DENVER, Aug. 5 /PRNewswire-FirstCall/ -- Double Eagle Petroleum Co.
(Nasdaq: DBLE) today reported its record financial and production results for
its second quarter of 2008. The key highlights emphasized include:
-- Record quarterly earnings per share of $0.26 per diluted share as
compared to a net loss per share of $(0.06) for the second quarter 2007;
-- Record quarterly revenue of $13,789,000, representing a 277% increase
over the same prior-year period;
-- Cash flows from operations for the first six months of 2008 equaled
$10,470,000 as compared to $2,582,000 the six months ended June 30, 2007;
-- Record quarterly production volumes of 1.49 Bcfe, representing a 99%
increase over the same prior-year quarter.
The Company reported net income attributable to common shareholders of
$2,342,000, or $0.26 per diluted share, for the second quarter 2008 as
compared to a net loss of $(507,000), or $(0.06) per share, for the same
prior-year period. On an income per share basis, this represented an increase
of 533%. The net income attributable to common stock for the three months
ended June 30, 2008 included dividends paid on the Company's outstanding
Series A Preferred Stock of $931,000.
Total revenues for the three months ended June 30, 2008 increased 277% to
$13,789,000, as compared to $3,662,000 in the same prior-year period. Total
production-related revenue for the three months ended June 30, 2008 increased
to $13,179,000 from $3,643,000, or 262%, as compared to the three months ended
June 30, 2007. The increase in production revenue was due to an increase in
the average price realized, coupled with record production volumes. The
Company experienced favorable changes in natural gas prices, resulting in our
average price for the quarter ended June 30, 2008 increasing 70% to $7.71 per
Mcfe from $4.54 per Mcfe in the prior year period.
The total net production volume for the three months ended June 30, 2008
was 1.49 Bcfe, or 16,419 Mcfe per day, an increase of 99% over the same
prior-year period. The increase in production volume is primarily due to the
addition of 23 new wells at our Catalina Unit, 10 new wells at the Mesa Unit
and 47 new wells at the Sun Dog Unit in the first half of 2008.
Richard Dole, Chairman of the Board of Double Eagle, commented, "In the
second quarter of 2008, we realized record production, revenue and earnings
results, which evidences the successful execution of our development plan. We
continue to see excellent organic growth in our Catalina Unit from our newly
drilled wells."
The Company's gross operating margin, excluding depreciation, depletion
and amortization ("DD&A"), increased to 68.7% and 68.2% for the three and six
months ended June 30, 2008, respectively, as compared to 36.4% and 47.5% for
the same prior-year periods. The increase in gross margin was due to
increased realized gas prices, and increased production and operating
efficiency at the Catalina Unit.
For the six months ended June 30, 2008, the Company reported net income of
$3,273,000, or $0.36 per diluted share as compared to a net loss of
$(268,000), or $(0.03) per share, for the same prior-year period.
Total revenues for the six months ended June 30, 2008 increased 145% to
$21,105,000 as compared to $8,607,000 for the six months ended June 30, 2007.
Total production related revenue for the first half of 2008 increased to
$20,339,000 from $8,466,000, or 140%, as compared to same period in 2007.
Year to date, the Company has realized an average price of $7.43 per Mcfe, a
40% increase over the average price during the same period in 2007. The total
net production volume for the six months ended June 30, 2008 was 2.39 Bcfe, or
13,148 Mcfe per day, an increase of 58% over the same prior-year period.
Management believes that the Company's balance sheet continues to be
strong with assets totaling $113.8 million and total long-term debt
outstanding on its existing credit facility of $19.2 million. Currently, the
Company has a $50 million credit facility in place with a borrowing base of
$35 million (based on December 31, 2007 reserves).
The Company has implemented a hedging policy in place in order to mitigate
its exposure to oil and gas production cash-flow risk caused by fluctuating
commodity prices. Our outstanding derivatives as of June 30, 2008 are
summarized below (volume and daily production are expressed in Mcf):
FORWARD SALES CONTRACTS
Remaining
Contractual Daily Fixed
Property Volume Production Term Price/Mcf
Catalina 335,000 1,000 06/07-05/09 $5.47
365,000 1,000 07/07-06/09 $5.84
730,000 2,000 07/07-06/09 $5.69
488,000 1,000 11/07-10/09 $5.66
Atlantic Rim 396,000 1,000 08/07-07/09 $6.15
Pinedale Anticline 365,000 1,000 07/07-06/09 $6.41
Company Total 2,679,000
HEDGING INSTRUMENTS
Remaining
Type of Contractual Daily
Contract Volume Production Term Fixed Price Price Index
Future 453,000 3,000 11/08-3/09 $9.53 NYMEX
Costless
Collar 246,000 2,000 5/08-10/08 $6.50 floor/$10.00 ceiling CIG
Costless
Collar 453,000 3,000 11/08-3/09 $6.50 floor/$13.50 ceiling CIG
Costless
Collar 615,000 5,000 7/08-10/08 $10.00 floor/$17.00 ceiling NYMEX
Costless
Collar 755,000 5,000 11/08-3/09 $10.50 floor/$20.00 ceiling NYMEX
Total 2,522,000
In July 2008, we entered into two fixed price swap contracts for calendar
2009 and 2011 for 8,000 Mcf per day at a CIG price of $7.34 and $7.07,
respectively. The Company also entered into a basis economic hedge for 5,000
Mcf per day, locking in the basis differential between NYMEX and CIG at $2.27.
This hedge coincides with our NYMEX collar for the period November 2008
through March 2009 and effectively turns our NYMEX collar into a CIG collar.
SUMMARY STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Revenues
Oil and gas sales $12,456 $3,417 $19,252 $8,033
Transportation revenue 723 226 1,087 433
Price risk management
activities 440 - 547 -
Other income, net 170 19 219 141
Total revenues 13,789 3,662 21,105 8,607
Expenses
Lease operating
expenses 2,076 1,641 3,092 3,066
Production taxes 1,534 433 2,334 1,000
Pipeline operating
expenses 659 45 747 84
Exploration expenses
including dry holes 50 118 531 278
Impairment of equipment
and properties - 91 - 91
Total Expenses 4,319 2,328 6,704 4,519
Gross margin 9,470 1,334 14,401 4,088
Gross margin percentage 68.7% 36.4% 68.2% 47.5%
General and
administrative 1,302 968 2,209 1,775
Depreciation,
depletion and
amortization 2,979 1,361 3,994 2,745
Interest expense, net - - 64 155
Pre-tax income 5,189 (995) 8,134 (587)
Provision for
deferred taxes (1,916) 488 (2,999) 319
NET INCOME $3,273 $(507) $5,135 $(268)
Preferred stock
dividends 931 - 1,862 -
Net income
attributable to
common stock $2,342 $(507) $3,273 $(268)
Net income per common
share:
Basic $0.26 $(0.06) $0.36 $(0.03)
Diluted $0.26 $(0.06) $0.36 $(0.03)
Weighted average
shares outstanding:
Basic 9,152,023 9,141,609 9,150,064 9,080,585
Diluted 9,161,258 9,141,609 9,153,696 9,080,585
SELECTED BALANCE SHEET DATA
(In thousands)
As of
June 30, December 31,
2008 2007 % Change
Total assets $113,843 $84,597 35%
Total long-term debt 19,184 3,445 457%
Total stockholders' equity 27,498 28,624 -4%
SELECTED CASH FLOW DATA
(In thousands)
Six months ended
June 30, June 30,
2008 2007 % Change
Net cash (used in) provided
by operating activities $10,470 $2,582 306%
Net cash used in
investing activities (24,484) (16,054) 53%
Net cash (used in) provided
by financing activities 14,154 12,966 9%
SELECTED OPERATIONAL DATA
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 % Change 2008 2007 % Change
Total
production
(Mcfe) 1,494,147 752,601 99% 2,392,919 1,518,139 58%
Average
price
realized
per Mcfe $7.71 $4.54 70% $7.43 $5.29 40%
Use of Non-GAAP Financial Measures
The Company believes that the supplemental presentation of cash flow per
share shown below provides meaningful non-GAAP financial measures to help
management and investors understand and compare operating results and business
trends among different reporting periods on a consistent basis, independently
of regularly reported non-cash charges. The Company's management also uses
such pro forma measures in its planning and development of target operating
models. Readers are cautioned not to view the non-GAAP pro forma results as
superior to or an alternative to GAAP results or as being comparable to
results reported or forecasted by other companies. Readers should refer to
the reconciliation of GAAP results with the pro forma results for the three
and six months of 2008 and 2007, respectively, contained below.
Taking into account the effects of the charges detailed in the below
reconciliation of GAAP to pro forma results, the Company's pro forma cash flow
per share was $0.66 per diluted share for the three months ended June 30, 2008
and $.93 per diluted share for the six months ended June 30, 2008. This
compared to $0.05 and $0.26 pro forma cash flow per diluted share for the
three and six months ended June 30, 2007. The increase in cash flow is due
primarily to increased production, higher realized prices and cost reductions.
Reconciliation of GAAP Results to Pro Forma Cash Flow per Share Results
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Net income as
reported under
US GAAP $2,342 $(507) $3,273 $(268)
Add back non-cash
expenses:
Stock Option expense 142 102 240 175
Depreciation,
depletion and
amortization 2,979 1,361 3,994 2,745
Provision for
deferred income
taxes 1,916 (488) 2,999 (319)
Less non-cash revenue:
Gain on price risk
management (1) 1,370 - 2,022 -
Pro forma net income
before non-cash
income and expenses $6,009 $468 $8,484 $2,333
Pro forma cash flow per
diluted share $0.66 $0.05 $0.93 $0.26
(1) Gain on price risk management is an unrealized gain from the Company's
NYMEX futures and costless collar derivative instruments. Cash is received
upon settlement of the contract, and upon settlement, is recorded in the oil
and gas sales line item.
About Double Eagle
Double Eagle Petroleum Co. explores for, develops, and sells natural gas
and crude oil, with natural gas constituting more than 95% of its production
and reserves. The Company's current major development activities are in its
Atlantic Rim coal bed methane play and in the Pinedale Anticline in Wyoming.
This release contains forward-looking statements regarding Double Eagle's
future plans and expected performance based on assumptions the Company
believes to be reasonable. A number of risks and uncertainties could cause
actual results to differ materially from these statements, including, without
limitation, the success rate of exploration efforts and the timeliness of
development activities, fluctuations in oil and gas prices, and other risk
factors described from time to time in the Company's reports filed with the
SEC. In addition, the Company operates in an industry sector where securities
values are highly volatile and may be influenced by economic, environmental
and other factors beyond the Company's control. Double Eagle undertakes no
obligation to publicly update these forward-looking statements, whether as a
result of new information, future events or otherwise.
Company Contact:
John Campbell, IR
(303) 794-8445
http://www.dble.us
SOURCE Double Eagle Petroleum Co.
John Campbell, IR of Double Eagle Petroleum Co., +1-303-794-8445
