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Harken Reports Substantially Improved 2003 Results; Operating Margin Increased
Approximately 50%
HOUSTON, March 26 /PRNewswire-FirstCall/ -- Harken Energy Corporation
("Harken") today reported financial results for the year ended December 31,
2003.In 2003, Harken primarily focused resources and attention on
restructuring the balance sheet and generating increased operating margin. As
summarized in Table 1, Harken ended 2003 with positive Working Capital of
approximately $7.9 million, approximately $12.2 million in Cash, and outstanding
debt of $7.4 million, reduced from over $56 million of outstanding debt from the
prior year.
TABLE 1: Key Restructuring Related Results
Year Ended
December 31,
(Thousands of dollars) 2002 2003
Current ratio (A) 0.24 to 1 1.88 to 1
Working capital / (deficit) (B) $ (33,523) $ 7,886
Cash $ 6,377 $ 12,173
Total debt $ 56,667 $ 7,360
Total cash less debt $ (50,290) $ 4,813
Stockholders' equity $ 5,131 $ 52,761
Total debt to equity 11 to 1 0.14 to 1
(A) Current ratio is calculated as current assets divided by current
liabilities
(B) Working capital in the difference between current assets and current
liabilities
As set forth in Table 2, Harken also reported substantially improved operating
results. Harken's Net Loss, including the negative effect of change in
accounting principle of approximately $800,000, improved to a Net Loss of
approximately $1.0 million for 2003 as compared with a Net Loss of approximately
$9.8 million for 2002. In addition, Net Income Attributed to Common Stock in
2003 improved to approximately $2.1 million versus 2002's Net Loss Attributable
to Common Stock of $13.9 million.
Additionally, in 2003 Harken generated almost $9 million in Operating Margin,
(non-GAAP; see reconciliation below) an increase of approximately 50% from 2002
results.
TABLE 2: Operating Results
Year Ended
December 31,
2002 2003
Total Revenues $ 25,711,000 $ 27,445,000
Oil and Gas Operating Expenses 9,331,000 9,469,000
General and Administrative Expenses 10,298,000 9,210,000
Operating Margin (Non-GAAP; see
Reconciliation below) 6,082,000 8,766,000
Depreciation and Amortization 11,510,000 8,941,000
Full Cost Valuation Allowance 521,000 ---
Provision for Asset Impairment 400,000 ---
Litigation and contingent liability
settlements, net 1,288,000 1,125,000
Interest Expense and Other, net 5,723,000 4,504,000
Gains from Repurchases / Exchanges of
Convertible Notes 3,528,000 5,525,000
Income Tax (Expense) / Benefit (237,000) 184,000
Minority Interest of Subsidiary 262,000 (89,000)
Loss Before Cumulative Effect of Change in
Accounting Principle (9,807,000) (184,000)
Cumulative Effect of Change in Accounting
Principle --- (813,000)
Net Loss $ (9,807,000) $ (997,000)
Accrual of Dividends Related to
Preferred Stock (4,110,000) (3,676,000)
Payment of Preferred Stock Dividend
Liability In Common Stock --- 6,805,000
Net Income (Loss) Attributed to
Common Stock $(13,917,000) $ 2,132,000
Basic Net Income (Loss) per Common Share (0.64) 0.02
Basic Weighted Average Shares Outstanding 21,742,163 112,694,654
Diluted Net Income (Loss) per Common Share (0.64) (0.03)
Diluted Weighted Average Share Outstanding 21,742,163 112,790,327
Harken's fourth quarter results for 2003 were impacted by a $1.1 million accrual
and expense recorded in December 2003 related to the settlement of the Rice
lawsuit in the first quarter of 2004. In addition, Harken incurred increased
general and administrative costs of $900,000 in December 2003 related to
severance costs for employees at Harken's former Panhandle office along with
year-end 2003 compensation. Depreciation was negatively affected by
approximately $300,000 as a result of the sale of the Panhandle oil and gas
properties in December 2003 due to the divestiture of the associated reserves.
North American gross oil and gas revenues during 2003 were derived from
operations in Texas and Louisiana. In December 2003 Harken sold the majority of
its oil and gas properties located in the Panhandle region of Texas for a gross
sales price of approximately $7 million in cash, subject to certain
adjustments.
In January 2003, a total of 946,765 shares of Harken common stock were paid to
holders of Series G1 and G2 Preferred stock in payment of a dividend liability
of approximately $7.4 million accrued as of December 31, 2002. The January 2003
payment of Harken's Series G1 and Series G2 Preferred stock dividends with
shares of Harken common stock resulted in a $6.8 million increase, net of income
taxes paid on behalf of the preferred holders, to Net Income Attributed to
Common Stock for the Payment of Preferred Stock Dividend Liability in Common
Shares recognized in the Consolidated Statement of Operations for the year ended
December 31, 2003. For further discussion of the accounting treatment for
payment of Series G1 and G2 Preferred stock dividends, see Harken's Form 10-K
dated March 25, 2004.
"2003 was an excellent year for Harken," stated the Chairman, Alan G. Quasha.
"We succeeded in our objectives of restructuring the balance sheet, which had
been debt-laden, and strengthened our capital structure which positions us now
for significant growth. We decreased debt by over $50 million and ended the
year with cash less debt of approximately $5 million. At the same time, we
increased our stockholders' equity from $5 million in 2002 to approximately $53
million in 2003, and improved our net working capital by $41 million. Almost as
importantly, the restructuring was accomplished without penalizing our operating
results or our core asset base."
Mr. Quasha continued, "We were fortunate to have been helped by higher oil and
gas prices during much of 2003. As we look forward, we expect revenues,
earnings and cash flow to improve in 2004. We are enthusiastic about both our
drilling prospects and are encouraged by existing oil and gas prices and thus,
we have announced an $18 million drilling budget for this year. We have begun
this effort and we expect to finance it out of cash on hand and cash flow from
operations."
More information is available in Harken Energy Corporation's Form 10-K for the
period ended December 31, 2003 which is available on the Company's website at
http://www.harkenenergy.com/ .
Certain statements in this news release including phrases such as "we expect,"
"we anticipate" and "we hope" relating to Harken's revenue, profit, dividends,
cash flow and earnings expectations; statements regarding future expectations
and plans for oil and gas exploration, development and production; and
statements regarding commodity pricing expectations may be regarded as "forward
looking statements" within the meaning of the Securities Litigation Reform Act.
These forward-looking statements reflect the current view of management with
regard to its plans and expectations and other future events. Management's
current view and plans, however, are subject to numerous know and unknown risks,
uncertainties and other factors that may cause the actual results, performance,
timing or achievements of Harken to be materially different from any results,
performance, timing or achievements expressed or implied by such forward-looking
statements. The various uncertainties, variables, and other risks include those
discussed in detail in the Company's SEC filings, including the Annual Report on
Form 10-K dated March 25, 2004. Although Harken believes that the expectations
reflected in the forward- looking statements of this announcement are
reasonable, it can give no assurance that such expectations will prove to be
correct or that unforeseen developments will not occur. Harken undertakes no
duty to update or revise any forward-looking statements. Actual results may
vary materially.
NON-GAAP FINANCIAL MEASURE
The followingtable reconciles Operating Margin:
Reconciliation of Operating Margin to Net Loss
Year Ended
December 31,
2002 2003
Net Loss (GAAP) $ (9,807,000) $ (997,000)
Cumulative Effect of Change in
Accounting Principle --- 813,000
Minority Interest of a Subsidiary (262,000) 89,000
Income Tax Expense / Benefit 237,000 (184,000)
Gains from Repurchases / Exchanges of
Convertible Notes (3,528,000) (5,525,000)
Interest Expense and Other, Net 5,723,000 4,504,000
Litigation and Contingent Liability
Settlements, Net 1,288,000 1,125,000
Provision for Asset Impairment 400,000 ---
Full Cost Valuation Allowance 521,000 ---
Depreciation and Amortization 11,510,000 8,941,000
Operating Margin $ 6,082,000 $ 8,766,000
Management believes the presentation of this non-GAAP financial measure, in
connection with the results for the year ended December 31, 2003, provides
useful information to investors regarding our results of operations. This
non-GAAP financial measure allows investors to better evaluate on-going business
performance and the factors that influenced performance during the period under
the report. This non-GAAP financial measure should be considered in addition
to, and not as a substitute for, financial measures prepared in accordancewith
GAAP.
DATASOURCE: Harken Energy Corporation
CONTACT: Investor Relations of Harken Energy Corporation,
+1-281-504-4000, or
Web site: http://www.harkenenergy.com/