TXCO Resources Inc. has reported financial results for the quarter and half ended June 30, 2008.
Highlights include record:
• Cash flow metrics;
• Net and operating income;
• Oil and gas sales;
• Total assets.
Second Quarter
TXCO's net income attributable to common stock for the second quarter was $8.7 million, equal to $0.24 per share, in contrast to a $1.3 million loss, or $0.04 per share, for second-quarter 2007, and 166 percent above first-quarter 2008 net income of $3.3 million, or $0.09 per share. All per-share amounts are on a diluted basis. Quarterly operating income rose to a record $17.3 million from the $914,000 reported for the year-earlier period and, sequentially, a 163 percent increase from $6.6 million in the first quarter.
Net cash provided by operating activities for the quarter was a record $33.8 million, sharply above the $6.5 million in the year-earlier quarter and net cash used of $9.9 million in first-quarter 2008. Ebitdax – earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense – rose to a record $34.2 million, triple the $11.3 million in the prior-year quarter and 73 percent above the first quarter’s $19.8 million. Ebitda – Ebitdax less exploration expense – was $33.6 million, compared to $11.0 million in the 2007 period and a 75 percent increase over the first quarter.
The Company’s total revenues rose to a record $48.7 million, more than double the $22.3 million reported for second-quarter 2007 and 51 percent higher than the $32.3 million in revenues for first-quarter 2008. Oil and gas sales revenues increased sharply due to higher volumes and higher realized prices. Gas gathering revenues also increased.
First Half
For the January-June 2008 period, net income available to common stockholders was a record $12.0 million, equal to $0.34 per share. In the year-earlier period, the Company reported a $3.2 million loss, or $0.10 per share. Operating income for the half rose to a record $23.9 million from a $1.7 million operating loss for the 2007 first half. Revenues were a record $81.0 million, up 141 percent from $33.6 million for the earlier period as oil and gas sales rose sharply. Gas gathering revenues rose by 34 percent. Assets at June 30 stood at a record $424.9 million, 20 percent above the $354.6 million reported at year-end 2007.
Operating cash flow for the six months was $23.9 million, more than triple the $7.5 million reported in the year-earlier period. Ebitdax rose to $54.0 million from $16.0 million for the 2007 first half, while Ebitda also increased sharply to $52.8 million from $15.4 million.
Midyear Reserves
At June 30, TXCO’s net proved reserves were estimated at 90.9 Bcfe before the third-quarter sale of approximately 3.7 Bcfe of proved reserves on 15 non-core properties located in South Texas and the Gulf of Mexico. First half oil and gas sales were 4.8 Bcfe. The Company’s proved reserves were 54 percent crude oil and 46 percent natural gas, while approximately 59 percent of TXCO’s oil and gas reserves were classified as proved developed. The Company’s proved reserves at year-end 2007 were estimated at 91.8 Bcfe.
Midyear proved reserve numbers are based on internal estimates prepared in accordance with Securities and Exchange Commission and Financial Accounting Standards Board requirements.
Management Perspective
“TXCO’s growth continued during the first half of 2008 as our higher oil and gas sales were accompanied by record commodity prices,” said CEO James E. Sigmon. “Moreover our lifting costs declined further, enhancing cash margins. In fact, our cash margins in the second quarter reached 57 percent, compared to 42 percent in the first quarter. With our improved margins and a growing inventory of drill-ready projects, we foresee an excellent second half in 2008,” he added. “Although worldwide oil and gas prices have declined in recent weeks, they remain at historic highs.”
