Mitchell Energy's First-Quarter Earnings Almost Triple to a Record $2.41 Per Share

Apr 26, 2001, 01:00 ET from Mitchell Energy & Development Corp.

    THE WOODLANDS, Texas, April 26 /PRNewswire/ -- Mitchell Energy &
 Development Corp. (NYSE:   MND) today reported first-quarter earnings of
 $2.41 per diluted share, or $122.9 million, a 177 percent increase over prior
 year earnings of 87 cents per diluted share, or $43.3 million.  This marks the
 fifth consecutive quarter of record earnings for the company.
     The record earnings were attributable primarily to natural gas revenues
 that increased $156 million because of higher volumes and prices.  Gas sales
 volumes increased sharply over last year's first quarter, rising 35 percent to
 369 million cubic feet per day (8 percent above the fourth quarter).  Sales
 prices averaged $6.87 per thousand cubic feet for the quarter, up $3.98 over
 the prior-year period.
     Eighty percent of the increase in gas volumes came from the Barnett shale
 in North Texas where 150 wells have been drilled over the past twelve months
 and 276 wells are planned for the current year.  The remainder of the increase
 was primarily attributable to exploratory success and continuing follow-up
 drilling along the Texas Gulf Coast which added 23 million cubic feet to
 average daily production.  Total company gas production is on pace to meet or
 exceed management's 25 percent annual growth target for 2001.
     George P. Mitchell, chairman and chief executive officer said, "Our last
 two scheduled Barnett rigs didn't start drilling until late March due to
 contractor delays.  So we have picked up two more rigs in April and plan to
 have 15 rigs drilling the Barnett by the third quarter.  This will insure that
 we complete the 276 wells scheduled this year and achieve our growth targets.
 We are one of only a few exploration and production companies that are
 projecting double-digit gas production growth this year, and the only company
 with a three-year compounded organic growth target of over 20 percent."
     In the company's mid-stream business segment, gas gathering and marketing
 earnings increased $7.7 million to $13 million, benefiting from price-related
 improvements in sales and transportation margins and a 26 percent increase in
 throughput volumes.  This gain was more than offset, however, by decreases in
 earnings from gas processing operations ($9.4 million) and downstream
 partnerships ($2.6 million).
     Processing operations were adversely affected during the quarter by high
 natural gas prices which shrank "frac" spreads -- the difference between the
 value of the natural gas liquids stripped from the gas stream and the cost of
 replacement gas -- even though NGL prices remained quite strong, averaging
 $24.76 per barrel.  Due to below break-even spreads on certain "keep-whole"
 contracts, the company elected to not process at the Katy plant during January
 and February, dropping daily NGL volumes to an average of 42,900 barrels for
 the quarter compared with 50,600 barrels in the prior year.
     Mr. Mitchell noted, "While higher gas prices reduce gas processing
 margins, they are always accretive to the company's consolidated bottom line
 -- the earnings just show up in other business segments.  Another important
 point is that the economics of our own gas production is enhanced by our
 mid-stream operations and we leverage these assets by providing similar
 services to third parties."
     Because of the lower first-quarter volumes, the company has reduced its
 NGL volume growth target to 10 percent for the full year.  NGL production is
 currently running approximately 55,000 barrels per day and is expected to
 increase to more than 60,000 barrels by year-end, assuming at least break-even
 margins at that time.  This increase will be driven by processing the
 company's growing Barnett shale volumes at the Bridgeport plant where capacity
 will have more than doubled when the second expansion comes onstream in
 September.
     Operating cash flows for the quarter were $194 million, or $3.81 per
 share, significantly exceeding capital expenditures.  During the quarter, the
 company purchased $19 million of its senior notes in the open market, leaving
 approximately $100 million of excess cash invested in short-term money market
 funds at March 31.  A $44 million Federal income tax deposit was made in
 April, and the remainder of the excess cash is available to cover expected
 increases in capital spending -- primarily for drilling -- and further debt
 reductions.  The $63 million balance of the company's 9 1/4% senior notes
 matures on January 15, 2002.
     Mitchell Energy is one of the nation's largest independent producers of
 natural gas and natural gas liquids and will discuss operating and financial
 results with market analysts today starting at 10:00 a.m. CDT.  The
 teleconference will be broadcasted live on its website at
 www.mitchellenergy.com.
     This news release contains forward-looking statements.  Although the
 company believes that its expectations are based on reasonable assumptions, it
 can give no assurance that its goals will be achieved.  Important factors that
 could cause actual results to differ materially from those in the
 forward-looking statements include the timing and extent of changes in
 commodity prices for natural gas, NGLs and crude oil; the attainment of
 forecasted operating levels and reserve replacement; and unexpected changes in
 competitive and economic conditions, government regulations, technology and
 other factors.
 
 
             Supplemental Financial and Operational Data (Unaudited)
 
      Unaudited highlights follow:
 
                                                      Three Months Ended
                                                            March 31
                                                     2001            2000
      Revenues                                  $655,127,000     $313,931,000
 
      Net earnings                              $122,922,000     $ 43,251,000*
 
      Net earnings per share
        Basic                                          $2.47             $.88
        Diluted                                         2.41              .87
 
      Average common shares outstanding
        Basic                                     49,818,000       49,121,000
        Diluted                                   50,912,000       49,450,000
 
      * Includes $3.2 million gain ($4.9 million pretax) from an asset sale and
        a $.7 million ($1.2 million pretax) water well litigation provision
        reversal.
 
 
             Supplemental Financial and Operational Data (Unaudited)
                                  (in thousands)
 
                                                           Three Months Ended
                                                                March 31
                                                             2001       2000
      Segment Operating Earnings
      Exploration and production                          $169,100    $34,522
      Litigation provision reversal                            ---      1,200
        Total exploration and production                   169,100     35,722
 
      Natural gas processing                                18,812     28,237
      Natural gas gathering and marketing                   13,032      5,301
      Other                                                   (517)     2,039
                                                            31,327     35,577
      Gain from asset sale                                     ---      4,884
        Total gas services                                  31,327     40,461
      Total Segment Operating Earnings                     200,427     76,183
      General and administrative expense                     6,806      7,199
      Total Operating Earnings                             193,621     68,984
 
      Other Expense
      Interest expense                                       5,666      7,909
      Other (income) expense, net                            1,200     (3,688)
                                                             6,866      4,221
 
      Earnings Before Income Taxes                         186,755     64,763
 
      Income Taxes                                          63,833     21,512
 
      Net Earnings                                        $122,922    $43,251
 
      Operating Statistics (include, where
       applicable, interests in equity partnerships)
      Average Daily Volumes
        Natural gas sales (Mcf)                            369,300    273,400
        Crude oil and condensate sales (Bbls)                5,800      5,900
        Natural gas liquids produced (Bbls)                 42,900     50,600
        Pipeline throughput (Mcf)                          859,000    680,000
 
      Average Sales Prices (dollars)
        Natural gas (per Mcf)                                $6.87      $2.89
        Crude oil and condensate (per Bbl)                   27.32      26.93
        Natural gas liquids produced (per Bbl)               24.76      21.19
 
 
             Supplemental Financial and Operational Data (Unaudited)
                                   (in thousands)
 
                                                           Three Months Ended
                                                                March 31
                                                             2001       2000
      Cash Provided by Operating Activities
      Net earnings                                        $122,922    $43,251
      Adjustments to reconcile net earnings
       to cash provided by operating activities
        Depreciation, depletion and amortization            42,259     32,853
        Deferred income taxes                               22,375     10,211
        Exploratory well impairments                         2,168        ---
        Distributions in excess of
         earnings of equity investees                          594      3,129
        Gain from asset sale                                   ---     (4,884)
        Water well litigation provision reversal               ---     (1,200)
        Other, net                                           3,736     (3,458)
                                                           194,054     79,902
        Changes in operating assets and liabilities         76,668      6,513
                                                          $270,722    $86,415
 
      Capital and Exploratory Expenditures (accrual basis)
      Exploration and production                           $95,236    $42,495
      Gas services                                          54,799      7,187
      Corporate                                                532         56
                                                          $150,567    $49,738
 
      Depreciation, Depletion and Amortization
      Exploration and production                           $35,335    $27,217
      Gas services                                           6,612      5,176
      Corporate                                                312        460
                                                           $42,259    $32,853
 
      Selected Balance Sheet Data at March 31, 2001
      Stockholders' equity                                $738,012
      Long-term debt, including current maturities         281,025
 
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SOURCE Mitchell Energy & Development Corp.
    THE WOODLANDS, Texas, April 26 /PRNewswire/ -- Mitchell Energy &
 Development Corp. (NYSE:   MND) today reported first-quarter earnings of
 $2.41 per diluted share, or $122.9 million, a 177 percent increase over prior
 year earnings of 87 cents per diluted share, or $43.3 million.  This marks the
 fifth consecutive quarter of record earnings for the company.
     The record earnings were attributable primarily to natural gas revenues
 that increased $156 million because of higher volumes and prices.  Gas sales
 volumes increased sharply over last year's first quarter, rising 35 percent to
 369 million cubic feet per day (8 percent above the fourth quarter).  Sales
 prices averaged $6.87 per thousand cubic feet for the quarter, up $3.98 over
 the prior-year period.
     Eighty percent of the increase in gas volumes came from the Barnett shale
 in North Texas where 150 wells have been drilled over the past twelve months
 and 276 wells are planned for the current year.  The remainder of the increase
 was primarily attributable to exploratory success and continuing follow-up
 drilling along the Texas Gulf Coast which added 23 million cubic feet to
 average daily production.  Total company gas production is on pace to meet or
 exceed management's 25 percent annual growth target for 2001.
     George P. Mitchell, chairman and chief executive officer said, "Our last
 two scheduled Barnett rigs didn't start drilling until late March due to
 contractor delays.  So we have picked up two more rigs in April and plan to
 have 15 rigs drilling the Barnett by the third quarter.  This will insure that
 we complete the 276 wells scheduled this year and achieve our growth targets.
 We are one of only a few exploration and production companies that are
 projecting double-digit gas production growth this year, and the only company
 with a three-year compounded organic growth target of over 20 percent."
     In the company's mid-stream business segment, gas gathering and marketing
 earnings increased $7.7 million to $13 million, benefiting from price-related
 improvements in sales and transportation margins and a 26 percent increase in
 throughput volumes.  This gain was more than offset, however, by decreases in
 earnings from gas processing operations ($9.4 million) and downstream
 partnerships ($2.6 million).
     Processing operations were adversely affected during the quarter by high
 natural gas prices which shrank "frac" spreads -- the difference between the
 value of the natural gas liquids stripped from the gas stream and the cost of
 replacement gas -- even though NGL prices remained quite strong, averaging
 $24.76 per barrel.  Due to below break-even spreads on certain "keep-whole"
 contracts, the company elected to not process at the Katy plant during January
 and February, dropping daily NGL volumes to an average of 42,900 barrels for
 the quarter compared with 50,600 barrels in the prior year.
     Mr. Mitchell noted, "While higher gas prices reduce gas processing
 margins, they are always accretive to the company's consolidated bottom line
 -- the earnings just show up in other business segments.  Another important
 point is that the economics of our own gas production is enhanced by our
 mid-stream operations and we leverage these assets by providing similar
 services to third parties."
     Because of the lower first-quarter volumes, the company has reduced its
 NGL volume growth target to 10 percent for the full year.  NGL production is
 currently running approximately 55,000 barrels per day and is expected to
 increase to more than 60,000 barrels by year-end, assuming at least break-even
 margins at that time.  This increase will be driven by processing the
 company's growing Barnett shale volumes at the Bridgeport plant where capacity
 will have more than doubled when the second expansion comes onstream in
 September.
     Operating cash flows for the quarter were $194 million, or $3.81 per
 share, significantly exceeding capital expenditures.  During the quarter, the
 company purchased $19 million of its senior notes in the open market, leaving
 approximately $100 million of excess cash invested in short-term money market
 funds at March 31.  A $44 million Federal income tax deposit was made in
 April, and the remainder of the excess cash is available to cover expected
 increases in capital spending -- primarily for drilling -- and further debt
 reductions.  The $63 million balance of the company's 9 1/4% senior notes
 matures on January 15, 2002.
     Mitchell Energy is one of the nation's largest independent producers of
 natural gas and natural gas liquids and will discuss operating and financial
 results with market analysts today starting at 10:00 a.m. CDT.  The
 teleconference will be broadcasted live on its website at
 www.mitchellenergy.com.
     This news release contains forward-looking statements.  Although the
 company believes that its expectations are based on reasonable assumptions, it
 can give no assurance that its goals will be achieved.  Important factors that
 could cause actual results to differ materially from those in the
 forward-looking statements include the timing and extent of changes in
 commodity prices for natural gas, NGLs and crude oil; the attainment of
 forecasted operating levels and reserve replacement; and unexpected changes in
 competitive and economic conditions, government regulations, technology and
 other factors.
 
 
             Supplemental Financial and Operational Data (Unaudited)
 
      Unaudited highlights follow:
 
                                                      Three Months Ended
                                                            March 31
                                                     2001            2000
      Revenues                                  $655,127,000     $313,931,000
 
      Net earnings                              $122,922,000     $ 43,251,000*
 
      Net earnings per share
        Basic                                          $2.47             $.88
        Diluted                                         2.41              .87
 
      Average common shares outstanding
        Basic                                     49,818,000       49,121,000
        Diluted                                   50,912,000       49,450,000
 
      * Includes $3.2 million gain ($4.9 million pretax) from an asset sale and
        a $.7 million ($1.2 million pretax) water well litigation provision
        reversal.
 
 
             Supplemental Financial and Operational Data (Unaudited)
                                  (in thousands)
 
                                                           Three Months Ended
                                                                March 31
                                                             2001       2000
      Segment Operating Earnings
      Exploration and production                          $169,100    $34,522
      Litigation provision reversal                            ---      1,200
        Total exploration and production                   169,100     35,722
 
      Natural gas processing                                18,812     28,237
      Natural gas gathering and marketing                   13,032      5,301
      Other                                                   (517)     2,039
                                                            31,327     35,577
      Gain from asset sale                                     ---      4,884
        Total gas services                                  31,327     40,461
      Total Segment Operating Earnings                     200,427     76,183
      General and administrative expense                     6,806      7,199
      Total Operating Earnings                             193,621     68,984
 
      Other Expense
      Interest expense                                       5,666      7,909
      Other (income) expense, net                            1,200     (3,688)
                                                             6,866      4,221
 
      Earnings Before Income Taxes                         186,755     64,763
 
      Income Taxes                                          63,833     21,512
 
      Net Earnings                                        $122,922    $43,251
 
      Operating Statistics (include, where
       applicable, interests in equity partnerships)
      Average Daily Volumes
        Natural gas sales (Mcf)                            369,300    273,400
        Crude oil and condensate sales (Bbls)                5,800      5,900
        Natural gas liquids produced (Bbls)                 42,900     50,600
        Pipeline throughput (Mcf)                          859,000    680,000
 
      Average Sales Prices (dollars)
        Natural gas (per Mcf)                                $6.87      $2.89
        Crude oil and condensate (per Bbl)                   27.32      26.93
        Natural gas liquids produced (per Bbl)               24.76      21.19
 
 
             Supplemental Financial and Operational Data (Unaudited)
                                   (in thousands)
 
                                                           Three Months Ended
                                                                March 31
                                                             2001       2000
      Cash Provided by Operating Activities
      Net earnings                                        $122,922    $43,251
      Adjustments to reconcile net earnings
       to cash provided by operating activities
        Depreciation, depletion and amortization            42,259     32,853
        Deferred income taxes                               22,375     10,211
        Exploratory well impairments                         2,168        ---
        Distributions in excess of
         earnings of equity investees                          594      3,129
        Gain from asset sale                                   ---     (4,884)
        Water well litigation provision reversal               ---     (1,200)
        Other, net                                           3,736     (3,458)
                                                           194,054     79,902
        Changes in operating assets and liabilities         76,668      6,513
                                                          $270,722    $86,415
 
      Capital and Exploratory Expenditures (accrual basis)
      Exploration and production                           $95,236    $42,495
      Gas services                                          54,799      7,187
      Corporate                                                532         56
                                                          $150,567    $49,738
 
      Depreciation, Depletion and Amortization
      Exploration and production                           $35,335    $27,217
      Gas services                                           6,612      5,176
      Corporate                                                312        460
                                                           $42,259    $32,853
 
      Selected Balance Sheet Data at March 31, 2001
      Stockholders' equity                                $738,012
      Long-term debt, including current maturities         281,025
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X14249601
 
 SOURCE  Mitchell Energy & Development Corp.