Discretionary cash flow(1) for the second quarter 2012 was
As previously announced,
Key highlights for the second quarter 2012 include:
Second quarter 2012 sales volumes totaled 231 thousand barrels of oil equivalent per day (MBoe/d). Sales volumes from continuing operations averaged 224 MBoe/d, up 10 percent from the second quarter 2011. The entire increase was from crude oil, which was up 33 MBbl/d in the quarter. Approximately 47 percent of the Company's sales volumes were liquids, up from 39 percent last year. International and U.S. natural gas comprised the remaining 21 and 32 percent of sales volumes, respectively. Production volumes from continuing operations for the quarter were 223 MBoe/d, with the difference attributable to the timing of crude oil liftings in Equatorial Guinea.
U.S. sales volumes were 134 MBoe/d, up 17 percent from the second quarter last year. The growth was primarily attributable to the ongoing horizontal drilling program in the
International sales volumes totaled 90 MBoe/d for the quarter, up slightly from the same period last year. Strong operational performance at Aseng offset lower volumes resulting from the management of the reservoir at Mari-B offshore
The average realized price for crude oil and condensate was
Total production costs per barrel of oil equivalent (Boe), including lease operating expense (LOE), production and ad valorem taxes, and transportation and gathering expenses were
OPERATIONS UPDATE
In the
In the
In
UPDATED GUIDANCE
For the third quarter of 2012,
(1) A Non-GAAP measure, see attached Reconciliation Schedules
(2) See Schedule 7 for a financial summary of discontinued operations
SUPPLEMENTAL OPERATIONS INFORMATION
For additional information on
WEBCAST AND CONFERENCE CALL INFORMATION
This news release contains certain non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating the company's overall financial performance. These non-GAAP measures help facilitate comparison of company operating performance across periods and with peer companies.
This news release contains certain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "expects," "intends," "will," "should," "may," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect
|
Schedule 1 | ||||||||||||
|
| ||||||||||||
|
Reconciliation of Net Income to Adjusted Earnings | ||||||||||||
|
(in millions, except per share amounts, unaudited) | ||||||||||||
|
Three Months Ended |
Six Months Ended | |||||||||||
|
|
June 30, | |||||||||||
|
2012 |
Per Diluted Share [6] |
2011 |
Per Diluted Share [6] |
2012 |
Per Diluted Share [6] |
2011 |
Per Diluted Share | |||||
|
Net Income |
|
$ 1.58 |
|
$ 1.61 |
|
$ 3.06 |
|
$ 1.73 | ||||
|
Unrealized (gains) losses on commodity |
||||||||||||
|
derivative instruments |
(277) |
(1.54) |
(142) |
(0.79) |
(204) |
(1.13) |
160 |
0.89 | ||||
|
Asset impairments [1] |
73 |
0.41 |
131 |
0.73 |
73 |
0.41 |
139 |
0.78 | ||||
|
Gain on divestitures [2] |
(9) |
(0.05) |
(26) |
(0.15) |
(9) |
(0.05) |
(26) |
(0.15) | ||||
|
Drilling rig expense[3] |
- |
- |
1 |
0.01 |
- |
- |
19 |
0.11 | ||||
|
Other adjustments |
- |
- |
4 |
0.02 |
- |
- |
5 |
0.03 | ||||
|
Total adjustments before tax |
(213) |
(1.18) |
(32) |
(0.18) |
(140) |
(0.78) |
297 |
1.66 | ||||
|
Income Tax Effect of Adjustments [4] |
66 |
0.37 |
1 |
0.01 |
43 |
0.24 |
(102) |
(0.58) | ||||
|
Adjusted Earnings [5] |
|
$ 0.77 |
|
$ 1.44 |
|
$ 2.52 |
|
$ 2.81 | ||||
|
Weighted average number of shares outstanding |
||||||||||||
|
Diluted |
180 |
179 |
180 |
178 |
||||||||
|
[1] Amount for 2012 represents impairments of our South Raton assets in the Deepwater Gulf of
| ||||||||||||
|
[2] During the second quarter of 2012, we completed the sale of our Iron Horse U.S. onshore assets. During second quarter of 2011, we completed the transfer of assets and exit from Ecuador.
| ||||||||||||
|
[3] Amount for 2011 represents stand-by rig expense incurred prior to receiving permits to resume drilling activities, which were suspended under the Federal Deepwater Moratorium, in the deepwater Gulf of Mexico.
| ||||||||||||
|
[4] The net tax effects are determined by calculating the tax provision for GAAP Net Income, which includes the adjusting items, and comparing the results to the tax provision for Adjusted Earnings, which excludes the adjusting items. The difference in the tax provision calculations represents the tax impact of the adjusting items listed here. The calculation is performed at the end of each quarter and, as a result, the tax rates for each discrete period may be different.
| ||||||||||||
|
[5] Adjusted earnings should not be considered a substitute for net income as reported in accordance with GAAP. Adjusted earnings is provided for comparison to earnings forecasts prepared by analysts and other third parties. Our management believes, and certain investors may find, that adjusted earnings is beneficial in evaluating our financial performance as it excludes the impact of significant non-cash items. We believe such measures can facilitate comparisons of operating performance between periods and with our peers.
| ||||||||||||
|
[6] The diluted earnings per share calculations for the three and six months ended | ||||||||||||
|
Schedule 2 | ||||||||
|
| ||||||||
|
Summary Statement of Operations | ||||||||
|
(in millions, except per share amounts, unaudited) | ||||||||
|
Three Months Ended |
Six Months Ended | |||||||
|
|
June 30, | |||||||
|
2012 |
2011 |
2012 |
2011 | |||||
|
Revenues |
||||||||
|
Crude oil and condensate |
$ 769 |
$ 490 |
|
$ 951 | ||||
|
Natural gas |
117 |
226 |
270 |
425 | ||||
|
NGLs |
48 |
67 |
112 |
124 | ||||
|
Income from equity method investees |
32 |
48 |
86 |
96 | ||||
|
Other revenues |
- |
11 |
- |
33 | ||||
|
Total revenues |
966 |
842 |
2,056 |
1,629 | ||||
|
Operating Expenses |
||||||||
|
Lease operating expense |
100 |
83 |
205 |
163 | ||||
|
Production and ad valorem taxes |
44 |
39 |
81 |
70 | ||||
|
Transportation and gathering expense |
25 |
15 |
48 |
31 | ||||
|
Exploration expense |
167 |
67 |
227 |
137 | ||||
|
Depreciation, depletion and amortization |
325 |
211 |
619 |
404 | ||||
|
General and administrative |
96 |
82 |
193 |
164 | ||||
|
Asset impairments |
73 |
131 |
73 |
137 | ||||
|
Other operating (income) expense, net |
(2) |
(11) |
10 |
18 | ||||
|
Total operating expenses |
828 |
617 |
1,456 |
1,124 | ||||
|
Operating Income |
138 |
225 |
600 |
505 | ||||
|
Other (Income) Expense |
||||||||
|
(Gain) Loss on commodity derivative instruments |
(276) |
(143) |
(180) |
143 | ||||
|
Interest, net of amount capitalized |
27 |
21 |
59 |
37 | ||||
|
Other (income) expense, net |
(3) |
(9) |
(3) |
- | ||||
|
Total other (income) expense |
(252) |
(131) |
(124) |
180 | ||||
|
Income from Continuing Operations Before Taxes |
390 |
356 |
724 |
325 | ||||
|
Income Tax Provision |
115 |
87 |
200 |
90 | ||||
|
Income from Continuing Operations |
275 |
269 |
524 |
235 | ||||
|
Discontinued Operations, Net of Tax [1] |
17 |
25 |
32 |
73 | ||||
|
Net Income |
$ 292 |
$ 294 |
$ 556 |
$ 308 | ||||
|
Earnings Per Share |
||||||||
|
Basic |
||||||||
|
Income from continuing operations |
|
|
$ 2.95 |
| ||||
|
Discontinued operations, net of tax |
0.09 |
0.15 |
0.18 |
0.42 | ||||
|
Net Income |
|
|
$ 3.13 |
| ||||
|
Diluted |
||||||||
|
Income from continuing operations |
|
|
$ 2.88 |
| ||||
|
Discontinued operations, net of tax |
0.09 |
0.14 |
0.18 |
0.42 | ||||
|
Net Income |
|
|
$ 3.06 |
| ||||
|
Weighted average number of shares outstanding |
||||||||
|
Basic |
178 |
176 |
178 |
176 | ||||
|
Diluted |
180 |
179 |
180 |
178 | ||||
|
[1] Represents our | ||||||||
|
Schedule 3 | ||||||||
|
| ||||||||
|
Volume and Price Statistics | ||||||||
|
(unaudited) | ||||||||
|
Three Months Ended |
Six Months Ended | |||||||
|
June 30, |
June 30, | |||||||
|
2012 |
2011 |
2012 |
2011 | |||||
|
Crude Oil and Condensate Sales Volumes (MBbl/d) |
||||||||
|
|
46 |
37 |
44 |
37 | ||||
|
|
34 |
11 |
35 |
12 | ||||
|
|
5 |
3 |
5 |
4 | ||||
|
Total consolidated operations |
85 |
51 |
84 |
53 | ||||
|
Equity method investee |
1 |
2 |
2 |
2 | ||||
|
Total sales volumes |
86 |
53 |
86 |
55 | ||||
|
Crude Oil and Condensate Realized Prices ($/Bbl) |
||||||||
|
|
|
|
$ 97.70 |
$ 97.15 | ||||
|
|
104.55 |
114.80 |
111.38 |
108.57 | ||||
|
|
115.41 |
109.96 |
120.93 |
102.61 | ||||
|
Consolidated average realized prices |
|
|
|
| ||||
|
Natural Gas Sales Volumes (MMcf/d) |
||||||||
|
|
431 |
378 |
432 |
380 | ||||
|
|
215 |
233 |
222 |
240 | ||||
|
|
60 |
174 |
84 |
157 | ||||
|
Total consolidated operations |
706 |
785 |
738 |
777 | ||||
|
Natural Gas Realized Prices ($/Mcf) |
||||||||
|
|
$ 2.10 |
$ 4.21 |
$ 2.36 |
$ 4.14 | ||||
|
|
0.27 |
0.27 |
0.27 |
0.27 | ||||
|
|
5.44 |
4.81 |
4.84 |
4.54 | ||||
|
Consolidated average realized prices |
$ 1.82 |
$ 3.18 |
$ 2.01 |
$ 3.02 | ||||
|
Natural Gas Liquids (NGL) Sales Volumes (MBbl/d) |
||||||||
|
|
16 |
15 |
16 |
14 | ||||
|
Equity method investee |
4 |
5 |
5 |
5 | ||||
|
Total sales volumes |
20 |
20 |
21 |
19 | ||||
|
Natural Gas Liquids Realized Prices ($/Bbl) |
||||||||
|
|
|
$ 50.03 |
$ 37.46 |
$ 48.98 | ||||
|
Barrels of Oil Equivalent Volumes (MBoe/d) |
||||||||
|
|
134 |
115 |
132 |
114 | ||||
|
|
70 |
50 |
72 |
52 | ||||
|
|
10 |
29 |
14 |
26 | ||||
|
|
5 |
3 |
5 |
4 | ||||
|
Total consolidated operations |
219 |
197 |
223 |
196 | ||||
|
Equity method investee |
5 |
7 |
7 |
7 | ||||
|
Total barrels of oil equivalent from continuing operations |
224 |
204 |
230 |
203 | ||||
|
Total barrels of oil equivalent from discontinued operations |
7 |
11 |
7 |
12 | ||||
|
Total barrels of oil equivalent |
231 |
215 |
237 |
215 | ||||
|
Schedule 4 | ||||
|
| ||||
|
Condensed Balance Sheets | ||||
|
(in millions, unaudited) | ||||
|
|
December 31, | |||
|
2012 |
2011 | |||
|
Assets |
||||
|
Current Assets |
||||
|
Cash and cash equivalents |
$ 702 |
$ 1,455 | ||
|
Accounts receivable, net |
824 |
783 | ||
|
Asset held for sale |
324 |
- | ||
|
Other current assets |
368 |
180 | ||
|
Total current assets |
2,218 |
2,418 | ||
|
Net property, plant and equipment |
13,425 |
12,782 | ||
|
Goodwill |
696 |
696 | ||
|
Other noncurrent assets |
642 |
548 | ||
|
Total Assets |
|
$ 16,444 | ||
|
Liabilities and Shareholders' Equity |
||||
|
Current Liabilities |
||||
|
Accounts payable - trade |
$ 1,279 |
$ 1,343 | ||
|
Other current liabilities |
1,060 |
925 | ||
|
Total current liabilities |
2,339 |
2,268 | ||
|
Long-term debt |
4,074 |
4,100 | ||
|
Deferred income taxes |
2,080 |
2,059 | ||
|
Other noncurrent liabilities |
683 |
752 | ||
|
Total Liabilities |
9,176 |
9,179 | ||
|
Total Shareholders' Equity |
7,805 |
7,265 | ||
|
Total Liabilities and Shareholders' Equity |
|
$ 16,444 | ||
|
Schedule 5 | ||||||||
|
| ||||||||
|
Discretionary | ||||||||
|
(in millions, unaudited) | ||||||||
|
Three Months Ended |
Six Months Ended | |||||||
|
|
June 30, | |||||||
|
2012 |
2011 |
2012 |
2011 | |||||
|
Adjusted Earnings [1] |
|
|
$ 459 |
$ 503 | ||||
|
Adjustments to reconcile adjusted earnings to discretionary cash flow: |
||||||||
|
Depreciation, depletion and amortization |
339 |
235 |
651 |
456 | ||||
|
Exploration expense |
167 |
68 |
230 |
138 | ||||
|
(Income)/Dividends from equity method investments, net |
22 |
18 |
(7) |
(5) | ||||
|
Deferred compensation (income) expense |
(11) |
(7) |
(8) |
3 | ||||
|
Deferred income taxes |
25 |
67 |
63 |
110 | ||||
|
Stock-based compensation expense |
17 |
14 |
33 |
29 | ||||
|
Other |
(1) |
1 |
(2) |
1 | ||||
|
Discretionary |
|
|
|
| ||||
|
Reconciliation to Operating Cash Flows |
||||||||
|
Net changes in working capital |
(123) |
163 |
(64) |
63 | ||||
|
Cash exploration costs |
(50) |
(46) |
(112) |
(94) | ||||
|
Current tax expense of earnings adjustments |
(29) |
(34) |
(14) |
36 | ||||
|
Drilling rig expense [3] |
- |
(1) |
- |
(19) | ||||
|
Other adjustments |
5 |
4 |
18 |
8 | ||||
|
Net Cash Provided by Operating Activities |
|
|
|
| ||||
|
Capital expenditures (accrual based) |
|
|
|
| ||||
|
Increase in FPSO lease obligation |
- |
17 |
- |
51 | ||||
|
Total Capital Expenditures (Accrual Based) |
|
|
|
| ||||
|
[1] See Schedule 1: Reconciliation of Net Income to Adjusted Earnings.
|
||||||||
|
[2] The table above reconciles discretionary cash flow to net cash provided by operating activities. While discretionary cash flow is not a GAAP measure of financial performance, our management believes it is a useful tool for evaluating our overall financial performance. Among our management, research analysts, portfolio managers and investors, discretionary cash flow is broadly used as an indicator of a company's ability to fund exploration and production activities and meet financial obligations. Discretionary cash flow is also commonly used as a basis to value and compare companies in the oil and gas industry.
|
||||||||
|
[3] Amount for 2011 represents stand-by rig expense incurred prior to receiving permits to resume drilling activities, which were suspended under the Federal Deepwater Moratorium, in the deepwater Gulf of Mexico. |
||||||||
|
Schedule 6 | ||||||||
|
| ||||||||
|
Effect of Commodity Derivative Instruments | ||||||||
|
(in millions, unaudited) | ||||||||
|
Three Months Ended |
Six Months Ended | |||||||
|
|
June 30, | |||||||
|
2012 |
2011 |
2012 |
2011 | |||||
|
(Gain) Loss on Commodity Derivative Instruments |
||||||||
|
Crude Oil |
||||||||
|
Realized |
$ 17 |
$ 22 |
$ 51 |
$ 32 | ||||
|
Unrealized |
(300) |
(149) |
(208) |
125 | ||||
|
Total Crude Oil |
(283) |
(127) |
(157) |
157 | ||||
|
Natural Gas |
||||||||
|
Realized |
(16) |
(23) |
(27) |
(49) | ||||
|
Unrealized |
23 |
7 |
4 |
35 | ||||
|
|
7 |
(16) |
(23) |
(14) | ||||
|
Total (Gain) Loss on Commodity Derivative Instruments |
|
|
|
| ||||
|
Schedule 7 | ||||||||
|
| ||||||||
|
Discontinued Operations | ||||||||
|
(in millions, except volume amounts, unaudited) | ||||||||
|
Three Months Ended |
Six Months Ended | |||||||
|
June 30, |
June 30, | |||||||
|
Summary Statement of Operations: |
2012 |
2011 |
2012 |
2011 | ||||
|
Oil and gas revenues |
$ 65 |
$ 112 |
$ 140 |
$ 225 | ||||
|
Production expense |
11 |
18 |
25 |
32 | ||||
|
Exploration expense |
- |
1 |
3 |
1 | ||||
|
Depreciation, depletion and amortization |
14 |
24 |
32 |
52 | ||||
|
General and administrative |
1 |
- |
1 |
1 | ||||
|
Asset impairments |
- |
- |
- |
2 | ||||
|
Income Before Income Taxes |
39 |
69 |
79 |
137 | ||||
|
Current tax expense |
20 |
58 |
55 |
74 | ||||
|
Deferred tax expense |
2 |
(14) |
(8) |
(10) | ||||
|
Income From Discontinued Operations |
$ 17 |
$ 25 |
$ 32 |
$ 73 | ||||
|
Volume and Price Statistics: |
||||||||
|
Crude Oil and Condensate Sales Volumes (MBbl/d) |
6 |
10 |
6 |
10 | ||||
|
Crude Oil and Condensate Realized Prices ($/Bbl) |
|
|
|
| ||||
|
Natural Gas Sales Volumes (MMcf/d) |
4 |
6 |
5 |
7 | ||||
|
Natural Gas Realized Prices ($/Mcf) |
$ 8.84 |
$ 8.28 |
$ 8.29 |
$ 7.74 | ||||
SOURCE
News Provided by Acquire Media