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Net income available to common shareholders
for 2005 decreased to $10.6 million from $10.8 million in 2004 primarily
as a result of the factors described above.
Liquidity and Capital Resources
During 2006, our capital expenditures of
$163.5, net of $38.3 million in proceeds from property sales, exceeded
our net cash flows provided by operating activities. For future
capital expenditures, we expect to use cash on hand, cash generated
by operating activities and available draws on the Senior Credit
Facility to partially fund our planned drilling expenditures and
fund leasehold costs and geological and geophysical costs on our
exploration projects in 2007. We may need to seek other financing
alternatives to fully fund our 2007 capital expenditures program,
including possible debt or equity financings.
We may not be able to obtain financing needed
in the future on terms that would be acceptable to us. If we cannot
obtain adequate financing, we may be required to limit or defer
our planned oil and natural gas exploration and development program,
thereby adversely affecting the recoverability and ultimate value
of our oil and natural gas properties.
Our primary sources of liquidity have included
funds generated by operations, proceeds from the issuance of various
securities, including our common stock, preferred stock and warrants
(including our public offering in 2004 and our private placements
in 2005 and 2006 of our common stock), and borrowings under our
credit facilities. Our liquidity position has been enhanced by the
availability of funds under the Senior Credit Facility, the borrowing
base of which was increased to $65.0 million, effective November
8, 2006. In addition, we received net proceeds of $33.5 million
from the 2006 Private Placement.
In December 2006, we completed an amendment
to the Second Lien Credit Facility providing for $75.0 million of
additional borrowings which was drawn on January 3, 2007. The Company
used a portion of $72.1 million net proceeds to repay the $41.0
million of outstanding borrowings under the Senior Credit Facility.
Accordingly, the amended and undrawn borrowing base availability
on our Senior Credit Facility was $54.25 million (See "Financing
Arrangements—Senior Secured Revolving Credit Facility"
for further discussion).
We received $38.3 million in proceeds from
property sales in 2006. The sales included properties in both our
Gulf Coast and Barnett Shale areas. We may continue to sell properties
to fund a portion of our capital expenditures program.
Cash flows provided by operating activities
were $65.4 million, $38.8 million and $32.5 million for 2006, 2005
and 2004, respectively. The increase in cash flows provided by operations
in 2006 as compared to 2005 was primarily due to higher oil and
gas revenues generated from increased production. The increase in
cash flows provided by operations in 2005 as compared to 2004 was
primarily due to increased revenues attributable to increased production
and higher commodity prices.
Estimated maturities of long-term debt are
$1.5 million in each of the years 2007 through 2009 and the remainder
in 2010. The following table sets forth estimates of our contractual
obligations as of December 31, 2006:
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