FOR RELEASE: May 7, 2009

 

 

HKN Announces Positive Cash Flow from Operations in First Quarter 2009 even with Dramatically Reduced Oil and Gas Commodity Pricing

 

Dallas, Texas – May 7, 2009 – HKN, Inc. (NYSE Amex: HKN) (”HKN”) today reported its interim financial results for the three months ended March 31, 2009. HKN reported a net loss of $1.1 million during the first three months of 2009 as compared to net income of $1.1 million in the first three months of 2008.

 

During the first quarter 2009, oil and natural gas prices declined sharply as compared to the prior year period. However, we have reduced our controllable costs in order to maintain positive cash flow from operations even during the low commodity pricing environment. During the first quarter 2009, oil prices decreased 62% from an average of $97.80 per barrel in the first quarter 2008 to $37.40 per barrel in the first quarter 2009. Prices realized for natural gas sales decreased 52%, averaging $4.32 per mcf in first quarter 2009 compared to $9.00 per mcf during first quarter 2008.

 

·         Our operating expenses per barrel of oil equivalent (“boe”) decreased from $37.64 per boe in first quarter 2008 to $29.66 per boe in first quarter 2009.

 

·         Our general and administrative expenses decreased 54% from $1.2 million for the first quarter 2008 to $551 thousand for the first quarter 2009 primarily due to overall lower salary and personnel costs along with decreased rent and consultant expenses.

 

We have no debt outstanding, and we have a cash and marketable securities balance of approximately $14.7 million at March 31, 2009. We also anticipate our operating cash flow and other capital resources, if needed, will adequately fund our planned capital expenditures and other capital uses over the near-term. Due to our cost-cutting measures, we have budgeted our 2009 operations to remain cash-flow positive, even at current market pricing.

 

In January 2009, our Board of Directors authorized an amendment to the existing repurchase plan allowing us to buyback an additional 1.0 million shares of our common stock. During the three months ended March 31, 2009, we repurchased 500 thousand shares of our common stock for $1.3 million from a shareholder in a privately negotiated transaction pursuant to our repurchase program. During the three months ended March 31, 2009, we retired approximately 507 thousand treasury shares. As of March 31, 2009, approximately 737 thousand shares remained available for repurchase under our repurchase program.

 

 

 

 

 

 

 

 

 

HKN’s operating results for the three months ended March 31, 2009 and 2008 are as follows (in thousands except for share and per share amounts)

 

 

 

Balance Sheet Summary (in thousands)

 

(1)   Current ratio is calculated as current assets divided by current liabilities.

(2)   Working capital is the difference between current assets and current liabilities.

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURE

 

Reconciliation of Operating Margin to Net Income (in thousands)

 

 

 

 

 

Management believes the presentation of this non-GAAP financial measure, in connection with the results for the three months ended March 31, 2009 and 2008, provides useful information to investors regarding our results of operations. Management also believes that this non-GAAP financial measure provides a picture of our results that is comparable among reporting periods and provides factors that influenced performance during the period under the report. This non-GAAP financial measure should be considered in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

 

HKN, Inc. is an independent energy company engaged in the development and production of crude oil, natural gas and coalbed methane assets and in the active management of investments in the energy industry. Additional information may be found at the HKN Web site, www.hkninc.com. Please e-mail all investor inquiries to HKNinquiries@ctaintegrated.com.

Certain statements in this announcement and inferences derived therefrom may be regarded as “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made. Management’s current view and plans, however, are subject to numerous known and unknown risks, uncertainties and other factors that may cause the actual results, performance, timing or achievements of HKN to be materially different from any results, performance, timing or achievements expressed or implied by such forward-looking statements. The various uncertainties, variables, and other risks include those discussed in detail in the Company’s SEC filings, including the Annual Report on Form 10-K filed on February 18, 2009. HKN undertakes no duty to update or revise any forward-looking statements. Actual results may vary materially.