News Center

07-28-2005

HOUSTON - July 28, 2005 Burlington Resources Inc. (NYSE:BR - News) today reported a fourth consecutive quarterly earnings record, with estimated income of $537 million during the second quarter of 2005, compared to $379 million during the same quarter of 2004. Burlington earned $1.40 per diluted share, up 46 percent from the $0.96 per diluted share earned during the prior year's quarter. The increase was attributable to higher commodity prices, growth in production and accelerated share repurchases.

Records were achieved in a number of key financial performance measures. Net cash provided by operating activities increased to $974 million from $802 million, and discretionary cash flow(1) increased to $977 million from $825 million during the prior year's quarter. Burlington also achieved an annualized return on capital employed(1) of 26.4 percent during the current year's second quarter.

Total production increased 4 percent, or 8 percent on a per-share basis, to 2,879 million cubic feet of natural gas equivalent per day (MMcfed), an all-time quarterly volume record, compared to 2,758 MMcfed during the second quarter of 2004. Higher production was achieved from Canada, while in the U.S. increases came from the Bossier, Cedar Creek Anticline, Bakken and South Louisiana programs. Volumes also increased from Algeria's MLN Field. Production decreased from the San Juan Basin due to unscheduled maintenance performed by pipeline companies serving the area and the lingering impact of unfavorable weather earlier in the year.

"Burlington continues delivering what we believe is consistent and peer-leading performance during this exciting but challenging era for our industry," said Bobby S. Shackouls, chairman, president and chief executive officer. "Our asset base of large, sustainable drilling programs is enabling us to achieve production growth. At the same time we are working to contain rising service costs, increasing our capital program to fund new opportunities for growth and executing a share repurchase and dividend program that is returning substantial value to our stockholders."

In addition, Burlington announced the approval by its board of directors of a 20 percent increase in planned 2005 oil and natural gas capital investments to a total of $2.4 billion, excluding acquisitions. The incremental capital will fund additional exploration and development drilling throughout the company as well as increased lease purchases in North America. It will also help meet rising industry service costs.

The company further disclosed that it has recently completed or has pending contracts for three acquisitions totaling approximately $200 million. All are in existing core areas of operations. The transactions together with Burlington's lease purchases during the year's first half represent an addition of more than 300,000 net acres of land with estimated net risked drilling inventory of approximately 0.8 trillion cubic feet of natural gas equivalent (Tcfe). At year-end 2004, Burlington's total net risked drilling inventory stood at 7 Tcfe.

During the quarter, Burlington increased the rate of its stock repurchases by more than 25 percent to about five million shares for approximately $258 million, or $50.88 per share. The number of shares outstanding decreased during the quarter from approximately 385 million shares to 381 million. At the end of the quarter, approximately $508 million remained in the current share repurchase authorization.

Natural gas production during the second quarter was 1,909 million cubic feet per day (MMcfd), compared to 1,899 MMcfd during the prior year's quarter. Increases of 13 percent were achieved in both natural gas liquids (NGLs) production, which averaged 66.6 thousand barrels per day (Mbd), up from 59.0 Mbd, and crude oil production, which averaged 95.1 Mbd, up from 84.2 Mbd during the prior year's quarter.

Price realizations for natural gas increased to $6.28 per Mcf, from $5.40 per Mcf during the same quarter in 2004. Price realizations for NGLs increased to $29.62 per barrel, from $23.81 per barrel during the prior year's quarter. Crude oil price realizations increased to $46.71 per barrel, from $34.62 per barrel during the prior year's quarter.

2005 Outlook

Production -- Burlington has slightly narrowed its production guidance range for full-year 2005, with total production of 2,820 to 2,985 MMcfed expected. This guidance range assumes no volumes from the Rivers facility.

 
 
North American Natural Gas Hedges -- As of June 30, 2005, Burlington had hedged the following volumes of future North American natural gas production using costless price collars or fixed price contracts. All prices are weighted averages adjusted to a NYMEX equivalent price.
 
 
Additional information on North American natural gas hedging subsequent to the second quarter of 2006, as well as on natural gas hedging in the U.K. and crude oil hedging, is available on Burlington's Web site at www.br-inc.com/docs/hedge.pdf.
Other 2005 Financial Parameters - Estimated expenses for the fourth quarter and full year are:
 
 

In addition, Burlington anticipates an effective income tax rate of 33 to 37 percent for the full year of 2005. The breakdown between current and deferred taxes for the year could vary widely depending on commodity prices and other factors.

A financial statement, as well as statistics and non-GAAP (generally accepted accounting principles) reconciliation tables, accompany this release.

Burlington will webcast a conference call to discuss its third-quarter earnings and results, as well as future operations, on Friday, October 28 at 8 a.m. Central time. All materials and information related to the conference call, this press release and a package of financial and statistical information may be accessed from the Burlington Resources Web site home page (www.br-inc.com) by selecting the link entitled "Q3 2005 Conference Call Info" and then selecting the resource desired.

Burlington Resources ranks among the world's largest independent oil and gas companies, and holds one of the industry's leading positions in North American natural gas reserves and production. Headquartered in Houston, Texas, the company conducts exploration, production and development operations in the U.S., Canada, the United Kingdom, Africa, China and South America. For additional information see the Burlington Resources Web site at www.br-inc.com.

(1) See the accompanying tables for a reconciliation of GAAP and non-GAAP measures utilized in calculating discretionary cash flow and return on capital employed, as well as statements of why management believes these measures are useful information for investors.

FORWARD-LOOKING STATEMENTS

This press release may contain projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any such projections or statements reflect the company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and actual results could differ materially from those projected. A discussion of important factors that could cause actual results to differ materially from those projected is included in the company's periodic reports filed with the Securities and Exchange Commission.

 
Burlington Resources Inc. Reconciliation of GAAP to Non-GAAP Measure (a) Discretionary Cash Flow ($ in Millions) Below is a reconciliation of net cash provided by operating activities to discretionary cash flow.
 

            

(a) GAAP - Generally Accepted Accounting Principles
Management believes that the Non-GAAP measure of discretionary cash flow is useful information for investors because it is used internally and accepted by the investment community as a means of measuring the company's ability to fund its capital and dividend programs and to service its debt. Discretionary cash flow is also useful because it is widely used by professional research analysts in valuing, comparing ratings and providing investment recommendations of companies in the oil and gas exploration and production industry. Many investors use this published research in making investment decisions.
Burlington Resources Inc. Reconciliation of GAAP to Non-GAAP Measure (a) Net Debt to Total Capital Ratio ($ in Millions)
Below is a reconciliation of total debt to total capital ratio to net debt to total capital ratio.
 
 
(a) GAAP - Generally Accepted Accounting Principles
Total debt to total capital ratio is calculated by dividing total debt by total debt plus stockholders' equity. Management believes that total debt to total capital ratio is useful to investors because it is helpful in determining a company's leverage. Management also believes that since it has the ability to and may elect to use a portion of cash and cash equivalents to retire debt or incur additional expenditures without increasing debt, it is appropriate to apply cash and cash equivalents to debt in calculating net debt to total capital (Non-GAAP).
Burlington Resources Inc. Return on Capital Employed (ROCE) Annualized Reconciliation of GAAP to Non-GAAP Measure ($ in Millions)
 
 
ROCE is defined as net income plus after-tax interest expense divided by average capital (total debt plus stockholders' equity). Above is a reconciliation of ROCE calculated using net debt (total debt less cash and cash equivalents) in the average capital calculation (considered Non-GAAP) compared to ROCE calculated using total debt in average capital calculation.
Management believes that ROCE is a useful measure because it indicates the return on all capital, which includes equity and debt, employed in the business. Management believes that since it has the ability to and may elect to use a portion of the cash and cash equivalents to retire debt, the debt balance has been reduced for cash and cash equivalents. Management also believes that ROCE is an additional measure of efficiency when considered in conjunction with return on equity which measures the return on only the shareholders' equity component of total capital employed.
(Note: interest expense is taxed based on the company's effective tax rate.)
BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
 
This statement should be read in conjunction with the attached press release.
BURLINGTON RESOURCES INC. SALES VOLUMES AND PRICES
Acrobat Reader
Some of these documents are in Acrobat PDF format. If you do not have Adobe Acrobat you can download that here.