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Proc-Type: 2001,MIC-CLEAR
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Filed by Equity Oil Company Subject Company: Equity Oil Company On February 25, 2004, Equity Oil Company distributed the following
press release. NEWS RELEASE RELEASED AT 7:00 AM MST February 25, 2004 CONTACTS: Paul Dougan, President Equity Oil Reports Fourth Quarter and Year-End 2003 Results SALT LAKE CITY (PR Newswire) February 25, 2004 Equity Oil Company
(NASDAQ NM: EQTY) today reported fourth quarter net income of $560,000 or five cents per
diluted common share. This compares to fourth-quarter 2002 net income of $97,140, or one
cent per diluted common share. Total net revenues for the fourth quarter were $7.5 million
compared to total net revenues of $7.1 million for the same period last year. For the full year, Equity reported net income of $2.1 million, or 17 cents per diluted
common share. This compares to 2002 net income of $1.0 million, or eight cents per diluted
share. This represents the fifth consecutive year Equity reported positive net income.
Cash flow from operations was $11.5 million for 2003, a 20% increase compared to $9.6
million in 2002. Total weighted average shares outstanding on a fully diluted basis for
2003 were 12.4 million, unchanged from 2002. Total net revenues for 2003 were $27.8
million versus 2002s total net revenues of $23.7 million. Equity produced 565,000 barrels of oil and 3,253 MMcf of natural gas in 2003 as
compared to 634,000 barrels of oil and 4,198 MMcf of natural gas in 2002. Year end 2003
reserves as prepared by Ryder Scott Company, L.P. are 9.9 million barrels of oil and
28,081 MMcf of natural gas or 14.6 million barrels of oil equivalent. This compares to
10.5 million barrels of oil and 36,588 MMcf of natural gas reserves at year end 2002, or
16.6 million barrels of oil equivalent. The after-tax discounted present value of
standardized measure as required by the Securities and Exchange Commission, using year end
prices and a discount factor of 10% is $95.7 million at year end 2003 compared to $105.3
million at year end 2002. The pre-tax discounted present value of those reserves using the
same criteria is $131.9 million, down from $146.3 million at year end 2002. On February 2, 2004, Equity Oil Company announced the signing of a definitive merger
agreement with Whiting Petroleum Corporation (NYSE: WLL). The merger agreement
provides for a stock-for-stock exchange under which Equity shareholders will receive 0.185
shares of Whiting stock for each share of Equity. The merger will result in Whiting and
Equity shareholders owning approximately 88.4% and 11.6% of the combined company,
respectively. The Boards of Directors of both companies have unanimously approved the
merger, which is expected to be treated as a tax-free reorganization. The merger is
subject to the approval of shareholders owning two-thirds of the outstanding Equity shares
and other standard closing conditions. Equity intends to call a special meeting of its
shareholders during the second quarter of 2004 to consider and vote on the merger. The
parties expect to complete the merger as soon as practical following approval by the
Equity shareholders. About Equity Oil Company Equity Oil Companys oil and gas exploration operations are focused in California,
Colorado, North Dakota and Wyoming. Equitys headquarters are in Salt Lake City, Utah
with technical and operating offices in Denver, Colorado and Cody, Wyoming. More
information about Equity is available on the internet at www.equity-oil.com. Forward-Looking Statement Certain matters discussed in this press release are "forward-looking
statements" intended to qualify for the safe harbors from liability established by
the Private Securities Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because the context of the statement will include words
such as "believes," "anticipates" or "expects," or words of
similar import. The forward looking statements reflect Equitys current views with
respect to future events and financial performance. Such forward-looking statements are
subject to certain risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. A discussion of important factors that could
cause actual results to differ materially from those projected is included in the
companys periodic reports filed with the Securities and Exchange Commission (the
"SEC"). Such factors include, among others, risks inherent in exploration and
development activities generally, mechanical risks, risks that reserve estimates or that
the assumptions underlying them are inaccurate and uncertainties regarding future gas and
oil prices and the availability of capital. These risks and uncertainties also include
Whiting's and Equity's ability to complete the merger in a timely manner or at all, the
failure of Equity's shareholders to approve the merger, the risk that the business of
Equity will not be integrated successfully into Whiting, the risk that the cost savings
from the merger may not be fully realized or may take longer to realize than expected, and
other factors discussed in the filings of Whiting and Equity with the SEC. Investors
should consider these factors carefully in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such forward-looking statements. Information Regarding Proposed Acquisition by Whiting Petroleum This press release may be deemed to be solicitation material in respect of the proposed
acquisition of Equity by Whiting. In connection with the proposed transaction, a
registration statement on Form S-4 and other relevant documents will be filed with the
SEC. Shareholders of Equity are encouraged to read the registration statement and any
other relevant documents filed with the SEC, including the proxy statement/prospectus that
will be part of the registration statement, because they will contain important
information about the proposed transaction. After these documents are filed with the SEC,
investors and security holders will be able to obtain them free of charge at the
SECs website, www.sec.gov, or by requesting them from Whiting Petroleum Corporation,
Attn: Corporate Secretary, 1700 Broadway, Suite 2300, Denver, Colorado 80290-2300 or from
Equity Oil Company, Attn.: Corporate Secretary, 10 West Broadway, Suite 806, Salt Lake
City, Utah 84110-0959. Whiting and Equity and their respective directors, executive officers and other
employees may be deemed to be participants in the solicitation of proxies in respect of
the proposed transaction. Information regarding Whitings directors and executive
officers is available in its prospectus, dated November 19, 2003, filed with the SEC, and
information regarding Equitys directors and executive officers is available in its
proxy statement filed with the SEC on April 14, 2003. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the proxy
statement/prospectus and other relevant materials to be filed with the SEC when they
become available. Financial Tables follow INCOME STATEMENT DATA (In thousands, except per share data)
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Commission File Number: 000-00610
Dave Donegan, Vice President
(801) 521-3515
Quarter Ended December 31, | Year Ended December 31, | ||||||||
2003 | 2002 | 2003 | 2002 | ||||||
Revenues | |||||||||
Oil and gas sales | $7,426 |
$7,182 |
$30,227 |
$23,679 |
|||||
Gain (loss) from hedging
activities Other income |
(65) 149 |
(222) 140 |
(2,765) 363 |
(305) 310 |
|||||
Total revenues | 7,510 |
7,100 |
27,825 |
23,684 |
|||||
Expenses | |||||||||
Leasehold operating costs | 2,051 |
2,678 |
8,592 |
8,332 |
|||||
Depreciation, depletion & amortization | 2,438 |
2,274 |
8,114 |
7,675 |
|||||
Impairment of proved oil and gas properties | - |
54 |
- |
54 |
|||||
Equity loss in Symskaya Exploration, Inc. | 57 |
179 |
57 |
179 |
|||||
Leasehold abandonments | 32 |
6 |
32 |
6 |
|||||
3-D seismic | 7 |
200 |
25 |
215 |
|||||
Exploration | 49 |
- |
449 |
908 |
|||||
General and administrative | 608 |
666 |
3,097 |
2,410 |
|||||
Production and exploration overhead | 305 |
458 |
1,605 |
1,424 |
|||||
Accretion expense | 15 |
- |
219 |
- |
|||||
Interest | 255 |
371 |
1,097 |
1,176 |
|||||
Total expenses | 5,817 |
6,886 |
23,287 |
22,379 |
|||||
Income from continuing operations before income taxes | 1,693 |
214 |
4,538 |
1,305 |
|||||
Provision for income taxes | 1,133 |
165 |
2,106 |
658 |
|||||
Income from continuing operations | 560 |
49 |
2,432 |
647 |
|||||
Discontinued operations | |||||||||
Income from operations of properties sold, net of provision for income taxes | - |
48 |
90 |
354 |
|||||
Gain on sale of properties, net of provision for income taxes | - |
- |
655 |
- |
|||||
Income before cumulative effect of accounting change | 560 |
97 |
3,177 |
1,001 |
|||||
Cumulative effect of change in accounting, net of benefit from income taxes | - |
- |
(1,062) |
- |
|||||
Net income | $560 |
$97 |
$2,115 |
$1,001 |
|||||
SHARE INFORMATION | |||||||||
Income from continuing operations | $0.05 |
- |
$0.21 |
$0.05 |
|||||
Income from discontinued operations | - |
0.01 |
0.06 |
0.03 |
|||||
Income before cumulative effect of accounting change | 0.05 |
0.01 |
0.27 |
0.08 |
|||||
Cumulative effect of change in accounting | - |
- |
(0.09) |
- |
|||||
Basic net income per common share | $0.05 |
$0.01 |
$0.18 |
$0.08 |
|||||
Basic weighted average shares outstanding | 12,014 |
12,396 |
12,014 |
12,300 |
|||||
Diluted weighted average shares outstanding | 12,311 |
12,554 |
12,403 |
12,430 |
|||||
Diluted net income per share | $0.04 |
$0.01 |
$0.17 |
$0.08 |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) |
||||||||||
Dec. 31, |
Dec. 31, |
|||||||||
2003 |
2002 |
|||||||||
Assets | ||||||||||
Current assets | $10,062 |
$7,043 |
||||||||
Property and equipment, net | 66,146 |
69,026 |
||||||||
Other assets | 499 |
731 |
||||||||
Total assets | $76,707 |
$76,800 |
||||||||
Liabilities and Stockholders Equity | ||||||||||
Current liabilities Asset Retirement Obligation |
$2,803 3,242 |
$4,652 -- |
||||||||
Long-term debt | 29,000 |
34,500 |
||||||||
Deferred income taxes | 5,657 |
4,398 |
||||||||
Stockholders equity | 36,005 |
33,250 |
||||||||
Total liabilities and stockholders equity | $76,707 |
$76,800 |
||||||||
Long-term debt to total assets | 38% |
45% |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Quarter Ended December 31, | Year Ended December 31, | ||||||||
2003 | 2002 | 2003 | 2002 | ||||||
Net income | $560 |
$97 |
$2,115 |
$1,001 |
|||||
Depreciation, depletion and amortization | 2,438 |
2,274 |
8,113 |
7,674 |
|||||
Accretion expense | 15 |
- |
219 |
- |
|||||
Impairment of proved oil and gas properties | - |
54 |
- |
54 |
|||||
Property abandonments | 115 |
- |
115 |
- |
|||||
Equity loss in Symskaya Exploration, Inc. | 57 |
179 |
57 |
179 |
|||||
Gain (loss) on sale of oil and gas properties | - |
14 |
(1,264) |
18 |
|||||
Cumulative effect of change in accounting | - |
- |
1,062 |
- |
|||||
Change in other assets | (183) |
(72) |
(5) |
7 |
|||||
Deferred income tax expense | 672 |
66 |
1,500 |
580 |
|||||
Change in asset retirement obligations | (176) |
- |
(176) |
- |
|||||
Changes in working capital | (268) |
2,066 |
(193) |
46 |
|||||
Net cash provided by operating activities | 3,230 |
4,678 |
11,543 |
9,559 |
|||||
Net cash used in investing activities | (990) |
(1,756) |
(2,389) |
(36,070) |
|||||
Net cash provided (used in) financing activities | 7 |
(2,146) |
(5,469) |
26,898 |
|||||
Net increase (decrease) in cash | 2,247 |
776 |
3,685 |
387 |
|||||
Cash and cash equivalents at beginning of period | 2,786 |
572 |
1,348 |
961 |
|||||
Cash and cash equivalents at end of period | $5,033 |
$1,348 |
$5,033 |
$1,348 |
Equity Oil Company
(and Consolidated Subsidiaries)
PRODUCTION, PRICE DATA AND UNIT ANALYSIS
Quarter Ended December 31, | Year Ended December 31, | ||||||||
2003 | 2002 | 2003 | 2002 | ||||||
Oil (MBbL) | 138 |
157 |
565 |
637 |
|||||
Gas (MMcf) | 712 |
1,198 |
3,253 |
4,198 |
|||||
Total production (MBOE) | 257 |
357 |
1,107 |
1,334 |
|||||
Average oil price/BBL | $32.03 |
$22.87 |
$26.15 |
$21.97 |
|||||
Average gas price/MCF | $4.22 |
$3.08 |
$3.73 |
$2.48 |
|||||
Average price/BOE | $28.90 |
$20.38 |
$24.80 |
$18.25 |
|||||
Unit Margin Analysis, per BOE | |||||||||
Total revenues | $29.22 |
$20.77 |
$25.13 |
$18.48 |
|||||
Lease operating costs | (7.98) |
(7.74) |
(7.76) |
(6.44) |
|||||
G&A | (3.06) |
(1.86) |
(2.79) |
(1.81) |
|||||
Gross Profit | 18.18 |
11.17 |
14.58 |
10.23 |
|||||
Interest expense | $.99 |
$1.04 |
0.99 |
0.88 |
|||||
Cash flow | $17.19 |
$10.13 |
$13.59 |
$9.35 |
|||||
DD&A | $8.80 |
$6.37 |
$7.33 |
$5.75 |
Year End 2003 Proved Oil & Gas Reserves
United States |
Canada |
Total |
|||||||||
Oil |
Gas |
Oil |
Gas |
Oil |
Gas |
||||||
December 31, 2003: | |||||||||||
Proved developed and undeveloped reserves: | |||||||||||
Beginning of year | 8,968 |
33,796 |
1,581 |
2,792 |
10,549 | 36,588 |
|||||
Revisions of previous estimates** | (985) | (4,513) | (354) | (1,101) | (1,339) | (5,614) | |||||
Extensions and discoveries | 1,598 | 1,383 | - | - | 1,598 | 1,383 | |||||
Sales of minerals in place | - | - | (335) | (1,023) | (335) | (1,023) | |||||
Improved recovery | 36 | - | - | - | 36 | - | |||||
Production | (494) | (3,170) | (71) | (83) | (565) | (3,253) | |||||
End of year | 9,123 | 27,496 | 821 | 585 | 9,944 | 28,081 | |||||
Proved developed reserves: | |||||||||||
Beginning of year | 7,558 | 29,173 | 1,483 | 6,974 | 9,041 | 31,891 | |||||
End of year | 6,910 | 21,738 | 708 | 7,558 | 7,619 | 22,271 |
** Negative oil revisions were largely attributable to increased operating expense reducing the economic life of proven producing properties as well as an increase of the forecast decline rate in the Companys remaining Canadian asset. The negative gas revisions were chiefly associated with pre-mature water encroachment in several wells in our Yolo County property in the Sacramento Basin of California. In addition, one of three undeveloped locations drilled in the Todhunters Lake field in Yolo County found poor reservoir quality resulting in a downward revision.
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