Burlington Resources Announces 2005 Results

Business Wire,  Jan 26, 2006  

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HOUSTON -- Burlington Resources Inc. (NYSE:BR) today announced earnings and production for the fourth quarter and full year of 2005. Estimated fourth-quarter earnings were $927 million, or $2.45 per diluted share, including after-tax charges of $0.09 per diluted share for impairment of natural gas properties in China, $0.09 per share for various compensation programs and $0.05 per share for merger and legal expenses. The fourth-quarter earnings also included an after-tax gain on the sale of Permian Basin Royalty Trust units of $0.20 per share.

This compares to prior-year fourth-quarter earnings of $400 million, or $1.02 per diluted share, which included a $0.15 per share after-tax impairment charge. Net cash provided by operating activities increased to $1,573 million during the fourth quarter from $962 million during the prior year's fourth quarter. Discretionary cash flow(1) was $1,439 million, compared to $884 million during the prior year's fourth quarter.

Full-year financial results for 2005 included estimated net income of $2.683 billion, or $7.00 per diluted share, compared to the prior year's $1.527 billion, or $3.86 per diluted share. Net cash provided by operating activities increased to $4.536 billion, from $3.436 billion in 2004. Discretionary cash flow(1) during 2005 was $4.537 billion, compared to the prior year's $3.342 billion.

Total production during the fourth quarter of 2005 was 2,887 million cubic feet of natural gas equivalent per day (MMcfed) versus 2,846 MMcfed produced during the prior year's fourth quarter. Natural gas production was 1,928 million cubic feet per day (MMcfd). Natural gas liquids production was 65.9 thousand barrels per day (Mbd). Oil production was 94.0 Mbd. For the full year, total production increased 1.6 percent on an absolute basis or 4.8 percent on a per-share basis to 2,863 MMcfed, from 2,817 MMcfed in the prior year, despite downtime from major storms in the U.S. and greater than normal industry maintenance requirements in the San Juan Basin that together reduced annual volumes by approximately 40 MMcfed.

Fourth-quarter 2005 price realizations for natural gas were $9.43 per thousand cubic feet (Mcf), compared to $5.97 per Mcf during the prior year's quarter. Natural gas liquids price realizations were $38.86 per barrel, compared to $29.04 per barrel during the prior year's quarter. Oil price realizations were $52.80 per barrel, compared to $39.28 per barrel during the prior year's quarter. Full-year 2005 price realizations for natural gas were $7.22 per Mcf, compared to $5.49 per Mcf during 2004. Natural gas liquids price realizations were $32.88 per barrel, compared to $25.38 per barrel in 2004. Oil price realizations were $50.77 per barrel, compared to $36.25 per barrel in 2004.

Capital expenditures during 2005 totaled $2.687 billion, including $328 million for acquisitions. Burlington has approved a capital budget for 2006 of $3.1 billion, excluding acquisitions.

Additional highlights during 2005 included:

--Proposed Acquisition by ConocoPhillips - On Dec. 12, 2005, ConocoPhillips and Burlington announced that they signed a definitive agreement under which ConocoPhillips would acquire Burlington for consideration that includes $46.50 in cash and 0.7214 shares of ConocoPhillips stock for each share of Burlington stock. The transaction is subject to shareholder and regulatory approval and other customary terms and conditions. It is anticipated that the transaction will be completed during the first half of 2006.

--Volumes - Burlington increased volumes in the U.S. through successful drilling and development in the East Texas Bossier and Barnett Shale plays, and the Bakken trend and Cedar Creek Anticline in the Williston Basin. Volumes in Canada benefited from a successful early ramp-up in the winter 2005 drilling season. Volumes were negatively impacted throughout 2005 by weather events, including an unusually wet winter in the San Juan Basin, hurricanes Katrina and Rita in the Gulf of Mexico, and typhoon activity in the East China Sea. Volumes from Burlington's Algerian operations were also negatively impacted as a result of certain contractual provisions related to higher oil prices.

--Reserve replacement performance - Total reserves at year-end 2005 increased to 12.5 trillion cubic feet of natural gas equivalent (Tcfe), an increase of 4 percent from 12.0 Tcfe at year-end 2004. Reserve additions from all sources totaled 1,558 billion cubic feet equivalent (Bcfe) and included 1,416 Bcfe from extensions, discoveries, other additions and revisions and 142 Bcfe from acquisitions. The company's reserve replacement ratio for 2005 was 149 percent from all sources and 136 percent excluding acquisitions, as calculated by dividing the sum of reserve revisions, extensions, discoveries, other additions and acquisitions by 2005 actual production. Burlington's reserve replacement cost was $1.68 per Mcfe, compared to a three-year average of $1.17 per Mcfe from 2002 through 2004. The increase was primarily attributable to industry service cost inflation and the acquisition of undeveloped lands. Reserve replacement cost was calculated by dividing total oil and gas capital costs, including acquisitions, of $2.614 billion, by the sum of reserve revisions, extensions, discoveries, other additions and acquisitions.