-----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, Is7wuX2wMZOxxogFmf7YRItR46365m7EH9u0xH6dhsGnnDtGlyq06hWEnc2C5igj eXgfmgCaD91+7rR0sS3w+A== 0000899243-95-000788.txt : 19951119 0000899243-95-000788.hdr.sgml : 19951119 ACCESSION NUMBER: 0000899243-95-000788 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELLWETHER EXPLORATION CO CENTRAL INDEX KEY: 0000319459 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [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: 95591805 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 September 30, 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 ------------------- --------------------- None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $ .01 par value NASDAQ/NMS 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 November 10, 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 $41,269,998. ================================================================================ 1 BELLWETHER EXPLORATION COMPANY INDEX
PAGE NUMBER ------ PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheets: September 30, 1995 (Unaudited) and June 30, 1995......... 3 Condensed Consolidated Statements of Operations (Unaudited): Three months ended September 30, 1995 and September 30, 1994...................................... 5 Condensed Consolidated Statements of Cash Flows (Unaudited): Three months ended September 30, 1995 and September 30, 1994....................................... 6 Notes to Condensed Consolidated Financial Statements (Unaudited).............................................. 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................... 11 PART II. OTHER INFORMATION............................................. 15
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS) ASSETS
September 30, 1995 June 30, 1995 ------------------ ------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents............................... $ 1,755 $ 1,088 Accounts receivable and accrued revenue................. 4,359 5,322 Due from affiliates..................................... 266 -- Prepaid expenses and other.............................. 369 217 -------- -------- Total current assets.................................. 6,749 6,627 -------- -------- PROPERTY AND EQUIPMENT, at cost: Oil and gas properties (full cost method)............... 72,399 71,426 Gas plant facilities.................................... 12,803 13,049 Gas gathering system.................................... 6,014 6,011 -------- -------- 91,216 90,486 Accumulated depreciation, depletion and amortization.... (25,178) (23,291) -------- -------- 66,038 67,195 -------- -------- OTHER ASSETS............................................ 896 828 -------- -------- $ 73,683 $ 74,650 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT SHARES) LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, 1995 June 30, 1995 ------------------ ------------- (Unaudited) CURRENT LIABILITIES: Accounts payable and accrued liabilities........................ $ 1,718 $ 1,774 Due to affiliates............................................... 517 76 Current maturities of long-term debt............................ 2,548 6,023 ------- ------- Total current liabilities................................... 4,783 7,783 ------- ------- OTHER LONG-TERM LIABILITIES..................................... 151 151 LONG-TERM DEBT.................................................. 21,000 18,525 DEFERRED INCOME TAXES........................................... 2,288 2,400 MINORITY INTEREST............................................... -- 254 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued or outstanding at September 30, 1995 and June 30, 1995................................................ -- -- Common stock, $.01 par value, 15,000,000 shares authorized, 9,045,479 shares issued and outstanding at September 30, 1995 and June 30, 1995............................................ 90 90 Additional paid-in capital.................................... 41,472 41,472 Retained earnings............................................. 3,899 3,885 ------- ------- Total stockholders' equity.................................. 45,461 45,447 ------- ------- $73,683 $74,650 ======= =======
See accompanying notes to condensed consolidated financial statements. 4 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended September 30, -------------------------------- 1995 1994 -------- -------- REVENUES: Oil and gas revenues............................................... $3,289 $1,246 Gas plant revenues................................................. 1,087 1,486 Gas gathering revenues............................................. 1,281 1,252 Interest and other................................................. 21 13 ------ ------ 5,678 3,997 ------ ------ COSTS AND EXPENSES: Lease operating expenses........................................... 1,100 427 Gas plant operating expenses....................................... 620 786 Gas gathering expenses............................................. 837 798 Depreciation, depletion and amortization........................... 1,887 926 General and administrative expenses................................ 700 445 Interest expense................................................... 484 191 Other expense...................................................... 12 -- ------ ------ 5,640 3,573 ------ ------ Income before income taxes and minority interest..................... 38 424 Provision for income taxes........................................... 25 -- Minority interest.................................................... -- 46 ------ ------ NET INCOME........................................................... $ 13 $ 378 ====== ====== Earnings per share................................................... $ -- $ .07 ====== ====== Weighted average common and common equivalent shares outstanding..... 9,045 5,411 ====== ======
See accompanying notes to condensed consolidated financial statements. 5 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (AMOUNTS IN THOUSANDS)
Three Months Ended September 30, -------------------------------- 1995 1994 -------- -------- Cash flows from operating activities: Net income........................................................... $ 13 $ 378 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization........................... 1,904 966 Minority interest in gas plant venture............................. -- 33 Change in the assets and liabilities: Accounts receivable and accrued revenue............................ 962 (1,065) Accounts payable and other liabilities............................. (56) (317) Due (to) from affiliates........................................... 175 -- Other.............................................................. (215) 63 ------- -------- Net cash flows provided by operating activities...................... 2,783 58 ------- -------- Cash flows from investing activities: Additions to oil and gas properties................................ (1,085) (695) Cash paid for acquisition of Odyssey Petroleum Company............. -- (5,715) Investment in energy related equity securities..................... -- (2,013) Other.............................................................. (31) (7) ------- -------- Net cash flows used in investing activities...................... (1,116) (8,430) ------- -------- Cash flows from financing activities: Proceeds from borrowings........................................... -- 2,260 Payments of long-term debt......................................... (1,000) (12,045) Net proceeds from stock offering................................... -- 17,410 ------- -------- Net cash flows (used in) provided by financing activities............ (1,000) 7,625 ------- -------- Net Increase (decrease) in cash and cash equivalents............... 667 (747) Cash and cash equivalents at beginning of period................... 1,088 1,453 ------- -------- Cash and cash equivalents at end of period........................... $ 1,755 $ 706 ======= ========
6 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) (AMOUNTS IN THOUSANDS)
Three Months Ended September 30, -------------------------------- 1995 1994 -------- -------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest........................................................... $484 $160 Income taxes....................................................... $113 $ --
See accompanying notes to condensed consolidated financial statements. 7 BELLWETHER EXPLORATION COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all disclosures required by generally accepted accounting principles. However, in the opinion of management, these statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the financial position at September 30, 1995 and June 30, 1995 and the results of operations and changes in cash flows for the periods ended September 30, 1995 and 1994. These financial statements should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements in the 1995 Form 10-K of Bellwether Exploration Company ("the Company") that was filed with the Securities and Exchange Commission. 2. INDUSTRY SEGMENT INFORMATION The Company's operations are concentrated primarily in three segments; the exploration and production of oil and natural gas, gas plant operations and gas gathering operations.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 1994 -------------------------- Sales to unaffiliated customers: Oil and gas......................... $3,289 $1,246 Gas plants.......................... 1,087 1,486 Gas gathering....................... 1,281 1,252 Other revenues...................... 21 13 ------ ------ Total revenues.................... 5,678 3,997 ====== ====== Operating profit before income tax Oil and gas......................... 652 235 Gas plants.......................... 242 435 Gas gathering....................... 319 331 ------ ------ 1,213 1,001 Unallocated corporate expenses........ 712 432 Interest expense...................... 463 191 ------ ------ Income before taxes................... 38 378 ====== ====== Depreciation, depletion and amortization: Oil and gas.......................... 1,537 584 Gas plants........................... 225 219 Gas gathering........................ 125 123 ------ ------ $1,887 $ 926 ====== ======
8 BELLWETHER EXPLORATION COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. ACQUISITIONS, MERGERS AND PRO FORMA FINANCIAL INFORMATION During fiscal 1995, the Company completed the following mergers and acquisitions: On February 28, 1995 the Company acquired Hampton Resources Corporation ("Hampton") in exchange for $17.0 million in cash and 1,006,458 shares of the Company's common stock. Prior to the merger, the Company acquired common and preferred stock of Hampton for $2.7 million and incurred $1.4 million in expenses in connection with the merger. The total cash outlay of $21.1 million and the issuance of common stock valued at $4.8 million resulted in 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. On August 26, 1994 the Company acquired Odyssey Partners, Ltd, ("Odyssey") in exchange for $5.6 million in cash (funded from a common stock offering which closed on the same date) and 916,665 shares of the Company's common stock for a total cost of $9.6 million. 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 Gulf Coast region and the Permian Basin area of West Texas and Southeast New Mexico. The following table presents the unaudited proforma results of operations as if the Hampton and Odyssey transactions (the "Mergers") had occurred on July 1, 1994. The Mergers 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, 1994, or those in the future (in thousands, except earnings per share).
THREE MONTHS ENDED SEPTEMBER 30, 1994 ------------------ Revenues............................................. $6,910 Expenses............................................. 6,223 ------ Earnings before minority interest and income taxes... 687 Provision for income taxes........................... --- Minority interest.................................... 46 ------ Net income........................................... $ 641 ====== Earnings per share................................... $ .07 ======
9 BELLWETHER EXPLORATION COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. GAS PLANT MINORITY INTEREST The Company and its joint venture partner in the gas plant ventures have agreed to amend the joint venture agreements, effective July 1, 1995, to increase the Company's ownership in the gas plant ventures to 100% until payout. Upon payout, the Company's interest will be reduced to 80%, unchanged from the current arrangement. The provision for minority interest in gas plant ventures in the Company's financial statements has been eliminated as a result of this transaction. 5. LONG TERM DEBT During the second quarter of fiscal 1996, the borrowing base on the Company's credit facility was increased to $26.6 million and the repayment schedule modified and extended from March 1999 to January 2001. As a result of this increase, the current portion of long-term debt was reduced from $6.0 million at June 30, 1995 to $2.5 million at September 30, 1995. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity The strategy of the Company has been to acquire producing oil and gas properties through mergers, purchase and development, participation in certain gas processing and gas gathering investments, and participation selectively in exploration activities. The funding of these activities has been provided by operating cash flows, bank financing and equity placements. Net cash provided by operating activities was $2.8 million and $58,000 for the three months ended September 30, 1995 and 1994, respectively. The Company invested $1.1 million and $0.7 million in oil and gas properties for the three months ended September 30, 1995 and 1994, respectively. Additionally, the Company spent $11,000 and $12,000 for the three months ended September 30, 1995 and 1994, respectively, on gas plant and gas gathering facilities. During the second quarter of fiscal 1996 the borrowing base on the Company's credit facility was increased to $26.6 million and the repayment schedule modified and extended from March 1999 to January 2001. As a result of this increase and modification, the current portion of long-term debt was reduced from $6.0 million at June 30, 1995 to $2.5 million at September 30, 1995. Gas Balancing It is customary in the industry for various working interest partners to sell more or less than their entitled share of natural gas. The settlement or disposition of existing gas balancing positions is not anticipated to materially impact the financial condition of the Company. Fiscal 1996 Capital Expenditures The Company anticipates investing approximately $6.3 million during fiscal 1996, which is comprised of $5.4 million for development drilling activities and acquisitions, $0.6 million for exploratory drilling activities, and $0.3 million for gas plant and gas gathering facilities. Based on a preliminary analysis of seismic data from its Fausse Pointe and Cove fields, the Company previously had anticipated spending $2 million in these fields during the fourth calendar quarter of 1995, primarily to drill three wells. The Company is currently discussing the analysis of the detailed 3-D seismic data from the Fause Pointe and Cove fields with the respective working interest partners in each field. The Company expects that these discussions will be completed in the near future and expects to commence its Fausse Pointe and Cove drilling programs early in the first calendar quarter of 1996. The Company believes its cash flow provided by operating activities and the proceeds from credit facilities will be sufficient to meet these capital commitments. The Company continues to seek acquisition opportunities; the consummation of such a transaction will directly impact anticipated capital expenditures. 11 BELLWETHER EXPLORATION COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Results of Operations (Three months ended September 30, 1995 and 1994) The following table sets forth certain operating information of the Company for the periods presented:
Three Months Ended September 30, % ------------------- Increase/ 1995 1994 (Decrease) ------ ------ ---------- Production: Oil and condensate (MBBLS) 86 28 207.1% Natural gas (MMCF) 1,198 465 157.6% Average sales price: Oil and condensate $16.03 $16.08 (0.3%) Natural gas (1) $ 1.60 $ 1.73 (7.5%) Average unit production cost per BOE (2) $ 3.85 $ 4.05 (4.9%) Gas plant operations: Average daily inlet volumes (MMCF) 55 64 (14.1%) Average daily net production (MGALS) 33 50 (34.0%) Average NGL sales price (per gallon) $ .27 $ .26 3.8% Gas gathering operations: Throughput (MMCF) 366 381 (4.0%)
(1) Average sales price for natural gas includes revenues received from the sale of natural gas liquids. (2) Costs incurred to operate and maintain wells and related equipment and facilities including ad valorem and severance taxes. 12 BELLWETHER EXPLORATION COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Revenues Oil and gas revenues for the three months ended September 30, 1995 were $3.3 million, or 175% higher than oil and gas revenues of $1.2 million for the same period in 1994. The increase in oil revenues was attributable primarily to higher production as a result of the acquisitions of Odyssey in August 1994 and Hampton in March 1995. Gas revenues also increased as a result of production from the Mergers, partically offset by lower gas prices. Gas plant revenues of approximately $1.1 million and $1.5 million are reflected in the three months ended September 30, 1995 and 1994, respectively. A decline in plant inlet volumes from the SACROC Unit, the principal source of gas supplies to the plant, was the primary cause of the decrease. Expenses Lease operating expenses for the three months ended September 30, 1995 totaled $1.1 million or 175% over the $0.4 million for the three months ended September 30, 1994. The increase is the result of the Odyssey and Hampton acquisitions. Lease operating expenses per barrel of oil equivalent were 4.5% lower in the first quarter of 1995 when compared to the same period in 1994, due primarily to the effect of the Mergers. Gas plant operating expenses approximated $0.6 million in the three months ended September 30, 1995 as compared to $0.8 million for the quarter ended September 30, 1994. A decline in plant inlet volumes from the SACROC Unit reduced the payments to producers supplying gas to the plant. Gas gathering expenses for the three months ended September 30, 1995 were $0.84 million, or 5% less than the $0.80 million reflected in the same period in 1994. Depreciation, depletion and amortization of $1.9 million for the three months ended September 30, 1995 reflects a 111% increase from $0.9 million in the same period in 1994 due primarily to an increase in oil and gas production and an increased depletion rate per barrel of oil equivalent as a result of acquisitions. General and administrative expenses totaled $0.7 million and $0.4 million in the three months ended September 30, 1995 and 1994, respectively. The increase in general and administrative expenses in the third quarter of 1995 as compared to the same period of 1994 was due primarily to increased management fees and overhead incurred as a result of the Odyssey and Hampton acquisitions. 13 BELLWETHER EXPLORATION COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Interest expense increased to $0.5 million for the three months ended September 30, 1995 from $0.2 million in the same period of 1994. The increase in interest expense is the result of increased borrowings due to the Hampton merger. Net Income Net income of approximately $13,000 was generated for the three months ended September 30, 1995, as compared to net income of $0.4 million in the same period of 1994. 14 BELLWETHER EXPLORATION COMPANY PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits 27. Financial Data Schedule b. Reports on Form 8-K. None. 15 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: November 13, 1995 By:/s/ J. Darby Sere' ---------------------- ------------------------------------------- J. Darby Sere' President and Chief Operating Officer Date: November 13, 1995 By:/s/ Michael B. Smith ---------------------- --------------------------------------- Michael B. Smith Vice President and Chief Financial Officer 16 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-1996 JUL-01-1995 SEP-30-1995 1,755 0 4,359 0 0 6,749 91,216 (25,178) 73,683 4,783 0 90 0 0 45,371 73,683 5,657 5,678 4,444 5,640 712 0 484 38 25 0 0 0 0 13 0.00 0.00
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