Houston Exploration (NYSE:THX)
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HOUSTON, Nov. 8 /PRNewswire-FirstCall/ -- The Houston Exploration Company (NYSE:THX) today reported third quarter 2006 net income of $34.0 million, or $1.22 per diluted share. This compares to $8.1 million of net income, or $0.28 per diluted share, reported in the third quarter 2005. Excluding certain items described below and in the attached schedules, the company's adjusted net income for the third quarter 2006 was $20.0 million, or $0.72 per diluted share, versus $1.30 per diluted share in the third quarter 2005 on a comparable basis. Cash from operations before changes in operating assets and liabilities totaled $86.2 million for the quarter compared to $138.9 million reported in the third quarter 2005. The comparability of the company's third quarter and year-to-date 2006 results to those of the prior year were impacted by the sale of substantially all of the company's Gulf of Mexico assets during the first half of 2006. Adjusted net income and cash from operations before changes in operating assets and liabilities are non-GAAP financial measures that are defined and reconciled to GAAP measures in the attached schedules.
"I am pleased with our overall performance in this, our first full quarter as predominantly an onshore operator," stated William G. Hargett, chairman, president and chief executive officer. "Despite a challenging price environment, our third quarter production growth, coupled with our healthy balance sheet and liquidity position, provides us with a strong platform for growth in 2007."
Third Quarter 2006 Consolidated Results
Daily production for the third quarter 2006 averaged 204 million cubic feet of natural gas equivalent per day (MMcfe/d), compared to 308 MMcfe/d in the third quarter 2005. This 34 percent decline was primarily due to the sale of substantially all of the company's Gulf of Mexico assets during the first half of 2006.
The company's average unhedged natural gas sales price for the third quarter 2006 was $5.85 per thousand cubic feet (Mcf), compared to $8.15 per Mcf in the third quarter 2005. The company's average realized natural gas price for the third quarter 2006 was $5.70 per Mcf, compared to $5.78 per Mcf reported during the third quarter 2005. Crude oil prices averaged $59.86 per barrel for this year's third quarter compared to $54.08 per barrel reported during the comparable 2005 period.
Revenues for the third quarter 2006 totaled $131.3 million, compared to $125.4 million during the third quarter 2005. Total revenues for the third quarter 2006 included $19.9 million of net gains associated with the company's natural gas hedging activities, compared to $108.1 million of net losses in the third quarter 2005. The current period net gains of $19.9 million were comprised of the following:
* $1.8 million of realized losses associated with the settlement of hedge
contracts;
* $0.9 million of realized losses associated with the unwinding of
certain hedge contracts following the sale of the company's Gulf of
Mexico assets; and
* $22.6 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 third quarter 2006 totaled $1.04 per thousand cubic feet of natural gas equivalent (Mcfe) versus $0.89 per Mcfe reported in the third quarter 2005. Total depreciation, depletion and amortization and asset retirement accretion expenses for the quarter were $2.83 per Mcfe compared to $2.61 per Mcfe in the third quarter 2005. Third quarter 2006 net general and administrative expenses were $0.50 per Mcfe compared to $0.36 per Mcfe in the prior year period.
Third Quarter 2006 Onshore Results
The company's onshore production increased by 10 percent during the third quarter 2006, to an average rate of 204 MMcfe/d, compared to 185 MMcfe/d during the third quarter 2005. The company's average unhedged natural gas sales price for its onshore production was $5.86 per Mcf for the third quarter 2006, compared to $7.75 per Mcf in the third quarter 2005. This 24 percent decline in price more than offset the 10 percent increase in production, resulting in a 15 percent decline in onshore oil and gas revenues during the quarter, to $112.5 million, from $132.0 million during the third quarter 2005. Onshore lease operating, severance tax and transportation expenses during the third quarter 2006 totaled $1.03 per Mcfe compared to $0.82 per Mcfe reported in the third quarter 2005.
Strategic Restructuring Plan Update
Since November 2005, Houston Exploration has been implementing a strategic restructuring plan, the primary purpose of which is to improve the company's financial and operating performance by focusing its operations onshore. The following is a recap of the key restructuring milestones achieved to date, along with an update on certain related initiatives:
Recap of Key Milestones
* In March 2006, the company completed the sale of the Texas portion of
its Gulf of Mexico assets, which included 58.5 billion cubic feet of
natural gas equivalent (Bcfe) of estimated proved reserves at year-end
2005, for a gross sales price of $220 million.
* In May 2006, the company initiated activity under 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.
* In June 2006, the company completed the sale of substantially all of
the Louisiana portion of its Gulf of Mexico assets, which included
186.1 Bcfe of estimated proved reserves at year-end 2005, for a gross
sales price of $590 million. Net cash proceeds from the sale totaled
$530.8 million, of which $314.2 million was deposited with qualified
intermediaries for potential reinvestment in like-kind exchange
transactions under Section 1031 of the Internal Revenue Code. The
remaining balance of these escrowed funds is shown on the company's
balance sheet as designated cash.
* In June 2006, and in connection with the sale of its Gulf of Mexico
assets, the company completed the unwinding of natural 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.
* In June 2006, the company announced that its Board of Directors had
engaged Lehman Brothers to assist the company in an evaluation of a
broad range of strategic alternatives. This evaluation is ongoing.
Update on Related Initiatives
* In August 2006, following the sale of its Gulf of Mexico assets, the
company elected to unwind natural gas hedges totaling 20,000 MMBtu/d
for the period September 2006 through October 2006 for a cost of $0.9
million.
* On November 27, 2006, the 180-day time period prescribed by Section
1031 for reinvestment of the company's designated cash associated with
the sale of its offshore Louisiana assets will expire. Currently, the
company does not expect to complete any qualifying like-kind exchange
transactions prior to that expiry date. As a result, the company
anticipates that during the fourth quarter 2006, (i) the remaining
balance of the company's designated cash will be released from escrow
and reclassified as cash, and (ii) a tax gain of $250 million to $260
million on the sale of the company's offshore assets will be
recognized. The company estimates that, after considering available
net operating losses, alternative minimum tax credits and other
corporate tax attributes, this gain will result in a current net income
tax liability of $35 million to $40 million.
* The company is continuing to explore a broad range of strategic
alternatives. These alternatives may complement or replace the
continued execution of the company's existing 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 fourth quarter and full-year 2006 and for 2007. The estimated financial and operational results do not reflect any decision regarding the ongoing review of strategic alternatives and assume no additional capital spending for potential acquisitions. Other factors that could materially impact the company's actual results are noted below in the forward-looking statements section of this release.
4Q06 2006 2007
Total Onshore Offshore (A) Total Total
Capital Spending
(in millions)
Exploration and
development $121 $470 $49 $519 $466
Acquisitions 0 18 21 (B) 39 0
Subtotal $121 $488 $70 $558 $466
Capitalized
interest, G&A
and other 5 --- --- 26 24
Total $126 $488 $70 $584 $490
Production
Total (Bcfe) 20 75 14 89 85
Average daily
(MMcfe/d) 215 205 37 242 233
Percent hedged 82% N/A N/A 86% 12% (C)
Unit Costs ($/Mcfe)
Lease operating
expense 0.64 0.64 1.23 0.73 0.66
Severance tax 0.27 0.28 N/A 0.24 0.30
Transportation 0.15 0.14 0.05 0.13 0.14
DD&A and ARO 2.80 N/A N/A 2.85 2.75
General and
administrative, net 0.45 N/A N/A 0.40 0.41
Interest expense,
net 0.27 N/A N/A 0.29 0.17
(A) Substantially all of the company's offshore assets were sold during
the first half of 2006.
(B) Reflects a net profits interest payment to a predecessor owner in
certain of the company's offshore Louisiana properties that were
sold during the first half of 2006.
(C) Based on existing 2007 hedge portfolio of 30,000 MMBtu/d.
The company will hold a conference call on Wednesday, November 8, at 9:00 a.m. Central Time to further review the quarter's financial and operational results and activities. To access the call, dial (800) 288-8960 prior to the start and provide the confirmation code 845293. In addition, a listen-only webcast of the call can be accessed at http://www.houstonexploration.com/ .
A replay of both the call and the webcast will be available for one week beginning at approximately 1:00 p.m. Central Time on November 8. Dial (800) 475-6701 and provide the confirmation code 845293, or access the company's Web site for either of these options.
About the Houston Exploration Company
The Houston Exploration Company is an independent natural gas and crude oil producer engaged in the exploration, development, exploitation 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, any changes to the company's capital program, 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.
The Houston Exploration Company
Consolidated Financial Information
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Unaudited Income
Statement Data: (in thousands, except (in thousands, except
per share data) per share data)
Revenues
Natural gas revenues $105,793 $213,643 $434,083 $558,666
Oil revenues 7,004 19,470 42,624 55,395
Gain (loss) on
settled derivatives (2,715) (62,216) (67,664) (100,726)
Unrealized gain
(loss) on
derivatives 22,591 (45,900) 44,462 (47,324)
Other (1,336) 416 1,350 939
Total revenues 131,337 125,413 454,855 466,950
Operating Expenses
Lease operating 12,208 17,771 52,052 52,263
Severance tax 4,609 4,165 15,598 11,629
Transportation 2,546 3,000 8,176 8,759
Asset retirement
accretion 489 1,313 2,885 3,964
Depreciation,
depletion and
amortization 52,565 72,702 194,184 215,249
General and
administrative, net 9,392 10,229 26,703 27,552
Total operating
expenses 81,809 109,180 299,598 319,416
Income from Operations 49,528 16,233 155,257 147,534
Other (income)
expense (8,302) (101) (10,500) 286
Interest expense 6,173 5,898 24,000 16,943
Capitalized interest (993) (2,357) (3,648) (6,772)
Interest expense, net 5,180 3,541 20,352 10,171
Income before taxes 52,650 12,793 145,405 137,077
Provision for income tax
Current (852) (3,502) 2,467 12,526
Deferred 19,499 8,214 55,792 39,202
Total provision
for taxes 18,647 4,712 58,259 51,728
Net Income $34,003 $8,081 $87,146 $85,349
Earnings per Share
Net income per share -
Basic $1.22 $0.28 $3.06 $2.98
Net income per share -
Diluted $1.22 $0.28 $3.06 $2.95
Weighted average
shares - Basic 27,845 28,744 28,458 28,641
Weighted average
shares - Diluted 27,936 29,120 28,492 28,966
Sept. 30, Dec. 31,
2006 2005
Unaudited Balance Sheet Data:
(in thousands, except debt-
to-capitalization)
Assets
Cash and equivalents $18,435 $7,979
Accounts receivable 69,229 146,020
Inventories 6,269 2,726
Deferred tax asset 83,265 145,922
Prepayments and other 27,153 19,709
Total current assets 204,351 322,356
Natural gas and oil properties,
full-cost method
Unevaluated properties 45,322 107,146
Properties subject to amortization 3,270,984 3,556,755
Other property and equipment 14,782 12,971
3,331,088 3,676,872
Less: Accumulated depreciation,
depletion and amortization 1,852,530 1,658,532
1,478,558 2,018,340
Designated cash 314,043 ---
Other non-current assets 16,616 20,928
Total other assets 330,659 20,928
Total Assets $2,013,568 $2,361,624
Liabilities
Accounts payable and accrued expenses $159,475 $177,159
Derivative financial instruments 5,251 352,457
Asset retirement obligation --- 7,265
Total current liabilities 164,726 536,881
Long-term debt and notes 362,000 597,000
Deferred federal income taxes 456,786 341,302
Derivative financial instruments 22,324 65,201
Asset retirement obligation 40,015 112,406
Other non-current liabilities 11,008 15,696
Total Liabilities 1,056,859 1,668,486
Stockholders' Equity
Common stock 280 289
Additional paid-in capital 250,380 297,218
Retained earnings 750,513 663,367
Accumulated other comprehensive income (loss) (44,464) (267,736)
Total Stockholders' Equity 956,709 693,138
Total Liabilities and Stockholders'
Equity $2,013,568 $2,361,624
Total Debt-to-Capitalization 27.5% 46.3%
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Unaudited Cash Flow Data:
(in thousands) (in thousands)
Operating Activities
Net income $34,003 $8,081 $87,146 $85,349
Adjustments to
reconcile net income
to net cash provided
by operating activities:
Depreciation, depletion
and amortization 52,565 72,702 194,184 215,249
Deferred income tax
expense 19,499 8,214 55,792 39,202
Unrealized (gain)
loss on
derivatives (22,591) 45,900 (44,462) 47,324
Asset retirement
accretion 489 1,313 2,885 3,964
Other non-cash
adjustments 2,260 2,725 7,704 6,628
Changes in operating
assets and liabilities (369) (12,146) 35,914 (13,735)
Net cash provided by
operating activities 85,856 126,789 339,163 383,981
Investing Activities
Investment in property
and equipment (168,521) (146,327) (447,093) (401,163)
Net (deposits)
withdrawals of
designated cash 9,632 --- (314,043) ---
Dispositions and other (2,041) --- 721,607 165
Net cash provided by
(used in) investing
activities (160,930) (146,327) (39,529) (400,998)
Financing Activities
Net borrowings
(repayments) of long-
term debt 87,000 19,000 (235,000) (6,000)
Repurchase of common
stock --- --- (61,638) ---
Debt issuance costs --- --- (199) ---
Proceeds and tax
benefits from issuance
of common stock from
exercise of stock
options 3,021 4,621 7,659 13,217
Net cash provided by
(used in) financing
activities 90,021 23,621 (289,178) 7,217
Increase (decrease)
in cash $14,947 $4,083 $10,456 $(9,800)
Cash at beginning of
period 3,488 4,694 7,979 18,577
Cash at end of period $18,435 $8,777 $18,435 $8,777
Unaudited Non-GAAP Financial Measures:
Adjusted net income and adjusted net income per diluted share are non-GAAP financial measures consisting of 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. Adjusted net income and adjusted net income per diluted share should not be considered a substitute for net income and net income per diluted share in accordance with GAAP. The table below reconciles net income to adjusted net income and net income per diluted share to adjusted net income per diluted share.
Cash from operations before changes in operating assets and liabilities is a non-GAAP financial measure consisting of 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 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.
EBITDA is a non-GAAP financial measure consisting of net income 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 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.
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Reconciliation of
Non-GAAP Measures:
(in thousands, except (in thousands, except
per share amounts) per share amounts)
Net Income $34,003 $8,081 $87,146 $85,349
Adjustments:
Unrealized (gain)
loss on derivatives,
net of tax (14,594) 29,651 (28,722) 30,571
Loss on hedge unwind,
net of tax 589 --- 9,825 ---
Special compensation
expenses, net of
tax (A) --- --- 726 4,601
Additional tax
items (B) --- --- 6,800 ---
Adjusted Net Income $19,998 $37,732 $75,775 $120,521
Net Income per Diluted
Share $1.22 $0.28 $3.06 $2.95
Adjustments:
Unrealized (gain) loss
on derivatives, net of
tax (0.52) 1.02 (1.01) 1.06
Loss on hedge unwind,
net of tax 0.02 --- 0.34 ---
Special compensation
expenses, net of
tax (A) --- --- 0.03 0.16
Additional tax
items (B) --- --- 0.24 ---
Adjusted Net Income per
Diluted Share $0.72 $1.30 $2.66 $4.16
Cash from Operations
Before Changes in
Operating Assets
and Liabilities $86,225 $138,935 $303,249 $397,716
Plus: Changes in
operating assets and
liabilities (369) (12,146) 35,914 (13,735)
Net Cash Provided by
Operating Activities $85,856 $126,789 $339,163 $383,981
EBITDA $110,884 $90,349 $362,826 $366,461
Less: Interest, net 5,180 3,541 20,352 10,171
Income taxes 18,647 4,712 58,259 51,728
Asset retirement
accretion 489 1,313 2,885 3,964
Depreciation,
depletion and
amortization 52,565 72,702 194,184 215,249
Net Income $34,003 $8,081 $87,146 $85,349
(A) In 2006, special compensation expenses, net of tax, included the
non-capitalized portion of special bonus and severance payments made
in connection with the sale of the company's Gulf of Mexico assets.
In 2005, special compensation expenses, net of tax, included
payments made in connection with the renegotiation of employment
contracts for the executive officers.
(B) In 2006, additional tax items represented the Texas margin tax
accrual.
Note: Totals may not foot due to rounding.
Three Months Ended Three Months Ended
September 30, 2006 September 30, 2005
Onshore Offshore (A) Total Onshore Offshore (A) Total
Production
Natural gas
(MMcf) 18,081 --- 18,081 16,879 9,338 26,217
Oil (Mbbls) 108 9 117 24 336 360
Equivalent
(MMcfe) 18,729 54 18,783 17,023 11,354 28,377
Daily Equivalent
(MMcfe/d) 204 --- 204 185 123 308
Average Sales Price
Natural gas -
unhedged
($/Mcf) $5.86 $N/A $5.85 $7.75 $8.86 $8.15
Natural gas -
realized (B)
($/Mcf) N/A N/A 5.70 N/A N/A 5.78
Oil - unhedged
($/Bbl) 61.53 39.89 59.86 46.46 54.63 54.08
Oil - realized
($/Bbl) N/A N/A 59.86 N/A N/A 54.08
Revenues (in thousands)
Natural gas
revenues $105,875 $(82) $105,793 $130,894 $82,749 $213,643
Oil revenues 6,645 359 7,004 1,115 18,355 19,470
Gain (loss) on
settled
derivatives N/A N/A (2,715) N/A N/A (62,216)
Unrealized gain
(loss) on
derivatives N/A N/A 22,591 N/A N/A (45,900)
Other N/A N/A (1,336) N/A N/A 416
Total revenues $131,337 $125,413
Operating Expenses
(in thousands)
Lease
operating $11,984 $224 $12,208 $7,398 $10,373 $17,771
Severance tax 4,608 1 4,609 4,131 34 4,165
Transportation 2,543 3 2,546 2,502 498 3,000
Asset retirement
accretion 489 --- 489 305 1,008 1,313
Depreciation,
depletion and
amortization N/A N/A 52,565 N/A N/A 72,702
General and
administrative,
net N/A N/A 9,392 N/A N/A 10,229
Total operating
expenses $81,809 $109,180
Income from Operations
per Unit ($/Mcfe)
Total revenues N/A N/A $6.99 N/A N/A $4.42
Lease operating (0.64) (4.15) (0.65) (0.43) (0.91) (0.63)
Severance tax (0.25) (0.02) (0.25) (0.24) (0.00) (0.15)
Transportation (0.14) (0.06) (0.14) (0.15) (0.04) (0.11)
Asset retirement
accretion (0.03) (0.00) (0.03) (0.02) (0.09) (0.05)
Depreciation,
depletion and
amortization N/A N/A (2.80) N/A N/A (2.56)
General and
administrative,
net N/A N/A (0.50) N/A N/A (0.36)
Income from
operations per
unit $2.62 $0.56
Oil and Gas Capital
Expenditures (in thousands)
Exploration,
development and
leasehold $139,133 $6,314 $145,447 $71,442 $63,290 $134,732
Acquisitions 598 (9,034)(C) (8,436) --- 57 57
Subtotal 139,731 (2,720) 137,011 71,442 63,347 134,789
Capitalized
interest and
G&A --- --- 5,654 --- --- 6,537
Total $139,731 $(2,720) $142,665 $71,442 $63,347 $141,326
(A) Substantially all of the company's offshore assets were sold during
the first half of 2006.
(B) Realized natural gas prices include the effects of gains and losses
on contracts settled and unwound during the period, and do not
include unrealized gains and losses recognized pursuant to SFAS 133.
(C) Reflects an adjustment and reduction to a previously announced
estimate for a net profits interest paid to a predecessor owner in
certain of the company's offshore Louisiana properties that were
sold during the second quarter 2006.
Note: Totals may not foot due to rounding.
Nine Months Ended Nine Months Ended
September 30, 2006 September 30, 2005
Onshore Offshore (A) Total Onshore Offshore (A) Total
Production
Natural gas
(MMcf) 53,261 11,087 64,348 50,681 30,333 81,014
Oil (Mbbls) 289 433 722 69 1,103 1,172
Equivalent
(MMcfe) 54,995 13,685 68,680 51,095 36,951 88,046
Daily Equivalent
(MMcfe/d) 202 50 252 187 136 323
Average Sales Price
Natural gas -
unhedged
($/Mcf) $6.49 $7.97 $6.75 $6.62 $7.35 $6.90
Natural gas -
realized (B)
($/Mcf) N/A N/A 5.69 N/A N/A 5.65
Oil - unhedged
($/Bbl) 58.87 59.15 59.04 51.36 47.01 47.27
Oil - realized
($/Bbl) N/A N/A 59.04 N/A N/A 47.27
Revenues (in thousands)
Natural gas
revenues $345,679 $88,404 $434,083 $335,598 $223,068 $558,666
Oil revenues 17,012 25,612 42,624 3,544 51,851 55,395
Gain (loss) on
settled
derivatives N/A N/A (67,664) N/A N/A (100,726)
Unrealized gain
(loss) on
derivatives N/A N/A 44,462 N/A N/A (47,324)
Other N/A N/A 1,350 N/A N/A 939
Total revenues $454,855 $466,950
Operating Expenses
(in thousands)
Lease
operating $35,162 $16,890 $52,052 $20,493 $31,770 $52,263
Severance tax 15,549 49 15,598 11,540 89 11,629
Transportation 7,461 715 8,176 7,564 1,195 8,759
Asset retirement
accretion 1,447 1,438 2,885 1,025 2,939 3,964
Depreciation,
depletion and
amortization N/A N/A 194,184 N/A N/A 215,249
General and
administrative,
net N/A N/A 26,703 N/A N/A 27,552
Total operating
expenses $299,598 $319,416
Income from Operations
per Unit ($/Mcfe)
Total revenues N/A N/A $6.62 N/A N/A $5.30
Lease operating (0.64) (1.23) (0.76) (0.40) (0.86) (0.59)
Severance tax (0.28) (0.00) (0.23) (0.23) (0.00) (0.13)
Transportation (0.14) (0.05) (0.12) (0.15) (0.03) (0.10)
Asset retirement
accretion (0.03) (0.11) (0.04) (0.02) (0.08) (0.05)
Depreciation,
depletion and
amortization N/A N/A (2.83) N/A N/A (2.44)
General and
administrative,
net N/A N/A (0.39) N/A N/A (0.31)
Income from
operations per
unit $2.25 $1.68
Oil and Gas Capital
Expenditures (in thousands)
Exploration,
development and
leasehold $350,194 $48,326 $398,520 $199,513 $169,480 $368,993
Acquisitions 17,843 20,966(C) 38,809 31,355 336 31,691
Subtotal 368,037 69,292 437,329 230,868 169,816 400,684
Capitalized
interest and
G&A --- --- 19,223 --- --- 19,032
Total $368,037 $69,292 $456,552 $230,868 $169,816 $419,716
(A) Substantially all of the company's offshore assets were sold during
the first half of 2006.
(B) Realized natural gas prices include the effects of gains and losses
on contracts settled and unwound during the period, and do not
include unrealized gains and losses recognized pursuant to SFAS 133.
(C) Reflects an adjustment and reduction to a previously announced
estimate for a net profits interest paid to a predecessor owner in
certain of the company's offshore Louisiana properties that were
sold during the second quarter 2006.
Note: Totals may not foot due to rounding.
Contact: The Houston Exploration Company
Melissa R. Aurelio
713-830-6887
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/