Vintage Petroleum, Inc. (NYSE:VPI) today announced net income of
$57.7 million, or $0.86 per diluted share, in the second quarter of
2005, a 66 percent increase over income from continuing operations
of $34.7 million, or $0.53 per diluted share, in the same quarter
last year. This substantial increase was driven by a 17 percent
increase in production from continuing operations and significantly
higher oil and gas prices. Net income for the second quarter of
2004 was $37.4 million, or $0.57 per diluted share, including
income from discontinued operations of $2.7 million, or $0.04 per
diluted share. Cash flow, a non-GAAP measure, was $107.1 million
for the second quarter of 2005, up 58 percent from cash flow of
$67.7 million in the second quarter of 2004. See the attached table
for reconciliations of these non-GAAP financial measures to the
corresponding GAAP amounts of cash provided by operating activities
of $82.3 million for the second quarter of 2005 and $57.8 million
for the same quarter in 2004. Production Up 17 Percent Total
production from continuing operations for the quarter of 6.9
million barrels of oil equivalent (BOE) was 17 percent above the
comparable 5.9 million BOE in the second quarter of 2004. This
increase was driven by a 26 percent increase in oil production with
Argentina, Yemen and the U.S. each contributing to this growth. The
oil increase was slightly offset by a four percent decline in gas
production from continuing operations as a result of reduced market
demand in Bolivia compared to the prior-year quarter. Argentina oil
production, before the impact of changes in inventories, in the
second quarter of 2005 averaged 33,318 net barrels of oil per day
(BOPD), an increase of 24 percent over the 26,978 net BOPD produced
in the comparable quarter of 2004. The increase over the prior
year's quarter is primarily a result of additional production
resulting from the company's drilling and workover programs and the
company's acquisition of properties in the San Jorge basin during
September 2004. In addition, the prior year's quarter was
negatively impacted by a labor strike reducing second quarter 2004
reported production by an estimated 2,200 BOPD. Oil production in
Yemen made its initial contribution in the second quarter of 2004
at 1,186 net BOPD and almost quadrupled to average 4,294 net BOPD
during the second quarter of 2005, before the impact of changes in
inventories. All of the An Nagyah field production during the
second quarter was trucked to a nearby facility for processing and
transporting to an export terminal. An 18-mile (28 km) pipeline to
the processing facility was completed and became operational in
early July. As a result the company expects production to increase
to approximately 10,000 gross BOPD (5,200 net) by the middle of the
third quarter. U.S. oil production also showed a strong increase
during the second quarter of 2005 rising 13 percent over the prior
year's second quarter to average 18,967 net BOPD, driven by the
December 2004 acquisition of producing properties in the Gulf Coast
area of Alabama and 2005 exploitation successes. Partially
offsetting these increases, the company estimates the second
quarter of 2005 was reduced by 400 net BOPD as a result of certain
wells shut-in for part of the quarter due to damage from heavy
rains and mudslides in California earlier in the year. These
shut-in wells have now been returned to production. Total net gas
production from continuing operations was down four percent from
the prior year's second quarter. U.S. and Argentina net gas
production was up slightly during the second quarter of 2005;
however, the anticipated lower sales volumes into Brazil caused
Bolivia gas production to decrease 32 percent leading to the
overall decline in total net gas production. In addition, the
company estimates that U.S. gas production for the second quarter
of 2005 was reduced by 66 MMCF of gas as a result of the heavy
rains and mudslides in California. Commodity Prices and Revenues
Including the impact of derivative financial instruments accounted
for as hedges, the company's realized price for oil from continuing
operations increased 26 percent to an average of $36.48 per barrel
in the second quarter of 2005, compared with last year's second
quarter average price of $29.04 per barrel. The company's realized
price for gas, including the impact of hedges, increased 27 percent
to $4.92 per Mcf compared to $3.88 per Mcf in the second quarter of
2004. As a result of the increases in production and oil and gas
prices, oil and gas revenues increased 48 percent to $238.3 million
for the second quarter of 2005 from $160.6 million in the same
quarter of 2004. Costs and Expenses Production costs from
continuing operations totaled $6.38 per BOE in the second quarter
of 2005, which is eight percent higher than the $5.90 per BOE for
the previous year's quarter. During the second quarter of 2005, the
company incurred approximately $2.2 million, or $0.32 per BOE, to
repair mudslide damage on its properties in Ventura County,
California caused by heavy rains early in the year. The company
expects to spend an additional $2.5 million during the third
quarter of 2005 bringing the total expected cost in 2005 for the
mudslide repairs to $8.2 million. Second quarter export taxes in
Argentina increased from $6.7 million in 2004 to $16.3 million in
2005 primarily as a result of the increased export tax rates
announced in August 2004 and higher oil prices. Production,
transportation and storage costs combined with production, ad
valorem and export taxes (total lease operating expense) increased
to $10.60 per BOE in the second quarter of 2005 from $8.44 per BOE
in the year-earlier quarter, primarily attributable to increased
production taxes and Argentina export taxes. Exploration costs of
$7.4 million for the second quarter of 2005 consisted of $3.7
million of seismic, geological and geophysical costs, and $3.7
million of dry hole costs, primarily in Yemen. This compares to
exploration expense for the second quarter of 2004 of $7.3 million,
comprised of $1.7 million of seismic, geological and geophysical
costs, $4.4 million of dry hole costs, primarily in Italy, and $1.2
million of leasehold impairments. Six Months Results Net income for
the six months ended June 30, 2005, was $89.6 million, or $1.33 per
diluted share, compared to net income of $56.5 million, or $0.87
per diluted share, for the six months ended June 30, 2004. Income
from continuing operations of $78.9 million, or $1.17 per diluted
share, compares to $53.1 million, or $0.82 per diluted share for
the six months ended June 30, 2004. The company was required to
account for certain oil price swap agreements using mark-to-market
accounting during January and February 2005. As a result, the
company recorded $41.0 million of derivative losses during the
first quarter of 2005. As of June 30, 2005, $12.9 million of these
losses had been realized and $28.1 million remained unrealized. Net
income for the six months ended June 30, 2005, was reduced by $17.2
million ($28.1 million pre-tax), or $0.26 per diluted share,
related to these unrealized losses. As these oil price swap
agreements are settled in future periods, the company will report
higher oil revenues in those future periods than would have been
reported had the unrealized losses not been recognized in the first
quarter of 2005. As of March 1, 2005, the company resumed hedge
accounting for all of its derivative financial instruments. Cash
flow, a non-GAAP measure, was $210.1 million for the six months
ended June 30, 2005, up 58 percent compared to $132.9 million for
the six months ended June 30, 2004, reflecting the increase in
production and oil and gas prices from the six months ended 2004
levels. See the attached table for reconciliations of these
non-GAAP financial measures to the corresponding GAAP amounts of
cash provided by operating activities of $185.3 million for the six
months ended June 30, 2005, and $142.2 million for the six months
ended June 30, 2004. 2005 Targets Updated As a result of the
continued strong price environment and positive results from its
development drilling programs in the U.S. and Yemen, the company is
increasing its capital budget and production targets for 2005. The
company's 2005 capital budget has been increased 14 percent from
$250 million to $285 million with the increases primarily allocated
to the U.S. and Yemen development drilling programs. The company is
increasing its production target for 2005 from the previously
announced 26.8 million BOE to 27.3 million BOE. The increase is due
to positive results from its U.S. development drilling and workover
programs, production performance of its wells in Yemen and an
acceleration or expansion of various development drilling programs
in the U.S. and Yemen as evidenced by the increased capital budget.
Due to strong oil and gas prices experienced during the first half
of 2005 and the strength of the forward price curve, the company
has increased its average NYMEX price assumptions for 2005 to
$55.00 per barrel of oil and $7.00 per MMBtu of gas versus the
previous assumptions of $50.00 per barrel and $6.50 per MMBtu.
During the second quarter of 2005, the company experienced an
improvement in the contract differentials in Argentina from those
witnessed at year-end 2004 and earlier in 2005. Indications early
in the third quarter are that this improvement has been sustained.
Accordingly, the company has adjusted its expected net realized
prices for oil production as a percent of NYMEX prices during 2005
to be 74 percent versus the previous target of 71 percent. After
considering the impact of the increases in targeted production,
assumed NYMEX oil and gas prices, realized price assumptions and
the other assumptions enumerated in the accompanying table,
"Vintage Petroleum, Inc. and Subsidiaries, Revised 2005 Targets,"
the company is increasing its target for 2005 cash flow (as defined
in the attached table) by 23 percent to $435 million, which is $81
million higher than the previous target of $354 million. Similarly
the revised target for 2005 EBITDAX has been raised by 21 percent,
or $100 million, to $586 million from the previous target of $486
million. Vintage to Webcast Second-Quarter 2005 Conference Call The
company's second-quarter 2005 teleconference call to review second
quarter results will be broadcast live on a listen-only basis over
the internet on Thursday, August 4 at 3 p.m. Central Time.
Interested parties may access the webcast by visiting the Vintage
Petroleum, Inc. website at www.vintagepetroleum.com and selecting
the microphone icon, or at www.fulldisclosure.com and typing VPI in
the ticker search box and selecting "Go". The teleconference may be
accessed by dialing 800-362-0574 and providing the call identifier
"Vintage" to the operator. The webcast and the accompanying slide
presentation will be available for replay at the company's website.
An audio replay will be available until August 9, 2005, by dialing
402-530-9315. 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 estimates of future
production, operating costs, capital spending, EBITDAX, cash flow,
NYMEX prices of oil and gas and company realizations, the impact of
oil and gas hedging activities, and events or developments that the
company expects or believes are forward-looking statements.
Although the company 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,
actions taken and to be taken by Argentina as a result of its
political and economic conditions and changes in the estimated
impact on the company, as well as continued availability of capital
and financing, and general economic, market or business conditions
as well as other risk factors described from time to time in the
company's filings with the SEC. The company assumes no obligation
to update publicly such forward-looking statements, whether as a
result of new information, future events or otherwise. Vintage
Petroleum, Inc. is an independent energy company engaged in the
acquisition, exploitation, exploration, and development of oil and
gas properties and the 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. For
additional information, visit the company website at
www.vintagepetroleum.com -0- *T VINTAGE PETROLEUM, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share amounts) (Unaudited) Three Months Ended Six Months
Ended June 30, June 30, ------------------- -------------------
2005 2004 2005 2004 --------- --------- --------- ---------
REVENUES: Oil, condensate and NGL sales $186,089 $117,507 $351,646
$230,938 Gas sales 52,166 43,058 102,052 78,126 Sulfur sales 994
242 1,732 715 Gas marketing 16,124 17,462 34,702 32,234 ---------
--------- --------- --------- Total revenues 255,373 178,269
490,132 342,013 --------- --------- --------- --------- COSTS AND
EXPENSES: Production costs 43,836 34,806 87,195 70,165
Transportation and storage costs 4,300 2,741 8,529 5,061 Production
and ad valorem taxes 8,332 5,519 15,216 10,825 Export taxes 16,332
6,706 29,668 12,912 Exploration costs 7,429 7,329 17,755 8,565 Gas
marketing 15,124 16,480 32,666 30,551 General and administrative
16,821 16,791 34,171 34,856 Depreciation, depletion and
amortization 34,353 21,881 67,750 45,967 Impairment of proved oil
and gas properties - - - 3,915 Accretion 1,792 1,629 3,539 3,247
Other operating (income) expense 1,912 1,213 2,929 (3,604)
--------- --------- --------- -------- Total costs and expenses
150,231 115,095 299,418 222,460 --------- --------- ---------
--------- OPERATING INCOME 105,142 63,174 190,714 119,553 ---------
--------- --------- --------- NON-OPERATING (INCOME) EXPENSE:
Interest expense 11,600 12,674 23,155 26,695 Loss on early
extinguishment of debt - - - 9,903 Losses on derivative
transactions 2,728 440 43,444 444 (Gain) loss on disposition of
assets (16) 4 (16) (55) Foreign currency exchange (gain) loss 1,069
(1,969) 2,335 (826) Other non-operating income (726) (162) (1,157)
(173) --------- --------- --------- -------- Net non-operating
expense 14,655 10,987 67,761 35,988 --------- --------- ---------
--------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
90,487 52,187 122,953 83,565 --------- --------- ---------
--------- INCOME TAX PROVISION: Current 24,182 16,269 38,586 28,413
Deferred 8,587 1,216 5,467 2,089 --------- --------- ---------
-------- Total income tax provision 32,769 17,485 44,053 30,502
--------- --------- --------- --------- INCOME FROM CONTINUING
OPERATIONS 57,718 34,702 78,900 53,063 INCOME FROM DISCONTINUED
OPERATIONS - 2,707 10,743 3,481 --------- --------- ---------
--------- NET INCOME $ 57,718 $ 37,409 $ 89,643 $ 56,544 =========
========= ========= ========= *T -0- *T VINTAGE PETROLEUM, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Continued) (In
thousands, except per share amounts) (Unaudited) Three Months Ended
Six Months Ended June 30, June 30, -------------------
----------------- 2005 2004 2005 2004 ---------- -------- ---------
------- BASIC INCOME PER SHARE: Income from continuing operations
$0.86 $0.54 $1.19 $0.83 Income from discontinued operations - 0.04
0.16 0.05 ---------- -------- --------- ------- Net income $0.86
$0.58 $1.35 $0.88 ========== ======== ========= ======= DILUTED
INCOME PER SHARE: Income from continuing operations $0.86 $0.53
$1.17 $0.82 Income from discontinued operations - 0.04 0.16 0.05
---------- -------- --------- ------- Net income $0.86 $0.57 $1.33
$0.87 ========== ======== ========= ======= Weighted average common
shares outstanding: Basic 66,799 64,741 66,471 64,535 Diluted
67,472 65,487 67,182 65,258 *T -0- *T VINTAGE PETROLEUM, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except
shares and per share amounts) (Unaudited) ASSETS June 30, December
31, 2005 2004 ----------- ------------ CURRENT ASSETS: Cash and
cash equivalents $ 155,804 $ 124,221 Accounts receivable - Oil and
gas sales 127,098 107,870 Joint operations 11,854 12,479 Income
taxes receivable 39,460 31,571 Deferred income taxes 22,639 15,364
Prepaids and other current assets 17,758 23,648 -----------
------------ Total current assets 374,613 315,153 -----------
------------ PROPERTY, PLANT AND EQUIPMENT, at cost: Oil and gas
properties, successful efforts method 2,289,876 2,163,176 Oil and
gas gathering systems and plants 23,926 23,926 Other 33,313 31,932
----------- ------------ 2,347,115 2,219,034 Less accumulated
depreciation, depletion and amortization 1,009,816 942,656
----------- ------------ Total property, plant and equipment, net
1,337,299 1,276,378 ----------- ------------ DEFERRED INCOME TAXES
10,959 13,200 ----------- ------------ OTHER ASSETS, net 50,513
40,161 ----------- ------------ $1,773,384 $1,644,892 ===========
============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Revenue payable $ 28,154 $ 33,740 Accounts payable -
trade 55,925 50,775 Current income taxes payable 18,954 23,565
Derivative financial instruments payable 80,966 27,672 Other
payables and accrued liabilities 74,401 73,748 -----------
------------ Total current liabilities 258,400 209,500 -----------
------------ LONG-TERM DEBT 549,952 549,949 -----------
------------ DEFERRED INCOME TAXES 77,646 80,383 -----------
------------ LONG-TERM LIABILITY FOR ASSET RETIREMENT OBLIGATIONS
92,008 90,707 ----------- ------------ OTHER LONG-TERM LIABILITIES
39,195 30,675 ----------- ------------ STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par, 5,000,000 shares authorized, zero
shares issued and outstanding - - Common stock, $0.005 par,
160,000,000 shares authorized, 67,514,467 and 66,541,984 shares
issued and 66,977,600 and 66,012,252 outstanding, respectively 338
333 Capital in excess of par value 380,782 361,120 Retained
earnings 425,352 342,707 Accumulated other comprehensive loss
(40,083) (13,088) ----------- ----------- 766,389 691,072 Less
treasury stock, at cost, 536,867 and 529,732 shares, respectively
4,319 4,319 Less unamortized cost of non-vested stock awards 5,887
3,075 ----------- ------------ Total stockholders' equity 756,183
683,678 ----------- ------------ $1,773,384 $1,644,892 ===========
============ *T -0- *T VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended June 30, ------------------- 2005 2004 ---------
--------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 89,643
$ 56,544 Adjustments to reconcile net income to cash provided by
operating activities - Income from discontinued operations, net of
tax (10,743) (3,481) Depreciation, depletion and amortization
67,750 45,967 Impairment of proved oil and gas properties - 3,915
Accretion 3,539 3,247 Dry hole costs, impairments of unproved oil
and gas properties and other 12,010 5,684 Provision for deferred
income taxes 5,467 2,089 Foreign currency exchange (gain) loss
2,335 (826) Gain on dispositions of assets (16) (55) Loss on early
extinguishment of debt - 9,903 Stock compensation 3,130 5,938
Losses on derivative transactions 43,444 444 Other non-cash items
included in net income 613 647 Increase in receivables (18,928)
(16,675) Increase (decrease) in payables and accrued liabilities
(10,618) 1,744 Other working capital changes (2,296) 4,708
---------- --------- Cash provided by continuing operations 185,330
119,793 Cash provided by discontinued operations - 22,415
---------- --------- Cash provided by operating activities 185,330
142,208 ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - Oil and gas properties (132,743) (95,744)
Gathering systems and other (1,440) (1,430) Payments on non-hedge
derivative transactions (12,841) - Other (8,266) (913) ----------
--------- Cash used by investing activities - continuing operations
(155,290) (98,087) Cash used by investing activities - discontinued
operations - (16,123) ---------- --------- Cash used by investing
activities (155,290) (114,210) ---------- --------- CASH FLOWS FROM
FINANCING ACTIVITIES: Issuance of common stock 8,565 4,029 Purchase
of treasury stock - (129) Redemption of 9 3/4% Senior Subordinated
Notes due 2009 - (157,313) Advance on revolving credit facility and
other borrowings 45,000 294,000 Payments on revolving credit
facility and other borrowings (45,000) (144,900) Dividends paid
(6,626) (5,798) Other 106 (3,052) ---------- --------- Cash
provided (used) by financing activities 2,045 (13,163) ----------
--------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (502) 634
---------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS
31,583 15,469 CASH AND CASH EQUIVALENTS, beginning of period
124,221 32,264 ---------- --------- CASH AND CASH EQUIVALENTS, end
of period $155,804 $ 47,733 ========== ========= *T -0- *T VINTAGE
PETROLEUM, INC. AND SUBSIDIARIES SUMMARY OPERATING DATA (Unaudited)
Three Months Ended Six Months Ended June 30, June 30,
------------------- ----------------- 2005 2004 2005 2004
---------- -------- --------- ------- PRODUCTION: Oil (MBbls) -
U.S. (b) 1,727 1,532 3,191 3,045 Argentina (a)(c) 3,017 2,434 6,101
4,875 Bolivia (a) 15 21 30 41 Yemen (a) 342 59 703 59 Continuing
operations 5,101 4,046 10,025 8,020 Canada - 215 - 450 Total 5,101
4,261 10,025 8,470 Gas (MMcf) - U.S. (b) 7,141 7,125 14,824 13,365
Argentina (c) 2,228 2,147 4,381 4,179 Bolivia 1,236 1,829 2,567
3,548 Continuing operations 10,605 11,101 21,772 21,092 Canada -
3,868 - 7,806 Total 10,605 14,969 21,772 28,898 MBOE from
continuing operations 6,869 5,896 13,654 11,535 Total MBOE 6,869
6,756 13,654 13,286 (a) Oil production (in MBbls) before the impact
of changes in inventories: Three Months Ended Six Months Ended June
30, June 30, ------------------- ----------------- 2005 2004 2005
2004 --------- --------- --------- ------- Argentina 3,032 2,455
5,856 4,931 Bolivia 14 22 27 43 Yemen 391 108 735 109 (b) U.S.
production for the three months and six months ended June 30, 2005,
is estimated to have been reduced as a result of mudslides in
Ventura County, California by 36 MBbls of oil and 66 MMcf of gas,
or 47 MBOE, and 228 MBbls of oil and 304 MMcf of gas, or 279 MBOE,
respectively (c) Argentina production for the three months and six
months ended June 30, 2004, is estimated to have been reduced as
the result of a labor strike by 200 MBbls of oil and 165 MMcf of
gas, or 228 MBOE and 365 MBbls of oil and 300 MMcf of gas, or 415
MBOE, respectively. MBbls - thousand barrels MMcf - million cubic
feet MBOE - thousand barrels of oil equivalent *T -0- *T VINTAGE
PETROLEUM, INC. AND SUBSIDIARIES SUMMARY OPERATING DATA (Continued)
(Unaudited) Three Months Ended Six Months Ended June 30, June 30,
------------------- ----------------- 2005 2004 2005 2004
---------- -------- --------- ------- Average Sales Price
(including impact of hedges): Oil (per Bbl) - U.S. $38.36 $27.12
$36.82 $27.53 Argentina 33.83 30.29 32.67 29.62 Bolivia 22.62 24.67
22.87 24.26 Yemen 51.02 29.15 48.57 29.15 Continuing operations
36.48 29.04 35.08 28.80 Canada - 28.80 - 28.30 Gas (per Mcf) - U.S.
$6.68 $5.45 $6.32 $5.24 Argentina 0.96 0.66 0.86 0.58 Bolivia 1.87
1.54 1.78 1.62 Continuing operations 4.92 3.88 4.69 3.70 Canada -
5.02 - 4.85 Average Sales Price (excluding impact of hedges): Oil
(per Bbl) - U.S. $45.55 $34.54 $44.07 $33.54 Argentina 33.83 30.29
32.67 29.62 Bolivia 22.62 24.67 22.87 24.26 Yemen 51.02 29.15 48.57
29.15 Continuing operations 38.91 31.85 37.39 31.08 Canada - 33.94
- 32.29 Gas (per Mcf) - U.S. $6.80 $5.52 $6.29 $5.28 Argentina 0.96
0.66 0.86 0.58 Bolivia 1.87 1.54 1.78 1.62 Continuing operations
5.00 3.92 4.67 3.72 Canada - 5.02 - 4.85 *T -0- *T VINTAGE
PETROLEUM, INC. AND SUBSIDIARIES REVISED 2005 TARGETS Previous
Revised 2005 2005 Targets Targets(c) ---------- ---------- Oil
production (MMBbls): U.S. 6.0 6.3 Argentina 12.3(e) 12.3(e) Bolivia
0.1 0.1 Yemen 1.4 1.6 Total 19.8 20.3 Gas Production (Bcf): U.S.
28.3 28.4 Argentina 8.5 8.5 Bolivia 5.0 5.0 Total 41.8 41.9 Total
MMBOE 26.8 27.3 Assumed NYMEX(a) prices: Oil $50.00 $55.00 Gas
$6.50 $7.00 Net realized price (before impact of hedging) as a
percent of NYMEX(a) - Total Company: Oil 71% 74% Gas 68% 70%
DD&A per BOE (oil and gas only) $4.85 $5.00 G&A per BOE
$2.45 $2.40 Production, transportation and storage costs per BOE
$7.25 $7.25 Production, ad valorem and export taxes per BOE 3.05
3.55 ---------- ---------- Total LOE per BOE $10.30 $10.80
Non-Acquisition Capital Spending Budget (in millions) $250 $285
Cash Flow (before all exploration expenses, working capital changes
and current taxes associated with property sales) (in millions) (d)
$354 $435 EBITDAX (in millions)(b)(d) $486 $586 MMBbls - million
barrels Bcf - billion cubic feet MMBOE - million barrels of oil
equivalent (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 three 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, impairments, exploration expenses, cumulative effect of
change in accounting principle, loss on early extinguishment of
debt, gains/losses on property sales and other non-cash items. (c)
Targets do not reflect any future acquisitions or dispositions of
assets. Targets reflect the impact of existing hedges. See "2005
Targets Updated" and "Forward-Looking Statements" elsewhere in the
release. (d) The targets for non-GAAP financial measures are not
reconciled to the most directly comparable GAAP financial measure
as the company does not establish targets for such GAAP financial
measures. (e) Includes sales volumes of 400,000 barrels for an
expected decrease in oil inventories. *T -0- *T VINTAGE PETROLEUM,
INC. AND SUBSIDIARIES COMMODITY DERIVATIVE STATUS OIL PRICE SWAPS
NYMEX Reference Price Quarter Ending Barrels $ Per Bbl
------------------------------------- ------------
------------------- September 30, 2005 1,269,600 35.57 December 31,
2005 1,269,600 34.88 March 31, 2006 427,500 37.39 June 30, 2006
432,250 36.80 September 30, 2006 437,000 36.32 December 31, 2006
437,000 35.93 March 31, 2007 189,000 34.26 June 30, 2007 63,700
39.66 September 30, 2007 64,400 39.38 December 31, 2007 64,400
39.10 GAS PRICE SWAPS NYMEX Reference Price Quarter Ending MMBtu $
Per MMBtu ----------------------------------- ----------------
---------------- September 30, 2005 1,186,800 6.17 December 31,
2005 1,186,800 6.37 March 31, 2006 243,000 6.47 June 30, 2006
245,700 6.47 September 30, 2006 248,400 6.47 December 31, 2006
248,400 6.47 March 31, 2007 225,000 6.00 June 30, 2007 227,500 6.00
September 30, 2007 230,000 6.00 December 31, 2007 230,000 6.00 GAS
PRICE COLLARS MMBtu For NYMEX Floor NYMEX Cap July to December
Reference Price Reference Price 2005 $ Per MMBtu $ Per MMBtu
------------------------ -------------------- --------------------
920,000 6.00 6.80 1,840,000 6.00 8.02 920,000 6.00 8.73 1,840,000
6.00 9.21 *T VINTAGE PETROLEUM, INC. AND SUBSIDIARIES NON-GAAP
FINANCIAL MEASURES Cash flow, a non-GAAP measure, represents cash
provided by operating activities before the impact of discontinued
operations, changes in working capital items related to operating
activities, all exploration costs and further adjusted for payments
on derivative transactions no longer qualifying for hedge
accounting which are reflected as investing activities under GAAP.
This non-GAAP measure is presented because management believes it
is a useful adjunct to cash provided by operating activities under
accounting principles generally accepted in the United States
(GAAP). This non-GAAP cash flow measure is widely accepted as a
financial indicator of an oil and gas company's ability to generate
cash which is used to internally fund exploration and development
activities and to service debt and is comparable to targets
established by the company. This non-GAAP measure is not a measure
of financial performance under GAAP and should not be considered as
an alternative to cash provided (used) by operating, investing, or
financing activities as an indicator of cash flows, or as a measure
of liquidity. EBITDAX is also presented below because of its wide
acceptance by the investment community as a financial indicator of
a company's ability to internally fund exploration and development
activities and to service or incur debt. Management also views the
non-GAAP measure of EBITDAX as a useful tool for comparison of the
company's financial indicator with those of peer companies and is
comparable to targets established by the company. EBITDAX should
not be considered as an alternative to net income or cash provided
by operating activities, as defined by GAAP. The following table
reconciles cash provided by operating activities to cash flow and
EBITDAX (in thousands): -0- *T Three Months Ended Six Months Ended
June 30, June 30, ------------------ ------------------- 2005 2004
2005 2004 --------- -------- --------- --------- Cash provided by
operating activities (GAAP measure) $82,337 $57,758 $185,330
$142,208 Adjustments to remove the impact of: Cash provided by
discontinued operations - (12,402) - (22,415) Changes in working
capital items related to operating activities 29,570 20,646 31,842
10,223 Exploration geological and geophysical costs 3,685 1,681
5,745 2,881 Payments on derivative transactions included in
investing activities (8,492) - (12,841) - --------- --------
--------- --------- Cash flow (non-GAAP measure) 107,100 67,683
210,076 132,897 Current taxes 24,182 16,269 38,586 28,413 Interest
expense 11,600 12,674 23,155 26,695 --------- -------- ---------
--------- EBITDAX (non-GAAP measure) $142,882 $96,626 $271,817
$188,005 ========= ======== ========= ========= *T
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