VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2004 2003 2004 2003
-------- -------- -------- ---------
REVENUES:
Oil, condensate
and NGL
sales $136,382 $105,269
$367,320 $323,806
Gas sales 49,158 25,282
127,284 86,545
Sulfur sales 234 440 949 1,305
Gas marketing 17,897 15,445
50,131 59,978
-------- -------- -------- ---------
Total
revenues 203,671 146,436
545,684 471,634
-------- -------- -------- ---------
COSTS AND EXPENSES:
Production
costs 34,335 33,266
105,379 91,329
Transportation and
storage
costs 3,318 1,761
7,500 5,120
Production and ad
valorem
taxes 5,732 3,997
16,557 12,756
Export taxes 12,778 7,409
25,691 25,814
Exploration
costs 12,435 6,061
21,000 17,395
Gas marketing 16,857 14,798
47,409 58,093
General and
administrative 12,806 11,848
41,723 34,667
Stock
compensation 1,153 1,861
7,091 4,295
Depreciation,
depletion and
amortization 26,720 21,392
72,687 65,463
Impairment of
proved oil
and gas
properties - -
3,915 -
Accretion 1,685 1,523
4,932 4,422
Other
operating
(income)
expense 1,671 (701)
(1,933) 941
-------- -------- -------- ---------
Total costs
and
expenses 129,490 103,215
351,951 320,295
-------- -------- -------- ---------
OPERATING INCOME 74,181
43,221 193,733 151,339
-------- -------- -------- ---------
OTHER (INCOME) EXPENSE:
Interest
expense 12,625 17,818
39,321 54,328
Loss on early
extinguishment of
debt - -
9,903 1,426
(Gain) loss on
disposition
of assets (17) - (72) 667
Foreign currency
exchange
(gain) loss (285) (915)
(1,112) 6,653
Other
non-operating expense 8,252 818
8,522 41
-------- -------- -------- ---------
Net other
expense 20,575 17,721
56,562 63,115
-------- -------- -------- ---------
Income from
continuing
operations before
income
taxes and
cumulative
effect of change
in
accounting
principle 53,606 25,500
137,171 88,224
-------- -------- -------- ---------
INCOME TAX PROVISION (BENEFIT):
Current 19,068 5,128
47,481 39,609
Deferred 1,927
5,034 4,018 (2,057)
-------- -------- -------- ---------
Total income
tax
provision
20,995 10,162 51,499
37,552
-------- -------- -------- ---------
Income from
continuing
operations before
cumulative effect
of
change in
accounting
principle 32,611 15,338
85,672 50,672
INCOME (LOSS) FROM
DISCONTINUED
OPERATIONS, net
of income tax
provision
(benefit) of $(184), $221,
$130 and $25,480,
respectively (397) (3,583)
3,086 (14,042)
-------- -------- -------- --------
Income before
cumulative
effect of change
in
accounting
principle 32,214 11,755
88,758 36,630
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING
PRINCIPLE, net of
income tax provision
of
$4,104 - - - 7,119
-------- --------
-------- ---------
NET INCOME $32,214
$11,755 $88,758 $43,749
======== ======== ======== =========
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
(In
thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months
Ended
September 30, September 30,
------------------
------------------
2004 2003 2004 2003
--------- -------- ---------
--------
BASIC INCOME (LOSS) PER SHARE:
Income from
continuing
operations before
cumulative
effect of change
in
accounting
principle $0.50 $0.24
$1.32 $0.79
Income (loss) from
discontinued operations (0.01) (0.06) 0.05 (0.22)
--------- -------- ---------
--------
Income before
cumulative
effect of change
in
accounting
principle 0.49 0.18
1.37 0.57
Cumulative effect
of change
in accounting
principle - - - 0.11
--------- -------- ---------
--------
Net
income $0.49 $0.18
$1.37 $0.68
========= ======== =========
========
DILUTED INCOME (LOSS) PER SHARE:
Income from
continuing
operations before
cumulative
effect of change
in
accounting
principle $0.50 $0.24
$1.31 $0.79
Income (loss) from
discontinued
operations (0.01) (0.06)
0.05 (0.22)
--------- -------- ---------
--------
Income before
cumulative
effect of change
in
accounting
principle 0.49 0.18
1.36 0.57
Cumulative effect
of change
in accounting
principle - - - 0.11
--------- -------- ---------
--------
Net
income $0.49 $0.18
$1.36 $0.68
========= ========
========= ========
Weighted average common shares
outstanding:
Basic 65,283 64,228
64,786 63,938
Diluted 66,043 64,767
65,521 64,292
Certain 2003 amounts have been reclassified to conform with
the 2004
presentation. These reclassifications had no effect on the
Company's
net income.
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In
thousands, except shares and per share amounts)
(Unaudited)
ASSETS
September 30, December 31,
2004 2003
-------------
-------------
CURRENT ASSETS:
Cash and cash
equivalents
$46,012 $32,264
Accounts
receivable -
Oil and gas
sales 115,861 78,321
Joint
operations
8,616 7,480
Prepaids and other
current assets 9,631 6,660
Assets of
discontinued operations
254,394 224,321
-------------
-------------
Total current
assets 434,514 349,046
-------------
-------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas
properties, successful
efforts
method
2,023,933 1,835,588
Oil and gas
gathering systems and plants
23,890 23,344
Other
27,903 26,334
------------- -------------
2,075,726 1,885,266
Less: Accumulated depreciation,
depletion and
amortization
908,462 829,055
-------------
-------------
Total
property, plant and equipment,
net
1,167,264 1,056,211
-------------
-------------
DEFERRED INCOME TAXES 14,558 -
-------------
-------------
OTHER ASSETS, net 42,513 41,581
-------------
-------------
$1,658,849 $1,446,838
=============
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revenue payable $37,541 $22,641
Accounts payable -
trade 53,578 48,548
Current income
taxes payable
21,899 17,316
Derivative
financial instruments payable
75,735 7,551
Other payables and
accrued liabilities 88,796 54,852
Liabilities of
discontinued operations
102,467 65,465
-------------
-------------
Total current
liabilities 380,016 216,373
-------------
-------------
LONG-TERM DEBT 676,547 699,943
-------------
-------------
DEFERRED INCOME TAXES 36,565 34,939
-------------
-------------
LONG-TERM LIABILITY FOR ASSET RETIREMENT
OBLIGATIONS
77,577 72,158
-------------
-------------
OTHER LONG-TERM LIABILITIES 571 939
-------------
-------------
STOCKHOLDERS' EQUITY:
Preferred stock,
$0.01 par, 5,000,000
shares
authorized, zero shares issued
and
outstanding
- -
Common stock,
$0.005 par, 160,000,000
shares
authorized, 66,181,811 and
64,720,975 shares
issued and 65,657,693
and 64,281,199 outstanding,
respectively 331 324
Capital in excess
of par value 354,217 337,080
Retained
earnings
102,173 22,844
Accumulated other
comprehensive income 39,133 70,482
-------------
-------------
495,854 430,730
Less treasury
stock, at cost, 524,118
and 439,776 shares 4,319 3,117
Less unamortized
cost of restricted
stock awards 3,962 5,127
-------------
-------------
Total
stockholders' equity
487,573 422,486
-------------
-------------
$1,658,849 $1,446,838
=============
=============
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months
Ended
September 30,
------------------
2004
2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$88,758 $43,749
Adjustments to
reconcile net income to cash
provided by
operating activities -
Income from
discontinued operations, net of
tax
(3,086) 14,042
Cumulative
effect of change in accounting
principle,
net of tax
- (7,119)
Depreciation,
depletion and amortization
72,687 65,463
Impairment of
proved oil and gas properties
3,915 -
Accretion
4,932 4,422
Exploration
costs 16,733 9,910
Provision
(benefit) for deferred income
taxes
4,018 (2,057)
Foreign
currency exchange loss
(1,112) 6,653
(Gain) loss on
dispositions of assets
(72) 667
Loss on early
extinguishment of debt
9,903 1,426
Stock
compensation
7,091 4,295
Other non-cash
items included in net income
8,316 2,644
Increase in
receivables
(5,532) (2,100)
Increase in
payables and accrued
liabilities 9,648 9,490
Other working
capital changes
2,735 4,265
-------- --------
Cash
provided by continuing operations
218,934 155,750
Cash
provided by discontinued operations
37,280 16,406
--------
--------
Cash
provided by operating
activities
256,214 172,156
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
-
Oil and gas
properties
(159,538) (100,041)
Gathering
systems and other
(2,132) (3,232)
Proceeds from sale
of oil and gas properties
67 29,980
Purchase of
company, net of cash acquired
(26,757) -
Proceeds from sale
of company, net of cash sold
- 116,107
Other
2,454 (4,153)
-------- --------
Cash provided (used) by investing
activities
- continuing operations
(185,906) 38,661
Cash
provided (used) by investing
activities
- discontinued operations
(23,785) 8,311
--------
--------
Cash
provided (used) by investing
activities
(209,691) 46,972
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common
stock
11,218 1,122
Purchase of
treasury stock
(1,202) (3,013)
Redemption of 9
3/4% Senior Subordinated Notes
due 2009 (157,313) -
Redemption of 9%
Senior Subordinated Notes due
2005
- (50,750)
Advance on
revolving credit facility and other
borrowings 370,100 115,400
Payments on
revolving credit facility and other
borrowings (243,500)
(151,017)
Dividends
paid
(9,042) (7,971)
Other (3,668) 1
-------- --------
Cash
used by financing activities
(33,407) (96,228)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 632 480
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,748 123,380
CASH AND CASH EQUIVALENTS, beginning of period 32,264 8,128
-------- --------
CASH AND CASH EQUIVALENTS, end of period $46,012 $131,508
======== ========
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
SUMMARY OPERATING DATA
(Unaudited)
Three Months Ended Nine Months
Ended
September 30, September 30,
------------------
-----------------
2004 2003 2004 2003
-------- ------- ------- -------
PRODUCTION:
Oil (MBbls) -
U.S. 1,555 1,584
4,600 4,753
Argentina
(a) 2,578(d) 2,641 7,453(d) 7,705
Bolivia
(b) 24 22 65 62
Yemen (c) 107 - 166 -
Continuing
operations 4,264 4,247
12,284 12,520
Canada 214 274
664 945
Ecuador - - - 114
Total 4,478
4,521 12,948 13,579
Gas (MMcf) -
U.S. 8,135 5,458
21,500 17,435
Argentina 2,306(d) 2,612 6,485(d) 7,203
Bolivia 2,466 1,438 6,014
4,491
Continuing
operations 12,907 9,508
33,999 29,129
Canada 3,785 4,583
11,591 14,945
Total 16,692 14,091
45,590 44,074
MBOE from continuing operations 6,415 5,832 17,951
17,375
Total MBOE 7,260
6,870 20,546 20,925
(a) Production for Argentina for the three months ended
September 30,
2004 and 2003,
and for the nine months ended September 30, 2004
and 2003, before
the impact of changes in inventories was 2,528
MBbls, 2,571
MBbls, 7,458 MBbls and 7,626 MBbls, respectively.
(b) Production for Bolivia for the three months ended
September 30,
2004 and 2003,
and for the nine months ended September 30, 2004
and 2003, before
the impact of changes in inventories was 28
MBbls, 19 MBbls,
71 MBbls and 60 MBbls, respectively.
(c) Production for Yemen for the three months and nine
months ended
September 30,
2004, before the impact of changes in inventories
was 174 MBbls,
and 282 MBbls, respectively.
(d) Argentina production for the three months and nine
months ended
September 30,
2004, is estimated to have been reduced as the
result of a labor
strike and problems at a major oil loading
facility by 162
MBbls of oil and 129 MMcf of gas, or 183 MBOE and
527 MBbls of oil
and 429 MMcf of gas, or 598 MBOE, respectively.
MBbls - thousand
barrels
MMcf - million
cubic feet
MBOE - thousand
barrels of oil equivalent
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
SUMMARY OPERATING DATA
(Continued)
(Unaudited)
Three Months Ended Nine Months
Ended
September 30, September 30,
------------------
-----------------
2004 2003 2004 2003
--------- -------- ---------
-------
Average Sales Price (including
impact of hedges):
Oil (per Bbl) -
U.S. $27.52 $25.14
$27.53 $25.38
Argentina 34.39 24.60
31.27 26.19
Bolivia 24.68 22.33
24.42 22.70
Yemen 40.56 -
36.49 -
Continuing
operations 31.99 24.79
29.90 25.86
Canada 28.39 27.26
28.33 28.18
Ecuador - - - 26.87
Total 31.82 24.94
29.82 26.03
Gas (per Mcf) -
U.S. $5.31
$3.89 $5.26 $4.26
Argentina 0.74 0.48
0.64 0.45
Bolivia 1.72 1.95
1.66 2.01
Continuing
operations 3.81 2.66
3.74 2.97
Canada 4.75 4.11
4.82 4.35
Total 4.02 3.13
4.02 3.44
Average Sales Price (excluding
impact of hedges):
Oil (per Bbl) -
U.S. $38.85 $27.85
$35.34 $28.32
Argentina 34.39 24.60
31.27 26.19
Bolivia 24.68 22.33
24.42 22.70
Yemen 40.56 -
36.49 -
Continuing
operations 36.12 25.80
32.82 26.98
Canada 37.10 26.61
33.85 28.02
Ecuador - - - 26.87
Total 36.17 25.85
32.88 27.05
Gas (per Mcf) -
U.S. $5.27 $4.45
$5.27 $4.99
Argentina 0.74 0.48
0.64 0.45
Bolivia 1.72
1.95 1.66 2.01
Continuing
operations 3.78 2.98
3.74 3.41
Canada 4.75 4.26
4.82 4.83
Total 4.00 3.40
4.02 3.89
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
FINANCIAL
DATA RELATED TO DISCONTINUED OPERATIONS
CANADA AND ECUADOR
(In thousands)
(Unaudited)
Three Months
Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004
2003
-------- -------- ------- ---------
REVENUES:
Oil, condensate
and NGL sales $6,110 $7,480
$18,834 $29,717
Gas sales 17,983 18,832
55,813 65,049
Sulfur sales 147 142 339 485
-------- -------- ------- ---------
Total
revenues 24,240 26,454
74,986 95,251
-------- -------- ------- ---------
COSTS AND EXPENSES:
Production
costs 10,989 8,844
29,914 27,743
Transportation and
storage
costs 364 661
1,274 2,449
Production and ad
valorem
taxes 565 -
1,254 -
Exploration
costs 2,076 3,008
7,444 38,202
General and
administrative 2,244 2,271
7,291 7,489
Depreciation,
depletion and
amortization 8,062
13,516 23,900 41,852
Impairment of
proved oil and
gas
properties - 1,443 - 14,014
Accretion 354 328
1,046 1,008
Other
operating (income)
expense - 74
(141) 10
-------- -------- ------- ---------
Total costs
and expenses 24,654 30,145
71,982 132,767
-------- -------- ------- ---------
OPERATING INCOME (LOSS) (414)
(3,691) 3,004 (37,516)
-------- -------- ------- --------
OTHER (INCOME) EXPENSE:
Interest
expense - 18 - 64
Gain on
disposition of assets - (170) - (47,749)
Foreign currency
exchange
(gain) loss 538 (193) 526 (610)
Other
non-operating (income)
expense (371) 16
(738) (659)
-------- -------- ------- --------
Net other
(income)
expense 167 (329)
(212) (48,954)
-------- --------
------- --------
Income (loss) from
discontinued
operations
before income
taxes and gain
on sale of
discontinued
operations (581) (3,362)
3,216 11,438
-------- -------- ------- ---------
PROVISION (BENEFIT) FOR INCOME
TAXES
(184) 221 130 25,480
-------- -------- ------- ---------
NET INCOME (LOSS) FROM
DISCONTINUED
OPERATIONS $(397) $(3,583)
$3,086 $(14,042)
======== ======== ======= ========
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
REVISED 2004 TARGETS
Previous Revised
2004 2004
Targets Targets(c)
-------- ----------
Oil production (MMBbls):
U.S.
6.0 6.1
Canada
.8 .7
Argentina
10.5 10.4
Bolivia
.1 .1
Yemen
.5 .5
Total
17.9 17.8
Gas Production (Bcf):
U.S. 27.7 29.0
Canada
14.8 13.9
Argentina
8.3 8.5
Bolivia
6.8 7.6
Total
57.6 59.0
Total MMBOE 27.5 27.6
Assumed NYMEX(a)
prices:
Oil
$36.00 $42.00
Gas $5.90 $6.10
Net realized price (before impact of hedging)
as a percent of
NYMEX(a) - Total
Company:
Oil
82% 82%
Gas
70% 69%
DD&A per BOE (oil and gas only) $4.50 $4.50
G&A per BOE $2.60 $2.60
Production, transportation and storage costs per
BOE
$7.05 $6.91
Production, ad valorem and export taxes per BOE $2.10 $2.54
--------
----------
Total LOE per
BOE $9.15 $9.45
Non-Acquisition Capital Spending Budget (in
millions)
$250 $250
Cash Flow (before all exploration expenses,
working capital
changes and current taxes
associated with
property sales) (in millions) (d)
$325 $365
EBITDAX (in millions)(b)(d) $427 $480
------------------------
MMBbls - million barrels
Bcf - billion
cubic feet
MMBOE - million
barrels of oil equivalent
(a) NYMEX
Oil - Average of
the daily settlement price per barrel for the
near-month
contract for light crude oil as quoted on the
New York
Mercantile Exchange.
Gas - Average of
the settlement price per MMBtu for the last
three
trading days for the applicable contract month for
natural gas
as quoted on the New York Mercantile Exchange.
(b) EBITDAX: Earnings before interest, taxes, DD&A,
impairments,
exploration
expenses, cumulative effect of change in accounting
principle, loss
on early extinguishment of debt, gains/losses on
property sales
and other non-cash items.
(c) Targets include the previously announced acquisition of
Rio Alto
Resources
International, Inc. and the disposition of the Canada
assets on
November 30, 2004. Targets reflect the impact of
existing hedges.
See "2004 Targets for Production, Cash Flow and
EBITDAX
Increased" and "Forward-Looking Statements" elsewhere in
the release.
(d) The targets for non-GAAP financial measures are not
reconciled to
the most directly
comparable GAAP financial measure as the company
does not
establish targets for such GAAP financial measures.
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
HEDGING STATUS
OIL PRICE SWAPS
NYMEX
Reference
Price
Quarter
Ending Barrels $ Per Bbl
---------------------------- ----------- -----------------
December 31, 2004 1,264,500 30.20
March 31, 2005 1,170,000 37.39
June 30, 2005 1,183,000 36.07
September 30, 2005 1,196,000 35.13
December 31, 2005 1,196,000 34.44
March 31, 2006 360,000 36.63
June 30, 2006 364,000 36.01
September 30, 2006 368,000 35.52
December 31, 2006 368,000 35.11
March 31, 2007 126,000 31.42
GAS PRICE SWAPS
NYMEX
Reference
Price
Quarter
Ending MMBtu $ Per MMBtu
---------------------------- --------------
---------------
December 31, 2004 620,000 5.97
March 31, 2005 900,000 6.59
June 30, 2005 910,000 5.94
September 30, 2005 920,000 5.97
December 31, 2005 920,000 6.22
GAS PRICE COLLARS
NYMEX Floor NYMEX Cap
MMBtu
For Reference Price
Reference Price
2005 $ Per MMBtu $ Per MMBtu
------------------------------ --------------- ---------------
1,825,000
6.00 6.80
3,650,000
6.00 8.02
1,825,000
6.00 8.73
3,650,000
6.00 9.21
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
Cash flow, a non-GAAP measure, represents cash provided by
operating
activities before the impact of all exploration costs, changes
in
working capital items related to operating activities and
current
taxes on property sales. It includes cash flow from Canada
(now
classified as a discontinued operation) in all periods
presented but
excludes the cash used by discontinued operations related to
Ecuador
which was sold in 2003 and thus no comparable amounts exist
for the
periods in 2004. Cash flow is presented because management
believes it
is a useful adjunct to cash provided by operating activities
under
accounting principles generally accepted in the United
States
("GAAP"). Cash flow is widely accepted as a
financial indicator of an
oil and gas company's ability to generate cash which is used
to
internally fund exploration and development activities and
to service
debt. Cash flow is not a measure of financial performance
under GAAP
and should not be considered as an alternative to cash
provided (used)
by operating, investing, or financing activities as an
indicator of
cash flows, or as a measure of liquidity.
EBITDAX is also presented below because of its wide
acceptance by the
investment community as a financial indicator of a company's
ability
to internally fund exploration and development activities
and to
service or incur debt. Management also views the non-GAAP
measure of
EBITDAX as a useful tool for comparison of the company's
financial
indicator with those of peer companies. EBITDAX should not
be
considered as an alternative to net income or cash provided
by
operating activities, as defined by GAAP. The following
table
reconciles cash provided by operating activities to cash
flow and
EBIDTAX (in thousands):
Three Months Ended Nine Months
Ended
September 30, September 30,
------------------
------------------
2004 2003 2004 2003
--------- -------- --------
---------
Cash provided by operating
activities (GAAP
measure) $114,006 $78,041
$256,214 $172,156
Adjustments to remove the impact
of:
Changes in working
capital
items related to
operating
activities
(a) (19,973)
(25,475) (5,272) (1,279)
Exploration geological
and
geophysical costs
(b) 1,526 5,037
5,268 10,128
Current tax
provision
associated with
property
sales - 1,725 - 6,933
Cash used by
Ecuador
discontinued
operations - 9,441 - 30,370
--------- -------- --------
--------
Cash flow (non-GAAP measure) 95,559 68,769 256,210
218,308
Current taxes (c) 17,589
2,752 43,754 30,764
Interest expense 12,625
17,818 39,321 54,328
--------- -------- --------
--------
EBITDAX (non-GAAP measure) $125,773 $89,339
$339,285 $303,400
========= ======== ======== ========
(a) Includes changes in working capital items related to
operating
activities for
Canada (a discontinued operation) of $(733),
$(7,400), $5,213
and $10,376 for the three months ended September
30, 2004 and 2003
and the nine months ended September 30, 2004 and
2003,
respectively.
(b) Includes exploration, geological and geophysical costs
related to
Canada operations
of $140, $809, $1,000 and $2,644 for the three
months ended September
30, 2004 and 2003 and the nine months ended
September 30,
2004 and 2003, respectively.
(c) Includes a current tax benefit related to Canada
operations of
$1,479, $650,
$3,727 and $1,912 for the three months ended
September 30,
2004 and 2003 and the nine months ended September
30, 2004 and
2003, respectively.