-----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, MJxirsaDZykhmMokTTY0ULsibqPu+1/ZJ+J13lAS2FhuJHtz8l3JLIArX3nBhVyK uottvQ836hiY/uQv5lciYg== 0000899243-97-001509.txt : 19970811 0000899243-97-001509.hdr.sgml : 19970811 ACCESSION NUMBER: 0000899243-97-001509 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED MERIDIAN CORP CENTRAL INDEX KEY: 0000818885 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 752160316 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12088 FILM NUMBER: 97654169 BUSINESS ADDRESS: STREET 1: 1201 LOUISIANA STREET 2: STE 1400 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136549110 MAIL ADDRESS: STREET 1: 1201 LOUISIANA STREET 2: STE 1400 CITY: HOUSTON STATE: TX ZIP: 77002 10-Q 1 FORM 10-Q =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549-1004 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 Commission file number 1-12088 UNITED MERIDIAN CORPORATION (Exact name of registrant as specified in its charter) Delaware 75-2160316 - --------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1201 Louisiana, Suite 1400, Houston, TX 77002-5603 - ------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) (713) 654-9110 ------------------------------- (Registrant's telephone 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 [ ]. The number of shares outstanding of the registrant's common stock, all of which comprise a single class with a $0.01 par value, as of July 31, 1997, the latest practicable date, was 35,607,419. =============================================================================== UNITED MERIDIAN CORPORATION FORM 10-Q JUNE 30, 1997 TABLE OF CONTENTS PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Consolidated Statement of Income for the Three Months and Six Months Ended June 30, 1997 and 1996.............. 1 Consolidated Balance Sheet at June 30, 1997 and December 31, 1996........................................ 2 Consolidated Statement of Changes in Stockholders' Equity for the Year Ended December 31, 1996 and for the Six Months Ended June 30, 1997................... 4 Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1997 and 1996............................. 5 Notes to Consolidated Financial Statements................ 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition........................ 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings........................................... 16 Item 2. Changes in Securities....................................... 16 Item 3. Defaults Upon Senior Securities............................. 16 Item 4. Submission of Matters to a Vote of Security Holders......... 16 Item 5. Other Information........................................... 16 Item 6. Exhibits and Reports on Form 8-K............................ 16 SIGNATURES............................................................... 16 EXHIBITS - Index to Exhibits..................................................... 17 UNITED MERIDIAN CORPORATION CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) For the three months For the six months ended June 30, ended June 30, -------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Revenues: Gas sales...................... $ 20,639 $ 29,513 $ 53,245 $ 59,515 Oil sales...................... 32,365 18,865 63,239 35,284 Gain on sale of assets......... 1,421 12,487 2,248 18,012 Other.......................... 1,120 458 1,818 680 -------- -------- -------- -------- 55,545 61,323 120,550 113,491 -------- -------- -------- -------- Costs and expenses: Production costs............... 12,555 11,491 25,705 24,295 General and administrative..... 3,499 3,120 6,048 6,519 Exploration, including dry holes and impairments........ 10,078 10,250 22,818 14,711 Depreciation, depletion and amortization................ 22,402 22,062 43,598 41,821 -------- -------- -------- -------- 48,534 46,923 98,169 87,346 -------- -------- -------- -------- Income from operations............ 7,011 14,400 22,381 26,145 Other income, expenses and deductions: Interest and debt expense...... (4,750) (5,841) (9,438) (11,380) Interest and other income...... 454 (36) 1,427 78 -------- -------- -------- -------- Income before income taxes........ 2,715 8,523 14,370 14,843 Income tax benefit (provision): Current........................ (1,392) (189) (2,674) (297) Deferred....................... 497 (3,099) (3,677) (5,595) -------- -------- -------- -------- Net income........................ 1,820 5,235 8,019 8,951 Preferred stock dividends......... - (765) - (1,531) -------- -------- -------- -------- Net income available to common stockholders.................... $ 1,820 $ 4,470 $ 8,019 $ 7,420 ======== ======== ======== ======== Net income per common share (Exhibit 11.1).................. $ 0.05 $ 0.15 $ 0.22 $ 0.24 ======== ======== ======== ======== Weighted average number of common shares outstanding, including common share equivalents (Exhibit 11.1).................. 36,765 30,461 36,685 30,299 ======== ======== ======== ======== The accompanying notes are an integral part of these consolidated financial statements. -1- UNITED MERIDIAN CORPORATION CONSOLIDATED BALANCE SHEET (IN THOUSANDS) December 31, June 30, 1997 1996 ------------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents...................... $ 16,384 $ 54,942 Accounts receivable Oil and gas sales............................ 29,750 36,238 Joint interest and other..................... 33,899 45,447 Deferred income taxes.......................... 7,081 2,839 Inventory...................................... 12,491 11,389 Prepaid expenses and other..................... 4,218 5,306 --------- --------- 103,823 156,161 --------- --------- Property and equipment, at cost: Oil and gas (successful efforts method) Proved properties............................ 959,605 851,818 Unproved properties.......................... 18,240 14,667 Other property and equipment................... 11,291 8,295 --------- --------- 989,136 874,780 Accumulated depreciation, depletion and amortization............................. (373,160) (350,591) --------- --------- 615,976 524,189 --------- --------- Other assets: Gas imbalances receivable...................... 6,008 5,702 Deferred income taxes.......................... 17,930 23,035 Debt issue costs............................... 9,904 8,370 Other.......................................... 967 836 --------- --------- 34,809 37,943 --------- --------- TOTAL ASSETS.............................. $ 754,608 $ 718,293 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. -2- UNITED MERIDIAN CORPORATION CONSOLIDATED BALANCE SHEET (IN THOUSANDS) December 31, June 30, 1997 1996 ------------- ------------ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable............................... $ 91,550 $ 80,593 Advances from joint owners..................... 15,838 5,575 Interest payable............................... 3,530 3,800 Accrued liabilities............................ 7,863 7,525 Current maturities of long-term debt........... 1,635 899 --------- --------- 120,416 98,392 --------- --------- Long-term debt: 10-3/8% senior subordinated notes.............. 156,466 150,000 Other.......................................... - 6,832 --------- --------- 156,466 156,832 --------- --------- Deferred credits and other liabilities: Deferred income taxes.......................... 20,335 20,797 Gas imbalances payable......................... 4,385 3,994 Other.......................................... 6,473 6,042 --------- --------- 31,193 30,833 --------- --------- Commitments and contingencies Stockholders' equity: Common stock................................... 356 352 Additional paid-in capital..................... 547,274 540,661 Foreign currency translation adjustment........ (4,596) (4,257) Retained earnings (deficit).................... (96,501) (104,520) --------- --------- 446,533 432,236 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................................. $ 754,608 $ 718,293 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. -3- UNITED MERIDIAN CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS) FOR THE YEAR ENDED DECEMBER 31, 1996 AND SIX MONTHS ENDED JUNE 30, 1997
SERIES F PREFERRED STOCK COMMON STOCK ADD'L FOREIGN RETAINED --------------------- ----------------- PAID-IN CURRENCY EARNINGS SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENT (DEFICIT) TOTAL ---------- -------- -------- ------- ------- ---------- --------- --------- Balance, December 31, 1995........ 1,166,667 $ 12 28,150,224 $ 281 $ 336,469 $ (4,057) $(120,393) $ 212,312 Foreign currency translation adjustment.................... (200) (200) Common stock offering............ 4,088,942 41 182,629 182,670 Exercise of common stock options. 897,007 9 17,951 17,960 Exercise of warrants............. 235,749 2 3,619 3,621 Preferred stock dividends........ (1,531) (1,531) Automatic conversion of Series F preferred stock to common stock............... (1,166,667) (12) 1,845,284 19 (7) - Net income....................... 17,404 17,404 ---------- ------- ---------- ----- --------- ---------- --------- --------- Balance, December 31, 1996........ - - 35,217,206 352 540,661 (4,257) (104,520) 432,236 Foreign currency translation adjustment.................... (339) (339) Exercise of common stock options. 389,388 4 6,613 6,617 Net income....................... 8,019 8,019 ---------- ------- ---------- ----- --------- ---------- --------- --------- Balance, June 30, 1997 (Unaudited).................... - $ - 35,606,594 $ 356 $ 547,274 $ (4,596) $ (96,501) $ 446,533 ========== ======= ========== ===== ========= ========== ========= =========
The accompanying notes are an integral part of these consolidated financial statements. -4- UNITED MERIDIAN CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) For the six months ended June 30, --------------------- 1997 1996 --------- --------- Cash flows from operating activities: Net income.......................................... $ 8,019 $ 8,951 Adjustments to reconcile net income to cash from operating activities: Exploration, including dry holes and impairments.. 22,818 14,711 Depreciation, depletion and amortization.......... 43,598 41,821 Amortization of debt issue cost................... 744 792 Deferred income tax provision..................... 3,677 5,595 Gain on sale of assets............................ (2,248) (18,012) --------- --------- 76,608 53,858 Changes in assets and liabilities: Decrease (increase) in receivables................ 15,813 (2,530) Increase (decrease) in payables and other current liabilities............................. 11,506 (19,185) Increase in net gas imbalances.................... 85 117 Other............................................. 373 2,700 --------- --------- Net cash provided by operating activities....... 104,385 34,960 --------- --------- Cash flows from investing activities: Exploration......................................... (61,526) (24,148) Development......................................... (94,134) (37,444) Additions to other property and equipment........... (2,372) (615) Net proceeds from sale of assets.................... 13,573 29,715 --------- --------- Net cash used in investing activities........... (144,459) (32,492) --------- --------- Cash flows from financing activities: Repayment of long-term debt......................... (366) (105,238) Additions to total debt............................. 736 88,947 Debt issue costs.................................... (2,326) (251) Proceeds from exercise of common stock options...... 3,472 6,157 Preferred stock dividends........................... - (1,531) --------- --------- Net cash provided by (used in) financing activities.................................... 1,516 (11,916) --------- --------- Net decrease in cash and cash equivalents............. (38,558) (9,448) Cash and cash equivalents at beginning of period...... 54,942 13,586 --------- --------- Cash and cash equivalents at end of period............ $ 16,384 $ 4,138 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. -5- UNITED MERIDIAN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 BASIS OF FINANCIAL STATEMENTS The accompanying consolidated financial statements of United Meridian Corporation (UMC or the Company) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted, UMC believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1996. The financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. NOTE 2 ACQUISITIONS AND DISPOSITIONS As part of its on-going operations, the Company continually acquires and sells producing and undeveloped reserves and related assets. Certain transactions occurring in the periods presented are discussed below. Through July 1997, the Company has acquired additional interests in various properties from several of its institutional partners. In conjunction with one of these acquisitions, the Company sold a portion of the acquired interests. The net cost of the additional interests was approximately $25,936,000. During the six months ended June 30, 1997, the Company sold various non- strategic North American properties for total proceeds of $13,573,000, resulting in pre-tax gains of $2,248,000. In late 1995, the Company agreed to assign to Yukong Limited a portion of its interests in Blocks CI-01 and CI-02 in Cote d'Ivoire and Blocks B, C and D in Equatorial Guinea. Mobil Equatorial Guinea, Inc. (Mobil) subsequently exercised its preferential right to purchase the interest in Block B in lieu of the proposed assignment to Yukong Limited. Under the agreements, the Company received $13,016,000 in cash in the first six months of 1996, resulting in a pre-tax gain of $11,392,000. In June 1996, UMC Resources Canada, Inc. (Resources), the Company's wholly- owned Canadian subsidiary, sold all of its interests in the Rocanville area in the province of Saskatchewan, effective May 1, 1996. Net proceeds from the sale were $6,722,000 and a gain of $4,679,000 was recognized. During the first six months of 1996, the Company sold various other non- strategic North American properties for total proceeds of $9,977,000, resulting in pre-tax gains of $1,941,000. NOTE 3 FINANCIAL INSTRUMENTS The Company hedged a portion of its oil production with collar agreements in the first six months of 1997, having no material impact on oil revenues. The Company currently has no-cost natural gas collar contracts in place from June 1997 through October 1997 for 1 BCF per month with a floor price of $2.10 and a cap price of $2.39 and a separate no-cost collar for 250,000 MCF per month for September 1997 and October 1997 production at a floor price of $2.00 and a cap price of $2.26. UMC's current hedging agreements are settled on a monthly basis. All of UMC's current hedge contracts specify the third-party index to be the New York Mercantile Exchange (NYMEX) futures contract prices for the applicable commodity, matching the -6- appropriate basis risk. There was no deferred hedge gain or loss at June 30, 1997. NOTE 4 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share" superseding Accounting Principles Board (APB) No. 15. Although SFAS No. 128 cannot be adopted until December 15, 1997, pro forma disclosures are allowed to minimize the impact of year-end adoption. Therefore, the following pro forma information is presented: For the three months For the six months ended June 30, ended June 30, -------------------- ------------------ 1997 1996 1997 1996 --------- --------- -------- -------- Primary EPS as reported under APB No. 15 $ 0.05 $ 0.15 $ 0.22 $ 0.24 Effect of SFAS No. 128 - 0.01 0.01 0.02 --------- --------- -------- -------- Basic EPS, as restated $ 0.05 $ 0.16 $ 0.23 $ 0.26 ========= ========= ======== ======== Fully diluted EPS as reported under APB No. 15 $ 0.05 $ 0.15 $ 0.22 $ 0.24 Effect of SFAS No. 128 - - - - --------- --------- -------- -------- Diluted EPS, as restated $ 0.05 $ 0.15 $ 0.22 $ 0.24 ========= ========= ======== ======== As mandated by SFAS No. 128, basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share is determined on the assumption that outstanding stock options have been converted using the average price for the quarter. NOTE 5 SUPPLEMENTAL GUARANTOR INFORMATION In connection with the sale by UMC of the 10-3/8% Senior Subordinated Notes (Notes) in October 1995, UMC Petroleum Corporation (Petroleum), wholly-owned and the Company's only direct subsidiary, has unconditionally guaranteed the full and prompt performance of the Company's obligations under the Notes and related indenture, including the payment of principal, premium (if any) and interest. Other than intercompany arrangements and transactions, the consolidated financial statements of Petroleum are equivalent in all material respects to those of the Company and therefore the separate consolidated financial statements of Petroleum are not material to investors and have not been included herein. However, in an effort to provide meaningful financial data relating to the guarantor (i.e., Petroleum on an unconsolidated basis) of the Notes, the following condensed consolidating financial information has been provided following the policies set forth below: (1) Investments in subsidiaries are accounted for by the Company on the cost basis. Earnings of subsidiaries are therefore not reflected in the related investment accounts. (2) Certain reclassifications were made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries and intercompany balances. -7- SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME For the six months ended June 30, 1997 and 1996 (In thousands)
Unconsolidated --------------------------------------- Guarantor Non-Guarantor Consolidated UMC Subsidiary Subsidiaries UMC --------- ---------- ------------- ------------ 1997 - ---- Revenues...................................................... $ - $ 65,589 $ 54,961 $ 120,550 --------- ---------- ---------- ---------- Costs and expenses: Production costs............................................ - 17,476 8,229 25,705 General and administrative.................................. 90 5,086 872 6,048 Exploration, including dry holes and impairments............ - 5,625 17,193 22,818 Depreciation, depletion and amortization.................... - 25,909 17,689 43,598 --------- ---------- ---------- ---------- Income (loss) from operations................................. (90) 11,493 10,978 22,381 Interest income (expense), net.............................. 9,640 (12,003) (7,075) (9,438) Other credits, net.......................................... - 1,321 106 1,427 --------- ---------- ---------- ---------- Income before income taxes.................................... 9,550 811 4,009 14,370 Income tax provision.......................................... (3,904) (762) (1,685) (6,351) --------- ---------- ---------- ---------- Net income.................................................... $ 5,646 $ 49 $ 2,324 $ 8,019 ========= ========== ========== ========== 1996 - ---- Revenues...................................................... $ - $ 77,006 $ 36,485 $ 113,491 --------- ---------- ---------- ---------- Costs and expenses: Production costs............................................ - 18,458 5,837 24,295 General and administrative.................................. 107 5,187 1,225 6,519 Exploration, including dry holes and impairments............ - 8,811 5,900 14,711 Depreciation, depletion and amortization.................... - 35,537 6,284 41,821 --------- ---------- ---------- ---------- Income (loss) from operations................................. (107) 9,013 17,239 26,145 Interest income (expense), net.............................. 8,849 (15,814) (4,415) (11,380) Other credits, net.......................................... - (22) 100 78 --------- ---------- ---------- ---------- Income (loss) before income taxes............................. 8,742 (6,823) 12,924 14,843 Income tax benefit (provision)................................ (2,371) 1,272 (4,793) (5,892) --------- ---------- ---------- ---------- Net income (loss)............................................. $ 6,371 $ (5,551) $ 8,131 $ 8,951 ========= ========== ========== ==========
-8- SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME For the three months ended June 30, 1997 and 1996 (In thousands)
Unconsolidated --------------------------------------- Guarantor Non-Guarantor Consolidated UMC Subsidiary Subsidiaries UMC --------- ---------- ------------- ------------ 1997 - ---- Revenues...................................................... $ - $ 26,785 $ 28,760 $ 55,545 --------- ---------- ---------- ---------- Costs and expenses: Production costs............................................ - 7,978 4,577 12,555 General and administrative.................................. 60 3,037 402 3,499 Exploration, including dry holes and impairments............ - 2,647 7,431 10,078 Depreciation, depletion and amortization.................... - 12,241 10,161 22,402 --------- ---------- ---------- ---------- Income (loss) from operations................................. (60) 882 6,189 7,011 Interest income (expense), net.............................. 4,879 (6,848) (2,781) (4,750) Other credits, net.......................................... - 324 130 454 --------- ---------- ---------- ---------- Income (loss) before income taxes............................. 4,819 (5,642) 3,538 2,715 Income tax benefit (provision)................................ (2,181) 1,903 (617) (895) --------- ---------- ---------- ---------- Net income benefit (loss)..................................... $ 2,638 $ (3,739) $ 2,921 $ 1,820 ========= ========== ========== ========== 1996 - ---- Revenues...................................................... $ - $ 38,836 $ 22,487 $ 61,323 --------- ---------- ---------- ---------- Costs and expenses: Production costs............................................ - 8,751 2,740 11,491 General and administrative.................................. 70 2,544 506 3,120 Exploration, including dry holes and impairments............ - 6,792 3,458 10,250 Depreciation, depletion and amortization.................... - 18,839 3,223 22,062 --------- ---------- ---------- ---------- Income (loss) from operations................................. (70) 1,910 12,560 14,400 Interest income (expense), net.............................. 4,444 (7,861) (2,424) (5,841) Other credits, net.......................................... - (103) 67 (36) --------- ---------- ---------- ---------- Income (loss) before income taxes............................. 4,374 (6,054) 10,203 8,523 Income tax benefit (provision)................................ (862) 1,289 (3,715) (3,288) --------- ---------- ---------- ---------- Net income (loss)............................................. $ 3,512 $ (4,765) $ 6,488 $ 5,235 ========= ========== ========== ==========
-9- SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET At June 30, 1997 and December 31, 1996 (In thousands)
Unconsolidated --------------------------------------- Guarantor Non-Guarantor Eliminating Consolidated UMC Subsidiary Subsidiaries Entries UMC --------- ---------- ------------- ----------- ------------ JUNE 30, 1997 - ------------- ASSETS Current assets................................................ $ 2 $ 46,217 $ 57,604 $ - $ 103,823 Intercompany investments...................................... 687,658 (298,782) (250,539) (138,337) - Property and equipment, net................................... - 299,204 316,772 - 615,976 Other assets.................................................. (1,420) 39,567 (3,338) - 34,809 --------- ---------- ---------- ---------- ---------- Total assets............................................ $ 686,240 $ 86,206 $ 120,499 $ (138,337) $ 754,608 ========= ========== ========== ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities........................................... $ 3,329 $ 62,987 $ 54,100 $ - $ 120,416 Long-term debt................................................ 150,000 (5,700) 12,166 - 156,466 Deferred credits and other liabilities........................ - 10,056 21,137 - 31,193 Stockholders' equity.......................................... 532,911 18,863 33,096 (138,337) 446,533 --------- ---------- ---------- ---------- ---------- Total liabilities & stockholders' equity................ $ 686,240 $ 86,206 $ 120,499 $ (138,337) $ 754,608 ========= ========== ========== ========== ========== DECEMBER 31, 1996 - ----------------- ASSETS Current assets................................................ $ 3 $ 93,023 $ 63,135 $ - $ 156,161 Intercompany investments...................................... 668,025 (346,861) (182,827) (138,337) - Property and equipment, net................................... - 282,236 241,953 - 524,189 Other assets.................................................. 5,947 36,714 (4,718) - 37,943 --------- ---------- ---------- ---------- ---------- Total assets............................................ $ 673,975 $ 65,112 $ 117,543 $ (138,337) $ 718,293 ========= ========== ========== ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities........................................... $ 3,327 $ 42,577 $ 52,488 $ - $ 98,392 Long-term debt................................................ 150,000 (5,700) 12,532 - 156,832 Deferred credits and other liabilities........................ - 9,421 21,412 - 30,833 Stockholders' equity.......................................... 520,648 18,814 31,111 (138,337) 432,236 --------- ---------- ---------- ---------- ---------- Total liabilities & stockholders' equity................ $ 673,975 $ 65,112 $ 117,543 $ (138,337) $ 718,293 ========= ========== ========== ========== ==========
-10- SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the six months ended June 30, 1997 and 1996 (In thousands)
Unconsolidated --------------------------------------- Guarantor Non-Guarantor Consolidated UMC Subsidiary Subsidiaries UMC --------- ---------- ------------- ------------ 1997 - ---- Cash flows from operating activities: Net income.............................................. $ 5,646 $ 49 $ 2,324 $ 8,019 Adjustments to reconcile net income to cash from operating activities..................... 4,180 30,214 34,195 68,589 Changes in assets and liabilities....................... 2 29,809 (2,034) 27,777 --------- ---------- ---------- ---------- Net cash provided by operating activities........... 9,828 60,072 34,485 104,385 Cash flows used in investing activities................... - (45,017) (99,442) (144,459) Cash flows provided by (used in) financing activities..... (9,829) (53,094) 64,439 1,516 --------- ---------- ---------- ---------- Net decrease in cash and cash equivalents................. (1) (38,039) (518) (38,558) Cash and cash equivalents at beginning of period.......... 3 41,759 13,180 54,942 --------- ---------- ---------- ---------- Cash and cash equivalents at end of period................ $ 2 $ 3,720 $ 12,662 $ 16,384 ========= ========== ========== ========== 1996 - ---- Cash flows from operating activities: Net income (loss)....................................... $ 6,371 $ (5,551) $ 8,131 $ 8,951 Adjustments to reconcile net income (loss) to cash from operating activities.............. 2,633 42,526 (252) 44,907 Changes in assets and liabilities....................... 648 (14,598) (4,948) (18,898) --------- ---------- ---------- ---------- Net cash provided by operating activities........... 9,652 22,377 2,931 34,960 Cash flows used in investing activities................... - (31,425) (1,067) (32,492) Cash flows provided by (used in) financing activities..... (9,676) (2,945) 705 (11,916) --------- ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents...... (24) (11,993) 2,569 (9,448) Cash and cash equivalents at beginning of period.......... 31 6,631 6,924 13,586 --------- ---------- ---------- ---------- Cash and cash equivalents at end of period................ $ 7 $ (5,362) $ 9,493 $ 4,138 ========= ========== ========== ==========
-11- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. RESULTS OF OPERATIONS The following table sets forth certain operating information of the Company for the periods shown: FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------------- ------------------ 1997 1996 1997 1996 -------- -------- -------- -------- Production: Oil (MBO) U.S............................ 458 566 970 1,122 Canada......................... 110 150 212 295 Cote d'Ivoire.................. 274 241 568 444 Equatorial Guinea.............. 929 - 1,679 - -------- -------- -------- -------- Total........................ 1,771 957 3,429 1,861 Natural gas (MMCF) U.S............................ 10,066 12,558 20,654 24,850 Canada......................... 1,834 1,323 3,470 2,516 Cote d'Ivoire.................. 1,209 730 2,160 1,243 -------- -------- -------- -------- Total........................ 13,109 14,611 26,284 28,609 Average wellhead sales price, including hedging: Oil ($ per bbl) U.S............................ $ 18.01 $ 20.56 $ 18.82 $ 19.32 Canada......................... $ 16.59 $ 18.94 $ 18.88 $ 17.85 Cote d'Ivoire.................. $ 17.22 $ 18.21 $ 18.61 $ 18.79 Equatorial Guinea.............. $ 18.91 $ - $ 18.10 $ - Average...................... $ 18.27 $ 19.71 $ 18.44 $ 18.96 Natural gas ($ per MCF) U.S............................ $ 1.63 $ 2.13 $ 2.14 $ 2.17 Canada......................... $ 1.13 $ 1.16 $ 1.49 $ 1.37 Cote d'Ivoire.................. $ 1.79 $ 1.74 $ 1.82 $ 1.73 Average...................... $ 1.57 $ 2.02 $ 2.03 $ 2.08 Additional data ($ per BOE): Production and operating costs /(1)/..................... $ 2.71 $ 2.89 $ 2.68 $ 2.96 General and administrative expense......................... $ 0.88 $ 0.92 $ 0.77 $ 0.98 Oil and natural gas depletion and depreciation................ $ 5.56 $ 6.42 $ 5.48 $ 6.22 ______________ (1) Costs incurred to operate and maintain wells and related equipment, excluding ad valorem and production taxes of $0.61 and $0.70 per BOE for the six months ended June 30, 1997 and 1996, respectively, and $0.46 and $0.50 per BOE for the three months ended June 30, 1997 and 1996, respectively. -12- SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996. Oil and gas revenues for the six months ended June 30, 1997 were $116.5 million, or 22.9% greater than oil and gas revenues of $94.8 million for the six months ended June 30, 1996. The increase in oil and gas revenues is primarily due to increased oil production volumes in West Africa, offset by lower U.S. gas volumes due to property sales and lower product prices. The average sales price after hedging for natural gas decreased to $2.03 per Mcf, or 2.4%, in the first six months as compared to the same period of 1996. Natural gas production for the six months ended June 30, 1997 was 26,284 MMCF, a decrease of 8.1% as compared to the first six months of 1996 volumes due primarily to the impact of property sales. Oil production increased 84.3%, or 1,568 MBO, in the first six months of 1997 as compared to the same period in 1996 due primarily to increased oil production in Cote d'Ivoire and commencement of production in Equatorial Guinea in August 1996. The average sales price after hedging for oil decreased to $18.44, or 2.7%, in the six months ended June 30, 1997 as compared to the prior year period. During the six months ended June 30, 1997, the Company sold various non- strategic North American properties for total cash proceeds of $13.6 million, resulting in pre-tax gains of $2.2 million. The first half of 1996 gains on sales of assets resulted primarily from a pre-tax gain of $11.4 million on cash proceeds of $13.0 million related to the purchase by Mobil of a 10% interest in Equatorial Guinea Block B and the gain on sale of the Company's interests in the Rocanville area of Saskatchewan of $4.7 million on proceeds of $6.7 million. Production costs, including ad valorem and production taxes, increased to $25.7 million, or 5.8%, in the first six months of 1997 as compared to $24.3 million in the comparable period of 1996, primarily due to commencement of production in Equatorial Guinea in August 1996. However, on a cost per barrel of oil equivalent (BOE) basis, production costs in the first six months of 1997 decreased $0.37 per BOE (10.1%) when compared to the first six months of 1996. General and administrative expenses for the six months ended June 30, 1997 were $6.0 million compared to $6.5 million in the six months ended June 30, 1996. This decrease was primarily due to certain non-cash benefits accrual adjustments in the first quarter of 1997 and increased management fees from institutional partners. General and administrative expenses per BOE of production decreased from $0.98 per BOE in the first six months of 1996 to $0.77 per BOE in the comparable period of 1997. Exploration, dry hole and lease impairment expenses for the first six months of 1997 totaled $22.8 million as compared to $14.7 million in the first six months of 1996. This increase of $8.1 million was primarily due to increased dry hole costs experienced in Equatorial Guinea Block D and Cote d'Ivoire Block CI-12. In addition, the Company had increased geological and geophysical costs in the 1997 period as compared to the 1996 period reflecting a higher level of exploration activity in Cote d'Ivoire, Equatorial Guinea and North America. Depreciation, depletion and amortization (DD&A) expense for the six months ended June 30, 1997 of $43.6 million increased 4.2% from $41.8 million for the comparable 1996 period. This increase is primarily attributable to increased production levels in Cote d'Ivoire and Equatorial Guinea. The rate per BOE of oil and gas DD&A decreased 11.6% from $6.22 per BOE in the first six months of 1996 to $5.48 per BOE in the 1997 comparable period. This decrease is primarily due to a change in the Company's production mix (lower Gulf of Mexico production with historically high DD&A rates, offset by increased West African production with lower DD&A rates). Interest and debt expense for the six months ended June 30, 1997 was $9.4 million, including non-cash amortization of debt issue costs totaling $0.7 million, compared to $11.4 million in the six months ended June 30, 1996. The decrease in interest expense is primarily due to the reduced debt levels in 1997 as a result of debt payments in late 1996 with the proceeds of the November 1996 equity offering. An income tax provision of $6.4 million (of which $2.7 million is a current provision and $3.7 million is a deferred provision) was recognized for the six months ended June 30, 1997, compared to a provision of $5.9 million (of which $0.3 million was a current provision and $5.6 million was a deferred provision) for the comparable 1996 period. Significantly impacting first six months 1997 current taxes is a $2.3 million non-cash provision representing current taxes incurred in Cote d'Ivoire which, under the terms of the production sharing contract, will be paid by the Ivorian government from their production proceeds. Consistent with Statement of Financial Accounting Standards (SFAS) 109, Accounting for Income Taxes, the deferred income tax provision or benefit was derived primarily from changes in deferred income tax assets and liabilities recorded on the balance sheet. The deferred tax provision for the six months of 1997 reflects a $1.1 million benefit reflecting final analysis and resolution of certain Canadian tax issues. -13- The Company reported net income of $8.0 million, or $0.22 per share, for the first six months of 1997 compared to a net income of $9.0 million, or $0.24 per share, for the six months of 1996. THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 1996. Material changes in the results of operations between the three months ended June 30, 1997 and 1996, primarily reflect the significant increases in oil and natural gas production volumes offset by decreases in prices received and gain on sale of assets, all of which have been discussed previously. Production costs during the second quarter of 1997 as compared to the comparable period in 1996 reflect the Equatorial Guinea production that began in the third quarter of 1996. CAPITAL RESOURCES AND LIQUIDITY The Company has historically funded its operations, acquisitions, exploration and development expenditures from cash flows from operating activities, bank borrowings, sales of common and preferred stock, issuance of senior subordinated notes, sales of non-strategic oil and natural gas properties, sales of partial interests in exploration concessions and project finance borrowings. The primary sources of cash for the Company during the six months ended June 30, 1997, included proceeds from funds generated from operations, proceeds from asset sales and exercise of stock options. In the comparable period of 1996, the primary sources of cash included funds generated from operations, proceeds from asset sales and bank borrowings. Primary cash uses for the six months ended June 30, 1997 and 1996 included capital expenditures (including exploration expenses) which totaled $158.0 million and $62.2 million, respectively. In addition, during the six months ended June 30, 1997, cash uses include $2.3 million of debt issue costs as a result of the new Credit Facility discussed below. Discretionary cash flow, a measure of performance for exploration and production companies, is derived by adjusting net income to eliminate the effects of exploration expenses, including dry hole costs and impairments, DD&A, deferred income tax, gain (loss) on sale of assets and non-cash amortization of debt issue costs. The effects of working capital changes are not taken into account. This measure reflects an amount that is available for capital expenditures, debt repayment or dividend payments. The company generated discretionary cash flow for the six months ended June 30, 1997 and 1996 of $76.6 million and $53.9 million, respectively. The 42% increase in discretionary cash flow in the 1997 period as compared to the 1996 period is primarily due to increased oil production in Cote d'Ivoire and Equatorial Guinea. The Company has used the Credit Facility in the past to partially finance its capital expenditures. During March 1997, the Company completed negotiations to expand the Credit Facility to $300.0 million from $200.0 million with an initial borrowing base of $275.0 million. As of June 30, 1997, the Company had no outstanding loans thereunder and outstanding letters of credit of approximately $1.0 million. Resulting liquidity (including cash) at June 30, 1997 was approximately $290.4 million. As of December 31, 1996, the borrowing base under the Credit Facility was $200.0 million, and the Company had no outstanding loans thereunder and outstanding letters of credit of approximately $0.6 million. Resulting liquidity (including cash) exceeded $254.0 million. As part of its on-going operations, the Company periodically sells interests in proved reserves and enhanced exploration prospects. This practice continued in the first six months of 1997 and 1996, with net cash proceeds from sales of assets of $13.6 million and $29.7 million, respectively. During the six months ended June 30, 1997, the cash proceeds were generated through the sale of various non-strategic North American properties. These proceeds were used to redeploy capital to domestic and international opportunities which management believes will generate higher rates of return. The Company's capital expenditure budget for 1997 is expected to be approximately $300 million, consisting of approximately $100 million for exploration and approximately $200 million for development and property acquisitions. Primary areas of emphasis will be East Texas, the Gulf of Mexico and Western Africa. Funding for capital expenditures is anticipated to come from present cash on hand, discretionary cash flow and, if necessary, borrowings under the Credit Facility. In addition, the Company will evaluate its level of capital spending throughout the year based upon drilling results, commodity prices, cash flows from operations and property acquisitions. Actual capital spending may vary from the established capital expenditure budget. Due to the aforementioned expanded Credit Facility and the equity offering completed in November 1996, the Company's financial structure has been significantly strengthened. The Company's debt to total capitalization ratio has decreased to 26% at June 30, 1997, from 27% at December 31, 1996. Combined with cash flows from operating -14- activities, the Company has the financial strength, leverage and liquidity that will allow it to fund the 1997 capital expenditure program, including the international exploration and development opportunities in Cote d'Ivoire and Equatorial Guinea, and continue to selectively pursue strategic corporate and property acquisitions. The Company's interest coverage ratio (calculated as the ratio of income from operations plus DD&A and exploration expense to interest plus capitalized interest less non-cash amortization of debt issue costs) was 10.21 to 1 for the first six months of 1997, compared with 7.11 to 1 for the first six months of 1996. FOREIGN CURRENCY TRANSACTIONS The Company conducts a portion of its business in Canadian dollars. Therefore, a portion of the Company's business is subject to fluctuations in currency exchange rates. In preparing the Company's financial statements, the results of operations of the Canadian subsidiary are generally translated at the average exchange rate for the year-to-date, and the subsidiary's assets and liabilities are translated at the rate of exchange in effect on the balance sheet date. The majority of revenues and expenditures for the Company's West African operations are settled and all books and records are maintained in the U.S. dollar. CHANGES IN PRICES AND INFLATION The Company's revenues and the value of its oil and natural gas properties have been, and will continue to be, affected by changes in oil and natural gas prices. The Company's ability to maintain its current borrowing capacity and to obtain additional capital on attractive terms is also substantially dependent on oil and natural gas prices. Oil and natural gas prices are subject to significant seasonal, market and other fluctuations that are beyond the Company's ability to control or predict. Although certain Company costs and expenses are affected by the level of inflation, inflation did not have a significant effect on the Company's results of operations for the first six months of 1997 or 1996. FORWARD - LOOKING STATEMENTS Certain statements in this report, including statements of the Company's and management's expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to Consolidated Financial Statements, are forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, that are dependent on certain events, risks and uncertainties that may be outside the Company's control. These forward-looking statements include statements of management's plans and objectives for the Company's future operations and statements of future economic performance; information regarding drilling schedules, expected or planned production or transportation capacity, future production levels from international and domestic fields, the Company's capital budget and future capital requirements, the Company's meeting its future capital needs, the Company's realization of its deferred tax asset, the level of future expenditures for environmental costs and the outcome of regulatory and litigation matters; and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements, fluctuations in the price of crude oil and natural gas, the success rate of exploration efforts, timeliness of development activities, and the risk factors described from time to time in the Company's other documents and reports filed with the Securities and Exchange Commission. -15- PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is a named defendant in lawsuits and is a party in governmental proceedings in the ordinary course of business. While the outcome of such lawsuits or other proceedings against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse effect on the financial condition or results of operations of the Company. 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: See Index to Exhibits on page 18. (b) Report on Form 8-K: None. 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. UNITED MERIDIAN CORPORATION August 6, 1997 /s/Jonathan M. Clarkson --------------------------------- Jonathan M. Clarkson Executive Vice President and Chief Financial Officer /s/Christopher E. Cragg --------------------------------- Christopher E. Cragg Vice President, Controller and Chief Accounting Officer -16- INDEX TO EXHIBITS EXHIBIT NUMBER EXHIBIT - ------ ------- 3.1 Certificate of Incorporation of the Company, as amended, incorporated by reference to Exhibit 3.1 to UMC's 1995 Form 10-K filed with the Securities and Exchange Commission on March 7, 1996. 3.2 By-laws of the Company, as amended, incorporated by reference to Exhibit 3.2 to UMC's Form S-8 (No. 333-28017) filed with the Securities and Exchange Commission on May 29, 1997. 4.1 Amendment No. 1 to Registration Rights Agreement dated as of August 9, 1994 among GARI, UMC, General Atlantic Corporation, John Hancock Mutual Life Insurance Company and Fidelity Oil Holdings, Inc., incorporated by reference to Exhibit (c)(8) to UMC's Schedule 14D-1 (No. 5-44990) filed with the Securities and Exchange Commission on August 11, 1994. 4.2 Specimen of certificate representing Series A Voting Common Stock, $0.01 par value, of the Company, incorporated herein by reference to Exhibit 4.13 to the Company's Form 10-Q for the period ended June 30, 1994 filed with the Securities and Exchange Commission on August 10, 1994. 4.3 Stock Purchase Agreement of Series F Convertible Preferred Stock (par value $0.01 per share) between UMC and John Hancock Mutual Life Insurance Company, The Travelers Insurance Company, The Travelers Life and Annuity Company, The Phoenix Insurance Company and The Travelers Indemnity Company dated June 30, 1994, incorporated by reference to Exhibit 4.16 to UMC's Form 10-Q for the quarterly period ended June 30, 1995, filed with the Securities and Exchange Commission on August 10, 1995. 4.4 Stock Purchase Agreement of Series F Convertible Preferred Stock (par value $0.01 per share) between UMC and John Hancock Mutual Life Insurance Company dated July 24, 1995, incorporated by reference to Exhibit 4.17 to UMC's Form 10-Q for the quarterly period ended June 30, 1995, filed with the Securities and Exchange Commission on August 10, 1995. 4.5 First Amendment to Credit Agreement among UMC, The Chase Manhattan Bank, N.A., Morgan Guaranty Trust Company of New York and Lenders Signatory thereto dated as of June 30, 1995, incorporated by reference to Exhibit 4.18 to UMC's Form 10-Q for the quarterly period ended June 30, 1995, filed with the Securities and Exchange Commission on August 10, 1995. 4.6 Loan Agreement between UMIC Cote d'Ivoire Corporation and International Finance Corporation dated as of July 14, 1995, incorporated by reference to Exhibit 4.19 to UMC's Form 10-Q for the quarterly period ended June 30, 1995, filed with the Securities and Exchange Commission on August 10, 1995. 4.7 Share Retention, Guarantee and Clawback Agreement among UMC, UMC Petroleum Corporation, UMIC Cote d'Ivoire Corporation and International Finance Corporation dated as of July 14, 1995, incorporated by reference to Exhibit 4.20 to UMC's Form 10-Q for the quarterly period ended June 30, 1995, filed with the Securities and Exchange Commission on August 10, 1995. 4.8 Fourth Joint Amendment to Amended and Restated Credit Agreement and to Amended and Restated Credit Agreement (Canada) effective as of October 30, 1995, incorporated by reference to Exhibit 4.21 to UMC's Form 10-Q for the quarterly period ended September 30, 1995, filed with the Securities and Exchange Commission on November 13, 1995. 4.9 Indenture between the Company, Petroleum and Bank of Montreal Trust Company, dated October 30, 1995, incorporated by reference to Exhibit 4.20 to UMC's 1995 Form 10-K filed with the Securities and Exchange Commission on March 7, 1996. 4.10 Rights Agreement by and between United Meridian Corporation and Chemical Mellon Shareholder Services, L.L.C., as Rights Agent, dated as of February 13, 1996, incorporated by reference as Exhibit 1 to Form 8-K, filed with the Securities and Exchange Commission on February 14, 1996. 4.11 Global Credit Agreement dated as of March 18, 1997, among United Meridian Corporation, UMC Petroleum Corporation, The Chase Manhattan Bank, N.A., as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, NationsBank of Texas, N.A. and Societe Generale, as Documentation -17- Agents, Banque Paribas, Wells Fargo Bank, N.A., and Colorado National Bank, as Co-Agents and The Lenders Now or Hereafter Signatory Hereto, incorporated by reference to Exhibit 4.11 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.12 Credit Agreement dated as of March 18, 1997 among UMC Resources Canada Ltd., as the Company, The Chase Manhattan Bank of Canada, as Agent, and the Lenders Signatory Hereto, incorporated by reference to Exhibit 4.12 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.13 Guaranty Agreement dated as of March 18, 1997, by UMC Petroleum Corporation in favor of The Chase Manhattan Bank of Canada, as Administrative Agent, and The Lenders Now or Hereafter Signatory to the Credit Agreement, incorporated by reference to Exhibit 4.13 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.14 Guaranty Agreement dated as of March 18, 1997, by United Meridian Corporation in favor of The Chase Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, NationsBank of Texas, N.A. and Societe Generale, as Documentation Agents, Banque Paribas, Wells Fargo Bank, N.A., and Colorado National Bank as Co- Agents, and The Lenders Now or Hereafter Signatory to the Credit Agreement, incorporated by reference to Exhibit 4.14 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.15 Guaranty Agreement dated as of March 18, 1997 by United Meridian Corporation in favor of The Chase Manhattan Bank of Canada, as Administrative Agent, and The Lenders Now or Hereafter Signatory to the Credit Agreement, incorporated by reference to Exhibit 4.15 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.16 Guaranty Agreement dated as of March 18, 1997 by Norfolk Holdings, Inc. as the Guarantor, in favor of The Chase Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust Company of New York as Syndication Agent, NationsBank of Texas, N.A. and Societe Generale, as Documentation Agents, Banque Paribas, Wells Fargo Bank, N.A., and Colorado National Bank, as Co-Agents, and The Lenders Now or Hereafter Signatory to the Credit Agreement, incorporated by reference to Exhibit 4.16 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.17 Guaranty Agreement dated as of March 18, 1997 by UMIC Cote d'Ivoire Corporation, as the Guarantor, in favor of The Chase Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, NationsBank of Texas, N.A., and Societe Generale, as Documentation Agents, Banque Paribas, Wells Fargo Bank, N.A., and Colorado National Bank, as Co-Agents, and The Lenders Now or Hereafter Signatory to the Credit Agreement, incorporated by reference to Exhibit 4.17 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.18 Guaranty Agreement dated as of March 18, 1997 by UMC Equatorial Guinea Corporation, as the Guarantor, in favor of The Chase Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, NationsBank of Texas, N.A. and Societe Generale, as Documentation Agents, Banque Paribas, Wells Fargo Bank, N.A., and Colorado National Bank, as Co-Agents, and The Lenders Now or Hereafter Signatory to the Credit Agreement, incorporated by reference to Exhibit 4.18 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 4.19 Intercreditor Agreement dated as of March 18, 1997, among United Meridian Corporation, UMC Petroleum Corporation, Norfolk Holdings Inc., UMC Resources Canada Ltd., UMIC Cote d'Ivoire Corporation, UMC Equatorial Guinea Corporation, The Chase Manhattan Bank, as Administrative Agent and Collateral Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, NationsBank of Texas, N.A. and Societe Generale, as Documentation Agents, Banque Paribas, Wells Fargo Bank, N.A., as Co-Agents, The Chase Manhattan Bank of Canada, as Canadian Agent, and The Lenders Now or Hereafter Signatory Hereto, incorporated by reference to Exhibit 4.19 to UMC's Form 10-Q for the quarterly period ended March 31, 1997, filed with the Securities and Exchange Commission on May 9, 1997. 10.1 Employment Agreement dated as of August 9, 1994, among Donald D. Wolf, UMC and Petroleum, incorporated by reference to Exhibit (c)(4) to UMC's Schedule 14D-1 (No. 5-44990) filed with the Securities and Exchange Commission on August 11, 1994. 10.2 The UMC Petroleum Savings Plan as amended and restated incorporated herein by reference to Exhibit 4.10 to the Company's Form S-8 (No. 33-73574) filed with the Securities and Exchange Commission on December 29, 1993. 10.3 First Amendment to the UMC Petroleum Savings Plan, as Amended and Restated as of January 1, 1993, dated April 18, 1994, incorporated by reference to Exhibit 10.3 to UMC's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.4 UMC 1987 Nonqualified Stock Option Plan, as amended, incorporated herein by reference to Exhibit 10.3 to the Company's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on May 28, 1993. 10.5 Third Amendment to UMC 1987 Nonqualified Stock Option Plan dated November 16, 1993 incorporated herein by reference to Exhibit 10.4 to the Company's 1993 Form 10-K filed with the Securities and Exchange Commission on March 7, 1994. -18- 10.6 Fourth Amendment to UMC 1987 Nonqualified Stock Option Plan dated April 6, 1994, incorporated by reference to Exhibit 10.6 to UMC's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.7 UMC 1994 Employee Nonqualified Stock Option Plan incorporated by reference to Exhibit 4.14 to the Company's Form S-8 (No. 33-79160) filed with the Securities and Exchange Commission on May 19, 1994. 10.8 First Amendment to the UMC 1994 Employee Nonqualified Stock Option Plan dated November 16, 1994, incorporated by reference to Exhibit 4.11.1 to the Company's Form S-8 (No. 33-86480) filed with the Securities and Exchange Commission on November 18, 1994. 10.9 Second Amendment to the UMC 1994 Employee Nonqualified Stock Option Plan dated May 22, 1996, incorporated by reference to Exhibit 4.3.2 to the Company's Form S-8 (No. 333-05401) filed with the Securities and Exchange Commission on June 6, 1996. 10.10 Third Amendment to the UMC 1994 Employee Nonqualified Stock Option Plan dated November 13, 1996, incorporated by reference to Exhibit 4.3.3 to the Company's Form S-8 (No. 333-28017) filed with the Securities and Exchange Commission on May 29, 1997. 10.11 UMC 1994 Outside Directors' Nonqualified Stock Option Plan incorporated herein by reference to Exhibit 4.15 to the Company's Form S-8 (No. 33-79160) filed with the Securities and Exchange Commission on May 19, 1994. 10.12 First Amendment to the UMC 1994 Outside Directors' Nonqualified Stock Option Plan dated May 22, 1996, incorporated by reference to Exhibit 4.4.1 to the Company's Form S-8 (No. 333-05401) filed with the Securities and Exchange Commission on June 6, 1996. 10.13 Form of the Second Amendment to the UMC 1994 Outside Directors' Nonqualified Stock Option Plan dated November 13, 1996, incorporated by reference to Exhibit 10.13 to UMC's 1996 Form 10-K filed with the Securities and Exchange Commission on March 7, 1997. 10.14 UMC Petroleum Corporation Supplemental Benefit Plan effective January 1, 1994, approved by the Board of Directors on March 29, 1994, incorporated by reference to Exhibit 10.10 to UMC's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.15 Form of Indemnification Agreement, with Schedule of Signatories, incorporated herein by reference to Exhibit 10.4 to the Company's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on May 28, 1993. 10.16 Petroleum Production Sharing Contract on Block CI-11 dated June 27, 1992 among the Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and Societe Nationale d'Operations Petrolieres de la Cote d'Ivoire (including English translation), incorporated herein by reference to Exhibit 10.5 to Amendment No. 3 to the Company's Form S-1 (No. 33- 63532) filed with the Securities and Exchange Commission on July 20, 1993. 10.17 Production Sharing Contract dated August 18, 1992 between the Republic of Equatorial Guinea and United Meridian International Corporation (Area A -Offshore NE Bioco), incorporated herein by reference to Exhibit 10.6 to Amendment No. 1 to the Company's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on June 18, 1993. 10.18 Production Sharing Contract dated June 29, 1992 between the Republic of Equatorial Guinea and United Meridian International Corporation (Area B -Offshore NW Bioco), incorporated herein by reference to Exhibit 10.7 to Amendment No. 1 to the Company's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on June 18, 1993. 10.19 Production Sharing Contract dated June 29, 1994 between the Republic of Equatorial Guinea and United Meridian International Corporation (Area C -Offshore Bioco) incorporated by reference to Exhibit 10.15 to UMC's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.20 Production Sharing Contract on Block CI-01 dated December 5, 1994 among The Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and Societe Nationale d'Operations Petrolieres de la Cote d'Ivoire (English translation) incorporated by reference to Exhibit 10.16 to UMC's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. -19- 10.21 Production Sharing Contract on Block CI-02 dated December 5, 1994 among The Republic of Cote d'Ivoire UMIC Cote d'Ivoire Corporation and Societe Nationale d'Operations Petrolieres de la Cote d'Ivoire (English translation) incorporated by reference to Exhibit 10.17 to UMC's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.22 Production Sharing of Block CI-12 dated April 27, 1995 among The Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and others (English translation), incorporated by reference to Exhibit 10.18 to UMC's 1995 Form 10-K filed with the Securities and Exchange Commission on March 7, 1996. 10.23 Contract for Sale and Purchase of Natural Gas for Block CI-11 among Caisse Autonome D'Amortissement, UMIC Cote d'Ivoire Corporation and others dated September 30, 1994 (French and English translation) incorporated by reference to Exhibit 10.7 to the Company's Form 10-Q for the period ended September 30, 1994 filed with the Securities and Exchange Commission on November 14, 1994. 10.24 Production Sharing Contract dated April 5, 1995 between The Republic of Equatorial Guinea and UMIC Equatorial Guinea Corporation (Area D - Offshore Bioco) incorporated by reference to Exhibit 10.20 to the Company's Form 10-Q for the period ended June 30, 1995 filed with the Securities and Exchange Commission on August 10, 1995. 10.25 Contract for Purchase and Sale of Lion Crude Oil between UMIC Cote d'Ivoire Corporation, International Finance Corporation, G.N.R. (Cote d'Ivoire) Ltd. and Pluspetrol S.A. and Total International Limited, dated December 1, 1995, incorporated by reference to Exhibit 10.22 to UMC's 1995 Form 10-K filed with the Securities and Exchange Commission on March 7, 1995. 10.26 Amendment to United Meridian Corporation 1994 Non-Qualified Stock Option Agreement for Former Employees of General Atlantic Resources, Inc. dated as of April 16, 1996 among UMC and Donald D. Wolf, incorporated by reference to Exhibit 10.22 to the Company's Form 10-Q for the period ended June 30, 1996 filed with the Securities and Exchange Commission on August 8, 1996. 10.27 Amendment to Employment Agreement dated as of April 16, 1996 among Petroleum and Donald D. Wolf incorporated by reference to Exhibit 10.23 to the Company's Form 10-Q for the period ended June 30, 1996 filed with the Securities and Exchange Commission on August 8, 1996. 10.28 Employment Agreement, dated October 9, 1996, between UMC, UMC Petroleum Corporation and James L. Dunlap, incorporated by reference to Exhibit 10.1 to UMC's Form S-3, Amendment No. 2 (No. 333-12823), filed with the Securities and Exchange Commission on October 30, 1996. 10.29 Form of Indemnification Agreement with a schedule of director signatories, incorporated by reference to Exhibit 10.2 to UMC's Form S-3, Amendment No. 2 (No. 333-12823) filed with the Securities and Exchange Commission on October 30, 1996. 10.30 Fourth Amendment to the UMC 1994 Employee Nonqualified Stock Option Plan dated May 29, 1997, incorporated herein by reference to Exhibit 4.3.4 to the Company's Form S-8 (No. 333-28017) filed with the Securities and Exchange Commission on May 29, 1997. 10.31 Second Amendment to the UMC 1994 Outside Directors' Nonqualified Stock Option Plan dated November 13, 1996, incorporated herein by reference to Exhibit 4.4 to the Company's Form S-8 (No. 333-28017) filed with the Securities and Exchange Commission on May 29, 1997. 11.1* Calculation of Net Income per Common Share. 27.1* Financial Data Schedule, included solely in the Form 10-Q filed electronically with the Securities and Exchange Commission. ______________________ * Filed herewith. (B) REPORTS ON FORM 8-K None. -20- EX-11.1 2 CALCULATION NET INCOME PER COMMON SHARE EXHIBIT 11.1 CALCULATION OF NET INCOME PER COMMON SHARE (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) For the three For the six months ended months ended June 30, June 30, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net income...................... $ 1,820 $ 5,235 $ 8,019 $ 8,951 Dividends paid on preferred stock......................... - (765) - (1,531) -------- -------- -------- -------- Amount available to common shareholders.................. $ 1,820 $ 4,470 $ 8,019 $ 7,420 ======== ======== ======== ======== Weighted average number of common shares outstanding..... 36,765 30,461 36,685 30,299 ======== ======== ======== ======== Net income per common share..... $ 0.05 $ 0.15 $ 0.22 $ 0.24 ======== ======== ======== ======== CALCULATION OF WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS) (UNAUDITED) For the three For the six months ended months ended June 30, June 30, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Shares outstanding from beginning of period........... 35,549 28,253 35,217 28,150 57 and 389 stock options exercised in the three and six months ended June 30, 1997, respectively............ 31 - 237 - 451 and 554 stock options and warrants exercised in the three and six months ended June 30, 1996, respectively... - 261 - 186 Common stock equivalents of stock options/(1)/............ 1,185 1,947 1,231 1,963 -------- -------- -------- -------- 36,765 30,461 36,685 30,299 ======== ======== ======== ======== (1) The calculation of common stock equivalents of stock options is based on the "Treasury Method" as detailed in Accounting Principles Board Opinion No. 15. EX-27.1 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 16,384 0 62,459 1,190 12,491 103,823 989,136 373,160 754,608 120,416 156,466 0 0 356 446,177 754,608 116,484 120,550 0 25,705 66,416 0 9,438 14,370 6,351 8,019 0 0 0 8,019 .22 .22
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