KCS Energy, Inc. Reports Third Quarter 1999 Results
Business Initiatives and Strengthening Commodity Prices Result in Significant
Turnaround in Operating Results
HOUSTON, Nov. 4 /PRNewswire/ -- KCS Energy, Inc. (NYSE: KCS) today
announced financial and operating results for the three and nine months ended
September 30, 1999.
Financial Highlights
($thousands except per share)
3 mos. 1999 3 mos. 1998
Revenue $35,605 $32,277
Operating Income $14,678 $4,801
Net Income (Loss) $4,756 $(3,581)
Earnings (Loss) Per Share $0.16 $(0.12)
9 mos. 1999 9 mos. 1998
Revenue $101,965 $97,249
Operating Income (Loss) $32,658 $(38,801) *
Net Income (Loss) $3,057 $(42,598) *
Earnings (Loss) Per Share $0.10 $(1.44) *
* 1998 nine-month period includes a $57.6 million pretax ($37.5 million
after-tax), or $1.27 per share, non-cash ceiling writedown of oil and
gas assets.
Commenting on the Company's third quarter 1999 performance, KCS President
and Chief Executive Officer James W. Christmas said, "We are extremely pleased
with our results in the third quarter, building on the positive performance of
the second quarter. We have continued to make significant strides toward
achieving our goals by significantly reducing operating and administrative
expenses, reducing debt by $33 million since March 31, 1999 and implementing
our property rationalization program, which is enabling us to focus on our
core operating areas. EBITDA (earnings before interest, taxes and DD&A)
increased 30% to $26.3 million for the quarter, reflecting the benefits of our
business initiatives and strengthening oil and gas commodity prices." KCS'
average realized prices per Mcfe were $1.90, $2.12 and $2.48 during the first,
second and third quarters.
For the third quarter 1999, KCS' operating income more than tripled
to $14.7 million, compared to $4.8 million for the comparable 1998 period.
Net income for the third quarter was $4.8 million, or $0.16 per share,
compared to a net loss of $3.6 million, or $0.12 per share, for the same
period in 1998. Cash operating and administrative expenses in the third
quarter were reduced by approximately $2.4 million, or 20% below the third
quarter of 1998 (and 4% below the second quarter of 1999). EBITDA for the
quarter was $26.3 million, compared to $20.3 million in the same period last
year, while cash flow before changes in working capital was $17.0 million, or
$0.58 per share, compared to $14.2 million, or $0.48 per share, last year.
For the nine-month period of 1999, net income was $3.1 million, or
$0.10 per share, compared to a net loss of $42.6 million, or $1.44 per share,
for the comparable 1998 period. The 1998 loss reflects a non-cash ceiling
writedown of $57.6 million pretax ($37.5 million after-tax), or $1.27 per
share. EBITDA for the nine-month period was $72.1 million, compared to
$62.9 million in 1998. Cash flow before changes in working capital was
$44.1 million, or $1.51 per share, compared to $40.9 million, or $1.39 per
share.
Operations Update
"The Company had excellent drilling results in the third quarter with
solid contributions from the Mid-Continent and Gulf Coast core operating
areas," according to William N. Hahne, KCS Senior Vice President and Chief
Operating Officer. "In total, 16 wells were drilled in the third quarter, of
which 13 were successful for an 81% success ratio. As previously announced,
the Company also completed property acquisitions in October that should
favorably impact production volumes." Through October 1999, KCS has spent
approximately $50 million of its $60 million budgeted capital program. The
remainder of this program is expected to be funded by cash flow from
operations.
In the Permian Basin, the Company drilled three successful step-out wells
from the West Shugart Field discovery well drilled in late 1998. In addition,
the Federal 19-5, in which KCS has a 100% working interest, was spudded in the
third quarter and was recently completed at a rate of 463 barrels of oil per
day (Bopd) and 168 thousand cubic feet of gas per day (Mcfgpd) with no water
from a Bone Spring Carbonate Zone. Production from this well will be
restricted to 230 Bopd in accordance with state allowables. KCS also
participated with a 50% working interest in drilling the High Top Fee #1 well,
located in Lea County, New Mexico, which is producing at a rate of 120 Bopd
and no water from a Devonian reservoir.
In the Anadarko and Arkoma basins, KCS participated in two significant
wells, as announced November 1. The Fort Chaffee 14-30 #1, in which KCS has a
50% working interest, penetrated three apparently productive zones and was
dually completed. The lower Hunton Penters Chert zone tested at 3,975 Mcfgpd
and the Upper Spiro sand tested at 2,798 Mcfgpd. Additionally, KCS recently
completed the McCabe #14-1 well in the South East Wilburton Field with a 13%
working interest. The McCabe well, which was KCS' fifth successful well in
this field, was placed on production this month at a rate of 4,027 Mcfgpd and
no water.
In South Texas, the Company participated in drilling the Hernandez #1 well
located in the Austin Field in Goliad County, Texas. KCS has a 34.3% working
interest in this well, which logged pay in four different Wilcox sand
horizons. The well, which was completed in the Sixth Nita Sand this week and
tested at a rate of 4,400 Mcfgpd at 5,560 psi, should be on production by the
end of the month. KCS also drilled a development well, the Josey 3-19, in the
Langham Creek Field. KCS has an 87.5% working interest in this well, which
was recently stimulated and is producing at a rate of 3,200 Mcfgpd at 3,020
psi.
KCS also participated with a 25% working interest in an exploratory
discovery well in the Mississippi Salt Basin. The Robertson 21-9 #1 was the
second KCS successful exploratory well drilled in the Mississippi Salt Basin
in the last year. The well was drilled to 18,600 feet and discovered a new
field, N.E. Collins, with over 60 feet of excellent Cotton Valley oil pay.
The well is currently being completed and should be on production before year
end.
In South Texas, KCS purchased 50% of the working and royalty interest held
by Shell Western E&P, Inc. and its subsidiaries in the Provident City and N.E.
Provident City fields. These long-lived Wilcox fields add approximately 4,000
thousand cubic feet of gas equivalent per day (Mcfepd) to KCS' net production.
KCS also purchased additional interest in the Cypress/Langham Creek
Field adding approximately 800 Mcfepd of production. The acquisition included
42% working interests in two wells and one future drilling location. Both
acquisitions were completed in early October.
"These third quarter discoveries and recent acquisitions have opened up
further drilling opportunities which we will pursue in 2000," Hahne explained.
"These successes, combined with five straight quarters of expense reductions
and our successful 1999 asset rationalization program, which has already
exceeded its 1999 property sales target of $25 million, will significantly
strengthen KCS for the future."
Forbearance Agreements
As announced September 30, 1999, KCS and its bank lenders extended their
forbearance agreements until December 3, 1999 on each of the revolving bank
credit facilities. Under the terms of the agreements, the Company has
committed to make monthly principal payments of $2.5 million and to dedicate a
portion of the proceeds from the sale of any of its oil and gas properties to
principal payments. The lenders have agreed to refrain from exercising any
rights and remedies not heretofore exercised until the expiration of the
agreements. The agreements also preclude the Company from making interest
payments on its senior and subordinated notes. The Company did not make the
July 15, 1999 interest payments totaling $13.8 million on its senior and
subordinated notes.
Restructuring
KCS continues to pursue a consensual restructuring transaction with the
assistance of its financial advisors, Houlihan Lokey Howard & Zukin, and is
having continuing conversations with institutional investors holding a
majority of both classes of outstanding notes.
KCS is an independent energy company engaged in the acquisition,
exploration and production of natural gas and crude oil with operations in the
Mid-Continent and Gulf Coast regions. The Company also purchases reserves
(priority rights to future delivery of oil and gas) through its Volumetric
Production Payment (VPP) program. For more information on KCS Energy, Inc.,
please visit the Company's web site at kcsenergy.com .
To receive KCS' latest news and other corporate developments via fax at no
cost, please call 1-800-PRO-INFO. Use company code KCS. See also
frbinc.com .
This press release contains forward-looking statements that involve a
number of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements are delays and difficulties in developing currently
owned properties, the failure of exploratory drilling to result in commercial
wells, delays due to the limited availability of drilling equipment and
personnel, fluctuations in oil and gas prices, general economic conditions and
the risk factors detailed from time to time in the Company's periodic reports
and registration statements filed with the Securities and Exchange Commission.
KCS Energy, Inc.
Condensed Income Statements
Three Months Ended Nine Months Ended
(Amounts in Thousands September 30, September 30,
Except Per Share Data) 1999 1998 1999 1998
Oil and gas revenue $33,230 $30,446 $96,906 $92,309
Other revenue, net 2,375 1,831 5,059 4,940
Total revenue 35,605 32,277 101,965 97,249
Operating costs and
expenses
Lease operating expenses 6,900 8,075 20,525 22,993
Production taxes 910 961 2,487 3,019
General and
administrative 1,683 2,873 7,313 8,465
Depreciation, depletion
and amortization 11,434 15,567 38,982 43,942
Writedown of oil and
gas properties -- -- -- 57,631
Total operating costs
and expenses 20,927 27,476 69,307 136,050
Operating income (loss) 14,678 4,801 32,658 (38,801)
Interest and other
income, net 223 (82) 445 117
Interest expense (10,145) (9,787) (30,046) (26,589)
Income (loss) before
income taxes 4,756 (5,068) 3,057 (65,273)
Federal and state
income taxes (benefit) -- (1,487) -- (22,675)
Net income (loss) $4,756 $(3,581) $3,057 $(42,598)
Basic and diluted
earnings (loss)
per share of
common stock $0.16 $(0.12) $0.10 $(1.44)
Weighted average
shares outstanding 29,268 29,537 29,262 29,486
KCS Energy, Inc.
Condensed Balance Sheets
September 30, December 31,
(Thousands of Dollars) 1999 1998
Assets
Cash $20,895 $876
Other current assets 33,894 42,198
Property, plant and equipment, net 222,299 256,492
Deferred charges and other assets 9,540 9,312
Total assets $286,628 $308,878
Liabilities and stockholders' equity
Current liabilities $43,444 $49,851
Short-term debt 391,713 135,700
Deferred credits and other liabilities 2,600 2,896
Long-term debt -- 274,635
Stockholders' equity (151,129) (154,204)
Total liabilities and
stockholders' equity $286,628 $308,878
Condensed Statements of Cash Flow
Nine Months Ended
June 30,
1999 1998
Net income (loss) $3,057 $(42,598)
DD&A 38,982 43,942
Writedown of oil and gas properties -- 57,631
Other non-cash items 2,024 (18,092)
44,063 40,883
Net changes in assets and liabilities 992 (25,460)
Net cash provided by operating activities 45,055 15,423
Cash flow from investing activities:
Investment in oil and gas properties (31,077) (143,214)
Net proceeds from sale of oil
and gas properties 25,297 4,895
Investment in other property, plant
and equipment 1,039 (2,189)
Net cash used in investing activities (4,741) (140,508)
Cash flow provided by (used in)
financing activities (20,295) 121,459
Net increase in cash and cash equivalents $20,019 $(3,626)
EBITDA * $72,085 $62,889
*Earnings before interest, taxes and DD&A.EBITDA is not a measure of
financial performance or liquidity under generally accepted accounting
principles and should not be considered in isolation.
KCS Energy, Inc.
Supplemental Data
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Production data:
Gas (MMcf) 11,387 12,728 38,889 36,365
Oil (Mbbl) 299 428 967 1,285
Liquids (Mbbl) 33 22 85 78
Total production (MMcfe) 13,383 15,430 45,202 44,542
Other data:
Average realized prices*
Gas (per Mcf) $2.39 $2.00 $2.12 $2.11
Oil (per bbl) 18.80 11.10 14.25 11.60
Liquids (per bbl) 10.52 10.56 9.71 7.85
Total (per Mcfe) 2.48 1.97 2.14 2.07
* Includes the effects of hedging
SOURCE KCS Energy, Inc.
CO: KCS Energy, Inc.
ST: Texas
IN: OIL
SU: ERN
11/04/1999 12:25 EST prnewswire.com |
