Exhibit 99.1
For Information
---------------
Mark A. Hellerstein
Robert T. Hanley
303-861-8140
ST. MARY REPORTS EARNINGS FOR THIRD QUARTER 2003
DENVER, November 5, 2003 - St. Mary Land & Exploration Company (NYSE: SM)
today announced its earnings for third quarter 2003 of $13.8 million or $0.41
per diluted share. Third quarter 2002 earnings were $7.7 million or $0.27 per
diluted share. Revenues for the third quarter of 2003 were $91.0 million
compared to $51.0 million for the third quarter of 2002. Third quarter
discretionary cash flow, which is computed as net income plus depreciation,
depletion, amortization, impairments, deferred taxes, exploration expense and
non-cash mark-to-market adjustments related to compensation plans, less the
cumulative effect of change in accounting principle and unrealized derivative
gain, increased to $51.8 million in the third quarter of 2003 from $27.8 million
in the third quarter of 2002. Net cash provided by operating activities
increased from $30.1 million in the third quarter of 2002 to $60.2 million in
the third quarter of 2003. See the attached financial highlights for a
reconciliation of discretionary cash flow to net cash provided by operating
activities, a presentation of other cash flow information, and a statement
indicating why management believes the presentation of this non-GAAP measure of
discretionary cash flow provides useful information to investors.
Earnings for the first nine months of 2003 were $70.9 million or $2.08 per
diluted share, compared to $20.6 million or $0.72 per diluted share for the
first nine months of 2002. Revenues for the first nine months of 2003 were
$295.9 million compared to $145.7 million for the same period in 2002.
Discretionary cash flow for the first nine months of 2003 increased from $82.6
million in the first nine months of 2002 to $169.0 million. Net cash provided by
operating activities increased from $106.2 million in the first nine months of
2002 to $150.9 million in the first nine months of 2003.
Daily oil and gas production during the third quarter of 2003 averaged 209.4
million cubic feet of gas equivalent (MMCFE), up 46% from 143.3 MMCFE in the
comparable 2002 period. Average prices realized during the quarter were $4.53
per MCF and $26.39 per barrel, compared to $2.97 per MCF and $26.54 per barrel
realized in the third quarter of 2002.
Mark Hellerstein, Chairman, President and CEO commented, "With production up 42%
and realized commodity prices up 48% over the first nine months of 2002, we
continue to enjoy a very good year. Earnings through the first nine months of
2003 are higher than in any fiscal year in our history. Our balance sheet
remains strong as we continue to look for new opportunities."
The Company's forecasts for the fourth quarter and the full year 2003 are as
follows:
4th Quarter Year
---------------- ----------------
Oil and gas production 18.5 - 19.5 BCFE 76.3 - 77.3 BCFE
Lease operating expenses,
including production taxes and
transportation $1.15-$1.25/MCFE $1.15-$1.25/MCFE
General & administrative expense $0.29-$0.33/MCFE $0.29-$0.33/MCFE
Depreciation, depletion & amort. $1.10-$1.20/MCFE $1.05-$1.15/MCFE
An operational update for the third quarter 2003 was provided in the Company's
October 6, 2003, press release.
During October 2003, the Company entered into fixed to floating interest rate
swaps on a notional amount of $50 million, which represents 50% of the
outstanding principal amount of the Company's 5.75% Senior Convertible Notes due
2022. Under the swaps, St. Mary will receive payments at a fixed interest rate
of 5.75% in exchange for making payments at a variable interest rate of 235
basis points plus the six-month LIBOR rate. The swaps expire during March 2007,
on the first date that the Company is entitled to redeem the Notes.
In October 2003, the bank group for the Company's long-term revolving credit
facility concluded its normal semi-annual borrowing base determination which
resulted in the borrowing base remaining unchanged at $275 million. The Company
elected to maintain a loan commitment amount under the facility of $150 million.
Outstanding debt under the facility is currently $5 million, and the Company
expects to completely repay that amount during November 2003.
As previously announced, St. Mary has scheduled a teleconference call for
November 6, 2003, at 8:00 am (MST) to discuss third quarter results. The call
participation number is 888-424-5231. A digital recording of the conference call
will be available two hours after the completion of the call, 24 hours per day
through November 17 at 800-642-1687, conference number 3172842. International
participants can dial 706-634-6088 to take part in the conference call, and can
access a replay of the call at 706-645-9291, conference number 3172842. In
addition, the call will be broadcast live online and can be accessed by going
directly to St. Mary's web site home page at www.stmaryland.com. An audio
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recording of the conference call will be available at that site through November
17.
This release contains forward looking statements within the meaning of
securities laws, including forecasts and projections for future periods. The
words "will," "believe," "anticipate," "intend," "estimate," "forecast" and
"expect" and similar expressions are intended to identify forward looking
statements. These statements involve known and unknown risks, which may cause
St. Mary's actual results to differ materially from results expressed or implied
by the forward looking statements. These risks include such factors as the
volatility and level of oil and natural gas prices, unexpected drilling
conditions and results, production rates and reserve replacement, reserve
estimates, drilling and operating service availability and uncertainties in cash
flow, the financial strength of hedge contract counterparties, the availability
of attractive exploration and development and property acquisition opportunities
and any necessary financing, expected acquisition benefits, competition,
litigation, environmental matters, the potential impact of government
regulations, and other such matters discussed in the "Risk Factors" section of
St. Mary's 2002 Annual Report on Form 10-K filed with the SEC. Although St. Mary
may from time to time voluntarily update its prior forward looking statements,
it disclaims any commitment to do so except as required by securities laws.
PR-03-18
###
Financial Highlights Follow
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
September 30, 2003
(Unaudited)
PRODUCTION DATA
- ---------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 % 2003 2002 %
-------------------------- --------------------------
Change Change
Average realized price:
Oil (per Bbl) $26.39 $26.54 -1% $27.01 $25.07 8%
Gas (per Mcf) $4.53 $2.97 53% $4.98 $2.86 74%
Production:
Oil (MBbls) 1,147 679 69% 3,352 2,057 63%
Gas (MMcf) 12,378 9,111 36% 37,696 28,283 33%
MMCFE (6:1) 19,262 13,186 46% 57,808 40,625 42%
Daily Production:
Oil (Bbls per day) 12,470 7,382 69% 12,278 7,535 63%
Gas (Mcf per day) 134,547 99,031 36% 138,082 103,603 33%
MCFE per day (6:1) 209,366 143,323 46% 211,750 148,810 42%
Margin analysis per MCFE:
Net realized price $4.49 $3.42 31% $4.81 $3.26 48%
Oil and gas production costs 1.25 0.94 33% 1.18 0.93 26%
General and administrative costs 0.29 0.33 -14% 0.31 0.26 18%
-------------------------- --------- ---------
Operating margin $2.95 $2.15 37% $3.32 $2.07 61%
-------------------------- --------- ---------
Depletion, depreciation &
amortization $1.08 $0.97 11% $1.06 $0.96 10%
INCOME STATEMENT
- ----------------
(In thousands, except
per share amounts) Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
-------------------------- --------------------------
Revenues:
Oil and gas production $86,414 $45,121 $278,236 $132,411
Gas marketing revenue 3,911 3,366 11,019 6,810
Loss on sale of proved properties (343) (503) (221) (90)
Derivative gain 325 2,619 358 4,594
Other 692 351 6,515 2,005
-------------------------- --------------------------
90,999 50,954 295,907 145,730
-------------------------- --------------------------
Operating Expenses:
Oil and gas production costs 23,914 12,392 68,304 37,953
Depletion, depreciation, amortization
and abandonment liability accretion 20,765 12,836 61,251 39,169
Exploration 9,883 4,219 20,668 15,432
Impairment and abandonment 2,300 587 4,003 1,906
General and administrative 5,535 4,388 17,699 10,544
Gas marketing expenses 3,584 3,545 10,041 6,631
Minority interest and other 707 286 1,202 906
-------------------------- --------------------------
66,688 38,253 183,168 112,541
-------------------------- --------------------------
Income from operations 24,311 12,701 112,739 33,189
Interest income 73 288 647 568
Interest expense (1,833) (1,110) (6,416) (2,580)
-------------------------- --------------------------
Income before income tax expense 22,551 11,879 106,970 31,177
Income tax expense (benefit)- current 4,039 (900) 25,893 502
Income tax expense - deferred 4,726 5,105 15,612 10,094
-------------------------- --------------------------
Income from continuing operations 13,786 7,674 65,465 20,581
Cumulative effect from change
in accounting principle - - 5,435 -
-------------------------- --------------------------
Net income $13,786 $7,674 $70,900 $20,581
========================== ==========================
Basic weighted avg shares outstanding 31,529 27,873 31,126 27,828
Diluted weighted avg shares outstanding 35,828 28,448 35,426 28,388
Basic earnings per common share:
Income from continuing operations $0.44 $0.28 $2.11 $0.74
Cumulative effect of accounting change - - 0.17 -
-------------------------- --------------------------
Basic net income per common share $0.44 $0.28 $2.28 $0.74
========================== ==========================
Diluted earnings per common share:
Income from continuing operations $0.41 $0.27 $1.93 $0.72
Cumulative effect of accounting change - - 0.15 -
-------------------------- --------------------------
Diluted net income per common share $0.41 $0.27 $2.08 $0.72
========================== ==========================
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
September 30, 2003
(Unaudited)
BALANCE SHEET
- -------------
(In thousands) Sept 30, Dec 31,
2003 2002
--------------------------
Working capital (deficit) ($7,278) $2,050
Long-term debt 112,672 113,601
Stockholders' equity 371,568 299,513
Shares outstanding - permanent equity 28,153 27,973
Shares outstanding - temporary equity 3,381 -
Note receivable from Flying J
(contra-equity) $71,594 $ -
PROVEN RESERVES
- ---------------
(In thousands) Pro Forma*
Dec 31, Dec 31,
2002 2002
--------- ---------
Oil (Bbls) 36,119 44,411
Gas (Mcf) 274,172 293,219
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MCFE (6:1) 490,887 559,685
========= =========
* Pro forma proven reserves is defined as December 31, 2002 proven reserves plus
the estimated reserves aquired in the Flying J acquisition.
CASH FLOW
- ---------
(In thousands)
Reconciliation of Discretionary Cash Flow to Net Cash
Provided by Operating Activities:
- -----------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
-------------------------- --------------------------
Discretionary Cash Flow (1) $ 51,845 $ 27,801 $ 169,048 $ 82,587
(Gain) loss on property sales 343 503 221 90
Non-expl dry hole exploration exp (3,528) (3,059) (13,171) (8,139)
Minority interest & other (506) (1,496) (1,324) (2,044)
Changes in working capital 11,992 6,333 (3,864) 33,658
--------- --------- --------- ---------
Net Cash Provided by Operating Activities $ 60,146 $ 30,082 $ 150,910 $106,152
========= ========= ========= =========
Net Cash Used in Investing Activities (33,029) (29,382) $(153,648) $(93,858)
========= ========= ========= =========
Net Cash Provided by (Used in) Financing
Activities (30,853) 514 $ (1,306) $ 32,660
========= ========= ========= =========
(1)Discretionary cash flow is computed as net income plus depreciation,
depletion, amortization, impairments, deferred taxes, exploration expense,
and non-cash mark-to-market adjustments related to compensation plans less
the change in accounting principle and unrealized derivative gain. The
non-GAAP measure of discretionary cash flow is presented since management
believes that it provides useful additional information to investors for
analysis of St. Mary's ability to internally generate funds for exploration,
development and acquisitions. In addition, discretionary cash flow is widely
used by professional research analysts and others in the valuation,
comparison and investment recommendations of companies in the oil and gas
exploration and production industry, and many investors use the published
research of industry research analysts in making investment decisions.
Discretionary cash flow should not be considered in isolation or as a
substitute for net income, income from operations, net cash provided by
operating activities or other income, profitability, cash flow or liquidity
measures prepared under GAAP. Since discretionary cash flow excludes some,
but not all, items that affect net income and net cash provided by operating
activities and may vary among companies, the discretionary cash flow amounts
presented may not be comparable to similarly titled measures of other
companies.