Mariner Energy, Inc. (NYSE: ME) today reported third quarter 2009
financial and operating results. The company reported net income of
$4.2 million for the three-month period ended September 30, 2009,
with diluted earnings per share (EPS) of $0.04. For the same period
in the prior year, Mariner reported net income of $64.7 million
with diluted EPS of $0.73. During the three-month period ended
September 30, 2009, the company incurred certain hurricane-related
lease operating expenses and certain other general and
administrative expenses that negatively impacted income before
taxes by approximately $15.4 million. The company reported
operating cash flow of approximately $403.6 million for the nine
months ended September 30, 2009 (see reconciliation of this
non-GAAP measure below).
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
========= =========
For further information, contact: Patrick Cassidy
ir@mariner-energy.com (713) 954-5558
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