After several years being hard up for cash because gas and oilwere dirt cheap, producers are now rolling in the dough. Severalmore reported record financial results for the fourth quarter andfull year last week because of extremely high natural gas and crudeoil prices and rising production. EOG Resources, Louis DreyfusNatural Gas and Equitable Resources all hit the jackpot withmassive earnings increases from the year prior.
EOG Resources reported record fourth quarter and full year 2000results with a 431% increase in 4Q net income to $158.7 million, or$1.36 per share, and a 570% increase in annual net income to $385.9million, or $3.30 per share. EOG’s 4Q production per share was up11.1% and its annual production per share grew 7.6%. Its crude oilproduction increased 35.1% and natural gas liquids production rose7.9%.
“Combined with record natural gas prices, our strong 2000results reflect our success in delivering on EOG’s long termstrategy of being natural gas based, per share focused and rate ofreturn driven,” said CEO Mark G. Papa. “Year 2000 was outstandingfor our shareholders. EOG’s stock price appreciated 211%, rankingit third in the S&P 500 Index,” he added.
EOG increased its proved reserves by 6% to 3,821 Bcfe by the endof the year. It also replaced 152% of production from all sourcesat a finding cost of $1.07/Mcfe.
Louis Dreyfus Natural Gas also announced record financialresults for the quarter and year. Fourth quarter net income was up304% to $50.9 million, or $1.15 per share, on total revenue of$174.4 million. Revenue rose 87% from 4Q99. Cash flow jumped by156% in the fourth quarter to $131.8 million. Gas productionaveraged 347 MMcf/d, a 13% increase. The company’s equivalent oiland gas production for the quarter increased 11% to 394 MMcfe/dcompared to 355 MMcfe/d in 4Q99. In addition, the price realizedfor the company’s gas production in the fourth quarter averaged$4.82 per Mcf, an increase of 97% compared to $2.45/Mcf in 4Q99.Oil prices averaged $30.67/bbl, a 46% increase.
For the year Louis Dreyfus reported a 359% increase in netincome to $98.3 million, or $2.29 per share, on total revenue of$477.3 million, which was up 58%. Net income excluding the non-cashimpact of SFAS 133 derivative accounting and nonrecurringimpairment charges was $114.3 million, or $2.67 per share, for theyear compared to $24.6 million, or $0.61 per share, for 1999.
“The strategic decision made 10 years ago to focus on building alarge domestic natural gas reserve base is clearly paying dividendsin the current natural gas price environment,” said CEO MarkMonroe. “Last year, our proved reserve base grew 23% to 1.8 Tcfe,with 275 Bcfe added through drilling and 204 Bcfe added byacquisitions. Natural gas reserves comprised 89% of our totalproved reserves, or 1.6 Tcf, continuing to secure our position asone of the largest natural gas companies in the U.S.”
Equitable Resources reported a 71% earnings increase for theyear to $114.1 million or $3.44/share and 51% growth for thequarter driven by increased production, prices and throughput.Equitable’s stock price achieved 100% appreciation during 2000.
“Equitable Resources’ record earnings performance in year 2000is a significant milestone,” said CEO Murry S. Gerber. “Thisachievement is tangible evidence of exceptional implementation of astrategy focused on building value from our core businesses.Equitable is considerably larger, more profitable and financiallystronger than it was one year ago. As such we are better positionedcompetitively than at any time in our recent history.”
Equitable’s growth was led by its production segment, whichshowed a 120% increase in EBIT to $120.3 million for the year 2000.The positive results were due primarily to increased productionattributable to the acquisition of Statoil’s Appalachian oil andgas properties and higher commodity prices. Some of the improvementwas offset by the merger of its Gulf business with WestportResources, the results of which are no longer included with thissegment, and the settlement of the Kentucky West labor situation.
“I am optimistic about earnings potential for the year ahead,”said Gerber. “We are currently targeting diluted earnings per sharegrowth of 35-40% over our 2000 recurring EPS of $3.44. This outlookassumes average Nymex gas prices of $4.00/MMBtu.”
For 2001, Equitable expects 40 Bcfe of net equity gas sales, ofwhich about 12.5 Bcfe has been hedged in the form of Nymex collarswith an average floor of about $3.25/Mcf and an average ceiling ofabout $4.30/Mcf. About 6.6 Bcfe will be sold subject to a fixedprice of about $4/Mcfe.
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