Exhibit 99.1
 
For Information
Brent A. Collins
303-861-8140      

FOR IMMEDIATE RELEASE

ST. MARY REPORTS RESULTS FOR FIRST QUARTER OF 2008

·  
Company reports net income of $96.0 million, or $1.50 per diluted share

·  
Adjusted net income per diluted share of $1.15

·  
Quarterly production of 28.3 BCFE exceeds guidance of 27.0 – 28.0 BCFE, driven by strong results in the ArkLaTex and Permian regions

·  
Divestiture of non-core properties drives production expense below guidance


DENVER, May 1, 2008– St. Mary Land & Exploration Company (NYSE: SM) today reports financial results from the first quarter of 2008.

 MANAGEMENT COMMENTARY

Tony Best, President and CEO, commented, “St. Mary had a successful first quarter of 2008.  We performed well operationally, as evidenced by our better than anticipated production and lease operating cost results.  Our divestiture of non-core properties was successfully executed, which allows us to focus on key growth projects and helps improve our cost structure.  We have posted strong earnings and cash flow numbers, which are a result of our execution on our business plan, the growth and improvement of our portfolio, and strong commodity prices.  I am very pleased with how the Company is positioned entering the second quarter.”

FIRST QUARTER 2008 RESULTS

Earnings for the first quarter of 2008 were $96.0 million, or $1.50 per diluted share, which included an after-tax gain of $35.3 million related to the sale of non-strategic assets that closed on January 31, 2008.  This compared to $40.0 million, or $0.63 per diluted share, for the same period in the prior year.  Adjusted net income, which adjusts for significant non-recurring and non-cash items, was $73.6 million or $1.15 per diluted share, for the quarter versus $45.5 million, or $0.71 per diluted share, for the first quarter of 2007.  Discretionary cash flow increased to $198.0 million for the first quarter of 2008 from $141.5 million in the same period of the preceding year.  Net cash provided by operating activities increased to $142.5 million for the first quarter of 2008 from $126.1 million in the same period in 2007.  Adjusted net income and discretionary cash flow are non-GAAP financial measures – please refer to the respective
 
 
reconciliation in the accompanying Financial Highlights section at the end of this release.

Revenues for the quarter were $362.1 million compared to $221.0 million for the same period in 2007.  The Company’s oil and gas production exceeded guidance for the first quarter of 2008 due to stronger than budgeted performance in the ArkLaTex and Permian regions.  Reported daily oil and gas production for the quarter increased 10% year over year to an average of 311.5 MMCFED in the first quarter of 2008 from 283.1 MMCFED in the first quarter of 2007.  Excluding the properties that were sold in the January 2008 divestiture, total oil and gas production from the retained properties increased 15% year over year.  St. Mary’s operating margin increased to $7.26 per MCFE for the quarter, up 26% from $5.78 per MCFE in the first quarter of 2007.

Average realized prices, inclusive of hedging activities, were $8.69 per Mcf and $76.24 per barrel in the first quarter of 2008, which is an increase of 8% and 45%, respectively, from the same period a year ago.  Average prices, excluding hedging activities, were $8.53 per Mcf and $92.33 per barrel during the quarter.  These were 25% and 75% higher, respectively, than the first quarter of 2007.

Lease operating and transportation expense was lower than guidance and decreased 9% between the first quarters of 2007 and 2008 on a per MCFE basis.  A key driver of this improved performance was the divestiture of non-strategic properties in January of 2008.  The divested properties were a relatively small portion of the production base, but they had a higher operating and workover cost structure compared to the retained assets.  The increase in depletion and depreciation expense between the two periods reflects the higher finding cost environment experienced by the industry in recent years to acquire and develop properties.  General and administrative expense came in below guidance for the quarter as a result of lower than budgeted stock compensation expense as well as a higher than forecasted allocation of compensation to exploration expense.  Year over year, general and administrative expense increased as a result of increased headcount and larger Net Profits Plan payments.  The increase in the expense recognized in the first quarter of 2008 related to the change in the Net Profits Plan liability is the result of commodity prices increasing during the quarter.


CURRENT FINANCIAL POSITION

As of March 31, 2008, St. Mary had total long-term debt of $564.0 million, comprised of $287.5 million in 3.50% Senior Convertible Notes and $276.5 million drawn under our existing long-term credit facility.  The Company’s debt to book capitalization ratio as of the end of the quarter was 41%.  Currently, the Company has a borrowing base of $1.4 billion and a commitment amount of $500 million under its credit facility.

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EARNINGS CALL INFORMATION

The Company has scheduled a teleconference call to discuss first quarter 2008 earnings results on May 2, 2008, at 8:00 am (Mountain Time).  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 May 16, 2008, at 800-642-1687, conference number 44042108.  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 44042108.  In addition, the call will be broadcast live through St. Mary’s website at  www.stmaryland.com and the earnings press release and financial highlights will be available before the call.  An audio recording of the conference call will be available at that site through May 16, 2008.



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ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2008
(Unaudited)
             
Production Data:
            
 
For the Three Months Ended
      
 
March 31,
      
 
2008
  
2007
  
Percent Change
  
             
Average realized sales price, before hedging:
            
Oil (per Bbl)
 $ 92.33   $ 52.61   75 %
Gas (per Mcf)
 $ 8.53   $ 6.82   25 %
                 
Average realized sales price, net of hedging:
                
Oil (per Bbl)
 $ 76.24   $ 52.62   45 %
Gas (per Mcf)
 $ 8.69   $ 8.04   8 %
                 
Production:
                
Oil (MMBbls)
   1.67     1.71   -2 %
Gas (Bcf)
   18.34     15.22   21 %
BCFE (6:1)
   28.35     25.48   11 %
                 
Daily production:
                
Oil (MBbls per day)
   18.3     19.0   -4 %
Gas (MMcf per day)
   201.6     169.1   19 %
MMCFE per day (6:1)
   311.5     283.1   10 %
                 
Margin analysis per MCFE:
                
Average realized sales price, before hedging
 $ 10.95   $ 7.60   44 %
                 
Average realized sales price, net of hedging
 $ 10.11   $ 8.34   21 %
Lease operating expense and transportation
   1.38     1.51   -9 %
Production taxes
   0.72     0.54   33 %
General and administrative
   0.75     0.51   47 %
Operating margin
 $ 7.26   $ 5.78   26 %
Depletion, depreciation, amortization, and
                
asset retirement obligation liability accretion
 $ 2.48   $ 1.92   29 %
 
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ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2008
(Unaudited)
Consolidated Statements of Operations
        
(In thousands, except per share amounts)
For the Three Months Ended
  
 
March 31,
  
 
2008
  
2007
  
         
Operating revenues:
        
Oil and gas production revenue
 $ 310,432   $ 193,706  
Realized oil and gas hedge gain (loss)
   (23,950 )   18,684  
Marketed gas system and other operating revenue
   19,603     8,616  
Gain on sale of proved properties
   56,017     -  
Total operating revenues
   362,102     221,006  
             
Operating expenses:
            
Oil and gas production expense
   59,476     52,320  
Depletion, depreciation, amortization
            
and asset retirement obligation liability accretion
   70,354     48,959  
Exploration (1)
   14,308     19,019  
Abandonment and impairment of unproved properties
   1,008     1,484  
General and administrative (1)
   21,128     12,891  
Change in Net Profits Plan liability
   13,626     4,965  
Marketed gas system and other operating expense
   18,445     7,952  
Unrealized derivative loss
   6,417     3,904  
Total operating expenses
   204,762     151,494  
             
Income from operations
   157,340     69,512  
             
Nonoperating income (expense):
            
Interest income
   97     103  
Interest expense
   (4,971 )   (6,053 )
             
Income before income taxes
   152,466     63,562  
Income tax expense
   56,470     23,612  
             
Net income
 $ 95,996   $ 39,950  
             
Basic weighted-average common shares outstanding
   62,861     57,011  
             
Diluted weighted-average common shares outstanding
   64,045     64,908  
             
Basic net income per common share
 $ 1.53   $ 0.70  
             
Diluted net income per common share
 $ 1.50   $ 0.63  
             
(1)   As a result of a change in circumstances in 2007, the Company began classifying all payments made under the Net Profits Plan to exploration
  
overhead only for those individuals who are currently employed by St. Mary and who continue to be involved in the Company's exploration
  
efforts. This change was made to reflect current distributions being made and accrued for under the Net Profits Plan for former employees
  
as being fully allocated to general and administrative expense since there is no longer any functional link to geologic and geophysical or
  
exploration related work by those former employees. The entire impact for 2007 was recorded in the fourth quarter. The quarterly financial
  
information presented for 2007 throughout the unaudited consolidated financial statements has been reclassified to reflect the change.
  
The reclassification had no impact on total operating expenses, income from operations, income before income taxes, net income,
        
basic net income per common share, or diluted net income per common share as it was solely a reclassification between two line items within the
  
consolidated statements of operations. Refer to Note 14 of Part II, Item 8 within the 2007 Form 10-K/A for additional discussion.
  
 
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ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2008
(Unaudited)
         
Consolidated Balance Sheets
        
(In thousands, except share amounts)
        
         
 
March 31,
  
December 31,
  
                                                         ASSETS
2008
  
2007
  
Current assets:
        
Cash and cash equivalents
 $ 7,511   $ 43,510  
Short-term investments
   1,187     1,173  
Accounts receivable
   200,385     159,149  
Refundable income taxes
   -     933  
Prepaid expenses and other
   12,022     14,129  
Accrued derivative asset
   1,181     17,836  
Deferred income taxes
   58,956     33,211  
Total current assets
   281,242     269,941  
             
Property and equipment (successful efforts method), at cost:
            
Proved oil and gas properties
   2,851,809     2,721,229  
Less - accumulated depletion, depreciation, and amortization
   (823,410 )   (804,785 )
Unproved oil and gas properties, net of impairment allowance
            
of $9,554 in 2008 and $10,319 in 2007
   153,148     134,386  
Wells in progress
   146,932     137,417  
Oil and gas properties held for sale less accumulated depletion,
            
depreciation, and amortization
   27,181     76,921  
Other property and equipment, net of accumulated depreciation
            
of $11,940 in 2008 and $11,549 in 2007
   9,755     9,230  
    2,365,415     2,274,398  
             
Noncurrent assets:
            
Goodwill
   9,452     9,452  
Accrued derivative asset
   1,744     5,483  
Other noncurrent assets
   12,434     12,406  
Total noncurrent assets
   23,630     27,341  
             
Total Assets
 $ 2,670,287   $ 2,571,680  
             
LIABILITIES AND STOCKHOLDERS' EQUITY
        
Current liabilities:
            
Accounts payable and accrued expenses
 $ 285,481   $ 254,918  
Accrued derivative liability
   156,345     97,627  
Deposit associated with oil and gas properties held for sale
   -     10,000  
Total current liabilities
   441,826     362,545  
             
Noncurrent liabilities:
            
Long-term credit facility
   276,500     285,000  
Senior convertible notes
   287,500     287,500  
Asset retirement obligation
   100,171     96,432  
Asset retirement obligation associated with oil and gas properties held for sale
   1,104     8,744  
Net Profits Plan liability
   225,032     211,406  
Deferred income taxes
   289,050     257,603  
Accrued derivative liability
   235,795     190,262  
Other noncurrent liabilities
   9,813     8,843  
Total noncurrent liabilities
   1,424,965     1,345,790  
             
Stockholders' equity:
            
Common stock, $0.01 par value: authorized  - 200,000,000 shares;
            
issued:  61,501,825 shares in 2008 and 64,010,832 shares in 2007;
            
outstanding, net of treasury shares: 61,301,725 shares in 2008
            
and 63,001,120 shares in 2007
   615     640  
Additional paid-in capital
   64,923     170,070  
Treasury stock, at cost:  200,100 shares in 2008 and 1,009,712 shares in 2007
   (2,804 )   (29,049 )
Retained earnings
   971,570     878,652  
Accumulated other comprehensive loss
   (230,808 )   (156,968 )
Total stockholders' equity
   803,496     863,345  
             
Total Liabilities and Stockholders' Equity
 $ 2,670,287   $ 2,571,680  
 
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ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2008
(Unaudited)
         
Consolidated Statements of Cash Flows
        
(In thousands)
        
 
For the Three Months Ended
  
 
March 31,
  
 
2008
  
2007
  
Cash flows from operating activities:
        
Reconciliation of net income to net cash provided
        
by operating activities:
        
Net income
 $ 95,996   $ 39,950  
Adjustments to reconcile net income to net cash
            
provided by operating activities:
            
Gain on sale of proved properties
   (56,017 )   -  
Depletion, depreciation, amortization,
            
and asset retirement obligation liability accretion
   70,354     48,959  
Exploratory dry hole expense
   690     9,569  
Abandonment and impairment of unproved properties
   1,008     1,484  
Unrealized derivative loss
   6,417     3,904  
Change in Net Profits Plan liability
   13,626     4,965  
Stock-based compensation expense (2)
   3,310     2,967  
Deferred income taxes
   50,089     21,237  
Other
   3,627     (125 )
Changes in current assets and liabilities:
            
Accounts receivable
   (41,236 )   7,762  
Refundable income taxes
   933     -  
Prepaid expenses and other
   (336 )   2,319  
Accounts payable and accrued expenses
   (5,142 )   (16,003 )
Income tax benefit from the exercise of stock options
   (860 )   (913 )
Net cash provided by operating activities
   142,459     126,075  
             
Cash flows from investing activities:
            
Proceeds from sale of oil and gas properties
   130,400     324  
Capital expenditures
   (161,306 )   (135,183 )
Acquisition of oil and gas properties
   (53,031 )   (1,186 )
Other
   (10,007 )   16  
Net cash used in investing activities
   (93,944 )   (136,029 )
             
Cash flows from financing activities:
            
Proceeds from credit facility
   389,000     19,000  
Repayment of credit facility
   (397,500 )   (3,000 )
Repayment of short-term note payable
   -     (4,469 )
Income tax benefit from the exercise of stock options
   860     913  
Proceeds from sale of common stock
   328     779  
Repurchase of common stock
   (77,202 )   -  
Net cash provided by (used in) financing activities
   (84,514 )   13,223  
             
Net change in cash and cash equivalents
   (35,999 )   3,269  
Cash and cash equivalents at beginning of period
   43,510     1,464  
Cash and cash equivalents at end of period
 $ 7,511   $ 4,733  
             
(2)   Stock-based compensation expense is a component of exploration expense and general and administrative expense on the
        
consolidated statements of operations. During the periods ended March 31, 2008, and 2007, respectively, $1.1 million and $1.0
        
million of stock-based compensation expense was included in exploration expense. During the periods ended March 31, 2008,
        
and 2007, respectively, $2.2 million and $1.9 million of stock-based compensation expense was included in general and administrative
  
expense.
            
 
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ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2008
(Unaudited)
       
Adjusted Net Income
        
(In thousands, except per share data)
        
         
Reconciliation of Net Income (GAAP)
For the Three Months Ended
  
to Adjusted Net Income (Non-GAAP):
March 31,
  
 
2008
  
2007
  
         
Reported Net Income (GAAP)
 $ 95,996   $ 39,950  
             
Change in Net Profits Plan liability
   13,626     4,965  
Unrealized derivative loss
   6,417     3,904  
Gain on sale of proved properties
   (56,017 )   -  
Loss on insurance settlement (3)
   480     -  
Total of adjustments
   (35,494 )   8,869  
             
Tax effect on adjustments
   13,146     (3,295 )
             
Adjusted Net Income (Non-GAAP) (4)
 $ 73,648   $ 45,524  
             
Adjusted Net Income Per Share (Non-GAAP)
            
Basic
 $ 1.17   $ 0.80  
Diluted
 $ 1.15   $ 0.71  
             
Average Number of Shares Outstanding
            
Basic
   62,861     57,011  
Diluted
   64,045     64,908  
             
(3)   Included within line item marketed gas system and other operating revenue on the consolidated statements of operations.
        
             
(4)   Adjusted net income is calculated as net income adjusted for significant non-cash and non-recurring items. Examples of non-cash charges
  
include non-cash gains or losses resulting from changes in the Net Profits Plan liability and unrealized derivative gains and losses.
  
Examples of non-recurring items include gains on sale of proved properties and loss on insurance settlement. The non-GAAP measure of
  
adjusted net income is presented because management believes it provides useful additional information to investors for analysis of St. Mary’s
  
fundamental business on a recurring basis. In addition, management believes that adjusted net income 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. Adjusted
  
net income should not be considered in isolation or as a substitute for net income, income from operations, cash provided by operating
  
activities or other income, profitability, cash flow, or liquidity measures prepared under GAAP. Since adjusted net income excludes some,
  
but not all, items that affect net income and may vary among companies, the adjusted net income amounts presented may not be comparable
  
to similarly titled measures of other companies.
            
 
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ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2008
(Unaudited)
       
Discretionary Cash Flow
        
(In thousands)
        
         
Reconciliation of Net Cash Provided by Operating
        
Activities (GAAP) to Discretionary Cash Flow (Non-GAAP):
        
 
For the Three Months Ended
  
 
March 31,
  
 
2008
  
2007
  
Net cash provided by operating activities (GAAP)
 $ 142,459   $ 126,075  
             
Exploration (1)
   14,308     19,019  
Less:  Exploratory dry hole expense
   (690 )   (9,569 )
Less:  Stock-based compensation expense included in exploration
   (1,069 )   (1,004 )
Other
   (3,627 )   125  
Changes in current assets and liabilities
   46,641     6,835  
             
Discretionary cash flow (Non-GAAP) (5)
 $ 198,022   $ 141,481  
             
             
(5)   Discretionary cash flow is computed as net income adjusted for depreciation, depletion, amortization, asset retirement obligation liability
  
accretion, impairments, deferred taxes, exploration expense, stock-based compensation expense, non-cash changes in the Net Profits
  
Plan liability, and the effect of unrealized derivative gains and 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. See the Consolidated Statements of Cash Flows herein
  
for more detailed cash flow information.
            
 
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