Stocks & Investing
Stocks and Investing
Stocks and Investing
Fri, November 6, 2009
Thu, November 5, 2009 
HOUSTON, TX--(Marketwire - November 5, 2009) - Mariner Energy, Inc. (
Third quarter and fourth quarter to date highlights include:
-- Exploration success in deepwater at Green Canyon 490 (Wide Berth), encountering approximately 130 feet of net pay. Mariner holds a 56.25% working interest. -- Exploration success on the shelf at South Marsh Island 10, encountering approximately 87 feet of net pay. Mariner holds a 100% working interest. -- Net production for third quarter was up slightly from second quarter 2009 to 33.3 billion cubic feet of natural gas equivalent (Bcfe). -- Start up of production on two deepwater fields: Green Canyon 646 (Daniel Boone) and Viosca Knoll 821, with current gross daily production rates of approximately 7,000 barrels of oil equivalent (BOE) and 1,000 BOE, respectively. Mariner holds a 40% working interest in Daniel Boone and a 30% working interest in VK 821. -- Acquisition of a 50% working interest in the deepwater discovery on East Breaks 597 (Balboa), with estimated gross proved and probable reserves of 7 - 8 million barrels of oil equivalent. Mariner has assumed operations and commenced development on the project. Production could begin as early as fourth quarter 2010. -- Completion of an eight-block deepwater acreage trade with Anadarko Petroleum Company in the Heidelberg area and a farm-in to Anadarko's deepwater Keathley Canyon 875 (Lucius) prospect, which is currently drilling. -- Continued growth in the Permian Basin with success in seven wells, including three exploration wells further delineating our Deadwood field. At quarter's end, Mariner's net acreage position in the Permian Basin exceeded 123,000 acres. -- Affirmation of the company's $800 million borrowing base under its $1 billion revolving credit facility and further reduction of debt under the facility during the third quarter from approximately $145 million to approximately $70 million. -- Receipt of additional hurricane reimbursements, bringing the total year to date to approximately $68 million at October 31, 2009, with additional reimbursements expected prior to year end.
"During the third quarter, production increased in the deepwater and onshore, but construction delays temporarily deferred growth from the shelf. Mariner's capital spending for 2009 should be less than half of 2008's, but we expect to achieve a year-over-year production increase of approximately 10% to 128 - 130 Bcfe, as well as strong cash flow and excellent liquidity. We have continued to expand and diversify our opportunity set, most recently in the deepwater and onshore, including our entry into unconventional resources," said Scott D. Josey, Mariner's Chairman, Chief Executive Officer and President.
THIRD QUARTER 2009 RESULTS
For the three-month period ended September 30, 2009, Mariner reported net income of $4.2 million, or $0.04 per basic and diluted share. This compares with net income of $64.7 million and basic and diluted earnings per share of $0.74 and $0.73, respectively, for the same three-month period in the prior year. The lower year-over-year results are due primarily to lower commodity prices.
Net production for third quarter 2009 was 33.3 billion cubic feet of natural gas equivalent (Bcfe), up 23% compared with 27.1 Bcfe for third quarter 2008. Total natural gas net production for third quarter 2009 was 24.1 billion cubic feet (Bcf), compared with 18.4 Bcf for the same period in the prior year. Total net oil production for third quarter 2009 was 1.1 million barrels (MMBbls), compared with 1.1 MMBbls for the same period in 2008. Natural gas liquids (NGL) net production for third quarter 2009 was 0.4 MMBbls, compared with 0.4 MMBbls for third quarter 2008.
For third quarter 2009, Mariner's average realized natural gas price was $5.39 per thousand cubic feet (Mcf) compared with $10.50 per Mcf for the same period in 2008. Mariner's average realized oil price was $73.15 per barrel (Bbl) for third quarter 2009, compared with $92.97 per Bbl for third quarter 2008. The average realized NGL price was $36.85 per Bbl for third quarter 2009, compared with $61.05 per Bbl for the same period in 2008. Average realized prices reflect settlements during the period under Mariner's hedging program.
OPERATIONAL UPDATE
Offshore
Mariner drilled five offshore wells in the third quarter 2009, two of which were successful:
Working Water Well Name Operator Interest Depth (Ft) Location -------------- ------------ -------- ---------- ------------------ Vermillion 380 A3 ST1 Mariner 100.0% 340 Conventional Shelf South Timbalier 316 A6 ST1 W&T Offshore 33% 450 Conventional Shelf
Unsuccessful wells during the third quarter included Mariner's deepwater prospects at Arden (Garden Banks 949) and Tiger (East Breaks 494) and the deep shelf prospect at Sherwood (High Island 133).
Subsequent to the end of third quarter 2009, Mariner drilled two wells, both of which were successful:
Working Water Well Name Operator Interest Depth (Ft) Location ------------------ ------------ -------- ---------- ---------------------- Green Canyon 490#1 (Wide Berth) Mariner 56.25% 3,700 Conventional Deepwater South Marsh Island 10 #4 Mariner 100% 70 Conventional Shelf
Onshore
In the third quarter of 2009, Mariner drilled seven wells in the Permian Basin, all of which were successful. As of September 30, 2009, four rigs were operating on Mariner's Permian Basin properties.
CONFERENCE CALL TO DISCUSS RESULTS
A conference call has been scheduled for 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Friday, November 6, 2009, to discuss third quarter 2009 financial and operating results.
To participate in the call, please dial one of the numbers listed below at least 10 minutes prior to the scheduled start time:
Callers from the United States and Canada: +1 (800) 299-6183 Callers from International locations: +1 (617) 801-9713.
The conference passcode for both numbers is 6725 8155.
The call also will be webcast live over the Internet and can be accessed through the Investor Information section of Mariner's website at [ http://www.mariner-energy.com ].
A telephonic replay of the call will be available through November 16, 2009 by dialing (888) 286-8010 or (617) 801-6888, pass code 8892 8703. An archive of the webcast will be available shortly after the call on Mariner's website through December 31, 2009.
About Mariner Energy, Inc.
Mariner Energy, Inc. is an independent oil and gas exploration, development and production company headquartered in Houston, Texas, with principal operations in the Permian Basin and the Gulf of Mexico. For more information about Mariner, please visit its website at [ www.mariner-energy.com ].
MARINER ENERGY, INC. SELECTED OPERATIONAL RESULTS (1) (Unaudited) Net Production, Realized Pricing and Operating Costs Three Months Ended September 30, 2009 2008 ------- ------- Net production: Natural gas (Bcf) 24.1 18.4 Oil (MMBbls) 1.1 1.1 Natural gas liquids (MMBbls) .4 .4 Total production (Bcfe) 33.3 27.1 Realized prices (net of hedging): Natural gas ($/Mcf) $ 5.39 $ 10.50 Oil ($/Bbl) 73.15 92.97 Natural gas liquids ($/Bbl) 36.85 61.05 Operating costs per Mcfe: Lease operating expense $ 1.96 $ 2.41 Severance and ad valorem taxes 0.13 0.18 Transportation expense 0.13 0.15 General and administrative expense 0.57 0.43 Depreciation, depletion and amortization 3.19 4.22 (1) Certain prior year amounts have been reclassified to conform to current year presentation. MARINER ENERGY, INC. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS (1) (In thousands, except per share data) (Unaudited) Three Months Ended September 30, 2009 2008 --------- --------- Revenues: Natural gas sales $ 130,046 $ 192,804 Oil sales 80,908 97,987 Natural gas liquids sales 15,736 24,541 Other revenues 656 2,558 Total revenues 227,346 317,890 Cost and Expenses: Lease operating expense 65,325 65,267 Severance and ad valorem taxes 4,406 4,813 Transportation expense 4,468 4,065 General and administrative expense 18,922 11,554 Depreciation, depletion and amortization 106,218 114,398 Other miscellaneous expense 1,193 125 Total costs and expenses 200,532 200,222 OPERATING INCOME 26,814 117,668 Interest: Income 56 369 Expense, net of capitalized amounts (19,702) (17,507) --------- --------- Income before taxes 7,168 100,530 Provision for income taxes (2,946) (35,839) NET INCOME ATTRIBUTABLE TO MARINER ENERGY, INC. $ 4,222 $ 64,691 Earnings per share: Net income per share attributable to Mariner Energy, Inc.--basic $ 0.04 $ 0.74 Net income per share attributable to Mariner Energy, Inc.--diluted $ 0.04 $ 0.73 Weighted average shares outstanding--basic 100,753 87,596 Weighted average shares outstanding--diluted 101,085 88,184 (1) Certain prior year amounts have been reclassified to conform to current year presentation. MARINER ENERGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) September 30, December 31, 2009 2008 ------------- ------------- Current Assets Cash and cash equivalents $ 6,017 $ 3,209 Receivables, net of allowances 136,424 219,920 Insurance receivables 12,414 13,123 Derivative financial instruments 4,434 121,929 Intangible assets 1,446 2,334 Prepaid expenses and other 23,264 14,438 ------------- ------------- Total current assets 183,999 374,953 Property and Equipment Proved oil and gas properties, full-cost method 4,897,001 4,448,146 Unproved properties, not subject to amortization 214,891 201,121 ------------- ------------- Total oil and gas properties 5,111,892 4,649,267 Other property and equipment 55,229 53,115 Accumulated depreciation, depletion and amortization: Proved oil and gas properties (2,745,601) (1,767,028) Other property and equipment (7,549) (5,477) ------------- ------------- Total accumulated depreciation, depletion and amortization (2,753,150) (1,772,505) ------------- ------------- Total property and equipment, net 2,413,971 2,929,877 Insurance receivables - 22,132 Derivative financial instruments 920 - Other Assets, net of amortization 74,689 65,831 ------------- ------------- TOTAL ASSETS $ 2,673,579 $ 3,392,793 ============= ============= Current Liabilities Accounts payable $ 3,586 $ 3,837 Accrued liabilities 119,965 107,815 Accrued capital costs 128,781 195,833 Deferred income tax 15,772 23,148 Abandonment liability 47,977 82,364 Accrued interest 30,353 12,567 Derivative financial instruments 9,907 - ------------- ------------- Total current liabilities 356,341 425,564 Long-Term Liabilities Abandonment liability 408,504 325,880 Deferred income tax 78,468 319,766 Derivative financial instruments 18,267 - Long-term debt 954,503 1,170,000 Other long-term liabilities 29,037 31,263 ------------- ------------- Total long-term liabilities 1,488,779 1,846,909 Stockholders' Equity Preferred stock, $.0001 par value; 20,000,000 shares authorized, no shares issued and outstanding at September 30, 2009 and December 31, 2008 - - Common stock, $.0001 par value; 180,000,000 shares authorized; 101,855,521 shares issued and outstanding at September 30, 2009; 180,000,000 shares authorized, 88,846,073 shares issued and outstanding at December 31, 2008 10 9 Additional paid-in capital 1,250,151 1,071,347 Accumulated other comprehensive income 10,198 78,181 Accumulated deficit (431,900) (29,217) ------------- ------------- Total stockholders' equity 828,459 1,120,320 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,673,579 $ 3,392,793 ============= ============= MARINER ENERGY, INC. SELECTED CASH FLOW INFORMATION (1) (In Thousands) (Unaudited) Nine Months Ended September 30, ---------------------- 2009 2008 ---------- ---------- Operating cash flow (2) $ 403,583 $ 792,369 Changes in operating assets and liabilities 134,526 69,439 ---------- ---------- Net cash provided by operating activities $ 538,109 $ 861,808 ========== ========== Net cash used in investing activities $ (471,121) $ (996,752) ========== ========== Net cash provided by financing activities $ (64,180) $ 127,502 ========== ========== Increase (Decrease) in cash and cash equivalents $ 2,808 $ (7,442) ========== ========== (1) Certain prior year amounts have been reclassified to conform to current year presentation. (2) See below for reconciliation of this non-GAAP measure.
IMPORTANT INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS AND CERTAIN STATISTICS
This press release includes 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. All statements, other than statements of historical facts, that address activities that Mariner assumes, plans, expects, believes, projects, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. Our forward-looking statements generally are accompanied by words such as "may," "will," "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "plan," "goal," or other words that convey the uncertainty of future events or outcomes. Forward-looking statements provided in this press release are based on Mariner's current belief based on currently available information as to the outcome and timing of future events and assumptions that Mariner believes are reasonable. Mariner does not undertake to update its guidance, estimates or other forward-looking statements as conditions change or as additional information becomes available. Estimated reserves are related to hydrocarbon prices. Hydrocarbon prices in effect when the reserve estimates provided above were made may vary significantly from actual future prices. Therefore, volumes of reserves actually recovered may differ significantly from such estimates. Mariner cautions that its forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and development, production and sale of oil and natural gas. These risks include, but are not limited to, price volatility or inflation, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, and other risks described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as amended, and other documents filed by Mariner with the SEC. Any of these factors could cause Mariner's actual results and plans of Mariner to differ materially from those in the forward-looking statements. Investors are urged to read the Annual Report on Form 10-K for the year ended December 31, 2008, as amended, and other documents filed by Mariner with the SEC.
The SEC generally has permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Mariner uses the terms "probable," "possible" and "non-proved" reserves, reserve "potential" or "upside" or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines may prohibit it from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of actually being realized by Mariner.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities of Mariner.
Reconciliation of Non-GAAP Measure: Operating Cash Flow
Operating cash flow (OCF) is not a financial or operating measure under generally accepted accounting principles in the United States of America (GAAP). The table below reconciles OCF to related GAAP information. Mariner believes that OCF is a widely accepted financial indicator that provides additional information about its ability to meet its future requirements for debt service, capital expenditures and working capital, but OCF should not be considered in isolation or as a substitute for net income, operating income, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP or as a measure of a company's profitability or liquidity.
Nine Months Ended September 30, 2009 2008 --------- --------- (In thousands) (Unaudited) Net cash provided by operating activities $ 538,109 $ 861,808 Less: Changes in operating assets and liabilities 134,526 69,439 --------- --------- Operating cash flow (non-GAAP) $ 403,583 $ 792,369 ========= =========
