0000927356-95-000222.txt : 19950815 0000927356-95-000222.hdr.sgml : 19950815 ACCESSION NUMBER: 0000927356-95-000222 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARRETT RESOURCES CORP CENTRAL INDEX KEY: 0000351993 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS) [5172] IRS NUMBER: 840832476 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13446 FILM NUMBER: 95563048 BUSINESS ADDRESS: STREET 1: 1125 SEVENTEENTH ST STREET 2: STE 2400 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032973900 FORMER COMPANY: FORMER CONFORMED NAME: AIMEXCO INC DATE OF NAME CHANGE: 19840215 10-Q 1 2ND QTR. 10-Q -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER JUNE 30, 1995 1-13446 ---------------- BARRETT RESOURCES CORPORATION (Exact name of registrant as specified in its charter) DELAWARE (State of other jurisdiction of incorporation or organization) 1125 SEVENTEENTH STREET, SUITE 2400 DENVER, COLORADO 80202 TELEPHONE: (303) 297-3900 (Address and telephone number of principal executive offices) 84-0832476 (IRS Employer Identification Number) 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- There were 11,978,003 shares of the registrant's $.01 par value common stock outstanding as of June 30, 1995. There were 24,786,156 shares of the registrant's $.01 par value common stock outstanding as of August 8, 1995. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- BARRETT RESOURCES CORPORATION ----------------------------- INDEX ----- PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Condensed Balance Sheets - June 30, 1995 and September 30, 1994............................ 3 Consolidated Condensed Statements of Income - Three Months Ended June 30, 1995 and 1994........................ 4 Consolidated Condensed Statements of Income - Nine Months Ended June 30, 1995 and 1994........................ 5 Consolidated Condensed Statements of Cash Flows - Nine Months Ended June 30, 1995 and 1994........................ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................. 9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders............................... 13 Item 6. Exhibits and Reports on Form 8-K .............. 13 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (in thousands)
June 30, September 30, 1995 1994 ---------- ------------- ASSETS Current assets: Cash and cash equivalents $ 10,071 $ 7,760 Short-term investments -- 1,970 Receivables 21,971 18,826 Other current assets 248 264 -------- -------- Total current assets 32,290 28,820 Property and equipment, net 103,667 76,925 Other assets 685 147 -------- -------- $136,642 $105,892 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 10,820 $ 20,371 Amounts payable to oil and gas property owners 12,098 11,560 Accrued and other liabilities 1,832 1,089 -------- -------- Total current liabilities 24,750 33,020 Long-term debt 36,000 -- Stockholders' equity: Preferred stock, $.001 par value: 1,000,000 shares authorized, none outstanding -- -- Common stock, $.01 par value: 17,000,000 shares authorized; 11,981,060 issued (11,845,083 at September 30, 1994) 120 118 Additional paid-in capital 59,675 58,992 Retained earnings 16,169 13,762 Treasury stock, at cost: 3,057 shares (72) -- -------- -------- Total stockholders' equity 75,892 72,872 -------- -------- $136,642 $105,892 ======== ========
See accompanying notes. 3 BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data)
Three Months Ended ------------------------ June 30, June 30, 1995 1994 ---------- ---------- Revenues: Oil and gas production $ 6,850 $ 4,016 Trading revenues 7,522 5,656 Revenue from gas gathering 218 43 Interest income 142 219 Other income -- 10 ---------- ---------- 14,732 9,944 Operating expenses: Lease operating expense 1,469 802 Cost of trading 7,263 5,556 Depreciation, depletion and amortization 3,108 1,701 General and administrative 1,091 1,013 Interest expense 481 1 ---------- ---------- 13,412 9,073 ---------- ---------- Income for the period before income taxes 1,320 871 Provision for income taxes 23 72 ---------- ---------- Net income for the period $ 1,297 $ 799 ========== ========== Net income per common share and common share equivalent $ .11 $ .07 ========== ========== Weighted average number of shares of common stock and common stock equivalents 12,247,587 11,979,945 ========== ==========
See accompanying notes. 4 BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data)
Nine Months Ended ------------------------- June 30, June 30, 1995 1994 ---------- ---------- Revenues: Oil and gas production $17,193 $ 13,432 Trading revenues 26,042 15,054 Revenue from gas gathering 660 180 Interest income 347 691 Other income 41 54 ---------- ---------- 44,283 29,411 Operating expenses: Lease operating expense 3,859 2,544 Cost of trading 25,132 14,510 Depreciation, depletion and amortization 7,914 5,186 General and administrative 4,074 3,436 Interest expense 851 5 ---------- ---------- 41,830 25,681 ---------- ---------- Income for the period before income taxes 2,453 3,730 Provision for income taxes 46 129 ---------- ---------- Net income for the period $ 2,407 $ 3,601 ========== ========== Net income per common share and common share equivalent $ .20 $ .30 ========== ========== Weighted average number of shares of common stock and common stock equivalents 12,154,791 11,923,448 ========== ==========
See accompanying notes. 5 BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
Nine Months Ended -------------------- June 30, June 30, 1995 1994 --------- -------- Cash flows from operations: Net income $ 2,407 $ 3,601 Adjustments needed to reconcile to net cash provided by operations: Depreciation, depletion, and amortization 7,914 5,186 Reversal of gas trading allowance -- 100 Change in other assets (593) 5 -------- -------- 9,728 8,892 Change in current assets and liabilities: Increase in current receivables (3,676) (1,704) Decrease in other current assets 16 40 Increase (decrease) in accounts payable (9) 398 Increase in accrued and other liabilities 743 59 -------- -------- Net cash flow provided by operations 6,802 7,685 -------- -------- Cash flows from investing activities: Maturity of short-term investments 1,970 7,936 Purchase of short-term investments -- (14,781) Proceeds from sale of oil and gas properties 12 387 Acquisition of property and equipment (42,641) (22,958) Other 55 55 -------- -------- Net cash flow used in investing activities (40,604) (29,361) -------- -------- Cash flows from financing activities: Proceeds from issuance of common stock 613 144 Decrease (increase) in cash from operating oil and gas properties (500) 1,423 Borrowings on line of credit 36,000 -- -------- -------- Net cash flow provided by financing activities 36,113 1,567 -------- -------- Increase (decrease) in cash and cash equivalents 2,311 (20,109) Cash and cash equivalents at beginning of period 7,760 33,187 -------- -------- Cash and cash equivalents at end of period $ 10,071 $ 13,078 ======== ========
See accompanying notes. 6 BARRETT RESOURCES CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 1995 1. UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30, 1995 and the results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the periods presented are not necessarily indicative of the results for the full year. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in Form 10-K for the year ended September 30, 1994. It is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Form 10-K. (See note 4 for discussion of change in fiscal year.) 2. INCOME TAXES For the nine months ended June 30, 1995, the Company has used its estimated effective tax rate to compute the provision for income taxes as the Company does not believe it can reliably estimate its taxable income with any degree of precision for the entire current fiscal year. The estimated tax rate for the quarter and nine months ended June 30, 1995 is approximately two percent. 3. LONG-TERM DEBT As of June 30, 1995, the commitment amount of the Company's reserve-based line of credit with a bank was $80 million and the borrowing base was $40 million. At June 30, 1995, $36 million was outstanding on the line of credit. (See note 4 for discussion of a replacement line of credit.) 4. SUBSEQUENT EVENTS On July 18, 1995 a wholly owned subsidiary of the Company merged with Plains Petroleum Company (the "merger"). As a result of the merger, Plains Petroleum Company became a wholly subsidiary of the Company. The merger will be accounted for using the pooling of interests method which provides that previously reported results of the separate companies will be restated on a comparable, combined basis. The merger costs will be recorded as an expense in the results of operations of the combined entity in the period incurred. 7 On July 18, 1995, the Company changed its fiscal year end from September 30 to December 31. A transition report for the period October 1, 1994 through December 31, 1994 was filed with the Securities & Exchange Commission. On July 19, 1995, the Company entered into a credit agreement with five banks. The credit agreement provides for an unsecured line of credit of $200 million, with a current borrowing base of $160 million. This credit agreement replaces the previously existing separate lines of credit of the Company and Plains Petroleum Company. As of August 8, 1995 the outstanding balance is $80 million. 5. CAPITALIZED INTEREST During the nine months ended June 30, 1995, the Company borrowed against the line of credit to fund its oil and gas development. The Company capitalizes interest costs on amounts expended on assets during the period in which activities are occurring to place the asset in service. Excluded from interest capitalization are amounts spent to develop properties included in the full cost center of oil and gas properties. Total interest costs incurred for the quarter ended June 30, 1995 were $643,000. Of this amount $162,000 was capitalized to the specific proj- ects and $481,000 was recorded as interest expense. For the nine month period $428,000 was capitalized and $851,000 was recorded as interest expense. 8 BARRETT RESOURCES CORPORATION For the Quarter Ended June 30, 1995 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- On July 18, 1995 the Company consummated the merger of a wholly owned subsidiary of the Company with Plains Petroleum Company ("Plains") by issuing 12,804,134 shares of its common stock to the former Plains shareholders. As a result of this merger, Plains became a wholly owned subsidiary of the Company. Also on July 18, 1995, the Company changed its fiscal year end from September 30 to December 31 effective January 1, 1995. Subsequent to the merger, the Company replaced the previous bank lines of credit of both companies with a single line of credit as discussed below. The financial statements included in this Form 10-Q do not reflect the merger. Rather these financial statements report only the financial position and results of operations for Barrett Resources Corporation as of June 30, 1995 and for the nine months then ended. The financial statements for the quarter ended September 30, 1995 will report combined operations under the pooling of interests method of reporting the combination. Liquidity and Capital Resources ------------------------------- As of June 30, 1995, total assets were $136.6 million compared to $105.9 million at September 30, 1994, an increase of $30.7 million or 29 percent. Property and equipment increased $26.7 million or 35 percent while accounts receivable increased $3.1 million or 17 percent. Working capital increased to $7.5 million from a deficit of $4.2 million. These increases are primarily the result of increased investment in oil and gas properties and borrowings on the line of credit. During the nine month period ended June 30, 1995 the Company borrowed $36 million on its line of credit with a bank. On July 19, 1995, the Company entered into a $200 million credit agreement with five banks to replace both the Company's and Plain's lines of credit. The new credit agreement provides for an initial borrowing base of $160 million. The existing bank debt of both the Company and Plains was retired with proceeds from the new line of credit. As of August 8, 1995 the outstanding balance under the line of credit was $80 million. For the respective nine months ended June 30, 1995 and 1994, operations provided $9.7 million and $8.9 million of cash flow before working capital changes. The increase is primarily due to increased oil and gas production. The Company invested $42.6 million in the acquisition of property and 9 equipment during the nine months ended June 30, 1995 compared to $23.0 million for the same period of 1994. During the current year, the Company continued its exploration and development activities in the Piceance Basin of Colorado, the Wind River Basin in Wyoming and the Arkoma and Anadarko Basins of Oklahoma. Beginning December 1994, the Company began production of its Cave Gulch field in the Wind River Basin and began operation of its gas plant and gathering system extension in the Piceance Basin. These actions significantly increased the Company's productive capacity. Subject to market availability, these production increases should continue to generate a corresponding increase in cash flow. The July 18, 1995 merger with Plains Petroleum Company substantially increased the Company's reserve position and production capacity. As of December 31, 1994 Plains reported reserve estimates of 313 Bcf of gas and 11 million barrels of oil compared to the Company's reserve estimates of 226 Bcf of gas and 900,000 barrels of oil as of March 31, 1995. Depending on oil and gas sales prices the increased production from the combined reserves should substantially increase the Company's cash flow from operations. In addition to expected production increases, the increased reserve position increases the Company's borrowing availability. The Company's current borrowing availability under its new credit arrangement is $160 million compared to a borrowing base of $40 million (based on September 30, 1994 reserve estimates) prior to the merger. The Company is re-evaluating its investing activities in oil and gas properties due to low gas prices. Management believes that as a result of this evaluation, its oil and gas investing activities for the remainder of the year may be reduced compared to previous plans. Management believes that its current cash position, anticipated cash flow and borrowing availabilities will adequately fund its anticipated exploration and development activities for the next year. Results of Operations --------------------- Net income for the quarters ended June 30, 1995 and 1994 was $1.3 million ($.11 per share) and $.8 million ($.07 per share), respectively. The increase in net income of $.5 million is primarily due to increased oil and gas sales net of related lease operating expense and depreciation, depletion and amortization. Other factors affecting net income are an increase in gross profit from trading and an increase in interest expense. For the nine months ended June 30, 1995 and 1994, net income was $2.4 million ($.20 per share) and $3.6 million ($.30 per share), respectively. Production revenues increased $3.8 million and gross margins on trading activities increased $.4 million for the period. These increases were offset by lease operating expenses increasing by $1.3 million, depreciation, depletion and amortization increasing by $2.7 million, interest expense increasing by $.8 million and general and administrative expenses increasing by $.6 million. 10 Total revenues were $14.7 million and $9.9 million for the quarters ended June 30, 1995 and 1994 and total expenses were $13.4 million and $9.1 million, respectively. For the nine month periods, total revenues were $44.3 million and $29.4 million, and expenses were $41.8 million and $25.7 million. The largest portion of the increases in revenues and expenses for the quarter and the nine months is attributable to increased oil and gas production and to trading activities. Production revenue for the third quarter of 1995 increased from $4.0 million in 1994 to $6.9 million. During the quarter, the Company sold 4,329,700 mcf of gas and 23,700 barrels of oil at an average price of $1.48 per mcf of gas and $18.34 per barrel of oil. During the comparable quarter of 1994, the Company sold 2,175,000 mcf of gas and 14,200 barrels of oil at an average price of $1.76 per mcf of gas and $13.73 per barrel of oil. Production quantities increased 99 percent on a gas equivalent basis, while product prices decreased 14 percent. Daily sales on an mcfe basis were 49,140 and 24,800 for the respective quarters ended June 30, 1995 and 1994. For the nine months ended June 30, 1995, production revenue was $17.2 million compared to revenues of $13.4 million for the nine months ended June 30, 1994. The significant increases in production are the result of the operation of the gas plant and gas gathering system extension in the Piceance Basin and the production from the Cave Gulch project in the Wind River Basin, both of which commenced in December 1994. For the quarter ended June 30, 1995, trading revenues were $7.5 million ($5.7 million in 1994) and $26.0 million for the nine month period ($15.1 million in 1994). The associated costs of trading were $7.3 million and $5.6 million for the quarters ended June 30, 1995 and 1994, respectively, and $25.1 million and $14.5 million for the respective nine months. Gross profit from trading for the quarter increased to $.3 million from $.1 million and to $.9 million from $.5 million for the nine months. General and administrative expenses for the quarter ended June 30, 1995 increased $.1 million to $1.1 million from the comparable 1994 quarter. For the nine month period, these expenses increased from $3.4 million to $4.1 million. These increases are primarily due to expenses related to the Company expanding its oil and gas activities in both existing and new prospect areas. Depreciation, depletion and amortization increased from $1.7 million to $3.1 million for the quarter and from $5.2 million to $7.9 million for the nine month period. The increase is due to production volume increases. During fiscal 1995 and 1994, depletion on oil and gas production was recorded at $3.90 and $4.26 per barrel of oil equivalent, respectively. The July 18 merger with Plains Petroleum Company will substantially increase the Company's total oil and gas production on a consolidated basis. During the quarter ended June 30, 1995, Plains Petroleum produced 11 6.9 Bcf of gas and 397,700 barrels of oil. The merger will be accounted for using the pooling of interests method which provides that previously reported results of the separate companies will be restated on a combined basis. Merger costs will be recorded as an expense in the results of operations of the combined entity in the period incurred. The Company's largest source of operating income is from sales of its gas and oil production. Therefore, the levels of the Company's revenues and earnings are affected by prices at which natural gas and oil are being sold. This is particularly true with respect to natural gas, which accounts for approximately 94 percent of the Company's fiscal 1995 production revenues to date. As a result, the Company's operating results for any prior period are not necessarily indicative of future operating results because of the fluctuations in gas and oil prices and the lack of predictability of those fluctuations as well as changes in production levels. 12 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- During the quarter ended June 30, 1995, a Notice of Special Meeting of Stockholders and Proxy Statement were sent to the Company's common stockholders with respect to a special meeting of stockholders that was held on July 18, 1995. At the special meeting, the stockholders approved an amendment to the Company's Certificate of Incorporation to increase the Company's authorized Common Stock from 17,000,000 shares to 35,000,000 (the "Charter Amendment") and the issuance of shares of the Company's Common Stock (the "Stock Issuance") in connection with the Agreement and Plan of Merger (the "Merger Agreement") among the Company, Barrett Energy Inc., a wholly owned subsidiary of the Company ("Sub"), and Plains Petroleum Company ("Plains"), including the issuance of shares of the Company's Common Stock in the merger of Sub with and into Plains (the "Merger") and the reservation of shares of the Company's Common Stock for issuance upon exercise of certain stock options of Plains which, following the Merger, constitute options to purchase the Company's Common Stock. The Charter Amendment was approved by a vote of 9,834,398 shares voting for and 11,660 shares voting against, with 6,380 abstentions and 45 broker non-votes. The Stock Issuance was approved by a vote of 9,749,622 shares voting for and 3,840 shares voting against, with 6,027 abstentions and 92,994 broker non-votes. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) During the quarter ended June 30, 1995, a report on Form 8-K was filed reporting the event occurring on May 2, 1995, which was the signing of an agreement and plan of merger for Plains Petroleum Company to merge with a wholly owned subsidiary of Barrett Resources Corporation. (b) Subsequent to the quarter ended June 30, 1995, a report on Form 8-K was filed reporting the Company's decision on July 18, 1995 to change its fiscal year end from September 30 to December 31. The change in the year end is effective January 1, 1995. (c) Subsequent to the quarter ended June 30, 1995, a report on Form 8-K, as amended by a report on Form 8-K/A-1, was filed reporting the merger on July 18, 1995 of Barrett Energy, Inc., a wholly owned subsidiary of the Company and Plains Petroleum Company that resulted in Plains Petroleum Company becoming a wholly owned subsidiary of the Company. (d) The following Exhibit is filed as part of this Quarterly Report on Form 10-Q. Financial data schedule. 13 SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BARRETT RESOURCES CORPORATION August 14, 1995 By /s/ PAUL M. RADY -------------------------------- Paul M. Rady President August 14, 1995 By /s/ ROBERT W. HOWARD -------------------------------- Robert W. Howard Senior Vice President - Treasurer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS 9-MOS SEP-30-1995 SEP-30-1995 APR-01-1995 OCT-01-1995 JUN-30-1995 JUN-30-1995 10,071 10,071 0 0 21,971 21,971 0 0 0 0 32,290 32,290 103,667 103,667 0 0 136,642 136,642 24,750 24,750 0 0 120 120 0 0 0 0 75,772 75,772 136,642 136,642 14,372 43,235 14,732 44,283 7,263 25,132 8,732 28,991 0 0 0 0 481 851 1,320 2,453 23 46 1,297 2,407 0 0 0 0 0 0 1,297 2,407 .11 .20 .11 .20