-----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, RMxiYjzTcv+i8m4JXv2GZ/DWSJL5Ftc6JSH4Fs27LJ1ngpOMLKFjT3N0pY4RLpaA PrIZ/H2J44v81mkg5BjKsw== 0000927356-96-001039.txt : 19961113 0000927356-96-001039.hdr.sgml : 19961113 ACCESSION NUMBER: 0000927356-96-001039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARRETT RESOURCES CORP CENTRAL INDEX KEY: 0000351993 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] 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: 96659992 BUSINESS ADDRESS: STREET 1: 1515 ARAPAHOE ST STREET 2: TOWER 3 STE 1000 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032973900 MAIL ADDRESS: STREET 1: 1515 ARAPAHOE ST STREET 2: TOWER 3 STE 1000 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: AIMEXCO INC DATE OF NAME CHANGE: 19840215 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ------ EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 1996 ----------------------------------------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ------- SECURITIES EXCHANGE ACT OF 1934. For the transition period from to ---------------------- ----------------------- Commission file number 1-13446 ------------------------------------------------------- Barrett Resources Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-0832476 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1515 Arapahoe Street, Tower 3, Suite 1000 Denver, Colorado 80202 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (303) 572-3900 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 31,329,361 shares of the registrant's $.01 par value common stock outstanding as of November 11, 1996. BARRETT RESOURCES CORPORATION ----------------------------- INDEX ----- PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Condensed Balance Sheets - September 30, 1996 and December 31, 1995.............................. 3 Consolidated Condensed Statements of Income - Three Months Ended September 30, 1996 and 1995.................... 4 Consolidated Condensed Statements of Income - Nine Months Ended September 30, 1996 and 1995.................... 5 Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 30, 1996 and 1995 ................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................. 9 PART II. OTHER INFORMATION 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 (in thousands)
September 30, December 31, 1996 1996 ------------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 9,446 $ 7,529 Receivables, net 38,680 31,434 Inventory 962 657 Other current assets 886 470 --------- --------- Total current assets 49,974 40,090 Property and equipment, net 422,168 300,666 --------- ---------- $ 472,142 $ 340,756 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,860 $ 14,403 Amounts payable to oil and gas property owners 16,199 8,874 Production taxes payable 14,764 8,047 Accrued and other liabilities 2,149 5,080 --------- --------- Total current liabilities 47,972 36,404 Long-term debt 12,000 89,000 Deferred income taxes 48,595 23,524 Stockholders' equity: Preferred stock, $.001 par value: 1,000,000 shares authorized, none outstanding -- -- Common stock, $.01 par value: 35,000,000 shares authorized; 31,319,193 issued (25,092,246 at December 31, 1995) 313 251 Additional paid-in capital 241,407 86,154 Retained earnings 122,849 105,890 Treasury stock, at cost: 38,754 shares (20,439 at December 31, 1995) (994) (467) --------- --------- Total Stockholders' equity 363,575 191,828 --------- --------- $ 472,142 $ 340,756 ========= ==========
See accompanying notes. 3 BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data) Three Months Ended September 30, September 30, 1996 1995 ------------- ------------- Revenues: Oil and gas production $ 37,838 $ 21,963 Trading revenues 7,678 4,846 Revenue from gas gathering 544 408 Interest income 177 190 Other income 104 170 ------------- ------------- 46,341 27,577 Operating expenses: Lease operating expenses 12,430 8,379 Cost of trading 7,025 4,670 Depreciation, depletion & amortization 11,595 7,692 General and administrative 4,146 3,561 Interest expense 17 1,273 Other -- 184 Merger costs -- 13,207 ------------- ------------- 35,213 38,966 ------------- ------------- Income for the period before income taxes 11,128 (11,389) Provision for income taxes 4,230 459 ------------- ------------- Net income for the period $ 6,898 $ (11,848) ============= ============= Net income per common share and common share equivalent $ 0.22 $ (0.47) ============= ============= Weighted average number of shares of common stock and common stock equivalents 31,354 25,081 ============= ============= See accompanying notes. 4 BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data)
Nine Months Ended September 30, September 30, 1996 1995 ------------ ------------ Revenues: Oil and gas production $ 102,412 $ 70,481 Trading revenues 30,547 20,156 Revenue from gas gathering 1,996 917 Interest income 633 529 Other income 465 594 ---------- ---------- 136,053 92,677 Operating expenses: Lease operating expenses 34,027 25,418 Cost of trading 28,449 19,385 Depreciation, depletion & amortization 31,859 23,625 General and administrative 11,212 10,255 Interest expense 3,154 3,284 Other expense -- 568 Merger costs -- 13,207 ---------- ---------- 108,701 95,742 ---------- ---------- Income (loss) for the period before income taxes 27,352 (3,065) Provision for income taxes 10,393 2,812 --------- ---------- Net (loss) income for the period $ 16,959 $ (5,877) ========= ========== Net (loss) income per common share and common share equivalent $ 0.62 $ (0.23) ========= ========== Weighted average number of shares of common stock and common stock equivalents 27,554 25,020 ========= =========
See accompanying notes. 5 BARRETT RESOURCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Nine Months Ended September 30, September 30, 1996 1995 ------------- ------------- Cash flows from operations: Net income $ 16,959 $ (5,877) Adjustments needed to reconcile to net cash provided by operations: Depreciation, depletion and amortization 31,859 23,625 Unrealized hedging gains/(losses) (1,138) -- Deferred income taxes 9,778 2,543 Other -- (770) ------------- ------------ 57,458 19,521 Change in current assets and liabilities: Accounts receivable (7,246) 9,505 Other current assets (416) 432 Accounts payable 457 (15,305) Amounts due oil and gas owners 7,325 (942) Production taxes payable 6,717 -- Accrued and other liabilities (1,585) 3,242 ------------- ------------ Net cash flow provided by operations 62,710 16,453 ------------- ------------ Cash flows from investing activities: Proceeds from sale of oil and gas properties 1,992 209 Acquisition of property and equipment (124,054) (46,945) ------------- ------------ Net cash flow used in investing activities (122,062) (46,736) ------------- ------------ Cash flows from financing activities: Proceeds from issuance of common stock 138,269 6,413 Borrowings on line of credit 33,000 69,000 Payments on line of credit (110,000) (37,000) Dividends paid -- (1,179) Other -- (767) ------------- ------------ Net cash flow provided by financing activities 61,269 36,467 ------------- ------------ Increase in cash and cash equivalents 1,917 6,184 Cash and cash equivalents at beginning of period 7,529 12,348 ------------- ------------ Cash and cash equivalents at end of period $ 9,446 $ 18,532 ============= ============ Noncash investing and financing activities: Issuance of common stock for property and related deferred taxes $ 31,603 $ -- Treasury shares purchased in option transactions 527 -- See accompanying notes. 6 BARRETT RESOURCES CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS September 30, 1996 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 Barrett Resources Corporation and its wholly owned subsidiaries, collectively referred to as the "Company", as of September 30, 1996 and the results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Certain reclassifications have been made to 1995 amounts to conform to the 1996 presentation. On July 18, 1995, Plains Petroleum Company ("Plains") was merged with and into a subsidiary of the Company and thereby became a wholly owned subsidiary. The merger was accounted for using the pooling of interests method, and accordingly, the accompanying financial statements have been restated to include the accounts and operations of Plains for all periods prior to the merger. 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 December 31, 1995. These financial statements should be read in conjunction with the financial statements and notes included in the Form 10-K. 2. INCOME TAXES Provisions for income taxes were calculated in accordance with Statement of Financial Accounting Standards No. 109 which provides that a deferred tax liability or asset be determined based on the timing differences between the basis used for financial versus tax reporting of assets and liabilities as measured by the effective tax rates. For the quarter and nine months ended September 30, 1996, the Company used an estimated effective tax rate of thirty-eight percent. The Internal Revenue Service (IRS) has examined the federal tax returns of Plains, a subsidiary of Barrett Resources Corporation, for pre-merger calendar years 1991, 1992 and 1993. The IRS issued a "Notice of Deficiency" of $5.3 million together with penalties of $1.1 million, and an undetermined amount of interest. The IRS notice of deficiency resulted primarily from the IRS's disallowance of certain net operating loss deductions claimed during the periods under examination. These net operating losses originally had been incurred by a company that was acquired by Plains in 1986. The Company currently has additional unused net operating loss carryforwards of approximately $30 million related to the same acquisition. 7 2. INCOME TAXES (continued) Management disagrees with the IRS position. In management's opinion, the federal tax returns of Plains reflect the proper federal income tax liability and the existing net operating loss carryforwards are appropriate as supported by relevant authority. The Company will vigorously contest these proposed adjustments and believes it will prevail in its positions. It is anticipated that the final determination of this matter will involve a lengthy process. During the quarter ended September 30, 1996 the Company acquired oil and gas properties in purchase transactions that qualify as tax-free exchanges for tax purposes. The Company provided deferred income taxes payable of $10.1 million for the estimated income tax effect of the difference between the financial and tax basis of the properties acquired. 3. LONG-TERM DEBT Effective August 1, 1996, the Company decreased the borrowing limit on its reserved-based line of credit to $75 million. Under the terms of the Credit Agreement, the Company may borrow up to the $200 million limit. As of September 30, 1996, the Company's effective interest rate, on an outstanding balance of $12 million, was approximately 6.0 percent per annum. Total interest expense incurred for the nine months ended September 30, 1996 was $3.6 million. For the nine month period, $8,000 of interest expense was capitalized for specific projects. 8 BARRETT RESOURCES CORPORATION For the Quarter Ended September 30,1996 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- Liquidity and Capital Resources - ------------------------------- As of September 30, 1996, total assets were $472.1 million compared to $340.8 million at December 31, 1995, an increase of $131.3 million or 39 percent. Cash and short term investments increased $1.9 million, working capital decreased $1.7 million and property and equipment increased $121.5 million. Operating cash flows before working capital adjustments totaled $57.5 million in the nine months ended September 1996 compared with $19.5 million in the same period of 1995. After working capital adjustments, cash flow provided by operations increased by $46.3 million to $62.7 million as compared with 1995. Capital expenditures of $155.7 million, including acquisitions and related tax adjustments, for the nine month period, increased $108.7 million over the same period in 1995. These expenditures, funded by operating cash flows and issuance of the Company's common stock, consisted principally of drilling and development activities of oil and gas properties, and acquisition and development of producing properties. Development and expansion activities were focused in the Piceance, Wind River and Anadarko Basins. Acquisitions of oil and gas property interests and related facilities were concentrated principally in the Piceance Basin of Colorado, the Gulf of Mexico, and the Uinta Basin of Utah. Exploration activities consisting of acquiring lease positions and development of prospects were centered in the Anadarko and Arkoma basins and the Gulf Coast region. On September 26, 1996, the Company announced that it was the high bidder on 19 blocks in a Federal Offshore Lease Sale. All bids are subject to approval by the Minerals Management Service ("MMS"). Upon acceptance of the bids, the Company will own a 100 percent working interest in fifteen of the blocks and a 50 percent working interest in four of the blocks. Total bonus payments payable by the Company for these block interests will be $34.8 million once approval is received from the MMS. On November 1, 1996, the Company traded interests in certain properties located in the Permian Basin of Texas and the Green River Basin of Wyoming, issued 50,000 shares of its Common Stock and paid $13.8 million in cash to acquire producing and non-producing oil and gas interests in the Altamont-Bluebell Field in the Uinta Basin of Utah. The Company has entered into an international venture to evaluate, explore and develop property encompassing approximately 820,000 acres located in the Maranon Basin of Peru. The Company has a 55 percent interest in the acreage and as operator, may drill a well in mid-1997 following an evaluation study. 9 The Company plans to continue actively acquiring, exploring and developing oil and gas properties. Based on the June 30, 1996 reserve estimates, the Company has a borrowing capacity of up to the $200 million limit of its line of credit. The Company expects cash flow from its producing properties and its borrowing capacity to be sufficient to fund its anticipated activities. Results of Operations - --------------------- Net income for the third quarter ending September 30, 1996 was $6.9 million or $.22 per share compared with a net loss of $11.8 million ($.47 loss per share) for the same period in 1995. The increase in net income is partially the result of an increase of $15.9 million in oil and gas production revenue primarily attributed to higher production volumes and increased average oil and gas sales prices. Net income for the nine months ended September 30, 1996 was $17.0 million or $.62 per share, as compared with a net loss of $5.9 million ($.23 loss per share) for the nine month period in 1995. The third quarter and nine month period loss in 1995 was directly attributed to pre-tax merger costs of $13.2 million associated with the Company's merger with Plains. Total revenues for the third quarter of 1996 were $46.3 million, an increase of $18.8 million or 68 percent over the same period in 1995. A 72 percent increase in production revenues and a 58 percent increase in trading revenues were the primary contributing factors to the higher total revenue. Total revenues for the nine month period of 1996 were 47 percent higher than the same period in 1995. Production revenue for the third quarter of 1996 increased 72 percent to $37.8 million from $22.0 million in 1995. For the nine months ended September 30, 1996, production revenues were up 45 percent to $102.4 million compared with revenues of $70.5 for the nine months ended September 30, 1995. Production revenues and related volumes and average prices during the periods presented were as follows:
Quarter Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 ----- ---- ---- ---- Gas Revenues (000's) $27,793 $15,332 $76,415 $50,095 Gas Production (Bcf) 15.5 11.0 44.1 33.9 Average Price per Mcf $ 1.80 $ 1.40 $ 1.73 $ 1.48 Oil Revenues (000's) $10,045 $ 6,631 $25,997 $20,386 Oil Production (Mbbls) 511 436 1,397 1,288 Average Price per Barrel $ 19.66 $ 15.21 $ 18.61 $ 15.84
(Note: Bcf = billion cubic feet; Mcf = thousand cubic feet; Mbbls = thousand barrels) Third quarter gas revenues increased 81 percent as compared with the same period in 1995, principally due to a 41 percent increase in production volumes and an 29 percent increase in average gas prices. A 30 percent increase in production volumes accompanied by a 25 cent per Mcf (17 percent) increase in average gas prices caused gas revenues for the nine month period ended September 30, 1996 to be 53 percent higher than the same period in 1995. 10 Oil revenues for the third quarter of 1996 were higher by $3.4 million over 1995. This increase is attributed to higher production volumes, up 17 percent, and a $4.45 per barrel (29 percent) increase in average oil prices. For the nine months ended September 30, 1996 oil revenues were up $5.6 million from 1995 due to an eight percent increase in production volumes and a $2.77 per barrel increase in average oil prices. In 1996, trading revenues were $7.7 million for the third quarter ($4.8 million in 1995) and $30.5 million for the nine month period ($20.1 million in 1995). The associated costs of trading were $7.0 million and $4.7 million for the quarter ended September 30, 1996 and 1995, respectively, and $28.4 million and $19.4 million for the respective nine months in 1996 and 1995. Gross profit from trading increased to $653,000 from $176,000 for the quarter and to $2.1 million from $771,000 for the nine months as compared to the prior year. Production hedging expenses totaled $57,000 for the quarter and $1.5 million for the first nine months of 1996 as compared to hedging income of $1.1 million and $1.8 million for the 1995 three and nine month periods, respectively. These expenses are recorded in the consolidated statements of income as adjustments of oil and gas production revenue. Currently, the Company holds positions to hedge production of approximately 11.5 Bcf of gas through October 1997. Production costs averaged 67 and 62 cents per Mcf of gas equivalent for the third quarters of 1996 and 1995, respectively, and 65 cents and 61 cents for the nine months of 1996 and 1995, respectively. The increase is attributed to the Company's increased interests in properties which have higher operating costs. Depreciation, depletion and amortization increased to $11.6 million from $7.7 million for the quarter and to $31.9 million from $23.6 million for the nine month period. The increase is principally due to production volume increases. During the nine month periods in 1996 and 1995, depletion on oil and gas production averaged $.58 and $.53 per Mcf of gas equivalent, respectively. With increased exploration activities, general and administrative costs rose $585,000 (16 percent) in the third quarter and $957,000 (9 percent) in the first nine months of 1996 as compared to the same periods in 1995. These costs approximate nine percent and eight percent of total revenues for the three and nine month periods in 1996 versus 13 percent and 11 percent for the three and nine month periods in 1995. Interest expense decreased to $17,000 from $1.3 million for the quarter and to $3.2 million from $3.3 million for the nine month period. The decrease for the quarter is directly attributed to repayment of all of the Company's outstanding long-term debt in June. The Company did not borrow additional funds until late September. 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 accounted for approximately 75 percent of the Company's production revenue for the nine 11 month period in 1996. 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 6. Exhibits and Reports on Form 8-K -------------------------------- (a) The following Exhibit is filed as part of this Quarterly Report on Form 10-Q: 27. Financial Data Schedule. (b) During the quarter ended September 30, 1996, the Registrant did not file any reports on Form 8-K. 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 November 12, 1996 By /s/ Paul M. Rady ----------------- Paul M. Rady President November 12, 1996 By /s/ J. Frank Keller -------------------- J. Frank Keller Chief Financial Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS 9-MOS DEC-31-1996 DEC-31-1996 JUL-01-1996 JAN-01-1996 SEP-30-1996 SEP-30-1996 9,446 9,446 0 0 38,680 38,680 0 0 962 962 49,974 49,974 602,957 602,957 180,789 180,789 472,142 472,142 47,972 47,972 0 0 0 0 0 0 313 313 363,262 363,262 472,142 472,142 45,516 132,959 46,341 136,053 19,455 62,476 31,050 94,335 4,146 11,212 0 0 17 3,154 11,128 27,352 4,230 10,393 6,898 16,959 0 0 0 0 0 0 6,898 16,959 .22 .62 .22 .62
-----END PRIVACY-ENHANCED MESSAGE-----