Warren Resources Announces First Quarter 2005 Results
NEW YORK, May 11 /PRNewswire-FirstCall/ -- Warren Resources, Inc. (NASDAQ:WRES) ("Warren" or the "Company") today announced its 2005 first
quarter financial and operating results. The Company reported revenues of $8.1
million for the quarter ended March 31, 2005 as compared to revenues of $4.3
million for 2004. The increase in revenues for the first quarter of 2005
resulted from increases in turnkey drilling revenue from increased drilling
activity and increases in oil and gas sales primarily from our Wilmington
Townlot Unit field in California and our Atlantic Rim CBM project in Wyoming. The Company reported a net loss applicable to common stockholders (after
preferred stock dividends of $1.6 million) for the quarter ended March 31, 2005
of $3.4 million or $0.10 per share based on 33.4 million weighted average
common shares outstanding as compared to a net loss (after preferred stock
dividends of $1.6 million) of $2.7 million or $0.15 per share for the first
quarter of 2004. At March 31, 2005, the Company had 34.7 million shares of
common stock outstanding.
The Company reported that the increase in net loss for the first quarter of
2005 compared to 2004 was principally due to retirement of debt expense
totaling $1.2 million. This expense represents the write-off of unamortized
deferred offering costs and the premium paid on the 12% bonds due in 2007 and
2017 which were redeemed on March 31, 2005. Additionally, the Company recorded
interest expense of $1.1 million in the first quarter of 2005 compared to $0.1
million for the first quarter of 2004 when $1.5 million of such interest costs
were capitalized. As a result of the settlement of our Wilmington field
litigation, we will no longer be capitalizing interest attributable to our
investment in the field.
Oil and gas production was 422 MMcfe for the quarter-ended March 31, 2005
compared to 240 MMcfe for the same period in 2004. Average natural gas
equivalent sales prices were $5.16 per Mcfe for the quarter-ended March 31,
2005 as compared to $4.81 per Mcfe for the same period in 2004.
Net cash used in operating activities for the quarter ended March 31, 2005 was
$6.7 million. The net cash used in operating activities was primarily for
drilling wells on behalf of our drilling programs. After drilling the
remaining net 14 wells under its turnkey obligation with the drilling programs,
all wells will be drilled for Warren's own account.
Operational Update Norman F. Swanton, Chairman and CEO of Warren, stated that "in the first
quarter of 2005, we participated in drilling 11 gross (1.8 net) wells in
conjunction with our drilling programs, compared to 1.0 gross (0.3 net) well in
the first quarter of 2004. These wells were predominately in our active coalbed
methane (CBM) projects in Wyoming and included 8 gross (1.0 net) wells in our
Atlantic Rim AMI project with Anadarko and in our Pacific Rim project. We own
an average working interest of 56% in our Atlantic Rim and Pacific Rim acreage. Outside of the Joint Venture AMI with Anadarko, we are the operator of our
predominantly undeveloped CBM acreage in the Washakie Basin in southwest
Wyoming". The CBM wells are either producing, in the early stages of dewatering
or in the process of being gathered into production units.
As previously announced, effective January 1, 2005, we purchased Magness
Petroleum's interest in the Wilmington Unit, which increased our working
interest to 98.5%. We were also appointed operator of the Wilmington Unit. The
purchase increased Warren's total net proved reserves to 128.9 Bcfe and PV-10
to $306.9 million as of December 31, 2004, assuming proforma that the Magness
Petroleum acquisition had occurred on that date. These net proved reserves are
based upon approximately 6% of our net acreage.
Since closing on January 31, 2005, Warren has performed a detailed geological
and engineering evaluation of the Wilmington Unit. This review has identified
the potential for an increase in the number of wells in the Terminal zone in
the Wilmington Unit instead of the originally planned 100 wells, which could
increase our proved oil reserves from this zone. Also, as a result of the
evaluation, Warren has identified additional possible reserves in the Ford, Tar
and Ranger zones of the Wilmington unit.
Warren's 2005 capital expenditure budget for the Wilmington Unit is $18.4
million to drill 29 gross (28.6 net) wells in the Terminal and Ford zones. We
have obtained the approval for the initial drilling permits and anticipate
commencing drilling in the Terminal zone in June 2005 and the Ford zone in
September 2005.
Financial and Statistical Data Tables Following are financial highlights for the comparative first quarters ended
March 31, 2005 and March 31, 2004. All production volumes and dollars are
expressed on a net revenue interest basis.
Warren Resources, Inc. Consolidated Statements Of Operations
(Unaudited)
Three Months Ended
March 31,
2005 2004
Revenues
Turnkey contracts with affiliated
partnerships $2,279,317 $908,934
Oil and gas sales from marketing
activities 2,196,074 1,383,575
Well services 540,659 230,605
Oil and gas sales 2,176,587 1,226,475
Net gain on investments 31,460 49,813
Interest and other income 892,701 532,900
8,116,798 4,332,302
Expenses
Turnkey contracts 2,021,001 1,433,440
Cost of marketed oil and gas purchased
from affiliated partnerships 2,165,092 1,348,219
Well services 194,389 111,878
Production & exploration 673,162 998,417
Depreciation, depletion, amortization
and impairment 761,895 402,145
General and administrative 1,465,344 1,172,288
Interest 1,106,754 108,853
Retirement of debt 1,175,233 --
9,562,870 5,575,240
Loss before provision for income taxes (1,446,072) (1,242,938)
Deferred income tax expense
(benefit) 114,000 (214,000)
Loss before minority interest (1,560,072) (1,028,938)
Minority interest (168,034) (29,928)
Net loss (1,728,106) (1,058,866)
Less dividends and accretion on preferred
shares 1,640,432 1,645,925
Net loss applicable to common
stockholders $(3,368,538) $(2,704,791) Basic and diluted loss per common share $(0.10) $(0.15)
Weighted average common shares outstanding 33,358,796 17,973,963
Production:
Gas - MMcf 243.1 149.1
Oil - MBbls 29.8 15.1
Total Equivalents (MMcfe) 422.0 239.7 Realized Prices:
Gas - Mcf $4.65 $4.67
Oil - Bbl 35.08 30.27
Total Equivalents (Mcfe) 5.16 4.81 Net cash flow provided by operating
activities:
Cash flow from operations $(6,733,090) $(3,754,321)
Changes in working capital accounts 6,503,667 2,847,643
Cash flow from operations before working
capital changes (229,423) (906,678) Conference Call
The public is invited to listen to the Company's conference call set for today,
May 11, 2005, at 10:00 a.m. Eastern Time. The call will be broadcast live over
the Internet at our Web site: http://www.warrenresources.com/. If you are
unable to participate during the live broadcast, the call will be archived on
Warren's website for approximately 14 days. A telephonic replay will also be
available through May 18, 2005 by dialing (888) 286-8010, pass code 22856823.
2005 Guidance Warren provides the following forecast for production, capital expenditures and
operating costs based upon the information available at the time of this
release. Please see the forward-looking statement at the end of this release
for more discussion of the inherent limitations of this information.
Second Quarter Year
ending ending
June 30, 2005 December 31, 2005
Production: Oil (MBbl) 29 - 32 300 - 340
Gas (MMcf) 230 - 255 1,300 - 1,400
Gas Equivalent (MMcfe) 404 - 447 3,100 - 3,440
Capex Budget (in thousands) $2,000 $37,600
Selected operating revenue
and expenses (in thousands):
Turnkey contract revenue $1,300 $11,900
Turnkey contract expense $1,250 $11,300
General and administrative
expense $2,000 $8,500
About Warren Resources
Warren Resources, Inc. is a growing independent energy company engaged in the
exploration and development of domestic natural gas and oil reserves. Warren is
primarily focused on the exploration and development of coalbed methane
properties located in the Rocky Mountain region and its water flood oil
recovery program in the Wilmington Unit located in the Los Angeles Basin of
California. The Company is headquartered in New York, New York, and its
exploration and development subsidiary, Warren E&P, Inc., is headquartered in
Casper, Wyoming.
Forward-Looking Statements This press release contains 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. Statements regarding projections of revenues or income or
reserves or similar items, such as statements pertaining to future revenues,
future capital expenditures, future cash flows, future operations or results,
and other statements that are not historical facts, are examples of forward
looking statements. These forward-looking statements reflect our current views
with respect to future events, based on what we believe are reasonable
assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual
results to differ materially, including without limitation risks of declining
oil and gas prices, competition for prospects, accuracy of reserve estimates,
estimated rates of production, increases in drilling and lifting costs,
increases in equipment and supply costs and other factors detailed in the
Company's filings with the Securities and Exchange Commission
(http://www.sec.gov/). Full details regarding the selected financial
information provided above will be available in the Company's quarterly report
on Form 10-Q, which will be filed with the SEC on or about May 11, 2005. DATASOURCE: Warren Resources, Inc.
CONTACT: David Fleming, +1-212-697-9660 for Warren Resources Inc.
Web site: http://www.warrenresourcesinc.com/
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