EX-99.1 3 d10168exv99w1.txt PRESS RELEASE Exhibit 99.1 (WESTPORT RESOURCES CORPORATION LOGO) WESTPORT RESOURCES CORPORATION 1670 BROADWAY, SUITE 2800 DENVER, CO 80202 WESTPORT REPORTS FINANCIAL RESULTS AND OPERATIONS FOR THE THIRD QUARTER 2003 Denver, Colorado - November 3, 2003 - Westport Resources Corporation (NYSE: WRC) today announced increases in production, net income, EBITDAX and discretionary cash flow for the quarter and nine months ended September 30, 2003, compared to the corresponding periods in 2002. Net income available to common stockholders was approximately $24.6 million, or $0.37 per basic share ($0.36 per fully diluted share), in the third quarter of 2003, compared to net income available to common stockholders of approximately $1.0 million, or $0.02 per basic share ($0.02 per fully diluted share), in the third quarter of 2002. For the nine months ended September 30, 2003, net income available to common stockholders was approximately $57.1 million, or $0.85 per basic share ($0.84 per fully diluted share), compared to a net loss of approximately $18.5 million, or $0.35 per basic share ($0.35 per fully diluted share), for the same period in 2002. Net cash provided by operating activities for the third quarter and nine months ended September 30, 2003 was approximately $134.9 million and $331.3 million, respectively, compared to $79.0 million and $159.8 million recorded during the corresponding periods of 2002. Discretionary cash flow was approximately $108.4 million and $332.5 million, respectively, during the third quarter and nine months ended September 30, 2003, compared to $60.1 million and $167.4 million, respectively, achieved during the corresponding periods of 2002. EBITDAX for the third quarter and nine months ended September 30, 2003 was approximately $135.9 million and $388.9 million, respectively, compared to $67.4 million and $190.6 million recorded during the corresponding periods of 2002. EBITDAX and discretionary cash flow are financial measures that are calculated on the basis of methodologies other than Generally Accepted Accounting Principles ("GAAP"). EBITDAX and discretionary cash flow are presented herein because of their wide acceptance as financial indicators of a company's ability to internally generate funds for exploration, development and acquisition activities and to service or incur debt. For a definition, detailed summary and reconciliation of each measure to the most comparable GAAP measure, please refer to the section entitled "Reconciliation of Non-GAAP Financial Measures" included in this release. Donald D. Wolf, Chairman and Chief Executive Officer of Westport commented, "In the third quarter of 2003, we experienced approximately 35% production growth from the third quarter of 2002. Offshore, the first well in South Timbalier 316 commenced production at quarter's end. Onshore, the Uinta Basin properties continued to experience production growth and the lowering of operating expenses, exiting the quarter at over 80 Mmcfe/d, representing an approximate 20% increase from the beginning of the year. Production costs associated with our Uinta Basin properties year-to-date averaged $0.55 per Mcfe, approximately 20% lower than forecast." PRODUCTION AND COMMODITY PRICES Average daily gas equivalent production for the third quarter of 2003 was approximately 459 Mmcfe/d, representing a 35% increase from 340 Mmcfe/d in the third quarter of 2002. Approximately 71% of third quarter 2003 production was natural gas. For the nine months ended September 30, 2003, average daily oil and natural gas production increased 29% to approximately 449 Mmcfe/d, compared to 349 Mmcfe/d for the corresponding prior year period. During the third quarter of 2003, Westport recorded production from a reversionary interest on certain offshore Gulf of Mexico interests farmed out in 1999. Approximately 10 Mmcfe/d of production net to the Company was attributed to this reversionary interest in the third quarter of 2003. Excluding catchup volumes from these properties, Westport anticipates recording up to 3 Mmcfe/d related to this farmout in future quarters. Realized commodity prices for the third quarter of 2003 averaged approximately $28.68 per barrel of oil and $4.78 per Mcf of natural gas before the effect of hedge settlements and approximately $26.23 per barrel of oil and $4.21 per Mcf of natural gas after such effect. For the same period in 2002, realized commodity prices averaged approximately $26.06 per barrel of oil and $2.77 per Mcf of natural gas before the effect of hedge settlements and approximately $25.47 per barrel of oil and $2.74 per Mcf of natural gas after such effect. During the nine months ended September 30, 2003, realized commodity prices averaged approximately $29.11 per barrel of oil and $5.09 per Mcf of natural gas before the effect of hedge settlements and approximately $25.94 per barrel of oil and $4.32 per Mcf of natural gas after such effect. For the corresponding period in 2002, realized commodity prices averaged approximately $22.92 per barrel of oil and $2.66 per Mcf of natural gas before the effect of hedge settlements and approximately $23.03 per barrel of oil and $2.67 per Mcf of natural gas after such effect. OPERATING RESULTS In the third quarter of 2003, Westport drilled 65 development wells, 64 of which were successful, and 11 exploration wells, four of which were successful. As of September 30, 2003, 43 development wells and seven exploration wells were either being drilled or completed. The following table summarizes the third quarter 2003 drilling activity for each of Westport's Divisions:

NORTHERN DIVISION Westport's net daily production for its Northern Division averaged approximately 106 Mmcfe/d during the third quarter of 2003, representing approximately a 3% decrease from 109 Mmcfe/d reported in the second quarter of 2003. During the third quarter of 2003, the Company participated in the drilling of 20 development wells, 19 of which were successful, and five exploration wells, of which three were successful in the Northern Division. In the Williston Basin, Westport drilled seven successful development wells. The net daily production from the Basin for the quarter averaged approximately 46 Mmcfe/d, representing approximately 43% of the Northern Division's net production. During the third quarter of 2003, Westport drilled six successful coalbed methane development wells in the Powder River Basin. In the Greater Green River Basin, Westport drilled five successful development wells and participated in three successful exploration wells during the third quarter of 2003. Since the beginning of 2003, seven Moxa Arch wells have commenced production with a gross average initial production rate of approximately 1.8 Mmcfe/d. As of September 30, 2003, Westport was drilling nine Ferron coalbed methane wells located in the Uinta Basin. Gathering and saltwater disposal facilities are currently under construction and Westport expects production from these wells to commence by year-end. WESTERN DIVISION Westport's net daily production for its Western Division averaged approximately 78 Mmcfe/d during the third quarter of 2003, representing approximately a 4% increase from 75 Mmcfe/d in the second quarter of 2003. At quarter-end, production was averaging approximately 80 Mmcfe/d. During the third quarter of 2003, the Company drilled 16 development wells targeting the combined Wasatch and Upper Mesa Verde formations, and two development wells targeting the deeper Lower Mesa Verde and Mancos horizons. All of these wells were successfully completed, with 14 of the wells commencing production during the third quarter and the remaining four wells commencing production in October of this year. As of September 30, 2003, Westport was drilling or completing nine additional development wells in the Division. Westport expects to drill an additional 15 - 20 wells in and around the Natural Buttes Unit in the fourth quarter of 2003. SOUTHERN DIVISION Westport's net daily production for its Southern Division averaged approximately 154 Mmcfe/d during the third quarter of 2003 compared to 153 Mmcfe/d reported in the second quarter of 2003. During the third quarter of 2003, Westport drilled 27 development wells, all of which were successful, and four exploration wells, one of which was successful. Westport's Southeast Texas properties acquired in September 2002 are currently producing 42 Mmcfe/d compared to 28 Mmcfe/d at the time of the acquisition. During the third quarter of 2003, the Company drilled one successful and three unsuccessful exploration wells in this area. During the last twelve months, Westport has generated 25 to 30 exploratory prospect leads from participation in or acquisition of over 300 square miles of 3-D seismic data in Southeast Texas. Of these internally generated prospects, Westport has drilled and commenced production from six wells. Westport drilled 17 successful development wells in various Northern Louisiana fields during the third quarter of 2003. Net daily production in the region averaged approximately 26 Mmcfe/d, representing approximately 17% of the Southern Division's net production. Westport expects to drill 10 to 12 additional wells in this area by year-end. In the Permian Basin, Westport drilled and commenced production from four development wells during the third quarter of 2003. Net production from the Permian Basin averaged approximately 44 Mmcfe/d for the third quarter of 2003, representing approximately 28% of the Southern Division net production. During the third quarter of 2003, Westport commenced drilling its third development well in the Spaulding discovery located in McMullen County, Texas. This well was subsequently completed and the field is currently producing approximately 15 Mmcfe/d and Westport holds a 35% working interest. GULF OF MEXICO DIVISION Westport's net daily production for its Gulf of Mexico Division averaged approximately 121 Mmcfe/d during the third quarter of 2003, representing a 7% increase from 113 Mmcfe/d reported in the second quarter of 2003. Approximately 10 Mmcfe/d is attributable to the reversionary working interests discussed above on several producing fields. During the third quarter of 2003, Westport drilled two unsuccessful exploration wells in the Gulf of Mexico. During the third quarter, Westport completed the installation of platform, pipelines and facilities and commenced production from its first well in South Timbalier Block 316 with an initial production rate of approximately 6,000 Bopd and 14 Mmcf/d. The Company expects two additional wells in the block to come online in the fourth quarter. Westport operates this field with a 40% working interest. Westport commenced production in Ship Shoal Block 94 late in the second quarter of 2003 and is currently producing approximately 20 Mmcfe/d gross from this field. The Company operates the block and owns a 60% working interest. In Galveston Blocks 351/352, Westport completed the installation of additional facilities and commenced production from the second well in the third quarter of 2003. The blocks are currently producing approximately 9 Mmcfe/d. Westport owns a 67% working interest in the blocks. During the third quarter of 2003, Westport entered into a multi-prospect Gulf of Mexico exploration agreement with Chevron U.S.A. Inc. Westport expects to participate in the drilling on three of these prospects during the fourth quarter of 2003, one of which has already commenced, and an additional six wells are planned for 2004. COMMODITY PRICE RISK MANAGEMENT For the three months ended September 30, 2003, Westport recorded hedge settlement charges of approximately $22.1 million, non-hedge settlement gains of $1.3 million and non-hedge non-cash change in fair value of derivative gains of $4.8 million. For the corresponding period in 2002, Westport recorded hedge settlement charges of $1.8 million and non-hedge non-cash change in fair value of derivative charges of $0.7 million. For the nine months ended September 30, 2003, Westport recorded hedge settlement charges of approximately $86.0 million, non-hedge settlement gains of $2.0 million and non-hedge non-cash change in fair value of derivatives gains of $8.0 million. For the corresponding period in 2002, Westport recorded hedge settlement gains of $1.5 million, non-hedge settlement gains of $0.8 million and non-hedge non-cash change in fair value of derivative charges of $8.9 million. For a detailed summary of commodity price risk management contracts, please refer to the commodity price risk management table included in this release. 2003 AND 2004 GUIDANCE COMMENT The Company believes that its 2003 results will be within the guidance ranges previously disclosed and is forecasting its 2004 production will increase 6% to 10% from the levels achieved in 2003, excluding acquisitions or property sales. CONFERENCE CALL Westport will host a telephone conference call on Tuesday, November 4, 2003, at 11:00 a.m. EST to discuss financial and operational results for the third quarter of 2003. Please call 800-257-7087 (US/Canada) or 303-205-0055 (International) to be connected to the call. A digitized replay will also be available for two weeks following the live broadcast at 800-405-2236 (US/Canada) or 303-590-3000 (International) and can be accessed by using the passcode 558255#. In addition, the conference call will be available live on the Internet from the Investor Relations-Webcast Presentation tab on Westport's website at www.westportresourcescorp.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and archived on the Company's website. SUMMARY DATA (IN THOUSANDS, EXCEPT PER UNIT DATA)

SUMMARY DATA (CONTINUED) (IN THOUSANDS, EXCEPT PER UNIT DATA)

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands) EBITDAX and discretionary cash flow (as defined below) are presented herein because of their wide acceptance as financial indicators of a company's ability to internally fund exploration and development activities and to service or incur debt. EBITDAX and discretionary cash flow should not be considered as alternatives to net cash provided by operating activities and net income (loss) or income (loss) from continuing operations, as defined by GAAP. EBITDAX and discretionary cash flow should also not be considered as indicators of the Company's financial performance, as alternatives to cash flow, as measures of liquidity or as being comparable to other similarly titled measures of other companies. The following sets forth a reconciliation of net cash provided by operating activities to EBITDAX and discretionary cash flow:

(1) "EBITDAX" is a non-GAAP financial measure equal to net cash provided by operating activities, the most directly comparable GAAP financial measure, adjusted for interest expense, loss on debt retirement, changes in other assets and liabilities, exploration costs and change in fair value of derivatives and other. (2) "Discretionary cash flow" is a non-GAAP financial measure equal to net cash provided by operating activities, the most directly comparable GAAP financial measure, adjusted for loss on debt retirement, changes in other assets and liabilities, exploration costs, change in fair value of derivatives and other and current taxes. COMMODITY PRICE RISK MANAGEMENT The summary tables below provide details as of October 24, 2003 regarding the volumes and prices of all open commodity price risk management contracts, including hedge and non-hedge commitments, for the fourth quarter of 2003 and for all of 2004, 2005 and 2006.

---------- (1) For any particular New York Mercantile Exchange ("NYMEX") swap sold transaction, the counterparty is required to make a payment to Westport in the event that the NYMEX Reference Price for any settlement period is less than the swap price for such hedge, and Westport is required to make a payment to the counterparty in the event that the NYMEX Reference Price for any settlement period is greater than the swap price for such hedge. (2) For any particular Northwest Pipeline Rocky Mountain Index ("NWPRM") swap sold transaction, the counterparty is required to make a payment to Westport in the event that the NWPRM Index Price for any settlement period is less than the swap price for such hedge, and Westport is required to make a payment to the counterparty in the event that the NWPRM Index Price for any settlement period is greater than the swap price for such hedge. (3) For any particular Colorado Interstate Gas ("CIG") swap sold transaction, the counterparty is required to make a payment to Westport in the event that the CIG Index Price for any settlement period is less than the swap price for such hedge, and Westport is required to make a payment to the counterparty in the event that the CIG Index Price for any settlement period is greater than the swap price for such hedge. (4) For any particular NYMEX collar transaction, the counterparty is required to make a payment to Westport if the average NYMEX Reference Price for the reference period is below the floor price for such transaction, and Westport is required to make payment to the counterparty if the average NYMEX Reference Price is above the ceiling price of such transaction. (5) For any particular NWPRM collar transaction, the counterparty is required to make a payment to Westport if the average NWPRM Index Price for the reference period is below the floor price for such transaction, and Westport is required to make payment to the counterparty if the average NWPRM Index Price is above the ceiling price of such transaction. (6) Three way collars are settled as described in footnote (4) above, with the following exception: if the NYMEX Reference Price falls below the three-way floor price, the average floor price is reduced by the amount the NYMEX Reference Price is below the three-way floor price. For example, if the NYMEX Reference Price is $18.00 per bbl during the term of the 2003 three-way collars, then the average floor price would be $22.27 per bbl. (7) For any particular basis swap versus NYMEX, the counterparty is required to make a payment to Westport in the event that the difference between the NYMEX Reference Price and the applicable published index (NWPRM or CIG) for any settlement period is greater than the swap differential price for such hedge, and Westport is required to make a payment to the counterparty in the event that the difference between the NYMEX Reference Price and the applicable published index (NWPRM or CIG) for any settlement period is less than the swap differential price for such hedge. (8) These basis swaps are based on the differences in two indices not versus NYMEX. The counterparty is required to make a payment to Westport in the event that CIG plus the swap differential price exceeds NWPRM for any settlement period, and Westport is required to make a payment to the counterparty in the event that CIG plus the swap differential price is less than NWPRM for any settlement period. WESTPORT RESOURCES CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS

LIABILITIES Current Liabilities Accounts payable ............................................................ $ 50,239 $ 51,158 Accrued expenses ............................................................ 55,219 39,209 Ad valorem taxes payable .................................................... 19,431 8,988 Derivative liabilities ...................................................... 63,389 56,156 Income taxes payable ........................................................ 11,077 86 Current asset retirement obligation ......................................... 7,968 -- --------------- --------------- Total current liabilities ................................................. 207,323 155,597 Long-term debt .................................................................. 726,469 799,358 Deferred income taxes ........................................................... 133,997 124,530 Long term derivative liabilities ................................................ 35,360 21,305 Long term asset retirement obligation ........................................... 50,812 745 --------------- --------------- Total liabilities ......................................................... 1,153,961 1,101,535 --------------- --------------- Stockholders' equity: 6 1/2% convertible preferred stock, $.01 par value; 10,000,000 shares authorized; 2,930,000 issued and outstanding at September 30, 2003 and December 31, 2002, respectively ........................................... 29 29 Common stock, $0.01 par value; 100,000,000 authorized; 67,306,590 and 66,823,830 shares issued and outstanding at September 30, 2003 and December 31, 2002, respectively 673 668 Additional paid-in capital .................................................. 1,157,661 1,150,345 Treasury stock-at cost; 38,326 and 33,617 shares at September 30, 2003 and December 31, 2002, respectively .......................................... (576) (469) Retained earnings ........................................................... 57,101 2 Accumulated other comprehensive income Deferred hedge loss, net ................................................. (41,023) (18,408) Cumulative translation adjustment ........................................ (161) (161) --------------- --------------- Total stockholders' equity ............................................... 1,173,704 1,132,006 --------------- --------------- Total liabilities and stockholders' equity .................................. $ 2,327,665 $ 2,233,541 =============== ===============

WESTPORT RESOURCES CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

WESTPORT RESOURCES CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS

Westport is an independent energy company engaged in oil and natural gas exploitation, acquisition and exploration activities primarily in the Rocky Mountains, Permian Basin/Mid-Continent, the Gulf Coast and offshore Gulf of Mexico. Contact information: Lon McCain or Jonathan Bloomfield at (303) 573-5404. FORWARD - LOOKING STATEMENTS This 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. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact, such as anticipated dates of first production, estimated reserves, estimated expenses, estimated prices and basis differentials, cash flow and capital expenditures, projected drilling and development activity, projected production, and projected property sales. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. There are many factors that could cause forward-looking statements not to be correct, including the risks and uncertainties inherent in the Company's business and other cautionary statements set forth in the filings of the Company with the Securities and Exchange Commission, including without limitation the Company's most recent Annual Report on Form 10-K. These risks include, among others, oil and gas price volatility, availability of services and supplies, operating hazards and mechanical failures, uncertainties in the estimates of proved reserves and in projections of future rates of production and timing of development expenditures, environmental risks, regulatory changes, general economic conditions, risks of assimilating acquired properties and the actions or inactions of third-party operators. The Company does not undertake any obligation to update any forward-looking statements contained in this release.

WESTPORT RESOURCES CORP /NV/ 8-K