Venoco, Inc. (NYSE: VQ) today reported financial and operational
results for the second quarter of 2012. The company reported net
income for the quarter of $14.5 million on total revenues of $82.5
million.
Adjusted Earnings, which adjusts for unrealized derivative gains
and losses and certain one-time charges, were $13.3 million for the
quarter down from $38.5 million in the first quarter of 2012.
Adjusted EBITDA was $55.8 million in the quarter, down from $87.8
million in the first quarter. Adjusted Earnings and Adjusted EBITDA
were positively impacted by the monetization of certain 2012-2015
oil and natural gas hedges in the amount of $41.2 million in the
first quarter and $11.0 million in the second quarter. Please see
the end of this release for definitions of Adjusted Earnings and
Adjusted EBITDA and a reconciliation of those measures to net
income/loss.
Highlights include the following:
- Production of 1.6 million barrels of oil equivalent (MMBOE) for
the quarter, or 17,080 BOE per day (BOE/d).
- Daily oil volumes up 8% in the second quarter compared to the
first quarter of 2012.
- Second of four wells planned at South Ellwood for 2012
completed in late June and averaged 1,718 gross barrels of oil per
day during July.
- Adjusted EBITDA of $55.8 million and Adjusted Earnings of $13.3
million.
"We continued to grow our oil volumes from our Southern
California legacy assets, primarily as a result of drilling at West
Montalvo and Sockeye. Late in the second quarter we completed an
excellent PUD well at the South Ellwood field that, along with
positive results from the next two wells -- a PUD and a Probable --
to be drilled at South Ellwood should enable us to continue to grow
oil volumes throughout the remainder of the year," said Ed
O'Donnell, Venoco's CEO. "Since April 1st we have also benefited
from selling the majority of our crude oil based on California
postings, which continued to trade at a premium to WTI throughout
the second quarter."
Second Quarter Production
Average daily oil volumes were up eight percent in the second
quarter of 2012 compared to the first quarter of 2012 and up about
fourteen percent from full-year 2011. The company's average daily
production of 17,080 BOE/d in the second quarter, however, was down
slightly compared to the first quarter of 2012. The two percent
overall decrease in production was driven by declines in natural
gas volumes from the Sacramento Basin where the company has minimal
drilling activity due to continued low natural gas prices. The
declines in natural gas revenue were largely offset by increased
oil volumes and better oil realizations during the second quarter,
which kept full-company revenues just three percent below those in
the first quarter.
"We have some prolific oil properties and are very pleased to
report solid results from our three largest of these properties.
Our successful oil development has also provided a significant
offset to our forecasted volume declines in natural gas," said Mr.
O'Donnell. "We had a solid month of July with net oil volumes
averaging about 9,148 barrels per day, up 1,544 barrels per day
from our second quarter average. We will, however, continue to
guide to the lower end of our production range for 2012, which is
slightly higher than 2011 production," Mr. O'Donnell added.
The following table details the company's daily production by
region (BOE(1)/d):
Region Quarter Ended Six Months Ended
----------------------------- -------------------
6/30/11 3/31/12 6/30/12 6/30/11 6/30/12
--------- --------- --------- --------- ---------
Sacramento Basin 10,217 9,970 9,136 10,403 9,554
Southern California 7,343 7,455 7,944 7,284 7,699
--------- --------- --------- --------- ---------
Total 17,560 17,425 17,080 17,687 17,253
========= ========= ========= ========= =========
(1) Barrel of oil equivalent (BOE) is calculated using the ratio of six Mcf
of natural gas to one barrel of crude oil, condensate or natural gas
liquids.
Second Quarter Costs
Venoco's second quarter 2012 lease operating expenses of $12.93
per BOE were down 16% from the first quarter 2012 level which was
$15.42 per BOE. Costs in the first quarter of 2012 were higher due
primarily to non-recurring maintenance at Platforms Gail and
Holly.
The following table details certain of the company's per BOE
metrics for the indicated quarter:
Quarter Ended Six Months Ended
----------------------------- -------------------
UNAUDITED (per BOE) 6/30/11 3/31/12 6/30/12 6/30/11 6/30/12
--------- --------- --------- --------- ---------
Lease Operating Expenses $ 13.14 $ 15.42 $ 12.93 $ 13.33 $ 14.19
Property and Production
Taxes 0.90 1.02 3.41 0.93 2.20
DD&A Expense 13.59 14.03 13.65 13.56 13.84
G&A Expense (1) 4.70 5.37 5.15 4.96 5.26
(1) Net of amounts capitalized and excluding stock-based compensation costs
and costs related to the going-private transaction. See the end of this
release for a reconciliation of G&A per BOE.
Capital Investment Second Quarter 2012
Venoco's second quarter capital expenditures for exploration,
development and other spending were $70 million, including $54
million for drilling and rework activities, $5 million for
facilities, and $11 million for land, seismic and capitalized
G&A.
The company's second quarter capital expenditures in the
Sacramento Basin were $5 million, including approximately $1.5
million incurred performing 45 recompletions. The company's 2012
budget provides for total capital expenditures of $32 million in
the basin, of which $15 million was spent during the first half of
the year drilling three wells and performing 140 recompletions. The
budget contemplates drilling one additional well and performing
approximately 60 additional recompletions.
The company's Southern California legacy fields accounted for
$40 million or 57% of its second quarter capital expenditures. At
the West Montalvo field, two wells spud during the first quarter
were completed during the second quarter and drilling began on a
new well late in the quarter. Through the first six months of the
year, the company has brought five new wells online at West
Montalvo (including wells spud last year). At the Sockeye field,
the company completed three wells in the quarter. At the South
Ellwood field, the company completed two wells during the quarter.
The first well completed has averaged 130 gross barrels of oil per
day in July while the second well averaged 1,718 gross barrels per
day in July.
The company's 2012 capital expenditure budget for legacy
Southern California properties is $123 million, of which $70
million was spent during the first half of the year. During the
second half of the year, the company plans to complete one
additional well at West Montalvo and two wells at South
Ellwood.
The company had onshore Monterey capital expenditures of $25
million or 36% of its total second quarter capital expenditures. As
part of this activity, the company spud two wells and completed
three wells in the Sevier field. Through the first six months of
the year, the company has completed five wells in Sevier. The
company's 2012 capital expenditure budget for the onshore Monterey
shale development is $100 million, of which $46 million was spent
during the first half of the year.
2012 Guidance
The following summarizes the company's 2012 guidance:
- Production: 17,750 - 18,250 BOE/d
- Capital Budget: $255 million
- Lease Operating Expenses: $15.00 - $15.50 per BOE
- General & Administrative Expenses: $5.25 - $5.50 per
BOE
- Production & Property Taxes: $1.65 - $1.70 per BOE
(previously $1.00-$1.10 per BOE)
- DD&A: $15.00 - $15.50 per BOE
Earnings Conference Call
Venoco will host a conference call to discuss results today,
Wednesday, August 8, 2012 at 11:00 p.m. Eastern time (9 a.m.
Mountain). The conference call will be webcast and those wanting to
listen may do so by using a link on the Investor Relations page of
the company's website at http://www.venocoinc.com. Those wanting to
participate in the Q & A portion can call (866) 788-0539 and
use conference code 44920420. International participants can call
(857) 350-1677 and use the same conference code.
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 60971906. The 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 primarily in California. Venoco operates three offshore
platforms in the Santa Barbara Channel, has non-operated interests
in three other platforms, operates several onshore properties in
Southern California, and has extensive operations in Northern
California's Sacramento Basin.
Forward-looking Statements
Statements made in this news release relating to Venoco's future
production, expenses, revenue, price realizations, oil/gas
production mix, reserves, capital expenditures and development
projects, 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, and pipeline curtailments by third
parties. The company's activities with respect to the onshore
Monterey Shale and other projects are subject to numerous
operating, geological and other risks and may not be successful.
The company's results in the onshore Monterey Shale will be subject
to greater risks than in areas where it has more data and drilling
and production experience. Results from the company's onshore
Monterey Shale project will depend on, among other things, its
ability to identify productive intervals and drilling and
completion techniques necessary to achieve commercial production
from those intervals. The closing of the transaction contemplated
by the previously announced merger agreement with Mr. Marquez is
subject to a number of conditions, including a financing condition,
and those conditions may not be satisfied. All forward-looking
statements are made only as of the date hereof and the company
undertakes no obligation to update any such statement. 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.
References to reserve estimates other than proved are by their
nature more uncertain than estimates of proved reserves, and are
subject to substantially greater risk of not actually being
realized by the company.
OIL AND NATURAL GAS PRODUCTION AND PRICES
Quarter Ended Quarter Ended
---------------- ----------------
UNAUDITED 3/31/12 6/30/12 % Change 6/30/11 6/30/12 % Change
------- ------- -------- ------- ------- --------
Production Volume:
Oil (MBbls) (1) 641 692 8% 619 692 12%
Natural Gas (MMcf) 5,668 5,174 -9% 5,874 5,174 -12%
------- ------- -------- ------- ------- --------
MBOE 1,586 1,554 -2% 1,598 1,554 -3%
======= ======= ======== ======= ======= ========
Daily Average
Production Volume:
Oil (Bbls/d) 7,044 7,604 8% 6,802 7,604 12%
Natural Gas (Mcf/d) 62,286 56,857 -9% 64,549 56,857 -12%
------- ------- -------- ------- ------- --------
BOE/d 17,425 17,080 -2% 17,560 17,080 -3%
======= ======= ======== ======= ======= ========
Oil Price per Barrel
Produced (in
dollars):
Realized price
before hedging $ 98.66 $100.38 2% $ 96.37 $100.38 4%
Realized hedging
gain (loss)(2) (5.75) (9.56) 66% (5.37) (9.56) 78%
------- ------- -------- ------- ------- --------
Net realized price $ 92.91 $ 90.82 -2% $ 91.00 $ 90.82 0%
======= ======= ======== ======= ======= ========
Natural Gas Price
per Mcf (in
dollars):
Realized price
before hedging $ 2.76 $ 2.38 -14% $ 4.29 $ 2.38 -45%
Realized hedging
gain (loss)(2) 0.63 0.47 -25% 0.82 0.47 -43%
------- ------- -------- ------- ------- --------
Net realized price $ 3.39 $ 2.85 -16% $ 5.11 $ 2.85 -44%
======= ======= ======== ======= ======= ========
Expense per BOE (in
dollars):
Lease operating
expenses $ 15.42 $ 12.93 -16% $ 13.14 $ 12.93 -2%
Production and
property taxes $ 1.02 $ 3.41 234% $ 0.90 $ 3.41 279%
Transportation
expenses $ 2.78 $ 0.17 -94% $ 1.67 $ 0.17 -90%
Depreciation,
depletion and
amortization $ 14.03 $ 13.65 -3% $ 13.59 $ 13.65 0%
General and
administrative (3) $ 7.79 $ 6.35 -18% $ 5.52 $ 6.35 15%
Interest expense $ 9.91 $ 10.22 3% $ 10.00 $ 10.22 2%
OIL AND NATURAL GAS PRODUCTION AND PRICES
Six Months Ended
----------------
UNAUDITED 6/30/11 6/30/12 % Change
------- ------- --------
Production Volume:
Oil (MBbls) (1) 1,227 1,333 9%
Natural Gas (MMcf) 11,846 10,842 -8%
------- ------- --------
MBOE 3,201 3,140 -2%
======= ======= ========
Daily Average
Production Volume:
Oil (Bbls/d) 6,779 7,324 8%
Natural Gas (Mcf/d) 65,448 59,571 -9%
------- ------- --------
BOE/d 17,687 17,253 -2%
======= ======= ========
Oil Price per Barrel
Produced (in
dollars):
Realized price
before hedging $ 91.42 $ 99.55 9%
Realized hedging
gain (loss)(2) (3.46) (7.73) 123%
------- ------- --------
Net realized price $ 87.96 $ 91.82 4%
======= ======= ========
Natural Gas Price
per Mcf (in
dollars):
Realized price
before hedging $ 4.16 $ 2.58 -38%
Realized hedging
gain (loss)(2) 0.95 0.55 -42%
------- ------- --------
Net realized price $ 5.11 $ 3.13 -39%
======= ======= ========
Expense per BOE (in
dollars):
Lease operating
expenses $ 13.33 $ 14.19 6%
Production and
property taxes $ 0.93 $ 2.20 137%
Transportation
expenses $ 1.45 $ 1.49 3%
Depreciation,
depletion and
amortization $ 13.56 $ 13.84 2%
General and
administrative (3) $ 5.83 $ 7.08 21%
Interest expense $ 8.96 $ 10.06 12%
(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 are adjusted
for actual sales volumes since offshore oil inventories can vary
significantly from month to month based on pipeline inventories, oil
pipeline sales nominations, and prior to February 2012, the timing of
barge deliveries and oil in tanks.
(2) The realized commodity derivative gain (loss) excludes gains from the
early settlement of oil and natural gas hedges in the following periods:
- three months ended June 30, 2012 excludes gains of $3.1 million for
natural gas and $7.9 million for oil
- three months ended June 30, 2011 excludes gain of $2.0 million for oil
- six months ended June 30, 2012 excludes gains of $44.3 million for
natural gas and $7.9 million for oil
- six months ended June 30, 2011 excludes gain of $2.0 million for oil
(3) Net of amounts capitalized.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended Quarter Ended Six Months Ended
------------------ ----------------- ------------------
UNAUDITED (In
thousands) 3/31/12 6/30/12 6/30/11 6/30/12 6/30/11 6/30/12
-------- -------- -------- -------- -------- --------
REVENUES:
Oil and natural gas
sales $ 83,388 $ 80,936 $ 85,918 $ 80,936 $164,237 $164,324
Other 1,975 1,563 1,371 1,563 2,242 3,538
-------- -------- -------- -------- -------- --------
Total revenues 85,363 82,499 87,289 82,499 166,479 167,862
-------- -------- -------- -------- -------- --------
EXPENSES:
Lease operating
expense 24,450 20,093 21,000 20,093 42,676 44,543
Property and
production taxes 1,615 5,302 1,439 5,302 2,987 6,917
Transportation
expense 4,412 257 2,670 257 4,656 4,669
Depletion,
depreciation and
amortization 22,254 21,213 21,713 21,213 43,404 43,467
Accretion of asset
retirement
obligation 1,391 1,450 1,608 1,450 3,198 2,841
General and
administrative 12,361 9,869 8,824 9,869 18,653 22,230
-------- -------- -------- -------- -------- --------
Total expenses 66,483 58,184 57,254 58,184 115,574 124,667
-------- -------- -------- -------- -------- --------
Income from
operations 18,880 24,315 30,035 24,315 50,905 43,195
FINANCING COSTS AND
OTHER:
Interest expense 15,711 15,880 15,976 15,880 28,673 31,591
Interest rate
derivative
realized (gains)
losses - - - - 41,147 -
Interest rate
derivative
unrealized (gains)
losses - - - - (40,064) -
Amortization of
deferred loan
costs 569 585 592 585 1,123 1,154
Loss on
extinguishment of
debt - - - - 1,357 -
Commodity
derivative
realized (gains)
losses (41,096) (6,786) (3,507) (6,786) (8,975) (47,882)
Commodity
derivative
unrealized (gains)
losses and
amortization of
derivative
premiums 71,634 90 (2,049) 90 32,546 71,724
-------- -------- -------- -------- -------- --------
Total financing
costs and other 46,818 9,769 11,012 9,769 55,807 56,587
-------- -------- -------- -------- -------- --------
Income (loss)
before taxes (27,938) 14,546 19,023 14,546 (4,902) (13,392)
Income tax
provision
(benefit) - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $(27,938) $ 14,546 $ 19,023 $ 14,546 $ (4,902) $(13,392)
======== ======== ======== ======== ======== ========
Weighted average
common shares
outstanding:
Basic 58,910 59,106 58,718 59,106 57,446 59,008
Diluted 58,910 59,170 58,843 59,170 57,446 59,008
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
UNAUDITED ($ in thousands) 12/31/11 6/30/12
------------- -------------
ASSETS
Cash and cash equivalents $ 8,165 $ 19
Accounts receivable 30,017 28,717
Inventories 7,411 6,884
Other current assets 4,296 2,677
Commodity derivatives 47,768 4,806
------------- -------------
Total current assets 97,657 43,103
Net property, plant and equipment 810,465 874,297
Total other assets 21,622 20,413
------------- -------------
TOTAL ASSETS $ 929,744 $ 937,813
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 53,098 $ 52,159
Interest payable 21,854 21,311
Commodity derivatives 2,490 10,555
------------- -------------
Total current liabilities 77,442 84,025
LONG-TERM DEBT 686,958 689,329
COMMODITY DERIVATIVES 308 7,552
ASSET RETIREMENT OBLIGATIONS 92,008 92,568
------------- -------------
Total liabilities 856,716 873,474
Total stockholders' equity 73,028 64,339
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 929,744 $ 937,813
============= =============
GAAP RECONCILIATIONS
Adjusted Earnings and Adjusted EBITDA
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 the
effects of the items listed in the table below. We calculate the
tax effect of reconciling items by re-performing our period-end tax
calculation excluding the reconciling items from earnings. The
difference between this calculation and the tax expense/benefit
recorded for the period results in the tax effect disclosed below.
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 the
effects of the items listed in the table below. 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 Six Months Ended
---------------------------- ------------------
UNAUDITED ($ in thousands) 6/30/11 3/31/12 6/30/12 6/30/11 6/30/12
-------- -------- -------- -------- --------
Adjusted Earnings
Reconciliation
Net Income $ 19,023 $(27,938) $ 14,546 $ (4,902) $(13,392)
Plus:
Unrealized commodity
(gains) losses (4,039) 63,839 (2,134) 28,566 61,705
Unrealized interest rate
derivative (gains) losses - - - (40,064) -
Going private related
costs - 2,628 852 - 3,480
Loss on extinguishment of
debt - - - 1,357 -
Settlement of interest
rate swap contracts - - - 38,065 -
Tax effects - - - - -
-------- -------- -------- -------- --------
Adjusted Earnings $ 14,984 $ 38,529 $ 13,264 $ 23,022 $ 51,793
======== ======== ======== ======== ========
Quarter Ended Six Months Ended
---------------------------- --------------------
UNAUDITED ($ in
thousands) 6/30/11 3/31/12 6/30/12 6/30/11 6/30/12
-------- -------- -------- --------- ---------
Adjusted EBITDA
Reconciliation
Net income $ 19,023 $(27,938) $ 14,546 $ (4,902) $ (13,392)
Interest expense 15,976 15,711 15,880 28,673 31,591
Interest rate derivative
(gains) losses -
realized - - - 41,147 -
DD&A 21,713 22,254 21,213 43,404 43,467
Accretion of asset
retirement obligation 1,608 1,391 1,450 3,198 2,841
Amortization of deferred
loan costs 592 569 585 1,123 1,154
Loss on extinguishment
of debt - - - 1,357 -
Share-based payments 1,579 1,540 1,208 3,403 2,748
Going private related
costs - 2,628 852 - 3,480
Amortization of
derivative premiums 1,990 7,795 2,224 3,980 10,019
Unrealized commodity
derivative (gains)
losses (4,039) 63,839 (2,134) 28,566 61,705
Unrealized interest rate
derivative (gains)
losses - - - (40,064) -
-------- -------- -------- --------- ---------
Adjusted EBITDA $ 58,442 $ 87,789 $ 55,824 $ 109,885 $ 143,613
======== ======== ======== ========= =========
We also provide per BOE G&A expenses excluding costs
associated with the going-private transaction, and share-based
compensation 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.
UNAUDITED ($ in thousands,
except per BOE amounts) Quarter Ended Six Months Ended
---------------------------- ------------------
6/30/11 3/31/12 6/30/12 6/30/11 6/30/12
-------- -------- -------- -------- --------
G&A per BOE Reconciliation
G&A expense $ 8,824 $ 12,361 $ 9,869 $ 18,653 $ 22,230
Less:
Share-based compensation
expense (1,319) (1,220) (1,018) (2,773) (2,238)
Going private related
costs - (2,628) (852) - (3,480)
-------- -------- -------- -------- --------
G&A Expense Excluding
Share-Based Comp Going
Private Costs 7,505 8,513 7,999 15,880 16,512
MBOE 1,598 1,586 1,554 3,201 3,140
-------- -------- -------- -------- --------
G&A Expense per BOE
Excluding Share-Based
Comp and Going Private
Costs $ 4.70 $ 5.37 $ 5.15 $ 4.96 $ 5.26
======== ======== ======== ======== ========
For further information, please contact Mike Edwards Vice
President (303) 626-8320 http://www.venocoinc.com E-Mail Email
Contact
Venoco, Inc. (NYSE:VQ)
Historical Stock Chart
From Mar 2024 to Apr 2024
Venoco, Inc. (NYSE:VQ)
Historical Stock Chart
From Apr 2023 to Apr 2024
