-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, spIQitP9SKaIOnk4QPi5j9d16S2dpH7e4jfCGV0MjcacxYlEBRcE1LcPJAZD9UxI 2cueCODAd/ThkZ/qWFtaNA== 0000899243-95-000290.txt : 19950530 0000899243-95-000290.hdr.sgml : 19950530 ACCESSION NUMBER: 0000899243-95-000290 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELLWETHER EXPLORATION CO CENTRAL INDEX KEY: 0000319459 STANDARD INDUSTRIAL CLASSIFICATION: 1311 IRS NUMBER: 760437769 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09498 FILM NUMBER: 95539727 BUSINESS ADDRESS: STREET 1: 1221 LAMAR ST STE 1600 CITY: HOUSTON STATE: TX ZIP: 77010-3039 BUSINESS PHONE: 7136501025 MAIL ADDRESS: STREET 1: 1221 LAMAR STREET 2: STE 1600 CITY: HOUSTON STATE: TX ZIP: 77010-3039 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities ------- Exchange Act of 1934 For the quarter ended March 31, 1995 or Transition Report Pursuant to Section 13 or 15 (d) of the ------- Securities Exchange Act of 1934 {No Fee Required} For the Transition Period From to ---------- ---------- Commission file number 0-9498 BELLWETHER EXPLORATION COMPANY (Exact name of registrant as specified in its charter) Delaware 74-0437769 (State of incorporation) (I.R.S. Employer Identification No.) 1221 Lamar, Suite 1600, Houston, Texas 77010-3039 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 650-1025 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - - - - ---------------------------- --------------------- Common Stock, $ 01 par value NASDAQ Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required 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. Yes X No --- ---- At May 8, 1995 9,045,479 shares of Common Stock of Bellwether Exploration Company were outstanding and the aggregate market value of such Common Stock held by nonaffiliates (based upon the closing price of the stock on such date) was approximately $36,257,000. ================================================================================ 1 BELLWETHER EXPLORATION COMPANY INDEX
PART I. FINANCIAL INFORMATION: Page ------- Item 1. Consolidated Financial Statements...................... Balance Sheets March 31, 1995 (Unaudited) and June 30, 1994.......................................... 3 Statements of Earnings (Unaudited) For the Three and Nine Month Periods Ended March 31, 1995 and 1994.......................... 4 Statements of Cash Flows (Unaudited) for the Three and Nine Month Periods Ended December 31, 1995 and 1994....................... 5 Notes to Financial Statements.......................... 6 - 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 10 - 17 PART II. OTHER INFORMATION: Item 4. Submission of Matters to a Vote of Security Holders.................................... 17 Item 5. Other Information...................................... 17 - 18 Item 6. Exhibits and Reports on Form 8-K....................... 18 SIGNATURES 18
2 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements BELLWETHER EXPLORATION COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30, ASSETS 1995 1994 ---- ---- (Unaudited) Current assets: Cash and cash equivalents $ 3,470,981 $ 1,452,507 Accounts receivable and accrued revenues 5,624,807 2,798,943 Prepaid expenses 376,406 67,714 ------------ ------------ Total current assets 9,472,194 4,319,164 ------------ ------------ Property, plant and equipment: Oil and gas properties (full cost method) 70,576,304 29,749,228 Investment in gas plants 13,029,417 12,962,220 Gas gathering system 5,978,177 5,873,221 ------------ ------------ 89,583,898 48,584,669 Less accumulated depletion, depreciation and amortization (21,282,952) (17,979,148) ------------ ------------ Net property, plant and equipment 68,300,946 30,605,521 ------------ ------------ Other assets 862,884 945,802 ------------ ------------ Total assets $ 78,636,024 $ 35,870,487 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 3,192,411 $ 2,744,846 Current maturities of notes payable 7,061,583 1,823,160 ------------ ------------ Total current liabilities 10,253,994 4,568,006 ------------ ------------ Notes payable to bank 20,460,000 12,796,503 ------------ ------------ Deferred income taxes 2,400,000 - ------------ ------------ Minority interest in gas plant ventures 215,611 134,272 ------------ ------------ Stockholders' equity Preferred stock, $0.01 par value per share, 1,000,000 shares authorized, none issued - - Common stock, $0.01 par value, 15,000,000 shares authorized, 9,045,479 shares issued and outstanding at March 31, 1995 and 3,722,322 shares issued and outstanding at June 30, 1994 90,455 37,374 Additional paid-in capital 41,471,210 15,489,348 Retained earnings 3,744,754 2,944,162 Less treasury stock at cost; none at March 31, 1995 and 15,048 common shares at June 30, 1994 - (99,178) ------------ ------------ Total stockholders' equity 45,306,419 18,371,706 ------------ ------------ Total liabilities and stockholders' equity $ 78,636,024 $ 35,870,487 ============ ============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 BELLWETHER EXPLORATION COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three months ended Nine months ended March 31, March 31, ------------------------ ------------------------ 1995 1994 1995 1994 ---------- ----------- ----------- ---------- Revenues: Oil and gas sales $2,242,663 $ 993,791 $ 4,883,578 $2,696,329 Gas Plant revenues 1,300,535 1,411,457 4,283,944 2,902,471 Gas gathering revenues 1,228,799 1,179,224 3,761,416 1,179,224 Interest and other income 10,766 22,262 36,648 34,239 ---------- ----------- ----------- ---------- Total revenues 4,782,763 3,606,734 12,965,586 6,812,263 ---------- ----------- ----------- ---------- Expenses: Production expenses 737,532 370,919 1,655,291 923,016 Gas Plant expenses 669,356 734,244 2,234,877 1,425,840 Gas gathering expenses 707,187 790,199 2,328,099 790,199 Depreciation, depletion and amortization 1,335,468 824,353 3,301,403 1,667,188 General and administrative 757,042 365,972 1,816,606 861,958 Interest expense 338,431 247,269 694,887 506,477 ---------- ----------- ----------- ---------- Total expenses 4,545,016 3,332,956 12,031,163 6,174,678 ---------- ----------- ----------- ---------- Earnings before minority interest 237,747 273,778 934,423 637,585 Minority interests in Gas Plant Ventures 39,204 96,660 133,832 98,660 ---------- ----------- ----------- ---------- Net earnings $ 198,543 $ 177,118 $ 800,591 $ 538,925 ========== =========== =========== ========== Earnings per common share $0.02 $0.05 $0.11 $0.19 ----- ----- ----- ----- Average common shares outstanding 8,385,690 3,721,826 7,270,645 2,764,822 ========== =========== =========== ==========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 BELLWETHER EXPLORATION COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended Nine months ended March 31. March 31. -------------------------------- -------------------------------- 1995 1994 1995 1994 ------------ ------------ ------------ ------------ CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: Net earnings $ 198,543 $ 177,118 $ 800,591 $ 538,925 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion and amortization 1,368,478 830,766 3,386,022 1,682,424 Minority interest in gas plant ventures 31,573 94,814 81,339 86,213 Changes in assets and liabilities: Accounts receivable and accrued revenues 2,108,936 1,208,233 1,494,015 (166,239) Prepaid expenses (19,412) 49,573 (41,674) (33,369) Accounts payable and accrued expenses (9,071) 286,380 (2,044,334) 1,807,587 Other assets 221,818 (212,369) 123,755 (378,092) ------------ ------------ ------------ ------------ Net cash flows provided by operating activities 3,900,865 2,434,515 3,799,714 3,537,449 ------------ ------------ ------------ ------------ CASH FLOWS USED IN INVESTING ACTIVITIES: Additions to oil and gas properties (531,069) (337,768) (2,464,212) (1,154,747) Additions to gas plants (19,351) (115,973) (67,197) (7,710,901) Additions to gas gathering system (28,074) (401) (104,956) (401) Cash paid for acquisition of Odyssey - - (5,714,628) - Net cash paid for acquisition of Hampton (18,185,849) - (18,185,849) - Investment in energy related securities 2,606,570 - - - Additions to office furniture and automobiles - - (21,185) (1,213) Proceeds from sale of oil and gas properties - - 79,812 32,897 Investment in mining venture - - (17,370) (19,980) ------------ ------------ ------------ ------------ Net cash flows used in investing activities (16,157,773) (454,142) (26,495,585) (8,854,345) ------------ ------------ ------------ ------------ CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from bank loans 15,300,000 21,152 20,335,000 8,471,152 Repayment of bank loans (913,417) (240,000) (12,958,080) (789,156) Net proceeds (costs) from stock offering (2,419) 15,823 17,337,425 15,823 ------------ ------------ ------------ ------------ Net cash flows provided by financing activities 14,384,164 (203,025) 24,714,345 7,697,819 ------------ ------------ ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 2,127,256 1,777,348 2,018,474 2,380,923 Cash and cash equivalents at beginning of period 1,343,725 1,022,763 1,452,507 419,188 ------------ ------------ ------------ ------------ Cash and cash equivalents at end of period $ 3,470,981 $ 2,800,111 $ 3,470,981 $ 2,800,111 ============ ============ ============ ============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5 BELLWETHER EXPLORATION COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Basis of Presentation The financial statements include the accounts of Bellwether Exploration Company (the "Company") and its majority owned subsidiaries. These statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements include all material adjustments, which consist only of normal recurring adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows. The results for these interim periods are not necessarily indicative of results for the entire year. Oil and Gas Properties The Company uses the full cost method of accounting for exploration and development activities. Under this method of accounting, the costs of unsuccessful as well as successful exploration and development activities are capitalized as properties and equipment. The sum of net capitalized costs and estimated future development and dismantlement costs is amortized over the production of proved reserves using the unit of production method. The costs of unproved properties are excluded from amortization until the properties are evaluated. Should the net capitalized costs exceed the estimated present value of future cash inflows from proved oil and gas reserves reduced by operating expenses and future development expenditures, such excess costs would be charged to current operations. Gain or loss on the sale or other disposition of oil and gas properties are not recognized unless a significant amount of the Company's oil and gas reserves are involved. Gas Plants and Gas Gathering Facilities The Company computes the provision for depreciation of gas plants and gas gathering facilities on the straight-line method based on estimated useful lives of 15 years. (2) INCOME TAXES The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," effective July 1, 1993, and has applied the provisions of Statement 109 as of that date. 6 Under Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At June 30, 1994 the Company had net operating loss carryforwards for income tax purposes of approximately $12.6 million and no loss carryforwards for financial reporting purposes. (3) TRANSACTIONS WITH RELATED PARTIES The Company has a management agreement (the "Agreement") with Torch Energy Advisors Incorporated ("TEAI"), an affiliate of Black Hawk Oil Company (a Bellwether stockholder) pursuant to which the Company's administrative and management services are provided by TEAI. The agreement was last amended on January 1, 1994 and it expires on December 31, 1999. Pursuant to the terms of the Agreement, during the three and nine months periods ended March 31, 1995, $290,000 and $778,000, respectively, were charged to the Company under this agreement and during the same periods ended March 31, 1994, $207,000 and $446,000 respectively were charged. Torch Operating Company ("TOC") and Torch Energy Marketing, Inc. ("TEMI"), subsidiaries of TEAI receive revenues and disburse production expenses for the Company, and TEAI disburses general and administrative costs on behalf of the Company. Included in accounts receivable at March 31, 1995 is the excess of oil and gas revenues received by TOC and TEMI over production expenses and operational costs paid by them. Accounts payable includes the accrued general and administrative costs to be paid to TEAI. All receivable and payable balances with affiliated companies are settled on a monthly basis. (4) NOTES PAYABLE TO BANK The Company executed a loan agreement on February 28, 1995 with an initial borrowing base of $29.8 million, of which $21.4 million corresponds to Facility A, a revolving line of credit, and $8.4 million corresponds to Facility B, a declining revolving line of credit. These loans are secured by the Company's interests in oil and gas properties and in its gathering system and gas processing plants. The maturity date for both facilities is March 31, 1999. The interest rate is either the Bank's Prime Rate or the adjusted Eurodollar Rate plus 1 3/4% at the Company's option and a commitment fee of three-eighths of one percent (0.375%) per annum is charged on the unused portion of the Credit Commitment. The Eurodollar interest rate at March 31, 1995 was 7.9375%. 7 Loan maturities by fiscal year are as follows:
Year ending June 30, 1996 $ 8,815,000 Year ending June 30, 1997 7,490,000 Year ending June 30, 1998 6,745,000 Year ending June 30, 1999 4,300,000 ----------- $27,350,000 ===========
Prior to the execution of the new loan agreement the Company had outstanding loans of $9.0 million with the same lending institution. These loans were incorporated into the new loan agreement. On February 28, 1995 the Company drew $4.1 million against the new credit facility to pay off the existing bank debt of Hampton Resources Corporation and on March 1, the Company drew an additional $15.3 million to use in purchasing Hampton stock in conjunction with the merger which took place on February 28, 1995. On March 31, 1995 the Company made a loan repayment of $900,000, leaving loans payable of $27.5 million at that time. The loan agreement has various covenants including certain required financial measurements for a current ratio, consolidated tangible net worth and a ratio of consolidated liabilities to consolidated tangible net worth. In addition, the Company may not pay dividends of greater than 20% of consolidated after-tax net income in any fiscal year or make any other payment on account of its capital stock or redeem or purchase any of its capital stock. A copy of the new credit agreement was filed with the Securities and Exchange Commission on March 15, 1995 as Exhibit N to Amendment No. 6 to the Company's Schedule 13D, and it is incorporated herein by reference. (5) ACQUISITIONS AND PRO FORMA FINANCIAL INFORMATION On July 30, 1993 the Company acquired certain interests in the Snyder Gas Plant and the Diamond M Sharon Ridge Gas Plant (the "Gas Plants"), both in Scurry County, Texas, for a purchase price of $8.45 million. On December 31, 1993 Associated Gas Resources, Inc. ("AGRI") merged into the Company in consideration of the issuance of 1,419,726 shares of the Company's common stock and cash payments of $231,878. AGRI's principal assets are a gas gathering system located in Union Parish, Louisiana; a 4.12% interest in the Snyder Gas Plant; a 12.52% interest in the Diamond M Sharon Ridge Gas Plant ("Diamond M Gas Plant"); small non-operated working interests in approximately 137 gas wells in Oklahoma; and operated working interests in approximately 795 gas wells in Union Parish, Louisiana. On August 26, 1994 the Company acquired Odyssey Partners, Ltd. ("Odyssey") in exchange for $5.6 million in cash (funded from the 8 Offering which closed on the same date) and 916,665 shares of the Company's common stock. Odyssey is an exploration company which assembles, exploits and operates oil and gas properties using state-of-the-art 3-D seismic and computer-aided exploration technology. Odyssey's primary areas of operation have been the onshore US Gulf Coast region and the Permian Basin area of West Texas and Southeast New Mexico. On February 28, 1995 the Company acquired Hampton Resources Corporation ("Hampton") in exchange for $17.0 million in cash (funded from the new loan agreement dated February 28, 1995) and 1,006,458 shares of the Company's common stock which were valued at $4.8125 (average of high and low quotations on the NASDAQ exchange on February 28, 1995) per share for a total stock valuation of $4.8 million. The Company had previous to the merger paid $2.7 million to acquire common and preferred stock of Hampton and incurred $1.4 million in expenses in arranging the merger, making the total cash outlay of $21.1 million and common stock valued at $4.8 million for a total cost of $25.9 million for the acquisition of Hampton. Hampton is an energy company engaged in the exploration, acquisition and production of oil and natural gas. The following table presents the unaudited pro forma results of operations as if the Odyssey merger, the Offering of 3,400,000 shares of the Company's common stock and the Hampton merger had all occurred on July 1 of the period presented. The acquisitions were accounted for as purchases, and their results of operations are included in the Company's results of operations from the dates of acquisition. The Company's pro forma results are based on assumptions and estimates and are not necessarily indicative of the Company's results of operations had the transactions occurred as of July 1 of the period presented, or those in the future (in thousands, except earnings per share).
Nine Months Ended March 31, --------------------------- 1995 1994 -------- -------- Revenues $ 18,404 $ 18,330 Expenses 17,964 16,728 -------- -------- Earnings before minority interest and income taxes 440 1,602 Minority interest 134 107 -------- -------- Net earnings $ 306 $ 1,495 ======== ======== Net earnings per common share $0.03 $0.17
9 (7) INDUSTRY SEGMENT INFORMATION Prior to fiscal 1994 all of the Company's operations were in the exploration and production of crude oil and natural gas. Effective August 1, 1993 the Company acquired interests in two natural gas processing plants, and on December 31, 1993, the Company acquired a gas gathering system and additional interests in the two gas plants through a merger. The results of operations of these business segments for the nine months ended March 31, 1995 and 1994 are as follows (in thousands):
For the Nine Months Ended ------------------------- March 31, March 31, 1995 1994 --------- --------- Revenues Oil and gas $ 4,884 $2,696 Gas plants 4,284 2,902 Gas gathering 3,761 1,179 Other revenues 37 35 ------- ------ Total revenues $12,966 $6,812 ======= ====== Operating profit before income tax Oil and gas $ 959 $ 646 Gas plants 1,255 923 Gas gathering 1,062 303 ------- ------ 3,276 1,872 Unallocated corporate expenses 1,780 827 Interest expense 695 506 ------- ------ Income before taxes $ 801 $ 539 ======= ====== Depreciation, depletion and amortization: Oil and gas $ 2,269 $1,127 Gas plants 661 454 Gas gathering 371 86 ------- ------ $ 3,301 $1,667 ======= ======
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Management believes, based on current cash flow projections, that the Company will generate sufficient funds from operations to allow it to pay all current liabilities as they become due and to 10 maintain current operations. The Company executed a new loan agreement on March 14, 1994 with a borrowing base of $17.9 million, of which $8.2 million corresponds to Facility A, a revolving line of credit, and $9.7 million corresponds to Facility B, a declining revolving line of credit. These loans are secured by the Company's interests in oil and gas properties and in its gas gathering system and gas processing plants. The maturity dates are March 31, 1998 for the Facility A loan and September 30, 1999 for the Facility B loan. The interest rate is either the Bank's Prime Rate or the adjusted Eurodollar Rate plus 1 3/4% at the Company's option, and a commitment fee of three-eighths of one percent (0.375%) per annum is charged on the unused portion of the Credit Commitment. The outstanding loan principal balance at December 31, 1994 was $9.0 million. The Eurodollar interest rate, including the 1 3/4% add-on, was 8.125% at December 31, 1994. On August 26, 1994, the Company acquired certain of the assets of Odyssey Partners, Ltd. Odyssey was a privately held, independent exploration company which assembled, exploited and operated oil and gas properties using state-of- the-art 3-D seismic and computer-aided exploration technology. Odyssey's primary areas of operation have been the onshore US Gulf Coast region and the Permian Basin area of West Texas and Southeast New Mexico. The offering of 3,400,000 shares of the Company's common stock generated cash proceeds of $18.1 million, which were received on August 26, 1994. On the same date, $5.6 million of these proceeds was used to pay for the acquisition of Odyssey, $10.6 million was used to pay down the Company's debt and $1.4 million was used to repay the outstanding bank loan of Odyssey. In the last four months of 1994 the Company made additional loan drawings of $5.1 million, $2.7 million of which was used to purchase equity shares of Hampton Resources Corporation ("Hampton") and $2.4 million was used to fund Odyssey's interest in the Fausse Point (Etouffee) 3-D Project, three exploratory wells and one development well. At December 31, 1994, the Company's debt principal was $9.0 million and the unused portion of the bank credit commitment was $5.9 million. The remaining credit facility was available to develop the prospects acquired in the merger with Odyssey. The Company consummated a merger with Hampton Resources Corporation on February 28, 1995. In this regard the Company has acquired all of the outstanding common and preferred stock of Hampton on that date at a total cost of $17.0 million in cash plus 1,006,458 shares of Bellwether common stock. The cash payments to Hampton shareholders was financed by new bank loans which were effective February 28, 1995. On February 28, 1995 the Company signed the Third Amended and Restated Credit Agreement with First Interstate Bank of Texas N.A. 11 increasing the borrowing base from $17.9 million to $29.8 million. The terms of the amended agreement were the same as for the prior agreement, except that both of the loan facilities mature on March 31, 1999. On February 28, 1995 the Company drew $4.1 million to pay off the outstanding bank loan of Hampton and in March the Company paid $17.0 million to Hampton's stock transfer agent for distribution to Hampton shareholders in exchange for their Hampton common and preferred stock. Prior to signing the amended loan agreement the Company's outstanding bank loans totaled $9.0 million. These balances were rolled into the new loan agreement and additional loans were drawn on February 28 ($4.1 million) and March 1 ($15.3 million) and on March 31 the Company repaid $900,000, leaving loan balances of $27.5 million at March 31, 1995. The current maturities of these notes are as follows:
Due June 30, 1995 $ 171,583 Due September 30, 1995 2,300,000 Due December 31, 1995 2,300,000 Due March 31, 1996 2,290,000 ---------- Total current maturities $7,061,583 ==========
RESULTS OF OPERATIONS OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1994 OIL AND GAS OPERATIONS:
Three Months Ended March 31, ------------------------ Increase 1995 1994 ---------- ---------- ---------- Sales volume: Oil - barrels 51,984 17,138 34,846 Gas - MCF 720,434 368,063 352,371 Average sales prices: Oil - per barrel $ 17.26 $ 12.72 $ 4.54 Gas - per MCF $ 1.87 $ 2.11 $ <$0.24> Sales revenue: Oil $ 897,139 $ 217,935 $ 679,204 Gas 1,345,524 775,856 569,668 ---------- ---------- ---------- Total oil and gas revenues 2,242,663 993,791 1,248,872 Production expenses 737,532 370,919 366,613 ---------- ---------- ---------- Operating income $1,505,131 $ 622,872 $ 882,259 ========== ========== ========== Depletion, per net equivalent barrel $ 5.73 $ 6.60 <$0.87>
12 Six MCF of gas equals one Net Equivalent Barrel (NEB). The increase in oil sales volume of 34,846 barrels (203.3%) was due to sales of 20,000 barrels by Odyssey, which was acquired in a merger on August 26, 1994 and 20,000 barrels by Hampton, which was acquired on February 28, 1995. Most other oil wells are experiencing natural production declines. The net increase in oil sales volume has accounted for higher sales revenue of approximately $443,000 in the current quarter compared to the same quarter last year. The increase in gas sales volume of 352,371 MCF (95.7%) was due to sales of 269,000 MCF by Odyssey and 207,000 MCF by Hampton. Most other gas producing wells are experiencing natural production declines. The net increase in gas sales volume has accounted for higher sales revenue of approximately $743,000 in the current quarter compared to the same quarter last year. The average oil sales price increased by $4.54 per barrel (35.7%) in the current quarter, which has accounted for higher sales revenue of $236,000 in the current quarter compared to the same quarter last year. The average gas sales price decreased by $0.24 per MCF(11.4%) in the current quarter, which has accounted for lower sales revenue of $173,000 in the current quarter compared to the same quarter last year. GAS PLANT OPERATIONS:
Three Months Ended March 31, ------------------------ Increase 1995 1994 ---------- ---------- ----------- Product sales volume - gallons 3,626,742 5,101,645 <1,474,903> Average sales price per gallon $0.29 $0.24 $0.05 Revenues: Sales of NGL products $1,062,478 $1,241,190 <$178,712> Residual gas sales 98,639 - 98,639 Processing fees 139,418 170,267 <30,849> ---------- ---------- ----------- Total Gas plant revenues 1,300,535 1,411,457 <110,922> Operating expenses 669,356 734,244 <64,888> ---------- ---------- ----------- Income from operations 631,179 677,213 <46,034> Depreciation 224,000 221,180 2,820 Minority Interest 39,204 96,660 <57,456> ---------- ---------- ----------- Operating income $ 367,975 $ 359,373 $ 8,602 ========== ========== ===========
13 The decrease in NGL product sales volume of 1,474,903 gallons (28.9%) was due to: (1) a decline in gas volume produced by the SACROC Unit because of a change in the ratio of carbon dioxide injection versus water injection in the field, and (2) allocations of gas processed by the Diamond M-Sharon Ridge Gas Plant, in which the Company owns three times the interest that it owns in the Snyder Gas Plant, were 72% higher during the quarter ended March 31, 1994 in order to make up on the imbalance that existed at the time the Company acquired its interest in the gas plants. The Gas Plant investments are being depreciated over 15 years using the straight line method. GAS GATHERING OPERATIONS (THESE OPERATIONS WERE ACQUIRED IN THE AGRI MERGER ON DECEMBER 31, 1993):
Three Months Ended March 31, ------------------------ Increase 1995 1994 ---------- ---------- ---------- Gas gathering revenues $1,228,799 $1,179,224 $ 49,575 Gas gathering expenses 707,187 790,199 <83,012> Depreciation of gas gathering facilities 124,468 85,662 38,806 ---------- ---------- -------- Operating income $ 397,144 $ 303,363 $ 93,781 ========== ========== ========
The gas gathering facilities are being depreciated over 15 years using the straight line method. Depreciation, depletion and amortization expenses increased $511,000 in the current quarter compared to the same quarter last year. This increase is attributable to an increase of $470,000 in depletion of oil and gas properties, and an increase of $40,000 in the depreciation of gas gathering facilities. The depletion of oil and gas properties increased due to the increase of 94,000 net equivalent barrels sold in the current quarter, partially offset by the decrease in the depletion rate. General and administrative ("G&A") expenses have increased by $391,000 in the current quarter compared to the same quarter last year principally because of an increase of $83,000 in the management fee paid to TEAI as a result of the Odyssey and Hampton mergers and the revised method of computing the fee as specified in the management agreement renegotiated effective January 1, 1994; $110,000 of expenses incurred by Odyssey's office in Dallas; $131,000 of expenses incurred by Hampton in March 1995 (Hampton's G & A expenses will end at April 30, 1995 when all Hampton employees were terminated); and an increase in insurance expense of $36,000. 14 OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1995 COMPARED TO THE NINE MONTHS ENDED MARCH 31, 1994 OIL AND GAS OPERATIONS:
Nine Months Ended March 31, ------------------------ Increase 1995 1994 ---------- ---------- ---------- Sales volume: Oil - barrels 115,315 53,066 62,249 Gas - MCF 1,683,183 852,422 830,761 Average sales prices: Oil - per barrel $ 16.51 $ 15.05 $ 1.46 Gas - per MCF $ 1.77 $ 2.23 <$0.46> Sales revenue: Oil $1,904,161 $ 798,532 $1,105,629 Gas 2,979,417 1,897,797 1,081,620 ---------- ---------- ---------- Total oil and gas revenues 4,883,578 2,696,329 2,187,249 Production expenses 1,655,291 923,016 732,275 ---------- ---------- ---------- Operating income $3,228,287 $1,773,313 $1,454,974 ========== ========== ========== Depletion per net equivalent barrel $ 5.83 $ 5.78 $ 0.05
The increase in oil sales volume of 62,249 barrels (117.3%) was due to sales of 51,000 barrels by Odyssey, which was acquired in a merger on August 26, 1994 and 20,000 barrels by Hampton, which was acquired on February 28, 1995. Most other oil wells are experiencing natural production declines. The increase in oil sales volume has accounted for higher sales revenue of approximately $937,000 in the current nine month period compared to the same nine month period last year. The increase in gas sales volume of 830,761 MCF (97.5%) was due to sales of 605,000 MCF by Odyssey and 207,000 by Hampton and higher sales of 247,000 MCF by AGRI, which produced for nine months in the current nine month period compared to only three months in the same period last year; AGRI was acquired on December 31, 1993. Most other gas producing wells are experiencing natural production declines. The net increase in gas sales volume has accounted for higher sales revenue of approximately $1,850,000 in the current nine month period compared to the same nine month period last year. The average oil sales price increased by $1.46 per barrel (9.7%) in the current nine month period, which has accounted for higher sales revenue of $169,000 in the current nine month period compared to the same nine month period last year. 15 The average gas sales price decreased by $0.46 per MCF(20.6%) in the current nine month period, which has accounted for lower sales revenue of $768,000 in the current nine month period compared to the same nine month period last year. GAS PLANT OPERATIONS:
Nine Months Ended March 31, -------------------------- Increase 1995 1994 ----------- ----------- ---------- Product sales volume - gallons 12,373,556 10,656,701 1,716,855 Average sales price per gallon $0.28 $0.24 $0.04 Revenues: Sales of NGL products $ 3,507,096 $ 2,576,602 $ 930,494 Residual gas sales 269,646 - 269,646 Processing fees 507,202 325,869 181,333 ----------- ----------- ---------- Total gas plant revenues 4,283,944 2,902,471 1,381,473 Operating expenses 2,234,877 1,425,840 809,037 ----------- ----------- ---------- Income from operations 2,049,067 1,476,631 572,436 Depreciation 660,587 454,015 206,572 Minority Interest 133,832 98,660 35,172 ----------- ----------- ---------- Operating income $ 1,254,648 $ 923,956 $ 330,692 =========== =========== ==========
The 1995 Gas Plants activity includes the results for nine months of operations from interests of 11.98% in the Snyder Gas Plant and 35.78% in the Diamond M Gas Plant, whereas 1994 activity only includes results for five months for interests of 7.64% in the Snyder Gas Plant and 23.26% in the Diamond M Gas Plant and three months for interests of 11.98% in the Snyder and 35.78% in the Diamond M plants. GAS GATHERING OPERATIONS (THESE OPERATIONS WERE ACQUIRED IN THE AGRI MERGER ON DECEMBER 31, 1993):
Nine Months Ended March 31, ------------------------ Increase 1995 1994 ---------- ---------- ---------- Gas gathering revenues $3,761,416 $1,179,224 $2,582,192 Gas gathering expenses 2,328,099 790,199 1,537,900 Depreciation of gas gathering facilities 370,816 85,662 285,154 ---------- ---------- ---------- Operating income $1,062,501 $ 303,363 $ 759,138 ========== ========== ==========
16 Depreciation, depletion and amortization expenses increased by $1,634,000 in the current nine months period compared to the same period last year. This increase is attributable to an increase of $1,142,000 in depletion of oil and gas properties, an increase of $207,000 in gas plant depreciation and an increase of $285,000 in depreciation of gas gathering facilities. The depletion of oil and gas properties increased mainly due to the increase of 201,000 in net equivalent barrels sold. The gas plants were acquired on August 1, 1993, and December 31, 1993, and the gas gathering facilities were acquired in the AGRI merger on December 31, 1993; both of these assets are being depreciated over fifteen years on the straight line basis. General and administrative expenses increased $955,000 in the current nine months period compared to the same period last year principally due to higher management fees paid to TEAI ($331,000), expenses incurred by Odyssey's office in Dallas ($321,000), Hampton G&A expenses ($131,000), and higher insurance expense ($97,000). PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information On February 2, 1995 the Company filed a Registration Statement on Form S-4 with the Securities and Exchange Commission registering a maximum of 1,604,253 share's of the Company's common stock to be issued in conjunction with the merger with Hampton Resources Corporation. On April 18, 1995 the Company filed a Registration Statement on Form S-8 with the Securities and Exchange Commission for the registration of 131,325 shares of the Company's common stock to be issued in connection with the Company's 1988 Non-Qualified Stock Option Plan. On April 18, 1995 the Company filed a Registration Statement on Form S-8 with the Securities and Exchange Commission for the registration of 825,000 shares of the Company's common stock to be issued in connection with the Company's 1994 Stock Incentive Plan. On March 15, 1995 the Company filed Amendment No. 6 to its Schedule 13D reporting its acquisition of the common stock of Hampton Resources Corporation. Exhibit N, filed with the Schedule 13D, is an Amended and Restated Credit Agreement dated February 28, 1995, between the Company and First Interstate Bank of Texas N.A. 17 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit 27 --Financial Data Schedule (b) The Company filed a report on Form 8-K dated February 28, 1995, reporting the merger of Hampton Resources Corporation into a wholly-owned subsidiary of the Company effective February 28, 1995. 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. BELLWETHER EXPLORATION COMPANY REGISTRANT DATE: May 12, 1995 /s/ J. Darby Sere' -------------------------------- J. DARBY SERE', President DATE: May 12, 1995 /s/ James M. Vanderhider -------------------------------- JAMES M. VANDERHIDER, Vice President and Chief Financial Officer 18 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS 9-MOS JUN-30-1995 JUN-30-1995 JAN-01-1995 JUL-01-1994 MAR-31-1995 MAR-31-1995 3,470,981 0 0 0 5,624,807 0 0 0 0 0 9,472,194 0 89,583,898 0 (21,282,952) 0 78,636,024 0 12,269,329 0 0 0 90,455 0 0 0 0 0 46,003,077 0 78,636,024 0 3,573,198 9,167,522 4,782,763 12,965,586 2,114,075 6,218,267 3,449,543 9,519,670 757,042 1,816,606 0 0 338,431 694,887 237,747 934,423 0 0 0 0 0 0 39,204 133,832 0 0 198,543 800,591 0.02 0.11 0.02 0.11
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