(NYSE: SWN) Southwestern Energy Announces Record 2005 Financial and Operating Results [FWGYXZT]
Net Income Increases By 43% to $147.8 Million; Proved Reserves Increase By 28%
to 826.8 Bcfe
HOUSTON, Feb. 28 /PRNewswire-FirstCall/ -- Southwestern Energy Company
(NYSE: SWN) today announced financial and operating results for the fourth
quarter and the year ended December 31, 2005. Calendar year 2005 highlights
include:
* Record earnings of $147.8 million, up 43% from 2004
* Record net cash provided by operating activities before changes in
operating assets and liabilities (a non-GAAP measure reconciled below)
of $321.8 million, up 35% from 2004
* Record oil and gas production of 61.0 Bcfe, up 13% over 2004
* Record proved oil and gas reserves of 826.8 Bcfe, up 28% over 2004
For the fourth quarter of 2005, Southwestern reported net income of
$48.9 million, or $0.29 per diluted share, up 48% from $32.9 million, or
$0.22* per diluted share, for the same period in 2004. Net cash provided by
operating activities before changes in operating assets and liabilities
(non-GAAP; see reconciliation below), was $102.8 million in the fourth quarter
of 2005, up 42% from $72.4 million in 2004. Strong commodity prices and higher
production from the company's exploration and production (E&P) segment led to
the improved financial results.
Southwestern reported record net income for 2005 of $147.8 million, or
$0.95 per diluted share, up from $103.6 million, or $0.70* per diluted share
in 2004. Net cash provided by operating activities before changes in operating
assets and liabilities (non-GAAP; see reconciliation below) also set a new
record at $321.8 million, up from $237.7 million in 2004. A 13% increase in
production volumes and higher realized natural gas and oil prices primarily
drove the improved financial results.
"2005 was an outstanding year for our company, marked by record
achievements in our operating and financial results," stated Harold M. Korell,
President and Chief Executive Officer of Southwestern Energy. "For the third
straight year we set new records for annual production volumes and reserve
replacement. Our financial results were also outstanding, as we delivered new
records for earnings and cash flow, and our balance sheet is the strongest
it's ever been. We have started the year at a very fast pace and look forward
to what 2006 will bring as results from our Fayetteville Shale play unfold."
* Adjusted to reflect the company's two two-for-one stock splits
during 2005.
Fourth Quarter of 2005 Financial Results
E&P Segment - Operating income from the company's E&P segment was
$69.6 million for the three months ended December 31, 2005, up from
$50.6 million for the same period in 2004. The increase in 2005 was primarily
due to increased production volumes and higher realized natural gas and oil
prices, partially offset by increased operating costs and expenses.
Gas and oil production totaled 15.7 Bcfe for the three months ended
December 31, 2005, up 4% compared to 15.1 Bcfe in the fourth quarter of 2004.
The increase in 2005 production resulted primarily from increased production
from our Overton Field in East Texas and the Arkoma Basin. Production during
the fourth quarter of 2005 was lower than expected primarily due to delays in
the company's drilling programs in its Fayetteville Shale play and Ranger
Anticline area in Arkansas caused by drilling rig problems. Southwestern's
first quarter 2006 production guidance is 15.7 to 16.1 Bcfe.
Southwestern's average realized gas price was $7.51 per Mcf, including the
effect of hedges, in the fourth quarter of 2005 compared to $5.58 per Mcf in
the fourth quarter of 2004. The company's commodity hedging activities lowered
its average gas price $3.02 per Mcf during the fourth quarter of 2005 and
$0.88 per Mcf during the same period in 2004. Disregarding the impact of the
company's hedges, the company's average price received for its gas production
during the fourth quarter of 2005 was approximately $2.44 per Mcf lower than
average NYMEX spot prices, compared to approximately $0.65 per Mcf during the
fourth quarter of 2004. This change was primarily due to widening locational
market differentials that occurred in the company's core operating areas
during the fourth quarter of 2005.
Southwestern's average realized oil price was $43.71 per barrel, including
the effect of hedges, during the fourth quarter of 2005 compared to $37.00 per
barrel in the fourth quarter of 2004. The company's hedging activities lowered
its average oil price $14.07 per barrel during the fourth quarter of 2005 and
$10.56 per barrel during the same period in 2004.
Lease operating expenses per Mcfe for the company's E&P segment were $0.51
per Mcfe in the fourth quarter of 2005, compared to $0.37 per Mcfe in the same
period in 2004. The increase in lease operating expenses per Mcfe in 2005
resulted from increases in compression, saltwater disposal and gas processing
costs as wells as generally higher oilfield service costs. General and
administrative expenses per Mcfe were $0.64 during the fourth quarter of 2005,
as compared with $0.39 for the same period in 2004. The increase in general
and administrative expenses for the E&P segment was due primarily to increased
payroll costs due to the expansion of the company's E&P operations related to
the Fayetteville Shale play and increased incentive compensation costs. Taxes
other than income taxes per Mcfe were $0.40 during the fourth quarter of 2005,
compared to $0.33 per Mcfe during the same period in 2004. The increase in
2005 was due primarily to increased severance and ad valorem taxes that
resulted from increases in commodity prices. The company's full cost pool
amortization rate increased to $1.54 per Mcfe in the fourth quarter of 2005,
compared to $1.23 per Mcfe for the same period in 2004, primarily due to
increased finding and development costs.
Natural Gas Distribution Segment -- Operating income for the company's
natural gas distribution segment was $3.0 million for the three months ended
December 31, 2005, down from $3.8 million for the same period in 2004. The
decrease in operating income for this segment resulted from increased
operating costs and expenses and reduced usage per customer due to customer
conservation brought about by high gas prices and warmer than normal weather.
Effective October 31, 2005, the Arkansas Public Service Commission approved a
rate increase for Arkansas Western Gas Company of $4.6 million annually.
Midstream Services -- Operating income for the company's midstream
services segment, which is comprised of natural gas marketing and gathering
activities, was $2.2 million for the three months ended December 31, 2005,
compared to $0.7 million in the same period in 2004. The increase in 2005 was
primarily due to higher marketing margins on natural gas sales caused in large
part by the increased volatility of locational market differentials in the
company's core operating areas.
Transportation and Other -- The company recorded pre-tax income from
operations relating to the company's 25% interest in the Ozark Gas
Transmission System of $1.3 million during the fourth quarter of 2005,
compared to pre-tax income of $0.7 million for the same period in 2004.
SOURCE Southwestern Energy Company
Greg D. Kerley, Executive Vice President and Chief Financial Officer,
+1-281-618-4803, or Brad D. Sylvester, CFA, Manager, Investor Relations,
+1-281-618-4897, both of Southwestern Energy Company
28Feb06 22:08 GMT
Symbols:
ud;SWN us;SWN
Source PRN PR Newswire
