-----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, UB8SYNFy/UntT7JO4hz1zwZ/mM/xKLOL5+QJzGJtrOzYD4qzwLqyDimEIjcuDi+L evRs7rMz7o4fQQzdzTL+AA== 0000060512-97-000014.txt : 19971113 0000060512-97-000014.hdr.sgml : 19971113 ACCESSION NUMBER: 0000060512-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOUISIANA LAND & EXPLORATION CO CENTRAL INDEX KEY: 0000060512 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 720244700 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00959 FILM NUMBER: 97716178 BUSINESS ADDRESS: STREET 1: 909 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045666500 MAIL ADDRESS: STREET 1: 909 POYDRAS STREET CITY: NEW ORLEANS STATE: LA ZIP: 70112 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1997 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 1-959 THE LOUISIANA LAND AND EXPLORATION COMPANY Exact name of registrant as specified in its charter MARYLAND 72-0244700 State or other jurisdiction of I.R.S. Employer incorporation or organization Identification No. 909 POYDRAS STREET, NEW ORLEANS, LA. 70112 Address of principal executive offices Zip Code Registrant's telephone number, including area code 504-566-6500 NO CHANGE Former name, former address and former fiscal year, if changed since last report 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 . Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class October 22, 1997 CAPITAL STOCK, $.15 PAR VALUE 34,622,664 SHARES THE LOUISIANA LAND AND EXPLORATION COMPANY INDEX Page Number _________________________________________________________________ PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: (The September 30, 1997 and 1996 consolidated financial statements included in this filing on Form 10-Q have been reviewed by KPMG Peat Marwick LLP, independent auditors, in accordance with established professional standards and procedures for such a review. The report of KPMG Peat Marwick LLP commenting upon their review is included herein.) Consolidated Balance Sheets - September 30, 1997 and December 31, 1996............................. 3 Consolidated Statements of Earnings - three months and nine months ended September 30, 1997 and 1996...................................... 4 Consolidated Statements of Cash Flows - nine months ended September 30, 1997 and 1996............. 5 Notes to Consolidated Financial Statements........ 6-9 Independent Auditors' Review Report............... 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 11-13 Petroleum Segment Information......................... 14 Operating Data........................................ 15-16 Part II. OTHER INFORMATION: Item 4. Submission of Matters to a Vote of Security Holders.................................. 17 Item 6. Exhibits and Reports on Form 8-K............ 17 Part I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. THE LOUISIANA LAND AND EXPLORATION COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Millions of dollars) September 30, December 31, ASSETS 1997 1996 _____________________________________________________________________________________ CURRENT ASSETS: Cash, including cash equivalents (September 30, 1997-$3.8; December 31, 1996-$1.2) $ 14.2 9.0 Accounts and notes receivable, principally trade 85.1 150.7 Income taxes receivable .7 - Prepaid expenses 10.5 10.7 Deferred income taxes .7 .7 _____________________________________________________________________________________ TOTAL CURRENT ASSETS 111.2 171.1 _____________________________________________________________________________________ Investments in affiliates 8.8 8.1 Property, plant and equipment 3,201.7 3,100.6 Less accumulated depletion, depreciation and amortization (2,000.4) (1,940.9) _____________________________________________________________________________________ NET PROPERTY, PLANT AND EQUIPMENT 1,201.3 1,159.7 _____________________________________________________________________________________ Other assets 30.7 25.9 _____________________________________________________________________________________ $ 1,352.0 1,364.8 _____________________________________________________________________________________ LIABILITIES AND STOCKHOLDERS' EQUITY _____________________________________________________________________________________ CURRENT LIABILITIES: Accounts payable and accrued expenses 103.4 138.9 Income taxes payable 2.0 9.4 _____________________________________________________________________________________ TOTAL CURRENT LIABILITIES 105.4 148.3 _____________________________________________________________________________________ Deferred income taxes 85.3 78.4 Long-term debt 483.3 505.7 Other liabilities 159.7 157.8 _____________________________________________________________________________________ STOCKHOLDERS' EQUITY: Capital stock 5.2 5.1 Additional paid-in capital 60.7 44.6 Retained earnings 452.4 424.9 _____________________________________________________________________________________ TOTAL STOCKHOLDERS' EQUITY 518.3 474.6 _____________________________________________________________________________________ $ 1,352.0 1,364.8 _____________________________________________________________________________________ See accompanying notes to consolidated financial statements.
THE LOUISIANA LAND AND EXPLORATION COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Millions, except per share data)
Three months ended Nine months ended September 30, September 30, 1997 1996 1997 1996 _____________________________________________________________________________________ REVENUES: Oil and gas $135.3 136.7 440.5 420.2 Refined products - 38.5 - 263.5 Gain on sale of petroleum assets .2 1.7 .6 2.0 _____________________________________________________________________________________ 135.5 176.9 441.1 685.7 _____________________________________________________________________________________ COSTS AND EXPENSES: Lease operating and facility expenses 28.7 30.2 89.8 88.1 Refinery cost of sales and operating expenses - 38.3 - 254.4 Dry holes and exploratory charges 31.5 25.8 107.3 69.1 Depletion, depreciation and amortization 43.4 42.7 132.0 130.8 Taxes, other than on earnings 5.5 5.3 17.0 17.8 General, administrative and other expenses 10.4 10.1 29.5 29.4 _____________________________________________________________________________________ 119.5 152.4 375.6 589.6 _____________________________________________________________________________________ 16.0 24.5 65.5 96.1 OTHER INCOME (EXPENSE): Interest and debt expenses (8.1) (8.3) (22.5) (26.4) Other income (expense),net .1 2.3 7.9 7.1 _____________________________________________________________________________________ Earnings before income taxes 8.0 18.5 50.9 76.8 Income tax expense 1.8 4.8 17.3 25.3 _____________________________________________________________________________________ NET EARNINGS $ 6.2 13.7 33.6 51.5 _____________________________________________________________________________________ EARNINGS PER SHARE $ 0.18 0.40 0.97 1.51 _____________________________________________________________________________________ AVERAGE SHARES 34.8 34.4 34.6 34.1 _____________________________________________________________________________________ CASH DIVIDENDS PER SHARE $ 0.06 0.06 0.18 0.18 _____________________________________________________________________________________ See accompanying notes to consolidated financial statements.
THE LOUISIANA LAND AND EXPLORATION COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Millions of dollars)
Nine months ended September 30, 1997 1996 _____________________________________________________________________________________ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 33.6 51.5 Adjustments to reconcile to cash flows from operations: Gain on sale of petroleum assets (.6) (2.0) Depletion, depreciation and amortization 132.0 130.8 Deferred income taxes 6.9 19.8 Dry holes and impairment charges 66.5 41.6 Other (.1) 13.0 _____________________________________________________________________________________ 238.3 254.7 Changes in operating assets and liabilities, net of the 1996 sale of refining assets: Net (increase) decrease in receivables 61.5 (18.8) Net increase in inventories - (4.2) Net decrease in prepaid items .2 3.7 Net increase (decrease) in payables (41.4) 33.7 Other 4.4 (.6) _____________________________________________________________________________________ NET CASH FLOWS FROM OPERATING ACTIVITIES 263.0 268.5 _____________________________________________________________________________________ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (247.6) (164.4) Proceeds from asset sales 6.5 70.4 Other (.5) (9.8) _____________________________________________________________________________________ NET CASH FLOWS FROM INVESTING ACTIVITIES (241.6) (103.8) _____________________________________________________________________________________ CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term debt (22.4) (186.2) Advances against cash surrender value - 9.6 Dividends (6.1) (6.1) Repayment of loans to ESOP - 1.7 Other 12.3 18.3 _____________________________________________________________________________________ NET CASH FLOWS FROM FINANCING ACTIVITIES (16.2) (162.7) _____________________________________________________________________________________ INCREASE IN CASH AND CASH EQUIVALENTS $ 5.2 2.0 _____________________________________________________________________________________ See accompanying notes to consolidated financial statements. /TABLE THE LOUISIANA LAND AND EXPLORATION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of September 30, 1997, and the results of operations and cash flows for the three-month and nine-month periods ended September 30, 1997 and 1996. Certain amounts have been reclassified to conform with the current period's presentation. 2. On July 31, 1996, the Company completed the sale of its crude oil refinery and terminal near Mobile, Alabama, including crude oil and refined product inventories, for approximately $70 million resulting in a pretax gain of approximately $2 million. The net book value of refinery property, plant and equipment at that date totaled approxi- mately $33 million. The following table sets forth the refinery operating results for the periods indicated.
(Unaudited) Periods ended September 30, 1996 One Seven (Millions of dollars) Month Months _______________________________________________________________________________ REFINING OPERATIONS Refining Operating Profit (Loss): Revenues: Refined products* $ 41.4 280.4 Other - .3 _______________________________________________________________________________ 41.4 280.7 _______________________________________________________________________________ Cost and expenses: Cost of sales* 37.3 244.7 Operating expenses 3.9 26.6 Depreciation .2 1.1 Taxes, other than income .1 .9 _______________________________________________________________________________ 41.5 273.3 _______________________________________________________________________________ $ (.1) 7.4 _______________________________________________________________________________ *Before the elimination of intercompany transfers to the Company's refinery $ 2.9 16.9 _______________________________________________________________________________
3. For the three months ended September 30, 1997 and 1996, interest costs incurred were $9.7 million and $10.8 million, respectively, of which $1.6 million and $2.5 million, respectively, were capitalized as part of the cost of property, plant and equipment. For the nine months ended September 30, 1997 and 1996, interest costs incurred were $28.4 million and $35.2 million, respectively, of which $5.9 million and $8.8 million, respectively, were capitalized as part of the cost of property, plant and equipment. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 4. As prescribed by Accounting Principles Board Opinion No. 15, "Earnings Per Share" ("Opinion No. 15"), earnings per share are calculated on the weighted average number of shares outstanding during each period for capital stock and, when dilutive, capital stock equivalents, which assumes exercise of stock options. 5. In accordance with Regulation S-X, Rule 3-09, the audited consolidated financial statements of the Company's 50%-owned affiliate, MaraLou Netherlands Partnership (MaraLou) and its wholly-owned consolidated subsidiary, CLAM Petroleum Company (CLAM), were filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Accordingly, the following unaudited summarized consolidated income statement information for MaraLou/CLAM for the three-month and nine- month periods ended September 30, 1997 and 1996 are presented in accordance with Regulation S-X, Rule 10-01(b).
(Unaudited) Three months ended Nine months ended September 30, September 30, 1997 1996 1997 1996 ________________________________________________________________________________ Gross revenues $17.1 16.5 66.0 69.6 ________________________________________________________________________________ Operating profit 7.7 7.3 34.4 31.6 ________________________________________________________________________________ Net earnings (loss) $ 5.0 2.2 13.8 14.0 ________________________________________________________________________________
6. The Company uses derivative commodity instruments to manage commodity price risks associated with future natural gas and crude oil production but does not use them for speculative purposes. The Company's commodity price hedging program utilizes futures, forwards, options and swap contracts in series of transactions designed to set a floor price for future production and at the same time allowed the Company to participate in market price increases above a set level over the floor price and outside of specific ranges. To qualify as a hedge,these contracts must correlate to anticipated future production such that the Company's exposure to the effects of price changes is reduced. The Company uses the accrual method of accounting for derivative commodity instruments. At inception, the contract premiums paid are recorded as prepaid expenses and, upon settlement of the hedged production month, are included with the gains and losses on the contracts in oil and gas revenues. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) At September 30, 1997, approximately 22 trillion BTU of domestic natural gas production for the remainder of 1997 were covered by a series of transactions designed to set an average floor price of $1.86 per million BTU with the Company's nonparticipation in market price increases above the floor price limited to $0.18 per million BTU. For 1998, approximately 57 trillion BTU of domestic natural gas were similarly hedged at an average floor price of $1.80 per million BTU with the Company's nonparticipation in market price increases above the floor price limited to $0.24 per million BTU. For 1999, approximately 38 trillion BTU of domestic natural gas were similarly hedged at an average floor price of $1.79 per million BTU with the Company's nonparticipation in market price increases above the floor price limited to $0.23 per million BTU. While these transactions have nominal carrying values, their fair value, represented by the estimated amount that would be required to terminate the contracts, were a net cost of $3.0 million for the 1997 hedges, a net cost of $2.7 million for the 1998 hedges and a net benefit of $.6 million for 1999 hedges. (The Company estimates that its domestic natural gas production averages approximately 1.07 million BTU for each thousand cubic feet.) In addition, approximately 1.8 million barrels of the Company's worldwide crude oil production for the remainder of 1997 were similarly hedged at an average floor price of $17.82 per barrel with the Company's nonparticipation in market price increases above the floor price limited to $1.29 per barrel. For 1998, approximately 2.0 million barrels of the Company's worldwide crude oil production were similarly hedged at an average floor price of $19.38 per barrel with the Company's nonparticipation in market price increases above the floor price limited to $2.25 per barrel. These transactions also have nominal carrying values, but their fair value at September 30, 1997 amounted to a net cost of $.5 million for the 1997 hedges and a net benefit of $1.3 million for the 1998 hedges. 7. The Company has been notified by the U.S. Environmental Protection Agency that it is one of many Potentially Responsible Parties (PRP) with respect to certain National Priorities List sites. Based on its evaluation of the potential total cleanup costs, its estimate of its potential exposure, and the viability of the other PRP's, the Company believes that any costs ultimately required to be borne by it at these sites will not have a material adverse effect on the results of operations, cash flow or financial position of the Company. The Company is subject to other legal proceedings, claims and liabilities which arise in the ordinary course of its business. In the opinion of Management, the amount of ultimate liability with respect to these actions will not have a material adverse effect on results of operations, cash flow or financial position of the Company. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. In June 1997, the Company refinanced its existing $350 million Revolving Credit Facility with a Revolving Credit Facility of a like amount, the primary objectives of which were to avail the Company of lower market pricing, extend the maturity by one year to 2002 and improve other terms and conditions favorable to the Company. However, as a result of the combination of the Company with Burlington Resources, Inc. (BR), the Revolving Credit Facility automatically terminated on October 23, 1997. Further, the Company's commercial paper program was also terminated on that date and outstanding commercial paper totaling approximately $83 million was retired by BR. 9. On October 22, 1997, the shareholders of the Company approved a definitive agreement to combine with Burlington Resources Inc. (BR) in a transaction accounted for under the pooling of interests method of accounting for business combinations. Under the terms of the agreement, a wholly owned subsidiary of BR merged into the Company and the Company's shareholders received 1.525 shares of BR common stock for each Company share held and the Company became a wholly owned subsidiary of BR. The transaction is expected to qualify as a tax- free reorganization. At September 30, 1997, the Company has deferred approximately $2.7 million of costs related to the merger, which was expensed upon consummation of the merger. INDEPENDENT AUDITORS' REVIEW REPORT The Board of Directors The Louisiana Land and Exploration Company: We have reviewed the consolidated balance sheet of The Louisiana Land and Exploration Company and subsidiaries as of September 30, 1997, and the related consolidated statements of earnings and cash flows for the three- month and nine-month periods ended September 30, 1997 and 1996. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of The Louisiana Land and Exploration Company and subsidiaries as of December 31, 1996, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 7, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1996, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /KPMG PEAT MARWICK LLP KPMG PEAT MARWICK LLP New Orleans, Louisiana November 7, 1997 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements, other than historical facts, contained in this Quarterly Report on Form 10-Q, including statements of estimated oil and gas production and reserves, drilling plans, future cash flows, anticipated capital expenditures and Management's strategies, plans and objectives, are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that its forward looking statements are based on reasonable assumptions, it cautions that such statements are subject to a wide range of risks and uncertainties incident to the exploration for, acquisition, development and marketing of oil and gas, and it can give no assurance that its estimates and expectations will be realized. Important factors that could cause actual results to differ materially from the forward looking statements include, but are not limited to, changes in production volumes, worldwide demand, and commodity prices for petroleum natural resources; the timing and extent of the Company's success in discovering, acquiring, developing and producing oil and gas reserves; risks incident to the drilling and operation of oil and gas wells; future production and development costs; the effect of existing and future laws, governmental regulations and the political and economic climate of the United States and foreign countries in which the Company operates; the effect of hedging activities; and conditions in the capital markets. Other risk factors are discussed elsewhere in this Form 10-Q, including those risk factors described in Note 8 of "Notes to Consolidated Financial Statements" and in the Company's Form 10-K. REVIEW OF OPERATIONS Third quarter net earnings totaled $6.2 million compared with the $13.7 million earned in third quarter of 1996. For the first nine months of 1997, net earnings totaled $33.6 million in comparison to net earnings of $51.5 million in the year-earlier period. The decline in net earnings resulted primarily from lower liquids and domestic natural gas prices in the 1997 third quarter, higher exploratory costs in both 1997 periods and the inclusion in the comparable 1996 periods of operating results from the Company's Mobile refinery, which was sold in July 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (CONTINUED) OIL AND GAS OPERATIONS Revenues from the Company's oil and gas operations were down $1 million from the third quarter of 1996 due to lower liquids revenues. Liquids revenues were down $3 million due to lower crude oil prices ($6 million). Higher crude oil volumes ($3 million) partially offset the impact of lower prices. Natural gas revenues were up $1 million primarily as a result of higher domestic deliveries. In the first nine months of 1997, revenues from the Company's oil and gas operations were up $20 million from comparable 1996 period. Liquids revenues were up $4 million primarily due to the higher worldwide crude oil prices. Natural gas revenues were up $16 million as a result of higher domestic deliveries ($20 million), partially offset by lower prices ($4 million). Crude oil volumes in the third quarter increased 2300 barrels per day (BPD) from the 1996 quarter. However, in the first nine months of 1997, volumes declined 200 BPD from the comparable 1996 period. Crude volumes from other foreign operations were up 1800 BPD and 900 BPD in both 1997 periods due to new wells onstream at the KAKAP concession, offshore Indonesia. North Sea operations were up 2000 BPD in the 1997 third quarter and down 900 BPD in the 1997 first nine months as new production onstream at the T-Block complex offset in the third quarter the effect of natural declines and partially offset natural declines in the first nine months. Domestic volumes were down 1500 BPD and 200 BPD, respectively, in the third quarter and first nine months of 1997 with natural declines and the effect of properties sold more than offsetting new wells onstream in south Louisiana and the Gulf of Mexico. Domestic natural gas deliveries were up 7 million and 32 million cubic feet per day in the third quarter and first nine months of 1997, respec- tively, due to new wells onstream in the Gulf of Mexico and south Louisiana. The higher deliveries were partially offset by the effects of natural declines at mature producing properties. Lease operating and facility expenses, although down in the third quarter of 1997 due to lower workover costs, were up in the first nine months of 1997 as higher workover costs and facilities expenses offset reductions in operating costs and repair charges. Depletion, depreciation and amortization (DD&A) was up marginally in both 1997 periods as a result of the DD&A associated with new wells onstream. This increase in DD&A was partially offset by natural production declines on mature producing properties. Dry holes and exploratory charges increased due to the write- off of unsuccessful exploratory wells and higher seismic costs incurred. Interest and debt expenses were down from the 1996 periods primarily as a result of the significant reduction in long-term debt over the last twelve months. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES In the first nine months of 1997, the Company generated approximately $263 million in cash from operations which, along with available cash, was used for capital projects ($248 million), reductions of long-term debt ($22 million) and dividends paid ($6 million). In June 1997, the Company refinanced its existing $350 million Revolving Credit Facility with a Revolving Credit Facility of a like amount, the primary objectives of which were to avail the Company of lower market pricing, extend the maturity by one year to 2002 and improve other terms and conditions favorable to the Company. However, as a result of the combination of the Company with Burlington Resources, Inc. (BR), the Revolving Credit Facility automatically terminated on October 23, 1997. Further, the Company's commercial paper program was also terminated on that date and outstanding commercial paper totaling approximately $83 million was retired by BR. CAPITAL STOCK, DIVIDENDS AND OTHER MARKET DATA On October 22, 1997, the shareholders of the Company approved a definitive agreement to combine with Burlington Resources, Inc. (BR) in a transaction accounted for under the pooling of interest method of accounting for business combinations. Under the terms of the agreement, a wholly owned subsidiary of BR merged into the Company and the Company's shareholders received 1.525 shares of BR common stock for each Company share held and the Company became a wholly owned subsidiary of BR. The transaction is expected to qualify as a tax-free reorganization. NOTE: The accompanying consolidated financial statements and notes thereto included in Item 1. of this Form 10-Q and the petroleum segment information and operating data following this Item 2. are an integral part of this discussion and analysis and should be read in conjunction herewith. THE LOUISIANA LAND AND EXPLORATION COMPANY PETROLEUM SEGMENT INFORMATION (Millions of dollars)
Three months ended Nine months ended September 30, September 30, 1997 1996 1997 1996 _____________________________________________________________________________________ Sales to unaffiliated customers: Domestic1 $ 93.8 141.1 317.7 567.3 North Sea 33.5 30.3 101.0 100.4 Other foreign 8.2 5.5 22.4 18.0 _____________________________________________________________________________________ Total revenues $ 135.5 176.9 441.1 685.7 _____________________________________________________________________________________ Earnings (loss) before income taxes: Operating profit (loss): Domestic1 14.7 33.0 72.7 113.4 North Sea 11.5 7.2 36.2 29.3 Other foreign (.1) (4.0) (6.9) (11.2) _____________________________________________________________________________________ 26.1 36.2 102.0 131.5 Other income (expense), net (18.1) (17.7) (51.1) (54.7) _____________________________________________________________________________________ Earnings (loss) before income taxes $ 8.0 18.5 50.9 76.8 _____________________________________________________________________________________ Capital expenditures: Exploration: Domestic 30.4 36.4 114.3 80.3 North Sea .9 .6 3.5 1.4 Other foreign 8.0 7.7 20.1 14.1 _____________________________________________________________________________________ 39.3 44.7 137.9 95.8 _____________________________________________________________________________________ Development: Domestic 45.1 13.1 74.8 44.2 North Sea 3.6 3.6 13.3 13.9 Other foreign 1.3 2.1 6.9 6.9 _____________________________________________________________________________________ 50.0 18.8 95.0 65.0 _____________________________________________________________________________________ 89.3 63.5 232.9 160.8 Capitalized interest 1.6 2.5 5.9 8.8 Other 2.3 1.0 4.1 2.4 _____________________________________________________________________________________ $ 93.2 67.0 242.9 172.0 _____________________________________________________________________________________ 1 The 1996 periods include the operations of the Company's refinery which was sold in July 1996. See Note 2 of "Notes to Consolidated Financial Statements."
THE LOUISIANA LAND AND EXPLORATION COMPANY OPERATING DATA
Three months ended Nine months ended September 30, September 30, 1997 1996 1997 1996 _____________________________________________________________________________________ OIL AND GAS OPERATIONS1 CRUDE AND CONDENSATE2 Production (thousands of barrels per day): Domestic 19.8 21.3 20.8 21.0 North Sea 15.7 13.7 14.5 15.4 Other foreign 5.2 3.4 4.6 3.7 _____________________________________________________________________________________ 40.7 38.4 39.9 40.1 _____________________________________________________________________________________ Average price received (per barrel): Domestic $18.46 20.87 19.83 19.76 North Sea 18.48 19.54 19.25 18.84 Other foreign 17.21 17.93 17.97 17.66 Consolidated 18.31 20.14 19.41 19.21 _____________________________________________________________________________________ PLANT PRODUCTS Production (thousands of barrels per day): Domestic 2.8 2.6 2.8 2.2 North Sea .9 .8 .9 .9 _____________________________________________________________________________________ 3.7 3.4 3.7 3.1 _____________________________________________________________________________________ Average price received (per barrel): Domestic $10.68 12.49 13.43 12.46 North Sea 13.72 14.21 17.36 15.03 Consolidated 11.41 12.90 14.35 13.20 _____________________________________________________________________________________ NATURAL GAS Production (millions of cubic feet per day): Domestic 296.1 289.4 304.3 272.3 North Sea 26.5 24.1 30.2 30.1 CLAM Petroleum Company 34.3 30.6 41.6 44.9 _____________________________________________________________________________________ 356.9 344.1 376.1 347.3 _____________________________________________________________________________________ Average price received (per MCF): Domestic $ 2.08 2.12 2.30 2.39 North Sea 2.41 2.10 2.58 2.17 CLAM Petroleum Company 2.61 2.93 2.76 2.79 Consolidated 2.15 2.19 2.37 2.42 _____________________________________________________________________________________ 1 Includes the Company's 50% equity interest in its unconsolidated affiliate, CLAM Petroleum Company. 2 Before the elimination of intercompany transfers.
THE LOUISIANA LAND AND EXPLORATION COMPANY OPERATING DATA (CONTINUED)
Three months ended Nine months ended September 30, September 30, 1997 1996 1997 1996 _____________________________________________________________________________________ GROSS WELLS DRILLED Working Interest Exploratory: Oil 5 2 12 4 Gas 6 2 14 7 Dry 6 6 16 13 _____________________________________________________________________________________ 17 10 42 24 _____________________________________________________________________________________ Development: Oil 2 5 12 15 Gas 4 4 9 7 Dry - - - - _____________________________________________________________________________________ 6 9 21 22 _____________________________________________________________________________________ Total working interest 23 19 63 46 Royalty Interest 3 4 23 11 _____________________________________________________________________________________ Total wells 26 23 86 57 _____________________________________________________________________________________ NET WELLS DRILLED Exploratory: Oil 1.6 1.3 4.1 2.0 Gas 2.2 1.5 5.6 3.6 Dry 2.2 1.7 6.7 4.2 _____________________________________________________________________________________ 6.0 4.5 16.4 9.8 _____________________________________________________________________________________ Development: Oil .7 .6 1.9 1.7 Gas 1.2 .9 2.5 2.4 Dry - - - - _____________________________________________________________________________________ 1.9 1.5 4.4 4.1 _____________________________________________________________________________________ Total net wells 7.9 6.0 20.8 13.9 _____________________________________________________________________________________
PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER. At a Special Meeting of Stockholders held on October 22, 1997, the Agreement and Plan of Merger dated July 16,1997 among the Company, Burlington Resources Inc. and BR Acquisition Corporation, a wholly owned subsidiary of Burlington Resources Inc., pursuant to which BR Acquisition Corporation will merge with and into the Company, was approved by a stockholder vote of: For - 27,745,758; Against - 59,076; Abstaining - 55,314. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: Exhibit 27 - Financial Data Schedules: Quarter ended September 30, 1997 Quarter ended September 30, 1996 (restated) (b) Reports on Form 8-K: On July 17, 1997, the Company filed a Current Report on Form 8-K which included a press release announcing that the Company had entered into an agreement and Plan of Merger dated July 16, 1997 among the Company, Burlington Resources Inc. and BR Acquisition Corporation, a wholly owned subsidiary of Burlington Resources Inc., pursuant to which BR Acquisition Corporation will merge with and into the Company. On October 23, 1997, the Company filed a Current Report on Form 8-K which included the press release of Burlington Resources, Inc. announcing the approval of the aforementioned Plan of Merger by the shareholders of the Company and Burlington Resources, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE LOUISIANA LAND AND EXPLORATION COMPANY (REGISTRANT) By: /s/ John E. Hagale ___________________________________________ JOHN E. HAGALE CHIEF FINANCIAL OFFICER (PRINCIPAL ACCOUNTING OFFICER) By: /s/ J. N. Wood ___________________________________________ J N. WOOD VICE PRESIDENT Dated: November 13, 1997 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS OF THE LOUISIANA LAND AND EXPLORATION COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 SEP-30-1997 14,200 0 85,800 0 000 111,200 3,201,700 2,000,400 1,352,000 105,400 483,300 5,200 0 0 513,100 1,352,000 441,100 441,100 0 346,100 21,600 0 22,500 50,900 17,300 33,600 0 0 0 33,600 0.97 0.97 EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS OF THE LOUISIANA LAND AND EXPLORATION COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS BEEN RESTATED TO CONFORM TO FINANCIAL STATEMENTS CLASSIFICATIONS ADOPTED IN 1997. 1,000 9-MOS DEC-31-1996 SEP-30-1996 12,300 0 86,200 0 400 106,900 3,062,000 1,886,400 1,318,000 138,400 505,400 5,100 0 0 438,500 1,318,000 685,700 685,700 0 560,200 22,300 0 26,400 76,800 25,300 51,500 0 0 0 51,500 1.51 1.51 -----END PRIVACY-ENHANCED MESSAGE-----