Burlington beats the street as third-quarter profits soar

Burlington Resources, the first major U.S.-based exploration and production independent to weigh in with 2003 third-quarter earnings, stuck it to Wall Street with a quarterly profit more than triple the year-ago period.

Net income soared to $267 million or $1.33 per share versus $79 million or 39 cents per share for the same period last year, the company reported Oct. 22. Burlington’s third-quarter financial results beat analysts’ consensus of $1.04 per share by nearly 30 cents.

“We believe that we are in the early stages of an exceptional period of production growth for Burlington,” said Bobby Shackouls, Burlington’s chief executive officer.

Burlington attributed its third-quarter performance to a combination of higher production and commodity prices, but said improved operating margins due to expense controls contributed to the effort. On the production side, the company specifically cited increased natural gas and natural gas liquids volumes in Canada, and significantly higher oil output from its operated MLN field in Algeria.

In another surprise, Burlington said it expected to achieve 2004 production growth at the upper end of its previous 3 to 8 percent forecast of 2.65 billion cubic feet to 2.850 bcf per day of gas equivalent, compared to an estimated 2003 average of 2.5 bcf to 2.64 bcf per day of equivalent. The company said it should exit 2003 with volumes nearly 10 percent above 2002 levels.

Steve Shapiro, Burlington’s chief financial officer, said in a conference call with analysts that Burlington should generate discretionary annual cash flow averaging $1.5 billion over the next few years. Despite the hefty surplus, he added, Burlington intends to be careful with its money. But he suggested the company might use some of it to buy properties and repurchase stock.

“We’re continuing to look at deals but choosing to be very patient on near-term acquisitions,” Shapiro said, making it clear Burlington “won’t chase transactions.”