Here. You can read their earnings release, hot off the press. I didn't see any mention of dry holes. I do, however, recall reading of dry holes in the last year or two, and the company emphasizing 3-D seismic for better results.
Miller Exploration Company Announces First Quarter 1999 Financial and Operational Results.
HOUSTON, Texas--(PRNewswire)--May 12, 1999--Miller Exploration Company (NASDAQ:MEXP, the "Company" or "Miller") today announced first quarter 1999 Financial and Operational results.
FIRST QUARTER 1999 FINANCIAL RESULTS
Oil and natural gas revenues for the three months ended March 31, 1999 increased 20% to $4.8 million from $4.0 million for the comparable period in the prior year. The revenues for the three months ended March 31, 1999 and 1998 include approximately $384,000 and $(14,000) of hedging gains (losses), respectively. Subsequent to quarter end, the Company took advantage of the increase in natural gas prices and has hedged approximately 10.0 Mmcfd of May through October production at approximately $2.24.
Production volumes for natural gas during the three months ended March 31, 1999 increased 12% to 2,054.9 MMcf from 1,835.0 MMcf for the comparable period in the prior year. Average natural gas prices increased 3% to $2.00 per Mcf for the three months ended March 31, 1999 from $1.95 per Mcf for the comparable period in the prior year. Production volumes for oil during the three months ended March 31, 1999 increased 120% to 77.0 MBbls from 35.0 MBbls for the comparable period in the prior year. Average oil prices decreased 28% to $9.30 per barrel during the three months ended March 31, 1999 from $12.94 per barrel in the comparable period in the prior year.
Lease operating expenses and production taxes for the three months ended March 31, 1999 decreased 7% to $0.60 million from $0.65 million for the comparable period in the prior year. Lease operating expenses and production taxes decreased primarily due to cost containment measures and increased efficiency in the Company-operated Mississippi field operations.
Depreciation, depletion and amortization ("DD&A") expense for the three months ended March 31, 1999 increased 36% to $3.4 million from $2.5 million for the comparable period in the prior year. The higher depletion rate was the combined result of increased production, an increase in costs subject to DD&A and a downward revision in estimated proved oil and gas reserves.
General and administrative expense for the three months ended March 31, 1999 decreased 16% to $0.88 million from $1.1 million for the comparable period in the prior year due primarily to $0.3 million of non-recurring bonuses paid to certain employees of the Company in connection with consummation of the Company's initial public offering.
Interest expense for the three months ended March 31, 1999 increased 152% to $0.59 million from $0.24 million for the comparable period in the prior year, as a result of increased debt levels during 1998 and into 1999, associated with substantial exploration and development activities in the Mississippi Salt Basin area.
Net loss for the three months ended March 31, 1999 decreased to $0.3 million from $5.6 million for the comparable period in the prior year, as a result of the factors described above, plus the three months ended March 31, 1998 include a one-time non-cash charge to earnings of $5.4 million in connection with the termination of MOC's S corporation status.
The Company uses the full cost method of accounting for its oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including any general and administrative costs that are directly attributable to the Company's acquisition, exploration and development activities, are capitalized in a "full cost pool" as incurred. Additionally, proceeds from the sale of oil and gas properties are applied to reduce the costs in the full cost pool. The Company records depletion of its full cost pool using the unit-of-production method.
Securities and Exchange Commission ("SEC") Regulation S-X, Rule 4-10 requires companies reporting on a full cost basis to apply a ceiling test wherein the capitalized costs within the full cost pool may not exceed the net present value of the Company's proven oil and gas reserves plus the lower of cost or market of unproved properties. Any such excess costs should be charged against earnings. Using unescalated period-end prices at March 31, 1999, the Company would have recognized a non-cash cost ceiling write-down of oil and gas properties of approximately $2.8 million. However, using the improvements in pricing experienced subsequent to period-end, the Company has determined that a write-down is not required.
FIRST QUARTER 1999 OPERATIONAL REVIEW
The Company reported in its 1998 year-end press release (April 15, 1999) that two gross wells were in progress in Mississippi. The Horne #1 well, Centerville Dome, is a Paluxy formation test drilled to a total depth of 10,600 feet and is presently being logged. The well was spud on April 7 and reached total depth on May 10. The Company holds 43% working interest in this well. The Allar # 6 well, Midway Dome, was spud on April 3 and is drilling ahead below 12,000 feet with an ultimate objective of the Hosston formation at 16,500 feet. The Company holds an approximate 55% working interest in this well.
The Heffelfinger #1-25, Hillsdale County, Michigan, has been completed and tested and is awaiting completion of a pipeline connection as well as facility construction. Preliminary estimates call for first sales to begin in July at a rate of 2 Mmcfd. Miller owns 100% working interest in the property with an approximate 87.5% net revenue interest. The Vegas #2 well, Foules Dome, Catahoula Parish, Louisiana, began gas sales on April 20 at a rate of approximately 350 Mcfd. Miller owns a 75% working interest in the property. All drilling activity detailed above has been performed with Miller Exploration Company as operator.
Other recent operational activity includes the reperforation of the Allar #2 well, Midway Dome, Mississippi. Production was increased by 2.1 Mmcfd and 46 Bopd with flowing tubing increasing pressure by 700 p.s.i. to reach 1,700 p.s.i. The Company owns an 87.5% working interest in this well, which is currently producing at 9.6 Mmcfd and 188 Bopd. The Minerals Management #5 well was reperforated and showed no appreciable increase in its flowing rate of 8.1 Mmcfd. Oil production was increased by 10 Bopd to a new flow rate of 225 Bopd. Payout from the costs associated with the above reworks is estimated at 5 days. The Hoskins #1, Monticello Dome, Mississippi, is awaiting a gas sales line connection and the Atlas #1 well is undergoing completion. The Dake #1 well is the third well in the Monticello Dome and is also awaiting a gas sales line connection.
PROPERTY SALES
On May 3, 1999 the Company entered into a purchase and sale agreement with an unrelated third property to sell its interest in various non-strategic Texas and Louisiana properties. The effective date of the sale was March 1, 1999 for a sale price of $3.1 million. Estimated reserve quantities sold were approximately 2.7 Bcfe.
On March 16, 1999, an affiliated entity purchased a working interest in certain unproved oil and gas properties from the Company for $1 million. The Company believes that the purchase price is representative of the fair market value of the interest being sold, and that the terms are consistent with those available to unrelated parties.
Miller is an independent oil and gas exploration and production company with established exploration efforts concentrated primarily in four regions: the Mississippi Salt Basin, the onshore Gulf Coast region of Texas and Louisiana, the Blackfeet Indian Reservation of Northwest Montana and the Michigan Basin. Miller emphasizes the use of 3-D seismic data analysis and imaging, as well as other emerging technologies, to explore for and develop oil and natural gas in its core exploration areas. Miller is the successor to the independent oil and natural gas exploration and production business first established in Michigan by members of the Miller family in 1925. Miller's common shares trade on the NASDAQ under the symbol MEXP.
Except for the historical herein, the matters discussed in this press release are opinions, forward looking statements, assumptions, and estimates that are subject to a wide range of risks, uncertainties, and there is no assurance that our goals, estimates and expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward looking statements, including but not limited to the volatility of oil and gas prices and changes in oil and gas drilling and acquisition programs, operating risks, production rates, reserve replacement, reserve estimates, the effect of our hedging activities, the actions of our customers and competitors, government regulations, changes in general economic conditions, and the state of domestic capital markets and uncertainties detailed from time to time in the Company's prospectus as filed February 4, 1998 with the Securities and Exchange Commission. |
