Petroleum Development Corporation Announces 2010 First Quarter Results: Company Reports Net Income of $23.7 Million, or $1.23 Per Diluted Share; Adjusted Cash Flow From Operations of $49.3 Million, or $2.56 Per Diluted Share; Quarterly Production Exceeded Guidance by 7%
Press Release Source: Petroleum Development Corporation On Monday May 10, 2010, 10:24 pm EDT
DENVER, May 10, 2010 (GLOBE NEWSWIRE) -- Petroleum Development Corporation ("PDC" or the "Company") (Nasdaq:PETD - News) today reported its 2010 first quarter operating and financial results.
First Quarter 2010 Highlights
The Company reported net income for the quarter ended March 31, 2010 of $23.7 million, or $1.23 per diluted share, compared with a March 31, 2009 quarterly net loss of $5.7 million, or a $0.38 loss per diluted share.
Adjusted net income attributable to shareholders, a non-GAAP financial measure defined below, for the first quarter 2010 was $10.9 million, or $0.57 per diluted share, compared to $4.1 million, or $0.27 per diluted share in the same 2009 period.
First quarter 2010 results reflect a 30% increase in average realized sales prices (including realized gains on derivatives), to $9.20 per Mcfe for Q1 2010 compared to $7.08 per Mcfe for Q1 2009.
Adjusted cash flow from operations, a non-GAAP financial measure defined below, for the first quarter 2010 was $49.3 million, compared to $39.7 million for the first quarter 2009.
First quarter 2010 production of 9.1 Bcfe exceeded the Company's guidance of 8.5 Bcfe by 7%, primarily due to increased production from the Wattenberg Field.
The Company drilled 38.6 total net wells during the first quarter 2010, compared to 24.9 total net wells drilled in the same 2009 period.
Operating costs and G&A are in line with expectations.
The Company's liquidity at March 31, 2010 improved to $253.8 million, compared to $238.2 million at December 31, 2009.
Richard W. McCullough, Chairman and Chief Executive Officer, stated, "We are very pleased with our operational and financial results for the quarter. We are drilling in all of our major fields, our production, particularly in the oil and liquids-rich Wattenberg Field, has increased, and we are very encouraged with our progress in the Marcellus Shale where we reached total depth on our first horizontal well. Although our per unit costs have risen somewhat due to production declines from 2009 levels, overall our costs remain low which along with our hedges are allowing us to make money in this very low gas pricing environment. Our operating teams continue to perform exceptionally well. We expect our production to continue to increase throughout the year, although with lower annual realized prices than forecasted we are not revising guidance upward at this time."
Financial Results
Natural gas and oil sales revenues from the Company's producing properties for the first quarter 2010 were up 52% to $60.4 million, an increase of $20.7 million from $39.7 million for the same 2009 period. The average realized price of natural gas and oil, including realized gains and losses on derivatives, was $9.20 per Mcfe in the first quarter 2010 compared to $7.08 per Mcfe in the first quarter of 2009. The average sales price for natural gas and oil, excluding realized gains and losses on derivatives, during this year's first quarter was $6.67 per Mcfe, an increase of approximately 76% from $3.79 per Mcfe for the same quarter 2009. The Company anticipates a diminishing contribution to realized gains, as compared to the first quarter of 2010, from its existing hedge positions for the remainder of year.
Commodity price risk management contributed a gain of $43.2 million for the first quarter of 2010. The $43.2 million gain was comprised of a $22.9 million realized gain and a $20.3 million unrealized gain. Both the realized and unrealized gain were the result of a decrease in spot and forward natural gas prices offset somewhat by an increase in spot and forward oil and liquids prices during the first quarter 2010. Commodity price risk management contributed a gain of $23.7 million for the first quarter 2009, which was comprised of a $36.6 million realized gain offset by a $12.9 million unrealized loss.
Natural gas and oil production and well operations costs decreased 4% to $15.7 million, or $1.73 per Mcfe for the first quarter 2010, compared to $16.4 million, or $1.47 per Mcfe for the first quarter 2009. The reduction, on an absolute basis, was primarily attributable to the preservation of cost reductions for field service and equipment costs in the Company's producing basins, offset to a degree by higher production taxes during the period. The increase on a per Mcfe basis was due to lower production in the first quarter 2010 versus the first quarter 2009. Production taxes, which fluctuate with natural gas and oil revenues, increased $0.5 million, or 27%, to $2.4 million in the first quarter 2010 versus the same period of 2009.
DD&A expense for the first quarter 2010 decreased 17% to $28.4 million, or $3.14 per Mcfe, from $34.4 million, or $3.08 per Mcfe, in the respective quarter 2009. The DD&A expense related to gas and oil properties for the first quarter 2010 was $26.4 million, or $2.91 per Mcfe, compared to $32.4 million, or $2.90 per Mcfe, for the first quarter 2009. The expense decrease was primarily due to a 19% decrease in production in the first quarter 2010, compared to the first quarter 2009.
General and administrative expenses decreased to $10.7 million in the first quarter 2010, from $12.1 million in the same 2009 period. The first quarter 2010 expense decrease was primarily related to the expensing of previously capitalized 2008 acquisition costs of $1.5 million in the first quarter 2009, pursuant to the adoption of a new accounting standard.
The Company's exploration expense increased from $5.6 million in the first quarter 2009 to $6.4 million in the first quarter 2010. The increase was primarily due to costs related to several deep exploratory zone tests in the Piceance Basin and the acceleration of Marcellus Shale seismic expenses, partially offset by drilling rig demobilization and inventory impairment costs incurred in the first quarter 2009.
Interest expense decreased $0.6 million to $7.8 million in the first quarter 2010, from $8.4 million in the same period of 2009, primarily as a result of continued debt reduction. Debt to book capitalization was 33% at March 31, 2010
