Net income of
Adjusted Earnings for the third quarter were
Adjusted EBITDA for the third quarter was
"We are pleased to see daily production increase nicely as we anticipated
would be the case for the second half of the year. We are maintaining our
guidance to exceed 21,500 BOE/day for full-year 2008," said
2009 Capital Forecast
"We continue to focus on managing our capital spending and we are
tightening our 2009 capital expenditure program to reflect the unpredictable
capital markets and lower commodity prices," Mr. Marquez said. "In the
current economic and financial climate we believe it is prudent to reduce our
planned 2009 capital expenditures by
"With our lower capital budget for next year, our forecasted operating
cash flow for 2009 and our current availability on our revolver, we do not
foresee any liquidity issues," Mr. Marquez continued. "We have floors that
average
With the
2008 Capital Investments
Venoco's third quarter capital expenditures for development and other
spending on its properties were approximately
In the third quarter, the company spent approximately
"The drilling program in the
Approximately
In
2008 Production
Reported production in the quarter was an all-time high of 21,949 BOE/d - an anticipated level after being down in the second quarter due to scheduled maintenance. The following table details the company's quarterly daily production by region (BOE/d) as reported:
Region 3Q 2007 2Q 2008 3Q 2008 Sacramento Basin 7,608 9,159 9,363 Southern California 8,671 7,597 8,606 Texas 4,422 4,277 3,980 Total 20,701 21,033 21,949
Production from the
"In
The company has an agreement with Denbury Resources under which Denbury
exercised its option to purchase a portion of Venoco's interest in the
Hastings Complex. The agreement provides for a closing date for the sale on
"We continue to have discussions with Denbury on the sales price, but have
the contractual option to take either a volumetric production payment or a
cash payment based on year-end reserves and pricing," explained
In
Expectations with respect to future production rates, reserves and capital projects are subject to a number of uncertainties, including those referenced below in "Forward-looking Statements".
Lease Operating Expenses and General & Administrative Costs
Venoco's lease operating expenses in the third quarter were
G&A expenses in the quarter were
Conference Call and Webcast
The company will be hosting a conference call on
A replay of the conference call will be available for one week by calling (888) 286-8010 or, for international callers, (617) 801-6888, and using passcode 31661933. A replay will also be available on the Venoco website for 30 days.
About the Company
Venoco is an independent energy company primarily engaged in the
acquisition, exploitation and development of oil and natural gas properties in
Forward-looking Statements
Statements made in this news release relating to Venoco's future production, reserves, liquidity, capital expenditures, development projects, lease operating, G&A and other expenses, and all other statements except statements of historical fact, are 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. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in oil and gas prices, the timing and results of drilling and other development activities, the availability and cost of obtaining drilling equipment and technical personnel, risks associated with the availability of acceptable transportation arrangements and the possibility of unanticipated operational problems, delays in completing production, treatment and transportation facilities, higher than expected production costs and other expenses, pipeline curtailments by third parties and adverse developments in financial markets and general economic conditions. Costs anticipated on a per BOE basis are a function of total anticipated production volumes, changes to which can adversely affect the anticipated costs per barrel. Further information on risks and uncertainties that may affect the Company's operations and financial performance, and the forward- looking statements made herein, is available in the company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein.
OIL AND NATURAL GAS PRODUCTION AND PRICES Quarter Ended Quarter Ended % % 6/30/08 9/30/08 Change 9/30/07 9/30/08 Change Production Volume: Oil (MBbls) (1) 975 1,036 6% 1,071 1,036 -3% Natural Gas (MMcf) 5,634 5,900 5% 5,001 5,900 18% MBOE 1,914 2,019 5% 1,905 2,019 6% Daily Average Production Volume: Oil (Bbls/d) 10,714 11,261 5% 11,641 11,261 -3% Natural Gas (Mcf/d) 61,912 64,130 4% 54,359 64,130 18% BOE/d 21,033 21,949 4% 20,701 21,949 6% Oil Price per Barrel Produced (in dollars): Realized price before hedging $114.37 $ 109.08 -5% $66.73 $109.08 63% Realized hedging gain (loss) (38.44) (32.08) -17% (2.91) (32.08) 1002% Net realized price $75.93 $77.00 1% $63.82 $77.00 21% Natural Gas Price per Mcf (in dollars): Realized price before hedging $10.39 $8.92 -14% $5.71 $8.92 56% Realized hedging gain (loss) (0.07) (0.15) 114% 0.73 (0.15) -121% Net realized price $10.32 $8.77 -15% $6.44 $8.77 36% MBOE Sales Volume(2) 1,895 1,932 2% 1,889 1,932 2% Average Sale Price per BOE(3) $67.46 $63.53 -6% $50.90 $63.53 25% Expense per BOE: Production expenses(4) $17.31 $21.01 21% $14.90 $ 21.01 41% Transportation expenses 0.72 0.82 14% 0.60 0.82 37% Depreciation, depletion and amortization 15.61 16.31 4% 13.32 16.31 22% General and administrative(5) 6.36 5.07 -20% 4.00 5.07 27% Interest expense 6.88 6.59 -4% 8.13 6.59 -19% Nine Months Ended % 9/30/07 9/30/08 Change Production Volume: Oil (MBbls) (1) 2,960 2,995 1% Natural Gas (MMcf) 13,926 17,110 23% MBOE 5,281 5,846 11% Daily Average Production Volume: Oil (Bbls/d) 10,842 10,931 1% Natural Gas (Mcf/d) 51,011 62,445 22% BOE/d 19,344 21,339 10% Oil Price per Barrel Produced (in dollars): Realized price before hedging $58.00 $104.81 81% Realized hedging gain (loss) (0.99) (29.69) 2899% Net realized price $57.01 $75.12 32% Natural Gas Price per Mcf (in dollars): Realized price before hedging $6.56 $9.07 38% Realized hedging gain (loss) 0.25 (0.08) -132% Net realized price $6.81 $8.99 32% MBOE Sales Volume (2) 5,296 5,802 10% Average Sale Price per BOE (3) $48.44 $63.34 31% Expense per BOE: Production expenses(4) $15.04 $18.40 22% Transportation expenses 0.84 0.74 -12% Depreciation, depletion and amortization 13.17 16.09 22% General and administrative (5) 4.67 5.38 15% Interest expense 8.44 7.02 -17% (1) Amounts shown are oil production volumes for offshore properties and sales volumes for onshore properties (differences between onshore production and sales volumes are minimal). Revenue accruals for offshore properties are adjusted for actual sales volumes since offshore oil inventories can vary significantly from month to month based on the timing of barge deliveries, oil in tank and pipeline inventories, and oil pipeline sales nominations. (2) Amounts shown are BOE sales volumes for both offshore and onshore properties. (3) Amounts shown are based on oil and natural gas sales, net of inventory changes, realized commodity derivative gains (losses), and amortization of commodity derivative premiums, divided by sales volumes. (4) Production expenses are comprised of lease operating expenses and production/property taxes. (5) Net of amounts capitalized. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended 09/30/07 06/30/08 09/30/08 REVENUES: Oil and natural gas sales 95,681 167,132 158,041 Other 1,014 915 1,112 Total revenues 96,695 168,047 159,153 EXPENSES: Oil and natural gas production 28,386 33,138 42,418 Transportation expense 1,141 1,382 1,655 Depletion, depreciation and amortization 25,379 29,870 32,931 Accretion of asset retirement obligation 895 1,028 1,044 General and administrative 7,625 12,165 10,235 Total expenses 63,426 77,583 88,283 Income from operations 33,269 90,464 70,870 FINANCING COSTS AND OTHER: Interest expense 15,493 13,169 13,305 Amortization of deferred loan costs 981 889 735 Interest rate derivative (gains) losses, net 8,318 (9,908) 2,745 Loss on extinguishment of debt - - Commodity derivative gains (losses), net 9,696 364,783 (303,052) Total financing costs and other 34,488 368,933 (286,267) Income (loss) before taxes (1,219) (278,469) 357,137 Income tax provision (benefit) (1,700) (105,900) 136,200 Net income (loss) $481 $(172,569) $220,937 Nine Months Ended 09/30/07 09/30/08 REVENUES: Oil and natural gas sales 259,039 461,838 Other 2,579 2,812 Total revenues 261,618 464,650 EXPENSES: Oil and natural gas production 79,419 107,565 Transportation expense 4,425 4,334 Depletion, depreciation and amortization 69,534 94,047 Accretion of asset retirement obligation 2,512 3,065 General and administrative 24,658 31,466 Total expenses 180,548 240,477 Income from operations 81,070 224,173 FINANCING COSTS AND OTHER: Interest expense 44,595 41,063 Amortization of deferred loan costs 3,211 2,623 Interest rate derivative (gains) losses, net 8,555 6,808 Loss on extinguishment of debt 12,063 - Commodity derivative gains (losses), net 36,053 136,367 Total financing costs and other 104,477 186,861 Income (loss) before taxes (23,407) 37,312 Income tax provision (benefit) (10,400) 14,400 Net income (loss) $(13,007) $22,912 CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION UNAUDITED ($ in thousands) 12/31/2007 9/30/2008 ASSETS Cash and cash equivalents $9,735 $4,540 Accounts receivable 55,597 58,101 Inventories 10,377 11,191 Prepaid expenses and other current assets 4,391 6,256 Income tax receivable 6,725 6,325 Deferred income taxes 21,967 28,906 Commodity derivatives 7,780 10,805 Total current assets 116,572 126,124 Net property, plant and equipment 1,131,032 1,263,681 Total other assets 17,881 15,150 TOTAL ASSETS $1,265,485 $1,404,955 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $82,094 $60,426 Undistributed revenue payable 11,298 12,930 Interest payable 6,839 9,209 Current maturities of long-term debt 3,449 2,518 Commodity and interest derivatives 68,756 89,492 Total current liabilities 172,436 174,575 LONG-TERM DEBT 691,896 752,765 DEFERRED INCOME TAXES 16,607 37,860 COMMODITY AND INTEREST DERIVATIVES 87,224 106,137 ASSET RETIREMENT OBLIGATIONS 51,720 57,848 Total liabilities 1,019,883 1,129,185 Total stockholders' equity 245,602 275,770 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,265,485 $1,404,955
GAAP RECONCILIATIONS
In addition to net income (loss) determined in accordance with GAAP, we have provided in this release our Adjusted Earnings and Adjusted EBITDA for recent periods. Both Adjusted Earnings and Adjusted EBITDA are non-GAAP financial measures that we use as supplemental measures of our performance.
We define Adjusted Earnings as net income (loss) before (i) the after-tax effects of unrealized commodity and interest rate derivative gains and losses, (ii) loss on the extinguishment of debt in 2007 and (iii) costs associated with the cancellation of the planned MLP offering in 2008. We believe that Adjusted Earnings facilitates comparisons to earnings forecasts prepared by stock analysts and other third parties. Such forecasts generally exclude the effects of items that are difficult to predict or to measure in advance and are not directly related to our ongoing operations. Adjusted Earnings should not be considered a substitute for net income (loss) as reported in accordance with GAAP.
We define Adjusted EBITDA as net income (loss) before (i) net interest expense, (ii) loss on extinguishment of debt, (iii) income tax provision (benefit), (iv) depreciation, depletion and amortization, (v) amortization of deferred loan costs, (vi) the cumulative effect of change in accounting principle, (vii) unrealized gains and losses on derivative instruments, (viii) non-cash expenses relating to the amortization of derivative premiums and (ix) non-cash expenses relating to share-based payments under FAS 123R. Because the use of Adjusted EBITDA facilitates comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning and analysis purposes, in assessing acquisition opportunities and in determining how potential external financing sources are likely to evaluate our business.
We present Adjusted Earnings and Adjusted EBITDA because we consider them to be important supplemental measures of our performance. Neither Adjusted Earnings nor Adjusted EBITDA is a measurement of our financial performance under GAAP and neither should be considered as an alternative to net income (loss), operating income or any other performance measure derived in accordance with GAAP, as an alternative to cash flow from operating activities or as a measure of our liquidity. You should not assume that the Adjusted Earnings or Adjusted EBITDA amounts shown are comparable to similarly named measures disclosed by other companies.
Quarter Ended Nine Months Ended 09/30/07 06/30/08 09/30/08 09/30/07 09/30/08 Adjusted Earnings Reconciliation Net Income $481 $(172,569) $ 220,937 $(13,007) $ 22,912 Plus: Unrealized commodity (gains) losses 8,576 325,162 (338,773) 31,428 40,998 Unrealized interest rate derivative (gains) losses 8,315 (13,215) (626) 8,497 (287) Write-off of MLP offering costs - 2,740 - - 2,740 Early Extinguishment of debt - - - 12,063 - Tax effects of items above (7,505) (119,673) 129,435 (21,395) (16,445) Adjusted Earnings $9,867 $22,445 $10,973 $17,586 $49,918 Quarter Ended Nine Months Ended 09/30/07 06/30/08 09/30/08 09/30/07 09/30/08 EBITDA Reconciliations: Net income $481 $(172,569) $220,937 $ (13,007) $22,912 Plus: Interest expense 15,493 13,169 13,305 44,595 41,063 Interest rate derivative (gains) losses - realized 3 3,307 3,371 58 7,095 Income taxes (1,700) (105,900) 136,200 (10,400) 14,400 DD&A 25,379 29,870 32,931 69,534 94,047 Amortization of deferred loan costs 981 889 735 3,211 2,623 Loss on extinguishment of debt - - - 12,063 - Pre-tax share- based payments 1,280 1,180 1,300 3,880 3,820 Amortization of derivative premiums and other comprehensive loss 3,243 2,086 2,046 7,560 6,189 Pre-tax unrealized commodity derivative (gains) losses 8,576 325,162 (338,773) 31,428 40,998 Pre-tax unrealized interest rate derivative (gains) losses 8,315 (13,215) (626) 8,497 (287) Adjusted EBITDA $62,051 $83,979 $71,426 $157,419 $232,860
We also provide in this release per BOE G&A expenses excluding costs associated with the planned MLP offering and non-cash FAS 123R charges. We believe that these non-GAAP measures are useful in that the items excluded do not represent cash expenses directly related to our ongoing operations. These non-GAAP measures should not be viewed as an alternative to per BOE G&A expenses as determined in accordance with GAAP.
Quarter Ended Nine Months Ended 09/30/07 06/30/08 06/30/08 09/30/08 09/30/07 09/30/08 09/30/08 Excl. Excl. SFAS SFAS 123R 123R G&A per BOE Excluding and Excluding and Reconciliation SFAS 123R MLP SFAS 123R MLP G&A Expense $7,625 $12,165 $12,165 $10,235 $24,658 $31,466 $31,466 Less: SFAS 123R Expense (1,210) (1,020) (1,020) (1,140) (3,690) (3,400) (3,400) MLP Write Off - - (2,740) - - - (2,740) G&A Expense Excluding SFAS 123R / MLP 6,415 11,145 8,405 9,095 20,968 28,066 25,326 MBOE 1,905 1,914 1,914 2,019 5,281 5,846 5,846 G&A Expense per BOE Excluding SFAS 123R / MLP $3.37 $ 5.82 $4.39 $4.50 $3.97 $4.80 $4.34
SOURCE Venoco, Inc.