WTI » Topics » Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005

This excerpt taken from the WTI 10-K filed Feb 29, 2008.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Revenues. Revenues increased $215.3 million or 37% to $800.5 million for the year ended December 31, 2006. Increases in natural gas and oil revenues of $42.9 million and $172.9 million, respectively, were marginally offset by a decrease in other revenues of $0.5 million. The natural gas revenue increase was primarily caused by a sales volume increase of 13.9 Bcf, which was partially offset by a 14% decrease in the average realized natural gas price to $7.08 per Mcf for the year ended December 31, 2006 from $8.27 per Mcf for the same period in 2005. The natural gas volume increase is primarily attributable to properties acquired by merger in the Kerr-McGee transaction in August 2006 and the deferral of production in 2005 caused by Hurricanes Katrina and Rita. The oil revenue increase was caused by a sales volume increase of 2.4 MMBbls and an 18% increase in the average realized price to $57.70 per barrel in 2006 from $48.85 per barrel in 2005. The oil volume increase is primarily the result of successful drilling efforts, the Kerr-McGee transaction and the deferral of production in 2005 caused by Hurricanes Katrina and Rita.

Lease operating expenses. Lease operating expenses increased to $114.0 million in 2006 from $75.7 million in 2005. The increase is primarily attributable to properties acquired by merger in the Kerr-McGee transaction, higher insurance premiums as a result of the hurricanes in 2005, and an overall increase in service and supply costs at our existing properties. On a per Mcfe basis, lease operating expenses increased to $1.15 per Mcfe in the 2006 period from $1.07 per Mcfe for the same period in 2005 as a result of the aforementioned increase in insurance premiums and service and supply costs.

 

39


Table of Contents
Index to Financial Statements

Gathering and transportation costs and production taxes. Gathering and transportation costs increased to $16.1 million in 2006 from $12.0 million in 2005, due primarily to higher throughput of natural gas and an increased ownership interest in 2006 at one of our processing facilities. Production taxes increased to $1.6 million in 2006 from $0.7 million in 2005 due to the acquisition of a field in Louisiana state waters that was part of the properties acquired by merger in the Kerr-McGee transaction. Most of our production is from federal waters, where there are no production taxes.

Depreciation, depletion, amortization and accretion. DD&A increased to $337.6 million in 2006 from $183.8 million in 2005. The increase primarily reflects increases in total depletable costs due to properties acquired by merger in the Kerr-McGee transaction, increased capital spending, higher drilling and service costs and higher estimated future development costs in 2006. The total amount of depletable oil and gas properties and equipment, future development costs and future plugging and abandonment costs subject to DD&A, less related accumulated depreciation, was approximately $2.7 billion and $1.2 billion at December 31, 2006 and 2005, respectively. On a per Mcfe basis, DD&A was $3.40 for the year ended December 31, 2006, compared to $2.59 for the same period in 2005 due to the increase in our total depletable costs.

General and administrative expenses. G&A increased to $37.8 million for the year ended December 31, 2006 from $24.4 million in the same period of 2005 primarily due to increased personnel and resources necessary to administer our growth and increased professional fees related to the requirement that the Company be able to provide management’s assessment of internal control over financial reporting as prescribed by Section 404 of the Sarbanes-Oxley Act of 2002 as of December 31, 2006. G&A expenses related to our long-term incentive compensation plans were $8.4 million and $2.3 million in the years ended December 31, 2006 and 2005, respectively (see Note 12 to our consolidated financial statements). Also included in G&A for 2006 and 2005 are expenses of $2.1 million and $2.4 million, respectively, associated with the temporary displacement of the employees who worked in our operations office in Metairie, Louisiana due to damage caused by Hurricane Katrina and the subsequent relocation of the majority of those employees to Houston, Texas.

Derivative loss/gain. For the year ended December 31, 2006, our derivative gain of $24.2 million consisted of an unrealized gain of $13.5 million related to our open commodity derivative contracts and a realized gain of $10.7 million related to settlements of our commodity derivative contracts.

Interest expense. Interest expense incurred increased to $30.4 million for the year ended December 31, 2006 from $1.1 million in the same period of 2005 primarily due to debt incurred in August 2006 to finance a portion of the purchase price of properties acquired by merger in the Kerr-McGee transaction. During 2006, $13.2 million of interest was capitalized to unevaluated oil and gas properties.

Other income. Other income, consisting of interest income, increased to $5.9 million for the year ended December 31, 2006 from $2.7 million in the same period of 2005 due primarily to greater average daily balances of cash on hand in the 2006 period prior to the Kerr-McGee merger transaction and higher yields on cash investments.

Income tax expense. Income tax expense increased to $107.3 million in 2006 from $101.0 million in 2005 primarily due to an increase in pre-tax income. Our effective tax rates for the years ended December 31, 2006 and 2005 were 35.0% and 34.8%, respectively.

This excerpt taken from the WTI 10-K filed Mar 9, 2007.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Oil and natural gas revenues. Oil and natural gas revenues increased $215.7 million to $800.3 million for the year ended December 31, 2006. Natural gas revenues increased $42.8 million and oil revenues increased

 

34


Table of Contents
Index to Financial Statements

$172.9 million. The natural gas revenue increase was primarily caused by a sales volume increase of 13.9 Bcf, which was partially offset by a 14% decrease in the average realized natural gas price from $8.27 per Mcf for the year ended December 31, 2005 to $7.08 per Mcf for the same period in 2006. The natural gas volume increase is primarily attributable to our acquisition of a wholly-owned subsidiary of Kerr-McGee by merger in August 2006 and the deferral of production in 2005 caused by Hurricanes Katrina and Rita. The oil revenue increase was caused by a sales volume increase of 2,371 MBbls and an 18% increase in the average realized price, from $48.85 per barrel in 2005 to $57.70 per barrel in 2006. The oil volume increase is primarily the result of successful drilling efforts, the Kerr-McGee transaction and the deferral of production in 2005 caused by Hurricanes Katrina and Rita.

Lease operating expenses. Our lease operating expenses increased from $71.8 million in 2005 to $109.7 million in 2006. The increase is primarily attributable to the Kerr-McGee transaction, higher insurance premiums as a result of the hurricanes in 2005, and an overall increase in service and supply costs at our existing properties. On a per Mcfe basis, lease operating expenses increased from $1.01 per Mcfe in the 2005 period to $1.11 per Mcfe for the same period in 2006 as a result of the aforementioned increase in insurance premiums and service and supply costs.

Gathering and transportation costs and production taxes. Gathering and transportation costs increased from $12.0 million in 2005 to $16.1 million in 2006, due primarily to higher throughput of natural gas and an increased ownership interest in 2006 at one of our processing facilities. Production taxes increased from $0.7 million in 2005 to $1.6 million in 2006 due to the Kerr-McGee transaction. Most of our production is from federal waters, where there are no production taxes.

Depreciation, depletion, amortization and accretion. Depreciation, depletion, amortization and accretion (“DD&A”) increased from $183.8 million in 2005 to $337.6 million in 2006. The increase primarily reflects increases in total depletable costs due to the Kerr-McGee transaction, increased capital spending, higher drilling and service costs and higher estimated future development costs in 2006. The total amount of oil and gas properties and equipment, future development costs and future plugging and abandonment costs subject to DD&A, less related accumulated depreciation, was approximately $2.7 billion and $1.2 billion at December 31, 2006 and 2005, respectively. On a per Mcfe basis, DD&A was $3.40 for the year ended December 31, 2006, compared to $2.59 for the same period in 2005 due to the increase in our total depletable costs.

General and administrative expenses. General and administrative expenses (“G&A”) increased from $28.4 million for the year ended December 31, 2005 to $42.1 million in the same period of 2006 primarily due to increased personnel and resources necessary to administer our growth and increased professional fees related to the requirement that the Company be able to provide management’s assessment of internal control over financial reporting as prescribed by Section 404 of the Sarbanes-Oxley Act of 2002 as of December 31, 2006. G&A expenses related to our long-term incentive compensation plans were $8.4 million and $2.3 million in the years ended December 31, 2006 and 2005, respectively (see Note 12 to our consolidated financial statements). Also included in G&A for 2006 and 2005 are expenses of $2.1 million and $2.4 million, respectively, associated with the temporary displacement of the employees who worked in our operations office in Metairie, Louisiana due to damage caused by Hurricane Katrina and the subsequent relocation of the majority of those employees to Houston, Texas.

Commodity derivative gain. For the year ended December 31, 2006, we recorded an unrealized gain of $13.5 million related to our open commodity derivative contracts and a realized gain of $10.7 million related to settlements of our commodity derivative contracts.

Interest expense. Interest expense increased from $1.1 million for the year ended December 31, 2005 to $30.4 million in the same period of 2006 due primarily to higher average borrowings in 2006 related to the Kerr-McGee merger transaction. During 2006, $13.2 million of interest was capitalized to unevaluated oil and gas properties acquired in the Kerr-McGee transaction.

 

35


Table of Contents
Index to Financial Statements

Other income. Other income, primarily consisting of interest income, increased from $2.7 million for the year ended December 31, 2005 to $5.9 million in the same period of 2006 due primarily to greater average daily balances of cash on hand in the 2006 period prior to the Kerr-McGee merger transaction and higher yields on cash investments.

Income tax expense. Income tax expense increased from $101.0 million in 2005 to $107.3 million in 2006 primarily due to increased taxable income. Our effective tax rate for the years ended December 31, 2006 and 2005 was approximately 35%.

This excerpt taken from the WTI 10-Q filed Nov 14, 2006.

Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005

Oil and natural gas revenues. Oil and natural gas revenues increased $104.2 million to $535.9 million for the nine months ended September 30, 2006 as compared to the same period in 2005. Natural gas revenues increased $3.8 million and oil revenues increased $100.4 million. The natural gas revenue increase was caused by a sales volume increase of 0.4 Bcf and a 1% increase in the average realized natural gas price from $7.31 per Mcf for the nine months ended September 30, 2005 to $7.35 per Mcf for the same period in 2006. The natural gas volume increase is primarily attributable the Kerr-McGee merger transaction, which was substantially offset by natural reservoir declines. The oil revenue increase was caused by a 28% increase in the average realized price, from $47.38 per barrel in the 2005 period to $60.48 per barrel in 2006 and a sales volume increase of 929 MBbls. The oil volume increase is primarily the result of successful drilling efforts and the Kerr-McGee merger transaction.

Lease operating expenses. Our lease operating expenses increased from $52.3 million in the nine months ended September 30, 2005 to $66.5 million in the same period of 2006. The increase is primarily attributable to the Kerr-McGee merger transaction and increases in insurance premiums as a result of last year’s hurricanes, hurricane repair costs, overall service costs and supply costs at our existing properties. On a per Mcfe basis, lease operating expenses increased from $0.91 per Mcfe in the 2005 period to $1.05 per Mcfe for the same period in 2006 as a result of higher costs in 2006. Lease operating expenses for the nine months ended September 30, 2006 excludes $53.9 million of hurricane remediation costs reclassified to insurance receivables and other assets that we believe are reimbursable under our insurance policies.

 

17


Table of Contents

Gathering and transportation costs and production taxes. Gathering and transportation costs increased from $9.6 million for the nine months ended September 30, 2005 to $11.1 million for the same period in 2006, primarily due to higher throughput of natural gas and an increased ownership interest in 2006 at one of our processing facilities. Production taxes decreased from $0.6 million for the nine months ended September 30, 2005 to $0.5 million for the same period in 2006. Most of our production is from federal waters, where there are no production taxes.

Depreciation, depletion, amortization and accretion. DD&A increased from $138.8 million for the nine months ended September 30, 2005 to $201.9 million for the same period in 2006. DD&A increased as a result of an increase in our total depletable costs due to the Kerr-McGee merger transaction and our drilling activities. On a per Mcfe basis, DD&A was $3.19 for the nine months ended September 30, 2006, compared to $2.42 for the same period in 2005.

General and administrative expenses. G&A increased from $19.2 million for the nine months ended September 30, 2005 to $30.4 million in the same period of 2006 primarily due to increased personnel and resources necessary to administer our growth and increased professional fees related to the requirement that the Company be able to provide management’s assessment of internal control over financial reporting as prescribed by Section 404 of the Sarbanes-Oxley Act of 2002 as of December 31, 2006. Also included in G&A for the period ended in 2006 are expenses of $1.1 million related to the relocation of the majority of our employees to Houston, Texas and expenses of $0.4 million related to the temporary displacement of those employees due to damage caused by Hurricanes Katrina and Rita. Included in G&A for the nine months ended September 30, 2005 are expenses of $0.9 million related to our initial public offering in January 2005.

Commodity derivative gain. For the nine months ended September 30, 2006, we recorded an unrealized gain of $15.2 million related to our open commodity derivative contracts and a realized gain of $6.6 million related to settlements of our commodity derivative contracts.

Interest income. Interest income increased $4.2 million for the nine months ended September 30, 2006 as compared to the same period in 2005 primarily due to greater average daily balances of cash on hand in the 2006 period and higher yields on cash investments.

Interest expense. Interest expense, net of amounts capitalized, increased $5.5 million for the nine months ended September 30, 2006 as compared to the same period in 2005 primarily due to higher average borrowings related to the Kerr-McGee merger transaction during the period ended in 2006. During the 2006 period, $4.1 million of interest was capitalized to unevaluated oil and gas properties acquired in the Kerr-McGee merger transaction.

Income tax expense. Income tax expense increased from $74.2 million for the nine months ended in 2005 to $85.6 million for the same period in 2006 primarily due to increased taxable income. Our effective tax rate for the nine months ended September 30, 2006 and 2005 remained flat at approximately 35%.

Net income. Net income for the nine months ended September 30, 2006 increased $22.8 million to $161.0 million. The primary reasons for this increase were as follows:

 

    higher volumes of oil sold during the nine months ended in 2006 of 4.3 MMBbls, as compared to 3.4 MMBbls during the same period in 2005;

 

    higher average realized oil prices during the nine months ended in 2006 of $60.48 per barrel, as compared to $47.38 per barrel during the same period in 2005;

 

    a commodity derivative gain of $21.8 million ($14.2 million after taxes) during the nine months ended in 2006; and

 

    higher interest income for the nine months ended in 2006 as compared to the same period in 2005.

Offsetting these favorable factors were increases in lease operating expenses, gathering and transportation costs, DD&A, G&A, interest expense and income taxes.

 

18


Table of Contents
This excerpt taken from the WTI 10-Q filed Aug 14, 2006.

Six Months Ended June 30, 2006 Compared to the Six Months Ended June 30, 2005

Oil and natural gas revenues. Oil and natural gas revenues increased $44.2 million to $322.6 million for the six months ended June 30, 2006 as compared to the same period in 2005. Natural gas revenues increased $2.1 million and oil revenues increased $42.1 million. The natural gas revenue increase was caused by a 17% increase in the average realized natural gas price from $6.72 per Mcf for the six months ended June 30, 2005 to $7.88 per Mcf for the same period in 2006, which was substantially offset by a 3.5 Bcf sales volume decrease. The natural gas volume decrease is attributable to the deferral of production caused by Hurricanes Katrina and Rita and natural reservoir declines. The oil revenue increase was caused by a 33% increase in the average realized price, from $44.47 per barrel in the 2005 period to $59.32 per barrel in 2006 and a sales volume increase of 113 MBbls. The oil volume increase is primarily the result of successful drilling efforts.

Lease operating expenses. Our lease operating expenses decreased from $34.0 million in the six months ended June 30, 2005 to $32.1 million in the same period of 2006. The decrease resulted from decreases in workover and maintenance expenses which were partially offset by an increase in operating costs. On a per Mcfe basis, lease operating expenses increased from $0.85 per Mcfe in the 2005 period to $0.86 per Mcfe for the same period in 2006 as a result of lower total sales volumes in the period ended in 2006. Lease operating expenses for the six months ended June 30, 2006 excludes $33.1 million of hurricane remediation costs reclassified to accounts receivable that we believe are reimbursable under our insurance policies.

Gathering and transportation costs and production taxes. Gathering and transportation costs decreased from $7.2 million for the six months ended June 30, 2005 to $6.3 million for the same period in 2006, primarily due to a decrease in volumes transported. Production taxes decreased from $0.4 million for the six months ended June 30, 2005 to $0.2 million for the same period in 2006 due to lower production from leases in state waters. Most of our production is from federal waters, where there are no production taxes.

Depreciation, depletion, amortization and accretion. DD&A increased from $93.2 million for the six months ended June 30, 2005 to $116.4 million for the same period in 2006. Although total sales volumes were lower in the six months ended June 30, 2006 compared to the same period in 2005, DD&A increased as a result of an increase in our total depletable costs due to our drilling activities. DD&A for the six months ended June 30, 2006 and 2005 do not reflect changes in proved reserves that may have occurred during the respective periods because our mid-year reserve report update has historically not been available until the third quarter. On a per Mcfe basis, DD&A was $3.14 for the six months ended June 30, 2006, compared to $2.33 for the same period in 2005.

 

15


Table of Contents

General and administrative expenses. G&A increased from $12.7 million for the six months ended June 30, 2005 to $20.7 million in the same period of 2006 primarily due to increases in personnel and incentive compensation costs in the 2006 period. Also included in G&A for the period ended in 2006 are expenses of $0.8 million related to the relocation of the majority of our employees to Houston, Texas and expenses of $0.4 million related to the temporary displacement of those employees due to damage caused by Hurricanes Katrina and Rita. Included in G&A for the six months ended June 30, 2005 are expenses of $0.9 million related to our initial public offering in January 2005.

Commodity derivative loss. For the six months ended June 30, 2006, we recorded an unrealized loss of $7.5 million related to our open derivative contracts and a realized gain of $2.2 million related to settlements of our derivative contracts.

Interest income. Interest income increased $2.9 million for the six months ended June 30, 2006 as compared to the same period in 2005 primarily due to greater average daily balances of cash on hand in the 2006 period and higher yields on cash investments.

Income tax expense. Income tax expense increased from $46.2 million for the six months ended in 2005 to $50.1 million for the same period in 2006 primarily due to increased taxable income. Our effective tax rate for the six months ended June 30, 2006 and 2005 remained flat at approximately 35%.

Net income. Net income for the six months ended June 30, 2006 increased $9.2 million to $94.3 million. The primary reasons for this increase were as follows:

 

    higher oil prices during the six months ended in 2006 of $59.32 per barrel, as compared to $44.47 per barrel during the same period in 2005;

 

    higher natural gas prices during the six months ended in 2006 of $7.88 per Mcf, as compared to $6.72 per Mcf during the same period in 2005;

 

    lower lease operating expenses, production taxes and gathering and transportation costs for the six months ended in 2006 as compared to the same period in 2005; and

 

    higher interest income for the six months ended in 2006 as compared to the same period in 2005.

Offsetting these favorable factors were a commodity derivative loss of $5.3 million ($3.4 million after taxes), a decrease in gas sales volumes and increases in DD&A, G&A and income taxes.

This excerpt taken from the WTI 10-Q filed May 15, 2006.

Three Months Ended March 31, 2006 Compared to the Three Months Ended March 31, 2005

Oil and natural gas revenues. Oil and natural gas revenues increased $28.1 million to $156.8 million for the three months ended March 31, 2006 as compared to the same period in 2005. Natural gas revenues increased $17.8 million and oil revenues increased $10.3 million. The natural gas revenue increase was primarily caused by a 39% increase in the average realized natural gas price from $6.33 per Mcf for the three months ended March 31, 2005 to $8.82 per Mcf for the same period in 2006, which was partially offset by a sales volume decrease of 1.5 Bcf. The oil revenue increase was caused by a 30% increase in the average realized price, from $43.67 per barrel in the 2005 period to $56.90 per barrel in 2006, which was partially offset by a sales volume decrease of 87 MBbls. The volume decreases for oil and natural gas are attributable to the deferral of production caused by Hurricanes Katrina and Rita in 2005 and natural reservoir declines.

Commodity derivative income. For the three months ended March 31, 2006, we recorded an unrealized gain of $5.3 million related to our open derivative contracts. There were no realized gains or losses related to our derivative contracts during the three months ended March 31, 2006.

Lease operating expenses. Our lease operating expenses decreased from $16.2 million in the quarter ended March 31, 2005 to $15.8 million in the same period of 2006 primarily due to a decrease in workover expenses. On a per Mcfe basis, lease operating expenses increased 8%, from $0.84 per Mcfe in the 2005 period to $0.91 per Mcfe in 2006 primarily as a result of lower sales volumes in 2006.

Gathering and transportation costs and production taxes. Gathering and transportation costs decreased from $4.2 million for the three months ended March 31, 2005 to $1.2 million for the same period in 2006, primarily due to a decrease in volumes transported and reduced capacity of natural gas processing plants caused by the hurricanes in 2005. Production taxes decreased from $0.3 million for the three months ended March 31, 2005 to $0.1 million for the same period in 2006 due to lower production from leases in state waters. Most of our production is from federal waters, where there are no production taxes.

Depreciation, depletion, amortization and accretion. Depreciation, depletion, amortization and accretion (“DD&A”) increased from $41.3 million for the quarter ended March 31, 2005 to $49.1 million for the same period in 2006. Although sales volumes were lower in the first quarter of 2006 compared to 2005, DD&A was higher in the 2006 period as a result of an increase in our total depletable costs from our drilling activities. On a per Mcfe basis, DD&A was $2.84 for the three months ended March 31, 2006, compared to $2.14 for the same period in 2005.

General and administrative expenses. General and administrative expenses (“G&A”) increased from $6.9 million for the three months ended March 31, 2005 to $11.7 million in the same period of 2006 primarily due to increases in personnel and incentive compensation costs in the 2006 period.

 

12


Table of Contents

Interest and dividend income. Interest and dividend income increased from $0.1 million for the quarter ended March 31, 2005 to $1.6 million in the same period of 2006 due primarily to greater average daily balances of cash on hand in the 2006 period.

Income tax expense. Income tax expense increased from $20.8 million for the quarter ended in 2005 to $29.8 million for the same period in 2006 primarily due to increased taxable income. Our effective tax rate for the three months ended March 31, 2006 and 2005 remained flat at approximately 35%.

Net income. Net income for the three months ended March 31, 2006 increased $16.5 million to $55.8 million compared to the same period in 2005. The primary reasons for this increase were as follows:

 

    higher average realized oil prices during the quarter ended in 2006 of $56.90 per barrel, as compared to $43.67 per barrel during the same period in 2005;

 

    higher average realized natural gas prices during the quarter ended in 2006 of $8.82 per Mcf, as compared to $6.33 per Mcf during the same period in 2005;

 

    a commodity derivative gain of $5.3 million ($3.4 million after taxes) during the quarter ended in 2006;

 

    lower lease operating expenses and gathering and transportation costs for the quarter ended in 2006 as compared to the same period in 2005; and

 

    higher interest and dividend income for the quarter ended in 2006 as compared to the quarter ended in 2005.

Offsetting these favorable factors were lower sales volumes and increases in DD&A, G&A and income taxes.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki