CONTACT: Paul Korus FOR RELEASE AT 3:00 P.M. (MT)
(303) 295-3995 Thursday, November 2, 2000
KEY REPORTS FOURTH CONSECUTIVE QUARTER OF RECORD EARNINGS
Third Quarter 2000 Earnings Rise to $0.67 Per Share
DENVER - Key Production Company, Inc. (NYSE: KP) today reported that strong oil
and gas prices combined with rising production volumes boosted third quarter
2000 net income by 380 percent to $8.5 million, or $0.67 per share. Key earned
$1.8 million, or $0.15 per share, in the third quarter of 1999.
For the nine months ended September 30, 2000, Key's earnings total $18 million,
or $1.45 per share, compared with net income of $3.1 million, or $0.26 per
share, for the same nine months of last year.
"Reflecting the dual benefits of rising production and prices, Key reported its
fourth consecutive quarter of record earnings and cash flow," said F.H. (Mick)
Merelli, chairman and chief executive officer. "Our ability to consistently grow
production volumes through drilling also confirms that Key's regional
exploration programs continue to provide a solid platform for long-term
profitable growth."
Cash flow from operations (before changes in operating assets and liabilities)
in the latest quarter nearly doubled to $21.9 million, or $1.72 per share, up
from $11.0 million, or $0.90 per share, in the prior-year period. For the first
nine months of 2000, Key's operations have generated nearly $52.6 million of
cash flow, or $4.24 per share.
Revenues grew 73 percent during the third quarter to $27.4 million. The growth
in revenues is the result of 8 percent production volume growth and
significantly higher oil and gas prices. Key realized an average oil price of
$30.55 per barrel, up 55 percent from $19.65 per barrel in the prior-year
period. Natural gas prices increased 64 percent to $4.14 per thousand cubic feet
(Mcf) from $2.52 per Mcf in the third quarter of 1999.
Combined oil and gas production in the third quarter averaged 64.8 million cubic
feet equivalent (MMcfe) per day, versus output of 60.1 MMcfe in the same
three-month period of 1999. Gas volumes increased 6 percent to 39.4 million
cubic feet (MMcf) per day and oil output rose 11 percent to 4,242 barrels per
day. Key's volume growth is largely the result of new wells drilled in western
Oklahoma and the Mississippi Salt Basin.
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Year to date, the company has participated in drilling 75 wells, with an overall
success rate of 81 percent. Twenty-four of the 31 wells drilled during the third
quarter were successful. Our drilling efforts remain concentrated in the
Mid-Continent and Gulf Coast regions. Of the 33 wells we drilled in the
Mid-Continent region thus far in 2000, 27 have been completed or are in the
process of being completed. Fifteen successful wells were drilled in the Gulf
Coast area, with only two dry holes.
Through the first nine months of 2000, exploration and development expenditures
amounted to $40.5 million, up from $23.4 million during the same time period
last year. In addition to funding a higher level of reinvestment, we have used
$11 million of our net cash provided by operating activities to pay down debt.
As of September 30, 2000, we had long-term debt of $49.0 million and a debt to
total book capitalization ratio of 33 percent.
Key will conduct a conference call on Friday, November 3 at 9:00 am MT.
Interested parties may access the call by dialing (800) 881-5262 and requesting
the Key Production Company, Inc. teleconference. A replay of the call will be
available through November 10, 2000 and may be accessed by dialing (800)
642-1687, reservation number 997441.
Key is an independent natural gas and crude oil exploration and production
company. Headquartered in Denver, the company's operations are focused in the
Anadarko Basin of Oklahoma, the Rocky Mountains, the Sacramento Basin of
northern California, the Hardeman Basin of north-central Texas and the Gulf
Coast of Texas, Louisiana and Mississippi.
Financial statements follow.
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<TABLE>
<CAPTION>
KEY PRODUCTION COMPANY, INC.
SUMMARY FINANCIAL INFORMATION
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
SUMMARY OF OPERATIONS
(In thousands, except per share data)
Revenues:
<S> <C> <C> <C> <C>
Gas sales $ 15,005 $ 8,628 $ 34,749 $ 21,439
Oil sales 11,925 6,904 32,211 15,448
Plant products 356 203 1,194 512
Other 68 93 277 318
----------- ----------- ----------- ----------
27,354 15,828 68,431 37,717
----------- ----------- ----------- ----------
Operating expenses:
Depreciation, depletion
and amortization 8,917 8,277 25,181 20,209
Lease operating 2,524 2,419 8,238 6,392
Production taxes 1,058 1,010 2,302 2,411
General and administrative 758 607 2,179 1,825
----------- ----------- ----------- -----------
13,257 12,313 37,900 30,837
----------- ----------- ----------- ----------
Operating income 14,097 3,515 30,531 6,880
----------- ----------- ----------- ----------
Financing costs:
Interest expense 1,099 1,093 3,338 3,011
Capitalized interest (459) (361) (1,194) (1,008)
Interest income (53) (75) (134) (144)
----------- ----------- ----------- ----------
587 657 2,010 1,859
----------- ----------- ----------- ----------
Income before income taxes 13,510 2,858 28,521 5,021
Provision for income taxes 4,999 1,086 10,553 1,908
----------- ----------- ----------- ----------
Net income $ 8,511 $ 1,772 $ 17,968 $ 3,113
=========== =========== =========== ==========
Basic earnings per share $ .69 $ .15 $ 1.51 $ .27
=========== =========== =========== ==========
Diluted earnings per share $ .67 $ .15 $ 1.45 $ .26
=========== =========== =========== ==========
Weighted average basic shares 12,302 11,535 11,934 11,526
=========== =========== =========== ===========
Weighted average diluted shares 12,725 12,189 12,384 12,106
=========== =========== =========== ==========
</TABLE>
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<TABLE>
<CAPTION>
KEY PRODUCTION COMPANY, INC.
SUMMARY FINANCIAL INFORMATION
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
PRODUCTION AND PRICING DATA
Natural gas production:
<S> <C> <C> <C> <C>
Million cubic feet 3,624 3,422 10,414 10,293
Average daily volumes, million
cubic feet per day 39.4 37.2 38.0 37.7
Average price per thousand
cubic feet $ 4.14 $ 2.52 $ 3.34 $ 2.08
Oil production:
Barrels 390,300 351,500 1,136,500 1,000,400
Average daily volumes, barrels
per day 4,242 3,820 4,148 3,665
Average price per barrel $ 30.55 $ 19.65 $ 28.34 $ 15.44
CASH FROM OPERATIONS
(In thousands)
Net income $ 8,511 $ 1,772 $ 17,968 $ 3,113
Depreciation, depletion
amortization 8,917 8,277 25,181 20,209
Deferred taxes 4,458 972 9,412 1,707
----------- ----------- ------------ -----------
$ 21,886 $ 11,021 $ 52,561 $ 25,029
=========== =========== ============ ===========
CAPITALIZED COSTS INCURRED
(In thousands)
Exploration and development $ 16,507 $ 8,294 $ 40,493 $ 23,354
Acquisitions - 1,839 121 1,919
Property sales (138) (1,741) (265) (1,947)
BALANCE SHEET DATA September 30, December 31,
(In thousands) 2000 1999
------------------- ------------------
Total debt $ 49,000 $ 60,000
Shareholders' equity $ 100,494 $ 76,873
Common shares outstanding 12,418 11,587
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This news release may contain projections and other forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Any such projections or statements reflect the Company's current views
with respect to future events and financial performance. No assurances can be
given, however, that these events will occur or that such projections will be
achieved and actual results could differ materially from those projected. A
discussion of important factors that could cause actual results to differ
materially from those projected is included in the Company's periodic reports
filed with the Securities and Exchange Commission.
