Burlington Reports 46 Percent Increase in 3Q04 Earnings

Burlington Resources Inc. (NYSE:BR)(TSX:B) reported estimated earnings of $389 million, or $0.98 per diluted share, during the third quarter of 2004, a new quarterly earnings record for the company. The third-quarter earnings represent a 46 percent increase over the $267 million, or $0.67 per diluted share on a post-stock-split basis, earned during the third quarter of 2003. The higher quarterly earnings were attributable to a 10 percent increase in production and to higher commodity prices. Total production grew to 2,815 million cubic feet of natural gas equivalent per day (MMcfed), from 2,551 MMcfed during the prior year's third quarter.

Net cash provided by operating activities increased to $930 million from $665 million during the prior year's quarter. Discretionary cash flow(1) increased to $814 million from $651 million during the prior year's quarter. During the first three quarters of 2004, net cash provided by operating activities totaled approximately $2.5 billion, while discretionary cash flow also totaled approximately $2.5 billion.

"Burlington continues to perform very well, both operationally and financially. We are on track to deliver significant growth in 2004, while generating robust return on capital employed. This performance is consistent with our stated objectives of achieving both top-line growth and sector-leading returns to create value for our shareholders," said Bobby S. Shackouls, chairman, president and chief executive officer. "We maintain our commitment to these goals regardless of commodity price cycles."

Natural gas production during the third quarter increased 1 percent to 1,906 million cubic feet per day (MMcfd), from 1,889 MMcfd during the prior year's quarter. Natural gas liquids (NGLs) production increased 6 percent to 66.5 thousand barrels per day (Mbd), from 63.0 Mbd during the prior year's quarter. Crude oil production increased 80 percent to 85.1 Mbd, from 47.3 Mbd during the prior year's quarter.

Higher natural gas volumes were achieved from the Madden Field, South Louisiana, East Texas and the CLAM properties. Higher crude oil volumes were achieved from the Cedar Creek Anticline and Bakken areas in the Williston Basin, South Louisiana, offshore China, Algeria and Ecuador. As expected, natural gas production declined in Canada when compared to the prior year's third quarter, due to last winter's short drilling season, wet summer weather that hampered field operations, and a measured approach to capital investments in response to rising service costs and the strengthening Canadian dollar. However, Canadian natural gas production has flattened in recent months, and Burlington plans to accelerate development activity there during the balance of 2004 and 2005.

This week, Burlington placed into service the Rivers Fields facilities in the East Irish Sea. During the past three years Burlington has developed the Calder Field (one of the five Rivers Fields) and installed a production platform and 30-mile pipeline to shore, while constructing a major sour gas processing plant at Barrow-in-Furness in Cumbria, England. Sales volumes are expected to ramp up to an average of approximately 90 MMcfd as the plant reaches full capacity. It is anticipated that the Calder Field's initial production would be followed in future years by gas flow from the Crossans and Darwen fields. The new project is expected to increase Burlington's total East Irish Sea production to approximately 180 MMcfd by early 2005.

Price realizations for natural gas during the third quarter were $5.29 per Mcf, compared to $4.68 per Mcf during the same quarter in 2003. Price realizations for NGLs were $26.26 per barrel, compared to $20.42 per barrel during the prior year's quarter. Crude oil price realizations were $40.13 per barrel, compared to $27.16 per barrel during the prior year's quarter.

During the third quarter Burlington repurchased 4 million shares of its common stock, up from approximately 3.1 million shares repurchased during each of the year's first and second quarters on a post-stock-split basis. The third quarter's repurchases totaled $150 million at an average cost of $37.56 per share. Since resuming share repurchases in late 2000, the company has acquired approximately 57.6 million shares for $1.4 billion, or an average cost of $24.30 per share on a post-stock-split basis. At the end of the third quarter, Burlington's balance sheet included nearly $1.8 billion in cash and cash equivalents, an increase of approximately $500 million during the quarter.