Houston Exploration (NYSE:THX)
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HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- The Houston Exploration Company (NYSE:THX) today reported second quarter 2006 net income of $23.4 million, or $0.81 per diluted share. This compares to $43.8 million of net income, or $1.51 per diluted share, reported in the second quarter 2005. Cash from operations before changes in operating assets and liabilities totaled $92.7 million for the quarter compared to $133.7 million reported in the second quarter 2005. Excluding certain items described below and in the attached schedules, the company's adjusted net income for the second quarter 2006 was $28.7 million, or $1.00 per diluted share, versus the $1.51 per diluted share in the second quarter 2005 on a comparable basis. Cash from operations before changes in operating assets and liabilities, as well as adjusted net income, are non-GAAP measures that are defined and reconciled in the schedules below.
Second Quarter 2006 Consolidated Results
The company's consolidated results for the quarter were impacted by the sale of substantially all of the company's Gulf of Mexico assets during the first and second quarters of 2006.
Daily production for the second quarter 2006 averaged 239 million cubic feet of natural gas equivalent per day (MMcfe/d), compared to 2005's second quarter average rate of 328 MMcfe/d. This 27 percent decline was due to the sale of the company's Gulf of Mexico assets, coupled with the fact that, prior to such sale, production from the company's offshore Louisiana properties had not yet returned to expected levels after last fall's hurricanes.
The company's average unhedged natural gas sales price for the second quarter 2006 was $6.41 per thousand cubic feet (Mcf), compared to $6.60 per Mcf in the second quarter 2005. The company's average realized natural gas price for the second quarter 2006 was $5.50 per Mcf, down from $5.71 per Mcf reported during the second quarter 2005. Crude oil prices averaged $59.02 per barrel for this year's second quarter compared to $46.32 per barrel reported during the comparable 2005 period.
Revenue for the second quarter 2006 totaled $145.9 million, compared to $175.8 million during the second quarter 2005. Total revenues for the second quarter 2006 were reduced by $1.1 million of net losses associated with the company's hedging activities, compared to $24.3 million of net losses in the second quarter 2005. The current period net losses of $1.1 million were comprised of the following:
* $4.1 million of realized losses associated with the settlement of
hedge contracts;
* $14.3 million of realized losses associated with the unwinding of
certain hedge contracts in connection with the sale of the company's
Gulf of Mexico assets; and
* $17.3 million of net unrealized gains resulting primarily from changes
in the fair value of the company's hedge portfolio, all of which is
now being accounted for using mark-to-market accounting.
The company's lease operating, severance tax and transportation expenses for the second quarter 2006 totaled $1.18 per thousand cubic feet of natural gas equivalent (Mcfe) versus $0.89 per Mcfe reported in the second quarter 2005. Total depreciation, depletion and amortization and asset retirement accretion expenses for the quarter were $2.71 per Mcfe compared to $2.45 per Mcfe in the second quarter 2005. Second quarter 2006 net general and administrative expenses were $0.40 per Mcfe compared to $0.21 per Mcfe in the prior year period.
Income tax expense for the second quarter 2006 was $23.5 million, which included $6.8 million related to a recently adopted "margin tax" in the state of Texas.
Second Quarter 2006 Onshore Results
The company's onshore production increased by 5 percent during the second quarter 2006, to an average rate of 198 MMcfe/d, compared to 189 MMcfe/d during the second quarter 2005. The company's average unhedged natural gas sales price for its onshore production was $6.27 per Mcf for the second quarter 2006, compared to $6.36 per Mcf in the second quarter 2005. Oil and gas revenues from the company's onshore operations totaled $115.5 million for the second quarter 2006, compared to $110.0 million during the second quarter 2005. Onshore lease operating, severance tax and transportation expenses during the second quarter 2006 totaled $1.14 per Mcfe versus $0.82 per Mcfe reported in the second quarter 2005.
"Our onshore portfolio is comprised of quality assets that we believe have the potential to deliver future production increases consistent with our guidance for 2006 and 2007," stated William G. Hargett, chairman, president and chief executive officer. "While implementing our multi-year drilling program, which includes more than 7,500 potential drilling locations, the Houston Exploration Board of Directors and management team are assessing a number of strategic alternatives to further enhance value for all shareholders."
Strategic Update
Since late 2005, the company has continued to execute its strategic restructuring plan, the primary purpose of which is to improve the company's financial and operating performance by becoming a pure onshore operator. During the second quarter 2006, the company achieved several significant milestones toward its restructuring objectives, including the following:
* In May 2006, the company initiated its share repurchase program. To
date, the company has repurchased 1,176,500 shares of its common
stock, or approximately 4 percent of its outstanding shares, for
approximately $61.6 million. As a result, approximately $138.4 million
remains authorized under the company's previously announced
$200 million share repurchase program. Pursuant to this program, the
company may continue to repurchase shares in the open market or in
privately negotiated transactions, subject to market conditions,
applicable legal and contractual requirements, available cash,
competing investment opportunities and other factors.
* On June 1, 2006, the company completed the sale of substantially all
of the Louisiana portion of its Gulf of Mexico assets, which included
estimated proved reserves at year-end 2005 of 186.1 billion cubic feet
of natural gas equivalent (Bcfe), for a gross sales price of
$590 million.
* In June 2006, and in connection with the sale of its Gulf of Mexico
assets, the company completed the unwinding of gas hedges totaling
60,000 million British thermal units per day (MMBtu/d) for the period
July 2006 through December 2006, for a cost of $14.3 million. After
giving effect to this transaction, the company's average hedge
position for the remainder of 2006 is currently 190,000 MMBtu/d, with
a weighted average floor price of $5.83 per MMBtu and a weighted
average ceiling price of $6.89 per MMBtu.
Additionally, the company announced in June 2006 that its Board of Directors had engaged Lehman Brothers to assist the company in exploring a broad range of strategic alternatives. These alternatives may complement or replace the continued execution of the company's previously announced business plan and include, but are not limited to, a recapitalization of the company either through additional share repurchases or a special dividend; operating partnerships and/or strategic alliances; and the sale or merger of the company. The company does not expect to make any public comments regarding this process until after the company's Board of Directors has completed its review of the strategic alternatives and approved a definitive course of action.
Guidance
As described in the following table, the company has updated its guidance for the third quarter and full-year 2006 and reaffirmed the previously disclosed 2007 figures. The estimated financial and operational results do not reflect any decision regarding the pending review of strategic alternatives, assume no contribution from the company's offshore operations which were recently divested, and assume no additional capital spending for potential acquisitions. Various factors that could materially impact the company's actual results are noted below in the forward-looking statements section of this release.
3Q06 2006 2007
Total Onshore Offshore (A) Total Total
Capital Spending
(in millions)
Exploration and
development $113 $433 $46 $479 $466
Acquisition(s) 0 17 30 (B) 47 0
Subtotal $113 $450 $76 $526 $466
Capitalized interest,
G&A and other 6 N/A N/A 25 24
Total $119 $450 $76 $551 $490
Production
Total (Bcfe) 19 75 14 89 89
Average daily
(MMcfe/d) 207 205 37 242 245
Percent hedged 85% (C) N/A N/A 85% (C) 12% (D)
2006 Exit rate
(MMcfe/d) N/A 225 N/A 225 N/A
2006 Exit rate,
percent hedged N/A N/A N/A 13% (D) N/A
Unit Costs ($/Mcfe)
Lease operating
expense 0.57 0.60 1.22 0.70 N/A
Severance tax 0.24 0.27 N/A 0.23 N/A
Transportation 0.14 0.14 0.05 0.13 N/A
DD&A and ARO 2.70 N/A N/A 2.81 N/A
General and
administrative,
net 0.40 N/A N/A 0.37 N/A
Interest expense,
net 0.30 N/A N/A 0.30 N/A
(A) Substantially all of the company's offshore assets were sold in
separate transactions that closed on March 31, May 31, and June 1,
2006.
(B) Reflects the previously estimated $30 million net profits interest
payable to a predecessor owner in certain of the company's offshore
Louisiana properties that were sold during the second quarter 2006.
(C) Assumes unwinding of hedges covering an additional 20,000 MMBtu/d
for the period September - December 2006.
(D) Based on existing 2007 hedge portfolio of 30,000 MMBtu/d.
The company will hold a conference call on Thursday, August 3, at 8:00 a.m. Central Time to further review the quarter's financial and operational results and activities. To access the call, dial (800) 230-1074 prior to the start and provide the confirmation code 829798. In addition, a listen-only webcast of the call can be accessed at http://www.houstonexploration.com/ .
A replay of the call and an archive of the webcast will be available for one week beginning at approximately 12:00 p.m. Central Time on August 3. Dial (800) 475-6701 and provide the confirmation code 829798, or access the company's Web site for either of these services.
About the Houston Exploration Company
The Houston Exploration Company is an independent natural gas and crude oil producer engaged in the development, exploitation, exploration and acquisition of natural gas and crude oil properties. The company's operations are focused in South Texas, the Arkoma Basin, East Texas, and the Rocky Mountains. For more information, visit the company's Web site at http://www.houstonexploration.com/ .
Forward-Looking Statements
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact, such as estimated reserves and future drilling and development activity. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Factors that could cause actual results to vary materially from those targeted, expected or implied include the terms, timing and impact of our business strategy or other strategic alternatives, if any, ultimately selected by the Board, price volatility, the business outlook, the impact of onshore asset concentration, the risks associated with the consummation and successful integration of acquisitions, any tax deferrals, the impact of hurricanes, the risk of future writedowns, the impact of hedging activities, the accuracy of estimates of reserves and production rates, production and spending requirements, the inability to meet substantial capital requirements, the market and other factors for stock repurchases, constraints imposed by the company's outstanding indebtedness, the relatively short production life of the company's reserves, reserve replacement risks, drilling risks and results, the competitive nature of the industry, and other risks and uncertainties inherent in the exploration for and production of natural gas and crude oil discussed in the company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2005, and other filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements contained in this news release.
Contact: The Houston Exploration Company
Melissa R. Aurelio
713-830-6887
The Houston Exploration Company
Consolidated Financial Information
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Unaudited Income
Statement Data: (in thousands, (in thousands,
except per share data) except per share data)
Revenues
Natural gas revenues $129,785 $181,054 $328,290 $345,023
Oil revenues 15,167 18,805 35,620 35,925
Gain (loss) on settled
derivatives (18,424) (24,335) (64,949) (38,510)
Unrealized gain (loss)
on derivatives 17,285 --- 21,871 (1,424)
Other 2,101 293 2,686 523
Total revenues 145,914 175,817 323,518 341,537
Operating Expenses
Lease operating 18,032 19,124 39,844 34,492
Severance tax 4,830 4,530 10,989 7,464
Transportation 2,859 2,993 5,630 5,759
Asset retirement
accretion 1,069 1,326 2,396 2,651
Depreciation, depletion
and amortization 57,858 71,944 141,619 142,547
General and administrative,
net 8,705 6,200 17,311 17,323
Total operating
expenses 93,353 106,117 217,789 210,236
Income from Operations 52,561 69,700 105,729 131,301
Other (income) and expense (791) (1,067) (2,198) 387
Interest expense 7,451 5,621 17,827 11,045
Capitalized interest (1,000) (2,425) (2,655) (4,415)
Interest expense, net 6,451 3,196 15,172 6,630
Income before taxes 46,901 67,571 92,755 124,284
Provision for income tax
Current (1,239) 8,324 3,319 16,028
Deferred 24,769 15,417 36,293 30,988
Total provision for
taxes 23,530 23,741 39,612 47,016
Net Income $23,371 $43,830 $53,143 $77,268
Earnings per Share
Net income per share -
Basic $0.82 $1.53 $1.85 $2.70
Net income per share -
Diluted $0.81 $1.51 $1.84 $2.67
Weighted average shares -
Basic 28,625 28,679 28,770 28,589
Weighted average shares -
Diluted 28,678 28,973 28,824 28,920
June 30, December 31,
2006 2005
Unaudited Balance Sheet Data:
(in thousands, except
debt-to-capitalization)
Assets
Cash and equivalents $3,488 $7,979
Accounts receivable 83,390 146,020
Inventories 4,215 2,726
Deferred tax asset 67,439 145,922
Prepayments and other 15,549 19,709
Total current assets 174,081 322,356
Natural gas and oil properties,
full-cost method
Unevaluated properties 39,381 107,146
Properties subject to amortization 3,129,560 3,556,755
Other property and equipment 13,880 12,971
3,182,821 3,676,872
Less: Accumulated depreciation,
depletion and amortization 1,799,997 1,658,532
1,382,824 2,018,340
Designated cash 323,675 ---
Other non-current assets 16,730 20,928
Other assets 340,405 20,928
Total Assets $1,897,310 $2,361,624
Liabilities
Accounts payable and accrued expenses $185,743 $177,159
Derivative financial instruments 44,165 352,457
Asset retirement obligation --- 7,265
Total current liabilities 229,908 536,881
Long-term debt and notes 275,000 597,000
Deferred federal income taxes 410,511 341,302
Derivative financial instruments 36,928 65,201
Asset retirement obligation 36,868 112,406
Other non-current liabilities 10,648 15,696
Total Liabilities 999,863 1,668,486
Stockholders' Equity
Common stock 279 289
Additional paid-in capital 245,100 297,218
Retained earnings 716,510 663,367
Accumulated other comprehensive income (64,442) (267,736)
Total Stockholders' Equity 897,447 693,138
Total Liabilities and
Stockholders' Equity $1,897,310 $2,361,624
Total Debt-to-Capitalization 23.5% 46.3%
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Unaudited Cash Flow Data: (in thousands) (in thousands)
Operating Activities
Net income $23,371 $43,830 $53,143 $77,268
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation, depletion
and amortization 57,858 71,944 141,619 142,547
Deferred income tax
expense 24,769 15,417 36,293 30,988
Unrealized (gain) loss
on derivatives (17,285) --- (21,871) 1,424
Other non-cash
adjustments 3,996 2,493 7,840 6,554
Changes in operating
assets and liabilities 40,302 (9,851) 36,283 (1,589)
Net cash provided by
operating activities 133,011 123,833 253,307 257,192
Investing Activities
Investment in property
and equipment (149,806) (123,698) (278,572) (254,836)
Designated cash (323,675) --- (323,675) ---
Dispositions and other 534,277 15 723,648 165
Net cash provided by
(used in) investing
activities 60,796 (123,683) 121,401 (254,671)
Financing Activities
Net repayments of
long-term borrowings (149,000) (10,000) (322,000) (25,000)
Repurchase of common
stock (61,638) --- (61,638) ---
Debt issuance costs (199) --- (199) ---
Proceeds and tax benefits
from issuance of common
stock from exercise of
stock options 980 784 4,638 8,596
Net cash provided by
(used in) financing
activities (209,857) (9,216) (379,199) (16,404)
Increase (decrease)
in cash $(16,050) $(9,066) $(4,491) $(13,883)
Cash at beginning of
period 19,538 13,760 7,979 18,577
Cash at end of period $3,488 $4,694 $3,488 $4,694
Unaudited Non-GAAP Financial Measures:
EBITDA represents net income (loss) before interest expense, income tax expense (benefit) and depreciation, depletion and amortization. EBITDA is presented as a supplemental financial measurement in the evaluation of our business. We believe that EBITDA provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. EBITDA is widely used by investors, bankers and rating agencies to value, compare and rate companies. EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP). Accordingly, it should not be considered as a substitute for net income, income from operations, or net cash provided by operating activities prepared in accordance with GAAP. EBITDA is reconciled to net income in the table below.
Cash from operations before changes in operating assets and liabilities represents net cash provided by operating activities before changes in operating assets and liabilities. Cash from operations before changes in operating assets and liabilities is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP. Cash from operations before changes in operating assets and liabilities is widely accepted as a financial indicator of an oil and gas company's ability to generate cash which is used to internally fund exploration and development activities and to service debt. Cash from operations before changes in operating assets and liabilities is not a measure of financial performance under GAAP and should not be considered an alternative to net income or net cash provided by operating activities in accordance with GAAP. The table below reconciles cash from operations before changes in operating assets and liabilities to net cash provided by operating activities as disclosed on the statement of cash flows.
Adjusted net income and adjusted net income per diluted share represent net income and net income per diluted share, as the case may be, after the adjustments noted in the table below. We believe that adjusted net income and adjusted net income per diluted share are useful to analysts and investors because they are more reflective of our operating performance and improve period-to-period comparability. The table below reconciles net income to adjusted net income and net income per diluted share to adjusted net income per diluted share.
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Reconciliation of
Non-GAAP Measures: (in thousands, except (in thousands, except
per share amounts) per share amounts)
EBITDA $111,210 $142,711 $249,546 $273,461
Less: Interest, net 6,451 3,196 15,172 6,630
Income taxes 23,530 23,741 39,612 47,016
Depreciation, depletion
and amortization 57,858 71,944 141,619 142,547
Net Income $23,371 $43,830 $53,143 $77,268
Cash from Operations
Before Changes in
Operating Assets and
Liabilities $92,709 $133,684 $217,024 $258,781
Plus: Changes in operating
assets and liabilities 40,302 (9,851) 36,283 (1,589)
Net Cash Provided by
Operating Activities $133,011 $123,833 $253,307 $257,192
Net Income $23,371 $43,830 $53,143 $77,268
Adjustments:
Unrealized (gain)
loss on derivatives,
net of tax (11,166) --- (14,129) 920
Loss on hedge unwind,
net of tax 9,238 --- 9,238 ---
Severance/bonus costs -
offshore sale,
net of tax 429 --- 727 ---
Texas margin tax
accrual 6,800 --- 6,800 ---
Adjusted Net Income $28,672 $43,830 $55,779 $78,188
Net Income per Diluted
Share $0.81 $1.51 $1.84 $2.67
Adjustments:
Unrealized (gain) loss
on derivatives,
net of tax (0.39) --- (0.49) 0.03
Loss on hedge unwind,
net of tax 0.32 --- 0.32 ---
Severance/bonus costs -
offshore sale,
net of tax 0.02 --- 0.03 ---
Texas margin tax accrual 0.24 --- 0.24 ---
Adjusted Net Income per
Diluted Share $1.00 $1.51 $1.94 $2.70
The Houston Exploration Company
Additional Information for the Three Months Ended June 30, 2006
Three Months Ended Three Months Ended
June 30, 2006 June 30, 2005
Onshore Offshore Total Onshore Offshore Total
(A) (A)
Production
Natural gas
(MMcf) 17,365 2,879 20,244 17,123 10,317 27,440
Oil (Mbbls) 114 143 257 21 385 406
Equivalent
(MMcfe) 18,049 3,737 21,786 17,249 12,627 29,876
Daily Equivalent
(MMcfe/d) 198 41 239 189 139 328
Average Sales Price
Natural gas -
unhedged
($/Mcf) $6.27 $7.24 $6.41 $6.36 $7.00 $6.60
Natural gas -
realized (B)
($/Mcf) N/A N/A 5.50 N/A N/A 5.71
Oil - unhedged
($/Bbl) 57.66 60.10 59.02 54.86 45.85 46.32
Oil - realized
($/Bbl) 57.66 60.10 59.02 54.86 45.85 46.32
Revenues (in thousands)
Natural gas
revenues $108,929 $20,856 $129,785 $108,826 $72,228 $181,054
Oil revenues 6,573 8,594 15,167 1,152 17,653 18,805
Gain (loss) on
settled
derivatives N/A N/A (18,424) N/A N/A (24,335)
Unrealized gain
(loss) on
derivatives N/A N/A 17,285 N/A N/A ---
Other N/A N/A 2,101 N/A N/A 293
Total revenues 145,914 175,817
Operating Expenses
(in thousands)
Lease
operating $13,006 $5,026 $18,032 $7,091 $12,033 $19,124
Severance tax 4,817 13 4,830 4,499 31 4,530
Transportation 2,644 215 2,859 2,610 383 2,993
Asset retirement
accretion 479 590 1,069 360 966 1,326
Depreciation,
depletion and
amortization N/A N/A 57,858 N/A N/A 71,944
General and
administrative,
net N/A N/A 8,705 N/A N/A 6,200
Total operating
expenses 93,353 106,117
Income from Operations
per Unit ($/Mcfe)
Total revenues N/A N/A $6.70 N/A N/A $5.88
Lease operating (0.72) (1.34) (0.83) (0.41) (0.95) (0.64)
Severance tax (0.27) (0.00) (0.22) (0.26) (0.00) (0.15)
Transportation (0.15) (0.06) (0.13) (0.15) (0.03) (0.10)
Asset retirement
accretion (0.03) (0.16) (0.05) (0.02) (0.08) (0.04)
Depreciation,
depletion and
amortization N/A N/A (2.66) N/A N/A (2.41)
General and
administrative,
net N/A N/A (0.40) N/A N/A (0.21)
Income from
operations per
unit $2.41 $2.33
Capital Spending
(in thousands)
Exploration and
development 118,525 16,573 135,098 65,264 51,578 116,842
Acquisitions 21,336 30,000 (C) 51,336 9,271 (254) 9,017
Subtotal 139,861 46,573 186,434 74,535 51,324 125,859
Capitalized
interest,
G&A and
other --- --- 6,720 --- --- 6,216
Total $139,861 $46,573 $193,154 $74,535 $51,324 $132,075
(A) Substantially all of the company's offshore assets were sold in
separate transactions that closed on March 31, May 31, and
June 1, 2006.
(B) Realized natural gas prices include the effects of gains and losses
on contracts settled during the period, and do not include
unrealized gains and losses recognized pursuant to SFAS 133.
(C) Reflects the previously estimated $30 million net profits interest
payable to a predecessor owner in certain of the company's offshore
Louisiana properties that were sold during the second quarter 2006.
The Houston Exploration Company
Additional Information for the Six Months Ended June 30, 2006
Six Months Ended Six Months Ended
June 30, 2006 June 30, 2005
Onshore Offshore Total Onshore Offshore Total
(A) (A)
Production
Natural gas
(MMcf) 35,180 11,087 46,267 33,802 20,995 54,797
Oil (Mbbls) 181 424 605 44 768 812
Equivalent
(MMcfe) 36,266 13,631 49,897 34,066 25,603 59,669
Daily Equivalent
(MMcfe/d) 201 75 276 188 142 330
Average Sales Price
Natural gas -
unhedged
($/Mcf) $6.82 $7.98 $7.10 $6.07 $6.67 $6.30
Natural gas -
realized (B)
($/Mcf) N/A N/A 5.69 N/A N/A 5.59
Oil - unhedged
($/Bbl) 57.28 59.56 58.88 47.05 44.08 44.24
Oil - realized
($/Bbl) 57.28 59.56 58.88 47.05 44.08 44.24
Revenues (in thousands)
Natural gas
revenues $239,804 $88,486 $328,290 $205,071 $139,952 $345,023
Oil revenues 10,367 25,253 35,620 2,070 33,855 35,925
Gain (loss)
on settled
derivatives N/A N/A (64,949) N/A N/A (38,510)
Unrealized
gain (loss)
on derivatives N/A N/A 21,871 N/A N/A (1,424)
Other N/A N/A 2,686 N/A N/A 523
Total
revenues 323,518 341,537
Operating Expenses
(in thousands)
Lease
operating $23,178 $16,666 $39,844 $12,871 $21,621 $34,492
Severance tax 10,941 48 10,989 7,409 55 7,464
Transportation 4,918 712 5,630 5,062 697 5,759
Asset
retirement
accretion 958 1,438 2,396 720 1,931 2,651
Depreciation,
depletion and
amortization N/A N/A 141,619 N/A N/A 142,547
General and
administrative,
net N/A N/A 17,311 N/A N/A 17,323
Total
operating
expenses 217,789 210,236
Income from
Operations per
Unit ($/Mcfe)
Total revenues N/A N/A $6.48 N/A N/A $5.72
Lease operating (0.64) (1.22) (0.80) (0.38) (0.84) (0.58)
Severance tax (0.30) (0.00) (0.22) (0.22) (0.00) (0.13)
Transportation (0.14) (0.05) (0.11) (0.15) (0.03) (0.10)
Asset retirement
accretion (0.03) (0.11) (0.05) (0.02) (0.08) (0.04)
Depreciation,
depletion and
amortization N/A N/A (2.84) N/A N/A (2.39)
General and
administrative,
net N/A N/A (0.35) N/A N/A (0.29)
Income from
operations per
unit $2.11 $2.19
Capital Spending
(in thousands)
Exploration and
development 211,061 42,011 253,072 128,069 106,191 234,260
Acquisitions 17,245 30,000 (C) 47,245 31,355 277 31,632
Subtotal 228,306 72,011 300,317 159,424 106,468 265,892
Capitalized
interest,
G&A and
other --- --- 13,570 --- --- 12,495
Total $228,306 $72,011 $313,887 $159,424 $106,468 $278,387
(A) Substantially all of the company's offshore assets were sold in
separate transactions that closed on March 31, May 31, and
June 1, 2006.
(B) Realized natural gas prices include the effects of gains and losses
on contracts settled during the period, and do not include
unrealized gains and losses recognized pursuant to SFAS 133.
(C) Reflects the previously estimated $30 million net profits interest
payable to a predecessor owner in certain of the company's offshore
Louisiana properties that were sold during the second quarter 2006.
DATASOURCE: The Houston Exploration Company
CONTACT: Melissa R. Aurelio of The Houston Exploration Company,
+1-713-830-6887, or
Web site: http://www.houstonexploration.com/