Seneca Resources Corporation Announces Second Quarter Earnings Increase of 110%

Apr 25, 2001, 01:00 ET from Seneca Resources Corporation

    BUFFALO, N.Y., April 25 /PRNewswire/ -- Seneca Resources Corporation
 ("Seneca"), the exploration and production subsidiary of National Fuel Gas
 Company ("National Fuel") (NYSE:   NFG), today announced results for its second
 quarter of fiscal year 2001 which ended March 31, 2001.
     The second quarter total revenue was $98.5 million and net income was
 $16.6 million, a contribution of $0.42 per share to National Fuel's second
 quarter earnings.  Compared to the second quarter of fiscal 2000, total
 revenues increased by $48.1 million, or 96%, and net income increased by
 $8.7 million, or 110%.  Higher commodity prices for natural gas contributed
 significantly to the earnings increase.  Average oil prices (before hedging)
 decreased 3% to $24.60 per barrel (BBL) and natural gas prices (before
 hedging) rose 202% to $7.92 per thousand cubic feet (MCF) compared to the
 prior year's second quarter.
     Production for the quarter increased 27% from last year's second quarter
 to 21.0 billion cubic feet equivalent (BCFE) with March 2001 production of
 7.24 BCFE.  Production increases over the fiscal first quarter were recorded
 from Seneca's operations in both Canada and the Gulf Coast while production
 from its properties in California remained nearly flat.  Three new offshore
 wells and a new offshore platform were placed on production by April 12, 2001,
 and these, combined with the three offshore platforms placed on production in
 January 2001, should continue Seneca's production increases from the Gulf
 Coast.*  In addition, on Vermilion 253, where Seneca has a 50% working
 interest and High Island 194, where Seneca has a 55% working interest, work
 has been started by the operators, and improved production from these blocks
 is expected by June 2001.*
     Seneca's emphasis on reducing expenses has resulted in lower costs this
 quarter compared to the first quarter of this fiscal year.  General and
 administrative (G&A) expenses per thousand cubic feet equivalent (MCFE) were
 reduced by 23% from $0.30 per MCFE last quarter to $0.23 per MCFE for the
 second quarter.  Lease operating expenses (LOE) per MCFE were reduced 8% from
 $0.75 per MCFE last quarter to $0.69 per MCFE for this quarter. Production
 taxes in Canada, which are tied to oil prices, were a significant part of this
 LOE reduction.  Management has continued to focus on identifying ways to limit
 expense increases, despite a very difficult operating market.
     Hedging expense for the quarter was $35.4 million, an increase of
 $27.6 million from the second quarter of fiscal 2000.  Most of the expense was
 associated with the gas swaps for January and February 2001 when gas prices
 were at record high levels. There was a $2.0 million mark-to-market expense
 booked for the quarter.  This expense, which represents Seneca's
 mark-to-market exposure for no cost collars, is required by the Financial
 Accounting Standards Board Statement No. 133.  There was also a $1.3 million
 expense associated with this amortization of the accrual of the no cost
 collars.
     Seneca's exploration and development drilling programs posted record
 results this quarter.  Seneca drilled a total of 68 gross wells this quarter:
 50 in the U.S. and 18 in Canada; this compares to 12 wells drilled during the
 second quarter of 2000.  Seneca's success rate was 91% for all wells drilled
 for the second quarter of this fiscal year.
     Seneca's offshore exploration program was very successful during the
 second quarter.  On Vermilion Block 56, the #1 Well, in which Seneca has
 63.75% working interest, was placed on production from two zones at a combined
 rate of 15.2 million cubic feet (MMCF) per day and 825 barrels of condensate
 per day (BCPD). On Galveston Block 307, the #1 Well was flowing at a rate of
 4.9 MMCF per day and 52 BCPD, while the #2 Well was producing 1 MMCF per day
 and 27 BCPD.  Seneca has a 100% working interest in each of these wells.  West
 Cameron 294 #3, another successful well was tested but is not expected to be
 on production until October 2001.*  This well tested at a rate of 7.7 MMCF per
 day with 78 BCPD with a flowing tubing pressure of 10,260 PSI.  A second well,
 West Cameron 294 #4, is currently being drilled, and pipeline installation to
 these wells has begun.  Seneca has a 45.5% working interest in each of these
 wells.
     Seneca's California properties had the largest increase in activity where
 28 new wells were drilled. Most of these new wells were drilled in the Lost
 Hills Field for higher gravity oil and natural gas.  California's monthly
 production for the quarter remained consistent with the previous year's
 quarter at 297,000 barrels of oil equivalent (BOE). Normal declines in
 production from the Sespe Field, combined with limited steaming operations at
 Midway-Sunset and North Lost Hills, account for the lack of growth in this
 region's production during the second quarter.
     As announced on December 11, 2000, Seneca previously discontinued its
 steaming operations in the Midway-Sunset Field and began selling the natural
 gas used in those operations. Seneca did reinitiate some limited steaming in
 Midway-Sunset, but currently 19 wells are waiting to be steamed.  Management
 is reviewing the production loss versus the steaming costs and will reinitiate
 steaming when natural gas prices and the economics of this strategy warrant.*
     Seneca's Canadian subsidiary, National Fuel Exploration Corp. (NFE),
 continued its drilling program during the second quarter.  A total of 24 wells
 were drilled with a success rate of 79%.  The exploration and development
 drilling program for 2001 is on schedule and more than 70 wells are planned.*
 NFE drilled a total of six successful exploratory wells, three of which were
 previously announced as successes in March.  Of the remaining new discoveries,
 two were located in the Tilston Trend and one was located in the Dawson Area.
     Seneca's drilling plans for all of its properties remain on schedule.
 Currently, Seneca has shut down drilling in Canada for Spring Break-up, two
 rigs are drilling offshore, two in California and one in the Appalachia area.
 In addition, Seneca has a non-operated interest in two wells currently being
 drilled in the Gulf Coast area. Seneca's current hedging position for the
 remainder of fiscal 2001 is contained in the summary table at the end of this
 release.
     Additionally, Seneca increased its exploration inventory by being the high
 bidder on seven out of 12 tracks of the Federal Lease Sale 178 held on
 March 28, 2001.  Seneca was awarded two tracks by the Minerals Management
 Service and is currently awaiting the evaluation on the remaining five high
 bids.
     National Fuel will host a conference call on Thursday, April 26, 2001 at
 2:00 p.m. (Eastern Time) to discuss this announcement.  There are two ways to
 access this call; first via the Company's home page at its Internet Web site
 http://www.nationalfuelgas.com under the section "Conference Call"; and
 second, for those without Internet access, a toll free number may be used.
 Please call 888-455-5419 and use the passcode "National Fuel" to listen to the
 live call.  For those unable to listen to the live broadcast, a replay will be
 available at http://www.nationalfuelgas.com beginning about one hour after the
 call.  In addition, the call will be recorded and a toll-free replay will be
 available for playback by telephone approximately one hour after the call is
 completed at 800-568-0673.
     National Fuel is an integrated energy company with $3.5 billion in assets
 comprised of the following six operating segments: Utility, Pipeline and
 Storage, Exploration and Production, International, Energy Marketing, and
 Timber. Additional information about National Fuel is available on its
 Internet Web site: http://www.nationalfuelgas.com or through its investor
 information service at 800-334-2188.
 
     *Certain statements contained herein, including those which are designated
 with an "*", are "forward-looking statements" as defined by the Private
 Securities Litigation Reform Act of 1995 and involve risks and uncertainties
 which could cause actual results or outcomes to differ materially from those
 expressed in the forward-looking statements.  The expectations, beliefs and
 projections contained herein are expressed in good faith and are believed to
 have a reasonable basis, but there can be no assurance that such expectations,
 beliefs or projections will result or be achieved or accomplished.  In
 addition to other factors, the following are important factors that could
 cause actual results to differ materially from those discussed in the
 forward-looking statements:  changes in economic conditions or weather
 conditions; changes in the availability or price of natural gas and oil;
 significant changes in competitive conditions affecting the company;
 governmental/regulatory actions, initiatives and proceedings, including those
 affecting acquisitions, financings, allowed rates of return, industry and rate
 structure, franchise renewal, and environmental/safety requirements;
 significant changes from expectations in actual capital expenditures and
 operating expenses and unanticipated project delays or changes in project
 costs; the nature and projected profitability of pending and potential
 projects and other investments; occurrences affecting the company's ability to
 obtain funds from operations, debt or equity to finance needed capital
 expenditures and other investments; uncertainty of oil and gas reserve
 estimates; ability to successfully identify and finance oil and gas property
 acquisitions and ability to operate existing and any subsequently acquired
 business or properties; ability to successfully identify, drill for and
 produce economically viable natural gas and oil reserves; significant changes
 from expectations in the company's actual production levels for natural gas or
 oil; changes in the availability or price of derivative financial instruments;
 changes in the price of natural gas or oil and the related effect given the
 accounting treatment or valuation of these financial instruments; inability of
 the various counterparties to meet their obligations with respect to the
 company's financial instruments; regarding foreign operations -- changes in
 foreign trade and monetary policies, laws, and regulations related to foreign
 operations, political and governmental changes, inflation and exchange rates,
 taxes and operating conditions; significant changes in tax rates or policies
 or in rates of inflation or interest; significant changes in the company's
 relationship with its employees and contractors and the potential adverse
 effects if labor disputes or grievances were to occur; or changes in
 accounting principles or the application of such principles to the company.
 The company disclaims any obligation to update any forward-looking statements
 to reflect events or circumstances after the date hereof or to reflect the
 occurrence of unanticipated events.
 
                           2nd Quarter Results       Year to Date Results
                         2001       2000 %Change     2001      2000  %Change
     Financial Results
      (in millions
       of dollars)
 
     Revenue            $98.5      $50.4     96%   $199.7    $100.4      99%
     Operating Expenses $58.0      $30.6     90%   $109.1     $60.1      82%
     EBITDA             $62.9      $35.4     78%   $133.5     $71.4      87%
     Operating Income
       (before Income
        taxes)          $40.4      $19.8    105%    $90.6     $40.3     125%
     Net Income         $16.6       $7.9    110%    $39.6     $15.9     149%
 
     Operating Performance Statistics
 
     Production (bcfe)   21.0       16.5     27%     40.7      32.8      24%
 
     Operating Performance
 
       General & Administrative
         Expense/mcfe   $0.23      $0.17     35%    $0.27     $0.16      69%
       Lease Operating
         Expense/mcfe   $0.69      $0.52     33%    $0.72     $0.51      41%
       Depreciation
         Depletion
         & Amortization
         /mcfe          $1.07      $0.94     14%    $1.06     $0.95      12%
 
     Commodity Prices (Before Hedging)
 
     Avg. Oil Price
       /barrel         $24.60     $25.41    (3%)   $26.40    $23.26      13%
     Avg. Gas Price/mcf $7.92      $2.62    202%    $7.04     $2.63     168%
 
     Commodity Prices (After Hedging)
 
     Avg. Oil Price
       /barrel         $20.81     $19.12      9%   $21.88    $18.26      20%
     Avg. Gas Price/mcf $5.24      $2.77     89%    $4.51     $2.70      67%
 
     Hedging Summary (remaining six months of fiscal 2001)
 
      SWAPs               Volume              Average Hedge Price
      Oil                 1.89 MMBBL          $20.99/BBL
      Gas                 11.9 BCF            $3.37/MCF
 
      No-cost Collars     Volume              Floor Price         Ceiling Price
      Oil                 1.02 MMBBL          $22.26              $29.22
      Gas                 3.5 BCF             $3.95               $5.53
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X19773624
 
 

SOURCE Seneca Resources Corporation
    BUFFALO, N.Y., April 25 /PRNewswire/ -- Seneca Resources Corporation
 ("Seneca"), the exploration and production subsidiary of National Fuel Gas
 Company ("National Fuel") (NYSE:   NFG), today announced results for its second
 quarter of fiscal year 2001 which ended March 31, 2001.
     The second quarter total revenue was $98.5 million and net income was
 $16.6 million, a contribution of $0.42 per share to National Fuel's second
 quarter earnings.  Compared to the second quarter of fiscal 2000, total
 revenues increased by $48.1 million, or 96%, and net income increased by
 $8.7 million, or 110%.  Higher commodity prices for natural gas contributed
 significantly to the earnings increase.  Average oil prices (before hedging)
 decreased 3% to $24.60 per barrel (BBL) and natural gas prices (before
 hedging) rose 202% to $7.92 per thousand cubic feet (MCF) compared to the
 prior year's second quarter.
     Production for the quarter increased 27% from last year's second quarter
 to 21.0 billion cubic feet equivalent (BCFE) with March 2001 production of
 7.24 BCFE.  Production increases over the fiscal first quarter were recorded
 from Seneca's operations in both Canada and the Gulf Coast while production
 from its properties in California remained nearly flat.  Three new offshore
 wells and a new offshore platform were placed on production by April 12, 2001,
 and these, combined with the three offshore platforms placed on production in
 January 2001, should continue Seneca's production increases from the Gulf
 Coast.*  In addition, on Vermilion 253, where Seneca has a 50% working
 interest and High Island 194, where Seneca has a 55% working interest, work
 has been started by the operators, and improved production from these blocks
 is expected by June 2001.*
     Seneca's emphasis on reducing expenses has resulted in lower costs this
 quarter compared to the first quarter of this fiscal year.  General and
 administrative (G&A) expenses per thousand cubic feet equivalent (MCFE) were
 reduced by 23% from $0.30 per MCFE last quarter to $0.23 per MCFE for the
 second quarter.  Lease operating expenses (LOE) per MCFE were reduced 8% from
 $0.75 per MCFE last quarter to $0.69 per MCFE for this quarter. Production
 taxes in Canada, which are tied to oil prices, were a significant part of this
 LOE reduction.  Management has continued to focus on identifying ways to limit
 expense increases, despite a very difficult operating market.
     Hedging expense for the quarter was $35.4 million, an increase of
 $27.6 million from the second quarter of fiscal 2000.  Most of the expense was
 associated with the gas swaps for January and February 2001 when gas prices
 were at record high levels. There was a $2.0 million mark-to-market expense
 booked for the quarter.  This expense, which represents Seneca's
 mark-to-market exposure for no cost collars, is required by the Financial
 Accounting Standards Board Statement No. 133.  There was also a $1.3 million
 expense associated with this amortization of the accrual of the no cost
 collars.
     Seneca's exploration and development drilling programs posted record
 results this quarter.  Seneca drilled a total of 68 gross wells this quarter:
 50 in the U.S. and 18 in Canada; this compares to 12 wells drilled during the
 second quarter of 2000.  Seneca's success rate was 91% for all wells drilled
 for the second quarter of this fiscal year.
     Seneca's offshore exploration program was very successful during the
 second quarter.  On Vermilion Block 56, the #1 Well, in which Seneca has
 63.75% working interest, was placed on production from two zones at a combined
 rate of 15.2 million cubic feet (MMCF) per day and 825 barrels of condensate
 per day (BCPD). On Galveston Block 307, the #1 Well was flowing at a rate of
 4.9 MMCF per day and 52 BCPD, while the #2 Well was producing 1 MMCF per day
 and 27 BCPD.  Seneca has a 100% working interest in each of these wells.  West
 Cameron 294 #3, another successful well was tested but is not expected to be
 on production until October 2001.*  This well tested at a rate of 7.7 MMCF per
 day with 78 BCPD with a flowing tubing pressure of 10,260 PSI.  A second well,
 West Cameron 294 #4, is currently being drilled, and pipeline installation to
 these wells has begun.  Seneca has a 45.5% working interest in each of these
 wells.
     Seneca's California properties had the largest increase in activity where
 28 new wells were drilled. Most of these new wells were drilled in the Lost
 Hills Field for higher gravity oil and natural gas.  California's monthly
 production for the quarter remained consistent with the previous year's
 quarter at 297,000 barrels of oil equivalent (BOE). Normal declines in
 production from the Sespe Field, combined with limited steaming operations at
 Midway-Sunset and North Lost Hills, account for the lack of growth in this
 region's production during the second quarter.
     As announced on December 11, 2000, Seneca previously discontinued its
 steaming operations in the Midway-Sunset Field and began selling the natural
 gas used in those operations. Seneca did reinitiate some limited steaming in
 Midway-Sunset, but currently 19 wells are waiting to be steamed.  Management
 is reviewing the production loss versus the steaming costs and will reinitiate
 steaming when natural gas prices and the economics of this strategy warrant.*
     Seneca's Canadian subsidiary, National Fuel Exploration Corp. (NFE),
 continued its drilling program during the second quarter.  A total of 24 wells
 were drilled with a success rate of 79%.  The exploration and development
 drilling program for 2001 is on schedule and more than 70 wells are planned.*
 NFE drilled a total of six successful exploratory wells, three of which were
 previously announced as successes in March.  Of the remaining new discoveries,
 two were located in the Tilston Trend and one was located in the Dawson Area.
     Seneca's drilling plans for all of its properties remain on schedule.
 Currently, Seneca has shut down drilling in Canada for Spring Break-up, two
 rigs are drilling offshore, two in California and one in the Appalachia area.
 In addition, Seneca has a non-operated interest in two wells currently being
 drilled in the Gulf Coast area. Seneca's current hedging position for the
 remainder of fiscal 2001 is contained in the summary table at the end of this
 release.
     Additionally, Seneca increased its exploration inventory by being the high
 bidder on seven out of 12 tracks of the Federal Lease Sale 178 held on
 March 28, 2001.  Seneca was awarded two tracks by the Minerals Management
 Service and is currently awaiting the evaluation on the remaining five high
 bids.
     National Fuel will host a conference call on Thursday, April 26, 2001 at
 2:00 p.m. (Eastern Time) to discuss this announcement.  There are two ways to
 access this call; first via the Company's home page at its Internet Web site
 http://www.nationalfuelgas.com under the section "Conference Call"; and
 second, for those without Internet access, a toll free number may be used.
 Please call 888-455-5419 and use the passcode "National Fuel" to listen to the
 live call.  For those unable to listen to the live broadcast, a replay will be
 available at http://www.nationalfuelgas.com beginning about one hour after the
 call.  In addition, the call will be recorded and a toll-free replay will be
 available for playback by telephone approximately one hour after the call is
 completed at 800-568-0673.
     National Fuel is an integrated energy company with $3.5 billion in assets
 comprised of the following six operating segments: Utility, Pipeline and
 Storage, Exploration and Production, International, Energy Marketing, and
 Timber. Additional information about National Fuel is available on its
 Internet Web site: http://www.nationalfuelgas.com or through its investor
 information service at 800-334-2188.
 
     *Certain statements contained herein, including those which are designated
 with an "*", are "forward-looking statements" as defined by the Private
 Securities Litigation Reform Act of 1995 and involve risks and uncertainties
 which could cause actual results or outcomes to differ materially from those
 expressed in the forward-looking statements.  The expectations, beliefs and
 projections contained herein are expressed in good faith and are believed to
 have a reasonable basis, but there can be no assurance that such expectations,
 beliefs or projections will result or be achieved or accomplished.  In
 addition to other factors, the following are important factors that could
 cause actual results to differ materially from those discussed in the
 forward-looking statements:  changes in economic conditions or weather
 conditions; changes in the availability or price of natural gas and oil;
 significant changes in competitive conditions affecting the company;
 governmental/regulatory actions, initiatives and proceedings, including those
 affecting acquisitions, financings, allowed rates of return, industry and rate
 structure, franchise renewal, and environmental/safety requirements;
 significant changes from expectations in actual capital expenditures and
 operating expenses and unanticipated project delays or changes in project
 costs; the nature and projected profitability of pending and potential
 projects and other investments; occurrences affecting the company's ability to
 obtain funds from operations, debt or equity to finance needed capital
 expenditures and other investments; uncertainty of oil and gas reserve
 estimates; ability to successfully identify and finance oil and gas property
 acquisitions and ability to operate existing and any subsequently acquired
 business or properties; ability to successfully identify, drill for and
 produce economically viable natural gas and oil reserves; significant changes
 from expectations in the company's actual production levels for natural gas or
 oil; changes in the availability or price of derivative financial instruments;
 changes in the price of natural gas or oil and the related effect given the
 accounting treatment or valuation of these financial instruments; inability of
 the various counterparties to meet their obligations with respect to the
 company's financial instruments; regarding foreign operations -- changes in
 foreign trade and monetary policies, laws, and regulations related to foreign
 operations, political and governmental changes, inflation and exchange rates,
 taxes and operating conditions; significant changes in tax rates or policies
 or in rates of inflation or interest; significant changes in the company's
 relationship with its employees and contractors and the potential adverse
 effects if labor disputes or grievances were to occur; or changes in
 accounting principles or the application of such principles to the company.
 The company disclaims any obligation to update any forward-looking statements
 to reflect events or circumstances after the date hereof or to reflect the
 occurrence of unanticipated events.
 
                           2nd Quarter Results       Year to Date Results
                         2001       2000 %Change     2001      2000  %Change
     Financial Results
      (in millions
       of dollars)
 
     Revenue            $98.5      $50.4     96%   $199.7    $100.4      99%
     Operating Expenses $58.0      $30.6     90%   $109.1     $60.1      82%
     EBITDA             $62.9      $35.4     78%   $133.5     $71.4      87%
     Operating Income
       (before Income
        taxes)          $40.4      $19.8    105%    $90.6     $40.3     125%
     Net Income         $16.6       $7.9    110%    $39.6     $15.9     149%
 
     Operating Performance Statistics
 
     Production (bcfe)   21.0       16.5     27%     40.7      32.8      24%
 
     Operating Performance
 
       General & Administrative
         Expense/mcfe   $0.23      $0.17     35%    $0.27     $0.16      69%
       Lease Operating
         Expense/mcfe   $0.69      $0.52     33%    $0.72     $0.51      41%
       Depreciation
         Depletion
         & Amortization
         /mcfe          $1.07      $0.94     14%    $1.06     $0.95      12%
 
     Commodity Prices (Before Hedging)
 
     Avg. Oil Price
       /barrel         $24.60     $25.41    (3%)   $26.40    $23.26      13%
     Avg. Gas Price/mcf $7.92      $2.62    202%    $7.04     $2.63     168%
 
     Commodity Prices (After Hedging)
 
     Avg. Oil Price
       /barrel         $20.81     $19.12      9%   $21.88    $18.26      20%
     Avg. Gas Price/mcf $5.24      $2.77     89%    $4.51     $2.70      67%
 
     Hedging Summary (remaining six months of fiscal 2001)
 
      SWAPs               Volume              Average Hedge Price
      Oil                 1.89 MMBBL          $20.99/BBL
      Gas                 11.9 BCF            $3.37/MCF
 
      No-cost Collars     Volume              Floor Price         Ceiling Price
      Oil                 1.02 MMBBL          $22.26              $29.22
      Gas                 3.5 BCF             $3.95               $5.53
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X19773624
 
 SOURCE  Seneca Resources Corporation