Remington Oil & Gas Reports 1Q06 Earnings
Remington Oil and Gas Corporation (NYSE: REM) says oil and gas revenues for the three months ended March 31, 2006 increased $525,000, or 0.9%, compared to the same period in 2005. Gas revenues increased $4.2 million, or 10.5%, for the first quarter of 2006 compared to the first quarter of 2005 primarily due to the increase in average gas prices offset slightly by a decrease in production. Average gas prices for the first quarter of 2006 were $1.12 per Mcf, or 17.1% higher compared to the first quarter of 2005. Oil revenues decreased $3.7 million, or 19.4%, for the first quarter of 2006 compared to the first quarter of 2005 primarily due to the decrease in oil production partially offset by the increase in average oil prices. Oil prices increased $12.96 per barrel, or 27.5% during the first quarter of 2006 compared to 2005.
Other income for the three months ended March 31, 2006 includes $17.3 million related to the partial accrual of lost production insurance payments.
Net income for the three months ended March 31, 2006 increased $10.3 million, or 64.5%, compared to the same period of 2005. Cash flow from operations increased $5.0 million, or 11.0%, compared to the same period of 2005.
Income taxes for the three months ended March 31, 2006 increased $5.2 million, or 59.0%, compared to the same period of 2005 due to the increase in income before taxes. Current taxes accounted for $10.3 million of total tax expense for the three months ended March 31, 2006.
Dry hole expense for the first quarter of 2006 was $5.2 million. We utilize the successful-efforts method of accounting, which requires dry holes to be reported as an expense in the quarter they are determined to be dry. It is very difficult to predict when dry holes will occur and thus dry hole expense is subject to dramatic fluctuation each quarter.
As of March 31, 2006, we have $38.9 million accrued as insurance receivables on the Balance Sheet. Of this amount, $18.3 million represents insurance receivables for hurricane related expenditures associated with physical damage, lost equipment and a control of well claim. The remaining $20.6 million represents an insurance receivable for partial claim for lost production through March 31, 2006, from shut-ins caused by Hurricane Rita, of which $17.3 million is related to the current period and is included in Other income on the Income Statement. Additional claims associated with lost production as a result of Hurricane Katrina have been made and will be recorded when finalized.
2006 Production Guidance
Production volumes for the first quarter averaged 82 Mmcfe/day, versus guidance of 75 to 80 Mmcfe/day. Production volumes for the second quarter 2006 are expected to range between 90 and 100 Mmcfe/day (8.2 to 9.1 Bcfe). This increase in production over first quarter 2006 is anticipated as several fields shut-in as a result of damage from Hurricanes Katrina and Rita re- commence production during the second quarter. Repairs to the company's largest producing field, East Cameron 346, are nearing completion and expected to be finalized this month. Additionally, repairs to other third party pipelines servicing other Remington properties are expected to be completed by the end of the second quarter.
Remington Oil and Gas Corporation is an independent oil and gas exploration and production company headquartered in Dallas, Texas, with operations concentrating in the onshore and offshore regions of the Gulf Coast.
Three Months Ended March 31, 2006 2005 (In thousands, except per share data) Oil and gas revenues $ 59,996 $ 59,471 Other income $ 18,102 $ 315 Net income $ 26,383 $ 16,035 Cash flow provided by operations $ 50,345 $ 45,355 Basic income per share $ 0.92 $ 0.57 Diluted income per share $ 0.90 $ 0.56 Production Bcfe 7.4 8.6 Average gas price $ 7.66 $ 6.54 Average oil price $ 60.07 $ 47.11
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