EXHIBIT 99.1
For Information
---------------
Mark A. Hellerstein
Robert T. Hanley
303-861-8140
ST. MARY REPORTS EARNINGS FOR SECOND QUARTER 2004
DENVER, August 3, 2004 - St. Mary Land & Exploration Company (NYSE: SM)
today announced its earnings for the second quarter 2004 of $21.8 million or
$0.69 per diluted share. Second quarter 2003 earnings were $24.3 million or
$0.71 per diluted share. Second quarter 2003 included other income of $3.6
million from proceeds of a litigation settlement. Per share results reflect a
decline in basic weighted average shares outstanding from 31.5 million shares in
the second quarter 2003 to 28.6 million shares in the second quarter 2004
resulting from the repurchase in early February 2004 of the 3.4 million shares
issued to Flying J in January 2003, partially offset by shares issued from
option exercises.
Revenues for the second quarter of 2004 were $102.5 million compared to $103.8
million for the second quarter of 2003. Second quarter discretionary cash
flow(1) increased from $60.4 million in the second quarter of 2003 to $64.5
million in the second quarter of 2004. Net cash provided by operating activities
increased from $48.5 million in the second quarter of 2003 to $59.9 million in
the second quarter of 2004.
Earnings for the first six months of 2004 were $43.3 million or $1.34 per
diluted share, compared to $57.1 million or $1.67 per diluted share for the
first six months of 2003. Revenues for the first six months of 2004 were $199.1
million compared to $204.9 million for the same period in 2003. Discretionary
cash flow for the first six months of 2004 increased from $117.2 million in the
first six months of 2003 to $120.7 million. Net cash provided by operating
activities increased from $90.8 million in the first six months of 2003 to $99.8
million in the first six months of 2004.
Daily oil and gas production during the second quarter 2004 averaged 198.2
million cubic feet of gas equivalent (MMCFE), down from 226.3 MMCFE in the
comparable 2003 period. The second quarter 2003 included 357 MMCFE associated
with the payout of the Parlange #4 well in the Judge Digby field. Average prices
realized during the quarter were $5.39 per MCF and $30.78 per barrel, 12% and
18% higher, respectively, than the realized prices in the second quarter of
2003.
The Company also announced that it has increased its 2004 capital expenditures
budget to $305 million from $288 million. The increase is allocated to the
following regions:
Mid-Continent Region $14 million
ArkLaTex Region 1 million
Hanging Woman Basin 2 million
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Total Increase $17 million
The changes to the capital expenditures budget reflect increases in the
Company's planned drilling activity in the Mid-Continent and ArkLaTex regions,
and increases in expected drilling expenditures for the 108 planned wells in
2004 for the Hanging Woman Basin coalbed methane program. The Company has
recently completed its internal estimates of net probable reserve potential for
the Hanging Woman Basin program to be approximately 257 BCF. This estimate
includes the Montana portion of the project, which is currently subject to
environmental public interest group challenges.
Mark Hellerstein, Chairman, President and CEO, commented, "After enjoying
outstanding results and a ramp up in production in 2003, we have been facing the
challenge of replacing and growing production from a much larger base of
reserves, together with depletion associated with some of the new flush
production we saw peaking during the second quarter of 2003. Completion activity
is gaining momentum in the second half of the year and we expect production will
begin inclining once again in the fourth quarter."
The Company's current forecasts for the third quarter and the full year 2004 are
shown below.
3rd Quarter Year
----------- ----
Oil and gas production 17.0 - 18.0 BCFE 72.0 - 74.0 BCFE
Lease operating expenses,
including production taxes and
transportation $1.33 - $1.38/MCFE $1.25 - $1.35/MCFE
General and administrative exp. $0.25 - $0.29/MCFE $0.25 - $0.29/MCFE
Depreciation, depletion & amort. $1.20 - $1.28/MCFE $1.15 - $1.25/MCFE
Operational updates for the second quarter 2004 were provided in the Company's
July 16, 2004 press release.
As previously announced, the St. Mary third quarter earnings teleconference
call 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 this
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earnings press release and financial highlights attachment will be available
before the call at www.stmaryland.com under "News--Press Releases." An audio
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recording of the conference call will be available at that site through August
31.
Also as previously announced, Mark Hellerstein is scheduled to appear on an
interview by Bloomberg Television on August 4, 2004 beginning at 6:39 am (MDT).
The interview is expected to cover St. Mary's results for the second quarter of
2004 and its outlook for the future.
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, the imprecise nature of oil and gas reserve
estimates, drilling and operating service availability, 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.
(1)Discretionary cash flow is computed as net income plus depreciation,
depletion, amortization, impairments, deferred taxes, exploration
expense, stock-based compensation expense, and changes in the net
profits interest bonus plan liability, less the change in accounting
principle and unrealized derivative gain. 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 the non-GAAP measure of discretionary cash flow
provides useful information to investors.
PR-04-10
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
June 30, 2004
(Unaudited)
PRODUCTION DATA
- --------------- Three Months Ended Six Months Ended
June 30, Percent June 30, Percent
---------------------------- ----------------------------
2004 2003 Change 2004 2003 Change
---------------------------- ----------------------------
Average realized price:
Gas (per Mcf) $ 5.39 $ 4.82 12% $ 5.30 $ 5.20 2%
Oil (per Bbl) $ 30.78 $ 26.20 17% $ 29.50 $ 27.32 8%
Production:
Gas (MMcf) 11,070 13,614 -19% 22,682 25,318 -10%
Oil (MBbls) 1,161 1,164 0% 2,302 2,205 4%
MMCFE (6:1) 18,038 20,595 -12% 36,494 38,546 -5%
Daily production:
Gas (Mcf per day) 121,648 149,607 -19% 124,631 139,879 -11%
Oil (Bbls per day) 12,762 12,786 0% 12,648 12,181 4%
MCFE per day (6:1) 198,220 226,323 -12% 200,516 212,965 -6%
Margin analysis per MCFE:
Net realized price $ 5.29 $ 4.67 13% $ 5.15 $ 4.98 3%
Oil and gas production costs 1.20 1.13 6% 1.24 1.15 8%
General and administrative costs 0.30 0.26 15% 0.30 0.28 7%
---------------------------- ----------------------------
Operating margin $ 3.79 $ 3.28 16% $ 3.61 $ 3.55 2%
---------------------------- ----------------------------
Depletion, depreciation & amortization $ 1.15 $ 1.05 10% $ 1.13 $ 1.05 8%
INCOME STATEMENT
- ----------------
(In thousands, except per share amounts) Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2004 2003 2004 2003
---------------------------- ----------------------------
Operating revenues:
Oil and gas production $ 95,447 $ 96,134 $188,054 $ 191,822
Marketed gas revenue 3,724 3,333 7,297 7,108
Gain on sale of proved properties 1,581 86 1,776 122
Other 1,771 4,233 1,958 5,856
---------------------------- ----------------------------
102,523 103,786 199,085 204,908
---------------------------- ----------------------------
Operating expenses:
Oil and gas production 21,573 23,260 45,116 44,390
Depletion, depreciation, amortization
and abandonment liability accretion 20,673 21,601 41,299 40,486
Exploration 6,569 6,276 11,200 10,426
Impairment of proved properties 494 - 494 -
Abandonment and impairment of
unproved properties 966 784 1,888 1,703
General and administrative 5,410 5,453 10,987 10,826
Change in net profits interest
bonus plan liability 4,325 924 6,485 1,697
Derivative loss 1,721 82 869 -
Marketed gas system operating expense 3,310 3,098 6,721 6,457
Other 897 299 1,562 495
---------------------------- ----------------------------
65,938 61,777 126,621 116,480
---------------------------- ----------------------------
Income from operations 36,585 42,009 72,464 88,428
Interest income 242 344 386 574
Interest expense (1,565) (2,367) (3,053) (4,583)
---------------------------- ----------------------------
Income before income tax expense and
accounting change 35,262 39,986 69,797 84,419
Income tax expense - current 7,520 10,536 13,421 21,854
Income tax expense - deferred 5,906 5,133 13,091 10,886
---------------------------- ----------------------------
Income before accounting change 21,836 24,317 43,285 51,679
Cumulative effect from change in
accounting principle - - - 5,435
---------------------------- ----------------------------
Net income $ 21,836 $ 24,317 $ 43,285 $ 57,114
============================ ============================
Basic weighted average shares outstanding 28,584 31,482 29,201 30,921
Diluted weighted average shares outstanding 33,062 35,798 33,646 35,222
Basic earnings per common share:
Income before accounting change $ 0.76 $ 0.77 $ 1.48 $ 1.67
Cumulative effect of accounting change - - - 0.18
---------------------------- ----------------------------
Basic net income per common share $ 0.76 $ 0.77 $ 1.48 $ 1.85
============================ ============================
Diluted earnings per common share:
Income before accounting change $ 0.69 $ 0.71 $ 1.34 $ 1.52
Cumulative effect of accounting change - - - 0.15
---------------------------- ----------------------------
Diluted net income per common share $ 0.69 $ 0.71 $ 1.34 $ 1.67
============================ ============================
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
June 30, 2004
(Unaudited)
BALANCE SHEET
- -------------
(In thousands) June 30, Dec 31,
2004 2003
----------------------------
Working capital $ 13,579 $ 3,101
Long-term debt $ 99,743 $ 110,696
Stockholders' equity $ 426,983 $ 390,653
Shares outstanding - permanent equity 28,671 28,242
Shares outstanding - temporary equity - 3,381
Note receivable from Flying J (contra-equity) $ - $ 71,594
PROVEN RESERVES
- ---------------
December 31,
----------------------------
2003 2002
----------------------------
Oil (MBbls) 47,787 36,119
Gas (MMcf) 307,024 274,172
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MMCFE (6:1) 593,744 490,887
========== ==========
CASH FLOW
- ---------
(In thousands)
Reconciliation of Discretionary Cash Flow to Net Cash
Provided by Operating Activities:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2004 2003 2004 2003
---------------------------- ----------------------------
Discretionary Cash Flow (1) $ 64,520 $ 60,350 $120,712 $ 117,203
Gain on sale of property sales (1,581) (86) (1,776) (122)
Exploration exp, excluding
exploratory dry hole exp (4,304) (5,938) (9,964) (9,643)
Other (3,749) (1,071) (2,588) (818)
Changes in working capital 5,015 (4,745) (6,565) (15,856)
---------- ---------- ---------- -----------
Net Cash Provided by Operating Activities $ 59,901 $ 48,510 $ 99,819 $ 90,764
========== ========== ========== ===========
Net Cash Used in Investing Activities $(20,818) $(26,565) $(62,290) $(120,619)
========== ========== ========== ===========
Net Cash Provided by (Used in)
Financing Activities $ 20,242 $(28,389) $ 24,775 $ 29,547
========== ========== ========== ===========
(1)Discretionary cash flow is computed as net income plus depreciation,
depletion, amortization, impairments, deferred taxes, exploration expense,
stock-based compensation expense, and changes in the net profits interest
bonus plan liability less the change in accounting principle and unrealized
derivative loss. 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.