EXHIBIT 99.1
For Information
---------------
Mark A. Hellerstein
Robert T. Hanley
303-861-8140
ST. MARY REPORTS EARNINGS FOR FIRST QUARTER 2004 AND PROVIDES
OPERATIONS UPDATE
DENVER, April 29, 2004 - St. Mary Land & Exploration Company (NYSE: SM)
today announced its earnings for the first quarter 2004 of $21.4 million or
$0.66 per diluted share. First quarter 2003 earnings, before the cumulative
effect of change in accounting principal, were $27.4 million or $0.81 per
diluted share, and after the effect of the change in accounting principal were
$32.8 million or $0.97 per diluted share. Revenues for the first quarter of 2004
were $97.4 million compared to $101.2 million for the first quarter of 2003.
First quarter Discretionary Cash Flow(1) decreased from $56.9 million in the
first quarter of 2003 to $56.2 million in the first quarter of 2004.
Daily oil and gas production during the first quarter 2004 averaged 202.8
million cubic feet of gas equivalent (MMCFE), up from 199.5 MMCFE in the
comparable 2003 period. Average prices realized during the quarter were $5.20
per MCF and $28.20 per barrel, 7.6% and 1.3% lower, respectively, than the
realized prices in the first quarter of 2003.
The Company also announced that it has increased its 2004 capital expenditures
budget to $288 million from $273 million. The change is due to an increase in
its planned drilling activity in the Mid-Continent region, primarily the
Anadarko Basin.
Mark Hellerstein, Chairman, President and CEO, commented, "For the first time,
St. Mary's market capitalization has reached $1 billion. This was achieved by
growing net asset value per share which has translated into an 18% compounded
growth in shareholder return since our IPO in 1992. Our challenge remains the
same. We must replace 200% of our production and do it economically. This is
only possible if we combine sound and steady performance with a periodic major
success. We have a quality inventory of prospects and we have grown our
technical expertise. The current high price environment has made our current
asset base appreciate considerably, drilling economics on existing prospects are
very good and our financial position is outstanding. We are optimistic about St.
Mary's future."
The Company's forecasts for the second quarter and the full year 2004 are shown
below. The forecasts presume approval of the restricted stock plan at the Annual
Stockholders meeting on May 26, 2004. Grants under the restricted stock plan
will be performance based and are intended to replace the current stock option
program. Pending approval, the initial grant will be made in June 2004.
Compensation expense will be recorded based on the vesting of the grants.
Restricted stock grants will begin vesting in the second quarter of 2004. The
initial grant accounts for the increase in General and Administrative expense in
the second quarter.
2nd Quarter Year
----------- ----
Oil and gas production 18.0 - 19.5 BCFE 78.0 - 82.0 BCFE
Lease operating expenses,
including production taxes and
transportation $1.20 - $1.25/MCFE $1.20 - $1.30/MCFE
General and administrative exp. $0.37 - $0.42/MCFE $0.30 - $0.35/MCFE
Depreciation, depletion & amort. $1.10 - $1.15/MCFE $1.15 - $1.25/MCFE
OPERATIONAL UPDATE OF 2004 EXPLORATION AND DEVELOPMENT PROGRAM
Through March 31, St. Mary has participated in a total of 73 new wells, which
include 30 successful completions and one dry hole (97% success rate). At the
end of the first quarter, 24 wells were being completed and 18 were drilling.
During the first quarter 19 wells were recompleted with a 74% success rate.
MID-CONTINENT REGION
In the Mid-Continent region there were 48 active wells during the first quarter
with 18 successful completions and 30 wells drilling or being completed at the
end of the quarter. Completed wells during the first quarter include the Douglas
6-10 in the Mocane Laverne field (SM 50% w.i.) completed at 4,200 MCFED, the
Hall 1-2 in the Tunny field (SM 98% w.i.) completed at 3,900 MCFED, the Paggi
Gas Unit 1 #2 in the Westbury field (SM 40% w.i.) completed at 4,600 MCFED and
the Robert 5-36 in NE Mayfield (SM 31% w.i.) completed at an initial rate of
3,100 MCFED. At the end of the first quarter eight wells were completing and
seven wells were drilling in NE Mayfield.
ROCKIES REGION
During the first quarter there were eight active new wells in the Rockies
region. Four successful wells were completed, three wells were being completed
and one well was drilling at March 31. The Larson 11-26 in the Williston Basin
(SM 100% w.i.) was completed in the Red River formation with initial rates of
310 BOPD and 300 MCFD. Subsequent to the end of the first quarter, the Asbeck
15-35 in the Ridgelawn field in the Williston Basin (SM 100% w.i.) was completed
in the Red River formation and is currently flowing at 590 BOPD and 670 MCFD.
ARKLATEX REGION
2
Seven wells in the ArkLaTex region were completed as producing wells during the
first quarter with no dry holes. Two wells are currently being completed and two
are drilling. Of the productive completions, two wells were drilled in the
horizontal James Lime Huxley field. The USA No 7-H (SM 81% w.i.) was completed
at a rate of 1,900 MCFED and the USA No 8-H (SM 81% w.i.) was completed at a
rate of 1,000 MCFED. The DeSoto Parish School Board well in the horizontal James
Lime Spider field (SM 100% w.i.) was completed at a rate of 2,900 MCFED.
GULF COAST REGION
The David #1 in the Judge Digby field has reached total depth at 23,300 feet and
has logged 15 feet of pay in the C sand (SM 6.5% w.i.) and 136 feet in the B
sand (SM 11.5% w.i.). Completion efforts are currently in progress.
As previously announced, the St. Mary first quarter earnings teleconference call
is scheduled for April 30 at 8:00 am (MDT). The call participation number is
888-424-5231. A replay of the conference call will be available two hours after
the completion of the call, 24 hours per day through May 10 at 800-642-1687,
conference number 6683513. International participants can dial 706-634-6088 to
take part in the conference call, and can access a replay of the call at
706-645-9291, conference number 6683513. In addition the call will be broadcast
live at St. Mary's website at www.stmaryland.com and this press release and
financial highlights attachment will be available before the call at
www.stmaryland.com under "News--Press Releases." An audio recording of the
conference call will be available at that site through May 31.
This release contains forward looking statements within the meaning of
securities laws, including forecasts and projections for future periods. The
words "will," "believe," "anticipate," "intend," "estimate," "forecast" and
"expect" and similar expressions are intended to identify forward looking
statements. These statements involve known and unknown risks, which may cause
St. Mary's actual results to differ materially from results expressed or implied
by the forward looking statements. These risks include such factors as the
volatility and level of oil and natural gas prices, production rates and reserve
replacement, the imprecise nature of oil and gas reserve estimates, drilling and
operating service availability, uncertainties in cash flow, the financial
strength of hedge contract counterparties, the availability of attractive
exploration and development and property acquisition opportunities and any
necessary financing, expected acquisition benefits, competition, litigation,
environmental matters, the potential impact of government regulations, and other
such matters discussed in the "Risk Factors" section of St. Mary's 2003 Annual
Report on Form 10-K filed with the SEC. Although St. Mary may from time to time
voluntarily update its prior forward looking statements, it disclaims any
commitment to do so except as required by securities laws.
(1)Discretionary cash flow is computed as net income plus depreciation,
depletion, amortization, impairments, deferred taxes, exploration
expense and non cash mark-to-market adjustments related to compensation
plans, less the unrealized change in accounting principle and
derivative gain. See the attached financial highlights for a
3
reconciliation of discretionary cash flow to net cash provided by
operating activities, a presentation of other cash flow information,
and a statement indicating why management believes the presentation of
the non-GAAP measure of discretionary cash flow provides useful
information to investors.
PR-04-08
###
4
ST. MARY LAND & EXPLORATION COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2004
(Unaudited)
PRODUCTION DATA Three Months Ended
- --------------- March 31, Percent
--------------------------
2004 2003 Change
--------------------------- -------
Average realized price:
Gas (per Mcf) $ 5.20 $ 5.63 -8%
Oil (per Bbl) $ 28.20 $ 28.58 -1%
Production:
Gas (MMcf) 11,613 11,704 -1%
Oil (MBbls) 1,141 1,041 10%
MMCFE (6:1) 18,456 17,951 3%
Daily production:
Gas (Mcf per day) 127,614 130,043 -2%
Oil (Bbls per day) 12,533 11,568 8%
MCFE per day (6:1) 202,812 199,453 2%
Margin analysis per MCFE:
Net realized price $ 5.02 $ 5.33 -6%
Oil and gas production costs 1.28 1.18 8%
General and administrative costs 0.36 0.34 6%
---------------------------
Operating margin $ 3.38 $ 3.81 -11%
---------------------------
Depletion, depreciation & amortization $ 1.12 $ 1.05 7%
INCOME STATEMENT
- ----------------
(In thousands, except per share amounts) Three Months Ended
March 31,
---------------------------
2004 2003
Revenues: ---------------------------
Oil and gas production $ 92,607 $ 95,688
Gas marketing revenue 3,573 3,775
Gain on sale of proved properties 195 36
Derivative gain 852 115
Other 187 1,590
---------------------------
97,414 101,204
---------------------------
Operating expenses:
Oil and gas production costs 23,543 21,130
Depletion, depreciation, amortization
and abandonment liability accretion 20,626 18,885
Exploration 5,704 4,150
Impairment and abandonment 922 919
General and administrative 6,664 6,146
Gas marketing expenses 3,411 3,359
Minority interest and other 665 196
---------------------------
61,535 54,785
---------------------------
Income from operations 35,879 46,419
Interest income 144 230
Interest expense (1,488) (2,216
---------------------------
Income before income tax expense 34,535 44,433
Income tax expense - current 5,901 11,318
Income tax expense - deferred 7,185 5,753
---------------------------
Income from continuing operations 21,449 27,362
Cumulative effect from change
in accounting principle - 5,435
---------------------------
Net income $ 21,449 $ 32,797
===========================
Basic weighted avg shares outstanding 29,775 30,354
Diluted weighted avg shares outstanding 34,191 34,861
Basic earnings per common share:
Income from continuing operations $ 0.72 $ 0.90
Cumulative effect of accounting change - 0.18
---------------------------
Basic net income per common share $ 0.72 $ 1.08
===========================
Diluted earnings per common share:
Income from continuing operations $ 0.66 $ 0.81
Cumulative effect of accounting change - 0.16
---------------------------
Diluted net income per common share $ 0.66 $ 0.97
===========================
BALANCE SHEET
- -------------
(In thousands) Mar 31, Dec 31,
2004 2003
----------------------------
Working capital $ 21,143 $ 3,101
Long-term debt $ 130,720 $ 110,696
Stockholders' equity $ 396,647 $ 390,653
Shares outstanding - permanent equity 28,504 28,242
Shares outstanding - temporary equity - 3,381
Note receivable from Flying J (contra-equity) $ - $ 71,594
PROVEN RESERVES
- --------------- December 31,
---------------------------
2003 2002
---------------------------
Oil (MBbls) 47,787 36,119
Gas (MMcf) 307,024 274,172
---------- ---------
MMCFE (6:1) 593,744 490,887
========== =========
CASH FLOW
- ---------
(In thousands)
Reconciliation of Discretionary Cash Flow to Net Cash
Provided by Operating Activities:
Three Months Ended
March 31,
----------------------------
2004 2003
----------------------------
Discretionary Cash Flow (1) $ 56,192 $ 56,954
Gain on property sales (195) (36)
Exploration exp, excluding exploratory dry hole exp (5,660) (3,689)
Minority interest & other 1,161 204
Changes in working capital (11,580) (11,179)
---------- ----------
Net Cash Provided by Operating Activities $ 39,918 $ 42,254
========== ==========
Net Cash Used in Investing Activities $ (41,472) $ (94,053)
========== ==========
Net Cash Provided by Financing Activities $ 4,533 $ 57,936
========== ==========
(1)Discretionary cash flow is computed as net income plus depreciation,
depletion, amortization, impairments, deferred taxes, exploration expense,
and non-cash mark-to-market adjustments related to compensation plans less
the change in accounting principle and unrealized derivative gain. The
non-GAAP measure of discretionary cash flow is presented since management
believes that it provides useful additional information to investors for
analysis of St. Mary's ability to internally generate funds for exploration,
development and acquisitions. In addition, discretionary cash flow is widely
used by professional research analysts and others in the valuation,
comparison and investment recommendations of companies in the oil and gas
exploration and production industry, and many investors use the published
research of industry research analysts in making investment decisions.
Discretionary cash flow should not be considered in isolation or as a
substitute for net income, income from operations, net cash provided by
operating activities or other income, profitability, cash flow or liquidity
measures prepared under GAAP. Since discretionary cash flow excludes some,
but not all, items that affect net income and net cash provided by operating
activities and may vary among companies, the discretionary cash flow amounts
presented may not be comparable to similarly titled measures of other
companies.