The Wiser Oil Company Reports Fourth Quarter Results, 2001 Year-End Reserves and Provides...
Business Editors
DALLAS--(BUSINESS WIRE)--Feb. 15, 2002
The Wiser Oil Company (NYSE:WZR) today reported a net loss (excluding preferred stock discount amortization and non-cash gain on sale of property) for the fourth quarter of 2001 of $10.2 million, or ($1.11) per basic and
Including the preferred stock discount amortization, earnings (loss) per basic and diluted share was ($1.11) for the fourth quarter of 2001 and $0.67 per share ($0.53 per diluted share) for the year 2001.
Discretionary cash flow (cash flow from operations before exploration expense, changes in working capital and adjusting hedge income to a cash basis) for the fourth quarter of 2001 was $2.8 million, or $0.30 per share ($0.18 per diluted share), down $5.2 million from fourth quarter 2000 discretionary cash flow of $8.0 million. For the year 2001, discretionary cash flow was $31.0 million, or $3.38 per share ($2.16 per diluted share), compared to $24.8 million or $2.77 per share ($2.24 per diluted share) in 2000, an increase of 25%.
EBITDAX for the fourth quarter of 2001 was $6.2 million, or $0.67 per share ($0.41 per diluted share), down $4.8 million from fourth quarter 2000 EBITDAX of $11.0 million. For the year 2001, EBITDAX was $43.9 million or $4.79 per share ($3.06 per diluted share) compared to $36.8 million or $4.11 per share ($3.32 per diluted share) in 2000, an increase of 19%.
During the fourth quarter of 2001, Wiser produced 2.9 Bcf of gas and 467,000 barrels of oil and NGL's for a daily average of 10,309 BOEPD, up 23% from 8,406 BOEPD in the fourth quarter of 2000 and up 9% sequentially from third quarter 2001 average production of 9,424 BOEPD. For the year 2001, daily production averaged 9,342 BOEPD compared to 8,792 BOEPD in 2000. Total BOE production for 2001 was 3.41 million BOE, up 6% from 3.21 million BOE in 2000. For the year 2002, Wiser expects BOE production to increase approximately 24% over year 2001 production to 4.2 million BOE, or approximately 11,500 BOEPD.
Oil and gas revenues for the fourth quarter 2001 were $16.9 million, down 9% or $1.7 million from fourth quarter 2000, with oil prices averaging $20.20 per barrel and gas prices averaging $2.65 per Mcf, after recognizing net hedging gains of $3.4 million in the fourth quarter. For the year 2001, oil and gas revenues were $80.3 million, after recognizing $4.5 million of hedging gains, and the average oil and gas prices received by the Company were $24.27 per barrel and $3.85 per Mcf. Average prices received by the Company in 2001, before hedging gains, were approximately $2.72 per barrel less than the average NYMEX oil price and $0.80 per mcf less than the average NYMEX gas price, due to quality and location differentials.
Wiser's cash balance at December 31, 2001 was $12.7 million.
Capital and exploration expenditures for 2001 were as follows
(millions):
U.S. Canada Total
-------- ---------- ---------
Invasion Acquisition $ - $ 36.4 $ 36.4
Talisman Exchange - 8.2 8.2
Exploration 11.0 1.3 12.3
Development and Acquisition 10.1 13.7 23.8
------ ------- -------
Total $ 21.1 $ 59.6 $ 80.7
======= ======= =======
Proved Oil and Gas Reserves
During 2001, the Company replaced 274% of its 2001 production with 2.37 million BOE added through extensions and discoveries and 6.97 million BOE added through acquisitions. At year-end, the proved reserves were 54% oil and 46% gas and 73 % of the reserve value was attributable to proved developed producing wells. The reserve life index at 12/31/01 was 10.5 years. In comparison, at 12/31/00, the reserves were 66% oil and 34 % gas and the percentage of proved developed producing reserves was 85 % with an reserve life index of 11.6 years.
The discounted future net cash flows as calculated using SEC pricing guidelines, or pre-tax PV10 of Wiser's proved reserves at 12/31/01 is $160.9 million. The commodity prices used in this valuation were $19.72 per barrel and $2.35 per Mcf, respectively. Due to the limitations associated with the SEC pricing guidelines, last year the Company began publishing a proved reserve valuation based on its own internal price forecast. Based on the Company's internal price forecast using NYMEX index prices of $20.50 per barrel for 2002, $21.50 for 2003, $23.00 for 2004 and thereafter escalated annually at 3% with a cap of $29.00 per barrel and $2.50 per Mcf for 2002, $3.00 for 2003, $3.25 for 2004 and thereafter escalated at 3% with a cap of $3.50 per Mcf, the Company's pre-tax PV10 was $210.7 million at 12/31/01. In this valuation, costs are escalated annually at a rate of 2% until the price cap of the product is reached. Following is a reconciliation of the proved reserve quantities using SEC pricing guidelines as of 12/31/00 and 12/31/01:
Mmcf Mbbls MBOE
Reserve Volumes: Natural Gas Liquids Total
----------- ------- -----
Beginning of year 76,109 24,491 37,176
Revisions (814) (4,140) (4,275)
Price effect (3,168) (1,111) (1,639)
Additions 8,762 906 2,366
Production (9,999) (1,743) (3,410)
Purchases 34,822 1,166 6,970
Sales (7,739) (485) (1,775)
-------- -------- --------
End of Year 97,973 19,084 35,413
======= ======= =======
The 4.275 million BOE downward revision in reserves is due primarily to a write-down of the oil reserves associated with the Wellman field located in Terry County, Texas and to a lesser extent the Maljamar field located in the Lea and Eddy County, New Mexico.
Operations Update
In 2001, Wiser drilled a total of 48 gross wells (32.3 net) with 40 of them completed as successful producers for a success rate of 83%. In the U.S., Wiser drilled 18 gross wells (7 net) of which 14 were successfully completed yielding a 78% success rate. In Canada, Wiser drilled a total of 30 gross wells (25.3 net), of which 26 were completed as producers yielding an 87% success rate.
Gulf of Mexico - During the fourth quarter of 2001, Wiser participated in the drilling of the successful East Cameron (EC) 179 #1 to a measured depth of 12,054 feet. This was the first development well in the new EC Block 184 Field discovered by Wiser and its partners Magnum Hunter Resources and Remington Oil and Gas Corporation earlier in 2001. The EC 179 #1 well encountered over 65 feet of well developed gas sands at a depth approximately 60 feet lower than the same productive interval encountered in the EC 185 #1 well. This well also has additional potential pay in a deeper horizon. The well has been completed and temporarily shut-in while the previously drilled EC 185 #1 well is completed and production facilities are installed.
Wiser participated in the drilling of six wells in the Gulf of Mexico in 2001. Five of the wells were successful: four as new-field discoveries, and the EC 179 #1 as a successful development well. Production from all four fields should be on line during the first half of 2002. Upon commencement of production from all the fields, the Company anticipates its net production from the Gulf of Mexico should be between 5 and 7 MMCFPD.
In 2002, the Company anticipates that it will participate in up to six Gulf of Mexico exploration wells with working interests ranging from 12.5% to 25%. These wells will test prospects with gross reserve potential of approximately 525 BCF, or 115 BCF net to Wiser. In addition to these exploration wells, three development wells are planned in 2002 for fields discovered in 2001. After the completion of our 2001 drilling program, Wiser has an average 22.5 % working interest in an additional 26 offshore blocks covering some 126,683 gross acres. Each of these blocks has a 3-D seismically defined prospect that may be part of an exploration program in 2002 and later years.
U.S. Onshore - In the fourth quarter, the Company participated in two wells in the Gulf Coast area. On the Fitzsimmons Ranch prospect located in Jim Wells County, Texas, the Company participated with a 40% working interest in the drilling of the Goldapp #2 well, an 8,200 foot Yegua test. This well encountered 47 feet of apparent net gas pay in multiple sands, and is currently awaiting completion. An additional development well is planned for this prospect. In East Feliciana Parish, Louisiana, Wiser participated with an 18.75% working interest in the State Lease 17215 #1 well, a 13,600' Lower Tuscaloosa well. This test failed to encounter commercial hydrocarbons and was plugged and abandoned.
In the San Juan Basin, the Company participated in the Rosa Unit 32B and 342 wells with a 44.75% working interest. These wells, both of which are operated by Williams Production Company, are producing at a combined gross rate of 2.1 MMCFD, or 0.8 MMCFPD net to Wiser. These two wells have increased the Company's current net daily production from the San Juan Basin by 12 percent to approximately 7.4 MMCFPD.
Wellman Field - At the beginning of 2001, the Company made the decision to evaluate all options available for the Wellman field located in Terry County, Texas (WI: 95%). This tertiary recovery project, which was acquired in 1993 from Mobil, had reached a point in its life cycle where continued operation as a carbon dioxide (CO2) flood under existing conditions was no longer economically viable due to recurrent workover costs, plant operating expenses and prices. Among the reservoir management options considered and tested were more aggressive plug down workover techniques and vertically altering CO2 injection points. While some positive results were obtained, this work ultimately proved unsuccessful in sustaining required production levels. By the end of the summer, having worked with the Company's outside engineering consultants, DeGolyer & McNaughton ("D & M"), in a detailed evaluation and model study, the decision was made to cease CO2 make-up injection and prepare the field for blowdown of the substantial CO2 reserves that had been injected into the reservoir beginning in 1983. Of the CO2 previously injected into the field, the Company and D & M believe that approximately 40 BCF can be economically recovered. At current prices for CO2 and assuming a sales rate of 22.5 MMCF per day, these reserves have the potential to generate some $23 million of revenue to the Company. Of note is the fact that the cost of the CO2 purchased in the field was carried as a lease operating expense, therefor the Company has no cost basis in the CO2 which may be sold. The Company is presently investigating the CO2 market and expects to begin sales within the next twelve months.
Canada - The Hayter heavy oil project has successfully developed a base of production of approximately 1,300 BOEPD by the reactivation of 40 wells and the drilling of 16 horizontal and 7 vertical wells. Currently, engineering evaluations of the production characteristics of the wells are being made before increasing pumping rates. A pipeline connection is being re-established for the second quarter of 2002, which will decrease operating costs significantly. Future development will depend on product pricing, which is heavily influenced by the differentials between light and heavy crude prices.
Winter drilling activity on the Invasion properties in northern Alberta has nearly been completed, with the drilling of 25 of the planned 27 well program. Concurrent completions of the wells are under way, along with hooking up pipelines. Several exploration successes have identified new areas for next year's development, although they are sufficiently remote that they will not be tied in this year. Considerable facility and infrastructure upgrading has been carried out to optimize gas production and water re-injection. Preliminary testing indicates that gross production before royalties from the area will be in the range of 18 to 20 MMCFPD by April 1, 2002.
In our Hinton/Obed area, three recent discoveries have been made by other operators at locations adjacent to Company lands. These wells are producing from Cretaceous sands at flow rates ranging from 10 to 23 MMCFPD. Plans are being formulated to offset those discoveries within the next few months and Wiser anticipates having a 16.7% working interest in the offset wells. Meanwhile, Rio Alto Exploration is continuing to evaluate the Cardium Formation under their area farmout.
At the Company's Wild River Prospect, a substantial Gething and Cadomin play has developed adjacent to Company lands. This recent activity extends a trend that was established by the Company's successful Gething well in 6-33-57-24W5M, currently restricted to 0.7 MMCFPD. Plans are being made to further develop Wiser's substantial acreage position in this play, being some 17,440 gross (9,497 net) acres, by re-completing the 2-32-57-24W5M well which was drilled in 2000 in these Cretaceous sands and drilling the first two wells of a potential 22 well development program. Wiser and ExxonMobil each have a 50% working interest in the acreage which comprises this prospect. Potential reserves for the entire drilling program are in the range of 60-80 BCF gross, 30-40 BCF net to Wiser.
During 2001, Wiser Canada's land position grew from 221,872 gross acres, 98,054 net acres at the end of 2000 to 547,901 gross acres, 331,129 net acres at year-end 2001, an increase in net acres of 238%.
Commenting, George K. Hickox, Jr., Company Chairman and CEO said, "During this past year we accomplished many of the goals that were established as part of the recapitalization of the Company which began in June of 2000. Our oil to gas reserve mix is now more balanced, the reserve life has been reduced and our portfolio of exploration and development projects has increased dramatically. After this year of repositioning, we are now looking forward to increased production volumes from activities in our focus areas. We hope to build on these successes and will be allocating capital in 2002 to those projects and prospects which have the best potential to deliver value and growth to the enterprise."
Hedging Summary
The Company's current hedge position for 2002, excluding hedge
positions with Enron, is as follows (current hedge information is also
maintained on the Company's website at www.wiseroil.com):
2002
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Swaps
Barrels oil
per day 1,000 1,000 1,000
Price per bbl $22.05 $22.05 (a) $22.00 (b)
Barrels oil per day 1,000
Price per bbl $23.00 (b)
Barrels oil per day 400 400 400 400
Price per bbl Floating price - Wiser receives NYMEX less $8.30
Wiser pays Bow River - Platts
MMBTU gas per day 5,000
Price per MMBTU $2.95 (b)
MMBTU gas per day 5,000 5,000 10,000
Price per MMBTU $3.00 $3.00 (a) $3.14 (b)
MMBTU gas per day 5,000 5,000
Price per MMBTU $2.94 $2.94 (a)
MMBTU gas per day 10,000
Price per MMBTU $2.80 (b)
Costless Collars
MMBTU gas per day 5,000 (c) 5,000 (b)
Ceiling price per
MMBTU $2.95 $4.00
Floor price per
MMBTU $2.50 $3.15
MMBTU gas per day 5,000 (d)
Ceiling price per
MMBTU $3.00
Floor price per
MMBTU $2.50
The Company also has a costless collar for 10,000 MMBTU of gas per
day with a ceiling price of $4.25 and a floor price of $3.25 for the
entire year 2003.
(a) Wiser has granted the counterparty an option to extend this
swap to December 31, 2002.
(b) Wiser has granted the counterparty an option to extend this
swap an additional 3 months.
(c) Wiser has granted the counterparty an option to extend this
swap to June 30, 2002 as a $2.95 swap.
(d) Wiser has granted the counterparty an option to extend this
swap to June 30, 2002 as a $3.00 swap.
Preferred Stock
The Board of Directors approved the payment of quarterly dividends on the preferred stock for the fourth quarter of 2001 in the amount of $441,096. The annual dividend rate on the preferred stock is 7% and was paid on January 1, 2002. Half of the dividend was paid in cash of $220,547 and half was paid by the issuance of 44,385 shares of Wiser's common stock based on an average price for the last 10 trading days of the quarter of $4.97 per share.
Basic and diluted shares are summarized below using a weighted average
based on the period of time the shares are outstanding (000's):
4th Qtr 2001 Year 2001 If Converted
12/31/01
------------ --------- ------------
Common shares outstanding 9,199 9,161 9,199
$15 million Preferred Stock
(May 2000) 3,529 3,529 3,529
$10 million Preferred Stock
(June 2001) 2,353 1,431 2,353
Warrants and stock options 172 202 172
------- ------- -------
Total Diluted Shares 15,253 14,323 15,253
====== ====== ======
Diluted earnings per share is computed by adding back preferred stock
dividends and preferred stock discount amortization to net earnings
and then dividing the result by the diluted shares for the applicable
period of time.
Glossary of terms
BCF - billion cubic feet.
BOE - barrels of oil equivalent.
BOEPD - barrels of oil equivalent per day.
BOPD - barrels of oil per day
EBITDAX - earnings before interest, income taxes, depreciation,
amortization, gain on sale of property, exploration expense
and adjusting hedge income to a cash basis.
MCF - thousand cubic feet
MMBTU - million British thermal units.
MMCFPD - million cubic feet of gas per day
Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, and the business prospects of The Wiser Oil Company, are subject to a number of risks and uncertainties which may cause the Company's actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of oil and gas prices, product supply and demand, competition, government regulation or action, litigation, the costs and results of drilling and operations, the Company's ability to replace reserves or implement its business plans, access to and cost of capital, uncertainties about estimates of reserves, quality of technical data, and environmental risks. These and other risks are described in the Company's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission.
THE WISER OIL COMPANY
(and Consolidated Subsidiaries)
(UNAUDITED) (UNAUDITED)
Quarter Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Total production (MBOE) 949 773 3,410 3,209
Oil (MBBL) 441 388 1,615 1,505
Gas (MMCF) 2,890 2,001 9,999 8,938
Natural gas liquids (MBBL) 26 51 128 214
Average oil price/BBL $ 20.20 $ 20.06 $ 24.27 $ 21.69
Average gas price/MCF 2.65 4.78 3.85 3.31
Average natural gas
liquids price/BBL 14.39 23.44 20.32 22.19
INCOME STATEMENT DATA
---------------------
(In thousands, except per share data)
Revenues
Oil and condensate $ 8,912 $ 7,790 $ 39,201 $ 32,659
Natural gas 7,649 9,557 38,536 29,614
Natural gas liquids 368 1,205 2,607 4,743
Gain on sale of property 1,120 - 9,527 -
Hedging gain (loss) (4,429) - (2,094) -
Interest and other income 239 928 1,699 2,717
--------- --------- --------- ---------
Total revenues 13,859 19,480 89,476 69,733
Expenses
Production and operating 7,021 6,557 28,404 24,125
Depreciation, depletion
and amortization 5,605 4,102 19,388 15,637
Impairments 2,490 - 2,490 680
Exploration 2,017 914 7,542 3,792
General and administrative 2,273 1,859 8,082 8,720
Interest expense 3,398 3,159 13,364 12,659
--------- --------- --------- ---------
Total expenses 22,804 16,591 79,270 65,613
Earnings (loss) before income
taxes (8,945) 2,889 10,206 4,120
Income Tax Expense (Benefit)
Current 241 - 216 -
Deferred (528) - (58) -
--------- --------- --------- ---------
Total income tax expense (287) - 158 -
Net income (loss) (8,658) 2,889 10,048 4,120
Preferred dividends (441) (268) (1,460) (633)
Preferred stock discount
amortization (1,077) - (2,410) -
--------- --------- --------- ---------
Net Income (loss) -
Common Stock $ (10,176)$ 2,621 $ 6,178 $ 3,487
========= ========= ========= =========
SHARE INFORMATION
Common shares outstanding 9,199 8,995 9,161 8,963
Common shares outstanding -
diluted 15,253 12,530 14,323 11,079
Basic Earnings (Loss) Per
Share $ (1.11)$ 0.29 $ 0.67 $ 0.39
Diluted Earnings (Loss) Per
Share $ (1.11)$ 0.23 $ 0.53 $ 0.37
THE WISER OIL COMPANY
(and Consolidated Subsidiaries)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
Dec. 31, Dec. 31,
2001 2000
------------ ------------
Assets
Current assets $ 31,453 $ 52,603
Property, net 223,664 160,368
Other assets 3,142 3,342
------------ ------------
$ 258,259 $ 216,313
============ ============
Liabilities and Stockholders' Equity
Current liabilities $ 18,976 $ 17,432
Long-term debt 143,463 124,600
Deferred taxes 11,110 -
Stockholders' equity 84,710 74,281
------------ ------------
$ 258,259 $ 216,313
============ ============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED) (UNAUDITED)
Quarter Ended Year Ended
December 31, December 31,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net income (loss) before pfd.
dividends $ (8,658)$ 2,889 $ 10,048 $ 4,120
DD&A and impairments 8,095 4,102 21,878 16,317
Exploration expense 2,017 914 7,542 3,792
Adjust hedge income to cash
basis 2,746 - 411 -
Property sale gains (1,120) (63) (9,527) (74)
Other non-cash charges (326) 169 653 675
--------- --------- --------- ---------
Cash flow before exploration
and working capital changes 2,754 8,011 31,005 24,830
Changes in working capital, net (2,977) (3,283) (1,407) (5,156)
Exploration expenditures (1,005) (1,001) (4,624) (2,358)
--------- --------- --------- ---------
Operating cash flow (1,228) 3,727 24,974 17,316
--------- --------- --------- ---------
Capital expenditures (9,809) (5,639) (76,100) (20,066)
Preferred stock, net of
issuance costs - - 10,006 13,684
Common stock issued
(treasury stock) (79) - (210) -
Proceeds from property sales - 1,984 219 1,995
Preferred cash dividends (221) - (221) -
Foreign exchange 176 (233) (123) (232)
Increase (decrease) in long-
term debt - - 19,036 -
--------- --------- --------- ---------
Net cash flow (11,161) (161) (22,419) 12,697
Beginning cash 23,878 35,297 35,136 22,439
--------- --------- --------- ---------
Ending cash $ 12,717 $ 35,136 $ 12,717 $ 35,136
========= ========= ========= =========
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