The Meridian Resource Corp. Announces Increased Revenues, Earnings and Cash Flows for Third Quarter 2004 and Provides Operations Update

Business Wire, Nov 10, 2004

HOUSTON -- The Meridian Resource Corporation (NYSE:TMR) today announced net income applicable to common shareholders of $7.8 million, or $0.09 per diluted common share, for the third quarter of 2004, compared to net income applicable to common shareholders of $3.0 million, or $0.05 per diluted common share for the third quarter of 2003. For the nine months ended September 30, 2004, the Company reported net income applicable to common shareholders of $20.8 million, or $0.27 per diluted common share, compared to net income applicable to common shareholders of $6.6 million, or $0.12 per diluted common share, for the corresponding period of 2003.

Discretionary cash flow totaled $43.7 million for the three months ended September 30, 2004, compared to $30.5 million for the corresponding period of 2003. For the nine months ended September 30, 2004, discretionary cash flow increased 67% to $118.7 million, compared to $71.0 million for the nine month period ended September 30, 2003.

Average daily production volumes increased by 17%, to 105.1 million cubic feet of gas equivalent ("Mmcfe") for the third quarter of 2004 from 90.2 Mmcfe for the third quarter of 2003. Oil and natural gas volumes for the third quarter of 2004 totaled 9,671 Mmcfe compared to 8,302 for the comparable quarter of 2003. Beginning in mid-August 2004, the Company placed five new wells on production at varying times in its Biloxi Marshlands ("BML") project area. The increase in production from the new wells was partially offset by storm related shut-ins due to the impending arrival of hurricane Ivan. For the nine months ended September 30, 2004, oil and natural gas production totaled 27,269 Mmcfe, or 99.5 Mmcfe per day, compared to 19,899 Mmcfe, or 72.9 Mmcfe per day, for the corresponding period of 2003.

For the three months ended September 30, 2004 oil and gas revenues totaled $53.0 million, or $5.48 per thousand cubic feet of gas equivalent ("Mcfe"), an increase of 35% compared to oil and gas revenues of $39.1 million, or $4.71 per Mcfe, for the corresponding period of 2003. Oil and gas revenues totaled $149.2 million, or $5.47 per Mcfe, for the nine months ended September 30, 2004, an increase of 53%, compared to $97.7 million, or $4.91 per Mcfe, for the corresponding period of 2003. The increase in production, revenues, earnings and discretionary cash flow between the three month and nine month periods ended September 30, 2004 and 2003 were a result of the Company's drilling successes in the Biloxi Marshlands ("BML") project area and the Weeks Island field, coupled with successful workover operations in the Company's Ramos and Weeks Island fields.

For the nine months ended September 30, 2004, lease operating expenses on a Mcfe basis declined by 20%, to $0.32 per Mcfe from $0.40 for the corresponding period of 2003. Lease operating expenses totaled $8.8 million for the nine months ended September 30, 2004 compared to $8.0 million for the same period of 2003. For the three months ended September 30, 2004, lease operating expenses totaled $3.1 million compared to $2.7 million for the same period of 2003. The increase between each of the periods is primarily a result of the addition of successful wells primarily in the BML project area and the Weeks Island field. Historically, the BML wells have exhibited high flow rates that have contributed to the decrease in lease operating expenses on a Mcfe basis. In total, production taxes increased by $1.6 million, or 30%, between the comparable nine month periods because of production increases. On a per unit basis, production taxes declined by 4%, from $0.24 per Mcfe for the three months ending September 30, 2003 to $0.23 for the three months ended September 2004, partially reflecting a shift in the mix between oil and gas production coupled with a refund of Louisiana severance taxes for prior periods.

Depletion and depreciation increased by $5.6 million, or 26%, to $28.4 million for the three month period ended September 30, 2004 from $22.5 million for the corresponding period of 2003. For the nine months ended September 30, 2004 depreciation and depletion totaled $77.4 million compared to $52.3 million for the comparable period of 2003. The increase in depletion and depreciation between the comparable periods was primarily a result of a 16% and 37% increase in production between the respective three and nine month periods. On a per Mcfe basis, depletion and depreciation totaled $2.98 and $2.85 for the three and nine month periods ended September 30, 2004, respectively, compared to $2.71 and $2.63 for the three and nine month periods ended September 30, 2003, respectively.

General and administrative expenses decreased on a per Mcfe basis to $0.39 per Mcfe for the nine months ending September 30, 2004, compared to $0.44 per Mcfe for the comparable 2003 period. In total general and administrative expenses increased for the three and nine month periods ending September 30, 2004 due to an increase in professional fees and higher volume activity during 2004.