Production down, EPS lower than expected for Meridian.
In the past four years, Meridian Resource Corp. (NYSE: TMR, Stock Forum) has dropped from a high of $8.95/share to below $3/share. The company focuses on oil and gas properties in Texas, Louisiana, and the Gulf of Mexico, properties that are getting tougher to find. Today's earnings report spotlights the problem.
Meridian reported EPS of a penny a share, net income of $839,000, and revenue of $46.5 million. Analysts were expecting EPS of nine cents on revenues of $49.1 million. Lease operating expenses were up, and total depletion and depreciation were down, even though the D&D per thousand cubic feet equivalent were up. From that latter number, you'd expect production to be down, and you'd be right. Average production in the second quarter was 40 million cubic feet equivalent per day, down from 52 million cubic feet per day equivalent in the same period a year ago. The company attributed the drop to "natural production declines" and other factors.
If production is dropping in the fields you operate, then it seems that you should be looking for new fields. Meridian does not appear to be doing that. They don't have a lot of cash, and the company's current liabilities and long-term debt equal about 70% of their market cap. If the company can even get a loan, it'll cost them plenty.
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