CONSTELLATION ENERGY (CEP, Financial) filed Quarterly Report for the period ended 2012-03-31.
Constelltn Engy has a market cap of $54.3 million; its shares were traded at around $2.02 with a P/E ratio of 1.8 and P/S ratio of 0.5.
Oil and natural gas sales. Oil and natural gas sales decreased $8.7 million, or 33.8%, to $17.2 million for the three months ended March 31, 2012 as compared to $25.9 million for the same period in 2011. Of this decrease, $0.9 million was attributable to decreased natural gas production volumes partially offset by higher oil production volumes, while $3.4 million was attributable to lower market prices for our natural gas production partially offset by higher market prices for our oil production and by $4.4 million in lower cash hedge settlements from our hedge program. Production for the three months ended March 31, 2012 was 3.2 Bcfe, which was 0.2 Bcfe lower than the same period in 2011. Of the decrease, 0.2 Bcfe was associated with our properties in the Cherokee Basin, partially offset by increased oil production from our properties in the Central Kansas Uplift. Production from our Black Warrior Basin and Woodford Shale properties remained level. Due to the decrease in the level of our drilling activities during the past two years, our maintenance drilling programs have not been sufficient to offset the natural decline rate of production associated with our existing wells. We hedged approximately 69% of our actual production through March 31, 2012, and approximately 75% of our actual production during the same period in 2011.
Cost of sales. For the three months ended March 31, 2012, cost of sales decreased by $0.1 million, or 25.8%, to $0.4 million, compared to $0.5 million for the same period in 2011. This represents the cost of purchased natural gas in the Cherokee Basin and was impacted by lower production volumes and lower market prices for natural gas, as these costs are tied to natural gas prices in the Mid-continent region.
Our Accumulated other comprehensive income (loss) is shown in our consolidated statements of operations and comprehensive income (loss) as an unrealized loss of $0.7 million for the three months ended March 31, 2012, and as an unrealized loss of $0.7 million for the same period in 2011. This loss reflects the settlements during 2012 related to amounts previously included in locked accumulated other comprehensive income associated with our hedging positions previously accounted for as cash flow hedges. All of our derivative positions are now accounted for as mark-to-market activities and the remaining balance in accumulated other comprehensive income (loss) will be amortized to earnings as the positions settle by December 2012.
Our net cash flow provided by operating activities for the three months ended March 31, 2012 was $1.4 million, compared to net cash flow provided by operating activities of $8.1 million for the same period in 2011. This decrease in operating cash flow was primarily attributable to the impact of lower oil and natural gas sales of $8.8 million. This decrease in oil and natural gas sales is a result of $4.4 million in lower cash hedge settlements as a result of our hedge restructuring in 2011 which lowered our hedge price to approximately $5.75 per MMbtu, $3.4 million from lower market prices for natural gas offset by higher market prices for oil, and $0.9 million as a result of lower production volumes. The decrease in operating cash flows from lower oil and natural gas sales was partially offset by the impact of approximately $1.2 million in lower operating expenses, primarily as a result of lower total spending in both administrative and lease operating expenses and the impact of lower production taxes and cost of sales, and a $0.8 million net change in working capital and other items. Major changes in our working capital from 2011 to 2012 were impacted by lower accrued liabilities of $3.8 million, lower accounts receivable of $1.2 million, and lower royalty payables of $0.3 million, offset by increased other assets of $0.6 million, increased accounts payable of $0.1 million, and increased other liabilities of $0.2 million. Our accrued liabilities decreased with the payments associated with our 2011 incentive compensation programs. Our other assets increased as a result of establishing an escrow account related to a vendor dispute. Our accounts payable increased due to timing of invoice payments. Our receivables balance and our royalties payable balance both decreased due to lower production volumes for our estimated oil and natural gas sales and lower market prices for natural gas. The decrease in prepaid expenses primarily resulted from the timing of the payment for insurance expenses.
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Constelltn Engy has a market cap of $54.3 million; its shares were traded at around $2.02 with a P/E ratio of 1.8 and P/S ratio of 0.5.
Highlight of Business Operations:
Realized Prices. Our average realized price for the three months ended March 31, 2012, was $5.32 per Mcfe including hedge settlements and $3.44 per Mcfe excluding hedge settlements. After deducting the cost of sales associated with third party gathering, our average realized prices were $5.20 per Mcfe including hedge settlements and $3.32 per Mcfe excluding hedge settlements.Oil and natural gas sales. Oil and natural gas sales decreased $8.7 million, or 33.8%, to $17.2 million for the three months ended March 31, 2012 as compared to $25.9 million for the same period in 2011. Of this decrease, $0.9 million was attributable to decreased natural gas production volumes partially offset by higher oil production volumes, while $3.4 million was attributable to lower market prices for our natural gas production partially offset by higher market prices for our oil production and by $4.4 million in lower cash hedge settlements from our hedge program. Production for the three months ended March 31, 2012 was 3.2 Bcfe, which was 0.2 Bcfe lower than the same period in 2011. Of the decrease, 0.2 Bcfe was associated with our properties in the Cherokee Basin, partially offset by increased oil production from our properties in the Central Kansas Uplift. Production from our Black Warrior Basin and Woodford Shale properties remained level. Due to the decrease in the level of our drilling activities during the past two years, our maintenance drilling programs have not been sufficient to offset the natural decline rate of production associated with our existing wells. We hedged approximately 69% of our actual production through March 31, 2012, and approximately 75% of our actual production during the same period in 2011.
Cost of sales. For the three months ended March 31, 2012, cost of sales decreased by $0.1 million, or 25.8%, to $0.4 million, compared to $0.5 million for the same period in 2011. This represents the cost of purchased natural gas in the Cherokee Basin and was impacted by lower production volumes and lower market prices for natural gas, as these costs are tied to natural gas prices in the Mid-continent region.
Our Accumulated other comprehensive income (loss) is shown in our consolidated statements of operations and comprehensive income (loss) as an unrealized loss of $0.7 million for the three months ended March 31, 2012, and as an unrealized loss of $0.7 million for the same period in 2011. This loss reflects the settlements during 2012 related to amounts previously included in locked accumulated other comprehensive income associated with our hedging positions previously accounted for as cash flow hedges. All of our derivative positions are now accounted for as mark-to-market activities and the remaining balance in accumulated other comprehensive income (loss) will be amortized to earnings as the positions settle by December 2012.
Our net cash flow provided by operating activities for the three months ended March 31, 2012 was $1.4 million, compared to net cash flow provided by operating activities of $8.1 million for the same period in 2011. This decrease in operating cash flow was primarily attributable to the impact of lower oil and natural gas sales of $8.8 million. This decrease in oil and natural gas sales is a result of $4.4 million in lower cash hedge settlements as a result of our hedge restructuring in 2011 which lowered our hedge price to approximately $5.75 per MMbtu, $3.4 million from lower market prices for natural gas offset by higher market prices for oil, and $0.9 million as a result of lower production volumes. The decrease in operating cash flows from lower oil and natural gas sales was partially offset by the impact of approximately $1.2 million in lower operating expenses, primarily as a result of lower total spending in both administrative and lease operating expenses and the impact of lower production taxes and cost of sales, and a $0.8 million net change in working capital and other items. Major changes in our working capital from 2011 to 2012 were impacted by lower accrued liabilities of $3.8 million, lower accounts receivable of $1.2 million, and lower royalty payables of $0.3 million, offset by increased other assets of $0.6 million, increased accounts payable of $0.1 million, and increased other liabilities of $0.2 million. Our accrued liabilities decreased with the payments associated with our 2011 incentive compensation programs. Our other assets increased as a result of establishing an escrow account related to a vendor dispute. Our accounts payable increased due to timing of invoice payments. Our receivables balance and our royalties payable balance both decreased due to lower production volumes for our estimated oil and natural gas sales and lower market prices for natural gas. The decrease in prepaid expenses primarily resulted from the timing of the payment for insurance expenses.
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