For the three-month period ended March 31, 2010, Mariner Energy,
Inc. (NYSE: ME) reported net income of $15.3 million, which equates
to basic and fully-diluted earnings per share of $0.15. This
compares with a net loss of $424.1 million, or $4.77 per basic and
fully-diluted share, for the same three-month period in the prior
year.
Net production for first quarter 2010 was 5,352 Mboe (thousand
barrels of oil equivalent), compared with 4,917 Mboe for first
quarter 2009. Total natural gas net production for first quarter
2010 was 20.7 billion cubic feet (Bcf), compared with 22.0 Bcf for
the same period in the prior year. Total net oil production for
first quarter 2010 was 1.3 million barrels (MMBbls), compared with
1.0 MMBbls for the same period in 2009. Natural gas liquids (NGL)
net production for first quarter 2010 was 0.6 MMBbls, compared with
0.3 MMBbls for first quarter 2009.
For first quarter 2010, Mariner's average realized natural gas
price was $5.67 per thousand cubic feet (Mcf) compared with $6.95
per Mcf for the same period in 2009. Mariner's average realized oil
price was $72.31 per barrel (Bbl) for first quarter 2010, compared
with $62.81 per Bbl for first quarter 2009. The average realized
NGL price was $48.08 per Bbl for first quarter 2010, compared with
$23.70 per Bbl for the same period in 2009. Average realized prices
reflect settlements during the period under Mariner's hedging
program.
OPERATIONAL UPDATE
Offshore
Mariner drilled five offshore wells in the first quarter 2010,
all of which were successful:
Water
Working Depth
Well Name Operator Interest (Ft) Location
--------- --------- -------- ---------------------
Keathley Canyon
875#1 ST1 (Lucius) Anadarko 17% 7,125 Deepwater Subsalt
Mississippi Canyon
199#1 (Mandy) LLOG 35% 2,460 Conventional Deepwater
Mississippi Canyon
199#2 (Mandy) LLOG 35% 2,465 Conventional Deepwater
South Pass 75 A6ST1 Apache 29% 356 Conventional Shelf
South Pass 75 A11 ST2 Apache 29% 356 Conventional Shelf
Subsequent to the end of first quarter 2010, Mariner drilled
three wells offshore, all of which were successful:
Water
Working Depth
Well Name Operator Interest (Ft) Location
-------- -------- ------- --------------------
South Marsh Island 11#58 Mariner 100% 73 Conventional Shelf
West Cameron 112 A-2 Mariner 55% 43 Conventional Shelf
De Soto Canyon 4#1
(North Dalmatian) Murphy 12.5% 5,800 Conventional
Deepwater
Onshore
In first quarter 2010, Mariner drilled 32 wells in the Permian
Basin, all of which were successful. The company also drilled two
wells on other onshore properties, of which one is successful and
one is under evaluation. As of March 31, 2010, Mariner has six rigs
working on its Permian Basin properties and one on other onshore
properties.
About Mariner Energy, Inc.
Mariner Energy is an independent oil and gas exploration,
development, and production company headquartered in Houston,
Texas, with principal operations in the Permian Basin, Gulf Coast
and Gulf of Mexico. For more information about Mariner, visit the
company's website at www.mariner-energy.com.
MARINER ENERGY, INC.
SELECTED OPERATING DATA
(Unaudited)
Net Production, Realized Pricing and Operating Costs
Three Months Ended
March 31,
2010 2009
------------- -------------
Net production:
Natural gas (Bcf) 20.7 22.0
Oil (MMBbls) 1.3 1.0
Natural gas liquids (MMBbls) 0.6 0.3
Total production (Mboe) 5,352 4,917
Realized prices (net of hedging):
Natural gas ($/Mcf) $ 5.67 $ 6.95
Oil ($/Bbl) 72.31 62.81
Natural gas liquids ($/Bbl) 48.08 23.70
Operating costs per Boe:
Lease operating expense $ 9.89 $ 10.86
Severance and ad valorem taxes 1.29 0.72
Transportation expense 1.06 0.93
General and administrative expense 5.15 3.54
Depreciation, depletion and amortization 18.78 19.28
MARINER ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2010 2009
---------- ----------
Revenues:
Natural gas sales $ 117,512 $ 153,338
Oil sales 95,639 60,925
Natural gas liquids sales 27,660 6,469
Other revenues 2,302 22,604
---------- ----------
Total revenues 243,113 243,336
Cost and Expenses:
Lease operating expense 52,943 53,399
Severance and ad valorem taxes 6,919 3,532
Transportation expense 5,689 4,584
General and administrative expense 27,580 17,411
Depreciation, depletion and amortization 100,503 94,805
Full cost ceiling test impairment - 704,731
Other miscellaneous expense 2,689 8,009
---------- ----------
Total costs and expenses 196,323 886,471
---------- ----------
OPERATING INCOME (LOSS) 46,790 (643,135)
Other Income (Expense):
Interest income 135 85
Interest expense, net of capitalized amounts (20,463) (14,402)
---------- ----------
Income (Loss) before taxes 26,462 (657,452)
(Provision) Benefit for income taxes (11,199) 233,334
---------- ----------
Net income (loss) $ 15,263 $ (424,118)
========== ==========
Earnings per share:
Net income (loss) per share-basic $ 0.15 $ (4.77)
Net income (loss) per share-diluted $ 0.15 $ (4.77)
Weighted average shares outstanding-basic 100,991 88,865
Weighted average shares outstanding-diluted 101,885 88,865
MARINER ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
March 31, December 31,
2010 2009
-------------- --------------
Current Assets
Cash and cash equivalents $ 10,821 $ 8,919
Receivables, net of allowances 150,830 148,725
Insurance receivables 9,781 8,452
Derivative financial instruments 40,011 2,239
Intangible assets 19,571 22,615
Prepaid expenses and other 35,810 11,667
Deferred income tax - 9,704
-------------- --------------
Total current assets 266,824 212,321
Property and Equipment
Proved oil and gas properties, full-cost
method 5,218,933 5,117,273
Unproved properties, not subject to
amortization 337,693 292,237
-------------- --------------
Total oil and gas properties 5,556,626 5,409,510
Other property and equipment 55,976 55,695
Accumulated depreciation, depletion and
amortization:
Proved oil and gas properties (2,975,205) (2,884,411)
Other property and equipment (8,948) (8,235)
-------------- --------------
Total accumulated depreciation,
depletion and amortization (2,984,153) (2,892,646)
-------------- --------------
Total property and equipment, net 2,628,449 2,572,559
Insurance receivables - -
Derivative financial instruments 13,080 902
Deferred income tax - 12,491
Other assets, net of amortization 93,884 68,932
-------------- --------------
TOTAL ASSETS $ 3,002,237 $ 2,867,205
============== ==============
Current Liabilities
Accounts payable $ 7,355 $ 3,579
Accrued liabilities 158,882 137,206
Accrued capital costs 143,845 140,941
Deferred income tax 5,254 -
Abandonment liability 81,743 54,915
Accrued interest 28,992 8,262
Derivative financial instruments 25,351 27,708
-------------- --------------
Total current liabilities 451,422 372,611
Long-Term Liabilities
Abandonment liability 340,687 362,972
Deferred income tax 4,998 -
Derivative financial instruments 5,401 15,017
Long-term debt 1,222,204 1,194,850
Other long-term liabilities 36,280 38,800
-------------- --------------
Total long-term liabilities 1,609,570 1,611,639
Stockholders' Equity
Common stock, $.0001 par value;
180,000,000 shares authorized;
103,122,652 shares issued and
outstanding at March 31, 2010;
180,000,000 shares authorized,
101,806,825 shares issued and
outstanding at December 31, 2009 10 10
Additional paid-in capital 1,262,245 1,257,526
Accumulated other comprehensive
income/(loss) 12,353 (25,955)
Accumulated deficit (333,363) (348,626)
-------------- --------------
Total stockholders' equity 941,245 882,955
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,002,237 $ 2,867,205
============== ==============
MARINER ENERGY, INC.
SELECTED CASH FLOW INFORMATION
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2010 2009
------------ ------------
Operating cash flow (1) $ 131,884 $ 143,000
Changes in operating assets and liabilities (18,762) (17,043)
------------ ------------
Net cash provided by operating activities $ 113,122 $ 125,957
============ ============
Net cash used in investing activities $ (136,048) $ (191,404)
============ ============
Net cash provided by financing activities $ 24,828 $ 69,535
============ ============
Increase in cash and cash equivalents $ 1,902 $ 4,088
============ ============
(1) See below for reconciliation of this non-GAAP measure.
Important Information Concerning Forward-Looking Statements
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 used in estimating reserves
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 Mariner's
latest Annual Report on Form 10-K and other documents filed by
Mariner with the Securities and Exchange Commission (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 Mariner's latest Annual
Report on Form 10-K and other documents filed by Mariner with the
SEC.
"Proved" oil and gas reserves are those that can be estimated
with reasonable certainty to be economically and legally producible
under existing economic conditions, operating methods and
government regulations. "Probable," "possible" and "non-proved"
reserves, reserve "potential" or "upside" or other descriptions of
volumes of reserves potentially recoverable involve estimates that
by their nature are more speculative than estimates of proved
reserves and accordingly are subject to substantially greater risk
of actually being realized by Mariner. The SEC generally does not
permit a company's filings with the SEC to include estimates of oil
or gas resources other than reserves, and any estimated values of
such resources, due to concern that resources other than reserves
are too speculative and may be misleading.
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.
Three Months Ended
March 31,
2010 2009
--------------- ---------------
(In thousands)
(Unaudited)
Net cash provided by operating activities $ 113,122 $ 125,957
Less: Changes in operating assets and
liabilities (18,762) (17,043)
--------------- ---------------
Operating cash flow (non-GAAP) $ 131,884 $ 143,000
=============== ===============
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