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Exhibit 99
For Further Information Contact
Robert E. Phaneuf
For Immediate Release Vice President - Corporate Development
Wednesday, November 1, 2000 (918) 592-0101
VINTAGE PETROLEUM REPORTS RECORD RESULTS
FOR THIRD QUARTER
Tulsa, Oklahoma - Vintage Petroleum, Inc. today announced record high third
quarter 2000 income of $57.4 million, or $0.90 a share. The dramatically
improved results posted in the third quarter are more than double the income of
$27.3 million, or $0.43 per share, reported in the same quarter last year. Last
year's third quarter included a $2.0 million, or three cents per share, after-
tax gain from the sale of certain non-strategic oil and gas properties.
Substantially higher average oil and gas prices coupled with an increase in
production and lower interest expense associated with reduced long-term debt
accounted for the significant increase in profitability.
Oil and gas production for the quarter grew seven percent to a record 7.4
million equivalent barrels (BOE) from 7.0 million BOE in last year's period.
The increase is attributable to acquisitions made in the U.S. and Ecuador net of
asset sales in 1999, an increase in the capital budget in the first nine months
of 2000 which resulted in increased production from exploitation and
exploration, an increase in the allowable for Ecuador oil production and
improvement in gas market takes in Bolivia. As a result, oil production for the
quarter increased nine percent compared to last year's quarter to a record 5.0
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million barrels. Company production of natural gas increased four percent to a
record 14.5 billion cubic feet (Bcf).
Aiding the increase in production were substantially higher average prices
for oil and gas resulting from lower inventory levels, tighter supplies in the
market currently and the expectation of continued lower than average supplies
relative to anticipated demand into 2001. The company's average realized price
of oil rose 42 percent to $26.34 per barrel ($28.85 per barrel before the impact
of hedges) compared to $18.50 per barrel ($18.77 per barrel before the impact of
hedges) during the same quarter last year. The average realized price of gas
increased 62 percent to $3.23 per Mcf compared to $2.00 per Mcf in the same
quarter last year.
Oil and gas sales rose 58 percent to a record $179.5 million principally
due to the impact of the higher average prices of oil and gas coupled with
record oil and gas production levels. Total revenues for the third quarter rose
64 percent to $223.9 million compared to $136.4 million in the year-ago quarter.
Lease operating costs per BOE increased 12 percent to $5.13 per BOE
compared to $4.58 per BOE in last year's third quarter. The increase results
primarily from an increase in severance taxes and the rise in cost of purchased
electricity in the field associated with the rise in current quarter oil and gas
prices compared to the third quarter of 1999, a greater amount of high cost oil
production in the current quarter's mix compared to that of last year and higher
expenditures for well workovers and maintenance in the current quarter versus
the year-ago quarter. General and administrative expenses rose modestly by five
cents a BOE to $1.26 per BOE in the quarter. Exploration expense for the
quarter was $8.9 million, composed of $8.7 million
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attributable to leasehold impairments and unsuccessful exploratory drilling,
with the remaining $200,000 of expenditures for seismic and other geological and
geophysical activities. The unsuccessful exploratory well reported recently on
Ecuador's Block 19 and dry hole costs associated with the portions of the NJL
X-111 and NJL X- 118 Bolivia wells below the Iquiri formation were the primary
contributors to the increase in exploration expense. In last year's third
quarter, exploration expense totaled $1.3 million consisting of $600,000 of
geological and geophysical activities and $700,000 attributable to leasehold
impairments and dry hole costs. Interest expense declined 24 percent to $11.6
million as a result of lower average outstanding debt levels.
For the quarter just ended, income before taxes increased 141 percent to
$87.6 million compared to income before tax of $36.4 million in last year's
quarter, which included the impact of the $3.3 million pre-tax gain from non-
strategic property sales. The effective tax rate for the current quarter rose
to 34.5 percent compared to 25 percent in the year-ago quarter, largely as a
result of the utilization of all remaining Argentina net operating loss
carryforwards during 1999. Net income for the third quarter of 2000 was $57.4
million, or $0.90 per share, compared to last year's $27.3 million, or $0.43 a
share.
Cash flow from operations (before working capital changes) for the third
quarter increased to a record $97.7 million compared to $57.9 million in the
year-ago quarter.
Nine Months 2000 Summary
For the nine months, oil and gas sales rose to $478.1 million, 98 percent
above the $240.9 million in the nine months of 1999. The higher sales were
primarily the result of an improvement in the realized prices of oil and gas
accompanied by a 16 percent rise in
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production. Total revenues increased by 87 percent to $550.4 million, compared
to $295.0 million for the same period last year.
Net income in the first nine months of 2000 was $129.9 million, or $2.03
per share, more than eight times higher than the $14.3 million, or $0.25 per
share, recorded in the similar 1999 period.
Cash flow from operations (before changes in working capital) for the nine
months of 2000 was $232.8 million compared to $93.7 million in 1999.
Update and Outlook
Excess Cash Flow Allows Continued Debt Reduction
"We are pleased that at the end of the third quarter of 2000, the company's
net debt-to-book capitalization ratio continued to be reduced despite our $40.1
million cash acquisition of Argentina properties in the Cuyo basin in the
quarter. Net debt-to-book capitalization dropped to 45 percent from 57 percent
at year-end 1999 and 63 percent in last year's third quarter. The company
continues to generate more cash flow than is required to fund the non-
acquisition capital budget supporting our internal growth targets, allowing
increased financial flexibility to fund future acquisitions," said S. Craig
George, CEO.
Excess cash flow and other working capital changes over third quarter
capital expenditures were applied to reduce debt to $472.4 million at the end of
the quarter. As a result of lower outstanding debt and a reduction in letter of
credit obligations, the unused availability under the company's bank credit
facility as of the end of the third quarter was approximately $453 million.
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Exploration Activity Update
U.S. Exploration -
Mid-Continent -
Vintage, as operator, has completed the first of nine exploratory gas wells
to be drilled in the Stagecoach prospect area in southern Oklahoma during 2000.
The Defender 1-24, a new field discovery, was completed in the Dornick Hills
formation with current net daily production rates exceeding 3.4 million cubic
feet (MMcf) (11 MMcf, gross). As a result of the successful test, the first
offset well, the Apache-Rosser 1-19, is currently drilling below 13,500 feet to
a target depth of 16,000 feet. The next two exploratory test wells located in
separate geological features, the Pistol 1-6 and Kovo 1-25, have been drilled,
cased and testing is currently underway. The Marathon-Lovette Le Grand 1-10 is
drilling below 13,800 feet to a depth of 16,000 feet to test a separate
structural trap. All wells in this prospect area have multiple target zones in
the deep Springer through the shallow Granite Wash and Cisco formations. Based
on these encouraging results, Vintage has spud the next well and plans to drill
two additional wells before year end. In addition to the exploratory drilling,
Vintage is also engaged in an ongoing Granite Wash gas extentional development
program in this prospect area. Five wells are scheduled to be drilled this year
with the program continuing through 2001. All wells, if successful, may
generate offset development locations. In the Texas panhandle, the Mills
Ranch 1-97 is currently drilling below 22,000 feet to test the deep Hunton
formation.
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Gulf Coast -
Vintage's success in the Galveston Bay area of Texas continues with the
completion of the Hematite #2 and the State Tract 1-4A. The Hematite #2, a
lower Vicksburg test, was tested at 65 barrels of oil per day and nearly 1.0
MMcf per day net to Vintage's interest. The State Tract 1-4A, which logged 36
feet of net pay in the Text II formation has been completed and is currently
waiting on a pipeline connection. The State Tract 46-1, completed in June 2000,
continues to produce at net daily rates of 65 barrels of oil and 2.8 MMcf from
the Text II formation. Two new wells, the Sterling #1 and the State Tract 9-12B
have been spud. The Sterling #1 targets the lower Vicksburg offset to the
Hematite #1, which was drilled during the last quarter of 1999. The State Tract
9-12B will be drilled to 11,000 feet to test the Text II formation. Depending
upon rig availability and timing, Vintage could participate in one additional
well before year end in the prospect area. These new completions extend
Vintage's success rate to 13 out of 16 wells since utilizing comprehensive 3-D
seismic information obtained throughout the Galveston Bay prospect area.
International Exploration
In Bolivia, the company has completed the work unit obligation associated
with Vintage earning a 100 percent working interest in the Naranjillos
concession with the drilling of the final two wells of the program, the NJL X-
111 and the NJL X-118. These exploratory wells were drilled targeting the deep
Devonian Huamampampa and Santa Rosa formations. The NJL X-111 and NJL X-118 were
drilled to depths of 20,960 feet and 18,870 feet, respectively, but were both
non-productive in the deep target formations. Currently, Vintage expects that
the NJL X-118 wellbore may be utilized at a later date as a lower Iquiri
producer, having
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encountered the Iquiri formation as anticipated in a developed location. The NJL
X-111 well also encountered a potentially productive Iquiri zone in an
extentional location, which will be tested at a later date. Since acquiring the
Naranjillos concession in late 1997, Vintage has fulfilled the exploration work
obligations that were committed to as the consideration for the acquisition of
this concession from the state oil company, YPFB. The execution of this work
program in the Naranjillos concession has resulted in approximately a three-fold
increase in proved reserves to approximately 485 Bcfe at year-end 1999 from the
116 Bcfe that existed at the time of acquisition. "The potential long-term
attractiveness of investment returns in the concession remains, as Vintage's
all-in cost of acquisition, exploration and development of reserves to date in
Naranjillos is less than $0.18 per Mcfe," said Mr. George.
With initial testing operations concluded on the Harmel #1 in Yemen and
results recently announced, the completion rig has been moved to the An Naeem #2
well. The An Naeem #2 well was drilled to test the potential existence of a
downdip oil rim in the Alif formation after encountering test quantities of 40
MMcf per day of gas and 1,020 barrels of condensate per day from the Alif
formation in the An Naeem #1 well earlier in the year. Testing of the Alif
reservoir in the An Naeem #2 is currently underway with results expected during
the next several weeks, followed by testing the Fordus well. Plans also call
for a longer-term production test of the Harmel #1 based on results from the
initial testing.
"Although we are, of course, disappointed with results from the deep
formations in the NJL X-111 and NJL X-118 prospects in Bolivia, we are still
very optimistic about other opportunities in our inventory in Bolivia, as well
as in other countries. What we learn from these wells will contribute to our
continuing success in South America. We remain encouraged
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about our program in Yemen as testing continues and in our U.S. and Argentina
programs where we are seeing significant production added from the drill bit,"
said Mr. George.
Argentina - Company Plans to Initiate Activity in Cuyo Basin Properties and Add
a Third Rig in the San Jorge Basin During 2001
In Argentina, plans are underway that will lead to the initiation of
development drilling activity on the company's recently acquired Piedras
Coloradas concession in the Cuyo basin by late first quarter of 2001. Based on
the continued success of the company's San Jorge basin drilling program,
additional 3-D seismic campaigns have been authorized to continue to expand the
area available within Company concessions for potential future drilling
activity, as only fifteen percent of the company's acreage is currently covered
by 3-D seismic. By the second quarter, the company intends to add a third rig
to the existing two-rig program currently underway in order to further increase
production for a portion of 2001 and beyond.
Capital Budget for 2001 Expands to $245 Million to Accommodate Addition of Third
Drilling Rig in Argentina
As a result of the decision to add a third rig in the company's San Jorge
basin properties in Argentina during a portion of 2001 and the drilling planned
for the recently acquired Cuyo basin property, the capital budget has been
raised nine percent to $245 million from the prior $225 million. In the current
year, additional costs associated with testing activities in Yemen are being
more than offset by lower estimates of drilling and other development costs with
the likely result that non-acquisition capital spending may approximate $167
million rather than the most recent forecast of $172 million.
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Growth Targets for 2000 and 2001 Revised, 2001 Cash Flow Target Increased
Based upon the company's nine-month results, the revisions to the non-
acquisition capital budget and other expectations, Vintage is revising its
operating and financial targets for 2000. The company continues to target
production of approximately 28.9 million BOE (see accompanying table); however,
the mix is somewhat different than previously anticipated as a result of a
slower rate of growth in the U.S., slower growth in Argentina production
resulting from delays caused by severe winter weather and a faster rate of
growth in takes of Bolivia gas.
For 2001 the company has revised upward its target for production to 32.3
million BOE, as shown in the accompanying table, from the previous 31.7 million
BOE predominantly as a result of expected volume increases in Argentina
associated with the recent acquisition of producing properties in the Cuyo basin
and from the addition of a third drilling rig for a portion of the year. Based
on the assumed NYMEX oil price for the year 2001 of $25.00 per barrel and the
assumed NYMEX price of gas of $3.50 per Mcf, along with the company's revised
expectations for the capital budget, production, existing hedges, assumed costs
enumerated in the accompanying table, as well as other expectations, Vintage has
raised its target for cash flow for 2001 to approximately $332 million.
Vintage to Webcast Third Quarter 2000 Conference Call
The company's third quarter 2000 conference call to review financial and
operational results will be broadcast, on a listen-only basis, on the internet
on Thursday, November 2 at 3 p.m. Central Time.
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Interested parties can listen to the live conference call over the internet
by logging on to www.streetevents.com and selecting "Individual Investor
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Center". A replay will be available for one week at www.streetevents.com
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following the completion of the call. There will also be a telephone replay
available until November 9 at (402) 220-0680. To listen to the internet
broadcast, participants will need a multimedia computer with speakers and the
RealPlayer plug-in installed. RealPlayer can be accessed at www.real.com.
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Vintage is unable to provide technical support for downloading the software.
Forward-Looking Statements
This release includes certain statements that may be deemed to be "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements in this release, other than statements of
historical facts, that address targets or estimates of proved oil and gas
reserves, future production, exploration drilling, exploitation activities and
events or developments that the company expects are forward-looking statements.
Although Vintage believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors that could
cause actual results to differ materially from those in forward-looking
statements include oil and gas prices, exploitation and exploration successes,
continued availability of capital and financing, and general economic, market or
business conditions.
Vintage Petroleum, Inc. is an independent energy company engaged in the
acquisition, exploitation, exploration and development of oil and gas properties
and the
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marketing of natural gas and crude oil. Company headquarters are in Tulsa,
Oklahoma, and its common shares are traded on the New York Stock Exchange under
the symbol VPI.
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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 179,458 $ 113,580 $ 478,133 $ 240,902
Gas marketing 38,988 16,404 82,868 38,905
Oil and gas gathering and processing 5,529 1,734 13,223 5,184
Gain (loss) on disposition of assets (805) 3,305 (1,188) 7,671
Other income (expense) 722 1,406 (22,600) 2,332
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223,892 136,429 550,436 294,994
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COSTS AND EXPENSES:
Lease operating, including production taxes 38,215 31,886 110,737 80,991
Exploration costs 8,949 1,322 12,330 9,523
Gas marketing 37,482 15,705 79,409 37,095
Oil and gas gathering and processing 5,019 1,311 11,337 3,932
General and administrative 9,413 8,413 28,650 24,482
Depreciation, depletion and amortization 25,630 26,231 72,382 83,240
Interest 11,609 15,185 36,948 44,321
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136,317 100,053 351,793 283,584
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Income before income taxes 87,575 36,376 198,643 11,410
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 25,273 2,749 51,741 2,796
Deferred 4,932 6,349 17,019 (5,726)
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NET INCOME $ 57,370 $ 27,278 $ 129,883 $ 14,340
=========== =========== =========== ===========
EARNINGS PER SHARE:
Basic $ .91 $ .44 $ 2.08 $ .25
=========== =========== =========== ===========
Diluted $ .90 $ .43 $ 2.03 $ .25
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 62,770 62,309 62,592 56,505
=========== =========== =========== ===========
Diluted 63,956 64,143 63,892 57,869
=========== =========== =========== ===========
</TABLE>
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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
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SUMMARY BALANCE SHEET DATA
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(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
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<S> <C> <C>
Total current assets $ 170,852 $ 154,491
Property, plant and equipment, net 1,042,026 971,352
Total assets 1,258,193 1,168,134
Total current liabilities 193,629 93,902
Long-term debt 472,401 625,318
Stockholders' equity 557,618 431,129
</TABLE>
SUMMARY OPERATING DATA
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(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Production:
Oil (MBbls) -
U.S. 2,259 2,183 6,731 6,484
Argentina 2,409 2,287 6,901 5,330
Ecuador 331 138 880 381
Bolivia 38 28 82 58
Total 5,037 4,636 14,594 12,253
Gas (MMcf) -
U.S. 8,787 9,577 26,931 29,010
Argentina 2,589 2,547 6,277 2,921
Bolivia 3,096 1,817 5,681 3,345
Total 14,472 13,941 38,889 35,276
Total MBOE 7,449 6,959 21,076 18,132
Average prices:
Oil (per Bbl) -
U.S. $ 22.86(a) $ 17.50(a) $ 23.17(b) $ 14.01(b)
Argentina 29.97 19.72 27.78 15.32
Ecuador 23.39 14.28 22.13 10.74
Bolivia 28.41 16.95 28.17 14.53
Total 26.34(a) 18.50(a) 25.31(b) 14.48(b)
Gas (per Mcf) -
U.S. $ 4.24 $ 2.41 $ 3.31 $ 1.98
Argentina 1.82 1.37 1.84 1.32
Bolivia 1.55 .70 1.43 .63
Total 3.23 2.00 2.80 1.80
</TABLE>
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(a) The impact of oil hedges decreased the Company's U.S. and total average oil
prices per Bbl for the three months ended September 30, 2000, by $5.59 and
$2.51, respectively. The impact of oil hedges decreased the Company's U.S.
and total average oil prices for the three months ended September 30, 1999,
by $.57 and $.27, respectively.
(b) The impact of oil hedges decreased the Company's U.S. and total average oil
prices per Bbl for the nine months ended September 30, 2000 by $3.24 and
$1.50, respectively. The impact of oil hedges decreased the Company's U.S.
and total average oil prices per Bbl for the nine months ended September 30,
1999, by $.15 and $.08, respectively.
-Table Follows-
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VINTAGE PETROLEUM, INC.
REVISED TARGETS FOR 2000 AND 2001
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<TABLE>
<CAPTION>
Revised Revised
2000 2001
Target(c) Target(c)
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<S> <C> <C>
Oil production (MMBbls):
U.S. 9.1 9.0
Argentina 9.6 11.6
Other 1.4 2.0
Total 20.1 22.6
Gas production (Bcf):
U.S. 36.4 39.5
Argentina 8.4 8.6
Bolivia 8.4 9.9
Total 53.2 58.0
Total MMBOE 28.9 32.3
Net realized price (before impact of hedging)as a
percent of NYMEX(a) - Total Company:
Oil 90% 84%
Gas 79% 74%
DD&A per BOE (oil and gas only) $3.30 $3.35
LOE per BOE $5.20 $4.86
G&A per BOE $1.33 $1.28
Non-Acquisition Capital Spending Budget (in millions) $ 167 $ 245
Cash Flow (before working capital changes) (in millions):
2000 Assumed NYMEX - $30.31 oil and $3.76 gas $ 338
2001 Assumed NYMEX - $25.00 oil and $3.50 gas $ 332
EBITDAX(b) (in millions):
2000 Assumed NYMEX - $30.31 oil and $3.76 gas $ 463
2001 Assumed NYMEX - $25.00 oil and $3.50 gas $ 451
</TABLE>
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(a)NYMEX:
Oil - Average of the daily settlement price per barrel for the near-month
contract for light crude oil as quoted on the New York Mercantile
Exchange.
Gas - Average of the settlement price per MMBtu for the last 3 trading
days for the applicable contract month for natural gas as quoted on the
New York Mercantile Exchange.
(b)EBITDAX: Earnings before interest, taxes, DD&A and exploration expenses.
(c)Targets do not reflect acquisitions made after September 30, 2000.
(d)See "Growth Targets for 2000 and 2001 Revised" and Forward-Looking Statements
elsewhere in the release.
