Form 8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): July 31, 2003

 


 

SPINNAKER EXPLORATION COMPANY

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   001-16009   76-0560101
(State or Other Jurisdiction of Incorporation)   (Commission File Number)   (I.R.S. Employer Identification No.)

 

1200 Smith Street, Suite 800

Houston, Texas

  77002
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (713) 759-1770

 



Item 12.    Results of Operations and Financial Condition.

 

The following information is furnished pursuant to Item 12, “Results of Operations and Financial Condition.”

 

Contact:

Robert M. Snell, Vice President,

Chief Financial Officer and Secretary

(713) 759-1770

 

Spinnaker Exploration Company Reports Production of 12.3 Bcfe and a 61% Increase in Second Quarter Earnings


 

HOUSTON, July 31 /PRNewswire/ — Spinnaker Exploration Company (NYSE: SKE) today reported second quarter 2003 earnings of $10.0 million, or $0.30 per diluted share, representing an increase of 61% over second quarter 2002 net income of $6.2 million, or $0.18 per diluted share.

 

Second quarter 2003 production increased 16% to 12.3 billion cubic feet of natural gas equivalent (“Bcfe”) compared to second quarter 2002 production of 10.6 Bcfe and decreased 10% compared to first quarter 2003 production of 13.7 Bcfe.

 

Second quarter 2003 revenues increased 50% to $55.9 million compared to second quarter 2002 revenues of $37.2 million. The increase in revenues was due to increased production of 1.7 Bcfe and higher average natural gas and oil prices in the second quarter of 2003 compared to the second quarter of 2002.

 

The average natural gas price increased approximately 50% and the average oil price increased approximately 11% in the second quarter of 2003 compared to the second quarter of 2002. Excluding the effects of hedging activities, second quarter 2003 prices averaged $5.36 per thousand cubic feet of natural gas (“Mcf”) and $28.89 per barrel of oil (“Bbl”) compared to second quarter 2002 average prices of $3.57 per Mcf and $26.09 per Bbl. The second quarter 2003 average natural gas price was negatively impacted by $0.89 per Mcf related to hedging activities. Including the effects of hedging activities, second quarter 2003 realized prices averaged $4.47 per Mcf and $28.89 per Bbl compared to second quarter 2002 average realized prices of $3.37 per Mcf and $26.09 per Bbl.

 

Net income increased $13.5 million to $25.3 million, or $0.75 per diluted share, in the first six months of 2003, representing an increase of 115%, compared to net income of $11.8 million, or $0.38 per diluted share, in the first six months of 2002.

 

Revenues increased $57.8 million to $127.6 million in the first six months of 2003 compared to $69.8 million in the first six months of 2002, representing an increase of 83%. The increase in revenues was due to increased production of 5.6 Bcfe and higher average natural gas and oil prices in the first six months of 2003 compared to the same period of 2002.

 

2


The average natural gas price increased approximately 102% and the average oil price increased approximately 30% in the first six months of 2003 compared to the first six months of 2002. Excluding the effects of hedging activities, prices in the first six months of 2003 averaged $6.07 per Mcf and $31.62 per Bbl compared to average prices in the first six months of 2002 of $3.01 per Mcf and $24.38 per Bbl. The average natural gas price in the first six months of 2003 was negatively impacted by $1.24 per Mcf related to hedging activities. Including the effects of hedging activities, realized prices in the first six months of 2003 averaged $4.83 per Mcf and $31.62 per Bbl compared to average realized prices of $3.36 per Mcf and $24.38 per Bbl in the same period of 2002.

 

Lease operating expenses were $0.42 per thousand cubic feet equivalent (“Mcfe”) in the second quarter of 2003 compared to $0.35 per Mcfe in the second quarter of 2002 and $0.40 per Mcfe in the first quarter of 2003.

 

The depreciation, depletion and amortization (“DD&A”) rate was $2.55 per Mcfe in the second quarter of 2003 compared to $2.00 per Mcfe in the second quarter of 2002 and $2.40 per Mcfe in the first quarter of 2003.

 

Net cash provided by operating activities before changes in operating assets and liabilities is presented because of its acceptance as an indicator of the ability of an oil and gas exploration and production company to internally fund exploration and development activities. This measure should not be considered as an alternative to net cash provided by operating activities as defined by generally accepted accounting principles. A reconciliation of net cash provided by operating activities before changes in operating assets and liabilities to net cash provided by operating activities is shown below:

 

     Three Months Ended
June 30,


   Six Months Ended
June 30,


     2003

    2002

   2003

    2002

Net cash provided by operating activities

   $ 80,618     $ 9,833    $ 130,140     $ 41,830

Changes in operating assets and liabilities

     (33,068 )     21,520      (19,582 )     16,385
    


 

  


 

Net cash provided by operating activities before changes in operating assets and liabilities

   $ 47,550     $ 31,353    $ 110,558     $ 58,215
    


 

  


 

 

Effective January 1, 2003, Spinnaker adopted Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires entities to record a liability for asset retirement obligations at fair value in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. As of January 1, 2003, the Company recorded an increase to property of $21.4 million and an asset retirement obligation of $26.0 million. The cumulative effect of change in accounting principle was $3.5 million, net of taxes of $2.0 million.

 

Second quarter 2003 additions to property and equipment of $96.2 million included $4.9 million related to asset retirement costs. Capital expenditures were $84.7 million in the second quarter of 2003.

 

Income tax and cash tax rates in the second quarter of 2003 were 36% and 1%, respectively.

 

To learn more about Spinnaker, the Company’s web site may be accessed at www.spinnakerexploration.com.

 

Spinnaker Exploration Company is an independent energy company engaged in the exploration, development and production of natural gas and oil in the U.S. Gulf of Mexico.

 

3


Certain statements in this press release are forward-looking and are based upon Spinnaker’s current belief as to the outcome and timing of future events that are subject to numerous uncertainties. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for natural gas and oil, operating risks and other risk factors as described in Spinnaker’s Annual Report on Form 10-K for the year ended December 31, 2002 and its other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Spinnaker’s actual results and plans could differ materially from those expressed in the forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and Spinnaker undertakes no obligation to update such forward-looking statements.

 

4


SPINNAKER EXPLORATION COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
June 30,


    Six Months Ended
June 30,


 
     2003

    2002

    2003

    2002

 

REVENUES

   $ 55,931     $ 37,164     $ 127,602     $ 69,764  

EXPENSES:

                                

Lease operating expenses

     5,208       3,734       10,701       7,143  

Depreciation, depletion and amortization – natural gas and oil properties

     31,242       21,231       64,077       38,608  

Depreciation and amortization – other

     322       210       633       383  

Accretion expense

     569             1,064        

Gain on settlement of asset retirement obligations

     (171 )           (171 )      

General and administrative

     3,001       2,733       6,040       5,411  
    


 


 


 


Total expenses

     40,171       27,908       82,344       51,545  
    


 


 


 


INCOME FROM OPERATIONS

     15,760       9,256       45,258       18,219  

OTHER INCOME (EXPENSE):

                                

Interest income

     62       620       127       664  

Interest expense, net

     (153 )     (155 )     (302 )     (449 )
    


 


 


 


Total other income (expense)

     (91 )     465       (175 )     215  
    


 


 


 


INCOME BEFORE INCOME TAXES

     15,669       9,721       45,083       18,434  

Income tax expense

     5,641       3,499       16,230       6,636  
    


 


 


 


INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

     10,028       6,222       28,853       11,798  

Cumulative effect of change in accounting principle

                 (3,527 )      
    


 


 


 


NET INCOME

   $ 10,028     $ 6,222     $ 25,326     $ 11,798  
    


 


 


 


BASIC INCOME PER COMMON SHARE:

                                

Income before cumulative effect of change in accounting principle

   $ 0.30     $ 0.19     $ 0.87     $ 0.39  

Cumulative effect of change in accounting principle

                 (0.11 )      
    


 


 


 


NET INCOME PER COMMON SHARE

   $ 0.30     $ 0.19     $ 0.76     $ 0.39  
    


 


 


 


DILUTED INCOME PER COMMON SHARE:

                                

Income before cumulative effect of change in accounting principle

   $ 0.30     $ 0.18     $ 0.85     $ 0.38  

Cumulative effect of change in accounting principle

                 (0.10 )      
    


 


 


 


NET INCOME PER COMMON SHARE

   $ 0.30     $ 0.18     $ 0.75     $ 0.38  
    


 


 


 


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

                                

Basic

     33,207       33,030       33,199       30,200  
    


 


 


 


Diluted

     33,859       34,162       33,776       31,330  
    


 


 


 


 

5


SPINNAKER EXPLORATION COMPANY

SUMMARY STATISTICS

(In thousands, except per share/unit amounts)

(Unaudited)

 

     Three Months Ended
June 30,


    Six Months Ended
June 30,


    Three
Months
Ended
March 31,
2003


 
     2003

    2002

    2003

    2002

   

Production:

                                        

Natural gas (MMcf)

     10,206       9,096       21,791       18,441       11,585  

Oil and condensate (MBbls)

     343       250       695       323       352  

Total (MMcfe)

     12,264       10,592       25,963       20,377       13,699  

Average Daily Production:

                                        

Natural gas (MMcf)

     112       100       120       102       129  

Oil and condensate (MBbls)

     3.8       2.7       3.8       1.8       4.0  

Total (MMcfe)

     135       116       143       113       152  

Average Sales Price Per Unit:

                                        

Natural gas revenues from production (per Mcf)

   $ 5.36     $ 3.57     $ 6.07     $ 3.01     $ 6.69  

Effects of hedging activities (per Mcf)

     (0.89 )     (0.20 )     (1.24 )     0.35       (1.53 )
    


 


 


 


 


Average price (per Mcf)

   $ 4.47     $ 3.37     $ 4.83     $ 3.36     $ 5.16  

Oil and condensate revenues from production (per Bbl)

   $ 28.89     $ 26.09     $ 31.62     $ 24.38     $ 34.28  

Effects of hedging activities (per Bbl)

                              
    


 


 


 


 


Average price (per Bbl)

   $ 28.89     $ 26.09     $ 31.62     $ 24.38     $ 34.28  

Total revenues from production (per Mcfe)

   $ 5.27     $ 3.68     $ 5.94     $ 3.11     $ 6.54  

Effects of hedging activities (per Mcfe)

     (0.75 )     (0.17 )     (1.04 )     0.32       (1.30 )
    


 


 


 


 


Total average price (per Mcfe)

   $ 4.52     $ 3.51     $ 4.90     $ 3.43     $ 5.24  

Revenues:

                                        

Natural gas

   $ 54,706     $ 32,431     $ 132,194     $ 55,451     $ 77,488  

Oil and condensate

     9,909       6,502       21,984       7,869       12,075  

Net hedging income (loss)

     (9,167 )     (1,773 )     (26,910 )     6,485       (17,743 )

Other

     483       4       334       (41 )     (149 )
    


 


 


 


 


Total

   $ 55,931     $ 37,164     $ 127,602     $ 69,764     $ 71,671  

Expenses:

                                        

Lease operating expenses

   $ 5,208     $ 3,734     $ 10,701     $ 7,143     $ 5,493  

Lease operating expenses per Mcfe

     0.42       0.35       0.41       0.35       0.40  

Depreciation, depletion and amortization – natural gas and oil properties

   $ 31,242     $ 21,231     $ 64,077     $ 38,608     $ 32,835  

Depreciation, depletion and amortization – natural gas and oil properties per Mcfe

     2.55       2.00       2.47       1.89       2.40  

 

6


SPINNAKER EXPLORATION COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     June 30,
2003


    December 31,
2002


 
ASSETS             

CURRENT ASSETS:

                

Cash and cash equivalents

   $ 19,218     $ 32,543  

Accounts receivable, net of allowance for doubtful accounts of $3,232 at June 30, 2003 and December 31, 2002, respectively

     26,915       37,572  

Other

     8,280       11,438  
    


 


Total current assets

     54,413       81,553  

Property and equipment

     1,208,419       1,035,627  

Less – Accumulated depreciation, depletion and amortization

     (341,427 )     (274,773 )
    


 


Total property and equipment

     866,992       760,854  

Other assets

     159       308  
    


 


Total assets

   $ 921,564     $ 842,715  
    


 


LIABILITIES AND EQUITY             

CURRENT LIABILITIES:

                

Accounts payable

   $ 28,298     $ 29,453  

Accrued liabilities and other

     48,910       38,542  

Hedging liabilities

     19,157       19,917  

Asset retirement obligations, current portion

     1,262        
    


 


Total current liabilities

     97,627       87,912  

Asset retirement obligations

     28,855        

Deferred income taxes

     75,605       61,826  

Equity

     719,477       692,977  
    


 


Total liabilities and equity

   $ 921,564     $ 842,715  
    


 


 

7


SPINNAKER EXPLORATION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Six Months Ended
June 30,


 
     2003

    2002

 

Cash flows from operating activities:

                

Net income

   $ 25,326     $ 11,798  

Effects of non-cash operating activities

     85,232       46,417  

Changes in operating assets and liabilities

     19,582       (16,385 )
    


 


Net cash provided by operating activities

     130,140       41,830  

Cash flows from investing activities:

                

Oil and gas property expenditures

     (144,203 )     (184,432 )

Proceeds from the sale of oil and gas property and equipment

     1,148        

Purchases of other property and equipment

     (757 )     (3,694 )
    


 


Net cash used in investing activities

     (143,812 )     (188,126 )

Cash flows from financing activities:

                

Proceeds from borrowings

           37,000  

Payments on borrowings

           (37,000 )

Proceeds from issuance of common stock

           227,873  

Common stock issuance costs

           (469 )

Proceeds from exercise of stock options

     347       892  
    


 


Net cash provided by financing activities

     347       228,296  
    


 


Increase (decrease) in cash and cash equivalents

     (13,325 )     82,000  

Cash and cash equivalents, beginning of year

     32,543       14,061  
    


 


Cash and cash equivalents, end of period

   $ 19,218     $ 96,061  
    


 


 

 

8


Contact: Robert M. Snell, Vice President,

Chief Financial Officer and Secretary

(713) 759-1770

 

Spinnaker Exploration Company Summarizes Second Quarter Operations;

Announces New Exploratory Successes             


 

HOUSTON, July 31/PRNewswire/ — Spinnaker Exploration Company (NYSE: SKE) today provided a summary of its operating activities since April 29, 2003. The Company also provided mid-year reserve estimates prepared by Ryder Scott Company and production estimates for the third quarter and full-year 2003.

 

PRODUCTION

Production for the second quarter 2003 totaled 12.3 billion cubic feet of gas equivalent (Bcfge), including approximately 10.2 Bcfg and 343,000 barrels of oil (BO). Production was up 16% from levels of one year ago and was down 10% from the first quarter of 2003. Production for the quarter exceeded the Company’s expectations. Current productive capacity is approximately 125 million cubic feet of gas equivalent per day (MMcfged). Current rates are approximately 115 MMcfged due to a temporary shut-in at the Zia field.

 

Per unit lease operating expense (LOE) inclusive of severance tax and workover expense was $0.42 per thousand cubic feet of gas equivalent (Mcfge). LOE was below the Company’s expectation for the quarter.

 

EXPLORATION

Since April 29, 2003, Spinnaker has participated in eight successful wells in twelve attempts.

 

Well


   Working
Interest (WI)


    Net Revenue
Interest(NRI)


    Operator

Green Canyon 338 #A-8

   25 %   25 %*   Murphy

Brazos A17 #1

   100 %   83 %   Spinnaker

East Cameron 312 #1

   100 %   83 %   Spinnaker

East Cameron 312 #2

   100 %   83 %   Spinnaker

East Cameron 312 #3

   100 %   83 %   Spinnaker

High Island 47 #1

   67 %   56 %   Spinnaker

Ship Shoal 301 #A-4

   33 %   25 %   Gryphon

Eugene Island 344 #1

   100 %   78 %   Spinnaker

 

* Subject to terms of Royalty Relief

 

The Company has participated in 85 successful wells in 140 attempts since inception (61% gross/62% net).

 

9


RESERVES

The Company’s outside reserve engineers, Ryder Scott Company, estimated proven oil and gas reserves net to the Company’s interest to be 315.4 Bcfe at June 30, 2003. These reserve totals include 137.9 Bcf and 29.6 million barrels of oil (MMBO). The net present value (NPV) of future cash flows, after consideration of future capital expenditures, LOE, transportation and abandonment expenditures is estimated to be $902 million.

 

Net reserve additions of 29 Bcfge during the second quarter were partially offset by net reserve revisions to existing properties of 14 Bcfge and production of 12.3 Bcfge. A reduction of 4 Bcfe was made in recognition of assumed lost royalty relief volumes from the Front Runner and Sangria properties. This recognition was made due to gas pricing assumptions made relative to the Minerals Management Service’s threshold for maximum allowable market price. These reserves would be reclaimed if future commodity prices move below the relevant market thresholds. Additionally, 5.1 Bcfge reserve at the Zia Field was reclassified in category.

 

CURRENT ACTIVITY

The Company has eight rig operations in progress. Three rigs are completing their current operations, three rigs are drilling new exploratory wells, and two rigs are engaged in completion activities.

 

DEVELOPMENT ACTIVITY

Drilling, completion, evaluation, design and/or construction are ongoing in fifteen field developments.

 

Front Runner/Front Runner South/Quatrain (Green Canyon 338/339/382)

 

The GC 338 #A-8 was drilled to a depth of 20,851 feet. The well encountered approximately 420 feet of true vertical depth (TVD) pay and has been cased for production. This completes the spar-site drilling activities in the field that were scheduled prior to facility start-up. The spar hull is now 90% complete. The topsides facility is approximately 40% complete. First production is anticipated in July 2004. Spinnaker holds a 25% WI in the project.

 

West Cameron 72

The West Cameron 72 #1 has been completed and a caisson driven. First production is anticipated during the fourth quarter of 2003. Spinnaker owns a 25% WI and a 21% NRI in the project.

 

Madaleine Field (High Island 47)

The High Island 47 #1 has been completed and tested at a rate of 13 MMcfgd and 235 barrels of condensate per day (Bcpd). A caisson has been driven and a production facility installed. Flowline is currently being laid to a host platform. First production is anticipated by the fourth quarter of 2003. A second well was drilled to test a separate fault block and was unsuccessful. Two additional prospects remain untested on the block. Spinnaker operates the field with a 67% WI and a 56% NRI.

 

Galveston 352

 

10


The GA 352 #2 has been completed and a caisson driven. A flowline has been laid to the partnership’s GA 352 “A” platform. Installation of a caisson deck is expected to occur in August and first production is anticipated during September 2003. Spinnaker owns a 33% WI and a 28% NRI in the field.

 

Brazos A17

This field was discovered in May 2003 and was suspended at the mud line. A 48-inch caisson was partially driven when evacuation became necessary due to Hurricane Claudette. The storm overturned the caisson in place and remediation of the damage has been ongoing since. Most of the estimated $1.5 million in storm-related damage should be recoverable under the Company’s insurance policies. First production is still anticipated on or before November 1, 2003. Spinnaker owns a 100% WI and 83% NRI in the field.

 

Sangria Field (Green Canyon 177)

The GC 177 #1 has experienced a subsea pipeline obstruction. A remedial intervention will be performed to remove the obstruction, most probably hydrate or wax buildup, and should commence within two weeks. The estimated one-time cost of $2.5 million is included in third quarter LOE guidance. Spinnaker owns 100% WI and 75% NRI in the Sangria Field.

 

East Cameron 312

Three wells have now been drilled from a common platform site in this block. Two wells were gas productive (EC 312 #1 and #3) and one well was oil productive (EC 312 #2). All wells have been temporarily abandoned. A tripod is under construction and flowlines planned. First production is anticipated to occur in the fourth quarter of 2003. Spinnaker owns a 100% WI and 83% NRI in the block.

 

Eugene Island 343/344

Oil and gas have been discovered in multiple Pleistocene-aged pays in the Eugene Island 344 #1. A total of 238 feet of TVD pay was encountered to a depth of 12,865 feet in the well. The new field lies approximately 100 miles southwest of Fourchon, Louisiana and is situated in 285 feet of water.

 

Engineering is underway on the design of a tripod facility and additional, probable drilling locations are being further evaluated. First production is expected in late first quarter 2004. Spinnaker owns a 100% WI and 78% NRI in the field.

 

Zia Field (Mississippi Canyon 496)

Initial production commenced from the MC 496 #1 in late June 2003. The well has thus far performed very well and sustained rates of 7,300+ Boepd during the ramp-up before being shut-in due to problems with a production choke at the wellhead. Diagnostics and repair are underway. Spinnaker owns a 35% WI and 30% NRI in this deepwater subsea tie-back.

 

Grasshopper Field (Grand Isle 52)

A drilling rig has moved on location to drill the GI 52 #L-12 well. The well will test a fault block adjacent to the producing field from which the GI 52 #L-8 and #L-10 wells currently produce.

 

11


The wells currently produce in excess of 6,000 Boepd with numerous behind-pipe productive sands. Spinnaker owns a 50% WI and a 43% NRI in the field.

 

Ship Shoal 301

A total of 40 feet of TVD pay was found in two sands in this well. The well was recently drilled to a depth of 8,373 feet (5,534 feet TVD) from an existing platform. The well has been placed on production and is in the ramp-up phase. The Ship Shoal 301 #A-4 was tested at a rate of approximately 500 Bopd and 300 Mcfgd. Spinnaker owns a 33% WI and 25% NRI in the well.

 

FUTURE OUTLOOK

The Company expects to produce approximately 10.5 Bcfge during the third quarter of 2003. Detailed guidance parameters for the third quarter and full year 2003 follows. It is estimated that Hurricane Claudette reduced Spinnaker’s third quarter production by approximately 0.3 Bcfge. That impact has been considered in the provided guidance.

 

     Actual
Q2 2003


    Guidance
Q3 2003


    Guidance
Year
2003


 

Income Statement Parameters:

                        

Avg Daily Production (MMcfe/d)

     135       114       130-137  

% Gas

     83 %     76 %     80 %

Avg Daily Hedged Gas Volumes (Bbtu/d) – Swaps

     60.0       53.4       55.8  

Avg Price

   $ 3.78     $ 3.69     $ 3.71  

Avg Daily Hedged Gas Volumes (Bbtu/d) – Collars

     15.0       15.0       15.0  

Avg Ceiling Price

   $ 5.21     $ 5.21     $ 5.21  

Avg Floor Price

   $ 3.25     $ 3.25     $ 3.25  

Avg LOE, Workover & Severance Taxes / Mcfe

   $ 0.42     $ 0.69 *   $ 0.48  

Avg DD&A / Mcfe

   $ 2.55     $ 2.58     $ 2.53  

G&A (in millions)

   $ 3.0     $ 3.2     $ 12.5  

Net Interest Expense (in millions)

   $ 0.1     $ 0.4     $ 1.3  

Accretion Expense (in millions)

   $ 0.6     $ 0.7     $ 2.6  

Avg Cash Income Tax Rate

     1 %     1 %     1 %

Avg Accrual Income Tax Rate

     36 %     36 %     36 %

Weighted Average Shares Outstanding –

                        

Diluted (in millions)

     33.9       34.0       34.2  

Spending Parameters:

                        

Shelf Wells Drilled:

                        

 

12


Gross Wells

     9      8      22

Net Wells

     6.3      4.8      14.8

Deepwater Wells Drilled:

                    

Gross Wells

     3      1      9

Net Wells

     0.9      0.3      3.1

Total Wells Drilled:

                    

Gross Wells

     12      9      31

Net Wells

     7.2      5.1      17.9

Capital Expenditures (in millions):

   $ 96    $ 76    $ 275

Exploration

   $ 49    $ 37    $ 138

Development

   $ 47    $ 39    $ 137

* Includes a $0.24 per Mcfe pipeline intervention related to Green Canyon 177 (Sangria)

 

Spinnaker Exploration Company is an independent energy company engaged in the exploration, development and production of natural gas and oil in the U.S. Gulf of Mexico.

 

Certain statements in this press release are forward-looking and are based upon Spinnaker’s current belief as to the outcome and timing of future events that are subject to numerous uncertainties. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for natural gas and oil, operating risks and other risk factors as described in Spinnaker’s Annual Report on Form 10-K for the year ended December 31, 2002 and its other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Spinnaker’s actual results and plans could differ materially from those expressed in the forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and Spinnaker undertakes no obligation to update such forward-looking statements.

 

13


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

       

SPINNAKER EXPLORATION COMPANY

Date: July 31, 2003       By:  

/s/ JEFFREY C. ZARUBA


               

Name: Jeffrey C. Zaruba

Title: Vice President, Treasurer and

Assistant Secretary

 

14