Warren Resources Announces Fourth Quarter and Full-Year 2012 Results

Warren Resources Announces Fourth Quarter and Full-Year 2012 Results

NEW YORK, March 6, 2013 (GLOBE NEWSWIRE) -- Warren Resources, Inc.
(Nasdaq:WRES) today reported its fourth quarter and full-year 2012 financial
and operating results. For the year ended December 31, 2012, Warren reported
net income of $15.5 million, or $0.22 per diluted share, compared to net
income of $21.6 million for the year in 2011, or $0.30 per diluted share.

For the fourth quarter of 2012, Warren reported net income of $4.0 million, or
$0.06 per diluted share, compared to net income of $3.0 million for the fourth
quarter of 2011, or $0.04 per diluted share.

In announcing the results, Philip A. Epstein, Chairman and Chief Executive
Officer, commented, "We are in a strong financial position thanks to our
continued drilling success in California. This financial strength will be
helpful in implementing our new strategy of growing the Company through
acquisitions and joint ventures. As a result of drilling 17 new oil wells in
California, our proved oil reserves increased by 9.5% during 2012 to 16.4
million barrels. Assuming $80 per barrel average realized oil pricing in
California (although current Midway Sunset pricing is $100 per barrel), we
anticipate that the nine Tar formation wells drilled in 2012 will payout in
approximately one year, while the Ranger and Upper Terminal formation
sinusoidal wells will payout in 1 to 2 years. Warren exited the year with a
production rate of over 3,500 gross (2,900 net) barrels of oil per day
("BOPD") from our two Wilmington Field units.

I am also pleased to report that we began our 2013 drilling program in our
Wilmington Townlot Unit ("WTU") on March 1, 2013. As we announced earlier, our
plan for 2013 is to drill 13 new oil wells and 3 water injection wells in the
WTU. In our adjacent North Wilmington Unit ("NWU"), we plan to drill 4 new oil
wells and 3 injection wells during 2013. While growing our oil production and
reserves at the WTU and NWU and our natural gas production in the Washakie
Basin are priorities, we are now in a position to consider attractive
acquisitions in basins where we can implement our strengths which include
enhanced oil recovery, advanced horizontal drilling expertise and Rocky
Mountain natural gas development."

Full Year 2012 Results

For the year ended December 31, 2012, total oil and gas revenue increased by
18% to $121.8 million compared to $103.4 million in 2011 and cash flow from
operations increased by 43% to $66.8 million from $46.8 million in 2011. These
increases were primarily driven by increased oil production in 2012.

Total operating expenses increased 32% to $100.1 million compared to $76.0
million during 2011. Lease operating expenses ("LOE") increased 8% to $33.1
million from $30.6 million in 2011, primarily due to higher California
property taxes and increased well workover costs. Depletion, depreciation and
amortization ("DD&A") expense increased by 55% to $47.2 million, or $23.26 per
barrel of oil equivalent ("BOE"), due to a reduction in proved gas reserves
and an increase in estimated future development costs associated with
increased proved undeveloped oil reserves.

General and Administrative ("G&A") expenses increased by 34% to $19.8 million
in 2012, compared to $14.8 million in 2011. This increase in G&A primarily
resulted from the severance expenses for four former executive officers and
employees of the Company.

The Company's net loss on derivative financial instruments was $3.0 million
during the year ended December 31, 2012, which was comprised of a $2.8 million
realized cash loss on commodity derivatives and a $0.2 million unrealized,
non-cash loss on commodity derivatives.

Detailed fourth quarter and year-end 2012 production, proved reserves and
capital spending plans for 2013 were provided in the Company's February 6,
2013 press release.

Fourth Quarter of 2012 Results

For the quarter ended December 31, 2012, total oil and gas revenue increased
by 17% to $31.9 million compared to $27.3 million in 2011 and cash flow from
operations decreased by 3% to $14.2 million from $14.6 million in 2011.

Total operating expenses were $27.8 million during the fourth quarter of 2012
compared to $20.2 million during the fourth quarter of 2011. LOE increased by
64% to $10.3 million in the fourth quarter of 2012 compared to $6.3 million
during the same period in 2011. This increase was primarily attributable to
higher California property taxes, increased well workover costs and increased
start-up operating expenses in the Atlantic Rim area resulting from the
Anadarko Petroleum Corporation acquisition. DD&A was $12.6 million, or $21.73
per BOE, representing an increase of 27% over the fourth quarter of 2011.

G&A expenses increased by 24% to $4.9 million for the fourth quarter of 2012
compared to $4.0 million for the fourth quarter of 2011. This increase was due
primarily to the severance packages for four former executive officers and
employees. Non-cash stock-based compensation expense was $0.9 million for the
three months ended December 31, 2012, compared to $0.4 million for the three
months ended December 31, 2011.

The Company's net gain on derivative financial instruments was $0.8 million
during the fourth quarter of 2012, which was comprised of a $1.2 million
realized cash loss on commodity derivatives and a $2.0 million unrealized,
non-cash gain on commodity derivatives.

2012 Year-End Debt and Liquidity

At December 31, 2012, the Company had $99.5 million outstanding under its
senior credit facility, with $40.5 million of borrowing capacity available. At
December 31, 2012, Warren was, and currently is, in full compliance with all
covenants under its senior credit facility. The Company will undergo its
semi-annual borrowing base redetermination in April 2013.

2012 Capital Expenditures

Capital expenditures for 2012 were $46 million, which included $31 million for
drilling and development operations in the Wilmington Field oil properties in
California, $11 million for facilities improvements and infrastructure costs
in California, and $4 million relating to operations in our coalbed methane
natural gas properties in Wyoming. Additionally, we spent $16 million on the
acquisition from Anadarko Petroleum of additional oil and gas interests and
midstream assets in the Atlantic Rim project in Wyoming.

Hedging Update

Warren has entered into several financial derivative contracts to hedge our
exposure to commodity price risk associated with anticipated future oil and
gas production. As of the date hereof, the Company owns Brent Crude indexed
put options with an exercise price of $70 per barrel for 1,375 BOPD from
January 1, 2013 through September 30, 2013; NYMEX natural gas swaps with a
price of $3.39 for 7,000 MMbtu/d from January 1, 2013 through December 31,
2013; and NYMEX natural gas swaps with a price of $3.79 for 7,000 MMbtu/d from
January 1, 2014 through December 31, 2014.

2013 Guidance

Warren provides the following forecast for net production based on the
information available at the time of this release. Please see the
forward-looking statement at the end of this release for more discussion of
the inherent limitations of this information.

                     First Quarter ending Year ending
                      March 31, 2013       December 31, 2013
Production:                               
Oil (MBbl)            250 – 260            1,125 – 1,225
Gas (MMcf)            1,500 – 1,600        6,000 – 6,500
Oil Equivalent (Mboe) 500 – 527            2,125 – 2,308

Financial and Statistical Data Tables

Following are financial highlights for the comparative fourth quarters and
annual periods ended December 31, 2012 and 2011. All production volumes and
dollars are expressed on a net revenue interest basis.


Warren Resources, Inc.                              
Consolidated Statements of                          
Operations
                                                   
                          Three Months Ended        Year Ended
                          December 31,              December 31,
                          2012         2011         2012         2011
                          (in thousands, except per (in thousands, except per
                           share information)        share information)
Operating Revenues                                             
Oil and gas sales          $31,904      $27,280     $121,797     $103,371
                                                              
Operating Expenses                                             
Lease operating expenses   10,310       6,302        33,072       30,637
and taxes
Depreciation, depletion    12,601       9,935      47,172      30,517
and amortization
General and administrative 4,917        3,972        19,844       14,819
Total operating expenses   27,828       20,209       100,088      75,973
Income from operations     4,076        7,071        21,709       27,398
                                                              
Other income (expense)                                         
Interest and other income  31           15           90           77
Interest expense           (855)        (1,095)      (3,311)      (3,188)
Gain (loss) on derivative  797          (2,992)     (2,975)     (2,726)
financial instruments
Total other expense        (27)         (4,072)      (6,196)      (5,837)
Income before income taxes 4,049        2,999        15,513       21,561
Deferred income tax        7            (2)          (7)          (78)
expense (benefit)
Net income                 4,042        3,001        15,520       21,639
                                                              
Less dividends and
accretion on preferred     2            2            10           10
shares
                                                              
Net income applicable to   $4,040       $ 2,999      $15,510      $21,629
common stockholders
                                                              
Income per share - Basic  $0.06       $0.04        $0.22       $0.31
Income per share -        $0.06       $0.04        $0.22       $0.30
Diluted
                                                              
Weighted average common    71,454,487  70,886,560  71,376,046  70,830,855
shares outstanding - Basic
Weighted average common
shares outstanding -       72,142,941  71,829,277  72,096,672  72,047,488
Diluted
                                                              
Production:                                                    
Gas - MMcf                 1,842        1,300        5,514        5,020
Oil - MBbls                273          247          1,109        911
Total Equivalents (MBoe)   580          463          2,028        1,748
                                                              
Realized Prices:                                               
Gas - Mcf                  $3.33       $3.47       $2.78       $3.98
Oil - Bbl                  $94.42       $92.37       $96.02       $91.53
Total Equivalents (Boe)    $55.02      $58.89       $60.06      $59.14
                                                   
                          Three Months Ended        Year Ended
                          December 31,              December 31,
                          2012         2011         2012         2011
                          (in thousands)            (in thousands)
Net cash flow provided by                                      
operating activities:
                                                              
Cash flow from operations  $14,200     $14,571     $66,837     $46,756
Changes in working capital 2,358        (61)         (1,134)      (1,873)
accounts
Cash flow from operations
before working capital     $16,558     $14,510     $65,703      $44,883
changes
                                                              

About Warren Resources

Warren Resources, Inc. is an independent energy company engaged in the
acquisition, exploration, development and production of domestic oil and
natural gas reserves. Warren's activities are primarily focused on oil in the
Wilmington field in California and natural gas in the Washakie Basin in
Wyoming.

Forward-Looking Statements

Portions of this press release contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. A number of factors can and will cause actual
results to differ materially from the projections, anticipated results or
other expectations expressed in this release. Warren believes that its
expectations are based on reasonable assumptions. No assurance, however, can
be given that such expectations will prove to have been correct. Some factors
that could cause actual results to differ materially from those in the
forward-looking statements, include, but are not limited to, changes in oil
and gas prices, changes in expected levels of oil and gas reserve estimates
and production estimates, the timing and results of drilling and other
development activities, governmental and environmental regulations and
permitting requirements and delays, the availability of capital and credit
market conditions, unsuccessful exploratory activities, planned capital
expenditures, unexpected cost increases, delays in completing production,
treatment and transportation facilities, the availability and cost of
obtaining equipment and technical personnel, operating hazards, risks
associated with the availability of acceptable transportation arrangements,
unanticipated operational problems, potential liability for remedial actions
under existing or future environmental regulations, changes in tax,
environmental and other laws applicable to our business as well as general
domestic and international economic and political conditions. All
forward-looking statements are made only as of the date hereof and, unless
legally required, the Company undertakes no obligation to update any such
statements, whether as a result of new information, future events or
otherwise. Further information on risks and uncertainties that may affect
Warren's operations and financial performance, and the forward-looking
statements made herein, is available in the Company's filings with the
Securities and Exchange Commission (www.sec.gov), including its Annual Report
on Form 10-K under the headings "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and in other
public filings and press releases.

CONTACT: Media Contact:
         David Fleming
         212-697-9660

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