Vintage Petroleum, Inc. (NYSE:VPI) today announced income from
continuing operations before previously announced non-cash
unrealized derivative losses (a non-GAAP measure) of $43.4 million,
or $0.65 per diluted share, in the first quarter of 2005. This
compares to income from continuing operations of $18.4 million, or
$0.28 per diluted share, in the same quarter last year. The
significant increase was driven by a 20 percent increase in
production and significantly higher oil and gas prices. Income from
continuing operations (the GAAP measure) in the first quarter of
2005 was $21.2 million, or $0.32 per diluted share, reflecting the
previously announced non-cash unrealized derivative losses of $22.2
million after tax, or $0.33 per diluted share. Net income was $31.9
million, or $0.48 per diluted share, for the first quarter of 2005
compared to $19.1 million, or $0.29 per diluted share, in the year
earlier quarter. Included in net income for the first quarter of
2005 is income from discontinued operations of $10.7 million, or
$0.16 per diluted share. Cash flow, a non-GAAP measure, was $103.0
million for the first quarter of 2005, up 58 percent from cash flow
of $65.2 million in the first quarter of 2004. See the attached
table for reconciliations of these non-GAAP financial measures to
the corresponding GAAP amounts of cash provided by operating
activities of $103.0 million for the first quarter of 2005 and
$84.5 million for the same quarter in 2004. Production Up 20
Percent Total production from continuing operations for the quarter
of 6.8 million barrels of oil equivalent (BOE) was 20 percent above
the comparable 5.6 million BOE in the first quarter of 2004. This
increase was driven by a 24 percent increase in oil production and
a 12 percent increase in gas production compared to the prior-year
quarter. Argentina oil production, before the impact of changes in
inventories, in the first quarter of 2005 averaged 31,379 net
barrels of oil per day (BOPD), an increase of 15 percent over the
27,203 net BOPD produced in the comparable quarter of 2004. The
prior year's quarter was negatively impacted by a labor strike
reducing first quarter 2004 reported production by approximately
1,800 BOPD. The remaining increase over the prior year's quarter is
a result of the company's acquisition of properties in the San
Jorge basin during September 2004 and additional production
resulting from the company's drilling and workover programs. Oil
production in Yemen made its initial contribution in the second
quarter of 2004 and averaged 3,825 net BOPD during the first
quarter of 2005, before the impact of changes in inventories. All
of the An Nagyah field production is being trucked to a nearby
facility for processing and transporting to an export terminal
until the company's planned pipeline is operational. The trucking
capacity is approximately 7,500 gross BOPD (3,900 net). An 18-mile
(28 km) pipeline to the processing facility is under construction
and scheduled to be operational late in the second quarter of 2005
with initial throughput anticipated at 10,000 gross BOPD (5,200
net). A central processing facility with an initial capacity of
10,000 to 12,000 gross BOPD (5,200 to 6,250 net) is scheduled to
start up during the third quarter of 2005. Total net gas production
from continuing operations continued to show strong increases,
fueled by U.S. exploitation successes and the December 2004
acquisition of producing properties in the Gulf Coast area of
Alabama. Net gas production in the U.S. increased 23 percent from
last year's first quarter to average 85,360 Mcf per day in the
first quarter of 2005. The company estimates that U.S. production
for the first quarter of 2005 was reduced by 192 MBbls of oil and
238 MMcf of gas, or 232 MBOE as a result of heavy rains and
mudslides in Ventura County, California. Currently, production of
approximately 400 BOPD and 950 Mcf per day remains shut in. It is
expected this production will be restored by the end of the second
quarter. Commodity Prices and Revenues Including the impact of
derivative financial instruments accounted for as hedges, the
company's realized price for oil from continuing operations
increased 18 percent to an average of $33.62 per barrel in the
first quarter of 2005, compared with last year's first quarter
average price of $28.54 per barrel. The company's realized price
for gas, including the impact of hedges, increased 27 percent to
$4.47 per Mcf compared to $3.51 per Mcf in the first quarter of
2004. As a result of the increases in production and oil and gas
prices, oil and gas revenues increased 45 percent to $215.4 million
for the first quarter of 2005 from $148.5 million in the same
quarter of 2004. Costs and Expenses Production costs from
continuing operations totaled $6.44 per BOE in the first quarter of
2005, which is one percent higher than the $6.35 per BOE for the
previous year's quarter. During the first quarter of 2005, the
company incurred approximately $3.5 million to repair mudslide
damage on its properties in Ventura County, California caused by
heavy rains early in the quarter. The company expects to spend an
additional $4.0 million in total during the second and third
quarters of 2005 on these repairs. The prior year's first quarter
included $1.9 million for costs to repair damage resulting from
fires in California during late 2003. First quarter export taxes in
Argentina increased from $6.2 million in 2004 to $13.3 million in
2005 primarily as a result of the increased export tax rates
announced in August 2004. Production, transportation and storage
costs combined with production, ad valorem and export taxes (total
LOE) increased to $9.99 per BOE in the first quarter of 2005 from
$8.72 per BOE in the year-earlier quarter, primarily attributable
to the increased export taxes in Argentina. Exploration costs of
$10.3 million for the first quarter of 2005 consisted of $6.3
million of seismic, geological and geophysical costs, $2.6 million
of dry hole costs, primarily in Yemen, and $1.4 million of
leasehold impairments. This compares to exploration expense for the
first quarter of 2004 of $1.2 million, comprised entirely of
seismic, geological and geophysical costs. Interest expense
declined 18 percent to $11.6 million in the first quarter of 2005
compared to the first quarter of 2004 primarily due to a 19 percent
reduction in average debt outstanding. Income from discontinued
operations of $10.7 million resulted from the reversal of a
contingent tax liability established in conjunction with a
prior-year asset disposition. Previously Announced Derivative
Losses The previously announced non-cash unrealized derivative
losses of $22.2 million after tax were recorded in the first
quarter of 2005 as a result of a substantial increase in oil prices
during January and February when most of the company's oil price
swap agreements were accounted for under mark-to-market accounting.
As these oil price swap agreements are settled in future periods,
the pre tax $36.4 million non-cash charge for unrealized losses
(included in non-operating income or expense) will be offset by
higher reported oil revenues in those periods than would be
reported had this non-cash charge not been recognized in the first
quarter. As of March 1, 2005, the company re-designated all of its
oil price swap agreements as cash flow hedges and resumed hedge
accounting for these agreements. Under hedge accounting, the
effective portion of the gain or loss on a derivative instrument is
reported as a part of "accumulated other comprehensive income" (a
component of stockholders' equity) and reflected as an adjustment
to oil and gas sales revenues in the same period during which the
hedged volumes are sold. 2005 Cash Flow and EBITDAX Targets
Increased The company is increasing its production target for 2005
from the previously announced 26.4 million BOE to 26.8 million BOE.
The increase is due to the company's success in returning wells
shut in by the mudslides in California to production faster than
was originally anticipated plus additional gas sales in Argentina
and Bolivia as a result of increased market demands. Due to strong
oil prices experienced during the first quarter and the strength of
the forward price curve, the company has increased its average
NYMEX price assumption for 2005 to $50 per barrel versus the
previous assumption of $40 per barrel. The company's gas price
assumption for 2005 remains unchanged at $6.50 per MMBtu. At the
increased NYMEX price assumption of $50 per barrel for oil, the
company expects the above normal contract differentials recently
experienced in Argentina to continue during 2005 and has adjusted
its expected net realized prices for oil production as a percent of
NYMEX prices during 2005 to be 71 percent versus the previous
target of 75 percent. After considering the impact of the increase
in targeted production, assumed NYMEX oil and gas prices, realized
price assumptions and the other assumptions enumerated in the
accompanying table, "Vintage Petroleum, Inc. and Subsidiaries,
Revised 2005 Targets," the company is increasing its target for
2005 cash flow (as defined in the attached table) by 11 percent to
$354 million, which is $34 million higher than the previous target
of $320 million. Similarly the revised target for 2005 EBITDAX has
been raised by 10 percent, or $46 million, to $486 million from the
previous target of $440 million. Vintage to Webcast First-Quarter
2005 Conference Call The company's first-quarter 2005
teleconference call to review first quarter results will be
broadcast live on a listen-only basis over the internet on
Thursday, May 5 at 3 p.m. Central Time. Interested parties may
access the webcast by visiting the Vintage Petroleum, Inc. website
at www.vintagepetroleum.com and selecting the microphone icon, or
at www.fulldisclosure.com and typing VPI in the ticker search box
and selecting "Go". The teleconference may be accessed by dialing
800-362-0571 and providing the call identifier "Vintage" to the
operator. The webcast and the accompanying slide presentation will
be available for replay at the company's website. An audio replay
will be available until May 10, 2005, by dialing 402-220-1123.
Forward-Looking Statements This release includes certain statements
that may be deemed to be "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements in this release, other than statements of historical
facts, that address estimates of future production, operating
costs, capital spending, EBITDAX, cash flow, NYMEX prices of oil
and gas and company realizations, the impact of oil and gas hedging
activities, and events or developments that the company expects or
believes are forward-looking statements. Although the company
believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are
not guarantees of future performance and actual results or
developments may differ materially from those in the
forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements
include oil and gas prices, exploitation and exploration successes,
actions taken and to be taken by Argentina as a result of its
political and economic conditions and changes in the estimated
impact on the company, as well as continued availability of capital
and financing, and general economic, market or business conditions
as well as other risk factors described from time to time in the
company's filings with the SEC. The company assumes no obligation
to update publicly such forward-looking statements, whether as a
result of new information, future events or otherwise. Vintage
Petroleum, Inc. is an independent energy company engaged in the
acquisition, exploitation, exploration, and development of oil and
gas properties and the marketing of natural gas and crude oil.
Company headquarters are in Tulsa, Oklahoma, and its common shares
are traded on the New York Stock Exchange under the symbol VPI. For
additional information, visit the company website at
www.vintagepetroleum.com. -0- *T VINTAGE PETROLEUM, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share amounts) (Unaudited) Three Months Ended March 31,
------------------- 2005 2004 --------- --------- REVENUES: Oil,
condensate and NGL sales $165,557 $113,431 Gas sales 49,886 35,068
Sulfur sales 738 473 Gas marketing 18,578 14,772 ---------
--------- Total revenues 234,759 163,744 --------- --------- COSTS
AND EXPENSES: Production costs 43,670 35,827 Transportation and
storage costs 3,918 1,852 Production and ad valorem taxes 6,884
5,306 Export taxes 13,336 6,206 Exploration costs 10,326 1,236 Gas
marketing 17,542 14,071 General and administrative 15,844 14,303
Stock compensation 1,506 3,762 Depreciation, depletion and
amortization 33,397 24,086 Impairment of proved oil and gas
properties - 3,915 Accretion 1,747 1,618 Other operating (income)
expense 1,017 (4,817) --------- --------- Total costs and expenses
149,187 107,365 --------- --------- OPERATING INCOME 85,572 56,379
--------- --------- NON-OPERATING (INCOME) EXPENSE: Interest
expense 11,555 14,021 Loss on early extinguishment of debt - 9,903
Losses on derivative transactions 40,716 4 Gain on disposition of
assets - (59) Foreign currency exchange loss 1,266 1,143 Other
non-operating income (431) (11) --------- --------- Net
non-operating expense 53,106 25,001 --------- --------- INCOME FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES 32,466 31,378 ---------
--------- INCOME TAX PROVISION (BENEFIT): Current 14,404 12,144
Deferred (3,120) 873 --------- --------- Total income tax provision
11,284 13,017 --------- --------- INCOME FROM CONTINUING OPERATIONS
21,182 18,361 INCOME FROM DISCONTINUED OPERATIONS 10,743 774
--------- --------- NET INCOME $31,925 $19,135 ========= =========
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Continued) (In thousands, except per share amounts)
(Unaudited) Three Months Ended March 31, --------------------- 2005
2004 ---------- ---------- BASIC INCOME PER SHARE: Income from
continuing operations $0.32 $0.29 Income from discontinued
operations 0.16 0.01 ---------- ---------- Net income $0.48 $0.30
========== ========== DILUTED INCOME PER SHARE: Income from
continuing operations $0.32 $0.28 Income from discontinued
operations 0.16 0.01 ---------- ---------- Net income $0.48 $0.29
========== ========== Weighted average common shares outstanding:
Basic 66,139 64,328 Diluted 66,888 65,030 VINTAGE PETROLEUM, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Three Months Ended March 31,
------------------- 2005 2004 --------- --------- CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $31,925 $19,135 Adjustments to
reconcile net income to net cash provided by operating activities -
Income from discontinued operations, net of tax (10,743) (774)
Depreciation, depletion and amortization 33,397 24,086 Impairment
of proved oil and gas properties - 3,915 Accretion 1,747 1,618 Dry
hole costs, impairments of unproved oil and gas properties and
other 8,266 36 Provision (benefit) for deferred income taxes
(3,120) 873 Foreign currency exchange loss 1,266 1,143 Gain on
dispositions of assets - (59) Loss on early extinguishment of debt
- 9,903 Stock compensation 1,506 3,762 Losses on derivative
activities 40,716 4 Other non-cash charges included in net income
305 372 (Increase) decrease in receivables 1,029 (2,536) Increase
(decrease) in payables and accrued liabilities (4,976) 18,512 Other
working capital changes 1,675 (5,553) --------- --------- Cash
provided by continuing operations 102,993 74,437 Cash provided by
discontinued operations - 10,013 --------- --------- Cash provided
by operating activities 102,993 84,450 --------- --------- CASH
FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - Oil and gas
properties (59,752) (44,649) Gathering systems and other (509)
(674) Payments on non-hedge derivative transactions (4,349) - Other
- (1,578) --------- --------- Cash used by investing activities -
continuing operations (64,610) (46,901) Cash used by investing
activities - discontinued operations - (7,379) --------- ---------
Cash used by investing activities (64,610) (54,280) ---------
--------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common
stock 5,739 2,446 Purchase of treasury stock - (50) Redemption of 9
3/4% Senior Subordinated Notes due 2009 - (157,313) Advances on
revolving credit facility and other borrowings 29,200 201,900
Payments on revolving credit facility and other borrowings (29,200)
(64,000) Dividends paid (3,300) (2,893) Other (1,061) 3,385
--------- --------- Cash provided (used) by financing activities
1,378 (16,525) --------- --------- EFFECT OF EXCHANGE RATE CHANGES
ON CASH (174) (186) --------- --------- NET INCREASE IN CASH AND
CASH EQUIVALENTS 39,587 13,459 CASH AND CASH EQUIVALENTS, beginning
of period 124,221 32,264 --------- --------- CASH AND CASH
EQUIVALENTS, end of period $163,808 $45,723 ========= =========
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (In thousands, except shares and per share amounts)
(Unaudited) ASSETS March 31, December 31, 2005 2004 -----------
-------------- CURRENT ASSETS: Cash and cash equivalents $163,808
$124,221 Accounts receivable - Oil and gas sales 110,311 107,870
Joint operations 8,980 12,479 Income taxes receivable 41,203 31,571
Deferred income taxes 27,077 15,364 Prepaids and other current
assets 16,494 23,648 ----------- -------------- Total current
assets 367,873 315,153 ----------- -------------- PROPERTY, PLANT
AND EQUIPMENT, at cost: Oil and gas properties, successful efforts
method 2,217,325 2,163,176 Oil and gas gathering systems and plants
23,926 23,926 Other 32,441 31,932 ----------- --------------
2,273,692 2,219,034 Less: Accumulated depreciation, depletion and
amortization 975,072 942,656 ----------- -------------- Total
property, plant and equipment, net 1,298,620 1,276,378 -----------
-------------- DEFERRED INCOME TAXES 12,118 13,200 -----------
-------------- OTHER ASSETS, net 42,493 40,161 -----------
-------------- $1,721,104 $1,644,892 =========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Revenue
payable $21,570 $33,740 Accounts payable - trade 53,367 50,775
Current income taxes payable 28,552 23,565 Derivative financial
instruments payable 96,311 27,672 Other payables and accrued
liabilities 81,071 73,748 ----------- -------------- Total current
liabilities 280,871 209,500 ----------- -------------- LONG-TERM
DEBT 549,950 549,949 ----------- -------------- DEFERRED INCOME
TAXES 69,266 80,383 ----------- -------------- LONG-TERM LIABILITY
FOR ASSET RETIREMENT OBLIGATIONS 90,445 90,707 -----------
-------------- OTHER LONG-TERM LIABILITIES 40,402 30,675
----------- -------------- STOCKHOLDERS' EQUITY: Preferred stock,
$0.01 par, 5,000,000 shares authorized, zero shares issued and
outstanding - - Common stock, $0.005 par, 160,000,000 shares
authorized, 67,244,034 and 66,541,984 shares issued and 66,713,802
and 66,012,252 shares outstanding, respectively 336 333 Capital in
excess of par value 376,465 361,120 Retained earnings 371,306
342,707 Accumulated other comprehensive loss (46,733) (13,088)
----------- ------------- 701,374 691,072 Less: Treasury stock, at
cost, 530,232 and 529,732 shares, respectively 4,319 4,319 Less:
Unamortized cost of restricted stock awards 6,885 3,075 -----------
-------------- Total stockholders' equity 690,170 683,678
----------- -------------- $1,721,104 $1,644,892 ===========
============== VINTAGE PETROLEUM, INC. AND SUBSIDIARIES SUMMARY
OPERATING DATA (Unaudited) Three Months Ended March 31,
------------------- 2005 2004 --------- --------- PRODUCTION: Oil
(MBbls) - U.S. (b) 1,464 1,513 Argentina (a) (c) 3,084 2,441
Bolivia (a) 15 20 Yemen (a) 361 - Continuing operations 4,924 3,974
Canada - 235 Total 4,924 4,209 Gas (MMcf) - U.S. (b) 7,683 6,240
Argentina (c) 2,153 2,032 Bolivia 1,331 1,719 Continuing operations
11,167 9,991 Canada - 3,938 Total 11,167 13,929 MBOE from
continuing operations 6,785 5,639 Total MBOE 6,785 6,531 (a) Oil
production (in MBbls) before the impact of changes in inventories:
Three Months Ended March 31, ------------------- 2005 2004
--------- --------- Argentina 2,824 2,475 Bolivia 13 21 Yemen 344 1
(b) U.S. production for the three months ended March 31, 2005, is
estimated to have been reduced as a result of mudslides in Ventura
County, California by 192 MBbls of oil and 238 MMcf of gas, or 232
MBOE. (c) Argentina production for the three months ended March 31,
2004, is estimated to have been reduced as the result of a labor
strike by 165 MBbls of oil and 135 MMcf of gas, or 188 MBOE. MBbls
- thousand barrels MMcf - million cubic feet MBOE - thousand
barrels of oil equivalent VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
SUMMARY OPERATING DATA (Continued) (Unaudited) Three Months Ended
March 31, --------------------- 2005 2004 ------- ------- Average
Sales Price (including impact of hedges): Oil (per Bbl) - U.S.
$35.01 (a) $27.94 Argentina 31.53 28.95 Bolivia 23.14 23.86 Yemen
46.24 - Continuing operations 33.62 (a) 28.54 Canada - 27.84 Gas
(per Mcf) - U.S. $5.99 $4.99 Argentina 0.74 0.49 Bolivia 1.69 1.70
Continuing operations 4.47 3.51 Canada - 4.68 Average Sales Price
(excluding impact of hedges): Oil (per Bbl) - U.S. $42.33 $32.51
Argentina 31.53 28.95 Bolivia 23.14 23.86 Yemen 46.24 - Continuing
operations 35.80 30.28 Canada - 30.78 Gas (per Mcf) - U.S. $5.83
$4.99 Argentina 0.74 0.49 Bolivia 1.69 1.70 Continuing operations
4.36 3.51 Canada - 4.68 (a) The average oil sales price per barrel
for the U.S. and continuing operations for the three months ended
March 31, 2005, does not reflect realized losses of $2.98 and $0.89
per barrel, respectively, which relate to settlements on economic
hedges. These losses have been reflected in non-operating expense.
Economic hedges are derivative financial instruments, intended to
hedge a specific exposure, which did not qualify or ceased to
qualify for hedge accounting under SFAS 133. VINTAGE PETROLEUM,
INC. AND SUBSIDIARIES REVISED 2005 TARGETS Previous Revised 2005
2005 Targets Targets(c) ------------ ---------- Oil production
(MMBbls): U.S. 5.8 6.0 Argentina 12.3 (e) 12.3 (e) Bolivia 0.1 0.1
Yemen 1.4 1.4 Total 19.6 19.8 Gas Production (Bcf): U.S. 28.3 28.3
Argentina 8.0 8.5 Bolivia 4.5 5.0 Total 40.8 41.8 Total MMBOE 26.4
26.8 Assumed NYMEX(a) prices: Oil $40.00 $50.00 Gas $6.50 $6.50 Net
realized price (before impact of hedging) as a percent of NYMEX(a)
- Total Company: Oil 75% 71% Gas 69% 68% DD&A per BOE (oil and
gas only) $4.65 $4.85 G&A per BOE $2.35 $2.45 Production,
transportation and storage costs per BOE $7.35 $7.25 Production, ad
valorem and export taxes per BOE 2.35 3.05 ---------- ----------
Total LOE per BOE $9.70 $10.30 Non-Acquisition Capital Spending
Budget (in millions) $250 $250 Cash Flow (before all exploration
expenses, working capital changes and current taxes associated with
property sales) (in millions) (d) $320 $354 EBITDAX (in
millions)(b)(d) $440 $486 MMBbls - million barrels Bcf - billion
cubic feet MMBOE - million barrels of oil equivalent (a) NYMEX Oil
- Average of the daily settlement price per barrel for the
near-month contract for light crude oil as quoted on the New York
Mercantile Exchange. Gas - Average of the settlement price per
MMBtu for the last three trading days for the applicable contract
month for natural gas as quoted on the New York Mercantile
Exchange. (b) EBITDAX: Earnings before interest, taxes, DD&A,
impairments, exploration expenses, cumulative effect of change in
accounting principle, loss on early extinguishment of debt,
gains/losses on property sales and other non-cash items. (c)
Targets do not reflect any future acquisitions or dispositions of
assets. Targets reflect the impact of existing hedges. See "2005
Cash Flow and EBITDAX Targets Increased" and "Forward-Looking
Statements" elsewhere in the release. (d) The targets for non-GAAP
financial measures are not reconciled to the most directly
comparable GAAP financial measure as the company does not establish
targets for such GAAP financial measures. (e) Includes sales
volumes of 400,000 barrels for an expected decrease in oil
inventories. VINTAGE PETROLEUM, INC. AND SUBSIDIARIES COMMODITY
DERIVATIVE STATUS OIL PRICE SWAPS NYMEX Reference Price Quarter
Ending Barrels $ Per Bbl --------------------- -----------
---------------- June 30, 2005 1,255,800 36.49 September 30, 2005
1,269,600 35.57 December 31, 2005 1,269,600 34.88 March 31, 2006
427,500 37.39 June 30, 2006 432,250 36.80 September 30, 2006
437,000 36.32 December 31, 2006 437,000 35.93 March 31, 2007
189,000 34.26 June 30, 2007 63,700 39.66 September 30, 2007 64,400
39.38 December 31, 2007 64,400 39.10 *T -0- *T GAS PRICE SWAPS
NYMEX Reference Price Quarter Ending MMBtu $ Per MMBtu
--------------------- ----------- ---------------- June 30, 2005
1,173,900 6.15 September 30, 2005 1,186,800 6.17 December 31, 2005
1,186,800 6.37 March 31, 2006 243,000 6.47 June 30, 2006 245,700
6.47 September 30, 2006 248,400 6.47 December 31, 2006 248,400 6.47
March 31, 2007 225,000 6.00 June 30, 2007 227,500 6.00 September
30, 2007 230,000 6.00 December 31, 2007 230,000 6.00 GAS PRICE
COLLARS MMBtu For NYMEX Floor NYMEX Cap April to December Reference
Price Reference Price 2005 $ Per MMBtu $ Per MMBtu
--------------------- -------------- ---------------- 1,375,000
6.00 6.80 2,750,000 6.00 8.02 1,375,000 6.00 8.73 2,750,000 6.00
9.21 *T VINTAGE PETROLEUM, INC. AND SUBSIDIARIES NON-GAAP FINANCIAL
MEASURES Cash flow, a non-GAAP measure, represents cash provided by
operating activities before the impact of discontinued operations,
changes in working capital items related to operating activities,
all exploration costs and further adjusted for payments on
derivative transactions no longer qualifying for hedge accounting
which are reflected as investing activities under GAAP. This
non-GAAP measure is presented because management believes it is a
useful adjunct to cash provided by operating activities under
accounting principles generally accepted in the United States
(GAAP). This non-GAAP cash flow measure is widely accepted as a
financial indicator of an oil and gas company's ability to generate
cash which is used to internally fund exploration and development
activities and to service debt and is comparable to targets
established by the company. This non-GAAP measure is not a measure
of financial performance under GAAP and should not be considered as
an alternative to cash provided (used) by operating, investing, or
financing activities as an indicator of cash flows, or as a measure
of liquidity. EBITDAX is also presented below because of its wide
acceptance by the investment community as a financial indicator of
a company's ability to internally fund exploration and development
activities and to service or incur debt. Management also views the
non-GAAP measure of EBITDAX as a useful tool for comparison of the
company's financial indicator with those of peer companies and is
comparable to targets established by the company. EBITDAX should
not be considered as an alternative to net income or cash provided
by operating activities, as defined by GAAP. The following table
reconciles cash provided by operating activities to cash flow and
EBITDAX (in thousands): -0- *T Three Months Ended March 31,
--------------------- 2005 2004 --------- --------- Cash provided
by operating activities (GAAP measure) $102,993 $84,450 Adjustments
to remove the impact of: Cash provided by discontinued operations -
(10,013) Changes in working capital items related to operating
activities 2,272 (10,423) Exploration geological and geophysical
costs 2,060 1,200 Payments on derivative transactions included in
investing activities (4,349) - --------- --------- Cash flow
(non-GAAP measure) 102,976 65,214 Current taxes 14,404 12,144
Interest expense 11,555 14,021 --------- --------- EBITDAX
(non-GAAP measure) $128,935 $91,379 ========= ========= *T
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