T
|
Quarterly
Report Pursuant To Section 13 or 15(d) of The Securities Exchange
Act of
1934
|
£
|
Transition
Report Pursuant To Section 13 or 15(d) of The Securities Exchange
Act of
1934
|
Delaware
|
43-2083519
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
717
Texas, Suite 2800, Houston, TX
|
77002
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Part I – | Financial Information | |
3
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19
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24
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24
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Part II – | Other Information | |
24
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28
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29
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30
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30
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30
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31
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32
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33
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Rule
13a-14(a) Certification executed by Randy L. Limbacher
|
|
|
Rule
13a-14(a) Certification executed by Michael J. Rosinski
|
|
|
Section
1350 Certification
|
|
September 30,
2007
|
December 31,
2006
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
13,656
|
$ |
62,780
|
||||
Accounts
receivable
|
36,324
|
36,408
|
||||||
Derivative
instruments
|
7,271
|
20,538
|
||||||
Prepaid
expenses
|
18,986
|
8,761
|
||||||
Other
current assets
|
4,157
|
2,965
|
||||||
Total
current assets
|
80,394
|
131,452
|
||||||
Oil
and natural gas properties, full cost method, of which $46.3 million
at
September 30, 2007 and $37.8 million at December 31, 2006 were excluded
from amortization
|
1,481,033
|
1,223,337
|
||||||
Other
fixed assets
|
5,978
|
4,562
|
||||||
1,487,011
|
1,227,899
|
|||||||
Accumulated
depreciation, depletion, and amortization
|
(248,396 | ) | (145,289 | ) | ||||
Total
property and equipment, net
|
1,238,615
|
1,082,610
|
||||||
Deferred
loan fees
|
2,490
|
3,375
|
||||||
Other
assets
|
1,426
|
1,968
|
||||||
Total
other assets
|
3,916
|
5,343
|
||||||
Total
assets
|
$ |
1,322,925
|
$ |
1,219,405
|
||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ |
35,307
|
$ |
23,040
|
||||
Accrued
liabilities
|
57,773
|
43,099
|
||||||
Royalties
payable
|
14,925
|
9,010
|
||||||
Prepayment
on gas sales
|
16,678
|
17,868
|
||||||
Deferred
income taxes
|
2,741
|
7,743
|
||||||
Total
current liabilities
|
127,424
|
100,760
|
||||||
Long-term
liabilities:
|
||||||||
Derivative
instruments
|
12,052
|
11,014
|
||||||
Long-term
debt
|
250,000
|
240,000
|
||||||
Asset
retirement obligation
|
17,437
|
10,253
|
||||||
Deferred
income taxes
|
58,778
|
35,089
|
||||||
Total
liabilities
|
465,691
|
397,116
|
||||||
Commitments
and contingencies (Note 8)
|
||||||||
Stockholders'
equity:
|
||||||||
Common
stock, $0.001 par value; authorized 150,000,000 shares;
issued 50,525,323 shares and 50,405,794 shares at September 30,
2007 and December 31, 2006, respectively
|
50
|
50
|
||||||
Additional
paid-in capital
|
760,004
|
755,343
|
||||||
Treasury
stock, at cost; 105,436 and 85,788 shares at September 30, 2007 and
December 31, 2006, respectively
|
(1,973 | ) | (1,562 | ) | ||||
Accumulated
other comprehensive (loss) income
|
(2,785 | ) |
6,315
|
|||||
Retained
earnings
|
101,938
|
62,143
|
||||||
Total
stockholders' equity
|
857,234
|
822,289
|
||||||
Total
liabilities and stockholders' equity
|
$ |
1,322,925
|
$ |
1,219,405
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenues:
|
||||||||||||||||
Natural
gas sales
|
$ |
79,061
|
$ |
61,366
|
$ |
225,658
|
$ |
171,783
|
||||||||
Oil
sales
|
10,657
|
9,831
|
26,730
|
27,339
|
||||||||||||
Total
revenues
|
89,718
|
71,197
|
252,388
|
199,122
|
||||||||||||
Operating
Costs and Expenses:
|
||||||||||||||||
Lease
operating expense
|
11,912
|
9,449
|
33,274
|
27,330
|
||||||||||||
Depreciation,
depletion, and amortization
|
38,186
|
27,906
|
105,079
|
77,574
|
||||||||||||
Treating
and transportation
|
1,412
|
317
|
3,057
|
2,043
|
||||||||||||
Marketing
fees
|
518
|
526
|
1,850
|
1,634
|
||||||||||||
Production
taxes
|
1,243
|
2,153
|
3,428
|
5,476
|
||||||||||||
General
and administrative costs
|
12,032
|
8,316
|
29,999
|
24,645
|
||||||||||||
Total
operating costs and expenses
|
65,303
|
48,667
|
176,687
|
138,702
|
||||||||||||
Operating
income
|
24,415
|
22,530
|
75,701
|
60,420
|
||||||||||||
Other
(income) expense
|
||||||||||||||||
Interest
expense, net of interest capitalized
|
4,332
|
4,557
|
13,382
|
13,060
|
||||||||||||
Interest
income
|
(240 | ) | (1,099 | ) | (1,469 | ) | (3,351 | ) | ||||||||
Other
(income) expense, net
|
(105 | ) | (171 | ) | (287 | ) |
6
|
|||||||||
Total
other expense
|
3,987
|
3,287
|
11,626
|
9,715
|
||||||||||||
Income
before provision for income taxes
|
20,428
|
19,243
|
64,075
|
50,705
|
||||||||||||
Provision
for income taxes
|
7,715
|
7,321
|
24,280
|
19,293
|
||||||||||||
Net
income
|
$ |
12,713
|
$ |
11,922
|
$ |
39,795
|
$ |
31,412
|
||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ |
0.25
|
$ |
0.24
|
$ |
0.79
|
$ |
0.63
|
||||||||
Diluted
|
$ |
0.25
|
$ |
0.24
|
$ |
0.79
|
$ |
0.62
|
||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
50,409
|
50,282
|
50,363
|
50,211
|
||||||||||||
Diluted
|
50,570
|
50,426
|
50,572
|
50,384
|
Nine
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income
|
$ |
39,795
|
$ |
31,412
|
||||
Adjustments
to reconcile net income to net cash from operating
activities
|
||||||||
Depreciation,
depletion and amortization
|
105,079
|
77,574
|
||||||
Deferred
income taxes
|
24,195
|
18,991
|
||||||
Amortization
of deferred loan fees recorded as interest expense
|
885
|
885
|
||||||
Income
from unconsolidated investments
|
(117 | ) | (168 | ) | ||||
Stock
compensation expense
|
4,090
|
4,348
|
||||||
Change
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
84
|
5,300
|
||||||
Income
taxes receivable
|
-
|
6,000
|
||||||
Prepaid
expenses
|
(10,225 | ) |
605
|
|||||
Other
current assets
|
(1,192 | ) | (890 | ) | ||||
Other
assets
|
331
|
1,355
|
||||||
Accounts
payable
|
12,267
|
2,494
|
||||||
Accrued
liabilities
|
3,636
|
(324 | ) | |||||
Royalties
payable
|
4,725
|
(5,961 | ) | |||||
Net
cash provided by operating activities
|
183,553
|
141,621
|
||||||
Cash
flows from investing activities
|
||||||||
Acquisition
of oil and gas properties
|
(38,656 | ) | (11,587 | ) | ||||
Purchases
of property and equipment
|
(205,310 | ) | (135,656 | ) | ||||
Disposals
of property and equipment
|
1,104
|
36
|
||||||
Increase
in restricted cash
|
-
|
(15,000 | ) | |||||
Other
|
25
|
46
|
||||||
Net
cash used in investing activities
|
(242,837 | ) | (162,161 | ) | ||||
Cash
flows from financing activities
|
||||||||
Borrowing
from revolving credit facility
|
10,000
|
-
|
||||||
Equity
offering transaction fees
|
-
|
268
|
||||||
Proceeds
from issuances of common stock
|
571
|
515
|
||||||
Stock-based
compensation excess tax benefit
|
-
|
302
|
||||||
Purchases
of treasury stock
|
(411 | ) | (1,526 | ) | ||||
Net
cash provided by (used in) financing activities
|
10,160
|
(441 | ) | |||||
Net
decrease in cash
|
(49,124 | ) | (20,981 | ) | ||||
Cash
and cash equivalents, beginning of period
|
62,780
|
99,724
|
||||||
Cash
and cash equivalents, end of period
|
$ |
13,656
|
$ |
78,743
|
||||
Supplemental
non-cash disclosures:
|
||||||||
Capital
expenditures included in accrued liabilities
|
$ |
6,900
|
$ |
3,783
|
||||
Accrued
purchase price adjustment
|
-
|
11,400
|
(1)
|
Organization
and Operations of the
Company
|
(2)
|
Summary
of Significant Accounting
Policies
|
(3)
|
Property,
Plant and Equipment
|
September 30,
2007
|
December 31,
2006
|
|||||||
(In
thousands)
|
||||||||
Proved
properties
|
$ |
1,407,080
|
$ |
1,167,588
|
||||
Unproved/unevaluated
properties
|
46,322
|
37,813
|
||||||
Gas
gathering systems and compressor stations
|
27,631
|
17,936
|
||||||
Other
|
5,978
|
4,562
|
||||||
Total
oil and natural gas properties
|
1,487,011
|
1,227,899
|
||||||
Less:
Accumulated depreciation, depletion, and amortization
|
(248,396 | ) | (145,289 | ) | ||||
Total
property and equipment, net
|
$ |
1,238,615
|
$ |
1,082,610
|
(4)
|
Commodity
Hedging Contracts and Other
Derivatives
|
Settlement
Period
|
Derivative
Instrument
|
Hedge
Strategy
|
Notional
Daily Volume MMBtu
|
Total
of Notional Volume MMBtu
|
Average
Underlying Prices MMBtu
|
Total
of Proved Natural Gas Production Hedged (1)
|
Fair
Market Value Gain/(Loss) (In thousands)
|
|||||||||||||||
2007
|
Swap
|
Cash
flow
|
55,316
|
5,089,100
|
7.80
|
45%
|
5,363
|
|||||||||||||||
2008
|
Swap
|
Cash
flow
|
54,909
|
20,096,616
|
7.64
|
48%
|
(386) | |||||||||||||||
2009
|
Swap
|
Cash
flow
|
31,141
|
11,366,465
|
7.17
|
31%
|
(10,106) | |||||||||||||||
36,552,181
|
$
|
(5,129) |
Settlement
Period
|
Derivative
Instrument
|
Hedge
Strategy
|
Notional
Daily Volume MMBtu
|
Total
of Notional Volume MMBtu
|
Average
Floor Price MMBtu
|
Average
Ceiling Price MMBtu
|
Total
of Proved Natural Gas Production Hedged (1)
|
Fair
Market Value Gain/(Loss) (In thousands)
|
||||||||||||||||||
2007
|
Costless
Collar
|
Cash
flow
|
10,000
|
920,000
|
$ |
7.19
|
$ |
10.03
|
8%
|
$
|
658
|
|||||||||||||||
920,000
|
$
|
658
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
Natural
Gas
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Quantity
settled (MMBtu)
|
6,009,100
|
5,060,000
|
17,750,400
|
15,015,000
|
||||||||||||
Increase
in natural gas sales revenue (In thousands)
|
$ |
10,333
|
$ |
9,114
|
$ |
17,810
|
$ |
19,804
|
(5)
|
Asset
Retirement Obligation
|
Nine
Months Ended September 30, 2007
|
||||
(In
thousands)
|
||||
ARO
as of January 1, 2007
|
$ |
10,689
|
||
Revision
of previous estimates
|
8,610
|
|||
Liabilities
incurred during period
|
1,677
|
|||
Accretion
expense
|
1,035
|
|||
ARO
as of September 30, 2007
|
$ |
22,011
|
(6)
|
Long-Term
Debt
|
(7)
|
Income
Taxes
|
(8)
|
Commitment
and Contingencies
|
|
·
|
Calpine’s
conveyance of the Non-Consent Properties to the
Company;
|
|
·
|
Calpine’s
execution of all documents and performance of all tasks required
under
“further assurances” provisions of the Purchase Agreement with respect to
certain of the oil and natural gas properties for which the Company
has
already paid Calpine; and
|
|
·
|
Resolution
of the final amounts the Company is to pay Calpine, which the Company
had
at that time concluded was approximately $79 million, consisting
of
roughly $68 million for the Non-Consent Properties (excluding
that portion of these properties subject to a validly exercised third
party’s preferential right to purchase) and approximately $11 million in
other true-up payment obligations. The Company is currently updating
these calculations with respect to the final amounts, if any, the
Company
is to pay Calpine.
|
|
·
|
In
response to an objection filed by the Department of Justice and asserted
by the CSLC that the Debtors’ Motion to Assume Non-Residential Leases and
Set Cure Amounts (the “Motion”), did not allow adequate time for an
appropriate response, Calpine withdrew from the list of Oil and Gas
Leases
that were the subject of the Motion those leases issued by the United
States (and managed by the MMS) (the “MMS Oil and Gas Leases”) and the
State of California (and managed by the CSLC) (the “CSLC Leases”).
Calpine, the Department of Justice and the State of California agreed
to
an extension of the existing deadline to November 15, 2006 to assume
or
reject the MMS Oil and Gas Leases and CSLC Leases under Section 365
of the
Bankruptcy Code, to the extent the MMS Oil and Gas Leases and CSLC
Leases
are leases subject to Section 365. The effect of these actions was
to
render the objection of the Company inapplicable at that time;
and
|
|
·
|
The
Bankruptcy Court also encouraged Calpine and the Company to arrive
at a
business solution to all remaining issues including approximately
$68
million payable to Calpine for conveyance of the Non-Consent
Properties.
|
|
·
|
The
Company will extend the MSA with CPS until June 30, 2009, effective
as of
July 1, 2007. This agreement is subject to earlier termination
rights by the Company upon the occurrence of certain
events;
|
|
·
|
Calpine
will deliver to the Company documents that resolve title issues pertaining
to the Properties, defined as certain previously purchased oil and
gas
properties located in the Gulf of Mexico, California and
Wyoming;
|
|
·
|
The
Company will assume all Calpine's rights and obligations for an audit
by
the California State Lands Commission on part of the Properties;
and
|
|
·
|
The
Company will assume all rights and obligations for the Properties,
including all plugging and abandonment
liabilities.
|
(9)
|
Comprehensive
Income
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||||||||||
(In
thousands)
|
(In
thousands)
|
|||||||||||||||||||||||||||||||
Accumulated
other comprehensive (loss) income beginning of period
|
$ | (8,636 | ) | $ | (11,852 | ) | $ |
6,315
|
$ | (50,731 | ) | |||||||||||||||||||||
Net
income
|
$ |
12,713
|
$ |
11,922
|
$ |
39,795
|
$ |
31,412
|
||||||||||||||||||||||||
Change
in fair value of derivative hedging instruments
|
19,723
|
45,638
|
3,202
|
119,036
|
||||||||||||||||||||||||||||
Hedge
settlements reclassed to income
|
(10,333 | ) | (9,114 | ) | (17,810 | ) | (19,804 | ) | ||||||||||||||||||||||||
Tax
effect related to hedges
|
(3,539 | ) | (13,880 | ) |
5,508
|
(37,709 | ) | |||||||||||||||||||||||||
Total
other comprehensive income (loss)
|
5,851
|
5,851
|
22,644
|
22,644
|
(9,100 | ) | (9,100 | ) |
61,523
|
61,523
|
||||||||||||||||||||||
Comprehensive
income
|
18,564
|
34,566
|
30,695
|
92,935
|
||||||||||||||||||||||||||||
Accumulated
other comprehensive (loss) income
|
$ | (2,785 | ) | $ |
10,792
|
$ | (2,785 | ) | $ |
10,792
|
(10)
|
Earnings
Per Share
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Basic
weighted average number of shares outstanding
|
50,409
|
50,282
|
50,363
|
50,211
|
||||||||||||
Dilution
effect of stock option and awards at the end of the period
|
161
|
144
|
209
|
173
|
||||||||||||
Diluted
weighted average number of shares outstanding
|
50,570
|
50,426
|
50,572
|
50,384
|
||||||||||||
Stock
awards and shares excluded from diluted earnings per share due to
anti-dilutive effect
|
415
|
179
|
403
|
229
|
(11)
|
Geographic
Area Information
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2007
(1)
|
2006
(1)
|
2007
(1)
|
2006
(1)
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
California
|
$ |
22,110
|
$ |
18,820
|
$ |
77,705
|
$ |
54,921
|
||||||||
Rocky
Mountains
|
2,463
|
591
|
6,749
|
1,555
|
||||||||||||
Mid-Continent
|
494
|
596
|
1,851
|
1,506
|
||||||||||||
Gulf
of Mexico
|
11,573
|
6,172
|
27,954
|
22,093
|
||||||||||||
Lobo
|
30,792
|
21,009
|
84,059
|
50,090
|
||||||||||||
Perdido
|
5,951
|
4,939
|
19,289
|
21,722
|
||||||||||||
State
Waters
|
529
|
1,750
|
2,176
|
7,039
|
||||||||||||
Other
Onshore
|
5,473
|
8,206
|
14,795
|
20,392
|
||||||||||||
Total
revenue excluding hedges
|
$ |
79,385
|
$ |
62,083
|
$ |
234,578
|
$ |
179,318
|
|
(1)
|
Excludes
the effects of hedging of $10.3 million and $9.1 million for the
three
months ended September 30, 2007 and 2006, respectively, and $17.8
million
and $19.8 million for the nine months ended September 30, 2007 and
2006,
respectively.
|
September 30,
2007
|
December 31,
2006
|
|||||||
(In
thousands)
|
||||||||
California
|
$ |
517,358
|
$ |
435,167
|
||||
Rocky
Mountains
|
68,411
|
44,455
|
||||||
Mid-Continent
|
14,678
|
9,584
|
||||||
Gulf
of Mexico
|
154,447
|
125,425
|
||||||
Lobo
|
491,358
|
426,348
|
||||||
Perdido
|
69,762
|
52,702
|
||||||
State
Waters
|
50,594
|
26,922
|
||||||
Other
Onshore
|
114,425
|
102,734
|
||||||
Other
|
5,978
|
4,562
|
||||||
Total
property and equipment
|
$ |
1,487,011
|
$ |
1,227,899
|
(12)
|
Subsequent
Events
|
·
|
The
supply and demand for oil, natural gas, and other products and
services;
|
·
|
The
price of
oil, natural gas, and other products and services;
|
·
|
Conditions
in the energy markets;
|
·
|
Changes
or advances in technology;
|
·
|
Reserve
levels;
|
·
|
Currency
exchange rates and inflation;
|
·
|
The
availability and cost of relevant raw materials, goods and
services;
|
·
|
Commodity
prices;
|
·
|
Future
processing volumes and pipeline
throughput;
|
·
|
Conditions
in the securities and/or capital
markets;
|
·
|
The
occurrence of property acquisitions or
divestitures;
|
·
|
Drilling
and exploration risks;
|
·
|
The
availability and cost of processing and
transportation;
|
·
|
Developments
in oil-producing and natural gas-producing
countries;
|
·
|
Competition
in the oil and natural gas
industry;
|
·
|
The
ability and willingness of our current or potential counterparties
or
vendors to enter into transactions with us and/or to fulfill their
obligations to us;
|
·
|
Our
ability to access the capital markets on favorable terms or at
all;
|
·
|
Our
ability to obtain credit and/or capital in desired amounts and/or
on
favorable terms;
|
·
|
Present
and possible future claims, litigation and enforcement
actions;
|
·
|
Effects
of the application of applicable laws and regulations, including
changes
in such regulations or the interpretation
thereof;
|
·
|
Relevant
legislative or regulatory changes, including retroactive royalty
or
production tax regimes, changes in environmental regulation, environmental
risks and liability under federal, state and foreign environmental
laws
and regulations;
|
·
|
General
economic conditions, either internationally, nationally or in
jurisdictions affecting our
business;
|
·
|
The
amount of resources expended in connection with Calpine’s bankruptcy,
including costs for lawyers, consultant experts and related expenses,
as
well as all lost opportunity costs associated with our internal
resources
dedicated to these matters;
|
·
|
Disputes
with mineral lease and royalty owners regarding calculation and
payment of
royalties;
|
·
|
The
weather, including the occurrence of any adverse weather conditions
and/or
natural disasters affecting our business;
and
|
·
|
Any
other factors that impact or could impact the exploration of oil
or
natural gas resources, including but not limited to the geology
of a
resource, the total amount and costs to develop recoverable reserves,
legal title, regulatory, natural gas administration, marketing
and
operational factors relating to the extraction of oil and natural
gas.
|
·
|
Production
on an equivalent basis
increased 32%;
|
·
|
The
average revenue price, including the effects of hedging, decreased
$0.32
per Mcfe or 3.9%;
|
·
|
Total
revenue, including the effects of hedging, increased $53.3 million
or
27%;
|
·
|
Net
income increased $8.4 million or
27%;
|
·
|
Diluted
earnings per share increased $0.17 or
27%;
|
·
|
Capital
expenditures increased by $99.9 million or 66% including acquisitions
of
oil and natural gas properties; and
|
·
|
Drilled
149 gross wells with a success rate of
81%.
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
2007
|
2006
|
%
Change Increase/ (Decrease)
|
2007
|
2006
|
%
Change Increase/ (Decrease)
|
|||||||||||||||||||
(In
thousands, except percentages and per unit
amounts)
|
||||||||||||||||||||||||
Total
revenues
|
$ |
89,718
|
$ |
71,197
|
26 | % | $ |
252,388
|
$ |
199,122
|
27 | % | ||||||||||||
Production:
|
||||||||||||||||||||||||
Gas
(Bcf)
|
10.7
|
7.9
|
35 | % |
29.7
|
21.9
|
36 | % | ||||||||||||||||
Oil
(MBbls)
|
141.4
|
143.5
|
(1 | %) |
410.7
|
414.3
|
(1 | %) | ||||||||||||||||
Total
Equivalents (Bcfe)
|
11.6
|
8.7
|
33 | % |
32.2
|
24.4
|
32 | % | ||||||||||||||||
$
per unit:
|
||||||||||||||||||||||||
Avg.
Gas Price per Mcf
|
$ |
7.39
|
$ |
7.77
|
(5 | %) | $ |
7.60
|
$ |
7.84
|
(3 | %) | ||||||||||||
Avg.
Gas Price per Mcf excluding Hedging
|
6.42
|
6.61
|
(3 | %) |
7.00
|
6.94
|
1 | % | ||||||||||||||||
Avg.
Oil Price per Bbl
|
75.37
|
68.51
|
10 | % |
65.08
|
65.99
|
(1 | %) | ||||||||||||||||
Avg.
Revenue per Mcfe including hedges
|
7.73
|
8.18
|
(6 | %) |
7.84
|
8.16
|
(4 | %) |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
2007
|
2006
|
%
Change Increase/ (Decrease)
|
2007
|
2006
|
%
Change Increase/ (Decrease)
|
|||||||||||||||||||
(In
thousands, except percentages and per unit
amounts)
|
||||||||||||||||||||||||
Lease
operating expense
|
$ |
11,912
|
$ |
9,449
|
26 | % | $ |
33,274
|
$ |
27,330
|
22 | % | ||||||||||||
Depreciation,
depletion and amortization
|
38,186
|
27,906
|
37 | % |
105,079
|
77,574
|
35 | % | ||||||||||||||||
General
and administrative costs
|
12,032
|
8,316
|
45 | % |
29,999
|
24,645
|
22 | % | ||||||||||||||||
$
per unit:
|
||||||||||||||||||||||||
Avg.
lease operating expense per Mcfe
|
$ |
1.03
|
$ |
1.09
|
(6 | %) | $ |
1.03
|
$ |
1.12
|
(8 | %) | ||||||||||||
Avg.
DD&A per Mcfe
|
3.29
|
3.21
|
2 | % |
3.26
|
3.18
|
3 | % | ||||||||||||||||
Avg.
G&A per Mcfe
|
1.04
|
0.96
|
8 | % |
0.93
|
1.01
|
(8 | %) |
Nine
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands)
|
||||||||
Cash
flows provided by operating activities
|
$ |
183,553
|
$ |
141,621
|
||||
Cash
flows used in investing activities
|
(242,837 | ) | (162,161 | ) | ||||
Cash
flows provided by (used in) financing activities
|
10,160
|
(441 | ) | |||||
Net
decrease in cash and cash equivalents
|
$ | (49,124 | ) | $ | (20,981 | ) |
|
·
|
Calpine’s
conveyance of the Non-Consent Properties to
us;
|
|
·
|
Calpine’s
execution of all documents and performance of all tasks required
under
“further assurances” provisions of the Purchase Agreement with respect to
certain of the oil and natural gas properties for which we have already
paid Calpine; and
|
|
·
|
Resolution
of the final amounts we are to pay Calpine, which we had at that time
concluded was approximately $79 million, consisting of roughly $68
million
for the Non-Consent Properties (excluding
that portion of these properties subject to a validly exercised third
party’s preferential right to purchase) and approximately $11
million in other true-up payment obligations. We are currently
updating these calculations with respect to the final amounts, if
any, we
are to pay Calpine.
|
|
·
|
In
response to an objection filed by the Department of Justice and asserted
by the CSLC that the Debtors’ Motion to Assume Non-Residential Leases and
Set Cure Amounts (the “Motion”), did not allow adequate time for an
appropriate response, Calpine withdrew from the list of Oil and Gas
Leases
that were the subject of the Motion those leases issued by the United
States (and managed by the MMS) (the “MMS Oil and Gas Leases”) and the
State of California (and managed by the CSLC) (the “CSLC Leases”).
Calpine, the Department of Justice and the State of California agreed
to
an extension of the existing deadline to November 15, 2006 to assume
or
reject the MMS Oil and Gas Leases and CSLC Leases under Section 365
of the
Bankruptcy Code, to the extent the MMS Oil and Gas Leases and CSLC
Leases
are leases subject to Section 365. The effect of these actions was
to
render our objection inapplicable at that time;
and
|
|
·
|
The
Bankruptcy Court also encouraged Calpine and us to arrive at a business
solution to all remaining issues including approximately $68 million
payable to Calpine for conveyance of the Non-Consent
Properties.
|
|
·
|
We
will extend the MSA With CPS until June 30, 2009, effective July
1,
2007. This agreement is subject to earlier termination right by
us upon the occurrence of certain
events;
|
|
·
|
Calpine
will deliver to us documents that resolve title issues pertaining
to the
Properties defined as certain previously purchased oil and gas properties
located in the Gulf of Mexico, California and
Wyoming;
|
|
·
|
We
will assume all Calpine's rights and obligations for an audit by
the
California State Lands Commission on part of the Properties;
and
|
|
·
|
We
will assume all rights and obligations for the Properties, including
all
plugging and abandonment
liabilities.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
Period
|
Total
Number of Shares Purchased (1)
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares that May yet Be Purchased
Under the Plans or Programs
|
||||
July
1 - July 31
|
11,428
|
$
21.84
|
-
|
-
|
||||
August
1 - August 31
|
2,038
|
17.58
|
-
|
-
|
||||
September
1 - September 30
|
753
|
17.67
|
-
|
-
|
(1)
|
All
of the shares repurchased were surrendered by employees to pay tax
withholding upon the vesting of restricted stock awards. These
repurchases were not part of a publicly announced program to repurchase
shares of our common stock, nor do we have a publicly announced program
to
repurchase shares of our common
stock.
|
10.1
|
Separation
Agreement with B. A. Berilgen (incorporated herein by reference to
Exhibit
10.1 to the Company’s current report on Form 8-K as filed with the
Commission on July 9, 2007)
|
10.2
|
Second
Amended and Restated Employment Agreement with Michael J.
Rosinski
|
10.3
|
Amended
and Restated Employment Agreement with Charlie F.
Chambers
|
10.4
|
Partial
Transfer and Release Agreement with Calpine Corporation et
al.
|
10.5
|
Marketing
and Related Services Agreement with Calpine Producer Services,
L.P.
|
31.1
|
Certification
of Periodic Financial Reports by Randy L. Limbacher in satisfaction
of
Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
of Periodic Financial Reports by Michael J. Rosinski in satisfaction
of
Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
of Periodic Financial Reports by Randy L. Limbacher and Michael J.
Rosinski in satisfaction of Section 906 of the Sarbanes-Oxley Act
of 2002
and 18 U.S.C. Section 1350
|
ROSETTA
RESOURCES INC.
|
|||
By:
|
/s/
MICHAEL J. ROSINSKI
|
||
Michael
J. Rosinski
|
|||
Executive
Vice President and Chief Financial Officer
|
|||
(Duly
Authorized Officer and Principal Financial Officer)
|
Exhibit Number
|
Description
|
|
10.1
|
Separation
Agreement with B. A. Berilgen (incorporated herein by reference to
Exhibit
10.1 to the Company’s current report on Form 8-K as filed with the
Commission on July 9, 2007)
|
|
Second
Amended and Restated Employment Agreement with Michael J.
Rosinski
|
||
Amended
and Restated Employment Agreement with Charlie F.
Chambers
|
||
Partial
Transfer and Release Agreement with Calpine Corporation et
al.
|
||
Marketing
and Related Services Agreement with Calpine Producer Services,
L.P.
|
||
Certification
of Periodic Financial Reports by Randy L. Limbacher in satisfaction
of
Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification
of Periodic Financial Reports by Michael J. Rosinski in satisfaction
of
Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification
of Periodic Financial Reports by Randy L. Limbacher and Michael J.
Rosinski in satisfaction of Section 906 of the Sarbanes-Oxley Act
of 2002
and 18 U.S.C. Section 1350
|