Saratoga Resources Drops on Weak Earnings

Saratoga Resources

is down again on Wednesday after posting weak fourth quarter and 2012 earnings. The Houston-based firm lost $0.09 per share during the fourth quarter, down from a gain of $0.40 per share in Q4 2011. This figure was far below the EPS of $0.08 analysts hoped for. Fourth quarter revenue finished up one percent at $22.9 million and fell slightly short of the approximately $24 million Wall Street consensus. For the year, the oil and gas company lost $0.13 per share versus EPS of $0.93 in 2011. It also came in below expectations on this front, as analysts anticipated earnings of $0.08 per share. Total 2012 revenue closed up eight percent at $82.5 million, but fell short of the nearly $85 million consensus.

Saratoga produced over 3,000 barrels of oil equivalent per day in 2012 for a total of around 1.12 million. This marked an 18 percent increase in production versus 2011, which the company attributed to accelerated investment in its development and infrastructure upgrade program. The production increase occurred despite the effects of Hurricane Isaac, which shut down operations for 17 days in the third quarter. The storm also curtailed production into the fourth quarter as wells were brought back into operation.

During 2012, Saratoga drilled three successful development wells, which included 15 new pool discoveries. And, the company performed 12 recompletions (modifications of existing wells to generate more oil or gas), 11 of which were successful. Additionally, Saratoga undertook 16 workovers, an industry term for repairing or stimulating existing wells.

On March 21, Saratoga announced it was the apparent high bidder on four leases at the Central Gulf of Mexico Lease Sale 227 held in New Orleans on March 20. The four blocks the company appears to have won cover over 19,800 acres, which would increase its territory by 62 percent. Saratoga will not be officially awarded the blocks until the US Bureau of Ocean Energy Management, Regulation and Enforcement reviews its bids. The company estimates the blocks have reserves of 51.3 million barrels of oil equivalent.

Saratoga declined four consecutive days from March 20 through Tuesday, with investors seemingly unimpressed with the company's fortunes in the Gulf of Mexico. During that time, it dropped over 11 percent and fell to its lowest point in 23 months. On Wednesday, it has continued this descent as it spirals downward toward $2.50. Saratoga is down around two percent on Wednesday.