of the year, and further compounded by liquidity and bank covenant concerns for much of the year. Yet, I am very pleased with how far we have come and, from an operational and liquidity perspective, how much we improved during the latter half of the year. Cash flow provided by operating activities totaled $61.0 million for the fourth quarter, which is up meaningfully over the third quarter. The fourth quarter of 2009 was the third consecutive quarter of substantial growth in EBITDAX (a non-GAAP measure), up 134% from third quarter levels. We have also been able to reduce our lease operating expenses to $1.26 per Mcfe for the fourth quarter, down 14% from the third quarter 2009. More importantly, the EBITDAX for the fourth quarter is sufficient to be in compliance with the leverage ratio covenant of our senior credit facility. While we obtained waivers for the first quarter of 2010, under the current commodity price forward curve, our current financial projections suggest that we will be in compliance with our financial covenants for the remainder of 2010.
"Our liquidity situation has also improved materially, aided in no small part by the offshore litigation settlement proceeds received from the federal government at the end of the year, which netted approximately $48.7 million to Delta. While the proceeds are shown as cash on the December 31, 2009 balance sheet, subsequent to year-end, the proceeds of the settlement were used to reduce borrowings under our senior credit facility. With borrowing base availability and cash on hand, our liquidity position at December 31, 2009 was $102 million and is approximately $84 million as of today. Once the semi-annual borrowing base redetermination and the strategic alternatives process are completed we will announce our plans to recommence our drilling program in the Vega Area.
"Regarding our proved reserves for year-end 2009, the base price used for the calculation was $3.03 per MMBtu for natural gas (the average of the first day of the month prices in 2009 for Colorado Interstate Gas), which resulted in proved reserves of 154 Bcfe. If we calculated our proved reserves based upon year-end CIG pricing of $5.54 per MMBtu for natural gas in accordance with the SEC's former reserve reporting rules, our year-end proved reserves would have been approximately 830 Bcfe.
"Given how challenging our situation was, I can't help but be proud of how far we've come and where we stand today."
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