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Warren Resources Inc. Reports Operating Results (10-Q)

November 03, 2010 | About:
10qk

10qk

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Warren Resources Inc. (WRES) filed Quarterly Report for the period ended 2010-09-30.

Warren Resources Inc. has a market cap of $294.1 million; its shares were traded at around $4.2 with a P/E ratio of 14.3 and P/S ratio of 4.6. WRES is in the portfolios of NWQ Managers of NWQ Investment Management Co.

Highlight of Business Operations:

Our cash and cash equivalents decreased $0.9 million to $16.4 million during the nine months ended September 30, 2010. This resulted from cash provided from operating activities of $33.8 million offset by cash used in investing activities of $26 mllion and cash used in financing activities of $8.7 million.

On November 19, 2007, Warren entered into a five year, $250 million credit agreement with Merrill Lynch Capital (subsequently sold to GE Business Financial Services, Inc.) on behalf of itself and a syndicate of five participating banks (the Credit Facility). The Credit Facility provides for a revolving loan up to the lesser of (i) the borrowing base (ii) $250 million or (iii) the draw limit requested by the Company. The Credit Facility matures on November 19, 2012. It is secured by substantially all of our assets. The borrowing base will be determined by the lenders at least semi-annually on or about April 1 and October 1 of each year, and is based in part on the proved reserves of the Company. The current borrowing base is $120 million, representing an immediate availability of $37.5 million as of September 30, 2010. The Company repaid $7.4 million under the Credit Facility during the first nine months of 2010. The Company is subject to certain covenants

During the third quarter of 2010, the Company had net income of $4.3 million (which included $2.4 million of unrealized losses on derivative financial instruments). This compares to the third quarter of 2009 when the Company had net income of $2.2 million (which included a $1.4 million unrealized gain on derivative financial instruments). At September 30, 2010, current assets were $4.7 million more than current liabilities. Currently, the Company has a borrowing base of $120 million and $82.5 million outstanding under the Credit Facility.

* Does not include estimated interest of $3.0 million less than one year, $3.6 million 1-3 years, $0.4 million 3-5 years and $1.3 million thereafter.

Oil and gas sales. Revenue from oil and gas sales increased $6.7 million in the third quarter of 2010 to $23.1 million, a 41% increase compared to the same quarter in 2009. This increase resulted from an increase in realized energy prices and production of oil and gas. The average realized price per barrel of oil for the three months ended September 30, 2010 and 2009 was $68.87 and $60.51, respectively. Additionally, the average realized price per Mcf of gas for the three months ended September 30, 2010 and 2009 was $3.87 and $2.71, respectively. Net oil production for the three months ended September 30, 2010 and 2009 was 265 Mbbls and 226 Mbbls, respectively. Net gas production for the three months ended September 30, 2010 and 2009 was 1.3 Bcf and 1.0 Bcf, respectively.

Oil and gas sales. Revenue from oil and gas sales increased $22.5 million in the first nine months of 2010 to $65.7 million, a 52% increase compared to the same period in 2009. This increase resulted from an increase in realized energy prices and production of oil and gas. The average realized price per barrel of oil for the nine months ended September 30, 2010 and 2009 was $69.65 and $49.33, respectively. Additionally, the average realized price per Mcf of gas for the nine months ended September 30, 2010 and 2009 was $4.29 and $2.75, respectively. Net oil production for the nine months ended September 30, 2010 and 2009 was 729 Mbbls and 716 Mbbls, respectively. Net gas production for the nine months ended September 30, 2010 and 2009 was 3.5 Bcf and 2.9 Bcf, respectively.

Read the The complete Report

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