Pogo's Second Quarter Earnings Reflect Higher Volumes, Higher Prices; Seven-Well Exploration Program Planned in Gulf of Thailand; Quarterly Dividend Declared
TUESDAY, JULY 18, 2000 1:42:00 PM EST
HOUSTON, Jul 18, 2000 (BUSINESS WIRE) -- Pogo Producing Company PPP recorded second quarter 2000 net income of $18,309,000, or $0.45 per share, on revenues of $111,997,000, compared to a net loss in the second quarter of 1999 totaling ($3,006,000), or ($0.07) per share, on revenues of $44,828,000. For the first half of 2000, Pogo's net income was $30,265,000, or $0.75 per share, on revenues of $217,496,000, compared to first half 1999 net income of $11,307,000, or $0.28 per share, on revenues of $120,874,000.
Discretionary cash flow in the second quarter and the first half of 2000 was $58,509,000 and $112,301,000 respectively, compared to discretionary cash flow of $8,011,000 in the second quarter and $22,733,000 in the first half of 1999.
Pogo's Chairman, Paul G. Van Wagenen, said, "We are delighted to reap the fruits of our labors in the large Benchamas field of the Gulf of Thailand. Volumes from the first three Benchamas platforms are still rising as they near anticipated sustained levels for which we have worked so hard. Efforts there will not stop, however, as we begin a seven-well exploratory program in July testing four different fields within the large Block B8/32 license concession."
Production Volumes and Prices Rise Markedly
Production of liquid hydrocarbons, including crude oil, condensate and plant products, averaged 27,132 barrels per day in the second quarter, up dramatically from an average of 14,824 barrels per day produced in the second quarter of 1999. Equally important was the rise in average crude oil and condensate prices to $28.68 per barrel in the quarter just completed, up from $16.24 per barrel in the same quarter last year.
Natural gas production rates and prices were also markedly higher this past quarter, averaging 162.9 million cubic feet per day (mmcf/d) and $2.73 per thousand cubic feet (mcf), up from 119.5 mmcf/d at an average price of $2.02/mcf in the second quarter of 1999.
Thailand
In June, the government of Thailand granted Pogo and its industry joint-venture partners a 30-year production license on the Jarmjuree area of the Block B8/32 license concession area. The Jarmjuree production license area ("PLA") covers over 123,000 acres, and will allow Pogo and partners to further delineate and develop that important new PLA, and bring it to production.
Pogo successfully drilled in all three areas targeted during a second quarter exploration program. The Maliwan No. 7 well discovered hydrocarbons in an untested area of the northern part of that PLA. The Kung No. 2 well was the first exploratory well drilled in that southernmost exploration area of Block B8/32, and it, too, found pay. The Benchamas No. 21 well discovered an estimated 541 feet of oil and natural gas pay in the western hinge area of the large Benchamas field. That success will require a platform to be located near the Benchamas No. 21 well to accommodate significant new drilling and future completions in that new and very prospective area.
A seven-well Thailand exploratory program will commence in mid-July and will last through October. During this exploration program, two wells in the Kung exploratory area will build upon the success of the first Kung well previously mentioned. If successful, at least one of the new Kung area wells is expected to be production-tested to provide additional information prior to development of the Kung area. Two more wells are planned for the southern part of the Jarmjuree PLA, with the hope of extending that field beyond its currently known limits. Two more Maliwan wells are planned in the upcoming exploratory program, the Nos. 8 and 9, and we also plan to drill a northern test of the western Benchamas hinge area, the Benchamas No. 23 well.
"This is an ambitious exploratory program, but one that lends significant excitement to the extremely important Thailand component of Pogo's asset base," Van Wagenen said.
The Offshore
Expansion of the Virgo field at Viosca Knoll Block 823 continues. Five more wells will be drilled and completed within the next nine months. Elsewhere in the Gulf of Mexico, development of two important, recent Pogo discoveries, Viosca Knoll Block 1003 and Mississippi Canyon Block 661/705, should lead to first production late next year.
An important exploratory program at Main Pass Blocks 173/188 and at Main Pass Blocks 61/62, all of which blocks are owned 100% by Pogo, should be underway by the fourth quarter. Pogo also expects to undertake exploration drilling at South Pass Blocks 90/91 and Galveston Block 240 this year. Pogo owns 50% of those latter two prospect areas.
The Onshore
Sixteen wells have been successfully drilled and completed this year in Pogo's Western (Permian Basin) Division, and nine more are in various stages of drilling, completing or testing.
"Most of the wells are crude oil producers, but we also had some good natural gas discoveries this year at the McMillan Field in Eddy County, N.M., and the Ranch Hand Field in Crockett County, Texas," Van Wagenen noted.
The Pogo-operated 61-square mile Thibodaux 3-D project in LaFourche Parish, La., has yielded extremely high quality data, and drilling is expected to begin at Thibodaux before year-end. Another Garrington well, the 15-21, has been successfully drilled in Alberta, and three more Garrington wells are set for drilling this year, including the Garrington 14-14, which is already underway.
Hungary and Denmark
First data sets are in-house from the large Szolnok area seismic acquisition program on Pogo's 100% owned license in central Hungary. Pogo geoscientists are busy interpreting the data in anticipation of drilling early next year.
Analysis of 3-D seismic in the Denmark North Sea block, owned 40% by Pogo, is enabling Pogo and its partners to identify some very interesting prospective features. Drilling in that area of the North Sea should begin in early 2001.
Quarterly Dividend Declared
Pogo declared a dividend of $0.03 (three cents) per share of common stock to be paid on Aug. 18, 2000 to shareholders of record as of Aug. 4, 2000.
A summary of unaudited financial results follows, stated in thousands, except per share amounts:
Three Months EndedSix Months Ended
June 30,June 30,
----------------------------------------
2000199920001999
--------------------------------
(Unaudited)(Unaudited)
Natural Gas
Price per Mcf$2.73$2.02$2.61$1.86
Production, Mcf per day162,890119,468169,477125,929
Crude Oil and Condensate
Price per barrel$28.68$16.24$27.46$13.96
Production, barrels
per day24,58113,22324,64613,991
Liquids production,
barrels per day27,13214,82426,88715,875
Revenues
Oil and gas$108,530$43,159$211,007$80,894
Pipeline sales and
other3,4761,2636,5032,230
Gains (losses) on
sales(9)406(14)37,750
--------------------------------
Total$111,997$44,828$217,496$120,874
================================
Net income (loss)$18,309$(3,006)$30,265$11,307
================================
Earnings (loss) per
share:
Basic$0.45$(0.07)$0.75$0.28
Diluted$0.42$(0.07)$0.71$0.28
Discretionary Cash
Flow(a)$58,509$8,011$112,301$22,733
Weighted average number
of common stock and
potential common stock
outstanding
Basic40,38240,14140,33740,138
Diluted50,05240,14147,26340,315
(a) Discretionary cash flow is net cash provided by operating
activities before changes in operating assets and liabilities
and exploration expenses.
Pogo Producing Company explores for, develops and produces oil and natural gas. Headquartered in Houston, Pogo owns various ownership interests in 108 federal and state Gulf of Mexico lease blocks offshore from Louisiana and Texas. Pogo also owns approximately 340,000 gross leasehold acres in various oil and gas provinces onshore in the United States and Canada, approximately 734,000 gross acres in the Gulf of Thailand, approximately 778,000 gross acres in Hungary, and approximately 193,000 gross acres in the United Kingdom and Denmark sectors of the North Sea. Pogo common stock is listed on the New York Stock Exchange under the symbol PPP.
CONTACT:Pogo Producing Company, Houston
Paul G. Van Wagenen, 713/297-5000
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