Prima Energy Corporation Reports First Quarter 2004 Results and Operations Update

Prima Energy Corporation Reports First Quarter 2004 Results and
Operations Update 


DENVER, May 6  /PRNewswire-FirstCall/ -- Prima Energy Corporation ("Prima") , a
Denver based independent oil and gas company, today announced its operating
results for the quarter ended March 31, 2004 and provided an update of its
commodity hedging positions and operating activities.

First Quarter Operating Results

The Company reported net income for the first quarter of 2004 of $6,842,000, or
$0.52 per diluted share.  This compares to net income in the first quarter of
2003 of $5,382,000, or $0.41 per diluted share.  Cash flow from operations
before changes in operating assets and liabilities increased to $14,568,000 in
the first three months of 2004, from $9,196,000 in the first quarter of 2003. 
Cash flow from operations before changes in operating assets and liabilities is
a non-GAAP financial measure derived from net cash provided by operating
activities.  See "Reconciliation of Non-GAAP Financial Measure" in table below.

First quarter 2003 net income included an adjustment for the cumulative effect
of a change in accounting principle in conjunction with adoption of Statement
of Financial Accounting Standards No. 143, relating to accounting for asset
retirement obligations.  Adoption of SFAS 143 resulted in a non-cash, after-tax
credit of $403,000 or $0.03 per diluted share.  Excluding this adjustment,
Prima's income in the first quarter last year would have been $4,979,000 or
$0.38 per diluted share.

Revenues for the first quarter of 2004 totaled $20,644,000, compared to
$15,610,000 for the first three months of 2003.  Oil and gas sales in the first
quarter of 2004 rose by 45%, to $17,660,000, from $12,212,000 reported for the
same period in 2003.  This increase was attributable to the combined effects of
a 25% year-over-year improvement in production volumes and a 16% increase in
average realized prices per equivalent unit of oil and gas production.  The
overall improvement in revenues also reflected a $546,000, or 28%, increase in
revenues from oilfield service operations and a $1,036,000 reduction in gains
on commodity derivatives not accounted for as hedges.

Prima's total production in the first quarter of 2004 of 4,191,000 Mcfe, or
approximately 46,000 Mcfe per day, compares to 3,353,000 Mcfe produced in the
same quarter last year.  The Company's product mix was 83% natural gas and 17%
oil in both periods, with volumes of gas and oil both increasing by 25%
year-over-year.  Gas and oil production in the recent quarter of 3,493,000 Mcf
and 116,000 barrels, respectively, compare to 2,795,000 Mcf and 93,000 barrels
in the same period last year.  The increased gas volumes were primarily due to
Powder River Basin CBM operations, which generated net production of 1,781,000
Mcf in the first quarter of 2004 and 1,144,000 Mcf in the first quarter of
2003.  CBM production in both periods was primarily attributable to the
Porcupine-Tuit property, which began producing in the third quarter of 2002 and
was inclining through late 2003 as wells de-watered and additional wells were
drilled and hooked-up.  Higher oil production was attributable to increased
drilling and re-frac activity in the D-J Basin, which focused on areas in the
Wattenberg Field characterized by relatively low gas-oil ratios.

Average gas price realizations in the first quarter of 2004 were $3.96 per Mcf,
compared to $3.22 in the first quarter of 2003, for an increase of $0.74, or
23%.  Average oil price realizations were $32.94 per barrel in the recent
quarter and $34.60 in the same period last year, for a decrease of $1.66 per
barrel, or 5%. On an energy equivalent basis, the average price received in the
latest quarter was $4.21 per Mcfe, or 16% above the $3.64 per Mcfe realized in
the prior year period.  In the recent quarter, hedging effects reduced realized
prices by $0.26 per Mcf of gas, $2.25 per barrel of oil and $0.28 per Mcfe;
last year, hedging effects reduced average gas prices by $0.24 per Mcf,
increased average oil prices by $0.44 per barrel and lowered the average price
realized per Mcfe by $0.19. Approximately 78% of Prima's total oil and gas
revenues in 2004 were derived from natural gas sales, compared to 74% in the
first quarter of 2003.

Depletion expense in the first quarter of 2004 was $1.06 per Mcfe, compared to
$0.93 per Mcfe in the first quarter last year.  Lease operating expenses were
$0.24 per Mcfe produced in the 2004 quarter compared to $0.28 per Mcfe in the
2003 quarter.  Production taxes per Mcfe increased from $0.37 in the first
quarter last year to $0.44 in the recent quarter, due largely to higher product
prices in 2004 and an increased portion of sales from properties in Wyoming,
where severance tax rates are higher than in Colorado.  General and
administrative expenses increased by $146,000 year-over year, due primarily to
staff expansions.

Reported oilfield service revenues and expenses for the quarter ended March 31,
2004 were $2,485,000 and $1,719,000, respectively, for a gross margin of
$766,000.  In the same quarter last year, reported oilfield service revenues
and expenses totaled $1,939,000 and $1,739,000, respectively, for a gross
margin of $200,000.  Revenues and costs related to services provided on
Prima-operated properties are eliminated in consolidation, and represented
approximately 24% of the service companies' revenues in the 2004-period
compared to 17% in the same quarter last year.  The 28% year-over-year increase
in reported revenues, despite the increased portion of work conducted on behalf
of Prima, reflected higher utilization and billing rates in response to greater
demand.  The 1% reduction in costs reflected the increased amount eliminated in
consolidation, due to the greater portion of work performed for Prima, and
changes in the mix of activities conducted for Prima and other operators.

Commodity Price Derivatives

For the first five months of 2004, the CIG monthly index has averaged $4.74 per
MMBtu, compared to $3.68 in the same period of 2003.  As of the market close on
May 5, 2004, quoted futures prices for the CIG index for the months of June
through December 2004 averaged $5.61 per MMBtu, compared to $4.29 per MMBtu
realized during the same months in 2003.  Prima's open commodity derivatives
positions cover a total of 5,050,000 MMBtu of natural gas and 160,000 barrels
of crude oil, as shown below:

                                     Market    Total Volumes In   Contract
   Product and Time Period            Index      MMBtu or Bbls      Price
   Natural Gas
    June -- December 2004          NW Rockies     4,700,000        $4.74
    November 2004                     CIG           350,000         4.00
    January -- March 2005       NYMEX/CIG Basis     (75,000)        0.68
   Crude Oil
    June 2004 -- February 2005       NYMEX          160,000        35.21




At the market close on May 5, 2004 these open positions had an aggregate
unrealized mark-to-market net loss of $5,649,000.  During the current quarter
through May 5, the Company has realized net losses totaling $544,000 on
commodity derivative positions that have been closed out.

Investment and Operating Activities

During the first quarter of 2004, Prima invested $10,131,000 in oil and gas
properties, including $9,891,000 for well costs and other development
activities, primarily in the D-J Basin and on CBM properties in the Powder
River Basin.

Our D-J Basin operations included drilling and completing ten gross (10 net)
wells, completing two gross (2 net) wells that were drilled last year, and
re-fracturing 23 gross (21.8 net) wells.  Our Powder River Basin activities
included drilling 14 gross (14 net) wells, deepening eight gross (8 net) wells
and installing equipment, flow lines and related facilities in the North Shell
Draw and Kingsbury project areas in preparation for tie-in to a gathering
system later this year.  We also installed additional compression equipment to
bolster production rates from our 86 producing CBM wells in the Porcupine-Tuit
area.  Benefits began to be partially realized in April and gross production at
Porcupine-Tuit at the end of that month aggregated approximately 26,000 Mcf per
day, compared to an average of 24,000 Mcf per day in the first quarter of 2004
(Prima's net revenue interests at Porcupine-Tuit average approximately 78%).

Prima also participated with a 6.3% working interest in completion operations
to test the over-pressured Lance formation in the Sage Flat Federal #17-20 well
on the Merna Prospect, in the northern Green River Basin.  Flow rates were
uneconomic after the well was stimulated and Prima expects the operator to plug
and abandon the well.  The Company owns an average 35% working interest in
74,000 gross acres in the greater Merna area and has received recent
expressions of interest from other operators for conducting additional drilling
in the area to continue to test the play.

As previously reported, Prima anticipates investing approximately $45 million
on property and equipment during 2004, excluding acquisitions which are
unbudgeted.  Currently projected activities for the full year include drilling
approximately 35 wells and re-fracturing or re-completing approximately 50
wells in the D-J Basin; drilling an estimated 150 CBM wells in the Powder River
Basin and hooking up most of these and 130 previously-drilled CBM wells;
participation in up to six wells in the Cave Gulch area; and certain
exploratory activities, including operations on Prima's Coyote Flats Prospect
in Utah.  We intend to focus current year CBM activities on drilling additional
wells to further develop the Porcupine-Tuit field, which is producing from a
relatively shallow Wyodak coal, and operations to evaluate and develop deeper
unproved coals within our Kingsbury, Cedar Draw, North Shell Draw and Wild
Turkey project areas.

Prima previously indicated that its current year oil and gas production is
projected to total between 15.6 Bcfe and 16.1 Bcfe.  No adjustment to that
estimate is believed to be warranted at the present time.

The Company's net working capital increased from $56,148,000 at the end of 2003
to $60,890,000 at March 31, 2004, including $61,397,000 of cash equivalents and
short-term investments at the end of March 2004.  Prima also continues to be
free of long-term debt.

Conference Call

Prima Energy Corporation (NASDAQ:PENG) has scheduled a conference call for
Friday, May 7, 2004 at 9:30 a.m. Mountain Daylight Time (11:30 a.m. Eastern
Daylight Time), to review the Company's first quarter 2004 financial results
and provide an update on operations.

Interested parties may access the conference call by dialing [phone] and
providing conference I.D. "PRIMA".  Replays will be available from
approximately noon MDT, May 7 through 10:00 p.m. MDT May 14, 2004, by dialing
[phone] (no reservation number necessary).

In addition, the conference call will be webcast live over the Internet and can
be accessed by following the link from Prima's website at
http://www.primaenergy.com/.  A replay from the Internet site will be available
shortly after the call is completed and will be available for 90 days.

Prima is a Denver-based independent energy company engaged in the exploration
for, acquisition, development and production of natural gas and crude oil. 
Through wholly owned subsidiaries, Prima is also engaged in natural gas and oil
property operations, oilfield services and natural gas and crude oil marketing.
 The Company's current activities are principally conducted in the Rocky
Mountain region of the United States.

This press release contains projections or forward-looking statements, which
are made pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.  Such statements include, but are not limited
to, statements related to drilling and construction plans, other investment
activities, projected production levels, anticipated production commencement
dates, and future oil and gas prices.  Any such statements or projections
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.  Prima does not undertake to update, revise or
correct any of the forward-looking information. A discussion of important
factors that could cause actual results to differ materially from those
projected is included in the Company's most recent Annual Report on Form 10-K
filed with the Securities and Exchange Commission.

Financial data follows.  In addition, a copy of the Company's Form 10-Q for the
three months ended March 31, 2004 will be available on the Company's website at
http://www.primaenergy.com/ after it has been filed.

                         PRIMA ENERGY CORPORATION
                    CONSOLIDATED STATEMENTS OF INCOME
                               (UNAUDITED)

                                                   Three Months Ended
                                                       March 31,
                                                  2004           2003

   REVENUES
   Oil and gas sales                           $17,660,000    $12,212,000
   Gains on derivative instruments, net            318,000      1,354,000
   Oilfield services                             2,485,000      1,939,000
   Interest, dividend and other income             181,000        105,000
                                                20,644,000     15,610,000
   EXPENSES
   Depreciation, depletion and amortization:
    Depletion of oil and gas properties          4,441,000      3,135,000
    Depreciation of property and equipment         254,000        284,000
   Lease operating expense                         991,000        941,000
   Ad valorem and production taxes               1,863,000      1,234,000
   Cost of oilfield services                     1,719,000      1,739,000
   General and administrative                      994,000        848,000
                                                10,262,000      8,181,000
   Income Before Income Taxes and
    Cumulative Effect of Change in
    Accounting Principle                        10,382,000      7,429,000
   Provision for Income Taxes                    3,540,000      2,450,000
   Net Income Before Cumulative Effect
    of Change in Accounting Principle            6,842,000      4,979,000
   Cumulative Effect of Change in
    Accounting Principle                                --        403,000

   NET INCOME                                   $6,842,000     $5,382,000

   Basic Net Income per Share Before
    Cumulative Effect of Change in
    Accounting Principle                             $0.53          $0.39
   Cumulative Effect of Change in
    Accounting Principle                                --           0.03

   BASIC NET INCOME PER SHARE                        $0.53          $0.42

   Diluted Net Income per Share Before
    Cumulative Effect of Change in
    Accounting Principle                             $0.52          $0.38
   Cumulative Effect of Change in
    Accounting Principle                                --           0.03

   DILUTED NET INCOME PER SHARE                      $0.52          $0.41

   Weighted Average Common Shares
    Outstanding                                 12,964,819     12,820,817
   Weighted Average Common Shares
    Outstanding Assuming Dilution               13,271,725     13,167,300

   PRODUCTION
    Natural gas (Mcf)                            3,493,000      2,795,000
    Oil (Barrels)                                  116,000         93,000
    Net equivalent units (Mcfe)                  4,191,000      3,353,000
   AVERAGE PRICES
    Natural gas (Mcf)                                $3.96          $3.22
    Oil (Barrels)                                   $32.94         $34.60
    Net equivalent units (Mcfe)                      $4.21          $3.64


                         PRIMA ENERGY CORPORATION
                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                                March 31,    December 31,
                                                  2004           2003
                                               (Unaudited)
   ASSETS
    Current assets                             $77,070,000    $69,901,000
    Oil and gas properties -- net              107,061,000    101,414,000
    Other property and equipment -- net          4,662,000      4,718,000
    Other assets                                 1,185,000      1,184,000
                                              $189,978,000   $177,217,000

   LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                        $16,180,000    $13,753,000
    Non-current ad valorem taxes                 5,034,000      3,634,000
    Other liabilities                            2,064,000      1,903,000
    Deferred income taxes                       30,228,000     27,251,000
    Stockholders' equity                       136,472,000    130,676,000
                                              $189,978,000   $177,217,000


             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (Unaudited)
                                                   Three Months Ended
                                                        March 31,
                                                   2004           2003

   OPERATING ACTIVITIES
    Net income                                  $6,842,000     $5,382,000
    Depreciation, depletion and amortization     4,695,000      3,419,000
    Cumulative effect of change in
     accounting principle                               --       (403,000)
    Deferred income taxes                        2,451,000      1,539,000
    Unrealized (gains) losses on
     derivatives instruments                       536,000       (910,000)
    Other                                           44,000        169,000
    Net changes in operating assets
     and liabilities                              (382,000)    (3,693,000)
    Net cash provided by operating
     activities                                 14,186,000      5,503,000

   INVESTING ACTIVITIES
    Additions to oil and gas properties        (10,131,000)    (3,952,000)
    Proceeds from sales of oil &
     gas properties                                258,000      1,293,000
    Purchases of other property -- net
     of sales                                     (248,000)      (187,000)
    Purchases of available for sale
     securities -- net of sales                 (9,764,000)       (57,000)
    Net cash used in investing activities      (19,885,000)    (2,903,000)

   NET FINANCING ACTIVITIES                        140,000       (841,000)

   INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                                 (5,559,000)     1,759,000
   CASH AND CASH EQUIVALENTS,
    beginning of period                         55,918,000     36,263,000

   CASH AND CASH EQUIVALENTS,
    end of period                              $50,359,000    $38,022,000



               RECONCILIATION OF NON-GAAP FINANCIAL MEASURE



Cash flow from operations before changes in operating assets and liabilities is
presented because of its acceptance as an indicator of the ability of an oil
and gas exploration and production company to internally fund exploration and
development activities.  This measure should not be considered as an
alternative to net cash provided by operating activities as defined by
generally accepted accounting principles.  A reconciliation of cash flow from
operations before changes in operating assets and liabilities to net cash
provided by operating activities is shown below:

                                                   Three Months Ended
                                                        March 31,
                                                  2004           2003
   Net cash provided by operating
    activities                                 $14,186,000     $5,503,000
   Net changes in operating assets
    and liabilities                                382,000      3,693,000
   Cash flow from operations before
    changes in operating assets and
    liabilities                                $14,568,000     $9,196,000


DATASOURCE: Prima Energy Corporation



CONTACT:  Richard H. Lewis, President and Chief Executive Officer, or

Neil L. Stenbuck, Executive Vice President and Chief Financial Officer, both

of Prima Energy Corporation, [phone]



Web site:  http://www.primaenergy.com/ 

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