Titan Exploration Announces Full Year and Fourth
Quarter 1999 Results
MIDLAND, Texas, March 14 /PRNewswire/ -- Titan Exploration, Inc. (Nasdaq: TEXP - news) announced $44.9 million
($1.18 per basic share) of earnings before interest, taxes, exploration and abandonment expense and non-cash charges
(``EBITDAX') for 1999 as compared to approximately $31.6 million ($0.81 per basic share) of EBITDAX for 1998. For
1999 Titan reported a net loss of $8.3 million ($0.22 per basic share) as compared to a net loss of $47.2 million ($1.22 per
basic share) for 1998. The increase in EBITDAX and net income is primarily attributable to increased crude oil and natural
gas prices, lower lease operating (``LOE') and general and administrative (``G&A') expense levels, all partially offset by
normal production declines and lower production levels primarily resulting from the sale of producing oil and gas properties.
Additionally, Titan reported net income of $19.6 million ($0.51 per basic share) and EBITDAX of $14.7 million ($0.38 per
basic share) for the fourth quarter of 1999 as compared to a net loss of $31.6 million ($0.83 per basic share) and EBITDAX
of $ 7.2 million ($0.19 per basic share) for the comparable quarter of 1998.
Pure Resources, Inc. Merger
On December 13, 1999, Titan announced its agreement to merge Titan and the Permian Basin business unit of Unocal
Corporation (``Unocal') into a new company named Pure Resources, Inc. (``Pure Resources'). Pure Resources will be a
publicly traded company. The Permian Basin business unit of Unocal includes oil and gas exploration and production assets in
the Permian Basin of West Texas and the San Juan Basin in New Mexico and Colorado.
Pure Resources will have approximately 50 million shares of common stock outstanding upon completion of the merger.
Unocal will hold approximately 65% (32.7 million shares) of Pure Resources. Upon approval by Titan stockholders of the
merger, Titan stockholders will receive 0.4302314 shares of Pure Resources common stock for every share held of Titan's
common stock and will collectively own approximately 35% of the outstanding common stock of Pure Resources.
Titan filed, on a confidential basis, preliminary proxy materials relating to the proposed merger with the Securities and
Exchange Commission (``SEC') on January 12, 2000. Although Titan cannot determine when the preliminary proxy materials
will be finalized with the SEC, Titan anticipates mailing the definitive proxy materials as soon as they are finalized followed,
within approximately thirty days, by a shareholder's meeting to vote on the merger. The earliest that meeting could now occur
would be the end of April or the first part of May 2000.
Proved Oil and Gas Reserves
The net present value of Titan's proved reserves based on the Securities and Exchange Commission regulations at December
31, 1999 was $412.7 million as compared to $242.2 million at December 31, 1998.
At December 31, 1999 the estimated total proved reserves were 31.8 million barrels of oil (``Mmbo') and 244.7 billion cubic
feet of gas (``Bcfg'), or 72.6 million barrels of oil equivalent (``Mmboe'), as compared to 23.0 Mmbo and 332.0 Bcfg or
78.3 Mmboe at December 31, 1998. Approximately 65% of Titan's proved reserves at December 31, 1999 were proved
developed, as compared to approximately 60% at December 31, 1998. During the year, Titan had net upward revisions of
12.6 Mmboe attributable to higher commodity price levels and net downward revisions of 9.2 Mmboe primarily attributable to
lost proved undeveloped reserves in three of the Company's fields resulting from new information and supplemental technical
work leading Titan to reevaluate its reserve position in the fields.
Titan replaced 214% of its production during the year at an estimated all sources finding and development cost of $3.46 per
barrel of oil equivalent (``BOE'). Since inception, Titan's all sources finding and development costs is estimated to be $4.46
per BOE.
Financial Results
Oil and gas revenues for the quarter ended December 31, 1999, increased 42% to $22.3 million as compared to $15.7
million for the quarter ended December 31, 1998. Revenues, excluding the effects of hedging activities, were positively
affected by a 109% increase in prices received for crude oil (from $10.91 to $22.76 per barrel), a 37% increase in prices
received for natural gas (from $1.46 to $2.00 per mcf) partially offset by a decline in production primarily resulting from the
sale of producing oil and gas properties and normal production declines partially offset by production increases as a result of
Titan's capital spending activities.
LOE excluding production and other taxes dropped from $5.8 million ($0.59 per thousand cubic feet of gas equivalent
(``mcfe')) for the fourth quarter of 1998 to $4.4 million ($0.50 per mcfe) for the comparable 1999 quarter, a 15% per mcfe
decline. The decline in LOE is primarily attributable to Titan's continued efforts to more efficiently manage its properties,
reduced rework expense on Titan's acquired properties and to the sale of oil and gas properties with higher operating costs.
Titan employs the Successful Efforts method of accounting for its oil and gas properties and it expenses seismic, exploratory
dry holes and geophysical and geological costs as they are incurred, rather than capitalizing those costs as do companies
employing the Full Cost method of accounting. Titan's exploration and abandonment expenses were $2.8 million during the
fourth quarter of 1999, as compared to approximately $11.5 million during the comparable 1998 quarter. Included in these
1999 exploration and abandonment costs were $1.0 million for seismic acquisition costs (primarily 3-D seismic), $0.6 million
for dry holes, $0.8 million for impairment of unproved properties and $0.4 million for geophysical, geological and other costs
and delay rental payments on Titan's undeveloped acreage. These same costs for the fourth quarter of 1998 were
approximately $0.0, $1.1 million, $9.9 million and $0.5 million respectively.
Titan recorded an impairment pursuant to SFAS No. 121 in an amount equal to $5.9 million during the quarter. This
impairment is attributable to reduced proved undeveloped reserves in one of Titan's fields as discussed above.
Depletion, Depreciation and Amortization expense (``DD&A') decreased to $5.0 million ($0.56 per mcfe) during the quarter
ended December 31, 1999, from $7.6 million ($0.77 per mcfe) during the comparable 1998 quarter. The per unit decrease is
attributable to increased proved reserves between comparable quarters resulting from increased commodity prices and drilling
activities, the sale of oil and gas properties with higher per unit cost basis and prior period impairments.
In the fourth quarter of 1999, Titan recorded a $23.5 million tax benefit in order to eliminate Titan's previously recorded
deferred tax asset valuation allowance. Titan currently has a $20.6 million deferred tax asset on its balance sheet.
FORWARD LOOKING STATEMENTS
Statements in this press release, filings with the Securities and Exchange Commission and other written and oral statements
regarding estimated future net revenues from oil and natural gas reserves and the present value thereof, planned capital
expenditures (including the amount and nature thereof), increases in oil and gas production, the number of wells Titan
anticipates drilling, potential reserves and Titan's financial position, business strategy and other plans and objectives for future
operations are ``forward looking statements' within the meaning of the Securities Litigation Reform Act. Although Titan
believes that the expectations reflected in these forward looking statements are reasonable, there can be no assurance that the
actual results or developments anticipated by Titan will be realized or, even if substantially realized, that they will have the
expected effects on its business or operations. Among the factors that could cause actual results to differ materially from
Titan's expectations are general economic conditions, inherent uncertainties in interpreting engineering data, operating hazards,
delays or cancellations of drilling operations for a variety of reasons, competition, fluctuations in oil and gas prices, government
regulations and other factors set forth in Titan's Annual Report on Form 10-K. All subsequent oral and written forward
looking statements attributable to Titan or persons acting on its behalf are expressly qualified in their entirety by these factors. |
