RAM Energy Resources, Inc. (Nasdaq: RAME) today announced first
quarter 2010 earnings results that included strong EBITDA driven by
higher hydrocarbon prices and an improvement in key costs compared
to the year-ago quarter.
RAM Reports 1Q2010 Net Income of $2.4 Million
For the quarter ended March 31, 2010, RAM reported net income of
$2.4 million, or $0.03 per share, based upon 78.0 million diluted
weighted average shares outstanding compared to a net loss of $29.4
million, or $0.38 per share, on 77.3 million shares outstanding in
the first quarter of 2009. The 2009 quarter results included the
recognition of a non-cash impairment of the carrying value of oil
and gas properties of $47.6 million ($30.3 million after tax).
Higher Prices and Reduction in Key Costs Drive EBITDA
Increase of 34%
EBITDA for the first quarter 2010 was $15.7 million, 34% above
the $11.8 million in the first quarter of 2009. The combination of
higher hydrocarbon prices, lower lease operating expenses and lower
general and administrative expenses during the first quarter more
than offset production decreases. The production decrease in this
year’s quarter is attributable to limited natural gas drilling
activity in 2009 reflecting low natural gas prices and
weather-related downtime in this year’s first quarter. Free cash
flow was $11.3 million, or $0.14 per diluted share outstanding, for
the first quarter 2010 compared to $8.2 million, or $0.11 per
diluted share outstanding, for the same quarter in 2009.
Production
Sixty-three percent of RAM’s production mix and approximately
78% of oil and gas sales were derived from oil and natural gas
liquids (NGL). The average price of oil in the first quarter of
2010 of $75.83 per barrel was 96% above that of the year-ago
quarter. Similarly, the average price of NGLs increased 138% over
the first quarter of last year. The average price of natural gas
was $5.07 per Mcf in the first quarter of the current year compared
to $3.86 per Mcf last year. The benefit derived from higher average
prices for oil, NGLs and natural gas partially compensated for the
previously disclosed impact to production from decreased natural
gas drilling in 2009 and severe winter weather early in this year’s
first quarter, lifting oil and gas sales to $29.8 million in the
first quarter compared to sales of $19.1 million in the similar
quarter last year. This year’s first quarter 2010 production of
566,000 BOE was 14% below that of production in the prior year’s
quarter. Severe winter weather is estimated to have reduced first
quarter 2010 production by approximately 45,000 – 50,000 BOE.
Costs and Expenses
Production expenses were $13.99 per BOE in the first quarter of
2010, or a total of $7.9 million, 9% lower on a BOE basis than the
$15.39 per BOE, or a total of $10.1 million, in the previous year’s
quarter. Production taxes, which are based on realized prices at
the wellhead for most of the company’s production in this year’s
first quarter, were a total of $1.6 million compared to $872,000
during the first quarter of 2009, principally as a result of higher
hydrocarbon prices. On a per BOE basis, production taxes were $2.82
per BOE in this year’s first quarter, 112% above the $1.33 per BOE
in last year’s first quarter. Production taxes as a percent of oil
and natural gas sales were 5.3% in the current year’s quarter
compared to 4.6% of sales in the year-ago quarter. General and
administrative expenses for the first quarter of 2010 were reduced
to $3.8 million from $4.3 million in last year’s first quarter
resulting from the collection of certain past due receivables and
lower health and welfare costs. Interest expense for the first
quarter of 2010 increased by $2.0 million, or 56%, to $5.6 million
compared to the prior year’s first quarter interest expense of $3.6
million. The increase in total interest expense recorded is due
principally to a higher blended interest rate of approximately 8.1%
in the current quarter compared to a blended interest rate of 4.9%
in last year’s quarter. Total debt at March 31, 2010 was $247.0
million, down 5.3% from the $260.7 million level at the end of the
2009 first quarter. Over the past year, available cash flow in
excess of capital expenditures and proceeds of asset sales applied
to debt reduction along with a positive impact to EBITDA from the
rebound in oil and NGL prices and reductions to expenses during the
past several quarters has allowed the company’s leverage ratio, a
measure of debt to last twelve months of EBITDA, to decline to 3.97
times from the previous quarter’s 4.22 times.
First Quarter 2010 Capital Spending
Oil and gas related capital expenditures totaled approximately
$7.8 million in the first quarter, of which approximately $7.5
million was allocated to lower risk development and exploitation
activities and $308,000 for the acquisition of proven properties.
RAM participated in the drilling of 21 gross (16.1 net) wells
during the quarter, of which 10 gross (10 net) were completed and
capable of commercial production, while the remainder were in the
process of drilling, testing or completing at the end of the
period. RAM continues to expect to fund its 2010 total
non-acquisition capital budget of $50.0 million with cash flow from
internal sources and the sale of unspecified non-core assets.
First Quarter 2010 Conference Call
The company’s teleconference call to review first quarter
results will be broadcast live on a listen-only basis over the
internet on Tuesday, May 4, at 8:00 a.m. Central Daylight Time.
Interested parties may access the webcast by visiting the RAM
Energy Resources, Inc. website at www.ramenergy.com. The
teleconference may be accessed by dialing 866.788.0542 (domestic)
or 857.350.1680 (international) and providing the call identifier
“36423069” to the operator. An audio replay will be available until
May 11, 2010 by dialing 888.286.8010 (domestic) or 617.801.6888
(international) and using pass code “61878980”.
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 planned non-acquisition capital spending, NYMEX prices
of oil, natural gas, NGLs and company realizations, the impact of
oil and gas derivatives, drilling activities, estimates of the
impact of weather on production and the company’s production mix
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 the
government as a result of political and economic conditions,
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.
About RAM Energy Resources
RAM Energy Resources, Inc. is an independent energy company
engaged in the acquisition, exploitation, exploration, and
development of oil and gas properties and the marketing of crude
oil and natural gas. Company headquarters are in Tulsa, Oklahoma,
and its common shares are traded on the Nasdaq under the symbol
RAME. For additional information, visit the company website at
www.ramenergy.com.
RAM Energy Resources,
Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share and
per share amounts)
(unaudited)
Three months ended March 31, 2010 2009 REVENUES AND
OTHER OPERATING INCOME: Oil and natural gas sales Oil $ 19,488 $
11,258 Natural gas 6,429 6,050 NGLs 3,931
1,748 Total oil and natural gas sales 29,848 19,056 Realized
gains (losses) on derivatives (898 ) 7,878 Unrealized gains
(losses) on derivatives 1,935 (1,007 ) Other 36
85 Total revenues and other operating income 30,921
26,012 OPERATING EXPENSES: Oil and natural gas production
taxes 1,594 872 Oil and natural gas production expenses 7,920
10,085 Depreciation and amortization 6,714 8,282 Accretion expense
382 404 Impairment - 47,613 Share-based compensation 686 541
General and administrative, overhead and other expenses, net of
operator's overhead fees 3,770 4,345
Total operating expenses 21,066 72,142
Operating income (loss) 9,855 (46,130 ) OTHER INCOME
(EXPENSE): Interest expense (5,635 ) (3,608 ) Interest income 2 20
Other expense (9 ) (433 ) EARNINGS (LOSS) BEFORE
INCOME TAXES 4,213 (50,151 ) INCOME TAX PROVISION (BENEFIT)
1,795 (20,793 ) Net earnings (loss) $ 2,418 $
(29,358 ) BASIC EARNINGS (LOSS) PER SHARE $ 0.03 $
(0.38 ) BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 77,997,063
77,290,832 DILUTED EARNINGS (LOSS) PER
SHARE $ 0.03 $ (0.38 ) DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING 77,997,063 77,290,832
RAM Energy Resources,
Inc.
Condensed Consolidated Balance
Sheets
(in thousands, except share and
per share amounts)
March 31, December 31, 2010 2009 (unaudited)
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 101 $ 129 Accounts
receivable: Oil and natural gas sales, net of allowance of $50 ($50
at December 31, 2009) 12,473 12,585 Joint interest operations, net
of allowance of $606 ($641 at December 31, 2009) 525 1,303 Other,
net of allowance of $48 ($48 at December 31, 2009) 243 193 Prepaid
expenses 1,835 1,970 Deferred tax asset 3,612 3,531 Inventory 3,762
3,900 Other current assets 29 27 Total
current assets 22,580 23,638 PROPERTIES AND EQUIPMENT, AT COST:
Proved oil and natural gas properties and equipment, using full
cost accounting 709,901 702,502 Other property and equipment
9,509 9,337 719,410 711,839 Less accumulated
depreciation, amortization and impairment (469,177 )
(462,541 ) Total properties and equipment 250,233 249,298 OTHER
ASSETS: Deferred tax asset 29,938 31,573 Derivative assets 783 -
Deferred loan costs, net of accumulated amortization of $3,446
($2,924 at December 31, 2009) 4,175 4,697 Other 1,955
1,956 Total assets $ 309,664 $ 311,162
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT
LIABILITIES: Accounts payable: Trade $ 12,546 $ 15,697 Oil and
natural gas proceeds due others 9,841 10,113 Other 409 636 Accrued
liabilities: Compensation 1,774 2,664 Interest 2,935 2,933 Income
taxes 832 655 Other 10 10 Derivative liabilities 3,655 4,471 Asset
retirement obligations 713 711 Long-term debt due within one year
149 126 Total current liabilities
32,864 38,016 DERIVATIVE LIABILITIES - 358 LONG-TERM DEBT 246,880
246,041 ASSET RETIREMENT OBLIGATIONS 26,778 26,363 OTHER LONG-TERM
LIABILITIES 10 10 COMMITMENTS AND CONTINGENCIES 900 900
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $0.0001 par value,
100,000,000 shares authorized, 82,086,674 and80,748,674, shares
issued, 78,128,753 and 76,951,883 shares outstanding at March
31,2010 and December 31, 2009, respectively
8 8 Additional paid-in capital 223,643 222,979 Treasury stock -
3,957,921 shares (3,796,791 shares at December 31,2009) at cost
(6,513 ) (6,189 ) Accumulated deficit (214,906 )
(217,324 ) Stockholders' equity (deficit) 2,232
(526 ) Total liabilities and stockholders' equity (deficit)
$ 309,664 $ 311,162
RAM Energy Resources,
Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three months ended March 31, 2010 2009
OPERATING
ACTIVITIES: Net income (loss) $ 2,418 $ (29,358 ) Adjustments
to reconcile net income (loss) to net cash provided by operating
activities- Depreciation and amortization 6,714 8,282 Amortization
of deferred loan costs and Senior Notes discount 522 299 Non-cash
interest 765 - Accretion expense 382 404 Impairment - 47,613
Unrealized (gain) loss on derivatives and premium amortization (967
) 1,290 Deferred income tax provision (benefit) 1,554 (20,785 )
Share-based compensation 686 541 Gain on disposal of other
property, equipment and subsidiary (23 ) (15 ) Changes in operating
assets and liabilities Accounts receivable 840 1,756 Prepaid
expenses, inventory and other assets 272 832 Derivative premiums
(990 ) (579 ) Accounts payable and proceeds due others (3,650 )
(4,944 ) Accrued liabilities and other (888 ) (1,903 ) Income taxes
payable 177 (156 ) Asset retirement obligations -
(112 ) Total adjustments 5,394 32,523
Net cash provided by operating activities 7,812
3,165
INVESTING ACTIVITIES: Payments
for oil and natural gas properties and equipment (7,821 ) (13,258 )
Proceeds from sales of oil and natural gas properties 458 210
Payments for other property and equipment (254 ) (127 ) Proceeds
from sales of other property and equipment 4
23 Net cash used in investing activities (7,613 )
(13,152 )
FINANCING ACTIVITIES: Payments on long-term
debt (10,034 ) (5,042 ) Proceeds from borrowings on long-term debt
10,131 15,000 Stock repurchased (324 ) (6 ) Net cash
(used in) provided by financing activities (227 )
9,952 DECREASE IN CASH AND CASH EQUIVALENTS (28 ) (35 ) CASH
AND CASH EQUIVALENTS, beginning of period 129
164 CASH AND CASH EQUIVALENTS, end of period $ 101 $
129 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income
taxes $ 64 $ 149 Cash paid for interest $ 4,347
$ 3,450 DISCLOSURE OF NON CASH INVESTING AND
FINANCING ACTIVITIES: Asset retirement obligations $ 35 $
1,002 Payment-in-kind interest $ 765 $ -
RAM Energy Resources,
Inc.
Production by Area
Mature Mature
Developing Fields Oil Fields* Natural Gas
Fields Three Months Ended March 31, 2010 South
Texas Barnett Shale Appalachia Various
Various Total Aggregate Net Production Oil
(MBbls) 13 2 - 218 24 257
NGLs (MBbls) 35 31 - 13 19 98
Natural Gas (MMcf) 541 172 14 56 486 1,269
MBoe 139
61 2 240 124 566
Three Months Ended March 31, 2009
Aggregate Net Production Oil (MBbls) 19 2 - 251 18
290
NGLs (MBbls) 29 35 - 20 20 104
Natural Gas (MMcf)
519 238 23 119 668 1,567
MBoe 134 77 4 291 149 655
Change in MBoe 5 (16) (2) (51) (25) (89)
Percentage
Change in MBoe 3.7% -20.8% -50.0% -17.5% -16.8% -13.6%
*Includes Electra/Burkburnett,
Allen/Fitts and Layton fields.
RAM Energy Resources, Inc.
Production and Prices Summary
Three months ended March 31, 2010 2009
Production volumes: Oil (MBbls) 257 290 NGLs (MBbls) 98 104 Natural
gas (MMcf) 1,269 1,567 Total (MBoe) 566 655 Average sale
prices received: Oil (per Bbl) $75.83 $38.75 NGLs (per Bbl) $40.11
$16.86 Natural gas (per Mcf) $5.07 $3.86 Total per Boe $52.73
$29.08 Cash effect of derivative contracts: Oil (per Bbl)
$(3.84) $14.98 NGLs (per Bbl) $0.00 $0.00 Natural gas (per Mcf)
$0.07 $2.25 Total per Boe $(1.59) $12.03 Average prices
computed after cash effect of settlement of derivative contracts:
Oil (per Bbl) $71.99 $53.73 NGLs (per Bbl) $40.11 $16.86 Natural
gas (per Mcf) $5.14 $6.11 Total per Boe $51.14 $41.11 Cash
expenses (per Boe): Oil and natural gas production taxes $2.82
$1.33 Oil and natural gas production expenses $13.99 $15.39 General
and administrative $6.66 $6.63 Interest $7.68 $5.02 Taxes $0.11
$0.23 Total per Boe $31.26 $28.60 Cash Flow per Boe $19.88
$12.51
RAM Energy Resources,
Inc.
Modified EBITDA, Free Cash Flow
and Adjusted Net Income
( non-GAAP measures)
(unaudited)
Non-GAAP Financial
Measures
Modified EBITDA, a non-GAAP
measure, is determined by adding the following to net income
(loss): interest expense, income taxes, depreciation, amortization,
accretion, share-based compensation, impairment charges, unrealized
gains or losses on derivatives and MTM settlement charges. Free
cash flow is also a non-GAAP measure representing Modified EBITDA
after adjustments for the cash portion of interest and income
taxes. Adjusted net income is a non-GAAP measure which excludes the
income tax affected impact of unrealized derivative gains or
losses, MTM settlement charges and impairment charges on GAAP
income. These non-GAAP measures are 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). These non-GAAP measures are widely accepted
as financial indicators of an oil and gas company’s ability to
generate cash used to internally fund exploration and development
activities and fund debt service costs. These non-GAAP measures are
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.
Free Cash Flow $000s, except per share amounts
Restated Qtr Ended Qtr Ended 3/31/2010
3/31/2009 Modified EBITDA: Net income (loss) $ 2,418
$ (29,358 ) Plus: Interest expense $ 4,348 $ 3,309 Plus: PIK
interest $ 765 $ - Plus: Amortization of deferred loan costs $ 522
$ 299 Plus: Depreciation, amortization and accretion $ 7,096 $
8,686 Plus: Share-based compensation $ 686 $ 541 Plus: Income tax
provision (benefit) $ 1,795 $ (20,793 ) Plus: MTM escrowed legal
settlement proceeds $ - $ 448 Plus: Impairment charges $ - $ 47,613
Less: Unrealized (gain) loss on derivatives $ (1,935 ) $ 1,007
Modified EBITDA $ 15,695 $ 11,752 Less:
Cash paid for interest $ 4,347 $ 3,450 Cash paid for income tax $
64 $ 149 Free cash flow $ 11,284 $
8,153 Weighted average shares outstanding - basic
77,997 77,291 Weighted average shares outstanding - diluted 77,997
77,291 Free cash flow per share - basic $ 0.14 $ 0.11 Free
cash flow per share - diluted $ 0.14 $ 0.11 Adjusted
net income: (1) Net income (loss) $ 2,418 $ (29,358 ) Plus:
Tax affected impairment charge $ - 30,327 Plus: Tax affected
settlement charge $ - 278 Plus: Tax affected unrealized
(gain) loss on derivatives (1,200 ) 624
Adjusted net income $ 1,218 $ 1,871 Weighted
average shares outstanding - basic 77,997 77,291 Weighted average
shares outstanding - diluted 77,997 77,291 Adjusted net
income per share - basic $ 0.02 $ 0.02 Adjusted net income per
share - diluted $ 0.02 $ 0.02 (1) Comparability between
years is partially compromised due to the differing tax rates
associated with each period.
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