For the three-month period ended September 30, 2010, Mariner
Energy, Inc. (NYSE: ME) reported net income of $1.8 million, which
equates to basic and diluted earnings per share of $0.02. This
compares with net income of $4.2 million, or $0.04 per basic and
diluted share, for the same three-month period in the prior year.
Net production for third quarter 2010 was 4,724 Mboe (thousand
barrels of oil equivalent), compared with 5,553 Mboe for third
quarter 2009. Total natural gas net production for third quarter
2010 was 17.5 billion cubic feet (Bcf), compared with 24.1 Bcf for
the same period in the prior year. Total net oil production for
third quarter 2010 was 1.3 million barrels (MMBbls), compared with
1.1 MMBbls for the same period in 2009. Natural gas liquids (NGL)
net production for third quarter 2010 was 0.5 MMBbls, compared with
0.4 MMBbls for third quarter 2009.
For third quarter 2010, Mariner's average realized natural gas
price was $5.31 per thousand cubic feet (Mcf) compared with $5.39
per Mcf for the same period in 2009. Mariner's average realized oil
price was $71.97 per barrel (Bbl) for third quarter 2010, compared
with $73.15 per Bbl for third quarter 2009. The average realized
NGL price was $41.93 per Bbl for third quarter 2010, compared with
$36.85 per Bbl for the same period in 2009. Average realized prices
reflect settlements during the period under Mariner's hedging
program.
OPERATIONAL UPDATE
Offshore
Mariner drilled three offshore wells in the third quarter 2010,
all of which were successful:
Working Water Depth
Well Name Operator Interest (FT) Location
--------- --------- ---------- ---------- ------------------
West Cameron 110 #19 Mariner 100% 43 Conventional Shelf
East Cameron 24 #2 Apex 31% 40 Conventional Shelf
Eugene Island 330 #B-9 Apache 2% 248 Conventional Shelf
As of September 30, 2010 two offshore wells were drilling.
Onshore
In third quarter 2010, Mariner drilled 23 development wells and
13 extension wells in the Permian Basin, all of which were
successful. The company also drilled two wells on other onshore
properties, both of which were successful. As of September 30,
2010, Mariner has seven rigs working on its Permian Basin
properties and one on other onshore properties.
About Mariner Energy, Inc.
Mariner Energy is an independent oil and gas exploration,
development, and production company headquartered in Houston,
Texas, with principal operations in the Permian Basin, Gulf Coast
and Gulf of Mexico. For more information about Mariner, visit the
company's website at www.mariner-energy.com.
MARINER ENERGY, INC.
SELECTED OPERATING DATA
(Unaudited)
Net Production, Realized Pricing and Operating Costs
Three Months Ended
September 30,
2010 2009
------------ ------------
Net production:
Natural gas (Bcf) 17.5 24.1
Oil (MMBbls) 1.3 1.1
Natural gas liquids (MMBbls) 0.5 0.4
Total production (Mboe) 4,724 5,553
Realized prices (net of hedging):
Natural gas ($/Mcf) $ 5.31 $ 5.39
Oil ($/Bbl) 71.97 73.15
Natural gas liquids ($/Bbl) 41.93 36.85
Operating costs per Boe:
Lease operating expense $ 12.58 $ 11.76
Severance and ad valorem taxes 1.42 0.79
Transportation expense 0.95 0.80
General and administrative expense 3.89 3.41
Depreciation, depletion and amortization 19.82 19.13
MARINER ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,
2010 2009
----------- -----------
Revenues:
Natural gas sales $ 92,655 $ 130,046
Oil sales 91,434 80,908
Natural gas liquids sales 22,808 15,736
Other revenues 3,780 656
----------- -----------
Total revenues 210,677 227,346
Cost and Expenses:
Lease operating expense 59,436 65,325
Severance and ad valorem taxes 6,691 4,406
Transportation expense 4,484 4,468
General and administrative expense 18,379 18,922
Depreciation, depletion and amortization 93,620 106,218
Other miscellaneous expense 2,045 1,193
----------- -----------
Total costs and expenses 184,655 200,532
----------- -----------
OPERATING INCOME 26,022 26,814
Other Income (Expense):
Interest income 4 56
Interest expense, net of capitalized amounts (20,769) (19,702)
----------- -----------
Income before taxes 5,257 7,168
Provision for income taxes (3,436) (2,946)
----------- -----------
Net income $ 1,821 $ 4,222
=========== ===========
Earnings per share:
Net income per share - basic $ 0.02 $ 0.04
Net income per share - diluted $ 0.02 $ 0.04
Weighted average shares outstanding - basic 101,521,119 100,752,532
Weighted average shares outstanding - diluted 102,775,156 101,084,502
MARINER ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30, December 31,
2010 2009
------------ -----------
Current Assets
Cash and cash equivalents $ 9,846 $ 8,919
Receivables, net of allowances 128,719 148,725
Insurance receivables 7,681 8,452
Derivative financial instruments 42,809 2,239
Intangible assets 7,268 22,615
Prepaid expenses and other 28,384 11,667
Deferred income tax - 9,704
------------ -----------
Total current assets 224,707 212,321
Property and Equipment
Proved oil and gas properties, full-cost method 5,472,404 5,117,273
Unproved properties, not subject to amortization 453,164 292,237
------------ -----------
Total oil and gas properties 5,925,568 5,409,510
Other property and equipment 56,268 55,695
Accumulated depreciation, depletion and
amortization:
Proved oil and gas properties (3,142,994) (2,884,411)
Other property and equipment (11,116) (8,235)
------------ -----------
Total accumulated depreciation, depletion
and amortization (3,154,110) (2,892,646)
------------ -----------
Total property and equipment, net 2,827,726 2,572,559
Derivative financial instruments 33,366 902
Deferred income tax - 12,491
Other assets, net of amortization 75,858 68,932
------------ -----------
TOTAL ASSETS $ 3,161,657 $ 2,867,205
=========== ===========
Current Liabilities
Accounts payable $ 6,320 $ 3,579
Accrued liabilities 127,460 137,206
Accrued capital costs 94,200 140,941
Deferred income tax 12,649 -
Abandonment liability 80,249 54,915
Accrued interest 28,533 8,262
Derivative financial instruments 7,329 27,708
------------ -----------
Total current liabilities 356,740 372,611
Long-Term Liabilities
Abandonment liability 301,569 362,972
Deferred income tax 18,052 -
Derivative financial instruments 3,613 15,017
Long-term debt 1,463,930 1,194,850
Other long-term liabilities 35,431 38,800
------------ -----------
Total long-term liabilities 1,822,595 1,611,639
Stockholders' Equity
Preferred stock, $.0001 par value; 20,000,000
shares authorized; no shares issued and
outstanding at September 30, 2010 and
December 31, 2009 - -
Common stock, $.0001 par value; 180,000,000
shares authorized; 103,227,031 shares issued
and outstanding at September 30, 2010;
180,000,000 shares authorized, 101,806,825
shares issued and outstanding at December 31,
2009 10 10
Additional paid-in capital 1,272,043 1,257,526
Accumulated other comprehensive income/(loss) 40,107 (25,955)
Accumulated deficit (329,838) (348,626)
------------ -----------
Total stockholders' equity 982,322 882,955
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,161,657 $ 2,867,205
=========== ===========
MARINER ENERGY, INC.
SELECTED CASH FLOW INFORMATION
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2010 2009
----------- -----------
Operating cash flow (1) $ 342,172 $ 403,583
Changes in operating assets and liabilities (40,050) 134,526
----------- -----------
Net cash provided by operating activities $ 302,122 $ 538,109
=========== ===========
Net cash used in investing activities $ (562,089) $ (471,121)
=========== ===========
Net cash provided by (used in) financing
activities $ 260,894 $ (64,180)
=========== ===========
Increase in cash and cash equivalents $ 927 $ 2,808
=========== ===========
(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.
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,
2010 2009
----------- ------------
(In thousands)
(Unaudited)
Net cash provided by operating activities $ 302,122 $ 538,109
Less: Changes in operating assets and liabilities (40,050) 134,526
----------- ------------
Operating cash flow (non-GAAP) $ 342,172 $ 403,583
=========== ============
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