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Bois d'Arc Energy Inc. (BDE)

Q4 2007 Earnings Call

February 12 2008 10:00 am ET


Gary Blackie - President and CEO

Roland Burns - Chief Financial Officer

Jay Allison - Chairman


David Heikkinen - Tudor, Pickering, Holt

Pavel Molchanov - Raymond James



Good day ladies and gentlemen and welcome to the Fourth Quarter 2007 Bois d’Arc Energy Incorporated Earnings Call. My name is Michele and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator Instructions)

I would now like to turn the presentation over to your host for today's conference, Mr. Gary Blackie, Chief Executive Officer. Please proceed.

Gary Blackie

Thank you. Good morning to all, and welcome to Bois d'Arc Energy's 2007 Fourth Quarter Conference Call. We will discuss our fourth quarter and annual 2007 financial and operating results on this call. You can view a slide presentation during or after this call by going to our website at and clicking presentations. There you will find a presentation entitled Fourth Quarter 2007 Results.

I am Gary Blackie, President and Chief Executive Officer of Bois d'Arc, and with me today are Roland Burns, our Chief Financial Officer, and Jay Allison, our Chairman.

Our discussion today will include forward-looking statements within the meanings of the securities laws. While we believe the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct.

We had a pretty good year in 2007, actually a great year, as demonstrated by our financial results and strong production growth and reserve growth. Our production increased 34% in 2007 over 2006. We are also able to grow our reserves by 16% in 2007.

Our 2007 discoveries in the successful water flood project at Ship Shoal 113 have added 96 billion cubic foot equivalent to our proved reserve base. We also had excellent financial results in 2007. Our revenue soared to $355 million, and we generated EBITDAX of $291 million and operating cash flow of $262 million.

Our net income for 2007 increased by 43% to $79 million, or $1.39 per share. We also saw our cost structure improve in 2007. Our lifting cost averaged $1.17 per Mcfe in 2007, as compared to $1.70 per Mcfe last year, and that was a 13% decrease. We also saw a reduction in our finding cost this year which fell $2.22 per Mcfe, a substantial improvement from the $4.76 averaged in 2006.

I will now let our CFO Roland Burns go over the financial results in more detail.

Roland Burns

Thanks Gary. On slide 3 of the presentation you can follow our production growth over the last three years. Our production averaged 116 million cubic feet of natural gas equivalent per day, both in the fourth quarter and for the entire year in 2007. Production increased 20% over production in the fourth quarter of 2006, and is up 34% for the full year as compared to 2006. The growth in production is the result of the continued strong performance of our 2006 discoveries, especially the Sockeye well at South Pelto 22. This year we expect production to increase to 46 to 49 Bcfe as compared to the 42.2 Bcfe we produced in 2007.

Our production was down last month to around 108 million tons per day. Our platform at Ship Shoal 118 has been shut in since January 1st after a fire broke out on that platform. But now repairs are almost complete, and we expect that platform to be returning to service soon. We expect our production to reach around 130 million tons per day by March with this platform returning to service and a new platform at Ship Shoal 97 coming online.

On slide 4, we cover our oil prices. Our average oil price increased 58% in the fourth quarter of 2007 to $91.51 per barrel, as compared to $57.77 in the fourth quarter of 2006. In 2007, our realized oil price was $74.15 which increased 15% of our oil price to $64.66 in 2006. Our average oil price has been running at around 103% of the average NYMEX WTI price this year.

Slide five shows our average gas price, and the average gas price improved by 10% in the fourth quarter to $7.48 per Mcf, compared to $6.78 in the fourth quarter of 2006. For 2007, our average price increased 1% to $7.19, as compared to $7.13 in 2006. Our gas price realizations have been very strong, and our realized gas price was 105% of the average Henry Hub NYMEX price in 2007.

The strong production growth for 2007 increased our oil and gas sales, which is presented on slide six in the presentation. Oil and gas sales increased 51% in the fourth quarter to $100 million, as compared to $66 million in 2006's fourth quarter. For all of 2007, our oil and gas sales totaled $355 million, which is 40% higher than our oil and gas sales of $255 million in 2006.

As shown on slide seven, our earnings before interest, taxes, depreciation, amortization and expiration expenses and other non-cash expenses or EBITDAX, increased 63% in the fourth quarter to $82 million, as compared to $50 million in 2006’s fourth quarter. In 2007, our EBITDAX increased 48% to $291 million, as compared to $197 million in 2006.

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