EARNINGS / Plains Resources reports 1st 3 months Results
HOUSTON, May 1 /CNW/ -- Plains Resources (Amex: PLX) today reported
continued improvement in the fundamental performance drivers in both its
operating segments during the first quarter of 1998. Oil and gas production
in the company's upstream segment increased 19% and gross margin from its
midstream activities increased 62% over the similar results from last year's
first quarter. Despite the significant improvement in controllable aspects of
the company's operations, financial results were adversely affected by a 30%
decline in the average benchmark oil price between the two periods.
The company reported net income for the current year period of
$1.4 million, or $.07 per share ($.06 per share assuming dilution). These
results compare with net income in the prior year period of $3.9 million or
$.24 per share ($.22 per share assuming dilution) on substantially higher oil
prices. The NYMEX benchmark oil price averaged $15.97 per barrel in the first
quarter of 1998, substantially below the $22.83 per barrel average for the
first quarter of 1997.
The adverse impact of declining oil prices was partially offset by
improvement in fundamental operating results and the company's disciplined
hedging practices. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the first quarter of 1998 totaled $15.3 million, a
7% decline from the $16.5 million reported in the prior year period. Cash
flow from operations (net income plus noncash expenses) for the first quarter
of 1998 totaled $9.1 million as compared to $11.8 million in last year's first
quarter period.
Greg L. Armstrong, Plains' President and CEO, said "While our financial
results were clearly affected by lower oil price realizations, we are pleased
with the improved operating results turned in by each of our business
segments. It is worth noting that the adverse impact of the decline in oil
prices between the two periods was substantially mitigated by solid
improvement in each business segments' fundamental operating drivers, the
impact of our hedges and the counter-cyclical benefits provided by
terminalling and storage activities in our midstream segment."
Total oil equivalent production increased approximately 19% to an average
of 22,300 barrels per day as compared to the first quarter 1997 average of
18,800 barrels per day. Unit gross margin was $6.64 per barrel, a
30% decrease as compared to the $9.49 per barrel reported for the first
quarter of 1997 on substantially higher oil prices. Unit gross profit, which
deducts all pre-interest cash costs, was $5.95 per barrel, 32% lower than the
1997 amount of $8.75 per barrel.
During the quarter, the company's average product price received at the
wellhead was $13.03 per equivalent barrel, a decrease of approximately 16% as
compared to 1997's average wellhead price of $15.51 per equivalent barrel.
The NYMEX benchmark West Texas Intermediate crude oil price averaged $15.97
per barrel during the 1998 first quarter, compared to $22.83 per barrel for
the same period last year. The company maintained hedges on approximately 60%
and 80% of its crude oil production in the first quarter of 1998 and 1997,
respectively, with the current year's hedge price averaging $19.80 per barrel,
approximately $.80 per barrel higher than last year's average hedge price.
For the remainder of 1998, the company stated it has hedged an average of
approximately 12,250 barrels per day at an average NYMEX benchmark oil price
of approximately $19.80 per barrel. This hedge position represents
approximately 60% of first quarter 1998 average daily oil volumes. The company
noted that it also has hedge positions throughout 1999 on 8,000 barrels per
day, equivalent to approximately 40% of first quarter 1998 crude oil
production levels at an average price of $18.30 per barrel. All hedge prices
are before deductions for quality and area differentials.
The company reported that its midstream crude oil gathering, marketing,
terminalling and storage segment continued to record strong operating results
despite a generally weak industry environment. The midstream segment's gross
margin increased approximately 62% to $4.0 million from $2.5 million during
1997's first quarter. Gross profit (gross margin less general and
administrative expenses of the midstream segment) increased 85% to $3.0
million from $1.6 million reported last year. The company further noted that
the segment's storage activities in Cushing, Oklahoma, and strong margins
experienced in areas where the company conducts a large part of its marketing
activities more than offset weaker marketing margins in other areas.
Armstrong stated "As noted in previous periods, our storage and terminalling
facility in Cushing, the NYMEX delivery point, combined with our gathering and
marketing activities, provides Plains with a unique competitive advantage
within the entire midstream segment."
On March 23, 1998, the company announced it had entered into a definitive
agreement to acquire the All American Pipeline System, subject to receipt of
regulatory approvals. The company stated that the initial applications for
regulatory approvals were filed in early April and, based on past practices,
actions by the regulatory bodies should take place in the third quarter of
1998.
Except for the historical information contained herein, the matters
discussed in this news release are forward-looking statements that involve
risks and uncertainties. These risks and uncertainties include, among other
things, market conditions, government regulations and other factors discussed
in the company's filings with the Securities and Exchange Commission.
Plains Resources is an independent energy company engaged upstream in the
exploitation, development, acquisition and exploration of crude oil and
natural gas and the midstream activities of marketing, transportation,
terminalling and storage of crude oil. The company is headquartered in
Houston, Texas.
PLAINS RESOURCES INC. AND SUBSIDIARIES
FINANCIAL SUMMARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) (unaudited)
Three Months Ended
March 31,
REVENUE 1998 1997
Oil and natural gas sales $ 26,164 $ 26,279
Marketing, transportation and storage 167,204 180,795
Interest and other income 204 58
193,572 207,132
EXPENSES
Production expenses 12,838 10,194
Purchases, transportation and storage 163,200 178,329
General and administrative 2,376 2,095
Depreciation, depletion and amortization 6,755 5,320
Interest expense 6,109 4,710
191,278 200,648
Income before income taxes 2,294 6,484
Income tax expense
Current 3 114
Deferred 860 2,479
NET INCOME $ 1,431 $ 3,891
Earnings per share:
Basic $0.07 $0.24
Diluted $0.06 $0.22
Weighted average number of common
and common equivalent shares:
Basic 16,724 16,535
Diluted 18,271 18,031
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
March 31, Dec. 31,
1998 1997
(unaudited)
ASSETS
Cash and cash equivalents $ 29,906 $ 3,714
Other current assets 94,825 123,066
Property and equipment, net 426,124 413,308
Long-term assets 16,378 16,731
$ 567,233 $ 556,819
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 95,005 $ 132,791
Bank debt 126,560 80,000
Subordinated debt 202,605 202,661
Other long-term debt 3,067 3,067
Other long-term liabilities 5,089 5,107
432,326 423,626
Stockholders' equity 134,907 133,193
$ 567,233 $ 556,819
PLAINS RESOURCES INC. AND SUBSIDIARIES
FINANCIAL SUMMARY (continued)
FINANCIAL DATA
(in thousands) (unaudited)
Three Months Ended
March 31,
1998 1997
Earnings before interest, taxes,
depreciation, depletion and
amortization ("EBITDA") $ 15,267 $ 16,470
Cash flow from operations
(net income before noncash expenses) $ 9,100 $ 11,775
Midstream gross margin $ 4,004 $ 2,466
OPERATING DATA
(in thousands, except per unit data) (unaudited)
Three Months Ended
March 31,
1998 1997
Average Daily Volumes
Barrels of oil equivalent ("BOE")
California (91% oil) 13.7 10.1
Gulf Coast (100% oil) 4.9 5.2
Illinois Basin (100% oil) 3.7 3.4
Sold Properties --- 0.1
Total (94% oil) 22.3 18.8
Total Period Volumes
Barrels of oil equivalent
California (91% oil) 1,230 914
Gulf Coast (100% oil) 441 466
Illinois Basin (100% oil) 337 303
Sold Properties --- 11
Total (94% oil) 2,008 1,694
Unit Economics
Average sales price per barrel
of oil $ 13.33 $ 15.88
Average sales price per Mcf of
natural gas $ 1.38 $ 1.65
Average sales price per BOE $ 13.03 $ 15.51
Production expenses per BOE 6.39 6.02
Gross margin per BOE 6.64 9.49
Upstream G&A expenses per BOE 0.69 0.74
Gross profit per BOE $ 5.95 $ 8.75
Capital Expenditures (A) $ 19,262 $ 40,545
Midstream Average Daily Volumes
Crude oil barrels marketed 80.9 63.3
Crude oil terminal throughput barrels 55.3 70.6
(A) Includes capitalized interest of $.9 million and $.7 million for the
three months ended March 31, 1998 and 1997, respectively. Capital
expenditures for the three months ended March 31, 1997, includes $25
million for the Montebello acquisition.
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