[DESCRIPTION] 2000 FIRST QUARTER RESULTS ANNOUNCEMENT
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Filed by Titan Exploration, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-6
of the Securities Exchange Act of 1934
Subject Company: Titan Exploration, Inc.
Commission File No. 000-21843
TITAN EXPLORATION ANNOUNCES
2000 FIRST QUARTER RESULTS
Midland, Texas, May 15, 2000: Titan Exploration, Inc. (NASDAQ: "TEXP") announced
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$2.3 million ($0.06 per basic share) of net income for the quarter ended March
31, 2000 as compared to approximately $30.0 million ($0.79 per basic share) loss
for the comparable 1999 quarter. During the same quarter, Titan generated $12.7
million of earnings before interest, taxes, depreciation, amortization and
depletion, exploration expense and other non-cash charges ("EBITDAX") ($0.32 per
basic share) as compared to EBITDAX of $7.0 million ($0.18 per basic share)
during the comparable 1999 quarter
Pure Resources, Inc. Merger
On December 13, 1999, Titan announced its agreement to merge Titan and the
Permian Basin business unit of Unocal Corporation ("Unocal") into a new company
named Pure Resources, Inc. ("Pure Resources"). Pure Resources will be a
publicly traded company. The Permian Basin business unit of Unocal includes oil
and gas exploration and production assets in the Permian Basin of West Texas and
the San Juan Basin in New Mexico and Colorado.
Pure Resources will have approximately 50 million shares of common stock
outstanding upon completion of the merger. Unocal will hold approximately 65%
(32.7 million shares) of Pure Resources. Upon approval by Titan stockholders of
the merger, Titan stockholders will receive 0.4302314 shares of Pure Resources
common stock for every share held of Titan's common stock and will collectively
own approximately 35% of the outstanding common stock of Pure Resources.
Pure Resources' proxy materials relating to the proposed transaction were mailed
to shareholders holding Titan common stock as of the April 10, 2000 record date.
The shareholder meeting to consider the proposed transaction will be held May
24th, 2000 at 10:00 am central standard time in Midland, Texas. Assuming
shareholder approval of the transaction, the merger is scheduled to occur on May
25th, 2000 and Pure Resources will begin trading on the NYSE under the symbol,
"PRS" on Friday, May 26th, 2000.
Pure Resources' first quarter of 2000 financial results are expected to be
available upon filing a first quarter financial report on Form 10-Q with the
Securities and Exchange Commission in early June 2000.
Financial Data
During the quarter ended March 31, 2000, Titan spent approximately $11.2 million
on oil and gas capital spending activities as compared to $6.9 million for the
comparable 1999 quarter. The Company produced approximately 547,000 barrels of
oil and condensate and 5.2 billion cubic feet of natural gas during the quarter.
Average prices received, excluding the effects of hedging,
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during the first quarter of 2000 were $26.72 per barrel for crude oil and $2.00
per mcf for natural gas, as compared to $10.64 per barrel and $1.24 per mcf,
respectively, during the comparable 1999 quarter. The Company's first quarter
2000 crude oil prices suffered by $5.29 per barrel as a result of its hedging
activities. Gas prices for this same period were unaffected by the Company's
hedging activities. At March 31, 2000, the Company had oil and gas hedges in
place for approximately 1.5 million barrels and 12,315 MMBtu of the Company's
production through the remainder of 2000 and the first half of 2001. The hedges
will allow the Company to realize, at a minimum, a price of $16.86 per barrel of
oil and $2.64 per MMBtu on the volumes hedged. The increase in General and
Administrative ("G&A") expense levels during the 2000 first quarter over the
comparable 1999 quarter is principally attributable to expenses associated with
increased staff in non-synergy areas in anticipation of the merger and increased
staff and related costs associated with the Company's new activities in the
Central Gulf Coast region of Texas. As the Company assumes responsibility for
the Unocal properties and its Central Gulf Coast activities result in additional
production, the G&A expenses on a per unit basis are anticipated to decline to
the levels Titan experienced during 1999. The increase in production tax levels
is attributable to the significant increases in the level of commodity prices
over the comparable 1999 quarter.
Titan has mailed a proxy statement/prospectus concerning the merger to its
shareholders, and the document has been filed by Pure Resources with the United
States Securities and Exchange Commission as part of its Form S-4. WE URGE
INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS TO BE FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors may obtain these
documents free of charge at the Securities and Exchange Commission's website,
www.sec.gov.
FORWARD LOOKING STATEMENTS
Statements in this press release, filings with the Securities and Exchange
Commission and other written and oral statements regarding estimated future net
revenues from oil and natural gas reserves and the present value thereof,
planned capital expenditures (including the amount and nature thereof),
increases in oil and gas production, the number of wells Titan anticipates
drilling, potential reserves and Titan's financial position, business strategy
and other plans and objectives for future operations are "forward looking
statements" within the meaning of the Securities Litigation Reform Act.
Although Titan believes that the expectations reflected in these forward looking
statements are reasonable, there can be no assurance that the actual results or
developments anticipated by Titan will be realized or, even if substantially
realized, that they will have the expected effects on its business or
operations. Among the factors that could cause actual results to differ
materially from Titan's expectations are general economic conditions, inherent
uncertainties in interpreting engineering data, operating hazards, delays or
cancellations of drilling operations for a variety of reasons, competition,
fluctuations in oil and gas prices, government regulations and other factors set
forth in Titan's Annual Report on Form 10-K. All subsequent oral and written
forward looking statements attributable to Titan or persons acting on its behalf
are expressly qualified in their entirety by these factors.
## Contact Bill White or Jack Harper ##
(Financial Results Attached)
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Titan Exploration, Inc.
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
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(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,535 $ 1,310
Accounts receivable:
Oil and gas 12,181 10,365
Other 70 252
Inventories 595 732
Prepaid expenses and other current assets 971 549
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Total current assets 15,352 13,208
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Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts method of accounting:
Proved properties 354,259 345,349
Unproved properties 14,964 13,438
Accumulated depletion, depreciation and amortization (132,973) (128,686)
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236,250 230,101
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Other property and equipment, net 4,458 4,188
Deferred income taxes 19,348 20,612
Other assets, net of accumulated amortization 1,138 689
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$ 276,546 $ 268,798
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities:
Trade $ 4,430 $ 7,858
Accrued interest 1,096 959
Other 11,104 8,303
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Total current liabilities 16,630 17,120
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Long-term debt 96,000 90,000
Other liabilities 852 827
Stockholders' equity:
Preferred stock, $01 par value, 10,000 shares authorized; none issued
and outstanding at March 31, 2000 and December 31, 1999, respectively - -
Common stock, $01 par value, 60,000 shares authorized; 43,994 shares
issued and outstanding at March 31, 2000 and
December 31, 1999, respectively 440 440
Additional paid-in capital 285,265 285,265
Notes receivable - officers and employees (8,864) (8,729)
Treasury stock, at cost (25,764) (25,764)
Accumulated deficit (88,013) (90,361)
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Total stockholders' equity 163,064 160,851
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$ 276,546 $ 268,798
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</TABLE>
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Titan Exploration, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
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2000 1999
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<S> <C> <C>
Revenues:
Gas sales $ 10,369 $ 8,411
Oil sales 11,720 6,369
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Total revenues 22,089 14,780
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Expenses:
Oil and gas production 5,159 4,953
Production and other taxes 1,753 1,207
General and administrative 2,544 2,169
Amortization of stock option awards - 1,263
Exploration and abandonment 2,731 2,545
Depletion, depreciation and amortization 4,567 4,826
Impairment of long-lived assets - 25,900
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Total expenses 16,754 42,863
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Operating income (loss) 5,335 (28,083)
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Other income (expense):
Equity in net loss ofaffiliates - (115)
Interest income 137 11
Interest expense (1,769) (2,551)
Gain on sale of assets - 202
Other (91) 533
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Income (loss) before income taxes 3,612 (30,003)
Income tax expense (1,264) -
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Net income (loss) $ 2,348 $(30,003)
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Net income (loss) per share $ 0.06 $ (0.79)
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Net income (loss) per share -
assuming dilution $ 0.06 $ (0.79)
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Weighted average common shares outstanding 40,190 37,935
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</TABLE>
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Titan Exploration, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
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2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,348 $ (30,003)
Adjustment to reconcile net income (loss) to net cash provided by
operating activities:
Depletion, depreciation and amortization 4,567 4,826
Impairment of long-lived assets - 25,900
Amortization of stock option awards - 1,263
Exploration and abandonments 2,194 2,015
Equity in net loss of affiliates - 115
Gain on sale of assets - (202)
Deferred income taxes 1,264 -
Other items - 137
Changes in assets and liabilities:
Accounts receivable (1,633) 3,461
Prepaid expenses and other current assets (288) (195)
Other assets (128) (2)
Accounts payable and accrued liabilities (1,933) (4,158)
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Total adjustments 4,043 33,160
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Net cash provided by operating activities 6,391 3,157
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Cash flows from investing activities:
Investing in oil and gas properties (11,159) (6,920)
Additions to other property and equipment (470) (13)
Other investing activities - (615)
Capital contribution in equity investments - 805
Notes Receivable - officers and employees (535) -
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Net cash used in investing activities (12,164) (6,743)
Cash flows from financing activities:
Proceeds from debt 6,000 4,100
Other financing activities (2) (38)
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Net cash provided by financing activities 5,998 4,062
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Net increase in cash and cash equivalents 225 476
Cash and cash equivalents, beginning of period 1,310 610
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Cash and cash equivalents, end of period $ 1,535 $ 1,086
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</TABLE>
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Titan Exploration, Inc.
Unaudited Selected Financial and Operating Results
(in thousands, except per share data, average daily production and per unit
information)
<TABLE>
<CAPTION>
Three months ended
March 31,
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2000 1999
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<S> <C> <C>
FINANCIAL RESULTS:
Revenues $ 22,089 $ 14,780
Expenses (excluding income taxes) $ 18,477 $ 44,985
Net income (loss) $ 2,348 $(30,003)
Net income (loss) per share $ 0.06 $ (0.79)
Net income (loss) per share - assuming dilution $ 0.06 $ (0.79)
Weighted average common shares outstanding 40,190 37,935
Net cash provided by operating activities
before working capital adjustments $ 10,373 $ 4,051
EBITDAX (a) $ 12,679 $ 6,995
OPERATING RESULTS:
Production:
Oil (MBbls) 547 598
Gas (MMcf) 5,175 6,192
Total (MBOE) 1,409 1,630
Average Daily Production:
Oil (Bbl) 6,009 6,644
Gas (Mcf) 56,869 68,800
Total (BOE) 15,487 18,111
Average Sales Price Per Unit (excluding effects of
hedging):
Oil (per Bbl) $ 26.72 10.64
Gas (per Mct) $ 2.00 1.24
Total (per BOE) $ 17.71 8.64
Average Sales Price Per Unit (including effects of
hedging):
Oil (per Bbl) $ 21.43 10.64
Gas (per Mcf) $ 2.00 1.36
Total (per BOE) $ 15.67 9.07
Expenses Per BOE:
Production costs, excluding production and other
taxes $ 3.66 3.06
Production and other taxes $ 1.24 0.72
General and administrative expenses $ 1.81 1.32
Depletion, depreciation and amortization $ 3.24 2.94
</TABLE>
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(a) EBITDAX is calculated by adding interest expense, income taxes, depletion,
depreciation, and amortization, impairment of long-lived assets,
amortization of stock option awards, restructuring charge, exploration and
abandonment costs, gain (loss) on sale ofassets and equity in net loss
ofaffiliates to net income (loss).
