EARNINGS / Coho Energy Reports Third Quarter 1998 Results
TSE SYMBOL: CEE
NASDAQ SYMBOL: COHO
NOVEMBER 16, 1998
DALLAS, TEXAS--Coho Energy, Inc. today reported that oil and gas
production in the third quarter of 1998 rose 51 percent to 18,156
equivalent barrels of oil per day (boepd) compared to 12,000 boepd
in the third quarter of 1997. The increase was largely due to the
addition of producing properties in Oklahoma that were acquired in
December 1997 and continued development of both these new
properties and Coho's existing core properties in Mississippi.
Despite these production gains, the continuing weakness in crude
oil and natural gas prices (which fell 37 percent and 13 percent
respectively) caused Coho to report a loss for the third quarter
of 1998 of $7.2 million or $0.28 per basic share compared to
earnings of $1.4 million or $0.07 per basic share in the third
quarter of 1997.
Jeffrey Clarke, Coho's Chairman and Chief Executive Officer,
stated, "The third quarter was one of the most difficult periods
for the oil industry in recent memory and particularly difficult
for companies like Coho that are heavily weighted towards crude
oil. Currently, oil accounts for approximately 80 percent of
Coho's production and, during the quarter, our realizations were
at the lowest in Company's history. Despite this environment, the
Company has performed well and continues to make operating
progress. Given the uncertain near term outlook, however, our
current strategy is to limit discretionary outlays that would
increase near term production. Instead, we are focusing on capital
investment projects that have significant longer term potential."
"To strengthen the Company's financial position and position Coho
for future growth, Coho plans to issue $250 million of equity at
$6.00 per share to a limited partnership managed by Hicks, Muse,
Tate & Furst Incorporated, subject to approval by Coho
shareholders," Mr. Clarke continued. "This additional equity will
allow the Company to continue its growth oriented capital program
and take advantage of attractive acquisition opportunities
presented by the current depressed industry environment." A
shareholders' meeting to vote on the transaction has been
scheduled for December 4, 1998.
For the first nine months of 1998, Coho reported a loss of $71.1
million or $2.78 per basic share compared to earnings of $4.6
million or $0.22 per basic share in the same period of 1997. The
loss in this year's nine months results largely reflects a
non-cash pretax ceiling test writedown of $73.0 million recorded
in the first half of 1998 and sharply lower crude oil prices
throughout the year. The ceiling test writedown, which is mandated
by Securities and Exchange Commission accounting rules, require
companies using full cost accounting to value their reserves at
the lower of net book value or a valuation based on current oil
and gas prices, without escalation, for the life of the reserves.
No writedown was required in this year's third quarter.
During the first nine months of 1998, capital expenditures totaled
$62.5 million, including $5.9 million to acquire additional
working interests in the Company's Oklahoma fields, compared with
$55.3 million during the first nine months of 1997. Coho's
activities were focused on drilling, recompletions, workovers and
waterfloods in the Brookhaven, Laurel, Martinville and Summerland
fields in Mississippi and Bumpass, Tatums, East Fitts, North Alma
Deese and Sholem Alechem fields in Oklahoma. Of particular note
was the successful drilling and recompletion of three gas wells in
Oklahoma. These wells were brought on stream during the month of
September and are currently producing at a combined rate of six
million cubic feet per day.
On November 11, 1998, Coho announced that the Company had filed a
definitive proxy statement with Securities and Exchange Commission
relating to the proposed issuance of $250 million of common equity
to HM4 Coho L.P., a limited partnership managed by Hicks, Muse,
Tate & Furst Incorporated. Proxy materials were mailed on or about
November 10, 1998. As part of the transaction, HM4 Coho L.P. will
acquire 41,666,666 common shares at $6.00 per share and own
approximately 62 percent of Coho's outstanding shares.
Coho Energy, Inc. is a Dallas based independent oil and gas
producer focusing on exploitation of underdeveloped oil properties
and exploration in Oklahoma and Mississippi.
/T/
COHO ENERGY, INC.
SUMMARY OF FINANCIAL RESULTS
(In Thousands, Except Per Share Data)
Nine Months Three Months
Ended Ended
September 30, September 30,
1997 1998 1997 1998
---- ---- ---- ----
OIL PRODUCTION (BBL/D) 7,466 14,501 8,219 14,271
GAS PRODUCTION (MCF/D) 20,628 23,966 22,685 23,310
PRODUCTION (BOE/D) 10,904 18,495 12,000 18,156
Average Sales Price
$/BBL $16.44 $10.81 $15.45 $9.67
$/MCF $2.13 $1.99 $2.06 $1.79
OPERATING REVENUES
Net Oil and Gas
Production $45,506 $55,829 $15,985 $16,539
------- ------- ------- -------
OPERATING EXPENSES
Oil and Gas Production 10,012 18,282 3,899 5,698
Taxes on Oil and Gas
Production 1,629 2,728 559 844
General and
Administrative 5,048 4,752 1,425 1,437
Depletion and
Depreciation 14,072 22,235 5,112 7,216
Writedown of crude oil and
natural gas properties -- 73,000 -- --
------- ------- ------- --------
TOTAL OPERATING EXPENSES 30,761 120,997 10,995 15,195
NET INTEREST EXPENSE (7,227) (24,344) (2,694) (8,498)
INCOME TAXES 2,932 (18,432) 895 14
NET EARNINGS (LOSS) $4,586 $(71,080) $1,401 $(7,168)
------- ------- ------- --------
------- ------- ------- --------
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ 0.22 $ (2.78) $ 0.07 $ (0.28)
CASH FLOW FROM OPERATING
ACTIVITIES $21,905 $6,300 $7,498 $264
CASH FLOW PER COMMON SHARE
(BASIC) $ 1.07 $ 0.25 $ 0.37 $ 0.01
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 20,414 25,604 20,462 25,604
COHO ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
September 30, December 31,
1998 1997
------ ------
ASSETS
Current Assets $ 18,484 $ 17,074
Property and Equipment 498,826 531,409
Other 7,523 6,645
-------- --------
$524,833 $555,128
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 25,622 $ 19,095
Long Term Debt 424,488 369,924
Deferred Income Taxes -- 20,306
Commitments and Contingencies 3,700 3,700
-------- ---------
453,810 413,025
Shareholders' Equity 71,023 142,103
-------- ---------
$524,833 $555,128
-------- ---------
-------- ---------
Common Shares Outstanding 25,604 25,604
/T/
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