2008-08-07 17:44:00
Mariner Energy Reports Record Quarterly Financial and Operational Results
Net income up 274% and EPS up 266%
Quarterly revenues and production up 102% and 48%, respectively
HOUSTON, Aug. 7 /EMWNews/ -- Mariner Energy, Inc. (NYSE:
ME) today reported record quarterly revenues, income and production for the
three-month period ended June 30, 2008. Net income for second quarter 2008
was $123.4 million, an increase of 274% compared with the same period of
2007. Fully-diluted earnings per share (EPS) were $1.39, up 266% from $0.38
fully-diluted EPS reported for the second quarter 2007. Other financial and
operational highlights for second quarter 2008 include:
-- Total revenues increased to $429.5 million, up from the $213.1 million
reported for the second quarter a year ago
-- Estimated average daily production increased to approximately
390 million cubic feet of natural gas equivalent per day (MMcfe/d)
-- Net cash provided by operations for the six-month period ended June 30,
2008 increased 94% to $551.5 million, up from $283.9 million for the
same period in the prior year
-- Six of seven offshore wells drilled were successful
-- 100% success rate on 34 West Texas wells drilled
Scott D. Josey, Chairman, Chief Executive Officer and President of
Mariner Energy, commented: "Mariner's second quarter results reflect our
strong production growth, diligent cost control efforts, as well as
impressive drilling success in all areas -- deepwater, shelf and onshore.
We further expanded our position in West Texas, to more than 93,000 net
acres, up almost 50% from year end 2007. Moreover, we significantly
strengthened our balance sheet, resulting in an upgrade from Standard &
Poor's. Our strategy to build a diversified asset base is working,
delivering growth in all areas at attractive rates of return and providing
significant upside potential. I believe we are on track to deliver record
operational and financial results for the full year; and with identified
deepwater projects set to come online next year and the continuation of our
successful shelf and onshore programs, we expect 2009 to be another strong
year as well."
SECOND QUARTER 2008 RESULTS
Second quarter 2008 net income was $123.4 million, compared with $33.0
million for the same period in 2007. Basic and fully-diluted EPS for second
quarter 2008 were $1.40 and $1.39, respectively, up from the $0.38 basic
and fully-diluted EPS reported for second quarter 2007.
Mariner's second quarter 2008 net production was 36.4 billion cubic
feet of natural gas equivalent (Bcfe), a 48% increase from 24.6 Bcfe for
second quarter 2007. Net natural gas production for second quarter 2008 was
24.4 billion cubic feet (Bcf), a 49% increase compared with the 16.4 Bcf
reported for second quarter 2007. Net oil production for second quarter
2008 was up 39% to 1.50 million barrels (MMBbls), compared with 1.08 MMBbls
for the same period in 2007. Net natural gas liquids (NGL) production for
second quarter 2008 was 0.51 MMBbls, an 81% increase compared with the 0.28
MMBbls reported for second quarter 2007.
For second quarter 2008, Mariner's average realized natural gas price
was $10.27 per thousand cubic feet (Mcf), compared with $8.18 per Mcf for
the same period in 2007. Mariner's average realized oil price was $96.24
per barrel (Bbl) for second quarter 2008, compared with $61.69 per Bbl for
the same period in 2007. The second quarter 2008 average realized NGL price
was $64.69 per Bbl, compared with $40.51 per Bbl for second quarter 2007.
Average realized prices reflect settlements during the period under
Mariner's hedging program.
Mariner provides additional information regarding its hedging
activities in quarterly and annual reports filed with the Securities and
Exchange Commission (SEC).
OPERATIONAL UPDATE
Offshore
Mariner drilled seven offshore wells during the second quarter of 2008 of
which six were successful:
Water
Working Depth
Well Name Operator Interest (Ft) Location
Eugene Island 342 C17 Mariner 50% 287 Conventional Shelf
West Cameron 110#19 Mariner 100% 41 Conventional Shelf
Vermilion 380 A15ST4 Mariner 100% 340 Conventional Shelf
South Marsh 76 F-2 Mariner 100% 138 Conventional Shelf
Viosca Knoll 821#1 Mariner 30% 1,028 Deepwater (1)
Garden Banks 462#1 Mariner 60% 2,700 Deepwater
(1) As defined in Mariner's Form 10-K for the fiscal year ended December
31, 2007, "deepwater" means depths greater than 1,300 feet. Operationally,
Mariner characterizes this well as located in the deepwater because its
development and infrastructure requirements, such as a subsea tieback, are
more typical of Mariner's deepwater wells. Mariner reports financial
results for wells consistent with the definitional scheme set forth in its
Form 10-K.
Subsequent to the end of the second quarter period, Mainer drilled four
offshore wells, three of which were successful:
Water
Working Depth
Well Name Operator Interest (Ft) Location
Garden Banks 462#2 Mariner 60% 2,700 Deepwater
Vermilion 380 A21ST1 Mariner 100% 340 Conventional Shelf
East Cameron 14#13 Mariner 50% 33 Conventional Shelf
On August 6, 2008, Mariner had four rigs running on the shelf
conducting drilling and well completion operations. This included a
completion at East Cameron 14#13 and a workover at Eugene Island 342.
Drilling also was underway at two offshore wells:
Water
Working Depth
Well Name Operator Interest (Ft) Location
Vermilion 380 A16ST1 Mariner 100% 340 Conventional Shelf
Ship Shoal 202#1 Mariner 100% 90 Conventional Shelf
As of August 6, 2008, Mariner has been successful on 13 out of 16 wells
in 2008. The company expects to spud 28-30 offshore wells this year.
In July the Minerals Management Service awarded Mariner the remaining
blocks on which it was the apparent high bidder in the Central Gulf of
Mexico Lease Sale 206 held by the MMS on March 19, 2008. The company
received all 19 blocks on which it was the high bidder. Mariner's net
exposure on the awarded bids was $79.1 million, and its working interest
ranges from 33% to 100%.
Onshore
In the second quarter of 2008, Mariner drilled 34 wells in West Texas,
all of which were successful. As of August 6, 2008, four rigs were running
on Mariner's West Texas properties. Subsequent to the end of the second
quarter period, Mariner drilled 10 onshore wells, all of which were
successful. The company has participated in 80 onshore wells year to date
and expects to spud between 110 and 120 onshore wells this year.
CONFERENCE CALL TO DISCUSS RESULTS
A conference call has been scheduled for 10:00 a.m. Eastern Time (9:00
a.m. Central Time) on Friday, August 8, 2008, to discuss second quarter
2008 financial and operating results. To participate in the call, please
dial (866) 800-8649 at least 10 minutes prior to the scheduled start time.
International callers can dial (617) 614-2703. The conference pass code for
both numbers is 90544914. The call also will be webcast live over the
internet and can be accessed through the Investor Relations' Webcasts and
Presentations section of Mariner's website at
http://www.mariner-energy.com.
A telephonic replay of the call will be available through August 17,
2008, by dialing (888) 286-8010 or (617) 801-6888, pass code 43973434. An
archive of the webcast will be available shortly after the call on
Mariner's website through September 30, 2008.
About Mariner Energy, Inc.
Mariner Energy, Inc. is an independent oil and gas exploration,
development and production company headquartered in Houston, Texas, with
principal operations in West Texas and the Gulf of Mexico. For more
information about Mariner, please visit its website at
http://www.mariner-energy.com.
MARINER ENERGY, INC.
SELECTED OPERATIONAL RESULTS (1)
(Unaudited)
Net Production, Realized Pricing and Average Unit Costs
Three Months Ended
June 30,
2008 2007
Net production:
Natural gas (Bcf) 24.4 16.4
Oil (MMBbls) 1.50 1.08
Natural gas liquids (MMBbls) 0.51 0.28
Total production (Bcfe) 36.4 24.6
Realized prices (net of hedging):
Natural gas ($/Mcf) $10.27 $ 8.18
Oil ($/Bbl) 96.24 61.69
Natural gas liquids ($/Bbl) 64.69 40.51
Average Unit costs per Mcfe:
Lease operating expense $ 1.52 $ 1.57
Severance and ad valorem taxes 0.14 0.12
Transportation expense 0.12 0.06
General and administrative expense 0.39 0.52
Depreciation, depletion and amortization 3.88 3.82
(1) Certain prior year amounts have been reclassified to conform to
current year presentation.
MARINER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
2008 2007
Revenues:
Natural gas $250,278 $134,082
Oil 144,556 66,678
Natural gas liquids 33,057 11,413
Other revenues 1,561 908
Total revenues 429,452 213,081
Cost and Expenses:
Lease operating expense 55,315 38,601
Severance and ad valorem taxes 5,263 2,888
Transportation expense 4,197 1,403
General and administrative expense 14,360 12,878
Depreciation, depletion and amortization 141,454 93,799
Other expense 677 294
Total costs and expenses 221,266 149,863
OPERATING INCOME 208,186 63,218
Other Income (Expense):
Interest income 281 231
Interest expense, net of capitalized amounts (17,563) (13,873)
Other - (373)
Income before taxes 190,904 49,203
Provision for income taxes (67,416) (16,245)
Minority Interest Expense (98) -
NET INCOME $123,390 $ 32,958
Earnings per share:
Net income per share - basic $1.40 $0.38
Net income per share - diluted $1.39 $0.38
Weighted average shares outstanding - basic 87,984 85,627
Weighted average shares outstanding - diluted 88,829 85,905
(1) Certain prior year amounts have been reclassified to conform to
current year presentation.
MARINER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
June 30, December 31,
2008 2007
Current Assets
Cash and cash equivalents $ 41,269 $ 18,589
Receivables, net of allowances 289,214 157,774
Insurance receivables 10,800 26,683
Derivative financial instruments - 11,863
Intangible assets 5,422 17,209
Prepaid expenses and other 14,906 10,630
Deferred tax asset 119,669 6,232
Total current assets 481,280 248,980
Property and equipment, net 2,964,040 2,420,194
Restricted cash - 5,000
Goodwill 295,598 295,598
Insurance receivables 28,145 56,924
Derivative financial instruments - 691
Other Assets, net of amortization 62,166 56,248
TOTAL ASSETS $3,831,229 $3,083,635
Current Liabilities
Accounts payable $ 18,090 $ 1,064
Accrued liabilities 135,661 96,936
Accrued capital costs 210,510 159,010
Abandonment liability 52,421 30,985
Accrued interest 9,848 7,726
Derivative financial instruments 333,416 19,468
Total current liabilities 759,946 315,189
Long-Term Liabilities
Abandonment liability 208,430 191,021
Deferred income tax 420,885 343,948
Derivative financial instruments 102,459 25,343
Long-term debt, bank credit facility 350,000 179,000
Long-term debt, senior unsecured notes 600,000 600,000
Other long-term liabilities 54,656 38,115
Total long-term liabilities 1,736,430 1,377,427
Minority Interest 189 1
Stockholders' Equity
Common stock, $.0001 par value; 180,000,000 9 9
shares authorized; 88,820,553 shares issued
and outstanding at June 30, 2008;
180,000,000 shares authorized, 87,229,312
shares issued and outstanding at
December 31, 2007
Additional paid-in capital 1,057,787 1,054,089
Accumulated other comprehensive loss (278,144) (22,576)
Accumulated retained earnings 555,012 359,496
Total stockholders' equity 1,334,664 1,391,018
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,831,229 $3,083,635
MARINER ENERGY, INC. AND SUBSIDIARIES
SELECTED CASH FLOW INFORMATION (1)
(In Thousands)
(Unaudited)
Six Months Ended June 30,
2008 2007
Operating cash flow (2) $ 576,851 $ 303,918
Changes in operating assets and liabilities (25,371) (20,021)
Net cash provided by operating activities $ 551,480 $ 283,897
Net cash used in investing activities $(696,515) $(224,467)
Net cash provided by (used in) financing
activities $ 167,715 $ (59,862)
Increase (decrease) in cash and cash
equivalents $ 22,680 $ (432)
(1) Certain prior year amounts have been reclassified to conform to
current year presentation.
(2) See below for reconciliation of this non-GAAP measure.
IMPORTANT INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
AND CERTAIN STATISTICS
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, that address activities that Mariner assumes, plans,
expects, believes, projects, estimates or anticipates (and other similar
expressions) will, should or may occur in the future are forward-looking
statements. Our forward-looking statements generally are accompanied by
words such as "may", "will", "estimate", "project", "predict", "believe",
"expect", "anticipate", "potential", "plan", "goal", or other words that
convey the uncertainty of future events or outcomes. Forward-looking
statements provided in this press release are based on Mariner's current
belief based on currently available information as to the outcome and
timing of future events and assumptions that Mariner believes are
reasonable. Mariner does not undertake to update its guidance, estimates or
other forward-looking statements as conditions change or as additional
information becomes available. Mariner cautions that its forward-looking
statements are subject to all of the risks and uncertainties normally
incident to the exploration for and development, production and sale of oil
and natural gas. These risks include, but are not limited to, price
volatility or inflation, environmental risks, drilling and other operating
risks, regulatory changes, the uncertainty inherent in estimating future
oil and gas production or reserves, and other risks described in the Annual
Report on Form 10-K for the fiscal year ended December 31, 2007, and other
documents filed by Mariner with the SEC. Any of these factors could cause
Mariner's actual results and plans of Mariner to differ materially from
those in the forward-looking statements. Investors are urged to read the
Annual Report on Form 10-K for the year ended December 31, 2007 and other
documents filed by Mariner with the SEC. This press release does not
constitute an offer to sell or a solicitation of an offer to buy any
securities of Mariner.
Reconciliation of Non-GAAP Measure: Operating Cash Flow
Operating cash flow (OCF) is not a financial or operating measure under
generally accepted accounting principles in the United States of America
(GAAP). The table below reconciles OCF to related GAAP information. Mariner
believes that OCF is a widely accepted financial indicator that provides
additional information about its ability to meet its future requirements
for debt service, capital expenditures and working capital, but OCF should
not be considered in isolation or as a substitute for net income, operating
income, net cash provided by operating activities or any other measure of
financial performance presented in accordance with GAAP or as a measure of
a company's profitability or liquidity.
Six Months Ended June 30,
2008 2007
(In thousands)
(Unaudited)
Net cash provided by operating activities $551,480 $283,897
Changes in operating assets and liabilities 25,371 20,021
Operating cash flow (non-GAAP) $576,851 $303,918
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