DALLAS, March 24 /PRNewswire-FirstCall/ -- National Energy Group, Inc. (BULLETIN BOARD: NEGI) today announced results for the fourth quarter and year ended December 31, 2005.
Results of Operations
On September 12, 2001, as provided in the Company's Joint Plan of Reorganization, the Company contributed all its operating assets and oil and gas properties excluding cash of $4.3 million to NEG Holding LLC in exchange for an initial unconsolidated and non-controlling 50% membership interest (the "LLC Contribution"). Following the LLC Contribution, the Company no longer directly owns any oil and gas properties and will only recognize income from accretion of the preferred investment and fees attributable to the management and operation of NEG Holding LLC's oil and gas properties. The income from accretion of the preferred investment and management fees amounted to $12.3 million and $4.4 million, respectively, for the quarter ended December 31, 2005 and $44.3 million and $14.6 million, respectively, for the year ended December 31, 2005.
For the Three Months Ended December 31, 2005
The Company recognized net income of $10.9 million for the three months ended December 31, 2005 compared with net income of $4.5 million for the comparable 2004 period.
Total revenues increased $3.9 million (30.5%) to $16.7 million for the fourth quarter of 2005 from $12.8 million for the fourth quarter of 2004
The Company had no oil and natural gas production during the fourth quarter of 2004 or 2005 due to the LLC Contribution.
For the year Ended December 31, 2005
The Company recognized net income of $25.3 million for the year ended December 31, 2005 compared with net income of $14.3 million for the comparable 2004 period. The year ended December 31, 2005 includes $4.9 million in deferred income tax expense while the year ended December 31, 2004 includes $6.7 million in deferred income tax expense.
Total revenues increased $13.0 million (28.3%) to $59.0 million for the year ended December 31, 2005 from $46.0 million for the year ended December 31, 2004.
The Company had no oil and natural gas production during the year ended December 31, 2004 or 2005.
The Company
The Company is a management company engaged in the business of managing the exploration, development, production and operations of oil and natural gas properties, primarily located in Texas, Oklahoma, Arkansas and Louisiana (both onshore and in the Gulf of Mexico). The Company manages the oil and natural gas operations of NEG Operating LLC, National Onshore LP and National Offshore LP, all of which are affiliated entities. The Company's principal assets are our unconsolidated non-controlling 50% membership interest in NEG Holding LLC and the management agreements with Operating LLC, National Onshore and National Offshore.
On December 7, 2005, the Company, NEG Oil & Gas, LLC, NEG, Inc. and, for certain purposes, American Real Estate Holdings L.P., entered into a merger agreement, pursuant to which the Company agreed to be merged into NEG, Inc. NEG Oil & Gas, a wholly owned indirect subsidiary of AREP, is the owner of 50.01% of the Company's common stock.
Upon consummation of the merger with NEG, Inc., the current holders of the Company's common stock will receive shares of common stock of NEG, Inc. The transaction, which is conditioned upon the consummation of an initial public offering of common stock by NEG, Inc., may be terminated if the merger has not closed by December 1, 2006.
Following the merger, NEG, Inc. will be renamed National Energy Group, Inc. and will contribute the Company's non-controlling 50% ownership interest in NEG Holding LLC to NEG Oil & Gas LLC.
NEG, Inc. has filed a Registration Statement on Form S-1 with the Securities and Exchange Commission to register its common stock in an initial public offering under the Securities Act of 1933. The number of shares to be offered and the price range of the offering have not been determined. The Registration Statement has not become effective and is subject to review and comment by the SEC. There can be no assurance that NEG, Inc. will complete an initial public offering or that the merger will be completed.
National Energy Group, Inc. (BULLETIN BOARD: NEGI) is a Dallas, Texas based company.
This press release may contain projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any such projections or statements reflect the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and actual results could differ materially from those projected. A discussion of important factors that could cause actual results to differ materially from those projected is included in the Company's periodic reports filed with the Securities and Exchange Commission.
National Energy Group, Inc.
Summary Financial Results
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2004 2005 2004 2005
Results of Operations Data:
Revenues:
Accretion of Investment
in NEG Holding LLC $9,376 $12,305 $34,432 $44,306
Management fees from
affiliates 3,443 4,400 11,563 14,587
Interest income and
other, net 11 26 39 78
Total revenue 12,830 16,731 46,034 58,971
Costs and expenses:
General and administrative 3,505 5,242 11,145 14,905
Interest expense 3,485 3,485 13,940 13,940
Total costs and
expenses 6,990 8,727 25,085 28,845
Income before income taxes 5,840 8,004 20,949 30,126
Income tax (expense) benefit (1,377) (2,890) (6,664) (4,852)
Net income to common
shareholders $4,463 $10,894 $14,285 $25,274
Cash Flow Data:
Cash flow from
operations (A) $(3,900) $(4,961) $(15,521) $(16,369)
Per share data:
Net income per common share,
basic and diluted $.40 $.97 $1.28 $2.26
Cash flow from
operations (A) $(.35) $(.44) $(1.39) $(1.46)
Shares used in per share
computations:
Earnings per share,
basic and diluted 11,191 11,191 11,191 11,191
Cash flow per share,
basic and diluted 11,191 11,191 11,191 11,191
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.
National Energy Group, Inc.
Condensed Balance Sheet
(In thousands)
December 31, December 31,
2004 2005
Assets
Cash, cash equivalents and marketable
securities $2,488 $3,059
Other current assets 2,583 2,000
Investment in NEG Holding LLC 87,800 116,128
Deferred tax asset 19,242 14,540
Total assets $112,113 $135,727
Liabilities and Stockholders' Equity (Deficit):
Current liabilities $2,872 $3,251
Senior notes due to affiliate 148,637 148,637
Deferred gain on senior note redemption 3,737 1,698
Stockholders' deficit (43,133) (17,859)
Total liabilities and stockholders'
equity (deficit) $112,113 $135,727
(A) Cash flow from operations is shown before changes in working capital
accounts.
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.
