EX-99.1 3 a2117116zex-99_1.htm EX 99.1
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Exhibit 99.1

Carbon Energy Corporation Reports
Increased Net Income for the United States and Canada
for the Second Quarter of 2003

Carbon Energy Corporation (AMEX:CRB) today announced for the second quarter of 2003, a net loss of $53,000 or $.01 per share (diluted) on revenues from oil and gas sales of $5.3 million compared to a net loss of $14.1 million or $2.31 per share (diluted) on revenue from oil and gas sales of $4.4 million for the second quarter of 2002. Net cash provided by operations was $1.6 million for the second quarters of 2003 and 2002.

For the six months ended June 30, 2003, Carbon reported net income of $1.4 million or $.22 per share (diluted) on revenues from oil and gas sales of $12.3 million compared to a net loss of $14.6 million or $2.40 per share (diluted) on revenues from oil and gas sales of $8.3 million for the six months ended June 30, 2002. Net cash provided by operations was $4.1 million compared net cash used in operations of $511,000 for the six months ended June 30, 2002.

The reported net loss for the second quarter and first six months of 2002 included a non-cash charge related to a ceiling test impairment of the Company's full cost pool. Using pricing at June 30, 2002, the capitalized costs exceeded the ceiling limitation of the Company's oil and natural gas reserves in the United States and Canada by $14.0 million and $2.4 million, respectively. When product prices were adjusted for oil and natural gas hedges in place at June 30, 2002, the Company's capitalized costs exceeded the ceiling limitation in the United States and Canada by $12.0 million and $1.2 million, respectively. Accordingly, at June 30, 2002, the Company recorded a $12.0 million and $1.2 million non-cash charge in the United States and Canada, respectively, to reflect these impairments.

On March 31, 2003, Carbon entered into an Agreement and Plan of Reorganization (the Merger Agreement) with Evergreen Resources, Inc. Under the Merger Agreement, Carbon will merge with a subsidiary of Evergreen, and Carbon stockholders will receive .275 shares of Evergreen common stock for each outstanding share of Carbon common stock (and cash in lieu of any fractional shares). This ratio is prior to the two-for-one split of Evergreen common stock for shareholders of record on August 29, 2003 announced by Evergreen on July 31, 2003. As a result of the merger, Carbon will become a wholly owned subsidiary of Evergreen. The merger is intended to be a tax-free, stock-for-stock transaction. Completion of the merger, which is subject to customary conditions including approval by the stockholders of Carbon, is expected to occur in the third quarter of 2003.

United States Operations

For the second quarter 2003, natural gas production of Carbon USA averaged 5.1 million cubic feet (MMcf) of gas per day compared to 8.4 MMcf for 2002. The average realized natural gas price was $3.37 per thousand cubic feet (Mcf) for the second quarter of 2003 compared to $2.70 per Mcf for the similar period in 2002.

U.S. oil and liquids production averaged 98 barrels per day for the second quarter of 2003 compared to an average of 242 barrels per day for the second quarter of 2002. The average realized oil and liquids price was $20.85 per barrel for the second quarter of 2003 compared to $23.17 for the same period in 2002.

For the six months ended June 30, 2003, U.S. natural gas production averaged 6.4 MMcf of gas per day compared to 8.8 MMcf of gas per day for the six months ended June 30, 2002. The average realized natural gas price was $3.79 per Mcf for the six months ended June 30, 2003 compared to $2.01 per Mcf for the similar period in 2002.

For the six months ended June 30, 2003, U.S. oil and liquids production averaged 161 barrels per day compared to an average of 244 barrels per day for the six months ended June 30, 2002. The average realized oil and liquids price was $22.38 per barrel for the six months ended June 30, 2003 compared to $20.53 for the similar period in 2002.

The decrease in oil and gas production for the second quarter and six months ended June 30, 2003 was primarily due to the disposition of the Company's Kansas properties in September 2002 and the Company's Permian Basin properties in March 2003. Exclusive of these disposed assets, average production in the United States for the second quarter and first six months of 2003 increased 6% and 3%, respectively, on a Mcfe basis compared to the same time periods in 2002. These transactions completed the Company's plan to focus on its core operating areas in the Piceance and Uintah Basins.

Canadian Operations

Natural gas production of Carbon Canada increased by 17% to an average of 7.5 MMcf of gas per day for the second quarter of 2003 compared to 6.4 MMcf of gas per day for the second quarter of 2002. The average realized natural gas price was $4.66 per Mcf for the second quarter of 2003 compared to $2.76 per Mcf for the similar period in 2002.

Canadian oil and liquids production increased by 19% to an average of 166 barrels per day for the second quarter of 2003 compared to an average of 139 barrels per day for the second quarter of 2002. Carbon Canada's average realized oil and liquids price was $24.14 per barrel for the second quarter of 2003 compared to $20.04 per barrel for the similar period in 2002.

For the six months ended June 30, 2003, Canadian natural gas production increased by 19% to an average of 7.5 MMcf of gas per day compared to 6.3 MMcf of gas per day for the six months ended June 30, 2002. Carbon's average realized natural gas price was $4.80 per Mcf for the six months ended June 30, 2003 compared to $2.66 per Mcf for the similar period in 2002.

For the six months ended June 30, 2003, Canadian oil and liquids production increased by 10% to an average of 162 barrels per day compared to an average of 147 barrels per day for the six months ended June 30, 2002. The average realized oil and liquids price was $24.30 per barrel for the six months ended June 30, 2003 compared to $17.70 per barrel for the similar period in 2002.

The increase in Canadian natural gas, oil and liquids production was primarily due to successful drilling and acquisition activities in the Carbon and Rowley areas of central Alberta.

Exploration and Production Operations

Carbon is involved in the exploration and development of its extensive developed and undeveloped natural gas properties in the Rocky Mountain region of the United States and Canada, with emphasis on the Piceance and Uintah Basins of Colorado and Utah and the Carbon and Rowley areas of central Alberta.

Presently, Carbon USA's exploration and production operations are comprised of working interests in 154 (134 net) oil and gas wells, of which 138 (131 net) are operated by Carbon. In addition, Carbon USA owns approximately 173,200 net acres of oil and gas leases located in Colorado, Utah, and Montana.

Carbon Canada owns working interests in 131 (73 net) oil and natural gas wells located in Alberta and Saskatchewan, of which 59 (54 net) are operated by Carbon Canada. Carbon Canada owns approximately 69,600 net acres of oil and gas leases in Alberta and Saskatchewan.

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect the Company's operations, financial performance and other factors as discussed in the Company's filings with the Securities and Exchange Commission. Among the factors that could cause results to differ materially are those risks discussed in the Company's Form 10-K for the year ended December 31, 2002.

Carbon Energy Corporation		American Stock Exchange: CRB
Contact:	Patrick R. McDonald Chief Executive Officer 303-785-2603	Cindy L. Yarbrough Manager, Investor Relations 303-785-2631 cyarbrough@carbonenergy.com
Office Locations:
	Carbon USA 1700 Broadway, Suite 1150 Denver, CO 80290	Carbon Canada 1750, 530 8^th Avenue S.W. Calgary, AB T2P 3S8 Canada

www.carbonenergy.com

Financial and operations tables follow.

CARBON ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2003			2002			2003			2002
Revenues:
	Oil and gas sales		$	5,323		$	4,427		$	12,277		$	8,336
	Other, net			(24	)		101			(216	)		179

				5,299			4,528			12,061			8,515
Expenses:
	Oil and gas production costs			1,857			1,617			3,604			3,163
	Depreciation, depletion and amortization			1,204			1,697			2,655			3,437
	Full cost ceiling impairment			—			13,218			—			13,218
	General and administrative, net			1,471			1,161			2,984			2,490
	Interest and other, net			181			259			520			452

		Total operating expenses		4,713			17,952			9,763			22,760

	Income (loss) before income taxes			586			(13,424	)		2,298			(14,245	)
Income tax provision:
	Current			384			33			841			60
	Deferred			255			632			351			316

		Total taxes		639			665			1,192			376

	Income (loss) before cumulative effect of change in accounting principle			(53	)		(14,089	)		1,106			(14,621	)
Cumulative effect of change in accounting principle, net of tax				—			—			336			—

Net income (loss)			$	(53	)	$	(14,089	)	$	1,442		$	(14,621	)

Average number of common shares outstanding:
	Basic			6,149			6,097			6,134			6,091
	Diluted			6,149			6,097			6,431			6,091
Earnings (loss) per share—basic:
	Income (loss) before cumulative effect of change in accounting principle		$	(0.01	)	$	(2.31	)	$	0.18		$	(2.40	)
	Cumulative effect of change in accounting principle, net of tax			—			—			0.06			—

			$	(0.01	)	$	(2.31	)	$	0.24		$	(2.40	)

Earnings (loss) per share—diluted:
	Income (loss) before cumulative effect of change in accounting principle		$	(0.01	)	$	(2.31	)	$	0.17		$	(2.40	)
	Cumulative effect of change in accounting principle, net of tax			—			—			0.05			—

			$	(0.01	)	$	(2.31	)	$	0.22		$	(2.40	)

CARBON ENERGY CORPORATION

OPERATING DATA

(dollars in thousands, except prices)

			United States Three Months Ended June 30,							Canada Three Months Ended June 30,								Total Three Months Ended June 30,
			2003			2002		Change		2003			2002			Change		2003			2002		Change
			(in thousands, except prices and per Mcfe information)							(in thousands, except prices and per Mcfe information)								(in thousands, except prices and per Mcfe information)
Revenues:
	Oil and gas revenues		$	1,762		$	2,579	-32	%	$	3,561		$	1,848		93	%	$	5,323		$	4,427	20	%
	Other, net			(24	)		101	-124	%		—			—		n/a			(24	)		101	-124	%

		Total revenues	$	1,738		$	2,680	-35	%	$	3,561		$	1,848		93	%	$	5,299		$	4,528	17	%
Daily production volumes:
	Natural gas (MMcf)			5.1			8.4	-39	%		7.5			6.4		17	%		12.6			14.8	-15	%
	Oil and liquids (Bbl)			98			242	-60	%		166			139		19	%		264			381	-31	%
	Equivalent production (MMcfe 6:1)			5.7			9.9	-42	%		8.5			7.2		18	%		14.2			17.1	-17	%
Average price realized:
	Natural gas (Mcf)		$	3.37		$	2.70	25	%	$	4.66		$	2.76		69	%	$	4.14		$	2.72	52	%
	Oil and liquids (Bbl)			20.85			23.17	-10	%		24.14			20.04		20	%		22.92			22.03	4	%
Direct lifting costs			$	298		$	373	-20	%	$	645		$	382		69	%	$	943		$	755	25	%
Average direct lifting costs/Mcfe				0.57			0.41	39	%		0.83			0.58		43	%		0.73			0.49	49	%
Other production costs				915			846	8	%		(1	)		16		-106	%		914			862	6	%
General and administrative, net				867			746	16	%		604			415		46	%		1,471			1,161	27	%
Depreciation, depletion and amortization				392			1,034	-62	%		812			663		22	%		1,204			1,697	-29	%
Full cost ceiling impairment				—			12,003	n/a			—			1,215		n/a			—			13,218	n/a
Interest and other expense, net				54			207	-74	%		127			52		144	%		181			259	-30	%
Income tax provision (benefit)				—			1,089	n/a			639			(424	)	251	%		639			665	-4	%

			United States Six Months Ended June 30,							Canada Six Months Ended June 30,							Total Six Months Ended June 30,
			2003			2002		Change		2003		2002			Change		2003			2002		Change
			(in thousands, except prices and per Mcfe information)							(in thousands, except prices and per Mcfe information)							(in thousands, except prices and per Mcfe information)
Revenues:
	Oil and gas revenues		$	5,051		$	4,839	4	%	$	7,226	$	3,497		107	%	$	12,277		$	8,336	47	%
	Marketing and other, net			(216	)		179	-221	%		—		—		n/a			(216	)		179	-221	%

		Total revenues	$	4,835		$	5,018	-4	%	$	7,226	$	3,497		107	%	$	12,061		$	8,515	42	%
Daily production volumes:
	Natural gas (MMcf)			6.4			8.8	-27	%		7.5		6.3		19	%		13.9			15.1	-8	%
	Oil and liquids (Bbl)			161			244	-34	%		162		147		10	%		323			391	-17	%
	Equivalent production (MMcfe 6:1)			7.4			10.3	-28	%		8.5		7.2		18	%		15.9			17.5	-9	%
Average price realized:
	Natural gas (Mcf)		$	3.79		$	2.01	89	%	$	4.80	$	2.66		80	%	$	4.33		$	2.28	90	%
	Oil and liquids (Bbl)			22.38			20.53	9	%		24.30		17.70		37	%		23.34			19.46	20	%
Direct lifting costs			$	683		$	761	-10	%	$	1,006	$	732		37	%	$	1,689		$	1,493	13	%
Average direct lifting costs/Mcfe				0.51			0.41	-24	%		0.78		0.56		39	%		0.64			0.47	36	%
Other production costs				1,884			1,588	19	%		31		82		-62	%		1,915			1,670	15	%
General and administrative, net				1,844			1,624	14	%		1,140		866		32	%		2,984			2,490	20	%
Depreciation, depletion and amortization				1,147			2,116	-46	%		1,508		1,321		14	%		2,655			3,437	-23	%
Full cost ceiling impairment				—			12,003	n/a			—		1,215		n/a			—			13,218	n/a
Interest and other expense, net				290			370	-22	%		230		82		180	%		520			452	15	%
Income tax provision (benefit)				(90	)		746	-112	%		1,282		(370	)	446	%		1,192			376	217	%

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Carbon Energy Corporation Reports Increased Net Income for the United States and Canada for the Second Quarter of 2003
United States Operations
Canadian Operations
Exploration and Production Operations