Growth in production volumes and higher commodity prices in the first half of 2001 contributed to Houston-based independent Ocean Energy Inc.’s best annual financial performance in history, the company announced Thursday. Ocean reported 2001 net income of $278 million or $1.55 per diluted share, excluding special items, compared to 2000 net income of $228 million or $1.31 per diluted share, excluding special items. The first three quarters boosted the final quarter, however, with net income of $23 million or $0.13 per diluted share, excluding special items compared to net income of $80 million or $0.46 per diluted share a year earlier.

“Ocean Energy had an excellent year from both an operational and financial perspective, with significant exploration success and double-digit annual production growth,” said CEO James T. Hackett. “In addition, Ocean has continued to generate one of the industry’s highest reserve replacement rates and one of the lowest drill-bit finding and development costs.” He said, “while the second half of 2001 reflected the negative impact of lower commodity prices, we enter 2002 confident that we can retain a strong internal growth profile even in a period of reduced capital expenditures.”

Discretionary cash flow (income from continuing operations before non-cash operating activities) for the full year was $824 million for 2001 compared to $698 million in 2000. Discretionary cash flow per diluted share for the same period was $4.62 compared to $3.99 for the previous year. For the fourth quarter, discretionary cash flow was $132 million, compared to $209 million for the fourth quarter of 2000. Discretionary cash flow per diluted share for the quarter totaled $0.73 compared to $1.19 in the prior fourth quarter.

Total production for the year was 54 MMboe. Average daily production for the year was 443 MMcf and 75,000 bbl, or 149,000 boe/d. Average production for the fourth quarter was 405 MMcf/d and 77 thousand bbl/d, or 145 Mboe/d. These production rates represent a 10% and 4% increase, respectively, over the comparable year and quarter in 2000.

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