| TEXOIL, INC. NEWS RELEASE | FOR IMEDIATE RELEASE |
| COMPANY CONTACT Frank A. Lodzinski President | 110 Cypress Station Drive Suite No. 220 Houston, Texas 77090 (281) 537-9920 (281) 537-8324 - Fax |
HOUSTON, TEXAS,AUGUST 5, 1999 - Texoil, Inc., (NASDAQ Small Cap: "TXLID", Boston Stock Exchange "TXL") today announced financial and operating results for the second quarter 1999 and the six month period ended June 30, 1999. Oil and gas and related revenues increased 91% for the six months ended June 30, 1999, over the comparable period for 1998, to $9.2 million. Cash flow (EBITDA) increased 209% for the six months ended June 30, 1999, over the prior year period, to $4.6 million. The Company reported net income for the six month period of $870,000.
Second Quarter 1999
In the second quarter of 1999, Texoil, Inc., realized net income of $697,000 on revenues of $5.1 million compared to a net loss of $876,000 for the second quarter of 1998. During the second quarter of 1999, the Company produced 350,000 barrels of oil equivalent (BOE), up 97% from the second quarter of 1998. Gas production increased to 1,051 MMcf, up more than 270% from the second quarter of 1998. Oil production totaled 175,000 Bbls, up 34% from the second quarter of 1998. The Company's average oil price was 29% higher, averaging $15.80, compared to $12.24 in the same period of 1998, while the average gas price was slightly less than the prior year. Cash flow in the second quarter of 1998 increased to $2.7 million from $695,000 in the second quarter of 1998.
Six Months Ended June 30, 1999
Texoil's net income for the six months ended June 30, 1999, was $870,000 on revenues of $9.2 million. For the comparable period of 1998, Texoil reported a net loss of $724,000 on revenues of $4.8 million. Cash flow for the six month period increased to $4.6 million in 1999, from $1.5 million in 1998. The Company's production increased 110% to 670,000 BOE in 1999, compared to 319,000 BOE for the first six months of 1998. Gas production increased to 1,961 MMcf, up 276% from 1998. Oil production increased to 343,000 Bbls, up about 48% from 1998. The Company's average oil price for the six months ended June 1999 increased 4% to $13.43 per Bbl, compared to $12.88 per Bbl in 1997. Average gas prices decreased 8% in 1999, to $2.07 per Mcf compared to $2.26 per Mcf in 1998.
Reserves
Based on NYMEX prices as of June 30, 1999, adjusted for actual Company transportation and quality differentials, the Company's estimated proved reserves totaled 11.3 million Bbls and 48.4 Bcf, with a discounted present value (SEC PV 10%) of $95.3 million, including the recent acquisition of certain properties located in South Texas in July 1999.
Management Comments
Mr. Frank A. Lodzinski, Texoil's Chief Executive Officer, stated "Texoil has achieved significant increases in production, revenues, cash flows and profitability. Management is pleased with the operating results realized in the second quarter and year-to-date periods and currently forecasts continued profits. The majority of the increased revenues is a direct result of production increases from our acquisition and development programs. The recent recovery in oil prices certainly helped, but production increases and continued reductions in per unit operating and administrative costs were the major contributors to greater cash flows and profits. The Company has emerged the commodity price downturn and is well positioned to continue its growth. The average year-to-date oil price was only $13.43, and the average for the second quarter was $15.80. Further realized price recovery will have a direct impact on earnings. In addition, the recent acquisition of South Texas proved properties, along with development activities is expected to further improve production, cash flows and earnings."
Mr. Lodzinski also stated, "The Company is presently estimating revenues and cash flow for the year-ended December 31, 1999, of more than $19.5 million and $9.4 million, respectively, an increase of 88% and 196%, respectively, over results of operation for 1998, exclusive of additional acquisitions or development activities."
Other Matters
Texoil recently concluded the acquisition of a 100% working interest in the Hagist Ranch field, located in Duval and McMullen Counties, Texas. Shareholders and interested parties referred to a separate news release dated July 22, 1999, for this acquisition. In addition, the Company has recently increased its ownership to 70% and assumed operating responsibilities for its Greens Lake prospect. Texoil expects to farm-in the remaining 30% and is currently negotiating with an industry partner to cause the prospect to be drilled by the first quarter of 2000. Lastly, Texoil tested Marg-Tex objectives in its Great Scott prospect and failed to encounter commercial quantities of hydrocarbons. The Company and its partners are considering alternatives, including possible sidetrack operations or a farm-out of exploratory rights.
Shareholders and interested parties are referred to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's SEC filings for a discussion of industry conditions, the Company's business strategy and management goals. As outlined therein, management's intent is to continue the Company's growth through profitable acquisitions, development and exploration activities and through effective financial management. Texoil, Inc., is an independent energy company engaged in the acquisition and development of oil and gas reserves through an active and diversified program which includes purchases of reserves, re-engineering, development and exploration activities, currently focused in Texas, South Louisiana and the Texas Gulf Coast. On December 31, 1997, the Company acquired Cliffwood Oil & Gas Corp., in a reverse merger, which resulted in a comprehensive change of management and business strategy.
Forward Looking Information
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 23E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this report, are forward-looking statements regarding the Company's business strategy, plans, objectives and beliefs of management for future operations. All statements included in this release regarding the impact of recent acquisitions of producing properties on the Company are forward-looking statements and are based on management's best projections. Although the Company believes the expectations and beliefs reflected in forward-looking statements included in this release are reasonable, it can give no assurance that such expectations will prove to have been correct. Forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ from those envisioned by such forward-looking statements.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| 1999 | 1998 | 1999 | 1998 | |||||
| Revenues | ||||||||
| Oil and gas | $ | 4,845 | $ | 2,366 | $ | 8,672 | $ | 4,232 |
| Other | 245 | 242 | 491 | 554 | ||||
| Total | 5,090 | 2,608 | 9,163 | 4,786 | ||||
| Expenses | ||||||||
| Lease operating | 1,534 | 1,372 | 3,034 | 2,142 | ||||
| Workover | 44 | 29 | 46 | 109 | ||||
| Production taxes | 338 | 123 | 612 | 226 | ||||
| General and administrative | 449 | 389 | 896 | 827 | ||||
| Total | 2,365 | 1,913 | 4,588 | 3,304 | ||||
| Operating Income | 2,725 | 695 | 4,575 | 1,482 | ||||
| Depreciation, depletion & amortization | 1,069 | 500 | 2,094 | 934 | ||||
| Interest and debt expense | 535 | 170 | 1,082 | 279 | ||||
| Write-down of oil and gas properties | - | 1,208 | - | 1,208 | ||||
| Income (loss) before income taxes | 1,121 | (1,183) | 1,399 | (939) | ||||
| Provision for deferred income taxes | (424) | 307 | (529) | 215 | ||||
| Net Income (Loss) | 697 | (876) | 870 | (724) | ||||
| Per Common Share | ||||||||
| Net income (loss) per share-basic | $ | .11 | $ | (.14) | $ | .13 | (.12) | |
| Net income (loss) per share-diluted | $ | .10 | $ | (.14) | $ | .13 | (.12) | |
| Weighted average shares outstanding-basic | 6,555 | 6,388 | 6,555 | 6,252 | ||||
| Weighted average shares outstanding -diluted | 6,722 | 6,388 | 6,790 | 6,252 | ||||
| Cash Flow from Operations | ||||||||
| Net income (loss) | 697 | (876) | 870 | (724) | ||||
| Depreciation, depletion and amortization | 1,069 | 500 | 2,094 | 934 | ||||
| Interest | 535 | 170 | 1,082 | 279 | ||||
| Write-down of oil and gas properties | - | 1,208 | - | 1,208 | ||||
| Deferred income taxes | 424 | (307) | 529 | (215) | ||||
| Total | 2,725 | 695 | 4,575 | 1,482 | ||||
| Cash Flow per Common Share | ||||||||
| Cash flow per share-basic | $ | .42 | $ | .11 | $ | .70 | $ | .24 |
| Cash flow per share - diluted | $ | .41 | $ | .11 | $ | .67 | $ | .24 |
| Production and Prices | ||||||||
| Natural gas, MMcf | 1,051 | 283 | 1,961 | 521 | ||||
| Price per Mcf | $ | 2.30 | $ | 2.33 | $ | 2.07 | $ | 2.26 |
| Crude oil and condensate, Mbbls | 175 | 131 | 243 | 232 | ||||
| Price per barrel | $ | 15.80 | $ | 12.24 | $ | 13.43 | $ | 12.88 |
| Barrel of oil equivalent (MBOE) | 350 | 178 | 670 | 319 | ||||
| Productions costs (per BOE) | $ | 3.83 | $ | 6.60 | $ | 3.88 | $ | 5.55 |
| Current Assets | 4,618 | 2,474 | ||||||
| Property, plant and equipment-net | 44,923 | 26,485 | ||||||
| Deferred Tax Asset | 260 | - | ||||||
| Other assets, net | 715 | 669 | ||||||
| Total assets | 50,516 | 29,628 | ||||||
| Current liabilities | 3,842 | 3,116 | ||||||
| Long-term debt | 24,500 | 5,055 | ||||||
| Subordinated convertible debt | 10,000 | 10,000 | ||||||
| Shareholders' equity | 12,174 | 11,457 | ||||||
| Total liabilities and shareholders' equity | 50,516 | 29,628 | ||||||
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