DENVER, May 8 /PRNewswire-FirstCall/ -- Teton Energy Corporation ("Teton" or "the Company") (AMEX:TEC) today announced that for the quarter ended March 31, 2008, operating revenues from oil and gas sales increased 204 percent from the first quarter of 2007 to $3.6 million and operating cash flow from oil and gas activities (defined as oil and gas sales less lease operating expense, transportation expense and production taxes) increased 208 percent to $3.0 million. EBITDAX (a non-GAAP measure -- refer to last table of press release for a reconciliation to net income), increased 1,267 percent from the first quarter of 2007 to $834,000.
For the first quarter of 2008, Teton realized a net loss of $8.2 million, or a fully diluted loss of $0.46 per share of common stock, compared to a loss for the first quarter of 2007 of $1.8 million, or a fully diluted loss of $0.12 per share of common stock. Excluding first quarter 2008 non-cash items which totaled $8.6 million, adjusted net income would have been $400,000. These non-cash items included depreciation, depletion and accretion ($2.2 million), amortization of debt discount and issuance costs ($4.2 million), stock-based compensation ($1.8 million) and unrealized net loss on derivative contracts ($400,000).
Prices and volumes. Oil and gas sales volumes increased 108 percent to 422 million cubic feet equivalent ("MMcfe") at an average realized wellhead price of $8.62 per thousand cubic feet equivalent ("Mcfe") in the first quarter of 2008 compared to oil and gas sales volumes of 203 MMcfe at an average realized wellhead price of $5.90 per Mcfe in the first quarter of 2007. Sales volumes in the first quarter of 2008 were 80 percent natural gas and 20 percent crude oil.
Other Highlights. Other financial highlights for the first quarter of 2008 include the following: * Capital expenditures totaled approximately $8.7 million. * On April 2, 2008, the Company amended and increased its bank credit
facility with JPMorgan from $50 million to $150 million and increased
the available borrowing base from $10 million to $50 million. * On April 2, 2008, the Company closed the acquisition of oil and gas
properties in the Central Kansas Uplift, including 12.9 billion cubic
feet equivalent ("Bcfe") of proved reserves, 4.3 MMcfe per day of
related production and a 60 percent operated working interest in
39,385 undeveloped gross acres for $53.4 million in cash and stock,
before post-closing adjustments.
Price Risk Management. Teton manages its overall exposure to commodity price fluctuations through the use of various hedging contracts for some of its production. The duration of various hedging contracts depends on the Company's view of market conditions, available contract prices and operating strategy. The use of such contracts is intended to stabilize cash flows by limiting the risk of fluctuating commodity prices. As of April 2, 2008, Teton had hedging contracts in effect for approximately 80 percent of its then-current net proved developed producing ("PDP") production for the next five years including net PDP production from the recent Kansas acquisition.
Balance Sheet. At March 31, 2008, Teton had total assets of $66.0 million, cash and cash equivalents in short-term investments of $6.8 million and no long term debt outstanding.
Operating Expense Details. Oil and gas operating expenses, including lease operating expense ("LOE"), transportation expense and production taxes, for the first quarter of 2008 collectively increased 186 percent due to a significant increase in volumes and increased 37 percent on a per Mcfe basis to $1.60 per Mcfe. Higher LOE per Mcfe as a result of increased volumes in new project areas with higher production costs and higher production taxes per Mcfe as a result of higher prices were partially offset by lower transportation costs per Mcfe due to the fact that Teton owns or has an interest in the transportation assets that service its project areas in the eastern D-J Basin where volumes are increasing.
The Company's cash margin (oil and gas sales, excluding realized gain (loss) on oil and gas derivative contracts, less oil and gas operating expenses) in the first quarter of 2008 increased 48 percent on a per Mcfe basis to $7.02 from $4.73 in the first quarter of 2007.
General and administrative expense in the first quarter of 2008 increased $1.9 million due largely to an increase in compensation expense of $1.2 million related to (1) the increase in non-cash compensation charges of $900,000 for presumed vesting of long-term incentive awards and (2) cash compensation of $300,000 related to additional headcount over the same prior year period. The increase was also due to an increase in professional fees of $540,000 related to Sarbanes Oxley and financial consultant work performed in the first quarter of 2008, an increase of $90,000 for office rent and related expenses due to the additional headcount and related office space, and an increase in corporate communications of $130,000 resulting from investor relations consulting, the hosting of an analyst conference and additional attendance at investor conferences. The level of consulting expenses incurred in the first quarter will decrease on a go forward basis as work previously done by outside consultants will be done by in-house staff.
Depreciation, depletion and accretion ("DD&A") expense in the first quarter of 2008 increased 296 percent, largely due to increased volumes and a higher capitalized cost basis as the result of the ongoing drilling programs. DD&A expense on a per Mcfe basis should decrease as new wells come online and add new reserves.
Interest expense in the first quarter increased from $13,000 to $4.3 million due to an increase in non-cash interest expense related to the amortization of deferred debt discount and issuance costs of $4.2 million related to the 8% senior subordinated convertible notes.
CEO comments. Karl Arleth, President and Chief Executive Officer, commented, "The first quarter of 2008 was an extremely busy and productive period for Teton Energy. First and foremost, we completed negotiations and due diligence on our new Kansas acquisition that closed in early April. Secondly, net production volumes increased 108 percent to over 422 MMcfe, exceeding our budget for the first quarter. Importantly, these volumes do not include results from the Kansas assets which will positively and significantly impact our operating and financial results beginning in the second quarter." Earnings conference call. Teton invites you to participate in its first quarter 2008 earnings conference call today May 8, 2008 at 9:30 a.m. (Mountain Time) by dialing 877-407-9210 (Toll Free) or 201-689-8049 (International). Please dial in five to ten minutes before the start of the call. A replay of the conference call will be available through midnight, May 28, 2008 by dialing 877-660-6853 (Toll Free) or 201-612-7415 (International), Conference ID # 283981 and account # 286. Both numbers are needed for the replay. The live conference call may also be accessed on the Internet by logging onto Teton's Web site at http://www.teton-energy.com/. Select Investor Relations, then the Webcasts and Presentations option on the menu. Log on at least ten minutes prior to the start of the call to register, download and install any necessary audio software. An audio replay of the call will also be available on the web site for approximately 60 days following the live webcast.
Company Description. Teton Energy Corporation is an independent oil and gas exploration and production company focused on the acquisition, exploration and development of North American properties. The Company's current operations are concentrated in the Rocky Mountain and Mid-continent regions of the U.S. Teton has leasehold interests in the Central Kansas Uplift of Kansas, the eastern Denver-Julesburg Basin in Colorado, Kansas and Nebraska, the Piceance Basin in western Colorado, the Williston Basin in North Dakota and the Big Horn Basin in Wyoming. Teton is headquartered in Denver, Colorado and is publicly traded on the American Stock Exchange under the ticker symbol "TEC." For more information about Teton, please visit the Company's website at http://www.teton-energy.com/.
Forward-Looking Statements. This news release may contain certain forward-looking statements, including declarations regarding Teton's and its subsidiaries' expectations, intentions, strategies and beliefs regarding the future within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements contained herein are based upon information available to Teton's management as of the date hereof and actual results may vary based upon future events, both within and without the control of Teton's management, including risks and uncertainties that could cause actual results to differ materially including, among other things, the impact that additional acquisitions may have on Teton and its capital structure, exploration results, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, governmental regulations, and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission. Teton's disclosure reports are on file at the Securities and Exchange Commission and can be viewed on Teton's website at http://www.teton-energy.com/. Copies are available without charge upon request from the Company.
Consolidated Statement of Operations: Three Months Ended
(In thousands, except March 31, March 31,
per share amounts) 2008 2007
Operating revenues:
Oil and gas sales $3,640 $1,198 Operating expenses: Lease operating expense 350 43
Transportation expense 123 129
Production taxes 202 64
Exploration expense 326 306
General and administrative 3,819 1,879
Depreciation, depletion and
accretion expense 2,198 555
Total operating expenses 7,018 2,976 Operating income (loss) (3,378) (1,778) Other income (expense):
Realized gain (loss) on oil
and gas derivative contracts (220) 55
Unrealized (loss) on oil and gas
derivative contracts (1,233) (93)
Gain on derivative contract
liabilities 825 -
Interest income 129 29
Interest expense (4,346) (13)
Total other income (expense) (4,845) (22) Net income (loss) $(8,223) $(1,800) Basic income (loss) per common share $(0.46) $(0.12) Fully diluted income (loss) per
common share $(0.46) $(0.12)
Basic weighted-average common shares
outstanding 17,773 15,600
Fully diluted weighted-average
common shares outstanding 17,773 15,600
Condensed Consolidated Balance Sheet:
March 31, 2008 December 31, 2007
(Dollars in thousands) (Unaudited)
Assets:
Cash and cash equivalents $6,775 $24,616
Other current assets 5,847 4,385
Total current assets 12,622 29,001
Net property and equipment 52,676 49,139
Other non-current assets 682 159
Total assets $65,980 $78,299 Liabilities and Stockholders' Equity:
Current liabilities $22,040 $20,742
Long-term debt - 8,000
Other long-term liabilities 619 529
Total liabilities 22,659 29,271
Total stockholders' equity 43,321 49,028
Total liabilities and
stockholders' equity $65,980 $78,299
Operating Results: Three Months Ended
March 31, 2008 March 31, 2007
Net production volumes
(Mcfed) 4,640 2,254
Realized price ($/Mcfe) (1) $8.62 $5.90
Lease operating expense
($/Mcfe) $0.83 $0.21
Transportation expense
($/Mcfe) $0.29 $0.64
Production taxes ($/Mcfe) $0.48 $0.32
Gross margin ($/Mcfe)(2) $7.02 $4.73 (1) Excludes realized gain (loss) on oil and gas derivative contracts
(2) Gross margin is realized price less LOE, transportation expense and
production taxes
Reconciliation of Net income (loss) to EBITDAX:
(Dollars in thousands) Three Months Ended
March 31, 2008 March 31, 2007
Net income (loss) $(8,223) $(1,800)
Add:
Interest expense 4,346 13
Income taxes - -
Depreciation, depletion and
accretion expense 2,198 555
Exploration expense 326 306
Unrealized loss on oil and gas
derivative contracts 1,233 93
(Gain) on derivative contract
liabilities (825) -
Stock-based compensation expense,
exclusive of cash withheld for
payroll taxes of $329 and
$0 respectively 1,779 894 EBITDAX $834 $61 EBITDAX is not a measure determined pursuant to generally accepted
accounting principles, or GAAP, nor is it an alternative to GAAP income. The Company is presenting this information, as it is an important measure
of financial performance used by equity analysts. Investor contact:
Ron Wirth
Director of Investor Relations
& Administration
303-565-4600 X124
DATASOURCE: Teton Energy Corporation CONTACT: Investors, Ron Wirth, Director of Investor Relations & Administration of Teton Energy Corporation, +1-303-565-4600 X124, Web site: http://www.teton-energy.com/
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