Exhibit 99.1
For Information
---------------
Mark A. Hellerstein
Robert T. Hanley
303-861-8140
FOR IMMEDIATE RELEASE
ST. MARY PROVIDES OPERATIONS UPDATE, UPDATES GUIDANCE AND
SCHEDULES SECOND QUARTER 2004 EARNINGS CONFERENCE CALL FOR
AUGUST 5, 2004
DENVER, July 16, 2004 - St. Mary Land & Exploration Company (NYSE: SM) today
provided an update of its operations for the second quarter of 2004 and updated
its guidance for the second quarter and full year 2004. In addition, St. Mary
has scheduled its second quarter 2004 earnings conference call for August 5,
2004.
During the second quarter 2004 St. Mary participated in the drilling of 41 non
coalbed methane wells, of which 35 were completed as producers (85% success
rate). At the end of the second quarter, 37 wells were being completed and 20
were drilling. During the second quarter 28 wells were recompleted with a 64%
success rate. The Company also participated in the drilling of 29 coalbed
methane wells.
MID-CONTINENT REGION
In the Mid-Continent region there were 59 active wells during the second quarter
with 19 successful completions, one dry hole and 39 wells drilling or being
completed at the end of the quarter. Completed wells during the second quarter
include the Radtke 1-15 in the Hyers field (SM 40% WI) completed at 3,300 MCFED
and in NE Mayfield the Keathley 1-8 (SM 10% WI) completed at 5,300 MCFED and the
Betty 1-19 (SM 55% WI) completed at an initial rate of 3,000 MCFED. At the end
of the second quarter there were 11 wells completing and five wells drilling in
NE Mayfield. Pay has now been established in the Lower Morrow, Upper Morrow,
Atoka and most recently the Granite Wash formations. Numerous prospective
intervals are being tested as wells are drilled further from existing locations
than was done in prior periods due to the competitive nature of the play.
Consequently, a backlog of activity has accumulated. However, zones tested to
date suggest initial well production rates generally in the 2-5 MMCFED range,
which is somewhat less than the historic averages at Northeast Mayfield.
ROCKIES REGION
During the second quarter there were 19 active non coalbed methane wells in the
Rockies region. Six wells were successful completions, there were two dry holes,
eight wells were being completed and three wells were drilling at June 30. In
the Williston Basin, the Asbeck 15-35 in the Ridgelawn field (SM 100% WI) was
completed in the Red River formation at a rate of 590 BOPD and 670 MCFD. The
Franz 14-8H (SM 100% WI) was completed in the Bakken dolomite at an initial rate
of 650 BOPD.
Drilling has begun in the Company's Hanging Woman coalbed methane program in the
northern Powder River Basin. The drilling program is on schedule to complete the
108 planned wells reflected in the Company's 2004 capital expenditures budget.
The pipeline to connect the program to the main trunk line is currently being
constructed and is on schedule to be completed by December 1, 2004. To date, 18
wells have been drilled and are scheduled to be completed prior to completion of
the pipeline. Currently, two drilling rigs are operating in the program. The
Company also participated in 11 coalbed methane wells in the Doty Mountain
program in the Greater Green River Basin.
ARKLATEX REGION
Seven wells in the ArkLaTex region were completed as producing wells during the
second quarter, with one dry hole. Three wells are currently being completed and
two are drilling. In the horizontal James Lime Spider field, the Dave Brown No
1-H (SM 100% WI) was completed at a rate of 3,300 MCFED and the Jefferson No 1-H
(SM 100% WI) was completed at a rate of 2,200 MCFED. The Lawson No. 2 well in
the Bridges East field (SM 19% WI) was completed at a rate of 2,700 MCFED.
GULF COAST REGION
The Delambre #1 (formerly the David #1) in the Judge Digby field is currently
producing at a rate of 18,000 MCFED from the C sand (SM 6.5% WI). The well has
136 feet of B sand (SM 11.5% WI) which will be completed once the C sand is
depleted.
An option to lease 2,845 acres of the Company's fee acreage position in St. Mary
Parish, Louisiana, was exercised during the second quarter. The option was
granted as part of a 3-D survey conducted over all of St. Mary's 24,914 acres of
fee lands. In addition to a royalty interest, the Company will receive the right
to participate as a working interest owner for up to 25% in each well drilled on
the leased acreage.
The Company updated its forecast for the second quarter and full year of 2004 as
follows:
2nd Quarter Year
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Oil and gas production 17.5 - 18.5 BCFE 72.0 - 74.0 BCFE
Lease operating expenses,
including production taxes and
transportation $1.17 - $1.22/MCFE $1.25 - $1.35/MCFE
General and administrative expense,
excluding mark-to-market of NPP $0.29 - $0.34/MCFE $0.25 - $0.29/MCFE
Depreciation, depletion & amort. $1.10 - $1.15/MCFE $1.15 - $1.25/MCFE
Mark-to-market of NPP expense $3.5 - $4.0 million
The Company's production forecast is being revised to eliminate 4 BCFE of
production that was previously expected to result from budgeted 2004
acquisitions, the delay in new production from Northeast Mayfield and
underperformance of certain other fields. Significant production from
acquisitions is no longer anticipated in 2004 due to the current acquisition
pricing environment. The forecasted production at Northeast Mayfield is below
previous expectations because of the extended time necessary to complete wells
due to the multiple zones currently being tested. In addition, production rates
at the Terryville, Arcadia West, and "66" fields have underperformed previous
expectations.
In the second quarter of 2004, St. Mary realized a $3.1 million benefit
attributable to State severance tax credits from production through June 2004.
This benefit results in lower production tax expense for the second quarter than
was previously forecast.
Forecasted general and administrative expense includes $1.2 million and $1.8
million, respectively, for the second quarter and for the year 2004 for
incentive compensation expense associated with the Company's new Restricted
Stock Plan.
The mark-to-market expense adjustment related to the Company's Net Profits
Interest Bonus Plan will be shown separately in this and future releases.
Previously, this item was included in general and administrative and exploration
expense. The mark-to-market adjustment represents the change in the net present
value of estimated future incentive compensation cash bonus payments to be made
to plan participants based on the computational provisions of the plan with
respect to estimated future cash flows from oil and gas properties associated
with various pools under the plan. Accounting rules require the estimated market
value of such estimated future payments to be recorded as a liability prior to
recognizing the realized net revenues associated with the same properties. The
resulting mark-to-market liability and corresponding income statement items will
be separately presented in the balance sheet as a long-term liability and as a
separate component of the income statement. This reclassification has the effect
of reducing the previously reported general and administrative and exploration
expense. In order to facilitate comparability, the following table displays
historical general and administrative, exploration and mark-to-market expense
after giving effect to the reclassification:
G&A EXPENSE
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Total PER MCFE EXPL. EXP MTM
----- -------- --------- ---
2003
March 31, $5.4 million $0.34 $4.2 million $0.8 million
June 30, $5.5 million $0.29 $6.3 million $0.9 million
September 30, $4.8 million $0.29 $9.9 million $0.7 million
December 31, $5.6 million $0.29 $5.0 million $2.9 million
2004
March 31, $5.6 million 0.36 $4.6 million $2.2 million
St. Mary is scheduled to release second quarter 2004 earnings after the close of
trading on the NYSE on August 4, 2004. The teleconference call to discuss second
quarter results is scheduled for August 5, 2004 at 8:00 am (MDT). 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 August 15 at 800-642-1687, conference number 8530133. 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 8530133. In
addition, the call will be broadcast live at St. Mary's website at
www.stmaryland.com and the earnings press release and financial highlights
attachment will be available before the call at www.stmaryland.com under
"News-Press Releases." An audio recording of the conference call will be
available at that site through August 31.
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, the risks of various exploration strategies, 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 economically 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 2003 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-04-09