DENVER, March 31 /PRNewswire/ -- Venoco, Inc. (Bloomberg ticker: **VEN) today reported financial and operating results for the fourth quarter of 2005 and for the full-year 2005. For the full-year, Venoco generated net income of $16.1 million, net cash provided by operating activities of $39.9 million and EBITDA of $65.3 million (defined as earnings before interest expense, income taxes, and depreciation, depletion and amortization expense) with production of 4.218 million barrels of oil equivalent (MMBOE). Please see the end of this release for a reconciliation of EBITDA, and EBITDA before the impact of unrealized commodity derivative losses to net income.
"We had an excellent year in 2005. Production was up over 2004, realized prices for oil and natural gas were strong and Venoco added key personnel to our management and operations teams," said Tim Marquez, Chairman and Chief Executive Officer of Venoco.
"Our strong exit rates for 2005 provide a solid start to 2006. We are looking forward to exceptional performance and growth opportunities this year," Mr. Marquez continued.
For the fourth quarter, Venoco generated net income of $16.0 million, operating cash flow of $6.1 million and EBITDA of $37.8 million with production of 1.060 MMBOE.
Full-year and fourth quarter net income and EBITDA include the effect of unrealized hedging gains and losses. Excluding the impact of unrealized hedging gains and losses, EBITDA for the full-year was $100.0 million, and EBITDA for the fourth quarter was $28.3 million. For the full-year, unrealized hedging losses totaled $34.7 million, and for the fourth quarter, unrealized hedging gains totaled $9.5 million.
Despite the sale of the Big Mineral Creek field in the first quarter of 2005, production for the full-year 2005 averaged 11,555 BOE per day, up 4% from 2004. Adjusting for the sale of the Big Mineral Creek field, Venoco's year-over-year production growth was 8%.
Venoco ended the year with estimated proved reserves of 47.6 MMBOE. During the year, Venoco added a net 5.020 MMBOE of reserves from all sources, excluding revisions, effectively replacing 119% of its production. Including the effect of revisions, Venoco replaced 87% of its production. The estimated future net cash flows discounted at 10% before income taxes (PV-10) of Venoco's reserves at December 31, 2005 was $894 million, up 37% from $653 million at December 31, 2004. Please see the end of this release for a reconciliation of PV-10 to a standardized measure of future net cash flows.
Venoco dramatically increased its development spending in 2005, focusing capital on long-term opportunities offshore, as well as building on the company's attractive position onshore in the Sacramento Basin in California. During the year, Venoco completed four acquisitions, all focused in the Sacramento Basin. In addition, Venoco drilled 21 wells -- and participated in an additional three -- in the Sacramento basin, and recompleted an additional 42 wells in the basin. Offshore, Venoco drilled four wells during the year, three in the Sockeye field and one in the South Ellwood field. Venoco is in the process of implementing a waterflood in the Sockeye field which should add to production and reserves in the future. Venoco is also actively working to return the Santa Clara field to production, a project that is expected to see first production late in 2006.
Venoco's overall capital expenditures in 2005 included $32.9 million for drilling and rework activities, $28.6 million for facilities, $22.1 million for exploration projects, and $10.4 million for the acquisition of E&P assets. Total costs incurred for our E&P operations, including drilling, completion, acquisition, seismic, leasehold, capitalized costs, and asset retirement obligations were $95.2 million for 2005. Finding and development costs from all sources were $25.81 per BOE including revisions and $18.96 per BOE excluding revisions.
"Finding and development costs were higher than we would have liked in 2005; however, the capital program we are pursuing is focused on long-term value and much of the benefit to reserves is expected to come in future years as the projects proceed," explained Mr. Marquez.
"We took many actions in 2005 to position Venoco for growth, in terms of personnel, capital spending, and financial positioning. We have assets that offer significant opportunity for growth, financial resources that allow us to pursue those opportunities, and the key management, technical, and operations people in place to execute the plan. We are well positioned for another strong performance in 2006," Mr. Marquez concluded.
Conference Call & Webcast
The Company's 2005 earnings and operational review conference call will begin at 1 p.m. Eastern (11 a.m. Mountain; 10 a.m. Pacific) on Monday, April 3, 2006. You may participate by calling 1-(800) 374-2482 and using Conference ID# 7293944. Information on accessing the recorded call will be available on the Investor Information page of the Company's website http://www.venocoinc.com/.
About the Company
Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties in California. It has regional headquarters in Carpinteria, California and corporate headquarters in Denver, Colorado.
Forward-looking Statements
Statements made in this news release, including those relating to future growth and performance, economic returns, development opportunities, cash flow, reserve base, and future results of operation and financial condition are 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. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and Venoco's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, ability to acquire properties that meet Venoco's objectives, the timing and extent of changes in oil and gas prices, changes in underlying demand for oil and gas, the timing and results of drilling activity, the availability of and cost of obtaining drilling equipment and technical personnel, delays in completing production, treatment and transportation facilities, higher than expected production costs and other expenses, pipeline curtailments by third-parties and failure to close pending acquisitions. Further information on risks and uncertainties is available in the Company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set fourth herein.
Oil and Gas Production and Prices
Years Ended
Three-Months Ended December 31,
2005 2004 % Change 2005 2004 % Change
Production Volume
Natural Gas (MMcf) 1,935 1,745 11% 7,588 5,826 30%
Oil (MBbls) 738 795 -7% 2,953 3,101 -5%
MBOE 1,061 1,086 -2% 4,218 4,072 4%
Daily Average
Production Volume
Natural Gas
(Mcf/d) 21,033 18,967 11% 20,789 15,918 31%
Oil (Bbls/d) 8,022 8,641 -7% 8,090 8,472 -5%
BOE/d 11,528 11,803 -2% 11,556 11,125 4%
Oil Price per
Barrel Produced
(in dollars)
Realized price
before hedging
loss $41.39 $30.17 37% $45.66 $34.69 32%
Realized hedging
loss (9.26) (8.19) 13% (7.46) (5.47) 36%
Net realized $32.13 $21.98 46% $38.20 $29.22 31%
Natural Gas Price
per Mcf (in dollars)
Realized price
before hedging
loss $9.67 $6.24 55% $7.45 $5.77 29%
Realized hedging
loss (0.31) -- -- (0.11) (0.11) 0%
Net realized $9.36 $6.24 50% $7.34 $5.66 30%
Average Sale
Price per BOE $46.38 $31.88 45% $39.55 $30.42 30%
2005 and 2004 Financial Information
Venoco, Inc.
Condensed Consolidated Balance Sheets ($ in thousands) (unaudited)
December 31,
2005 2004
ASSETS
Cash and cash equivalents $9,389 $54,715
Accounts receivable 29,841 17,755
Inventories 1,753 1,079
Prepaid expenses and other current assets 4,351 3,431
Notes receivable -- officers -- 1,420
Income tax receivable 4,107 3,906
Deferred income taxes 8,611 209
Commodity derivatives 3,391 5,300
Total current assets 61,443 87,815
Net property, plant and equipment 233,776 198,563
Total other assets 7,339 12,504
$302,558 $298,882
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $31,854 $19,385
Undistributed revenue payable 2,155 4,774
Current maturities of long-term debt 126 127
Commodity derivatives 26,397 1,520
Repurchase of common stock -- 5,316
Total current liabilities 60,532 31,122
LONG-TERM DEBT 178,943 163,542
DEFERRED INCOME TAXES 24,108 32,208
COMMODITY DERIVATIVES 11,992 --
ASSET RETIREMENT OBLIGATIONS 22,649 23,184
Total liabilities 298,224 250,056
MINORITY INTEREST -- 387
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value
(200,000,000 shares authorized;
32,692,500 shares issued and
outstanding at December 31, 2005
and December 31, 2004) 327 327
Additional paid-in capital 20,976 31,085
Retained earnings (accumulated deficit) (3,785) 15,104
Accumulated other comprehensive income (loss) (13,184) 1,923
Total stockholders' equity 4,334 48,439
$302,558 $298,882
Venoco, Inc.
Condensed Consolidated Statement of Operations
($ in thousands) (Unaudited)
Years Ended
Three-Months Ended December 31,
2005 2004 % Change 2005 2004 % Change
REVENUES:
Oil and natural
gas sales $56,424 $40,200 40% $191,092 $139,961 37%
Commodity
derivative losses
(realized) (7,428) (6,513) 14% (22,870) (17,589) 30%
Commodity
derivative
losses
(unrealized) (1) 9,516 596 1497% (34,725) (1,096) 3068%
Other 1,589 1,323 20% 4,456 5,457 -18%
Total revenues 60,101 35,606 69% 137,953 126,733 9%
EXPENSES:
Oil and natural
gas production 16,008 14,269 12% 54,038 49,567 9%
Transportation
expense 916 693 32% 2,596 2,915 -11%
Depletion,
depreciation,
amortization and
impairment 6,553 5,497 19% 21,680 16,489 31%
Accretion of
abandonment
liability 441 389 13% 1,752 1,482 18%
General and
administrative 5,353 2,575 108% 16,007 11,272 42%
Amortization of
deferred loan costs 414 2,817 -85% 1,755 3,050 -42%
Interest, net 3,492 1,193 193% 13,673 2,269 503%
Total expenses 33,177 27,433 21% 111,501 87,044 28%
Income before
income taxes and
minority
interests 26,924 8,173 229% 26,452 39,689 -33%
Total income taxes 10,943 2,861 282% 10,300 16,088 -36%
Net income before
minority interest 15,981 5,312 201% 16,152 23,601 -32%
Minority interest
in Marquez Energy -- 59 -100% 42 95 -56%
Net income 15,981 5,253 204% 16,110 23,506 -31%
Preferred stock
dividends -- (786) -100% -- (7,134) -100%
Excess of carrying
value over
repurchase price
of preferred stock -- 29,904 -100% -- 29,904 -100%
Net income
applicable to
common equity $15,981 $34,371 -54% $16,110 $46,276 -65%
(1) Unrealized commodity derivative losses reflect the change in fair
value of financial instruments not qualifying for hedge accounting
under SFAS No. 133
GAAP Reconciliations
EBITDA is a non-GAAP financial measure which excludes certain items that management believes affect the Company's comparison of operating results. The Company discloses EBITDA because (i) the Company uses EBITDA to evaluate operating trends and performance related results (ii) the Company uses EBITDA to compare its performance to other oil and gas producing companies, and (iii) EBITDA is comparable to certain performance analysis methods of securities analysts. The Company's measures of EBITDA and EBITDA before pre-tax hedging losses is not comparable to the Company's other financial measures. The following reconciles net income to EBITDA and EBITDA before the pre-tax effects of realized and unrealized commodity derivative gains and losses for the three and twelve months ended December 31:
($ in thousands) (Unaudited)
Three-Months Ended Years Ended
December 31, December 31,
2005 2004 % Change 2005 2004 % Change
Net income $15,981 $34,371 $16,110 $46,276
Plus: Interest, net 3,492 1,193 13,673 2,269
Income taxes 10,943 2,861 10,300 16,088
DD&A 6,553 5,497 21,680 16,489
Accretion of
abandonment
liability 441 389 1,752 1,482
Amortization of
deferred loan
costs 414 2,817 1,755 3,050
EBITDA $37,824 $47,128 -20% $65,270 $85,654 -24%
Plus: Pre-tax
unrealized
commodity
derivative
(gains) losses (9,516) (596) 34,725 1,096
EBITDA before
pre-tax
unrealized
commodity
derivative
losses $28,308 $46,532 -39% $99,995 $86,750 15%
The present value of future net cash flows (PV-10 value) excludes income tax effects. Management believes that before-tax cash flow amounts are also useful for evaluative purposes since future income taxes, that are affected by a company's unique tax position and strategies, can make after-tax amounts less comparable.
December 31,
($ in thousands) (Unaudited) 2005 2004
Standardized measure of future net cash flows $565,385 $404,052
Add: Present value of future income tax
discounted at 10% 328,445 249,026
PV-10 value $893,830 $653,078
This release can be found at http://www.venocoinc.com/
