-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Txz818e1SMbIPWhHNOqw3otF5Anrj4bCucUIFi53Zl7aaqXy5TVZqgh7iWGl73ow qcljBvyG10GXMnHs2+NQIw== 0000930661-01-502350.txt : 20020410 0000930661-01-502350.hdr.sgml : 20020410 ACCESSION NUMBER: 0000930661-01-502350 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WISER OIL CO CENTRAL INDEX KEY: 0000107874 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 550522128 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12640 FILM NUMBER: 1785308 BUSINESS ADDRESS: STREET 1: 8115 PRESTON RD STE 400 CITY: DALLAS STATE: TX ZIP: 75225 BUSINESS PHONE: 2142650080 MAIL ADDRESS: STREET 1: 8115 PRESTON ROAD STREET 2: SUITE 400 CITY: DALLAS STATE: TX ZIP: 75225 10-Q 1 d10q.txt FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter ended September 30, 2001 Commission file number 0-5426 THE WISER OIL COMPANY A DELAWARE CORPORATION I.R.S. Employer Identification No. 55-0522128 8115 Preston Road, Suite 400 Dallas, Texas 75225 Telephone (214) 265-0080 Former name, former address and former fiscal year, if changed since last report. NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. x ----- ----- Yes No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding at September 30, 2001 ------------- --------------------------------- $.01 par value 9,172,954 ================================================================================ The Wiser Oil Company THE WISER OIL COMPANY PART I FINANCIAL INFORMATION Item 1. Financial Statements The consolidated condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments which are, in the opinion of management, necessary to fairly present such information. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including significant accounting policies, normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. 2 The Wiser Oil Company THE WISER OIL COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, December 31, 2001 2000 ------------- ------------ (000's) except share data Assets Current Assets: Cash and cash equivalents........................................ $ 23,878 $ 34,144 Restricted cash.................................................. -- 992 Accounts receivable.............................................. 13,773 16,621 Inventories...................................................... 588 420 Fair value of derivatives........................................ 6,009 -- Prepaid expenses................................................. 3,685 426 --------- --------- Total current assets......................................... 47,933 52,603 --------- --------- Property and Equipment, at cost: Oil and gas properties (successful efforts method)............... 350,231 284,615 Other properties................................................. 3,958 3,964 --------- --------- 354,189 288,579 Accumulated depreciation, depletion and amortization............. (127,432) (128,211) --------- --------- Net property and equipment....................................... 226,757 160,368 Other Assets...................................................... 3,332 3,342 --------- --------- $ 278,022 $ 216,313 ========= ========= Liabilities and Stockholders' Equity Current Liabilities: Accounts payable................................................. $ 11,755 $ 14,310 Current portion of long-term debt................................ -- 500 Dividends payable................................................ 441 265 Accrued liabilities.............................................. 6,447 2,357 --------- --------- Total current liabilities...................................... 18,643 17,432 --------- --------- Long-term Debt.................................................... 143,792 124,600 Deferred Income Taxes............................................. 12,006 -- Stockholders' Equity (Note 2): Series C convertible preferred stock - $10 par value; 1,000,000 shares authorized; 1,000,000 shares issued and outstanding at September 30, 2001 and 600,000 shares outstanding at December 31, 2000 - at $25 liquidation value per share 10,000 6,000 Common stock - $.01 par value; shares authorized - 30,000,000; shares issued - 9,380,558 at September 30, 2001 and 9,209,113 at December 31, 2000; shares outstanding - 9,172,954 at September 30, 2001 and 9,032,909 at December 31, 2000......... 94 92 Preferred stock discount, net of $1,333,000 amortization......... (8,673) -- Paid-in capital.................................................. 55,126 38,568 Retained earnings................................................ 48,075 31,721 Accumulated other comprehensive income........................... 1,843 629 Treasury stock - 207,604 shares at September 30, 2001 and 176,204 shares at December 31, 2000, at cost............... (2,884) (2,729) --------- --------- Total stockholders' equity..................................... 103,581 74,281 --------- --------- $ 278,022 $ 216,313 ========= =========
The notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 are an integral part of these financial statements. 3 The Wiser Oil Company THE WISER OIL COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Three Months For the Nine Months -------------------- ------------------- Ended September 30, Ended September 30, ------------------- ------------------- 2001 2000 2001 2000 ------- ------- ------- ------- (000's except per share data) Revenues: Oil and gas sales............................. $19,179 $17,585 $63,415 $48,463 Gain on sale of property...................... 111 -- 8,407 -- Interest income............................... 208 535 1,116 1,231 Other......................................... 2,139 109 2,680 559 ------- ------- ------- ------- 21,637 18,229 75,618 50,253 ------- ------- ------- ------- Costs and Expenses: Production and operating...................... 7,023 6,150 21,383 17,568 Depreciation, depletion and amortization...... 4,987 3,803 13,783 11,534 Property impairments.......................... -- - -- 680 Exploration................................... 1,621 638 5,525 2,878 General and administrative.................... 1,885 1,687 5,810 6,863 Interest expense.............................. 3,486 3,156 9,966 9,500 ------- ------- ------- ------- 19,002 15,434 56,467 49,023 ------- ------- ------- ------- Earnings Before Income Taxes.................... 2,635 2,795 19,151 1,230 Income Taxes.................................... (256) -- (445) -- ------- ------- ------- ------- Net Income...................................... $ 2,379 $ 2,795 $18,706 $ 1,230 ======= ======= ======= ======= Earnings Per Share: Basic.......................................... $0.10 $0.28 $1.79 $ 0.10 ======= ======= ======= ======= Diluted........................................ $0.10 $0.22 $1.34 $ 0.10 ======= ======= ======= =======
The notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 are an integral part of these financial statements. 4 The Wiser Oil Company THE WISER OIL COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the Nine Months Ended September 30, 2001
Shares Amount -------- -------- (000's) Series C convertible preferred stock, $10 par value - --------------------------------------------------- Balance at beginning of period............................................ 600 $ 6,000 Issuance of preferred stock............................................... 400 4,000 -------- -------- Balance at end of period.................................................. 1,000 10,000 ======== ======== Common stock, $0.01 par value: - ------------------------------ Balance at beginning of period............................................ 9,209 92 Issuance of common stock.................................................. 172 2 -------- -------- Balance at end of period.................................................. 9,381 94 -------- -------- Preferred stock discount: - ------------------------- Balance at beginning of period............................................ -- Issuance of preferred stock............................................... (10,006) Amortization of preferred stock discount.................................. 1,333 -------- Balance at end of period.................................................. (8,673) -------- Paid-in capital: - ---------------- Balance at beginning of period............................................ 38,568 Issuance of preferred stock............................................... 6,000 Beneficial conversion option.............................................. 9,192 Issuance of common stock.................................................. 553 Issuance of warrants...................................................... 813 -------- Balance at end of period.................................................. 55,126 -------- Retained earnings: - ------------------ Balance at beginning of period............................................ 31,721 Net income................................................................ 18,706 Dividends on preferred stock.............................................. (1,019) Amortization of preferred stock discount.................................. (1,333) -------- Balance at end of period.................................................. 48,075 -------- Accumulated other comprehensive income: - --------------------------------------- Balance at beginning of period............................................ 629 Foreign currency translation adjustment................................... (1,852) Net change in derivative fair value: Cumulative effect of accounting change................................. (3,083) Change in derivative fair value........................................ 7,216 Reclassification adjustments........................................... (1,067) -------- Balance at end of period.................................................. 1,843 -------- Treasury stock: - --------------- Balance at beginning of period............................................ (176) (2,729) Purchase of treasury stock................................................ (32) (155) -------- -------- Balance at end of period.................................................. (208) (2,884) -------- -------- Total Stockholders' Equity.................................................. 9,173 $103,581 ======== ========
The notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 are an integral part of these financial statements. 5 The Wiser Oil Company THE WISER OIL COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months ------------------- Ended September 30, ------------------- 2001 2000 -------- -------- (000's) Cash Flows From Operating Activities: Net Income (Loss)............................................. $ 18,706 $ 1,230 Adjustments to reconcile net income to operating cash flows: Depreciation, depletion and amortization.................... 13,783 11,534 Deferred income taxes....................................... 471 -- Property sale gains......................................... (8,407) (11) Foreign currency translation................................ (298) 1 Property impairments and abandonments....................... 1,907 2,201 Amortization of other assets................................ 507 507 Other Changes: Accounts receivable....................................... 2,848 (4,640) Restricted cash........................................... 992 (2,985) Inventories............................................... (168) 7 Fair value of derivative.................................. (2,335) -- Prepaid expenses.......................................... (3,259) (579) Other assets.............................................. (442) 84 Accounts payable.......................................... (2,555) 922 Accrued liabilities....................................... 4,090 2,440 Deferred benefits cost.................................... -- (216) -------- -------- Operating Cash Flows................................... 25,840 10,495 -------- -------- Cash Flows From Investing Activities: Capital expenditures.......................................... (65,237) (14,317) Proceeds from sales of property and equipment................. 219 11 -------- -------- Investing Cash Flows................................... (65,018) (14,306) -------- -------- Cash Flows From Financing Activities: Increase in long-term debt.................................... 19,036 -- Preferred stock issued, net of issuance costs................. 10,000 13,675 Common stock issued........................................... 25 -- Treasury stock purchased...................................... (155) -- Warrants for common stock issued.............................. 6 9 -------- -------- Financing Cash Flows................................... 28,912 13,684 -------- -------- Net Increase (Decrease).......................................... (10,266) 9,873 Cash and Cash Equivalents, beginning of period................... 34,144 21,447 -------- -------- Cash and Cash Equivalents, end of period......................... $ 23,878 $ 31,320 ======== ========
The notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 are an integral part of these financial statements. 6 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements Note 1. Hedging Activities Following are the Company's hedging arrangements that were in effect on October 1, 2001 or entered into before November 14, 2001:
The Wiser Oil Company Crude Oil: Daily Volume Price per Bbl ---------- ------------ ---------------------------- October 1, 2001 to December 31, 2001 1,750 Bbls $28.18 October 1, 2001 to December 31, 2001 1,000 Bbls (1) $25.00 floor, $30.41 ceiling January 1, 2002 to March 31, 2002 1,000 Bbls (1) $25.00 floor, $29.34 ceiling January 1, 2002 to March 31, 2002 (a) 2,000 Bbls $27.00 April 1, 2002 to June 30, 2002 (b) 1,000 Bbls $26.75 January 1, 2002 to June 30, 2002 (d) 1,000 Bbls $22.05 Natural Gas: Daily Volume Price per MMBTU ------------ ------------ ---------------------------- October 1, 2001 to December 31, 2001 10,000 MMBTU (1) $4.00 floor, $6.10 ceiling January 1, 2002 to June 30, 2002 (c) 10,000 MMBTU $4.01 January 1, 2002 to June 30, 2002 (d) 5,000 MMBTU $3.15 April 1, 2002 to October 31, 2002 5,000 MMBTU (1) $3.00 floor, $3.62 ceiling July 1, 2002 to September 30, 2002 (d) 5,000 MMBTU $3.32 October 1, 2002 to December 31, 2002 5,000 MMBTU (1) $3.15 floor, $4.00 ceiling October 1, 2001 to December 31, 2001 4,000 MMBTU (1) $4.06 floor, $5.85 ceiling October 1, 2001 to December 31, 2001 4,000 MMBTU (1) $4.17 floor, $5.53 ceiling
(1) These are "collar" hedges whereby the Company will receive the actual market price if the actual market price is between the floor price and the ceiling price. If the actual market price is below or above the floor or ceiling prices, the price received by the Company will be limited to the floor price or ceiling price, respectively. (a) This swap is extendable to June 30, 2002 at the same daily volume and price per bbl at the option of the counterparty. As such, it does not qualify for hedge accounting and changes in fair value will be recorded in earnings. (b) This swap is extendable to September 30, 2002 at the same daily volume and price per bbl at the option of the counterparty. As such, it does not qualify for hedge accounting and changes in fair value will be recorded in earnings. (c) This swap is extendable to March 31, 2003 at the same daily volume and price per mcf at the option of the counterparty. As such, it does not qualify for hedge accounting and changes in fair value will be recorded in earnings. (d) This swap is extendable to December 31, 2002 at the same daily volume and price per mcf or bbl at the option of the counterparty. As such, it does not qualify for hedge accounting and changes in fair value will be recorded in earnings. During the third quarter of 2001, oil and gas sales were increased by $2.6 million and other income was increased by $2.0 million from the Company's hedging activities. During the first nine months of 2001, oil and gas sales were increased by $1.1 million and other income was increased by $2.3 million from the Company's hedging activities. Based on September 30, 2001 NYMEX futures prices, the fair value of the Company's hedging arrangements at September 30, 2001 was a gain of $2.9 million for collars and $3.1 million for swaps. A 10% increase in both the oil price and the gas price would decrease this gain by $2.0 million and a 10% decrease in both the oil price and the gas price would increase this gain by $3.2 million. The counterparty for all of the Company's hedging arrangements is Enron North America Corp. 7 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued) Note 2. Convertible Preferred Stock On June 1, 2001, the Company sold an additional 396,000 shares of Series C Cumulative Convertible Preferred Stock ("Preferred Stock") to Wiser Investors, L.P., a Delaware limited partnership ("Investors") for $9.9 million or $25 per share and 4,000 shares of Preferred Stock to A. Wayne Ritter for $100,000 or $25 per share. Wiser Investment Company, LLC ("WIC") is the general partner of Investors. The Preferred Stock is convertible at the option of the holder into shares of the Company's common stock at a conversion price of $4.25 per common share, subject to customary adjustments. The Preferred Stock pays dividends in cash or in shares of the Company's common stock, at the option of the Company, at an annual rate of 7%. The holders of the Preferred Stock have the same voting rights as the holders of the Company's common stock with each share of the Preferred Stock having one vote for each share of common stock into which it is convertible. Any shares of Preferred Stock not previously converted will convert automatically to common stock on May 26, 2003, or whenever the market price of the Company's common stock exceeds $10.00 per share for a period of 60 consecutive trading days. On June 1, 2001, WIC acquired warrants to purchase 296,686 shares of the Company's common stock at $4.25 per share. The purchase price of the warrants is $0.02 per warrant. The warrants are not exercisable until May 26, 2002 and will expire on May 26, 2007. The warrants were recorded based on their relative fair value to the Preferred Stock at the time of issuance. Because the market price of the Company's common stock exceeded the conversion price of the preferred stock on the date of issuance, a preferred stock discount was recorded. This discount is being amortized as a reduction of net income available to common stock until the redemption date of May 26, 2003. If the preferred stock is converted prior to May 2003, the unamortized discount will be recognized in the period of conversion. Note 3. Acquisition of Invasion Energy Inc. On May 22, 2001, the Company acquired 100% of the outstanding common stock of Invasion Energy Inc. ("Invasion") through its wholly-owned subsidiary The Wiser Oil Company of Canada ("Wiser Canada"). The total purchase price was $37.5 million which was financed with $22.6 million of cash and $14.9 million of borrowings by Wiser Canada under its credit facility. The aggregate purchase price is computed as follows (000's):
Aggregate Purchase Price -------------- Aggregate purchase price for 100% of Invasion Common Stock $21,419 Nonrecurring cash transaction costs 1,201 ------- Aggregate purchase price $22,620 =======
8 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued) The following table represents the allocation of the total purchase price of Invasion to the acquired assets and liabilities of Invasion (000's).
Allocation of Aggregate Purchase Price --------------- Net working capital $ 1,142 Property and equipment 48,145 Long-term debt (14,928) Deferred income taxes (11,739) -------- Aggregate purchase price $ 22,620 ========
Following are the unaudited pro forma results of operations for the Company for the nine months ended September 30, 2001 and September 30, 2000, as if the acquisition of Invasion took place on January 1, 2000 (000's):
Nine Months Ended September 30, ------------------------------- 2001 2000 ------- ------- Revenues $85,180 $59,428 Expenses 64,666 58,661 ------- ------- Net Income $20,514 $ 767 ======= ======= Earnings per share - Basic $ 1.98 $ 0.04 ======= ======= Earnings per share - Diluted $ 1.46 $ 0.04 ======= =======
Note 4. Gain on Sale of Assets On June 29, 2001, Wiser Canada entered into an Asset Exchange Agreement to acquire producing properties and exploration acreage valued at $25.3 million (CDN $38.3 million). Under the Agreement, Wiser Canada exchanged certain of its producing properties valued at $16.2 million and paid $9.1 million in cash, before closing adjustments. The exchange of producing properties valued at $16.2 million has been accounted for as a sale of assets and, accordingly, a gain of $8.3 million has been recognized in the consolidated statements of income. The $9.1 million cash portion of the transaction was funded with $4.5 million of cash on hand and $4.6 million of bank debt. 9 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued) Note 5. Net Income per Common Share Basic net income per common share is computed based on the weighted average shares of common stock outstanding. Net income per share computations to reconcile basic and diluted net income consist of the following (in thousands, except per share data):
For the Quarter For the Nine Months Ended September 30, Ended September 30, ------------------- ----------------------- 2001 2000 2001 2000 ------- -------- ------- ------ Net income (loss).......................................... $ 2,379 $ 2,795 $18,706 $ 1,230 Less preferred dividends................................... (441) (265) (1,019) (365) Less amortization of preferred stock discount.............. (1,010) - (1,333) - ------- ------- ------- ------- Net income (loss) available to common stock................ 928 2,530 16,354 865 Plus: Income impact of assumed conversions: Dividends on preferred stock and amortization............ 1,451 265 2,352 365 ------- ------- ------- ------- Net income (loss) available to common plus assumed conversions...................................... $ 2,379 $ 2,795 $18,706 $ 1,230 ======= ======= ======= ======= Basic weighted average shares.............................. 9,202 8,952 9,152 8,952 Effect of dilutive securities: Convertible preferred stock.............................. 5,882 3,529 4,582 - Warrants................................................. 262 - 213 - Stock options............................................ 54 1 57 - ------- ------- ------- ------- Diluted weighted average shares............................ 15,400 12,482 14,004 8,952 ======= ======= ======= ======= Net Income (Loss) per Share: Basic.................................................... $ 0.10 $ 0.28 $ 1.79 $ 0.10 Diluted.................................................. 0.10 0.22 1.34 0.10
The effect of the convertible preferred stock for the quarter ended September 30, 2001 and the year ended September 30, 2000 was antidilutive. Note 6. Comprehensive Income Comprehensive income is as follows (000's):
For the Quarter For the Nine Months Ended September 30, 2001 Ended September 30, 2001 ------------------------ ------------------------ Net income........................................... $ 2,379 $ 18,706 Foreign currency translation adjustment.............. (1,121) (1,852) Net change in derivative fair value: Cumulative effect of accounting change............. -- (3,083) Change in derivative fair value.................... 2,935 7,216 Reclassification adjustments - contract settlements.. (2,604) (1,067) ------- -------- Comprehensive Income................................. $ 1,589 $ 19,920 ======= ========
10 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued) Note 7. Long-term Debt On May 21, 2001 the Company entered into an $80 million revolving credit facility ("Union Revolver") with Union Bank of California, N.A. and National Bank of Canada. The initial aggregate borrowing base under the Union Revolver is $40 million and is allocated $30 million for general corporate purposes and $10 million exclusively for acquisition of oil and gas properties. The $40 million aggregate borrowing base is also allocated $20 million for Canadian borrowings and $20 million for U.S. borrowings. The aggregate borrowing base is re-determined by the banks semi-annually starting in October 2001. At September 30, 2001, the Company had CDN$ 30.0 million (USD$ 19.1 million) of Canadian borrowings outstanding and $20.0 million was available primarily for U.S. borrowings. Available loan and interest options are (i) Prime Rate Loans, at the bank's prime interest rate; (ii) Eurodollar Loans, at LIBOR plus 2.125%, 2.375% or 2.625% depending on the percentage of the borrowing base actually borrowed by the Company; (iii) Canadian Prime Rate Advances, at the Canadian bank's prime interest rate; and (iv) Canadian Banker's Acceptances, at the Canadian drawing fee rate. The average interest rate during the third quarter of 2001 under the Union Revolver was 6.90%. The commitment fee on the unused borrowing base is 0.375%. The Union Revolver imposes certain restrictions on sales of assets, payment of dividends, incurring of indebtedness and requires the Company to maintain certain financial ratios. Under the Union Revolver, there is no requirement to maintain restricted cash balances after May 21, 2001. Note 8. Summary of Guaranties of 9 1/2% Senior Subordinated Notes In May 1998, the Company issued $125 million aggregate principal amount of its 9 1/2% Senior Subordinated Notes due 2007 pursuant to an offering exempt from registration under the Securities Act of 1933. The notes are unsecured obligations of the Company, subordinated in right of payment to all existing and any future senior indebtedness of the Company. The notes rank pari passu with any future senior subordinated indebtedness and senior to any future junior subordinated indebtedness of the Company. The notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, senior subordinated basis by certain wholly owned subsidiaries of the Company (the "Subsidiary Guarantors"). At the time of the initial issuance of the notes, Wiser Oil Delaware, Inc., The Wiser Marketing Company, Wiser Delaware LLC, T.W.O.C., Inc. and The Wiser Oil Company of Canada were the Subsidiary Guarantors (the "Initial Subsidiary Guarantors"). Except for two wholly owned subsidiaries that are inconsequential to the Company on a consolidated basis, the Initial Subsidiary Guarantors comprise all of the Company's direct and indirect subsidiaries. 11 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued) Sections 13 and 15(d) of the Securities Exchange Act of 1934 require presentation of the following unaudited summarized financial information of the Subsidiary Guarantors. The Company has not presented separate financial statements and other disclosures concerning each Subsidiary Guarantor because such information is not material to investors. There are no significant contractual restrictions on distributions from each of the Subsidiary Guarantors to the Company.
Condensed Income Statement for the Wiser Oil Subsidiary Consolidation Quarter Ended September 30, 2001 (Parent) Guarantors Adjustments Total ---------- ----------- ------------- --------- (000's) Revenues: Oil and gas sales $ 10,136 $ 9,043 $ - $ 19,179 Other 2,302 156 - 2,458 -------- ------- ----- --------- Total revenues 12,438 9,199 - 21,637 -------- ------- ----- --------- Costs and Expenses: Production and operating 5,170 1,853 - 7,023 DD&A and impairments 2,008 2,979 - 4,987 Exploration 1,230 391 - 1,621 General and administrative 1,278 607 - 1,885 Interest expense 3,157 329 - 3,486 -------- ------- ----- --------- Total Expenses 12,843 6,159 - 19,002 -------- ------- ----- --------- Income (Loss) Before Taxes (405) 3,040 - 2,635 Income tax -- (256) - (256) -------- ------- ----- --------- Net Income (Loss) $ (405) $ 2,784 $ - $ 2,379 ======== ======= ===== ========= Condensed Income Statement for the Quarter Ended September 30, 2000 Revenues: Oil and gas sales $ 10,957 $ 6,628 $ - $ 17,585 Other 594 50 - 644 -------- ------- ----- --------- Total revenues 11,551 6,678 - 18,229 -------- ------- ----- --------- Costs and Expenses: Production and operating 5,213 937 - 6,150 DD&A and impairments 2,357 1,446 - 3,803 Exploration 343 295 - 638 General and administrative 1,363 324 - 1,687 Interest expense 3,150 6 - 3,156 -------- ------- ----- --------- Total Expenses 12,426 3,008 - 15,434 -------- ------- ----- --------- Income (Loss) Before Taxes (875) 3,670 - 2,795 -------- ------- ----- --------- Net Income (Loss) $ (875) $ 3,670 $ - $ 2,795 ======== ======= ===== =========
12 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued)
Condensed Income Statement for the Wiser Oil Subsidiary Consolidation Nine Months Ended September 30, 2001 (Parent) Guarantors Adjustments Total ---------- ----------- ------------- --------- (000's) Revenues: Oil and gas sales $ 38,559 $ 24,856 $ - $ 63,415 Other 3,660 8,543 - 12,203 -------- -------- ----- --------- Total revenues 42,219 33,399 - 75,618 -------- -------- ----- --------- Costs and Expenses: Production and operating 17,083 4,300 - 21,383 DD&A and impairments 6,641 7,142 - 13,783 Exploration 4,166 1,359 - 5,525 General and administrative 4,172 1,638 - 5,810 Interest expense 9,524 442 - 9,966 -------- -------- ----- --------- Total Expenses 41,586 14,881 - 56,467 -------- -------- ----- --------- Income Before Taxes 633 18,518 - 19,151 Income tax -- (445) - (445) -------- -------- ----- --------- Net Income $ 633 $ 18,073 $ - $ 18,706 ======== ======== ===== ========= Condensed Income Statement for the Nine Months Ended September 30, 2000 Revenues: Oil and gas sales $ 30,221 $ 18,242 $ - $ 48,463 Other 1,699 91 - 1,790 -------- -------- ----- --------- Total revenues 31,920 18,333 - 50,253 -------- -------- ----- --------- Costs and Expenses: Production and operating 14,765 2,803 - 17,568 DD&A and impairments 7,010 5,204 - 12,214 Exploration 1,092 1,786 - 2,878 General and administrative 5,287 1,576 - 6,863 Interest expense 9,494 6 - 9,500 -------- -------- ----- --------- Total Expenses 37,648 11,375 - 49,023 -------- -------- ----- --------- Income (Loss) Before Taxes (5,728) 6,958 - 1,230 -------- -------- ----- --------- Net Income (Loss) $ (5,728) $ 6,958 $ - $ 1,230 ======== ======== ===== =========
13 The Wiser Oil Company THE WISER OIL COMPANY Notes to Financial Statements (continued)
Condensed Statement of Cash Flows for Wiser Oil Subsidiary Consolidation the Nine Months Ended Sept. 30, 2001 (Parent) Guarantors Adjustments Total ---------- ----------- ------------- --------- (000's) Cash Flows From Operating Activities: Net income $ 633 $ 18,073 $ - $ 18,706 Add back reconciling items 8,498 (535) - 7,963 Other changes 2,588 (3,417) - (829) -------- -------- ----- ---------- Operating Cash Flows 11,719 14,121 - 25,840 -------- -------- ----- ---------- Cash Flows From Investing Activities: Capital expenditures (12,275) (52,962) - (65,237) Proceeds from property sales - 219 - 219 -------- -------- ----- ---------- Investing Cash Flows (12,275) (52,743) - (65,018) -------- -------- ----- ---------- Cash Flows From Financing Activities: Intercompany transfers (19,500) 19,500 - - Long term debt (500) 19,536 - 19,036 Preferred stock issued 10,000 - - 10,000 Common stock issued 25 - - 25 Treasury stock purchased (155) - - (155) Warrants issued 6 - - 6 -------- -------- ----- ---------- Financing Cash Flows (10,124) 39,036 - 28,912 -------- -------- ----- ---------- Net Increase (Decrease) in Cash (10,680) 414 - (10,266) Cash and Cash Equivalents, beginning of period 29,518 4,626 - 34,144 -------- -------- ----- ---------- Cash and Cash Equivalents, end of period $ 18,838 $ 5,040 $ - $ 23,878 ======== ======== ===== ========== Condensed Statement of Cash Flows for the Nine Months Ended Sept. 30, 2000 Cash Flows From Operating Activities: Net income (loss) $ (5,728) $ 6,958 - $ 1,230 Add back reconciling items 8,305 5,927 - 14,232 Other changes (3,159) (1,808) - (4,967) -------- -------- ----- ---------- Operating Cash Flows (582) 11,077 - 10,495 -------- -------- ----- ---------- Cash Flows From Investing Activities: Capital expenditures (5,936) (8,381) - (14,317) Proceeds from property sales - 11 - 11 -------- -------- ----- ---------- Investing Cash Flows (5,936) (8,370) - (14,306) -------- -------- ----- ---------- Cash Flows From Financing Activities: Preferred stock issued 13,675 - - 13,675 Warrants issued 9 - - 9 -------- -------- ----- ---------- Financing Cash Flows 13,684 - - 13,684 -------- -------- ----- ---------- Net Increase (Decrease) in Cash 7,166 2,707 - 9,873 Cash and Cash Equivalents, beginning of period 18,779 2,668 - 21,447 -------- -------- ----- ---------- Cash and Cash Equivalents, end of period $ 25,945 $ 5,375 $ - $ 31,320 ======== ======== ===== ==========
14 The Wiser Oil Company THE WISER OIL COMPANY
Notes to Financial Statements (continued) Condensed Balance Sheets Wiser Oil Subsidiary Consolidation September 30, 2001 (Parent) Guarantors Adjustments Total ---------- ----------- ------------- --------- (000's) Assets: Current assets $ 32,992 $ 14,941 $ - $ 47,933 Net property and equipment 119,655 107,102 - 226,757 Other assets 89,161 - (85,829) 3,332 -------- -------- -------- -------- Total Assets $241,808 $122,043 $(85,829) $278,022 ======== ======== ======== ======== Liabilities and Stockholders' Equity: Current liabilities $ 11,392 $ 7,251 $ - $ 18,643 Long-term debt 124,655 19,137 - 143,792 Deferred income taxes - 12,006 - 12,006 Stockholders' equity 105,761 83,649 (85,829) 103,581 -------- -------- -------- -------- Total Liabilities and Stockholders' Equity $241,808 $122,043 $(85,829) $278,022 ======== ======== ======== ======== Condensed Balance Sheets December 31, 2000 Assets: Current assets $ 41,737 $ 10,866 $ - $ 52,603 Net property and equipment 115,372 44,996 - 160,368 Other assets 51,273 - (47,931) 3,342 -------- -------- -------- -------- Total Assets $208,382 $ 55,862 $(47,931) $216,313 ======== ======== ======== ======== Liabilities and Stockholders' Equity: Current liabilities $ 9,501 $ 7,931 $ - $ 17,432 Long-term debt 124,600 - - 124,600 Stockholders' equity 74,281 47,931 (47,931) 74,281 -------- -------- -------- -------- Total Liabilities and Stockholder's Equity $208,382 $ 55,862 $(47,931) $216,313 ======== ======== ======== ========
(1) Includes the accounts of Wiser Oil Delaware, Inc., Wiser Delaware LLC and The Wiser Oil Company of Canada. See other notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Note 9. Recent Accounting Pronouncements On June 30, 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 143, "Accounting for Asset Retirement Obligations," (SFAS 143) on the accounting for obligations associated with the retirement of long-lived assets. SFAS 143 requires a liability to be recognized in the financial statements for retirement obligations meeting specific criteria. Measurement of the initial obligation is to approximate fair value with an equivalent amount recorded as an increase in the value of the capitalized asset. The asset will be depreciable in accordance with normal depreciation policy and the liability will be increased, with a charge to the income statement, until the obligation is settled. SFAS 143 is effective for fiscal years beginning after June 15, 2002. The Company is currently evaluating the effect that adoption of the provisions of SFAS 143 will have on its results of operations and financial position. 15 The Wiser Oil Company THE WISER OIL COMPANY Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparison of Quarters Ended September 30, 2001 and September 30, 2000 Revenues for the third quarter of 2001 increased $3.4 million or 19% from the third quarter of 2000, due primarily to higher oil revenues and other income. Oil sales for the third quarter of 2001 were $1.6 million higher than the third quarter of 2000 as the average price received for oil sales in the third quarter of 2001 was $25.20 per barrel, up $3.78 per barrel or 18% from the third quarter of 2000. Net oil production for the third quarter of 2001 was 401,000 barrels, up 31,000 barrels or 8% from 370,000 barrels in the third quarter of 2000. The increase in oil production was attributable primarily to the Evi-Loon field acquired in the second quarter of 2001 in an asset exchange in Canada (see Note 4). Gas sales for the third quarter of 2001 were unchanged from the third quarter of 2000 as a result of lower realized prices which were partially offset by higher gas production. The average price received for gas sales in the third quarter of 2001 was $3.28 per Mcf, a decrease of $0.38 per Mcf or 10% from the third quarter of 2000. Net gas production for the third quarter of 2001 was 2,640 MMCF, up 307 MMCF or 13% from the third quarter of 2000. The increase in net gas production was attributable primarily to an additional 850 MMCF from the Invasion acquisition effective May 22, 2001, offset by reduced gas production of 247 MMCF from several Canadian gas properties that were disposed of in the second quarter 2001 asset exchange in Canada. During the third quarter of 2001, oil and gas sales were increased by $2.6 million and other income was increased by $2.0 million from the Company's hedging activities. Hedging activities reduced oil and gas sales by $4.1 million in the third quarter of 2000. Production and operating expense for the third quarter of 2001 increased $0.9 million or 14% from the third quarter of 2000 and, on a BOE basis, production and operating expense in the third quarter of 2001 increased to $8.10 per BOE or 6% from $7.66 per BOE during the third quarter of 2000. The increase in production and operating expense was attributable primarily to the Maljamar and Wellman fields which were $0.4 million higher in the third quarter of 2001 than the third quarter of 2000. Production and operating expense also increased by $0.7 million from the Invasion acquisition. Depreciation, depletion and amortization, ("DD&A") for the third quarter of 2001, increased $1.2 million or 31% from the third quarter of 2000 due primarily to the Invasion acquisition. Exploration expense for the third quarter of 2001 was $1.6 million, up $1.0 million from the third quarter of 2000 due primarily to $0.8 million of dry hole expense in the third quarter of 2001. General and administrative expense in the third quarter of 2001 was $1.9 million, up $0.2 million from the third quarter of 2000. Interest expense during the third quarter of 2001 was $3.5 million, up $0.3 million or 10% from the third quarter of 2000 due to borrowings under the Credit Agreement for the Invasion acquisition. The Company had a net operating loss carryforward for Federal income tax purposes of $19.8 million at December 31, 2000. The tax benefits of carryforwards are recorded as an asset to the extent that management assesses the future utilization of such carryforwards as "more likely than not." When the future utilization of some portion of the carryforwards is determined not to be "more likely than not," a valuation allowance is provided to reduce the recorded tax benefits from such assets. At September 30, 2001, a valuation allowance was provided to reduce deferred tax assets to an amount equal to deferred tax liabilities. Accordingly, no Federal income tax expense was recognized in the third quarter of 2001, and income tax benefits were recognized in 2000 only to the extent of the Company's existing deferred income tax liability. Canadian income tax expense, related to the Invasion properties, of $0.3 million was recognized in the third quarter of 2001. The Company realized net income available for common stock of $0.9 million and basic net earnings per share of $0.10 in the third quarter of 2001 compared to net income of $2.5 million and net income per share of $0.28 during the third quarter of 2000. 16 The Wiser Oil Company THE WISER OIL COMPANY Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparison of Nine Months Ended September 30, 2001 and September 30, 2000 Revenues for the first nine months of 2001 increased $25.4 million or 50% from the first nine months of 2000, due to an $8.3 million gain on sale of property and significantly higher oil and gas revenues in the first nine months of 2001. Oil sales for the first nine months of 2001 were $5.4 million higher than the first nine months of 2000 as the average price received for oil sales in the first nine months of 2001 was $25.80 per barrel, up $3.54 per barrel or 16% from the first nine months of 2000. Net oil production for the first nine months of 2001 was 1,174,000 barrels, up 57,000 barrels or 5% from 1,117,000 barrels in the first nine months of 2000. Gas sales for the first nine months of 2001 were $10.8 million higher than the first nine months of 2000 due to higher realized prices and increased gas production. The average price received for gas sales in the first nine months of 2001 was $4.35 per Mcf, an increase of $1.46 per Mcf or 50% from the first nine months of 2000. Net gas production for the first nine months of 2001 was 7,109 MMCF, up 172 MMCF or 2% from the first nine months of 2000. The increase in net gas production was attributable primarily to an additional 1,202 MMCF from the Invasion acquisition effective May 22, 2001, offset by reduced gas production of 247 MMCF from several Canadian gas properties that were disposed of in the second quarter 2001 asset exchange (see Note 4) and also by reduced production from the San Juan, South Texas and Dimmitt/Slash Ranch properties. During the first nine months of 2001, oil and gas sales were increased by $1.1 million and other income was increased by $2.4 million from the Company's hedging activities. Hedging activities reduced oil and gas sales by $8.1 million in the first nine months of 2000. Production and operating expense for the first nine months of 2001 increased $3.8 million or 22% from the first nine months of 2000 and, on a BOE basis, increased to $8.69 per BOE or 20% from $7.21 per BOE. Higher oil and gas prices led to increased production taxes in the first nine months of 2001 which were $0.8 million higher than the first nine months of 2000. Production and operating expense was also increased by $0.9 million from the Invasion acquisition and production expense at the Maljamar and Wellman fields in the first nine months of 2001 was $0.4 million higher than the first nine months of 2000. Depreciation, depletion and amortization, ("DD&A") for the first nine months of 2001, increased $2.2 million or 20% from the first nine months of 2000 due primarily to the Invasion acquisition. Exploration expense for the first nine months of 2001 was $5.5 million, up $2.6 million from the first nine months of 2000 due to increased exploration activities in the first nine months of 2001. General and administrative expense in the first nine months of 2001 was $5.8 million, down $1.1 million from the first nine months of 2000 due primarily to $2.2 million of officer termination expense in the first nine months of 2000. Interest expense during the first nine months of 2001 was $10.0 million, up $0.5 million or 5% from the first nine months of 2000 due to borrowings under the Credit Agreement for the Invasion acquisition. The Company had a net operating loss carryforward for Federal income tax purposes of $19.8 million at December 31, 2000. The tax benefits of carryforwards are recorded as an asset to the extent that management assesses the future utilization of such carryforwards as "more likely than not." When the future utilization of some portion of the carryforwards is determined not to be "more likely than not," a valuation allowance is provided to reduce the recorded tax benefits from such assets. At September 30, 2001, a valuation allowance was provided to reduce US deferred tax assets to an amount equal to deferred tax liabilities. Accordingly, no US Federal income tax expense was recognized in the first nine months of 2001, and income tax benefits were recognized in 2000 only to the extent of the Company's existing deferred income tax liability. Canadian income tax expense of $0.4 million was recognized in the first nine months of 2001 related to the Invasion properties. The Company realized net income available for common stock of $16.4 million and basic net earnings per share of $1.79 in the first nine months of 2001 compared to net income of $0.9 million and net income per share of $0.10 during the first nine months of 2000. 17 The Wiser Oil Company Liquidity and Capital Resources Operating cash flows during the first nine months of 2001 were $25.8 million, up $15.3 million from the first nine months of 2000. Higher oil and gas sales increased cash flows from operations by $15.0 million while changes in working capital decreased cash flows from operations by $0.8 million. Capital expenditures during the first nine months of 2001 were $65.2 million, up $50.9 million from $14.3 million in the first nine months of 2000 due primarily to the Invasion acquisition and the asset exchange in Canada (see Note 4). On a cash basis, the Company paid $6.0 million in interest expense in the first nine months of 2001 and no income taxes were paid in the first nine months of 2001. Cash flows from financing activities in the first nine months of 2001 included USD$19.0 million (CDN$ 30.0 million) of borrowings under the Company's credit facility (see Note 7. Long-term Debt) and $10.0 million of net proceeds from the issuance of preferred stock in June 2001. Cash flows from financing activities in the first nine months of 2000 included $13.7 million of net proceeds from the issuance of preferred stock in May 2000. Cash and cash equivalents during the first nine months of 2001 decreased $10.3 million from $34.1 million at December 31, 2000 to $23.8 million at September 30, 2001. The decrease was attributable primarily to capital expenditures of $65.2 million which were greater than operating cash flows of $25.8 million and financing cash flows of $28.9 million for the first nine months of 2001. 18 The Wiser Oil Company THE WISER OIL COMPANY PART II - OTHER INFORMATION Item 3. Quantitative and Qualitative Disclosures About Market Risk See Note 1 "Hedging Activities". Item 6. Exhibits and Reports on Form 8-K (a) Exhibits -------- None (b) Reports on Form 8-K ------------------- None 19 The Wiser Oil Company SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE WISER OIL COMPANY ------------------------------ (Registrant) Date: November 14, 2001 /s/ George K. Hickox, Jr. ------------------------------ George K. Hickox, Jr. Chairman of the Board and Chief Executive Officer Date: November 14, 2001 /s/ Richard S. Davis ------------------------------ Richard S. Davis Vice President of Finance 20 The Wiser Oil Company THE WISER OIL COMPANY Index to Exhibits Exhibit Number Exhibit - ------ ------- None 21 -----END PRIVACY-ENHANCED MESSAGE-----