Remington Oil and Gas Corporation Provides Guidance On Impact of Settlement of Phillips Litigation
DALLAS, May 30 /PRNewswire/ -- Remington Oil and Gas Corporation (Nasdaq: ROIL; PCX: REM.P) today provided guidance on the financial impact of the settlement of the Phillips Litigation announced on May 23, 2001. Of the $42.5 million total settlement, approximately $10 million will be capitalized for acquisition of the Net Profits Interest at South Pass 89 and $12.5 million will be expensed in the second quarter. Twenty million dollars has already been charged to expense in prior periods. On an after tax basis we expect earnings to be reduced by approximately $0.40 per share (basic) and $0.36 per share (diluted). In the third and fourth quarters, the reduced cash costs associated with the litigation are approximately offset by increased DD&A associated with the acquisition of the net profits interest. On a per share basis, the approximate impact of the issuance of new shares will reduce earnings and cash flow by between $0.02 and $0.03 per share in the third quarter and fourth quarters. This minimal dilutive event will be reduced or eliminated if Remington purchases shares from Phillips rather than Phillips selling the shares in the open market.
Since signing the agreement, Remington has paid Phillips $21.25 million. Phillips has provided evidence of removing all liens on our properties and provided an assignment of the 33% net profits interest at South Pass 89. Remington has made the final payments to the net profits account and is currently filing documents with the SEC to issue the 1.189 million shares to Phillips.
Remington Oil and Gas Corporation and Phillips have been engaged in litigation surrounding the allocation of funds to the 33% net profits interest at South Pass 89, offshore Louisiana almost since the field discovery in the late 1970s. The recently settled litigation involved both a Louisiana action and a Texas action. Phillips claimed Remington owed with interest to date approximately $56 million associated with the Louisiana action and an additional $20 million associated with the Texas action. In Louisiana, the trial court and the appellate court determined we owed approximately $20 million, but that determination was to be reviewed further by the Louisiana Supreme Court. The Texas action was stayed until the conclusion of the Louisiana action.
Year-end 2000, Remington had 8 Bcfe of proved reserves booked to South Pass 89 associated with the 33% net profits interest. An additional 4.2 Bcfe was recognized as probable reserves by Netherland, Sewell and Associates, Inc., the company's reserve engineers. The $10 million to be capitalized to this acquisition is associated with these reserves. We are currently conducting a long offset 3-D survey over the field in anticipation of defining new exploitation and exploration opportunities in addition to those currently identified. These new opportunities will not be burdened with the 33% net profits interests.
James A. Watt, President and Chief Executive Office of the company stated, "Removing the cloud of this litigation should be a significant benefit for our shareholders. We can now focus 100% of our time on continuing to grow our reserve base through the drillbit and evaluating other opportunities for growth in shareholder value." |
