10-K 1 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [ X ] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] for the fiscal year ended December 31, 1994 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] for the transition period from _________________ to _________________ Commission file number 1-10389 ------- WESTERN GAS RESOURCES, INC. --------------------------- (Exact name of registrant as specified in its charter) Delaware 84-1127613 ------------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12200 N. Pecos Street, Denver, Colorado 80234-3439 ------------------------------------- ------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (303) 452-5603 -------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of exchange on which registered ----------------------------- ------------------------------------ Common Stock, $0.10 par value New York Stock Exchange $2.28 Cumulative Preferred Stock, $0.10 par value New York Stock Exchange $2.625 Cumulative Convertible Preferred Stock, $0.10 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 aggregate market value of voting common stock held by non-affiliates of the registrant on March 1, 1995, was $237,958,374. On March 1, 1995, there were 25,749,986 shares of the registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of this Report (Items 10, 11, 12 and 13) is incorporated by reference from the registrant's proxy statement to be filed pursuant to Regulation 14A with respect to the annual meeting of stockholders scheduled to be held on May 24, 1995. Indicate by check mark if disclosure of delinquent filers to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Reference is made to listing beginning on page 45 of all exhibits filed as a part of this report. Page 1 of 66 Western Gas Resources, Inc. Form 10-K Table of Contents
Part Item(s) Page ---- I. 1 and 2. Business and Properties.................................................. 3 General................................................................ 3 Principal Facilities................................................... 4 Gas Gathering and Processing........................................... 5 Significant Acquisitions and Projects.................................. 6 Marketing.............................................................. 7 Producing Properties................................................... 9 Competition............................................................ 9 Environmental Matters.................................................. 9 Regulation............................................................. 10 Employees.............................................................. 11 3. Legal Proceedings........................................................ 11 4. Submission of Matters to a Vote of Security Holders...................... 11 II. 5. Market for Registrant's Common Equity and Related Stockholder Matters.... 12 6. Selected Financial Data.................................................. 13 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................. 14 8. Financial Statements and Supplementary Data.............................. 22 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................................................... 44 III. 10. Directors and Executive Officers of the Registrant....................... 44 11. Executive Compensation................................................... 44 12. Security Ownership of Certain Beneficial Owners and Management........... 44 13. Certain Relationships and Related Transactions........................... 44 IV. 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......... 45
2 PART I ITEMS 1 AND 2. BUSINESS AND PROPERTIES GENERAL Western Gas Resources, Inc. (the "Company") is an independent gas gatherer, processor and marketer with operations located in major oil and gas-producing basins in the Rocky Mountain, Gulf Coast and Southwestern regions of the United States. The Company owns and operates natural gas gathering, processing and storage facilities and markets and transports natural gas and natural gas liquids ("NGLs"). The Company provides necessary services to the producers of natural gas and NGLs by connecting producers' wells to the Company's gathering system for delivery to its processing plants, processing the gas to remove NGLs and by-products and marketing the gas and NGLs throughout the United States. Most of the natural gas processed by the Company is associated gas from oil wells. The Company also owns certain producing properties, primarily in Louisiana and Texas. Historically, the Company has derived over 90% of its revenues from the sale of natural gas and NGLs. Set forth below are the Company's revenues by type of operation (000s):
Year Ended December 31, ------------------------------------------------------------------------- 1994 % 1993 % 1992 % ---------- ---------- ---------- ---------- ---------- ------ Sale of residue gas............... $ 707,869 66.6 $563,068 60.4 $278,928 46.5 Sale of NGLs...................... 309,358 29.1 333,880 35.8 290,230 48.3 Processing and transportation revenues......................... 35,017 3.3 25,622 2.7 22,124 3.7 Other, net........................ 11,245 1.0 9,768 1.1 8,834 1.5 ---------- -------- -------- -------- -------- ----- $1,063,489 100.0 $932,338 100.0 $600,116 100.0 ========== ======== ======== ======== ======== =====
Since the Company's formation in 1977, its strategy has been to expand through acquisitions and internal project development. These activities have strengthened the Company's position in major producing basins and expanded its access to multiple natural gas markets. The table below illustrates the Company's growth from December 31, 1991 to December 31, 1994:
Average for the Year Ended Gas Gas ------------------------------------------ Gathering Throughput Gas Gas NGL Systems Capacity Throughput Production Production (Miles) (MMcf/D) (MMcf/D) (MMcf/D) (MGal/D) ---------- ----------- ----------- ----------- ---------- December 31, 1991..... 9,316 1,124 586 315 1,811 December 31, 1994..... 11,016 1,500 1,027 765 2,189 % change.............. 18.2 33.5 75.3 142.9 20.9
The Company's principal offices are located at 12200 North Pecos Street, Denver, Colorado 80234-3439, and its telephone number is (303) 452-5603. The Company was incorporated in Delaware in 1989. 3 PRINCIPAL FACILITIES The following table provides information concerning the Company's principal facilities. The Company also owns and operates several smaller treating and processing facilities located in the same areas as its other facilities.
Average for the year ended December 31, 1994 Gas Gas --------------------------------------------- Gathering Throughput Gas Gas NGL Year Placed Systems Capacity Throughput Production Production Facility (1) In Service Miles(2) (MMcf/D)(2) (MMcf/D)(3) (MMcf/D)(4) (MGal/D)(4) ---------------------------------- ---------- ----------- -------------- -------------- -------------- ----------- SOUTHERN REGION: Texas Midkiff and Benedum................. 1955 1,924 135 121.1 78.2 785.3 Giddings Gathering System........... 1979 637 80 75.4 65.1 109.9 Edgewood(5)......................... 1964 85 65 32.5 14.9 77.6 Perkins............................. 1975 2,545 55 22.7 12.3 145.5 Walnut Bend......................... 1978 402 8 3.1 1.3 17.0 Pecos System(6)..................... 1973 443 85 105.1 99.8 - Crockett System(6).................. 1973 136 - 38.5 38.0 - Katy(7)............................. 1994 17 - - - - MID-CONTINENT REGION: Louisiana Black Lake.......................... 1966 55 180 75.8 55.2 98.8 Toca(8)(9).......................... 1958 - 160 89.6 - 61.5 Oklahoma Chaney Dell/Lamont.................. 1966 1,996 158 91.7 67.0 304.1 Westana(10)......................... 1986 243 37 64.0 58.6 56.6 ROCKY MOUNTAIN REGION: Wyoming Granger(9).......................... 1987 219 230 142.9 134.1 167.4 Red Desert.......................... 1979 108 40 32.3 29.3 46.4 Lincoln Road........................ 1988 144 50 46.7 43.3 43.8 Hilight Complex(9).................. 1969 613 80 20.3 14.1 91.9 Amos Draw........................... 1983 79 30 4.5 3.7 14.5 Kitty(9)............................ 1969 225 17 8.2 5.5 39.8 Newcastle(9)........................ 1981 142 5 2.7 1.7 19.8 Reno Junction(11)................... 1991 - - - - 28.0 New Mexico San Juan River(5)................... 1955 122 60 24.6 24.6 .6 North Dakota Williston(12)....................... 1981 381 - 11.9 8.9 32.3 Temple(5)........................... 1984 65 7 3.0 2.1 10.2 Teddy Roosevelt and Alexander Gathering System(12)............. 1979 332 - 3.7 2.4 15.9 Utah Four Corners........................ 1988 95 15 4.7 3.9 10.5 Montana Baker(5)(9)......................... 1981 8 3 1.5 .9 11.6 ------ ----- ------- ----- ------- Total............................ 11,016 1,500 1,026.5 764.9 2,189.0 ====== ===== ======= ===== =======
----------------------------------- Footnotes on following page 4 (1) The Company's interest in all facilities is 100% except for Midkiff and Benedum (78%); Black Lake (69%); Lincoln Road (72%); Williston (50%); Westana (Chester) (50%); Newcastle (50%) and Walnut Bend (67%). All facilities are operated by the Company and all data include interests of the Company, other joint interest owners and producers of gas volumes dedicated to the facility. (2) Gas gathering systems miles and gas throughput capacity are as of December 31, 1994. (3) Aggregate wellhead natural gas volumes collected by a gathering system. (4) Volumes of residue gas and NGLs are allocated to a facility when a well is dedicated to that facility; volumes exclude NGLs fractionated for third parties. (5) Sour gas facility (capable of processing gas containing hydrogen sulfide). (6) West Texas gathering and treating assets of Oasis Pipe Line Company ("Oasis") acquired effective December 1, 1994. Throughput and production volume averages for the year ended December 31, 1994 are throughput and production volumes for the one month period ended December 31, 1994. (7) Hub and gas storage facility. Operations commenced in February 1994. (8) Straddle plant (a plant located near a transmission pipeline which processes gas dedicated to or gathered by the pipeline company or another third-party). (9) Fractionation facility (capable of fractionating raw NGLs). (10) Gas throughput in excess of gas throughput capacity is unprocessed gas transported directly to an unaffiliated pipeline. (11) NGL production represents conversion of third-party feedstock to iso- butane. (12) Processing facility has been shut-in since August 1993. The gas dedicated to these facilities is processed by a third-party under a contractual arrangement. Capital expenditures to connect new reserves and to acquire consolidating assets are anticipated to be approximately $63.5 million for 1995 and capital expenditures to maintain existing facilities are expected to approximate $16.5 million for 1995. GAS GATHERING AND PROCESSING The Company contracts with producers to gather raw natural gas from individual wells located near its plants. Once a contract has been executed, the Company connects wells to gathering lines through which the natural gas is delivered to a processing plant. At the plant, the natural gas is compressed, unfractionated NGLs are extracted, and the remaining dry residue gas is treated to meet pipeline quality specifications. Six of the Company's processing plants can further separate, or fractionate, the mixed NGL stream into ethane, propane, butane and natural gasoline to obtain higher value for the NGLs and four of the Company's plants are able to process and treat natural gas containing hydrogen sulfide or other impurities which require removal prior to transportation. In addition, the Company has one facility which converts normal butane into iso- butane. The Company continually acquires additional natural gas supplies to maintain or increase throughput levels to offset natural production declines in dedicated volumes. Such natural gas supplies are obtained by purchasing existing systems from third parties or by connecting additional wells. The opportunity to connect new wells to existing facilities is primarily affected by levels of drilling activity near the Company's gathering systems. The Company believes it has expanded into areas which present significant potential for new drilling or purchases of existing systems. Historically, the Company has connected additional reserves which more than offset production from reserves dedicated to existing facilities. However, certain individual plants have experienced declines in dedicated reserves. In 1994, including reserves associated with Westana Gathering Company ("Westana"), a general partnership in which the Company has a 50% ownership interest, the Company connected sufficient new reserves to its gathering systems to replace approximately 85% of 1994 production, or 194% of 1994 production including the Company's 1994 acquisitions. On a Company-wide basis, dedicated reserves, including certain proved undeveloped properties and revisions to previous estimates, totaled approximately 2.1 Tcf at December 31, 1994. Substantially all natural gas flowing through Company facilities is supplied under long-term contracts providing for the dedication for purchase or processing of such natural gas for periods ranging from 5 to 20 years. Under the typical natural gas purchase contract, the Company is responsible for arranging the transportation and marketing of the natural gas and NGLs after processing. However, some contracts are structured as natural gas processing arrangements in which gathering and processing services are performed for a fee and the producer retains marketing responsibility for the natural gas. In most of its gathering areas, the Company's policy is to structure natural gas purchase contracts on a percentage-of-proceeds basis under which it is entitled to a specified percentage of the net proceeds received from the resale of residue gas and NGLs 5 along with ancillary fees for treating, compression and marketing services. Percentage-of-proceeds contracts provide for the Company and producers to share proportionally in price changes. The Company's existing contracts generally entitle it to retain the same percentage, typically between 20% to 40%, of the net proceeds from the resale of residue gas and NGLs. For the year ended December 31, 1994, percentage-of-proceeds contracts accounted for approximately 57% of natural gas throughput (exclusive of the Toca straddle plant). Under its gas gathering and processing contracts, the Company collects fees based on the volume of natural gas processed or receives a predetermined percentage, ranging from 40% to 85%, of the NGLs produced. Natural gas processed at certain facilities is subject to contracts that combine gathering and compression fees with "keep whole" arrangements. In addition to the fees collected, the Company retains the NGLs recovered at the processing facility and keeps the producer whole by returning to the producer at the tailgate of the plant an amount of residue gas equal on a Btu basis to the raw natural gas received at the plant inlet. The fixed nature of the gathering and compression fees reduces the Company's exposure to the margin volatility of residue gas and NGLs typically experienced in pure "keep-whole" arrangements. For the year ended December 31, 1994, gas gathering and processing contracts accounted for 41% of natural gas throughput and other fee-based contracts accounted for 2% of natural gas throughput (exclusive of the Toca straddle plant). SIGNIFICANT ACQUISITIONS AND PROJECTS The Company's significant acquisitions and projects since January 1, 1992 are: Katy Gas Storage Facility The Company has completed the construction of the Katy Gas Storage Facility (the "Katy Facility") located approximately 20 miles from Houston, Texas and it commenced operations in February 1994. The complex utilizes a partially depleted natural gas reservoir with 18 Bcf of working gas and a pipeline header system, currently connected to eleven pipelines, which has the capability to deliver up to 400 MMcf/D of natural gas from the reservoir. The Katy Facility will be an electronic trading site through the NYMEX/Channel 4 on-line trading and information system. This service is expected to be available in May 1995. Lease acquisition and construction costs incurred through the commencement of operations, including pad gas, approximate $106.1 million, excluding capitalized pre-operating costs. See "Marketing" below. Oasis Effective December 1, 1994, the Company acquired the West Texas gathering and treating assets of Oasis for approximately $26.0 million. The Oasis purchase included 14 gathering systems in the Permian Basin comprising approximately 600 miles of pipeline and two treating facilities. In addition, the Company has entered into a long-term agreement with Oasis for 100 MMcf per day of firm transportation service on its intrastate pipeline. The Company will install a 200 MMcf per day pipeline interconnection between this pipeline and the Katy Facility. Mountain Gas Effective January 1, 1993, the Company acquired the stock of Mountain Gas Resources, Inc. ("Mountain Gas") from Morgan Stanley Leveraged Equity Fund II, L.P. for total consideration of approximately $168.2 million, including the payment of certain transaction costs and the assumption and repayment of $35 million of long-term debt of Mountain Gas. Mountain Gas owns the Red Desert and Granger facilities, both located near the Company's Lincoln Road gas processing plant and gathering system. The 22% interest in the Granger facility previously not owned by Mountain Gas was purchased by the Company in two separate transactions in November and December 1993 for an aggregate of $27.7 million. At the date of acquisition, the Red Desert facility consisted of a cryogenic plant and the Granger plant consisted of a refrigeration unit and a cryogenic unit. In December 1993, the Company completed construction of an additional cryogenic processing plant at Granger, at a total additional cost of approximately $4.8 million. In December 1993, a fire at the Granger facility's NGL tank farm required the facility to be shut down for one week. The new cryogenic processing plant as well as the smaller existing cryogenic unit were also damaged. Construction of a new tank farm and repairs to the cryogenic units were completed and fully operational in August 1994. See Note 1 "Organization, Accounting Policies and Other Matters" to the Company's Consolidated Financial Statements elsewhere in this Form 10-K. 6 Black Lake Effective January 1, 1993, the Company purchased the Black Lake gas processing plant and related reserves ("Black Lake") from Nerco Oil & Gas, Inc. for approximately $136.2 million. The acquisition included a 68.9% working interest in the Black Lake field in Louisiana and a gas processing plant. To increase the efficiency of Black Lake's processing capabilities, the Company installed a cryogenic processing plant at a cost of approximately $4.1 million. The cryogenic processing plant, which became fully operational in October 1994, is expected to decrease fuel usage by 3.6 MMcf per day and plant operating expenses by $1.4 million per year, and provides flexibility to recover or reject ethane. The Company also completed the drilling of an infill development well to enhance production in the Black Lake field which was completed in October 1994 at a cost of approximately $691,000. Westana Joint Venture Effective August 1, 1993, the Company formed Westana Gathering Company ("Westana"), a general partnership, with Panhandle Eastern Pipe Line Corporation ("PEPL"). Westana provides gas gathering and processing services in the Anadarko Basin in Oklahoma and markets natural gas and NGLs for producers connected to its system. The Company is the principal operator with each partner holding a 50% ownership interest. The Company contributed its Chester gas processing plant and gathering system, with a net book value of $13.8 million, to Westana. Westana also operates PEPL's 400 mile gathering system, which will be contributed to Westana after abandonment approval by the FERC. The FERC issued a ruling on March 15, 1995 which the Company is evaluating. The Company also made additional contractual partnership contributions of $8.3 million through December 31, 1994 for necessary modifications to the gathering system. This contribution is to be recouped by the Company through preferential partnership distributions. Other The Company continually monitors the economic performance of each operating facility to see that it meets a desired cash flow objective. If an operating facility is not generating desired cash flows or does not fit in with the Company's strategic plans, the Company will explore various options such as consolidation with other company owned facilities, dismantlement, asset swap or outright sale. In 1994, the Company sold the Sligo plant, swapped the Pyote treating facilities for gathering assets in Kansas, consolidated assets in the Powder River Basin and sold the Walnut Bend gathering system. In 1995, the Company expects to consolidate the Lamont gathering system with the Chaney Dell system, salvage the Lamont and Walnut Bend processing plants, and sell non- strategic assets acquired in the recent Oasis acquisition. MARKETING Natural Gas The Company markets residue gas produced at its plants and purchased from third parties to end-users, local distribution companies ("LDCs"), pipelines and other marketing companies throughout the United States. The Company's success in obtaining markets for residue gas has been an important factor in maintaining production levels for its producers and throughput levels for its gas plants. The Company continues to increase its marketing capabilities. Increased third- party sales and sales attributable to the Katy Facility, Red Desert, Granger and Black Lake systems have primarily accounted for the increase in average daily gas sales from 442 MMcf/D for the year ended December 31, 1992 to 1,097 MMcf/D for the year ended December 31, 1994. The Company has continued to increase sales to end-users and to achieve greater market penetration close to its facilities, while also expanding into new markets throughout the United States. Most of the Company's current sales contracts are short-term, ranging from a few days to one year. At December 31, 1994, the Company's commitment under long- term contracts, several of which have an annual redetermination of prices and several of which are rebid prior to expiration, was approximately 235 MMcf/D. The Company intends to continue to expand its residue gas marketing and third- party sales particularly to industrial and commercial end-users. Third-party sales and residue gas storage, combined with the stable supply from Company facilities, 7 enable the Company to respond quickly to changing market conditions and to take advantage of seasonal price variations and peak demand periods. This creates an opportunity for the Company to obtain a higher price on average for its delivered residue gas than the price obtained by other marketers or brokers. The Company customarily stores residue gas in underground storage facilities to assure an adequate supply for long-term sales contracts and for resale during periods when prices are favorable. At December 31, 1994, the Company held approximately 21.9 Bcf of residue gas inventory in underground storage at an average cost of $2.16 per Mcf ($1.94 per MMBtu), primarily at the Katy Facility. The Company typically hedges a portion of its residue gas volumes and requirements under gas sales contracts using the futures market. At December 31, 1994, the Company had sales contracts in place for approximately 16.2 million MMBtu of stored gas at prices ranging from approximately $1.90 per MMBtu to approximately $2.30 per MMBtu for the 1994-1995 winter heating season. Additionally, at December 31, 1994 the Company had sales contracts in place for approximately 12.6 million MMBtu of stored gas at prices ranging from approximately $1.85 per MMBtu to approximately $2.40 per MMBtu for the 1995-1996 winter heating season. The Company also hedges purchases related to these sales, the value of which is, or will be, included in the carrying cost of the related inventory. See Note 3 "Risk Management" to the Company's Consolidated Financial Statements elsewhere in this Form 10-K. In order to meet the peaking demand for residue gas in certain markets, the Company designed and constructed the Katy Facility. The ability to withdraw gas from the Katy Facility on short notice positions the Company to market residue gas to LDCs and other customers that need a reliable yet variable supply of residue gas. The Katy Facility allows the Company to bypass transportation bottlenecks and enhances flexibility in its marketing operations. The complex utilizes of a partially depleted natural gas reservoir with 18 Bcf of working gas and a pipeline header system, currently connected to eleven pipelines, which has the capability to deliver up to 400 MMcf per day of residue gas from the reservoir. In December 1993, the Company entered into a three-year winter-peaking gas purchase and sales agreement with a major utility in East Texas which designates the Katy Facility as the primary delivery point. Under the agreement, which was amended in August 1994, the utility has the right to purchase, during each year of the contract, up to approximately 50 MMcf per day in November and March and approximately 140 MMcf per day in December, January and February, determined daily, at the Houston Ship Channel Index Price plus a demand charge. The agreement calls for a minimum demand charge to be paid to the Company for each contract term, whether or not delivery is taken. This minimum demand charge is calculated based upon five Bcf. In February 1995, the Company's gas storage subsidiary entered into a long-term Firm Storage and Transportation Agreement with a St. Louis-based LDC. Under the agreement, the Company will lease approximately 3 Bcf of capacity in its Katy Facility to the LDC. The gas will principally serve local distribution requirements of the LDC's customers in central Missouri. During the year ended December 31, 1994, the Company sold residue gas to approximately 340 end-users, pipelines, LDCs and other customers. No single customer accounted for more than 5% of consolidated revenues for the year ended December 31, 1994. NGL Marketing The Company markets NGLs (ethane, propane, iso-butane, normal butane, natural gasoline, and condensate) produced at its plants and purchased from third parties in the Rocky Mountain, Mid-Continent and Gulf Coast regions. A majority of the Company's production of NGLs moves to the Gulf Coast area, which is the largest NGL market in the United States. Through the development of end-use markets and distribution capabilities, the Company ensures that production from the plants moves on a reliable basis, avoiding curtailment of production. The volatility of NGL prices in recent years has caused the Company to move to short-term contracts, with no prices set on a firm basis for more than a 30-day period. Although some contracts do commit the Company for periods as long as a year, prices are redetermined on a market-related basis. Storage space is leased at major trading locations near Houston and in central Kansas in order to store products so that they can be sold at higher prices on a seasonal basis. At December 31, 1994, approximately 11.6 MGal of NGLs were in storage at an average cost of $.30 per gallon. The Company generally intends that stored NGLs turn over on an annual basis. Additionally, the Company has entered into futures contracts totaling approximately 375,000 barrels of crude oil at an average price of $18.10 per barrel to hedge a portion of its share of 1995 condensate and crude oil production. The Company has, and will continue to enter into futures contracts for certain purchase and sales transactions as they occur. 8 For the year ended December 31, 1994, NGL sales averaged 2,970 MGal per day, an increase from 2,400 MGal per day in 1992. Sales were made to approximately 160 different customers and no single customer accounted for more than 5% of the Company's consolidated revenues for the year ended December 31, 1994. Revenues are also derived from marketing fees charged to some producers for NGL marketing services. At December 31, 1994, such fees were less than 1% of the Company's consolidated revenues. PRODUCING PROPERTIES Revenues derived from the Company's producing properties comprised approximately 3.8% of revenues for the year ended December 31, 1994. The producing properties are primarily working interests in a unit operated by the Company comprising the Black Lake field in Louisiana, which provides production to the Black Lake plant, and 20 gas properties producing from the Smackover formation of the East Texas Basin, which provide production to the Edgewood plant. The Company also has working interests in six fields in the Powder River Basin in northeastern Wyoming, six wells in the Sandwash Basin in northwestern Colorado, three gas wells in the Austin Chalk formation in southeast Texas and three gas wells in the San Juan Basin in southwest Colorado. COMPETITION The Company competes with other companies in the gathering, processing, marketing and transmission business both for supplies of natural gas and for customers for its natural gas and NGLs. Competition for residue gas supplies is primarily based on efficiency, reliability, availability of transportation and ability to obtain a satisfactory price for the producers' residue gas. Competition for customers is primarily based upon reliability and price of deliverable residue gas and NGLs. For customers that have the capability of using alternative fuels, such as oil and coal, the Company also competes based primarily on price against companies capable of providing such alternative fuels. ENVIRONMENTAL MATTERS The construction and operation of the Company's gathering lines, plants and other facilities used for the gathering, transporting, processing, treating or storing of residue gas and NGLs are subject to federal, state and local environmental laws and regulations, including those that can impose obligations to clean up hazardous substances at the Company's facilities or at facilities to which the Company sends wastes for disposal. In most instances, the applicable regulatory requirements relate to water and air pollution control or solid waste management procedures. The Company employs seven environmental engineers to monitor environmental compliance and potential liabilities at its facilities. Prior to consummating any major acquisition, the Company's environmental engineers perform audits on the facilities to be acquired. In addition, on an ongoing basis, the environmental engineers perform systematic environmental assessments of the Company's existing facilities. The Company believes that it is in substantial compliance with applicable material environmental laws and regulations. Environmental regulation can increase the cost of planning, designing, constructing and operating the Company's facilities. The Company believes that the costs for compliance with current environmental laws and regulations have not had and will not have a material effect on the Company's financial position or results of operation. In 1990, the Congress enacted the Clean Air Act Amendments of 1990 (the "Clean Air Act") which impose more stringent standards on emissions of certain pollutants and require the permitting of certain existing air emissions sources. Many of the regulations have not been promulgated and until their promulgation, the Company cannot make a final assessment of the impact of the Clean Air Act. However, based upon its preliminary review of the proposed regulations, the Company does not anticipate that compliance with the Clean Air Act will require any material capital expenditures, although it will increase permitting costs in 1995 and may increase certain operating costs on an on-going basis. The Company does not believe that such cost increases will have a material effect on the Company's financial position or results of operations. The Company believes that it is reasonably likely that the trend in environmental legislation and regulation will continue to be towards stricter standards. The Company is unaware of future environmental standards that are reasonably likely to be adopted that will have a material effect on the Company's financial position or results of operations, but cannot rule out that possibility. The Company is in the process of voluntarily cleaning up non-hazardous substances at facilities that it operates. In addition, the former owner of certain facilities that the Company acquired in 1992 is conducting cleanups at those facilities pursuant to contractual obligations. The Company's expenditures for environmental evaluation and remediation at existing facilities 9 have not been significant in relation to the results of operations of the Company and totaled approximately $1.4 million for the year ended December 31, 1994. For the year ended December 31, 1994, the Company paid an aggregate of approximately $550,000 in air emissions fees to the states in which it operates. Although the Company anticipates that such air emissions fees will increase over time, the Company does not believe that such increases will have a material effect on the Company's financial position or results of operations. REGULATION The purchase and sale of natural gas and the fees received for gathering and processing by the Company have generally not been subject to regulation, and therefore, except as constrained by competitive factors, the Company has considerable pricing flexibility. Many aspects of the gathering, processing, marketing and transportation of natural gas and NGLs by the Company, however, are subject to federal, state and local laws and regulations which can have a significant impact upon the Company's overall operations. As a processor and marketer of natural gas, the Company depends on the transportation and storage services offered by various interstate pipeline companies for the delivery and sale of its own gas supplies as well as those it processes and/or markets for others. Both the performance of transportation and storage services by interstate pipelines, and the rates charged for such services, are subject to the jurisdiction of the Federal Energy Regulatory Commission ("FERC") under the Natural Gas Act of 1938 (the "NGA") and the Natural Gas Policy Act of 1978 (the "NGPA"). The availability of interstate transportation and storage service necessary to enable the Company to make deliveries and/or sales of residue gas can at times be preempted by other system users in accordance with FERC-approved methods for allocating the system capacity of "open access" pipelines. Moreover, the rates charged by pipelines for such services are often subject to negotiation between shippers and the pipelines within certain FERC-established parameters and will periodically vary depending upon individual system usage and other factors. An inability to obtain transportation and/or storage services at competitive rates can hinder the Company's processing and marketing operations and/or affect its sales margins. During the past ten years, the FERC has implemented a nondiscriminatory blanket transportation program which initially authorized, and ultimately mandated, interstate natural gas pipelines to perform "open access," self-implementing (i.e., not generally requiring case-specific certificate authorization) ----- transportation services. Order Nos. 636, et seq., which constitute the FERC's ------- most recent issuances in this program, promulgated regulations that substantially restructure the services provided by interstate pipelines by "unbundling" (i.e., separating) and separately pricing pipeline gathering, ---- transportation, storage and sales activities in an effort to enable non-pipeline merchants to compete with pipelines for gas purchasers on an equal basis. These regulations have largely been implemented by all interstate transporters utilized by the Company (as well as by the Company's own non-major interstate pipeline located in Wyoming) in numerous individual pipeline restructuring and rate proceedings. The conversion of pipelines from natural gas merchants to primarily transporters of gas through implementation of the FERC's open access transportation and restructuring programs has caused the pipelines to incur significant producer take-or-pay costs and other transition costs resulting from their abandonment of gas purchasing and sales activities. The FERC has allowed, and indicated in Order Nos. 636, et seq. that it will continue to allow, the ------ recovery of some or all of these and related costs from current shippers of gas. Pipeline flow-through of many of these costs is subject to the outcome of administrative and appellate proceedings in individual pipeline rate and restructuring cases, and Order No. 636, et seq. themselves are currently the ------ subject of numerous petitions for appellate review presently pending in the United States Court of Appeals for the District of Columbia Circuit. The outcome of these proceedings could affect the Company's operations and the costs of transporting and selling gas. Pursuant to Section 1(b) of the NGA, production and gathering activities are exempt from the FERC's jurisdiction; however, judicial precedent has held that where gathering is performed largely in connection with the delivery of gas in interstate commerce, such gathering can be considered merely an extension of the jurisdictional transportation of such gas and thus subject to NGA rate regulation itself. Recently, primarily as a result of the aforementioned unbundling of interstate pipeline gathering services required by Order No. 636, et seq., many pipelines have sought FERC authorization to abandon gathering ------ operations and facilities previously held to be subject to the NGA. In response to those requests, the FERC has established a general policy permitting the abandonments but requiring a showing demonstrating that existing customers have been offered, for a two-year period, continued service through the abandoned facilities at the same rates and under the same terms as were previously offered by the pipeline. The Company has been active in acquiring and/or operating natural gas gathering facilities abandoned by interstate pipelines and, thus, certain of its operations and acquisitions will likely be affected by this FERC policy. The policy is currently being challenged at both agency and appellate levels, but at this stage the outcome of such challenges is too speculative to predict. 10 EMPLOYEES At December 31, 1994, the Company employed 838 full-time employees, none of whom was a union member. The Company considers relations with employees to be excellent. ITEM 3. LEGAL PROCEEDINGS Reference is made to Note 6 of the Company's Consolidated Financial Statements in Item 8 of this Form 10-K. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the quarter ended December 31, 1994. 11 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of March 1, 1995, there were 25,749,986 shares of Common Stock outstanding held by 461 holders of record. The Common Stock is traded on the New York Stock Exchange under the symbol "WGR". The following table sets forth quarterly high and low closing sales prices as reported by the NYSE Composite Tape for the quarterly periods indicated.
HIGH LOW ------- ------- 1993 First Quarter....................................... $34 3/4 $24 1/2 Second Quarter...................................... 36 29 5/8 Third Quarter....................................... 45 34 1/8 Fourth Quarter...................................... 44 7/8 28 3/8 1994 First Quarter....................................... 35 26 1/8 Second Quarter...................................... 30 26 Third Quarter....................................... 28 1/2 18 1/2 Fourth Quarter...................................... 22 1/8 18 1/8
The Company paid annual dividends on the Common Stock aggregating $.20 per share during the years ended December 31, 1994 and 1993. The Company has declared a dividend of $.05 per share of common stock for the quarter ending March 31, 1995 to holders of record as of such date. Declarations of dividends on the Common Stock are within the discretion of the Board of Directors and are dependent upon various factors, including the earnings, cash flow, capital requirements and financial condition of the Company. In addition, the Company's ability to pay dividends is restricted by certain covenants in its credit facilities, including a prohibition on declaring or paying dividends that exceed, in the aggregate, the sum of $35 million plus 50% of the Company's consolidated cumulative net income earned after March 31, 1994 plus 50% of the cumulative net proceeds in excess of the Redemption Limit (as defined in the Company's loan agreement) received from the sale of any equity securities sold after March 31, 1994. At December 31, 1994, this threshold amounted to $38.2 million. 12 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial and operating data for the Company. Certain prior year amounts have been reclassified to conform to the presentation used in 1994. The data for the three years ended December 31, 1994 should be read in conjunction with the Company's Consolidated Financial Statements included elsewhere in this document. The selected consolidated financial data for the two years ended December 31, 1991 is derived from the Company's historical Consolidated Financial Statements. See Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations." (000s, except per share amounts and operating data):
Year Ended December 31, ----------------------------------------------------------------- 1994 1993 1992 1991 1990 ----------- ---------- -------- -------- -------- STATEMENT OF OPERATIONS: Revenues...................................... $1,063,489 $ 932,338 $600,116 $358,242 $255,652 Gross profit.................................. 72,556 92,012 88,192 58,152 44,180 Income before taxes........................... 11,524 55,631 58,445 32,783 27,856 Provision for income taxes.................... 4,160 17,529 18,757 11,933 10,362 Net income.................................... 7,364 38,102 39,688 20,850 17,494 Earnings (loss) per share of common stock....................................... (.19) 1.25 1.43 .94 .83 CASH FLOW DATA: Net cash provided by operating activities..... 31,039 103,505 93,277 36,228 23,772 Capital expenditures.......................... 100,540 492,328 67,021 234,124 115,064 BALANCE SHEET DATA (at period end): Total assets.................................. 1,167,362 1,114,748 582,188 552,321 291,025 Long-term debt................................ 418,000 547,000 157,000 216,050 120,300 Stockholders' equity.......................... 436,683 314,387 287,021 221,389 98,629 Dividends declared per share of common stock....................................... .20 .20 .20 .15 - OPERATING DATA: Average gas sales (MMcf/D).................... 1,097.0 755.1 441.8 309.6 220.3 Average NGL sales (MGal/D).................... 2,970.1 2,940.9 2,399.5 1096.6 630.2 Average gas volumes gathered (MMcf/D)......... 1,026.5 894.7 625.4 323.0 216.8 Plant capacity (MMcf/D)....................... 1,500.0 1,526.0 1,117.0 1,123.5 480.5 Average gas prices ($/Mcf).................... $ 1.77 $ 2.02 $ 1.72 $ 1.59 $ 1.78 Average NGL prices ($/Gal).................... $ .28 $ .31 $ .32 $ .36 $ .40
13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis relates to factors which have affected the consolidated financial condition and results of operations of the Company for the three years ended December 31, 1994. Certain prior year amounts have been reclassified to conform to the presentation used in 1994. Reference should also be made to the Company's Consolidated Financial Statements and related Notes thereto and the Selected Financial Data included elsewhere in this document. RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993 (000S, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA).
Year Ended December 31, -------------------------- Percent 1994 1993 Change ------------- -------- -------- FINANCIAL RESULTS: Revenues...................................... $1,063,489 $932,338 14.1 Gross profit.................................. 72,556 92,012 (21.1) Net income.................................... 7,364 38,102 (80.7) Earnings (loss) per share of common stock..... (.19) 1.25 - Net cash provided by operating activities..... 31,039 103,505 (70.0) OPERATING DATA: Average gas sales (MMcf/D).................... 1,097.0 755.1 45.3 Average NGL sales (MGal/D).................... 2,970.1 2,940.9 1.0 Average gas prices ($/Mcf).................... $ 1.77 $ 2.02 (12.4) Average NGL prices ($/Gal).................... $ .28 $ .31 (9.7)
Net income decreased $30.7 million and net cash provided by operating activities decreased $72.5 million for the year ended December 31, 1994 compared to the same period in 1993. Overall, throughput and sales volumes at the Company's facilities have remained comparable to historical levels. The Company's decrease in net income and net cash provided by operating activities is primarily attributable to a decline in NGL and residue gas prices and higher interest, selling and administrative and depreciation costs associated with the Company's 1993 acquisitions of Black Lake and Mountain Gas, along with the completion of the Katy Facility construction. In addition, because of lower demand and lower than expected prices, the Katy Facility did not generate significant revenue. As a result, revenues from the Katy Facility in 1994 did not fully offset related depreciation, interest and operating costs. Revenues from the sale of residue gas increased approximately $144.8 million for the year ended December 31, 1994 compared to the same period in 1993, as a volume increase of approximately 345 MMcf per day was somewhat offset by a decrease in average residue gas sales prices of $.25 per Mcf. Approximately 300 MMcf per day of the volume increase is attributable to an increase in the sale of residue gas purchased from third parties, primarily resulting from the acquisition of Citizens National Gas Company ("Citizens") assets in the third quarter of 1993. The remaining volume increase is the result of increased production volumes at the Company's facilities, primarily due to the Mountain Gas and Black Lake acquisitions, new well connect activities and consolidations with smaller gathering systems. Revenues from the sale of NGLs decreased approximately $24.5 million for the year ended December 31, 1994 compared to the same period in 1993, as a volume increase of approximately 30 MGal per day was more than offset by a $.03 per gallon decrease in the average NGL sales price. Approximately 22 MGal per day of the volume increase is attributable to an increase in the sale of NGLs purchased from third parties. The remaining volume increase is primarily attributable to the acquisitions of Mountain Gas and Black Lake, new well connect activity and consolidations with smaller gathering systems. This volume increase was somewhat offset by unfavorable economics of ethane and propane extraction in the first quarter of 1994 and by limited NGL volumes at the Granger facility, primarily as a result of the December 1993 fire. The curtailment of production during the third quarter of 1994 at Black Lake while plant improvements were completed also contributed to lower volumes. 14 Processing and transportation revenues increased $9.4 million for the year ended December, 31, 1994 compared to the same period in 1993. The increase is due to additional gathering revenue associated with the Company's Granger gathering system acquired in the Mountain Gas acquisition in July 1993, increased gathering revenue at the Company's Lincoln Road facility and the recognition of demand fees associated with a winter-peaking gas purchase and sales contract at the Katy Facility during 1994. Other net revenue increased $1.5 million for the year ended December 31, 1994 compared to the same period in 1993. For the year ended December 31, 1994, the Company accrued approximately $3.3 million as an amount to be recovered under its business interruption insurance policy for business losses associated with the December 1993 fire at the Company's Granger facility and approximately $1.4 million in rate refunds from a pipeline company. These 1994 recoveries were somewhat offset by a $2.6 million gain recorded as a result of the termination of interest rate swap agreements in 1993. Historically, product purchases as a percentage of residue gas and NGL sales from the Company's plant production have approximated 70%. Product purchases as a percentage of residue gas and NGL sales from third-party purchases were substantially higher in 1994 and approximated 95%. Total product purchases as a percentage of residue gas and NGL sales increased approximately 2.5% to 84% for the year ended December 31, 1994 compared to the same period in 1993. The increase in the Company's combined percentage is primarily due to an increasing proportion of 1994 residue gas sales revenues resulting from products purchased from third parties. Plant operating expense and oil and gas exploration and production costs increased approximately $6.1 million and $2.2 million, respectively, for the year ended December 31, 1994 compared to the same period in 1993. The increase in plant operating expense was primarily due to the additional operating costs associated with three gas processing facilities acquired from Mountain Gas and Black Lake in July 1993 and the Katy Facility, which commenced operations in February 1994. The oil and gas exploration and production cost increase resulted primarily from costs associated with producing properties acquired in the Black Lake acquisition. Selling and administrative expense increased approximately $5.7 million for the year ended December 31, 1994 compared to the same period in 1993, primarily due to administrative expenses necessitated by the 1993 acquisitions, an overall increase in insurance expenditures and a reduction in overhead capitalized to the Company's construction projects. Depreciation, depletion and amortization expense increased approximately $19.6 million for the year ended December 31, 1994 compared to the same period in 1993. This increase is primarily due to the acquisitions of Mountain Gas and Black Lake in July 1993 and the Katy Facility, which commenced operations in February 1994, and is partially offset by lower depreciation and depletion expense resulting from the addition of recoverable reserves at Black Lake and Edgewood during 1994. Interest expense increased approximately $18.9 million for the year ended December 31, 1994 compared to the same period in 1993, primarily due to additional borrowings necessitated by the Mountain Gas and Black Lake acquisitions, a reduction in the amount of interest capitalized to the Katy Facility and an increase in the Company's variable borrowing rate. 15 YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992 (000S, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA).
Year Ended December 31, ------------------------- Percent 1993 1992 Change ------------ -------- -------- FINANCIAL RESULTS: Revenues...................................... $932,338 $600,116 55.4 Gross profit.................................. 92,012 88,192 4.3 Net income.................................... 38,102 39,688 (4.0) Earnings per share of common stock............ 1.25 1.43 (12.6) Net cash provided by operating activities..... 103,505 93,277 11.0 OPERATING DATA: Average gas sales (MMcf/D).................... 755.1 441.8 70.9 Average NGL sales (MGal/D).................... 2,940.9 2,399.5 22.6 Average gas prices ($/Mcf).................... $ 2.02 $ 1.72 17.4 Average NGL prices ($/Gal).................... $ .31 $ .32 (3.1)
Net income decreased $1.6 million and net cash provided by operating activities increased $10.2 million for the year ended December 31, 1993 compared to the same period in 1992. Revenues from the sale of residue gas increased $284.1 million for the year ended December 31, 1993 compared to the same period in 1992 due to an increase in residue gas prices of $.30 per Mcf and an increase in sales volumes of 315 MMcf per day. Of this volume increase, 246 MMcf per day is attributable to an increase in the sale of residue gas purchased from third parties, in part due to the acquisition of Citizens. The remaining volume increase is the result of increased production volumes at the Company's facilities, primarily due to the Mountain Gas and Black Lake acquisitions as well as new well hookups at the Midkiff/Benedum and Giddings facilities. Revenues from the sale of NGLs increased $43.7 million for the year ended December 31, 1993 compared to the same period in 1992 due to an increase in NGL sales volumes of 545 MGal per day which was somewhat offset by a $.01 per gallon decrease in the price of NGLs. Of the volume increase, 377 MGal per day is attributable to an increase in the sale of NGLs purchased from third parties. The remaining volume increase is the result of increased production volumes at the Company's facilities, primarily due to the Mountain Gas and Black Lake acquisitions as well as new well hookups at the Midkiff/Benedum and Giddings facilities. Historically, product purchases as a percentage of residue gas and NGL sales from the Company's plant production have approximated 70%. Product purchases as a percentage of residue gas and NGL sales from third-party purchases were substantially higher in 1993 than the historical percentage and approximated 95%. The increase in the Company's combined percentage is primarily due to a high proportion of 1993 sales volumes having come from third parties. As a result, total product purchases as a percentage of residue gas and NGL sales increased approximately 6.3% to 81.5% for the year ended December 31, 1993 compared to the same period in 1992. Plant operating expense increased $7.4 million for the year ended December 31, 1993 compared to the same period in 1992 primarily due to the Mountain Gas and Black Lake acquisitions and an increase in repair and maintenance charges incurred at facilities acquired from UTP. Selling and administrative expense increased $4.1 million as a result of higher payroll and benefit charges and professional fees resulting from the Company's growing operations and its preparation for the Katy Gas Storage Facility, a litigation reserve established for a lawsuit and franchise taxes resulting from the Company's expansion into states which do not charge income taxes, somewhat offset by increased overhead capitalized to the Company's construction projects. In 1993, overhead capitalized to the Company's construction projects increased approximately $3.3 million when compared to the same period in 1992. Depreciation, depletion and amortization expense increased $17.5 million for the year ended December 31, 1993 compared to the same period in 1992, primarily due to the Mountain Gas and Black Lake acquisitions. In February 1994, the Katy 16 Facility commenced operations; depreciation, depletion and amortization expense associated with the Katy Facility will be approximately $3.0 million per year. Interest expense increased $2.5 million for the year ended December 31, 1993 compared to the same period in 1992 due to higher average long-term debt outstanding. In 1993, interest incurred and capitalized during the construction period of new projects increased approximately $2.8 million compared to the same period in 1992. In 1993, the corporate income tax rate was increased from 34% to 35%. This rate increase resulted in an increase in deferred income taxes of approximately $2.1 million for the year ended December 31, 1993. FORWARD LOOKING INFORMATION The Company cannot accurately predict future hydrocarbon prices and in order to minimize the impact of price fluctuations on the Company's operating results, the Company has entered into futures contracts totaling approximately 70 MMcf per day, or a majority of the Company's share of 1995 natural gas production at an average price of approximately $2.02 per Mcf. Additionally, the Company has entered into futures contracts totaling approximately 375,000 barrels of crude oil at an average price of $18.10 per barrel to hedge a portion of its share of 1995 condensate and crude oil production. The Company has, and will continue to enter into futures contracts for certain purchase and sales transactions as they occur. Throughput volumes at the Company's facilities are expected to increase approximately 200 MMcf per day based primarily upon the added production to be provided by the Company's recent Oasis acquisition and additional well connections at the Company's facilities in the Green River Basin, Powder River Basin and Permian Basin. Average gas sales volumes are also expected to increase to approximately 1.3 Bcf per day based primarily upon the Company's expanding marketing capabilities, increased throughput volumes at the Company's processing facilities and as a result of the Katy Facility. OTHER The Company continually monitors the economic performance of each operating facility to see that it meets a desired cash flow objective. If an operating facility is not generating desired cash flows or does not fit in with the Company's strategic plans, the Company will explore various options such as consolidation with other company owned facilities, dismantlement, asset swap or outright sale. In 1994, the Company sold the Sligo plant, swapped the Pyote treating facilities for gathering assets in Kansas, consolidated assets in the Powder River Basin and sold the Walnut Bend gathering system. In 1995, the Company expects to consolidate the Lamont gathering system with the Chaney Dell system, salvage the Lamont and Walnut Bend processing plants, and sell non- strategic assets acquired in the recent Oasis acquisition. The oil and gas industry has experienced an increasing incidence of mergers, acquisitions and combinations in recent years. The Company has evaluated, and will continue to evaluate, any such opportunities, including smaller consolidating acquisitions, that it identifies as offering an opportunity to enhance the Company's operational and industry position. LIQUIDITY AND CAPITAL RESOURCES The Company's sources of liquidity and capital resources historically have been net cash provided by operating activities, funds available under its financing facilities and proceeds from offerings of equity securities. In the past, these sources have been sufficient to meet the needs and finance the growth of the Company's business. The Company can give no assurance that the historical sources of liquidity and capital resources will be available for future development and acquisition projects and may require the Company to investigate alternative financing sources. Net cash provided by operating activities has been primarily affected by product prices, the Company's success in increasing the number and efficiency of its facilities and the volumes of natural gas processed by such facilities, and the margin on third-party residue gas purchased for resale. The Company's continued growth will be dependent upon success in the areas of additions to dedicated plant reserves, acquisitions, new project development and marketing. For the year ended December 31, 1994, the Company's total sources of funds aggregated $300.0 million and was comprised of net proceeds from the issuance of the $2.625 Convertible Preferred Stock of $132.7 million, net proceeds from short-term borrowings of $75.0 million, proceeds from the issuance of long-term debt of $50.0 million, net cash provided by operating activities of $31.0 million, net proceeds received from the disposition of property and equipment of $10.9 million and net proceeds received from the exercise of common stock options of $413,000. During the same period, the Company's use of such funds aggregated $295.9 million which were used primarily to make payments of $179.0 million under its revolving 17 credit facility, to make capital investments of $100.5 million, to pay dividends to holders of 7.25% Convertible Preferred Stock, $2.28 Cumulative Preferred Stock and $2.625 Convertible Preferred Stock of $11.3 million and to pay dividends to holders of Common Stock of $5.1 million. The Company has Shelf Registrations available which provide for the sale of up to $200 million of debt securities and preferred stock and up to four million shares of common stock. The Company called for the redemption of its 7.25% Cumulative Senior Perpetual Convertible Preferred Stock (liquidation preference of $40 million) on October 31, 1994, at an aggregate redemption price of $42 million plus accrued dividends. After two previous extensions, the Company and holder agreed to extend the redemption date to May 31, 1995. The holder has the right on or prior to the redemption date to convert the preferred stock into an aggregate of 2,090,000 shares of the Company's common stock. The Company is unable to predict whether redemption or conversion will occur. The Company has been successful overall in replacing production with new reserves. However, volumes of natural gas dedicated to some of the Company's plants have declined during recent years because additions to dedicated plant reserves have not fully offset production. In 1994, including reserves associated with Westana, the Company connected new reserves to its gathering systems replacing approximately 85% of 1994 production, or 194% of 1994 production including the Company's 1994 acquisition. On a Company-wide basis, dedicated reserves, including certain proved undeveloped properties and revisions to previous estimates related to the Company's proved developed properties, totaled approximately 2.1 Tcf at December 31, 1994. An additional source of liquidity to the Company is volumes of residue gas and NGLs in storage facilities. The Company stores volumes of residue gas and NGLs primarily to assure an adequate supply for long-term sales contracts and for resale during periods when prices are favorable. At December 31, 1994, the Company held in storage approximately 11.6 million gallons of NGLs at an average cost of $.30 per gallon and 21.9 Bcf of residue gas at an average cost of $2.16 per Mcf ($1.94 per MMBtu) primarily at the Katy Facility. Hedging Activities The Company enters into futures, swaps and option contracts to hedge against a portion of the price risk associated with natural gas and NGLs. Gains and losses on hedges of product inventory are included in the carrying amount of the inventory and are ultimately recognized in residue and NGL purchases or sales when the related inventory is sold. Gains and losses related to qualifying hedges of firm commitments or anticipated transactions also are deferred and are recognized in residue and NGL sales when the hedged transaction occurs. Margins from the Company's forward fixed price hedges and physical sales for 1995 are expected to more than offset the related $6.1 million of losses deferred at December 31, 1994. At December 31, 1994, 2,257 contracts (net) (10,000 Mcf per contract) for the sale of residue gas in January 1995 through January 1996 at prices ranging from $1.55 per Mcf to $2.38 per Mcf were outstanding. At December 31, 1993, 296 such contracts were outstanding at prices ranging from $1.87 per Mcf to $2.56 per Mcf. No such contracts for NGLs were outstanding at December 31, 1994 or December 31, 1995. See also "Financing Facilities - Interest Rate Swap Agreements" below. Capital Investment Program Between January 1, 1992 and December 31, 1994, the Company expended approximately $660.3 million on new projects. For the three years ended December 31, 1994, the Company expended $101.0 million, $492.3 million and $67.0 million, respectively, on acquisitions, the construction of the Katy Facility, connection of new reserves, the acquisition of consolidating assets for existing systems and for upgrades to existing and newly acquired facilities. In order to maintain the volumes of natural gas dedicated to or processed by the Company's existing facilities, future capital expenditures for gathering systems needed to connect new reserves and to acquire consolidating assets are anticipated to be approximately $63.5 million for 1995 and capital expenditures to maintain existing facilities are expected to approximate $16.5 million for 1995. The availability of new reserves at existing facilities is somewhat affected by the price of crude oil or natural gas (depending on whether the natural gas is associated gas or gas well gas) which in turn stimulates new drilling at higher price levels. Depending on the timing of the Company's future projects, it may be required to seek additional sources of capital. The Company's ability to secure such capital is restricted by its credit facilities, although it may request additional borrowing 18 capacity from the banks, seek waivers from the banks to permit it to borrow funds from third parties, seek replacement credit facilities from other lenders or issue additional equity securities. While the Company believes that it would be able to secure additional financing, if required, no assurance can be given that it will be able to do so or as to the terms of any such financing. Financing Facilities REVOLVING CREDIT FACILITY. The Company's variable rate Revolving Credit Facility, as restated on September 2, 1994, and subsequently amended, with a syndicate of eight banks, provides for a maximum borrowing base of $325 million, of which $168.0 million was outstanding at December 31, 1994. The commitment decreases to $300 million on January 1, 1995. If the facility is not renewed on January 1, 1997, any outstanding balance thereunder converts to a four-year term loan during which such balance will be repaid in equal quarterly installments. The Revolving Credit Facility bears interest, at the Company's option, at certain spreads over the Eurodollar rate, the Federal Funds rate plus .50% or at the agent bank's prime rate. The interest rate spreads are adjusted based on the Company's debt to capitalization ratio. At December 31, 1994, the spread was 1.0% for the Eurodollar rate, resulting in an interest rate of 7.17%. Beginning with the quarter ended March 31, 1995, the spread will increase to 1.25%. The Company pays a commitment fee on the unused commitment ranging from .15% to .375% based on the debt to capitalization ratio. At December 31, 1994, the Company's debt to capitalization ratio was in the range of .50 to 1.0 resulting in a commitment fee rate of .30%. Beginning with the quarter ended March 31, 1995, the rate will increase to .375%. TERM LOAN FACILITY. The Company also has a Term Loan Facility with four banks for $50 million which bears interest at 9.87%. Payments on the Term Loan Facility of $25 million, $12.5 million and $12.5 million are due in September 1995, 1996 and 1997, respectively. The $25 million payment due on the Term Note in September 1995 has been classified as long-term debt as the Company intends to fund this payment from amounts available under the Revolving Credit Facility. The agreement governing the Company's Revolving Credit and Term Loan Facilities (the "Credit Facilities Agreement") is subject to certain mandatory prepayment terms. If funded debt of the Company exceeds five times the sum of the Company's last four quarters' cash flow (as defined in the agreement) less preferred stock dividends, the overage must be repaid in no more than six monthly payments commencing 90 days from notification. This mandatory prepayment threshold will be reduced to 4.0 to 1.0 at September 1, 1995 and 3.50 to 1.0 at September 1, 1998. At December 31, 1994, the Company had approximately $99.8 million of available borrowing capacity. The Term Loan and Revolving Credit Facilities are unsecured. The Company is required to maintain a current ratio of at least 1.0 to 1.0 (as defined in the Credit Facilities Agreement), a tangible net worth at December 31, 1994 of at least $403.2 million, a debt to capitalization ratio of no more than 60% through October 31, 1995 and 55% thereafter and an EBITDA to interest ratio of not less than 3.25 to 1.0 through October 31, 1995 and 3.75 to 1.0 thereafter. The Company is prohibited from declaring or paying dividends that exceed the sum of $35 million plus 50% of consolidated net income earned after March 31, 1994 plus 50% of the cumulative net proceeds in excess of the Redemption Limit (as defined in the Credit Facilities Agreement) received from the sale of any equity securities sold after March 31, 1994. At December 31, 1994, this threshold amounted to approximately $38.2 million. The Company generally utilizes excess daily funds to reduce any outstanding revolving credit balances to minimize interest expense and intends to continue such practice. The $8.7 million cash balance at December 31, 1994 is an overnight investment necessitated by the timing of cash receipts. MASTER SHELF AGREEMENT. In December 1991, the Company entered into a Master Shelf Agreement (the "Master Shelf") with The Prudential Insurance Company of America ("Prudential") pursuant to which Prudential agreed to quote, from time- to-time, an interest rate at which Prudential or its nominee would be willing to purchase up to $100 million of the Company's senior promissory notes (the "Master Notes"). Any such Master Notes must mature in no more than 12 years, with an average life not in excess of 10 years, and will be unsecured. On October 27, 1992, the Company sold $25 million of 7.51% Master Notes due 2000 and $25 million of 7.99% Master Notes due 2003. Principal payments on the $50 million of Master Notes of $8.3 million will be due on October 27 of each year from 1998 through 2003. On September 22, 1993, the Company sold $25 million of 6.77% Master Notes due in a single payment on September 22, 2003 and on December 27, 1993, the Company sold $25 million of 7.23% Master Notes due in a single payment on December 27, 2003. The Master Shelf contains certain financial covenants which conform with those contained in the Credit Facilities Agreement, as restated. In July 1993, Prudential and the Company amended the Master Shelf to provide for an additional $50 million of borrowing capacity (for 19 a total borrowing capacity of $150 million) and to extend the term of the Master Shelf to October 31, 1995. On October 27, 1994, the Company sold $25 million of 9.05% Master Notes due in a single payment on October 27, 2001 and $25 million of 9.24% Senior Notes due in a single payment on October 27, 2004. At December 31, 1994, the Master Shelf Agreement, as amended, was fully utilized. SENIOR NOTES. On April 28, 1993 the Company sold $50 million of 7.65% Senior Notes due 2003 to a group of insurance companies led by Connecticut General Life Insurance Company. Principal payments on the $50 million of Senior Notes of $7.1 million will be due on April 30th of each year from 1997 through 2002, with any remaining principal and interest outstanding due on April 30, 2003. The Senior Notes contain certain financial covenants which conform with those contained in the Credit Facilities Agreement, as restated. ADDITIONAL BORROWINGS. The Company anticipates entering into an agreement with Receivables Capital Corporation ("RCC"), as administered by Bank of America National Trust and Savings Association ("BA"), to sell an undivided interest in the Company's trade receivables for a maximum borrowing of $75 million bearing interest at RCC's commercial paper rate plus .375%. Specific terms of this agreement have not yet been negotiated; however, the Company anticipates completion of this agreement in April 1995. On September 2, 1994, in advance of completing the agreement with RCC, BA entered into a Master Note Agreement ("Short-Term Note") with the Company and advanced the Company $75 million bearing interest at the Eurodollar rate plus .50% which resulted in an interest rate of 6.625% at December 31, 1994. The $75 million received under the Short- Term Note was used to reduce borrowings under the revolving credit facility and has been included in short-term borrowings on the Company's Consolidated Balance Sheet at December 31, 1994. The Company anticipates repaying the Short-Term Note with proceeds from RCC. COVENANT COMPLIANCE. At December 31, 1994, the Company was in compliance with all covenants in its loan agreements. INTEREST RATE SWAP AGREEMENTS. The Company has entered into various interest rate swap agreements to manage exposure to changes in interest rates. The transactions generally involve the exchange of fixed and floating interest payment obligations or the exchange of foreign and U.S. currencies, without the exchange of the underlying principal amounts. The net effect of interest rate swap activity is reflected as an increase or decrease in interest expense. Any gains on termination of interest rate swap agreements and the effects of foreign currency positions that were marked to market are included in other income. At December 31, 1994 and 1993, the total notional principal amount of outstanding interest rate swap agreements was $50 million. In addition to the financial risk that will vary during the life of these swap agreements in relation to the maturity of the underlying debt and market interest rates, the Company is subject to credit risk exposure from nonperformance of the counterparties to the swap agreements. The Company does not anticipate nonperformance by the counterparties. The following table summarizes the results of the Company's interest rate swap and foreign currency positions for the three years ended December 31, 1994 (000s):
1994 1993 1992 ------ -------- ------ Net (increase) decrease to interest expense..... $(932) $ 1,769 $ 250 ===== ======= ===== Gains on swap termination....................... $ - $ 2,590 $ 765 ===== ======= ===== Losses on foreign currency positions............ $(361) $(1,175) $(119) ===== ======= =====
The Company believes that the amounts available to be borrowed under the Revolving Credit Facility together with cash provided from operations, will provide it with sufficient financing to connect new reserves, maintain its existing facilities and complete its current capital improvement projects. The Company also believes that cash provided from operations will be sufficient to meet its debt service and preferred stock dividend requirements and redemption requirements, if any. Environmental The construction and operation of the Company's gathering lines, plants and other facilities used for the gathering, transporting, processing, treating or storing of residue gas and NGLs are subject to federal, state and local environmental laws and regulations, including those that can impose obligations to clean up hazardous substances at the Company's facilities or at facilities to which the Company sends wastes for disposal. In most instances, the applicable regulatory requirements relate 20 to water and air pollution control or solid waste management procedures. The Company employs seven environmental engineers to monitor environmental compliance and potential liabilities at its facilities. Prior to consummating any major acquisition, the Company's environmental engineers perform audits on the facilities to be acquired. In addition, on an ongoing basis, the environmental engineers perform systematic environmental assessments of the Company's existing facilities. The Company believes that it is in substantial compliance with applicable material environmental laws and regulations. Environmental regulation can increase the cost of planning, designing, constructing and operating the Company's facilities. The Company believes that the costs for compliance with current environmental laws and regulations have not had and will not have a material effect on the Company's financial position or results of operation. In 1990, the Congress enacted the Clean Air Act Amendments of 1990 (the "Clean Air Act") which impose more stringent standards on emissions of certain pollutants and require the permitting of certain existing air emissions sources. Many of the regulations have not been promulgated and until their promulgation, the Company cannot make a final assessment of the impact of the Clean Air Act. However, based upon its preliminary review of the proposed regulations, the Company does not anticipate that compliance with the Clean Air Act will require any material capital expenditures, although it will increase permitting costs in 1995 and may increase certain operating costs on an on-going basis. The Company does not believe that such cost increases will have a material effect on the Company's financial position or results of operations. The Company believes that it is reasonably likely that the trend in environmental legislation and regulation will continue to be towards stricter standards. The Company is unaware of future environmental standards that are reasonably likely to be adopted that will have a material effect on the Company's financial position or results of operations, but cannot rule out that possibility. The Company is in the process of voluntarily cleaning up non-hazardous substances at facilities that it operates. In addition, the former owner of certain facilities that the Company acquired in 1992 is conducting cleanups at those facilities pursuant to contractual obligations. The Company's expenditures for environmental evaluation and remediation at existing facilities have not been significant in relation to the results of operations of the Company and totaled approximately $1.4 million for the year ended December 31, 1994. For the year ended December 31, 1994, the Company paid an aggregate of approximately $550,000 in air emissions fees to the states in which it operates. Although the Company anticipates that such air emissions fees will increase over time, the Company does not believe that such increases will have a material effect on the Company's financial position or results of operations. 21 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Western Gas Resources, Inc.'s Consolidated Financial Statements as of December 31, 1994 and 1993 and for the three years ended December 31, 1994: Page ---- Report of Management................................................... 23 Report of Independent Accountants...................................... 24 Consolidated Balance Sheets............................................ 25 Consolidated Statements of Cash Flows.................................. 26 Consolidated Statements of Operations.................................. 27 Consolidated Statements of Changes in Stockholders' Equity............. 28 Notes to Consolidated Financial Statements............................. 29 22 REPORT OF MANAGEMENT The financial statements and other financial information included in this Annual Report on Form 10-K are the responsibility of management. The financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances and include amounts that are based on management's informed judgments and estimates. Management relies on the Company's system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that transactions are properly recorded and executed in accordance with management's authorization. The concept of reasonable assurance is based on the recognition that there are inherent limitations in all systems of internal accounting control and that the cost of such systems should not exceed the benefits to be derived. The internal accounting controls in place during the periods presented are considered adequate to provide such assurance. The Company's financial statements are audited by Price Waterhouse LLP, independent accountants. Their report states that they have conducted their audit in accordance with generally accepted auditing standards. These standards include an evaluation of the system of internal accounting controls for the purpose of establishing the scope of audit testing necessary to allow them to render an independent professional opinion on the fairness of the Company's financial statements. The Audit Committee of the Board of Directors, composed solely of directors who are not employees of the Company, reviews the Company's financial reporting and accounting practices. The Audit Committee meets periodically with the independent accountants and management to review the work of each and to ensure that each is properly discharging its responsibilities. Signature Title --------- ----- /s/ BILL M. SANDERSON --------------------- Bill M. Sanderson President, Chief Operating Officer and Director /s/ WILLIAM J. KRYSIAK ---------------------- William J. Krysiak Vice President - Finance (Principal Financial and Accounting Officer) 23 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Stockholders of Western Gas Resources, Inc. In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of cash flows, of operations, and of changes in stockholders' equity present fairly, in all material respects, the financial position of Western Gas Resources, Inc. and its subsidiaries at December 31, 1994 and 1993, and the results of their cash flows and their operations for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Denver, Colorado March 24, 1995 24 WESTERN GAS RESOURCES, INC. CONSOLIDATED BALANCE SHEET (000s)
December 31, --------------------------- ASSETS 1994 1993 ------ ----------- ----------- Current assets: Cash and cash equivalents........................................................... $ 8,708 $ 4,666 Trade accounts receivable, net...................................................... 134,444 142,336 Product inventory................................................................... 51,139 20,850 Parts inventory..................................................................... 2,291 2,161 Other............................................................................... 1,367 1,544 ---------- ---------- Total current assets............................................................... 197,949 171,557 ---------- ---------- Property and equipment, at cost: Gas gathering, processing, storage and transmission................................. 881,569 684,964 Oil and gas properties and equipment................................................ 140,601 134,638 Construction in progress............................................................ 40,076 148,918 ---------- ---------- 1,062,246 968,520 Less: Accumulated depreciation, depletion and amortization.......................... (179,537) (123,351) ---------- ---------- Total property and equipment, net.................................................. 882,709 845,169 ---------- ---------- Other assets: Gas purchase contracts (net of accumulated amortization of $14,872 and $10,756, respectively)............................................................. 40,958 37,556 Other............................................................................... 45,746 60,466 ---------- ---------- Total other assets................................................................. 86,704 98,022 ---------- ---------- Total assets.......................................................................... $1,167,362 $1,114,748 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable.................................................................... $ 145,244 $ 160,956 Short-term debt..................................................................... 75,000 - Accrued expenses.................................................................... 13,448 17,667 Dividends payable................................................................... 3,895 2,080 Income taxes payable................................................................ 843 - ---------- ---------- Total current liabilities.......................................................... 238,430 180,703 Long-term debt........................................................................ 418,000 547,000 Deferred income taxes payable......................................................... 68,727 66,481 Other long-term liabilities........................................................... 5,522 6,177 ---------- ---------- Total liabilities.................................................................. 730,679 800,361 ---------- ---------- Commitments and contingent liabilities................................................ - - Stockholders' equity: Common stock, par value $.10; 100,000,000 shares authorized; 25,712,301 and 25,651,722 shares issued and outstanding, respectively............................. 2,574 2,565 Treasury stock, at cost, 25,016 and no shares in treasury, respectively............. (788) - Preferred Stock; 10,000,000 shares authorized: $2.625 cumulative convertible preferred stock, par value $.10; 2,760,000 and no shares issued and outstanding, respectively ($138,000 aggregate liquidation preference).......................................................... 276 - $2.28 cumulative preferred stock, par value $.10; 1,400,000 shares issued and outstanding ($35,000 aggregate liquidation preference)....................... 140 140 7.25% cumulative senior perpetual convertible preferred stock, par value $.10; 400,000 shares issued and outstanding ($40,000 aggregate liquidation preference)...................................................................... 40 40 Additional paid-in capital.......................................................... 338,926 205,694 Notes receivable from key employees secured by common stock......................... (1,525) (1,985) Retained earnings................................................................... 97,040 107,933 ---------- ---------- Total stockholders' equity......................................................... 436,683 314,387 ---------- ---------- Total liabilities and stockholders' equity............................................ $1,167,362 $1,114,748 ========== ==========
The accompanying notes are an integral part of the consolidated financial statements. 25 WESTERN GAS RESOURCES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (000s)
Year Ended December 31, ---------------------------------------- 1994 1993 1992 ---------- ---------- ---------- Reconciliation of net income to net cash provided by operating activities ------------------------------------------------------------------------- Net income.................................................................... $ 7,364 $ 38,102 $ 39,688 Add income items that do not affect working capital: Depreciation, depletion and amortization.................................... 63,586 43,980 26,491 Deferred income taxes....................................................... 2,246 7,439 8,361 Other non-cash items........................................................ 452 77 1,436 --------- --------- --------- 73,648 89,598 75,976 --------- --------- --------- Adjustments to working capital to arrive at net cash provided by operating activities: (Increase) decrease in trade accounts receivable............................ 7,892 (38,078) (2,227) (Increase) decrease in product inventory.................................... (30,289) (2,540) 8,280 (Increase) decrease in parts inventory...................................... (130) (490) 359 (Increase) decrease in other current assets................................. 177 56 (278) Increase in other assets and liabilities, net............................... (1,068) (6,456) (4,783) Increase (decrease)in accounts payable...................................... (15,712) 68,813 14,939 Increase (decrease) in accrued expenses..................................... (4,322) (7,398) 1,011 Increase in income taxes payable............................................ 843 - - --------- --------- --------- Total adjustments.......................................................... (42,609) 13,907 17,301 --------- --------- --------- Net cash provided by operating activities..................................... 31,039 103,505 93,277 --------- --------- --------- Cash flows from investing activities: Payments for business acquisitions.......................................... (24,685) (302,988) (11,299) Payments for additions to property and equipment............................ (67,148) (150,216) (54,681) Proceeds from dispositions of property and equipment........................ 10,897 741 18,547 Contributions to investments for capital expenditures....................... (1,189) (11,647) (1,041) Gas purchase contracts acquired............................................. (7,518) (27,477) - --------- --------- --------- Net cash used in investing activities......................................... (89,643) (491,587) (48,474) --------- --------- --------- Cash flows from financing activities: Net proceeds from issuance of preferred stock............................... 132,676 - 33,400 Net proceeds from exercise of common stock options.......................... 741 879 1,114 Notes receivable from key employees secured by common stock................. (328) (507) (580) Proceeds from short-term borrowings......................................... 75,000 - - Proceeds from issuance of long-term debt.................................... 50,000 100,000 50,000 Net borrowings (payments) under revolving credit facility................... (179,000) 290,000 (109,050) Dividends paid to holders of common stock................................... (5,137) (5,118) (5,085) Dividends paid to holders of preferred stock................................. (11,306) (5,666) (2,900) --------- --------- --------- Net cash provided by (used in) financing activities......................... 62,646 379,588 (33,101) --------- --------- --------- Net increase (decrease) in cash............................................... 4,042 (8,494) 11,702 Cash and cash equivalents at beginning of period.............................. 4,666 13,160 1,458 --------- --------- --------- Cash and cash equivalents at end of period.................................... $ 8,708 $ 4,666 $ 13,160 ========= ========= =========
The accompanying notes are an integral part of the consolidated financial statements. 26 WESTERN GAS RESOURCES, INC. CONSOLIDATED STATEMENT OF OPERATIONS (000s, except share and per share amounts)
Year Ended December 31, -------------------------------------------- 1994 1993 1992 ----------- ----------- ----------- Revenues: Sale of residue gas.................................... $ 707,869 $ 563,068 $ 278,928 Sale of natural gas liquids............................ 309,358 333,880 290,230 Processing and transportation revenue.................. 35,017 25,622 22,124 Other, net............................................. 11,245 9,768 8,834 ----------- ----------- ----------- Total revenues........................................ 1,063,489 932,338 600,116 ----------- ----------- ----------- Costs and expenses: Product purchases...................................... 853,398 730,676 427,906 Plant operating expense................................ 68,500 62,387 54,999 Oil and gas exploration and production costs........... 5,449 3,283 2,528 Selling and administrative expense..................... 29,116 23,409 19,298 Depreciation, depletion and amortization............... 63,586 43,980 26,491 Interest expense....................................... 31,916 12,972 10,449 ----------- ----------- ----------- Total costs and expenses.............................. 1,051,965 876,707 541,671 ----------- ----------- ----------- Income before taxes..................................... 11,524 55,631 58,445 Provision for income taxes: Current................................................ 1,913 10,090 10,396 Deferred............................................... 2,247 7,439 8,361 ----------- ----------- ----------- 4,160 17,529 18,757 ----------- ----------- ----------- Net income.............................................. $ 7,364 $ 38,102 $ 39,688 =========== =========== =========== Weighted average shares of common stock outstanding..... 25,695,760 25,608,503 25,453,029 =========== =========== =========== Earnings (loss) per share of common stock............... $ (.19) $ 1.25 $ 1.43 =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 27 WESTERN GAS RESOURCES, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (000s, except share amounts)
Shares of 7.25% Cumulative Shares of Senior Shares of $2.625 Perpetual $2.28 Cumulative Shares Shares of Convertible Cumulative Convertible of Common Common Stock Preferred Preferred Preferred Common Treasury Stock in Treasury Stock Stock Stock Stock Stock ---------- ------------ ----------- ---------- ----------- ------- -------- Balance at December 31, 1991........ 25,350,530 - 400,000 - - $2,535 $ - Net income, 1992.................... - - - - - - - Stock options exercised............. 172,045 - - - - 17 - Proceeds from issuance of $2.28 Cumulative Preferred Stock......... - - - 1,400,000 - - - Dividends declared on common stock.. - - - - - - - Dividends declared on 7.25% Cumulative Senior Perpetual Convertible Preferred Stock........ - - - - - - - Dividends declared on $2.28 Cumulative Preferred Stock......... - - - - - - - ---------- -------- -------- ---------- ---------- ------- ------- Balance at December 31, 1992........ 25,522,575 - 400,000 1,400,000 - 2,552 - Net income, 1993.................... - - - - - - - Stock options exercised............. 129,147 - - - - 13 - Dividends declared on common stock.. - - - - - - - Dividends declared on 7.25% Cumulative Senior Perpetual Convertible Preferred Stock........ - - - - - - - Dividends declared on $2.28 Cumulative Preferred Stock......... - - - - - - - ---------- -------- -------- ---------- ---------- ------- ------- Balance at December 31, 1993........ 25,651,722 - 400,000 1,400,000 - 2,565 - Net income, 1994.................... - - - - - - - Stock options exercised............. 85,595 - - - - 9 - Treasury stock, at cost............. (25,016) 25,016 - - - - (788) Proceeds from issuance of $2.625 Cumulative Convertible Preferred Stock.................... - - - - 2,760,000 - - Dividends declared on common stock.. - - - - - - - Dividends declared on 7.25% Cumulative Senior Perpetual Convertible Preferred Stock........ - - - - - - - Dividends declared on $2.28 Cumulative Preferred Stock......... - - - - - - - Dividends declared on $2.625 Cumulative Convertible Preferred Stock.................... - - - - - - - ---------- -------- -------- ---------- ---------- ------- ------- Balance at December 31, 1994........ 25,712,301 25,016 400,000 1,400,000 2,760,000 $2,574 $(788) ========== ======== ======== ========== ========== ======= ======= 7.25% Cumulative Senior $2.625 Perpetual $2.28 Cumulative Notes Total Convertible Cumulative Convertible Additional Receivable Stock- Preferred Preferred Preferred Paid-In from Key Retained holders' Stock Stock Stock Capital Employees Earnings Equity ----------- ----------- ----------- ---------- ---------- -------- -------- Balance at December 31, 1991........ $ 40 $ - $ - $169,987 $ (898) $ 49,725 $221,389 Net income, 1992.................... - - - - - 39,688 39,688 Stock options exercised............. - - - 1,097 (580) - 534 Proceeds from issuance of $2.28 Cumulative Preferred Stock......... - 140 - 33,636 - - 33,776 Dividends declared on common stock.. - - - - - (5,094) (5,094) Dividends declared on 7.25% Cumulative Senior Perpetual Convertible Preferred Stock........ - - - - - (2,900) (2,900) Dividends declared on $2.28 Cumulative Preferred Stock......... - - - - - (372) (372) ----- ------ ---- -------- -------- -------- -------- Balance at December 31, 1992........ 40 140 - 204,720 (1,478) 81,047 287,021 Net income, 1993.................... - - - - - 38,102 38,102 Stock options exercised............. - - - 974 (507) - 480 Dividends declared on common stock.. - - - - - (5,124) (5,124) Dividends declared on 7.25% Cumulative Senior Perpetual Convertible Preferred Stock........ - - - - - (2,900) (2,900) Dividends declared on $2.28 Cumulative Preferred Stock......... - - - - - (3,192) (3,192) ----- ------ ---- -------- -------- -------- -------- Balance at December 31, 1993........ 40 140 - 205,694 (1,985) 107,933 314,387 Net income, 1994.................... - - - - - 7,364 7,364 Stock options exercised............. - - - 831 (328) - 512 Treasury stock, at cost............. - - - - 788 - - Proceeds from issuance of $2.625 Cumulative Convertible Preferred Stock.................... - - 276 132,401 - - 132,677 Dividends declared on common stock.. - - - - - (5,140) (5,140) Dividends declared on 7.25% Cumulative Senior Perpetual Convertible Preferred Stock........ - - - - - (2,900) (2,900) Dividends declared on $2.28 Cumulative Preferred Stock......... - - - - - (3,192) (3,192) Dividends declared on $2.625 Cumulative Convertible Preferred Stock.................... - - - - - (7,025) (7,025) ----- ------ ---- -------- -------- -------- -------- Balance at December 31, 1994........ $ 40 $ 140 $276 $338,926 $(1,525) $ 97,040 $436,683 ===== ====== ==== ======== ======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 28 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION, ACCOUNTING POLICIES AND OTHER MATTERS ------------------------------------------------------------ Western Gas Resources, Inc., a Delaware corporation, is an independent gas gatherer, processor and marketer with operations in major oil and gas-producing basins in the Rocky Mountain, Gulf Coast and Southwestern regions of the United States. Western Gas Resources, Inc. owns and operates natural gas gathering, processing and storage facilities and markets and transports natural gas and natural gas liquids ("NGLs"). Western Gas Resources, Inc. was formed in October 1989 to acquire a majority interest in Western Gas Processors, Ltd. (the "Partnership") and to assume the duties of WGP Company, the general partner of the Partnership. The Partnership had been a Colorado limited partnership formed in 1977 to engage in the gathering and processing of natural gas. The reorganization was accomplished in December 1989 through an exchange for common stock of partnership units held by the former general partners of WGP Company (the "Principal Stockholders") and an initial public offering of Western Gas Resources, Inc. common stock. On May 1, 1991, a further restructuring of the Partnership and Western Gas Resources, Inc. (together with its predecessor, WGP Company, collectively, the "Company") was approved by a vote of the security holders. The combinations were reorganizations of entities under common control and have been accounted for at historical cost in a manner similar to poolings of interests. The Company has restated all historical financial information to reflect the restructuring. In October 1991, the Company issued 400,000 shares of 7.25% cumulative perpetual convertible preferred stock ("7.25% Convertible Preferred Stock"), with a liquidation preference of $100 per share to an institutional investor. In November 1991, the Company issued 4,115,000 shares of common stock at a public offering price of $18.375 per share. In November 1992, the Company issued 1,400,000 shares of $2.28 cumulative preferred stock ("$2.28 Cumulative Preferred Stock"), with a liquidation preference of $25 per share, at a public offering price of $25 per share. In February 1994, the Company issued 2,760,000 shares of $2.625 cumulative convertible preferred stock ("$2.625 Convertible Preferred Stock"), with a liquidation preference of $50 per share, at a public offering price of $50 per share. SIGNIFICANT BUSINESS ACQUISITIONS AND DISPOSITIONS Oasis Effective December 1, 1994, the Company acquired the West Texas gathering and treating assets of Oasis Pipe Line Company ("Oasis") for approximately $26.0 million. The Oasis purchase included 14 gathering systems in the Permian Basin comprising approximately 600 miles of pipeline and two treating facilities. In addition, the Company has entered into a long-term agreement with Oasis for 100 MMcf per day of firm transportation service on its intrastate pipeline. The Company will install a 200 MMcf per day pipeline interconnection between this pipeline and the Katy Facility. Mountain Gas Effective January 1, 1993, the Company acquired the stock of Mountain Gas Resources, Inc. ("Mountain Gas") from Morgan Stanley Leveraged Equity Fund II, L.P. for total consideration of approximately $168.2 million, including the payment of certain transaction costs and the assumption and repayment of $35 million of long-term debt of Mountain Gas. Mountain Gas owns the Red Desert and Granger facilities, both located near the Company's Lincoln Road gas processing plant and gathering system. The 22% interest in the Granger facility previously not owned by Mountain Gas was purchased by the Company in two separate transactions in November and December 1993 for an aggregate of $27.7 million. At the date of acquisition, the Red Desert facility consisted of a cryogenic plant and the Granger plant consisted of a refrigeration unit and a cryogenic unit. In December 1993, the Company completed construction of an additional cryogenic processing plant at Granger, at a total additional cost of approximately $4.8 million. 29 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) In December 1993, a fire at the Granger facility's NGL tank farm required the facility to be shut down for one week. The new cryogenic processing plant as well as the smaller existing cryogenic unit were also damaged. Construction of a new tank farm and repairs to the cryogenic units were completed and fully operational in August 1994. Claims for physical damage to the Company's facilities totaled approximately $6.7 million, of which $1.8 million had been received through December 31, 1994. In addition, the Company has recorded $3.3 million as other revenue for losses covered under its business interruption insurance policy for the year ended December 31, 1994. The Company believes that insurance will cover, subject to certain deductibles, the remaining amounts outstanding for physical damage, business interruption and third-party property, and for bodily injury claims, if any. The Company does not expect uninsured losses, if any, to be material. Black Lake Effective January 1, 1993, the Company purchased the Black Lake gas processing plant and related reserves ("Black Lake") from Nerco Oil & Gas, Inc. ("Nerco") for approximately $136.2 million. The acquisition included a 68.9% working interest in the Black Lake field in Louisiana and a gas processing plant. The purchase also included 50% of the stock of Black Lake Pipeline Company, which owns a 240 mile liquids pipeline extending from Cotton Valley, Louisiana to Mont Belvieu, Texas and transports NGLs for Black Lake and three unaffiliated gas processing plants. In May 1994, the Company sold its 50% of the stock in Black Lake Pipeline Company for approximately $5.4 million. The difference of approximately $2.5 million between the recorded book value and the sales price was treated as a purchase price adjustment. Westana Joint Venture Effective August 1, 1993, the Company formed Westana Gathering Company ("Westana"), a general partnership, with Panhandle Eastern Pipe Line Corporation ("PEPL"). Westana provides gas gathering and processing services in the Anadarko Basin in Oklahoma and markets residue gas and NGLs for producers connected to its system. The Company is the principal operator with each partner holding a 50% ownership interest. The Company contributed its Chester gas processing plant and gathering system, with a net book value of $13.8 million, to Westana. Westana also operates PEPL's 400 mile gathering system, which will be contributed to Westana after abandonment approval by the FERC. The FERC issued a ruling on March 15, 1995 which the Company is evaluating. The Company also made additional contractual partnership contributions of $8.3 million through December 31, 1994 for necessary modifications to the gathering system. This contribution is to be recouped by the Company through preferential partnership distributions. Midkiff/Benedum System Effective October 1, 1992, the Company sold a 20% undivided interest in the Midkiff and Benedum gas processing plants to the major producer in the area of the plant for $22 million, resulting in an increase to net income of $2.9 million, or $.11 per share of common stock. At December 31, 1994 this percentage approximated 22% and will increase or decrease based upon changes in throughput volumes at the facilities. ACCOUNTING POLICIES The significant accounting policies followed by the Company and the Company's wholly owned subsidiaries are presented here to assist the reader in evaluating the financial information contained herein. The Company's accounting policies are in accordance with generally accepted accounting principles. Principles of Consolidation The consolidated financial statements include the accounts of the Company and the Company's wholly owned subsidiaries. All material intercompany transactions have been eliminated in consolidation. The Company's interest in certain investments is accounted for by the equity method. 30 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Revenue Recognition Revenue for sales or services is recognized at the time the natural gas or NGLs are sold or at the time the service is performed. Reclassification Certain prior years' amounts in the consolidated financial statements and related notes have been reclassified to conform to the presentation used in 1994. Earnings Per Share of Common Stock Earnings per share of common stock is computed by dividing net income available to shares of common stock by the weighted average number of shares of common stock outstanding. Net income available to shares of common stock is net income less dividends declared on the 7.25% Convertible Preferred Stock, $2.28 Cumulative Preferred Stock and the $2.625 Convertible Preferred Stock . The computation of fully diluted earnings per share of common stock for the three years ended December 31, 1994 was not dilutive; therefore, only primary earnings per share of common stock is presented. Inventories Product inventory includes $47.5 million and $15.5 million of residue gas and $3.5 million and $5.2 million of NGLs at December 31, 1994 and 1993, respectively. Prior to 1992, the cost of residue gas and NGL inventories was determined by the weighted average cost and the first-in, first-out (FIFO) methods, respectively, on a location by location basis. Effective January 1, 1992, the Company changed its method of accounting for NGL inventories to the last-in, first-out (LIFO) method. The effect of this change was not material to the Company's results of operations for the year ended December 31, 1992. Residue inventory covered by hedging contracts is accounted for on a specific identification basis. Property and Equipment Depreciation is provided using the straight-line method based on the estimated useful life of each facility which ranges from three to 45 years. Useful lives are determined based on the shorter of the life of the equipment or the reserves serviced by the equipment. The cost of certain gas purchase contracts is amortized using the units-of-production method. Interest incurred during the construction period of new projects is capitalized and amortized over the life of the associated assets. Such capitalized interest was $1.5 million, $4.9 million and $2.1 million, respectively, for the three years ended December 31, 1994. Oil and Gas Properties and Equipment The Company follows the successful efforts method of accounting for oil and gas exploration and production activities. Acquisition costs, development costs and successful exploration costs are capitalized. Exploratory dry hole costs, lease rentals and geological and geophysical costs are charged to expense as incurred. If the undiscounted future net revenue of all proved developed properties does not exceed the net book value of such properties, a charge for impairment would be made against income of the period affected. Upon surrender of undeveloped properties, the original cost is charged against income. Producing properties and related equipment are depleted and depreciated by the units-of-production method based on estimated proved reserves for producing properties and proved developed reserves for lease and well equipment. 31 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Income Taxes Deferred income taxes for the three years ended December 31, 1994 reflect the impact of "temporary differences" between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. These temporary differences are determined in accordance with SFAS No. 109 and are more inclusive in nature than "timing differences" as determined under previously applicable accounting principles. Hedging Activities The Company enters into futures, swaps and option contracts to hedge against a portion of the price risk associated with natural gas and NGLs. Gains and losses on hedges of product inventory are included in the carrying amount of the inventory and are ultimately recognized in sales when the related inventory is sold. Gains and losses related to qualifying hedges of firm commitments or anticipated transactions also are deferred and are recognized in sales when the hedged transaction occurs. Interest Rate Swap Agreements The Company has entered into various interest rate swap agreements to manage exposure to changes in interest rates. The transactions generally involve the exchange of fixed and floating interest payment obligations without the exchange of the underlying principal amounts. In addition to the financial risk that will vary during the life of these swap agreements in relation to the maturity of the underlying debt and market interest rates, the Company is subject to credit risk exposure from nonperformance of the counterparties to the swap agreements. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable. The risk is limited due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographies. At December 31, 1994, the Company had no significant concentrations of credit risk. Fair Value of Financial Instruments The aggregate fair value of all of the Company's financial instruments approximates the aggregate carrying value. Cash and Cash Equivalents Cash and cash equivalents includes all cash balances and highly liquid investments with an original maturity of three months or less. Supplementary Cash Flow Information Interest paid was $32.8 million, $16.4 million and $12.5 million, respectively, for the three years ended December 31, 1994. Income taxes paid were $1.1 million, $10.2 million and $12.5 million, respectively, for the three years ended December 31, 1994. In February 1994, the President and Chief Operating Officer of the Company, surrendered 25,016 shares of the Company's common stock, which were valued at $31.50 per share based upon the February 22, 1994 closing price, as repayment of a loan and all accrued interest of approximately $788,000. 32 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) In 1994, the Company exchanged its Pyote Treating Facility for the Jayhawk gathering system in a transaction valued at approximately $800,000. In 1993, the Company exchanged its Fairview Gas Processing Plant for various gas gathering and processing equipment located in Montana and Kansas in a transaction valued at approximately $3.7 million. Payments for business acquisitions during the year ended December 31, 1993 include the following payments for working capital and other liabilities assumed (000s): Trade accounts receivable, net............................ $ 13,338 Product inventory......................................... 614 Other current assets...................................... 42 Other assets.............................................. 1,817 Accounts payable.......................................... (5,487) Accrued expenses.......................................... (10,588) -------- Total.................................................... $ (264) ========
NOTE 2 - RELATED PARTIES ------------------------ The Company purchases a significant portion of production from Williston Gas Company ("Williston") and Westana for resale to unrelated third parties. Such purchases from Williston included in the Consolidated Statement of Operations were $8.2 million, $8.6 million and $4.0 million, respectively, for the three years ended December 31, 1994. Purchases from Westana totaled $12.2 million and $5.3 million, respectively, for the two years ended December 31, 1994. The Company performs various operational and administrative functions for Williston and Westana and allocates the actual expenses incurred in performing the services to each Company. Such charges for Williston totaled $1.4 million, $2.4 million and $3.2 million, respectively, for the three years ended December 31, 1994. Charges to Westana totaled $239,000 and $933,000 for the two years ended December 31, 1994. In July 1990, the Company loaned Bill M. Sanderson, President, Chief Operating Officer and a Director, approximately $748,000 to purchase 294,524 shares of Common Stock in the Company. In February 1994, the loan and all accrued interest was repaid in full by Mr. Sanderson through surrender of 25,016 shares of the Company's Common Stock, which were valued at $31.50 per share based upon the February 22, 1994 closing price. The Company has entered into agreements committing the Company to loan to certain key employees an amount sufficient to exercise their options as each portion of their options vests under the Key Employees' Incentive Stock Option Plan and the Employee Option Plan (See Note 7). The Company will forgive the loan and accrued interest if the employee has been continuously employed by the Company for periods specified under the agreements. As of December 31, 1994 and 1993 loans totaling $1.5 million and $1.2 million, respectively, were outstanding to key employees under these programs. The loans are secured by the common stock issuable upon exercise of the options and are accounted for as a reduction of stockholders' equity. During 1994, the Board of Directors approved the forgiveness of loans to a key employee totaling approximately $130,000 after his resignation and prior to satisfaction of the continuous service requirements of the loan agreement. NOTE 3 - RISK MANAGEMENT ------------------------ Natural Gas and NGL Hedges The Company enters into futures, swaps and option contracts to hedge against a portion of the price risk associated with natural gas and NGLs. Gains and losses on hedges of product inventory are included in the carrying amount of the inventory and are ultimately recognized in residue and NGL sales when the related inventory is sold. 33 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Gains and losses related to qualifying hedges of firm commitments or anticipated transactions also are deferred and are recognized in residue and NGL purchases or sales when the hedged transaction occurs. Margins from the Company's forward fixed price hedges and physical sales for 1995 are expected to more than offset the related $6.1 million of losses deferred at December 31, 1994. At December 31, 1994, 2,257 contracts (net) (10,000 Mcf per contract) for the sale of residue gas in January 1995 through January 1996 at prices ranging from $1.55 per Mcf to $2.38 per Mcf were outstanding. At December 31, 1993, 296 such contracts were outstanding at prices ranging from $1.87 per Mcf to $2.56 per Mcf. No such contracts were outstanding for NGLs at December 31, 1994 or December 31, 1993. Interest Rate Swaps The Company has entered into various interest rate swap agreements to manage exposure to changes in interest rates. The transactions generally involve the exchange of fixed and floating interest payment obligations or the exchange of foreign and U.S. currencies, without the exchange of the underlying principal amounts. The net effect of interest rate swap activity is reflected as an increase or decrease in interest expense. Any gains on termination of interest rate swap agreements and the effects of foreign currency positions that were marked to market are included in other income. At December 31, 1994 and 1993, the total notional principal amount of outstanding interest rate swap agreements was $50 million. In addition to the financial risk that will vary during the life of these swap agreements in relation to the maturity of the underlying debt and market interest rates, the Company is subject to credit risk exposure from nonperformance of the counterparties to the swap agreements. The Company does not anticipate nonperformance by the counterparties. The following table summarizes the results of the Company's interest rate swap and foreign currency positions for the three years ended December 31, 1994 (000s):
1994 1993 1992 ------ -------- ------ Net (increase) decrease to interest expense..... $(932) $ 1,769 $ 250 ===== ======= ===== Gains on swap termination....................... $ - $ 2,590 $ 765 ===== ======= ===== Losses on foreign currency positions............ $(361) $(1,175) $(119) ===== ======= =====
NOTE 4 - DEBT ------------- The following summarizes the Company's consolidated debt at the dates indicated (000s):
December 31, --------------------- 1994 1993 -------- -------- Variable rate revolving credit facility..... $168,000 $345,000 Master shelf and senior notes............... 200,000 150,000 Bank term loan facility..................... 50,000 50,000 Line of credit.............................. - 2,000 -------- -------- Total long-term debt....................... 418,000 547,000 -------- -------- Short-term debt............................. 75,000 - -------- -------- Total debt................................. $493,000 $547,000 ======== ========
34 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) FINANCING FACILITIES REVOLVING CREDIT FACILITY. The Company's variable rate Revolving Credit Facility, as restated on September 2, 1994, and subsequently amended, with a syndicate of eight banks, provides for a maximum borrowing base of $325 million, of which $168.0 million was outstanding at December 31, 1994. The commitment decreases to $300 million on January 1, 1995. If the facility is not renewed on January 1, 1997, any outstanding balance thereunder converts to a four-year term loan during which such balance will be repaid in equal quarterly installments. The Revolving Credit Facility bears interest, at the Company's option, at certain spreads over the Eurodollar rate, the Federal Funds rate plus .50% or at the agent bank's prime rate. The interest rate spreads are adjusted based on the Company's debt to capitalization ratio. At December 31, 1994, the spread was 1.0% for the Eurodollar rate resulting in an interest rate of 7.17%. The Company pays a commitment fee on the unused commitment ranging from .15% to .375% based on the debt to capitalization ratio. At December 31, 1994, the Company's debt to capitalization ratio was in the range of .50 to 1.0 resulting in a commitment fee rate of .30%. TERM LOAN FACILITY. The Company also has a Term Loan Facility with four banks for $50 million which bears interest at 9.87%. Payments on the Term Loan Facility of $25 million, $12.5 million and $12.5 million are due in September 1995, 1996 and 1997, respectively. The $25 million payment due on the Term Note in September 1995 has been classified as long-term debt as the Company intends to fund this payment from amounts available under the Revolving Credit Facility. The Company's agreement governing the Revolving Credit and Term Loan Facilities (the "Credit Facilities Agreement") is subject to certain mandatory prepayment terms. If funded debt of the Company exceeds five times the sum of the Company's last four quarters' cash flow (as defined in the agreement) less preferred stock dividends, the overage must be repaid in no more than six monthly payments commencing 90 days from notification. This mandatory prepayment threshold will be reduced to 4.0 to 1.0 at September 1, 1995 and 3.50 to 1.0 at September 1, 1998. At December 31, 1994, the Company had approximately $99.8 million of available borrowing capacity. The Term Loan and Revolving Credit Facilities are unsecured. The Company is required to maintain a current ratio of at least 1.0 to 1.0 (as defined in the Credit Facilities Agreement), a tangible net worth at December 31, 1994 of at least $403.2 million, a debt to capitalization ratio of no more than 60% through October 31, 1995 and 55% thereafter and an EBITDA to interest ratio of not less than 3.25 to 1.0 through October 31, 1995 and 3.75 to 1.0 thereafter. The Company is prohibited from declaring or paying dividends that exceed the sum of $35 million plus 50% of consolidated net income earned after March 31, 1994 plus 50% of the cumulative net proceeds in excess of the Redemption Limit (as defined in the Credit Facilities Agreement) received from the sale of any equity securities sold after March 31, 1994. At December 31, 1994, this threshold amounted to approximately $38.2 million. The Company generally utilizes excess daily funds to reduce any outstanding revolving credit balances to minimize interest expense and intends to continue such practice. The $8.7 million cash balance at December 31, 1994 is an overnight investment necessitated by the timing of cash receipts. MASTER SHELF AGREEMENT. In December 1991, the Company entered into a Master Shelf Agreement (the "Master Shelf") with The Prudential Insurance Company of America ("Prudential") pursuant to which Prudential agreed to quote, from time- to-time, an interest rate at which Prudential or its nominee would be willing to purchase up to $100 million of the Company's senior promissory notes (the "Master Notes"). Any such Master Notes must mature in no more than 12 years, with an average life not in excess of 10 years, and will be unsecured. On October 27, 1992, the Company sold $25 million of 7.51% Master Notes due 2000 and $25 million of 7.99% Master Notes due 2003. Principal payments on the $50 million of Master Notes of $8.3 million will be due on October 27 of each year from 1998 through 2003. On September 22, 1993, the Company sold $25 million of 6.77% Master Notes due in a single payment on September 22, 2003 and on December 27, 1993, the Company sold $25 million of 7.23% Master Notes due in a single payment on December 27, 2003. The Master Shelf contains certain financial covenants which conform with those contained in the Credit Facilities Agreement, as restated. In July 1993, Prudential and the Company amended the Master Shelf to provide for an additional $50 million of borrowing capacity (for a total borrowing capacity of $150 million) and to extend the term of the Master Shelf to October 31, 1995. On October 27, 35 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 1994, the Company sold $25 million of 9.05% Master Notes due in a single payment on October 27, 2001 and $25 million of 9.24% Master Notes due in a single payment on October 27, 2004. At December 31, 1994, the Master Shelf Agreement, as amended, was fully utilized. SENIOR NOTES. On April 28, 1993 the Company sold $50 million of 7.65% Senior Notes due 2003 to a group of insurance companies led by Connecticut General Life Insurance Company. Principal payments on the $50 million of Senior Notes of $7.1 million will be due on April 30th of each year from 1997 through 2002, with any remaining principal and interest outstanding due on April 30, 2003. The Senior Notes contain certain financial covenants which conform with those contained in the Credit Facilities Agreement, as restated. ADDITIONAL BORROWINGS. The Company anticipates entering into an agreement with Receivables Capital Corporation ("RCC"), as administered by Bank of America National Trust and Savings Association ("BA"), to sell an undivided interest in the Company's trade receivables for a maximum borrowing of $75 million bearing interest at RCC's commercial paper rate plus .375%. Specific terms of this agreement have not yet been negotiated; however, the Company anticipates completion of this agreement in April 1995. On September 2, 1994, in advance of completing the agreement with RCC, BA entered into a Master Note Agreement ("Short-Term Note") with the Company and advanced the Company $75 million bearing interest at the Eurodollar rate plus .50% which resulted in an interest rate of 6.625% at December 31, 1994. The $75 million received under the Short- Term Note was used to reduce borrowings under the revolving credit facility and has been included in short-term borrowings on the Company's Consolidated Balance Sheet at December 31, 1994. The Company anticipates repaying the Short-Term Note with proceeds from RCC. COVENANT COMPLIANCE. At December 31, 1994, the Company was in compliance with all covenants in its loan agreements. Approximate future maturities of long-term debt at the date indicated are as follows (in 000s):
December 31, 1994 ------------ 1995........................................................ $ - 1996........................................................ 12,500 1997........................................................ 67,893 1998........................................................ 63,726 1999........................................................ 63,726 Thereafter.................................................. 210,155 -------- $418,000 ========
36 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) NOTE 5 - INCOME TAXES --------------------- The provision for income taxes for the three years ended December 31, 1994 are comprised of (000s):
1994 1993 1992 ------ ------- -------- Current: Federal............................. $1,913 $10,090 $10,397 State............................... - - (1) ------ ------- ------- Total Current....................... 1,913 10,090 10,396 ------ ------- ------- Deferred: Federal............................. 2,113 6,411 7,305 State............................... 134 1,028 1,056 ------ ------- ------- Total Deferred........................ 2,247 7,439 8,361 ------ ------- ------- Total tax provision................. $4,160 $17,529 $18,757 ====== ======= =======
Temporary differences and carryforwards which give rise to the deferred tax liability at December 31, 1994 and 1993 are as follows (000s):
1994 1993 --------- --------- Property and equipment........................................................... $ 91,559 $ 70,131 Deferred taxes attributable to differences between the book and tax basis of acquired assets................................................................. 22,750 23,637 AMT benefit carryforward......................................................... (25,059) (23,642) NOL carryforwards................................................................ (20,597) (3,779) Other............................................................................ 74 134 -------- -------- Total deferred income taxes..................................................... $ 68,727 $ 66,481 ======== ========
The differences between the provision for income taxes at the statutory rate and the actual provision for income taxes for the three years ended December 31, 1994 are summarized as follows (000s):
1994 % 1993 % 1992 % ------- ----- -------- ----- -------- ----- Income tax at statutory rate..................... $4,033 35.0 $19,471 35.0 $19,872 34.0 State income taxes, net of federal benefit......................................... 158 1.4 656 1.2 696 1.2 Increase in deferred income taxes to reflect the change in the federal tax rate.............. - - 2,100 3.8 - - Reduction of deferred income taxes to reflect NOL and AMT benefit carryforwards................................... - - (3,779) (6.8) (1,932) (3.3) Other............................................ (31) (0.3) (919) (1.7) 121 0.2 ------ ---- ------- ---- ------- ---- Total............................................ $4,160 36.1 $17,529 31.5 $18,757 32.1 ====== ==== ======= ==== ======= ====
37 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) NOTE 6 - COMMITMENTS AND CONTINGENT LIABILITIES ----------------------------------------------- Mountain Gas On January 26, 1995, Green River and Mountain Gas entered into an agreement with Cabot Oil & Gas Production Corporation, as successor to Washington Energy Exploration, Inc. ("Cabot") settling all claims (both known and unknown) between the parties relating to events that occurred prior to January 1, 1995, including claims raised in the case of Green River Gathering Company and Mountain Gas ---------------------------------------------- Resources, Inc. v. Washington Energy Exploration, Inc., Case No. 93CV2696, ------------------------------------------------------ District Court, Arapahoe County, Colorado. As part of the settlement, Mountain and Cabot have entered into a long-term Gas Gathering Agreement. On July 28, 1994, the Company and its wholly-owned subsidiary Mountain Gas filed a complaint in United States District Court, Denver, Colorado, against Morgan Stanley Leveraged Equity Fund II, L.P., Morgan Stanley Leveraged Equity Fund II, Inc., Morgan Stanley & Co., Incorporated and certain former directors and officers of Mountain Gas seeking monetary damages. The complaint alleges certain acts and omissions that violated federal and state securities laws by the defendants in connection with the Company's July 1993 purchase of the stock of Mountain Gas from Morgan Stanley Leveraged Equity Fund II, L.P. The acts and omissions set forth in the complaint relate primarily to defendants' failure to disclose adequately the nature and scope of the dispute between Mountain Gas and Washington Energy. In addition, the Company and Mountain Gas have raised fraud, misrepresentation and breach of contract claims against certain of the defendants. Katy Condemnation Commencing in March 1993 and continuing through July 1993, Western Gas Resources Storage, Inc. ("Storage"), a wholly-owned subsidiary of the Company, filed a total of 165 condemnation actions in the County Court at Law No. 1 and No. 2 of Fort Bend County, Texas, to obtain certain storage rights and rights-of-way relating to its Katy Gas Storage Facility and the related underground reservoir ("Katy"). The County Court appointed panels of Special Commissioners which awarded compensation to the owners whose rights were condemned. Condemnation awards are a capital cost of the Katy project. A majority of the land and mineral owners involved in the condemnation proceedings appealed to County Court, seeking a declaration that Storage did not possess the right to condemn or, in the alternative, that they should be awarded more compensation than previously awarded by the Special Commissioners. In all but one of those appeals, the right to condemn issue has been resolved in favor of Storage, although factual issues in individual cases remain open as to whether that right was exercised properly. In August 1994, in the only appeals in which the compensation issue has been determined, a jury awarded a landowner adjacent to the 82 acre site where the compression facilities are located a total of $214,000 and another jury awarded a landowner within 1,000 feet of the 82 acre site a total of $38,000, for storage rights and damages to property not taken. The Court also ruled in those appeals that Storage had properly exercised the right to condemn. The Special Commissioners had previously awarded these landowners a total of approximately $2,000 and $600, respectively. The Company does not believe that these jury verdicts are representative of what will occur in subsequent trials, although there is no assurance of this. In addition, the Company believes that several reversible errors were committed at trial and appeals of the jury verdicts are now pending in the Texas Court of Appeals. The Company is involved in various other litigation and administrative proceedings arising in the normal course of business. In the opinion of management, any liabilities that may result from these claims, as well as the specific claims discussed above, will not, individually or in the aggregate, have a material adverse effect on the Company's financial position or results of operations. 38 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) NOTE 7 - EMPLOYEE BENEFIT PLANS ------------------------------- A discretionary profit sharing plan exists for all Company employees meeting certain service requirements. The Company makes annual contributions to the plan as determined by the Board of Directors. Contributions are made to trust funds administered by an independent investment manager. Contributions were $1.3 million, $2.2 million and $2.0 million, respectively, for the three years ended December 31, 1994. The Board of Directors of the Company has adopted a Key Employees' Incentive Stock Option Plan and a Non-Employee Director Stock Option Plan that authorize the granting of options to purchase 250,000 and 20,000 shares of the Company's common stock, respectively. The Board of Directors has granted options to purchase 240,000 shares of common stock to certain officers and 20,000 shares of common stock to non-employee directors of the Company, at exercise prices ranging from $10.71 to $34.00. Each of these options became exercisable as to 25% of the shares covered by it on the later of January 1, 1992 or one year from the date of grant, subject to the continuation of the optionee's relationship with the Company, and became exercisable as to an additional 25% of the covered shares on the latter of each subsequent January 1 through 1995 or on each subsequent date of grant anniversary, subject to the same condition. The Company has entered into agreements committing the Company to loan certain key employees an amount sufficient to exercise their options as each portion of their options vests. The Company will forgive the associated loan and accrued interest if the employee has been continuously employed by the Company for four years after the date of each loan increment. In April 1987, the Partnership adopted an employee option plan that authorizes granting options to employees to purchase 430,000 common units in the Partnership. Pursuant to the Restructuring, the Company assumed the Partnership's obligation under the employee option plan. The plan was amended upon the Restructuring to allow each holder of existing options to exercise such options and acquire one share of common stock for each common unit they were originally entitled to purchase. The exercise price and all other terms and conditions for the exercise of such options issued under the amended plan were the same as under the plan, except that the Restructuring accelerated the time after which certain options may be exercised. In February 1994, the Board of Directors retroactively approved, adopted and ratified approximately 53,000 options which were granted to employees in excess of the 430,000 options originally authorized. No additional options may be granted under this plan. Through December 31, 1994 and 1993, the Board of Directors has granted options under the plan to purchase shares of common stock at $5.40 per share to approximately 355 employees. As of December 31, 1994 and 1993, approximately 445,000 and 415,000 options were vested and approximately 375,000 and 325,000 options for shares of common stock had been exercised, respectively. Options may be exercised only at the rate of 20% of the shares of common stock subject to such option for each year of continuous service by the optionee commencing from the later of July 2, 1987 or the optionee's employment commencement date. The Company has entered into agreements committing the Company to loan to certain key employees an amount sufficient to exercise their options, provided that the Company will not loan in excess of 25% of the total amount available to the employee in any one year. The Company will forgive any associated loan and accrued interest on July 2, 1997, if the employee is then employed by the Company. As of December 31, 1994 and 1993, loans related to 190,373 and 162,998 shares of common stock, totaling $1.5 million and $1.2 million, were extended under these terms. The 1993 Stock Option Plan (the "1993 Plan") became effective on May 24, 1993 after approval by the Company's stockholders. The 1993 Plan is intended to be an incentive stock option plan in accordance with the provisions of Section 422 of the Internal Revenue Code of 1986, as amended. The Company has reserved 1,000,000 shares of Common Stock for issuance upon exercise of options under the 1993 Plan. The 1993 Plan will terminate on the earlier of March 28, 2003 or the date on which all options granted under the 1993 Plan have been exercised in full. The Board of Directors of the Company determines and designates from time to time those employees of the Company to whom options are to be granted. If any option terminates or expires prior to being exercised, the shares relating to such option shall be released and may be subject to reissuance pursuant to a new option. The Board of Directors has the right to, among other things, fix the price, terms and conditions for the grant or exercise of any option. The purchase price of the stock under each option shall be the fair market value of the stock at the time such option is granted. 39 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Options granted will vest 20% each year or the anniversary of the date of grant commencing with the first anniversary. The employee must exercise the option within five years of the date each portion vests. If an employee's employment with the Company terminates, the employee may, within the 60 day period immediately following such termination of employment, but in no event later than the expiration date specified in the Option Agreement, exercise any options that have vested as of the date of such termination. If employment terminates by reason of death or disability, the employee (in the event of disability) or the person or persons to whom rights under the option shall pass by will or by the applicable laws of decent and distribution (in the event of death) shall be entitled to exercise 100% of the options granted regardless of the employee's years of service; provided however, that no such option may be exercised after 180 days from the date of death or termination of employment with the Company as a result of disability. Through December 31, 1994 and 1993, the Board of Directors has granted approximately 710,000 and 384,000 options, respectively, at exercise prices ranging from $18.625 to $35.50 per share of common stock to approximately 455 employees. Of the options granted under this plan in 1994, 267,000 options were granted to officers of the Company in December 1994 at an exercise price of $18.625 per share. At December 31, 1994 approximately 64,025 options were vested. No options have been exercised under the 1993 plan. NOTE 8 - SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ------------------------------------------------- ACTIVITIES (UNAUDITED): ----------------------- Costs The following tables set forth capitalized costs at December 31, 1994 and 1993 and costs incurred for oil and gas producing activities for the two years ended December 31, 1994 (000s):
1994 1993 -------- -------- Capitalized costs: Proved properties................................ $136,861 $130,783 Unproved properties.............................. 7,448 3,855 -------- -------- Total............................................. 144,309 134,638 Less accumulated depletion....................... (35,346) (17,877) -------- -------- Net capitalized costs............................. $108,963 $116,761 ======== ======== Costs incurred: Acquisition of properties Proved........................................... $ 2,523 $ 95,518 Unproved......................................... 1,617 2,428 Development costs................................. 3,555 1,106 Exploration costs................................. 2,465 320 -------- -------- Total costs incurred.............................. $ 10,160 $ 99,372 ======== ========
40 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Results of Operations The results of operations for oil and gas producing activities, excluding corporate overhead and interest costs, for the two years ended December 31, 1994 are as follows (000s):
1994 1993 --------- --------- Revenues from sale of oil and gas: Sales............................................. $ 3,402 $ 4,112 Transfers......................................... 37,335 27,567 -------- -------- Total........................................... 40,737 31,679 Production costs................................... (4,960) (2,963) Exploration costs.................................. (489) (320) Depreciation, depletion and amortization........... (17,469) (10,857) Income tax expense................................. (2,960) (3,182) -------- -------- Results of operations.............................. $ 14,859 $ 14,357 ======== ========
Reserve Quantity Information Reserve estimates are subject to numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation and judgement. Results of subsequent drilling, testing and production may cause either upward or downward revisions of previous estimates. Further, the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs. Reserve estimates, by their nature, are generally less precise than other financial statement disclosures. The following table sets forth information for the two years ended December 31, 1994 with respect to changes in the Company's proved reserves, all of which are in the United States. The Company has no significant undeveloped reserves.
Natural Crude Gas Oil (MMcf) (MBbls) -------- ------- Proved reserves: December 31, 1992.................................. 39,475 381 Revisions of previous estimates.................... 11,084 (42) Purchases of reserves in place*.................... 100,886 261 Production......................................... (15,854) (107) ------- ---- December 31, 1993.................................. 135,591 493 Revisions of previous estimates.................... 19,562 35 Purchases of reserves in place..................... 977 121 Production......................................... (21,589) (171) ------- ---- December 31, 1994.................................. 134,541 478 ======= ====
(*) Primarily represents acquisition of Black Lake oil and gas properties on September 27, 1993, from Nerco (See Note 1). 41 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Standardized Measures of Discounted Future Net Cash Flows Estimated discounted future net cash flows and changes therein were determined in accordance with Statement of Financial Accounting Standards No. 69. Certain information concerning the assumptions used in computing the valuation of proved reserves and their inherent limitations are discussed below. The Company believes such information is essential for a proper understanding and assessment of the data presented. Future cash inflows are computed by applying year-end prices of oil and gas relating to the Company's proven reserves to the year-end quantities of those reserves. Future price changes are considered only to the extent provided by contractual arrangements, including futures contracts, in existence at year-end. The assumptions used to compute estimated future net revenues do not necessarily reflect the Company's expectations of actual revenues or costs, nor their present worth. In addition, variations from the expected production rate also could result directly or indirectly from factors outside of the Company's control, such as unintentional delays in development, changes in prices or regulatory controls. The reserve valuation further assumes that all reserves will be disposed of by production. However, if reserves are sold in place, additional economic considerations could also affect the amount of cash eventually realized. Future development and production costs are computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. Future income tax expenses are computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pretax net cash flows relating to the Company's proved oil and gas reserves. Permanent differences in oil and gas related tax credits and allowances are recognized. An annual discount rate of 10% was used to reflect the timing of the future net cash flows relating to proved oil and gas reserves. Information with respect to the Company's estimated discounted future cash flows from its oil and gas properties for the two years ended December 31, 1994 is as follows (000s):
1994 1993 --------- --------- Future cash inflows...................................................... $239,188 $261,497 Future production costs.................................................. (50,214) (36,978) Future development costs................................................. (9,230) (12,623) Future income tax expense................................................ (11,081) (17,957) -------- -------- Future net cash flows.................................................... 168,663 193,939 10% annual discount for estimated timing of cash flows................... (67,230) (62,489) -------- -------- Standardized measure of discounted future net cash flows relating to proved oil and gas reserves............................................. $101,433 $131,450 ======== ========
42 WESTERN GAS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) Principal changes in the Company's estimated discounted future net cash flows for the two years ended December 31, 1994 are as follows (000s):
1994 1993 --------- --------- January 1.................................................................... $131,450 $ 40,604 Sales and transfers of oil and gas produced, net of production costs........ (35,777) (28,716) Net changes in prices and production costs related to future production..... (33,909) 2,318 Development costs incurred during the period................................ 3,555 1,106 Changes in estimated future development costs............................... (162) (12,623) Revisions of previous quantity estimates.................................... 14,830 17,819 Purchases of reserves in place.............................................. 3,882 118,894 Accretion of discount....................................................... 13,145 4,060 Net change in income taxes.................................................. 6,876 (11,119) Other....................................................................... (2,457) (893) -------- -------- December 31.................................................................. $101,433 $131,450 ======== ========
NOTE 9 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED): ----------------------------------------------------- The following summarizes certain quarterly results of operations (000s, except per share amounts):
Earnings (Loss) Per Share of Operating Gross Net Common Revenues Profit* Income Stock ---------- ------- ------- ---------- 1994 quarter ended: March 31................... $ 275,704 $16,562 $ 1,011 $(.05) June 30.................... 244,470 14,851 181 (.12) September 30............... 259,669 19,585 2,706 (.02) December 31................ 283,646 21,558 3,466 - ---------- ------- ------- ----- $1,063,489 $72,556 $ 7,364 $(.19) ========== ======= ======= ===== 1993 quarter ended: March 31................... $ 193,478 $23,022 $10,116 $ .34 June 30.................... 173,846 19,987 8,464 .27 September 30............... 273,359 23,843 9,734 .32 December 31................ 291,655 25,160 9,788 .32 ---------- ------- ------- ----- $ 932,338 $92,012 $38,102 $1.25 ========== ======= ======= =====
* Excludes selling and administrative, interest and income tax expenses. As a result of the reclassification of labor overhead from selling and administrative expense to plant operating expense in accordance with the percentage established by COPAS guidelines, gross profit varies from the amounts reported on prior Forms 10-Q and Form 10-K. 43 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Pursuant to instruction G(3) to Form 10-K, Items 10, 11, 12 and 13 are omitted because the Company will file a definitive proxy statement (the "Proxy Statement") pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days after the close of the fiscal year. The information required by such Items will be included in the definitive proxy statement to be so filed for the Company's annual meeting of stockholders scheduled for May 24, 1995 and is hereby incorporated by reference. 44 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements: Reference is made to the listing on page 22 for a list of all financial statements filed as a part of this report. (2) Financial Statement Schedules: None required (3) Exhibits: 3.1 Certificate of Incorporation of Western Gas Resources, Inc. (Filed as exhibit 3.1 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-31604 and incorporated herein by reference). 3.2 Certificate of Amendment to the Certificate of Incorporation of Western Gas Resources, Inc. (Filed as exhibit 3.2 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-31604 and incorporated herein by reference). 3.3 Bylaws of Western Gas Resources, Inc. (Filed as exhibit 3.3 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-31604 and incorporated herein by reference). 3.4 Assistant Secretary's Certificate regarding amendment to bylaws of Western Gas Resources, Inc. (Filed as exhibit 3.4 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 3.5 Certificate of Designation of 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of the Company (Filed as exhibit 3.5 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-43077 dated November 14, 1991 and incorporated herein by reference). 3.6 Certificate of Designation of $2.28 Cumulative Preferred Stock of the Company. (Filed as exhibit 3.6 to Western Gas Resources, Inc.'s Registration Statement of Form S-1, Registration No. 33-53786 dated November 12, 1992 and incorporated herein by reference). 3.7 Amendments of the By-Laws of Western Gas Resources, Inc. as adopted by the Board of Directors on December 13, 1993 (Filed as exhibit 3.7 to Western Gas Resources, Inc.'s Form 10-K for the year ended December 31, 1993 and incorporated herein by reference). 3.8 Certificate of Designation of the $2.625 Cumulative Convertible Preferred Stock of the Company (Filed under cover of Form 8-K dated February 24, 1994 and incorporated herein by reference). 4.1 Subscription Agreements between the respective Founders and Western Gas Resources, Inc. regarding such Founders' initial subscription for shares of common stock (Filed as exhibit 10.31 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 4.2 Amendment No. 1 to Registration Rights Agreement as of May 1, 1991 between Western Gas Resources, Inc., Bill Sanderson, WGP, Inc., Dean Phillips, Inc., Heetco, Inc. NV, Sauvage Gas Company and Sauvage Gas Service, Inc. (Filed as exhibit 4.2 to Western Gas Resources, Inc.'s Form 10-Q for the quarter ended June 30, 1991 and incorporated herein by reference). 45 10.1 Restated Profit-Sharing Plan and Trust Agreement of Western Gas Resources, Inc. (Filed as exhibit 10.8 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 10.2 Employees Common Units Option Plan of Western Gas Processors, Ltd. (Filed as exhibit 10.9 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 10.3 Amendment to Employees Common Units Option Plan of Western Gas Processors, Ltd. (Filed as exhibit 10.10 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 10.4 Western Gas Resources, Inc. Non-Employee Director Stock Option Plan (Filed as exhibit 10.12 Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 10.5 Western Gas Resources, Inc. Key Employees' Incentive Stock Option Plan (Filed as exhibit 10.13 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 10.6 Registration Rights Agreement among Western Gas Resources, Inc., WGP, Inc., Heetco, Inc., NV, Dean Phillips, Inc., Sauvage Gas Company and Sauvage Gas Service, Inc. (Filed as exhibit 10.14 to Western Gas Resources, Inc.'s Registration Statement on Form S-4, Registration No. 33-39588 dated March 27, 1991 and incorporated herein by reference). 10.7 Second Amendment and First Restatement of Western Gas Processors, Ltd. Employees' Common Units Option Plan (Filed as exhibit 10.6 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-43077 dated November 14, 1991 and incorporated herein by reference). 10.8 Agreement to provide loans to exercise key employees' common stock options (Filed as exhibit 10.26 to Western Gas Resources, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1991 and incorporated herein by reference). 10.9 Agreement to provide loans to exercise employees' common stock options (Filed as exhibit 10.27 to Western Gas Resources, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1991 and incorporated herein by reference). 10.10 Agreement and Plan of Restructuring among the Company, the Partnership and the Founders (Filed as exhibit 10.10 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-43077 dated November 14, 1991 and incorporated herein by reference). 10.11 Stock Purchase Agreement dated October 23, 1991 between the Company and The 1818 Fund, L.P. (Filed as exhibit 10.19 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-43077 dated November 14, 1991 and incorporated herein by reference). 10.12 Registration Rights Agreement dated October 23, 1991 between the Company and The 1818 Fund, L.P. (Filed as exhibit 10.20 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-43077 dated November 14, 1991 and incorporated herein by reference). 10.13 Letter Agreement dated June 10, 1992 amending the Stock Purchase Agreement dated October 23, 1991 between the Company and the 1818 Fund, L.P. (Filed as exhibit 10.36 to Western Gas Resources, Inc.'s Form 10-Q for the quarter ended June 30, 1992 and incorporated herein by reference). 46 10.14 $100,000,000 Senior Notes Master Shelf Agreement dated as of December 19, 1991 by and between the Company and the Prudential Insurance Company of America (Filed as exhibit 10.23 to Western Gas Resources, Inc.'s Registration Statement on Form S-1, Registration No. 33-53786 dated November 12, 1992 and incorporated herein by reference). 10.15 Letter Amendment No. 1 dated October 22, 1992 to $100,000,000 Senior Notes Master Shelf Agreement (Filed as exhibit 10.40 to Western Gas Resources, Inc's Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.16 Stock Purchase Agreement (without exhibits) dated March 30, 1993 by and between the Company and The Morgan Stanley Leveraged Equity Fund II, L.P. (Filed as exhibit 10.45 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.17 Amendment No. 1 (without exhibits) to Stock Purchase Agreement dated as of March 30, 1993 by and between the Company and The Morgan Stanley Leveraged Equity Fund II, L.P. (Filed as exhibit 10.46 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.18 $150,000,000 Amended and Restated Master Shelf Agreement (without exhibits) effective as of July 22, 1993 by and between the Company and Prudential Insurance Company of America (Filed as exhibit 10.47 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.19 Note Purchase Agreement (without exhibits) dated as of April 1, 1993 by and between the Company and the Purchasers for $50,000,000, 7.65% Senior Notes Due April 30, 2003 (Filed as exhibit 10.48 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.20 General Partnership Agreement (without exhibits), dated August 10, 1993 for Westana Gathering Company by and between Western Gas Resources - Oklahoma, Inc. (a subsidiary of the Company) and Panhandle Gathering Company (Filed as exhibit 10.50 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.21 Amendment to General Partnership Agreement dated August 10, 1993 by and between Western Gas Resources - Oklahoma, Inc. (a subsidiary of the Company) and Panhandle Gathering Company (Filed as exhibit 10.51 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.22 Operating and Maintenance Agreement (without exhibits) dated August 10, 1993 by and between Western Gas Resources - Oklahoma, Inc. (a subsidiary of the Company) and Panhandle Gathering Company (Filed as exhibit 10.52 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.23 Amendment to Operating and Maintenance Agreement dated August 10, 1993 by and between Western Gas Resources - Oklahoma, Inc. (a subsidiary of the Company) and Panhandle Gathering Company (Filed as exhibit 10.53 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.24 Pipeline Operating Agreement (without exhibits) dated August 10, 1993 by and between Westana Gathering Company and Panhandle Eastern Pipe Line Company (Filed as exhibit 10.56 to Western Gas Resources Inc.'s Form 10-Q for the six months ended June 30, 1993 and incorporated herein by reference). 10.25 Letter Amendment No. 1 to the Amended and Restated Master Shelf Agreement effective as of June 30, 1993 by and between the Company and Prudential Insurance Company of America (Filed as exhibit 10.59 to Western Gas Resources Inc.'s Form 10-Q for the nine months ended September 30, 1993 and incorporated herein by reference). 47 10.26 Asset Purchase Agreement (without exhibits) dated July 18, 1993 by and between the Company and Nerco Oil & Gas, Inc. (Filed as exhibit 10.60 to Western Gas Resources Inc.'s Form 10-Q for the nine months ended September 30, 1993 and incorporated herein by reference). 10.27 Amendment No. 1 to Note Purchase Agreement dated as of August 31, 1993 by and among the Company and the Purchasers (Filed as exhibit 10.61 to Western Gas Resources Inc.'s Form 10-Q for the nine months ended September 30, 1993 and incorporated herein by reference). 10.28 First Amendment to Stock Purchase Agreement, amending the Stock Purchase Agreement dated October 23, 1991 between Western Gas Resources, Inc. and the 1818 Fund, L.P. (Filed as exhibit 10.62 to Western Gas Resources, Inc.'s Form 10-K for the year ended December 31, 1993 and incorporated herein by reference). 10.29 First Restated Loan Agreement (Revolver) (without exhibits) as of September 2, 1994 among Western Gas Resources, Inc. and NationsBank of Texas, N.A. as Agent and Certain Banks as Lenders. (Filed as exhibit 10.65 to Western Gas Resources, Inc.'s Form 10-Q for the nine months ended September 30, 1994 and incorporated herein by reference). 10.30 Second Amendment to Third Restated Loan Agreement (Term) as of September 2, 1994 among Western Gas Resources, Inc. and NationsBank of Texas, N.A. as Agent and Certain Banks as Lenders. (Filed as exhibit 10.66 to Western Gas Resources, Inc.'s Form 10-Q for the nine months ended September 30, 1994 and incorporated herein by reference). 10.31 Letter Amendment No. 2 to the Amended and Restated Master Shelf Agreement effective as of August 31, 1994 by and between Western Gas Resources, Inc. and Prudential Insurance Company of America. (Filed as exhibit 10.67 to Western Gas Resources, Inc.'s Form 10-Q for the nine months ended September 30, 1994 and incorporated herein by reference). 10.32 Amendment No. 2 to Note Purchase Agreement dated as of August 31, 1994 by and among Western Gas Resources, Inc. and the Purchasers. (Filed as exhibit 10.68 to Western Gas Resources, Inc.'s Form 10-Q for the nine months ended September 30, 1994 and incorporated herein by reference). 10.33 Master Note dated September 2, 1994 between Western Gas Resources, Inc. and Bank of America National Trust and Savings Association. (Filed as exhibit 10.69 to Western Gas Resources, Inc.'s Form 10-Q for the nine months ended September 30, 1994 and incorporated herein by reference). 10.34 First Amendment to First Restated Loan Agreement (Revolver) as of December 2, 1994 by and among Western Gas Resources, Inc. and NationsBank of Texas, N.A. as Agent and Certain Banks as Lenders (See page 51). 10.35 Third Amendment to Third Restated Loan Agreement (Term) as of December 2, 1994 by and among Western Gas Resources, Inc. and NationsBank of Texas, N.A. as Agent and Certain Banks as Lenders (See page 58). 11.1 Statement regarding computation of per share earnings (See page 64). 21.1 List of Subsidiaries of Western Gas Resources, Inc. (See page 65). 23.1 Consent of Price Waterhouse LLP, independent accountants (See pages 49 and 66). (b) Reports on Form 8-K: None. (c) Exhibits required by Item 601 of Regulation S-K. See (a) (3) above. 48 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statements on Form S-3 (No.33-66516 and No. 33-54741) and in the Registration Statement on Form S-8 (No. 33-67834) of Western Gas Resources, Inc. of our report dated March 24, 1995 appearing on page 24 of this Form 10-K. PRICE WATERHOUSE LLP Denver, Colorado March 28, 1995 49 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Denver, State of Colorado on March 23, 1995. WESTERN GAS RESOURCES, INC. --------------------------- (Registrant) By: /s/BRION G. WISE --------------------------- Brion G. Wise Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/BRION G. WISE Chairman of the Board, Chief March 23, 1995 ----------------- Executive Officer and Director Brion G. Wise /s/BILL M. SANDERSON President, Chief Operating Officer March 23, 1995 -------------------- and Director Bill M. Sanderson /s/WALTER L. STONEHOCKER Vice Chairman of the Board and March 23, 1995 ------------------------ Director Walter L. Stonehocker Director March 23, 1995 ------------------------ Richard B. Robinson /s/DEAN PHILLIPS Director March 23, 1995 ------------------------ Dean Phillips Director March 23, 1995 ------------------------ Ward Sauvage /s/JAMES A. SENTY Director March 23, 1995 --------------------- James A. Senty /s/JOSEPH E. REID Director March 23, 1995 ---------------------- Joseph E. Reid /s/WALTER W. GRIST Director March 23, 1995 ------------------------ Walter W. Grist /s/WILLIAM J. KRYSIAK Vice President - Finance March 23, 1995 --------------------- (Principal Financial and William J. Krysiak Accounting Officer) 50 EX-10.34 2 1ST AMENDMENT, 1ST RE LOAN AGREEMENT FIRST AMENDMENT TO FIRST RESTATED LOAN AGREEMENT (REVOLVER) THIS FIRST AMENDMENT TO FIRST RESTATED LOAN AGREEMENT (REVOLVER) (herein called the "Amendment") made as of the 2nd day of December, 1994, by and among Western Gas Resources, Inc., a Delaware corporation ("Borrower"), NationsBank of Texas, N.A., a national banking association, as Agent ("Agent"), and NationsBank of Texas, N.A., Bank of Montreal, CIBC Inc., Societe Generale, Southwest Agency, The First National Bank of Boston, Colorado National Bank, Bank of America National Trust and Savings Association and Credit Lyonnais Cayman Island Branch, (herein, collectively referred to as "Lenders"). W I T N E S S E T H: WHEREAS, Borrower, Agent and Lenders have entered into that certain First Restated Loan Agreement (Revolver) dated as of September 2, 1994, (the "Original Agreement") for the purpose and consideration therein expressed, whereby Lenders became obligated to make loans to Borrower as therein provided; and WHEREAS, Borrower, Agent and Lenders desire to amend the Original Agreement as expressly set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Agreement and in consideration of the loans which may hereafter be made by Lenders to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I. Definitions and References -------------------------- Section 1.1. Terms Defined in the Original Agreement. Unless the context --------------------------------------- otherwise requires or unless otherwise expressly defined herein, the terms defined in the Original Agreement shall have the same meanings whenever used in this Amendment. Section 1.2. Other Defined Terms. Unless the context otherwise requires, ------------------- the following terms when used in this Amendment shall have the meanings assigned to them in this Section 1.2. "Loan Agreement" shall mean the Original Agreement as amended hereby. ARTICLE II. Amendments ---------- Section 2.1. Amendment to Defined Terms. -------------------------- (a) The last sentence of the definition of "Debt to Capitalization Ratio" contained in Section 1.1 of the Original Agreement is hereby amended in its entirety to read as follows: "As used in this definition, "Adjusted Funded Debt of Borrower" means, at the time of determination, the sum of (1) Funded Debt (excluding the Indebtedness described in Section 6.2(b)(ix)) plus (2) Excess Working Capital Deficit." (b) The last sentence of the definition of Eurodollar Spread found in Section 1.1 of the Original Agreement is hereby amended in its entirety to read as follows: 51 Exhibit 10.34 "Each of the above listed Eurodollar Spreads will be reduced (an `interest rate reduction') by one-eighth of one percent (.125%) upon the issuance (in one or more transactions) by Borrower of either Funded Debt which has a maturity in excess of six years or capital stock, which issuance results in aggregate proceeds (net of expenses) to Borrower of at least $100,000,000 (a `triggering event'), provided, however, that in the event, the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower is redeemed, an interest rate reduction shall not become effective until such time as both (a) a triggering event has occurred and (b) Borrower has received not less than an amount equal to the Redemption Amount in proceeds (net of expenses) from the sale or sales of its common or preferred stock made after the Redemption Date (in this section referred to as "New Equity Proceeds"). Within ten (10) business days after Borrower provides Agent with notice of the occurrence of a triggering event and such supporting documents or other information as Agent may reasonably request and provided that Agent concurs with Borrower that a triggering event has occurred and, if applicable, that New Equity Proceeds in the amount of the Redemption Amount have been received by Borrower, Agent shall notify Borrower and Lenders of the effective date of the reduction of such Eurodollar Spreads which shall be the date on which Borrower provided Agent with such notice." (c) The following definition of "Redemption Amount" is hereby added to Section 1.1 of the Original Agreement immediately following the definition of "Rate Election": "Redemption Amount" means the aggregate amount of all sums paid by ----------------- Borrower to the holder of the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower in connection with the redemption of such stock." (d) The following definition of "Redemption Date" is hereby added to Section 1.1 of the Original Agreement immediately following the definition of "Redemption Amount": "Redemption Date" means the date on which any portion of the 7.25% --------------- Cumulative Senior Perpetual Convertible Preferred Stock of Borrower is redeemed." Section 2.2. Amendment to Covenant Regarding Limitation on Dividends and ----------------------------------------------------------- Distributions. ------------- Section 6.2(a) of the Original Agreement is hereby amended in its entirety to read as follows: "(a) Limitation on Dividends and Distributions. Except for payments by ----------------------------------------- Borrower to its stockholders which are permitted under the following sentences of this subsection and do not otherwise violate any provisions of this Agreement and except for dividends paid to Borrower by its Subsidiaries or to MIGC by MGTC, none of Borrower and its Subsidiaries will declare or pay any dividends on, or make any other distribution in respect of, any class of its capital stock or any partnership or other interest in it, other than the distribution of common stock pursuant to the conversion or exchange of Preferred Stock, nor will any of Borrower and its Subsidiaries directly or indirectly make any capital contribution to or purchase, redeem, acquire or retire any shares of the capital stock of or partnership interest in any of Borrower and its Subsidiaries (whether such interests are now or hereafter issued, outstanding or created), other than pursuant to the redemption of the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower, or cause or permit any reduction or retirement of the capital stock of or partnership interest in any of Borrower and its Subsidiaries. Borrower may make any of the payments, distributions, capital contributions or purchases described above in this Section 6.2(a), so long as (I) no Default or Event of Default has occurred and is continuing at the time such dividends are declared and paid and (ii) such repurchases and dividends declared or paid by Borrower since March 31, 1994, other than the Redemption Amount, together with all investments Borrower has made in accordance with the provisions of Section 6.2(f)(v), do not, in the aggregate, exceed the sum of (A) $35,000,000; plus (B) fifty percent (50.0%) of Borrower's Consolidated ---- cumulative net income earned after March 31, 1994 if such figure is positive (zero percent, if negative); plus (C) fifty percent (50.0%) of the cumulative ---- net proceeds, in excess of the Redemption Amount, received by Borrower and its Subsidiaries at any time after March 31, 1994 from the sale of any equity securities issued by Borrower or any of its Subsidiaries." Section 2.3. Amendment to Covenant Regarding Tangible Net Worth. -------------------------------------------------- The definition of "Tangible Net Worth Minimum" contained in the last sentence of Section 6.2(j) of the Original Agreement is hereby amended in its entirety to read as follows: 52 "As used in this subsection the term "Tangible Net Worth Minimum" means the sum of (I) $400,000,000 less the Redemption Amount; plus (ii) fifty percent ---- (50.0%) of Borrower's Consolidated cumulative net income earned after March 31, 1994, if such figure is positive (zero percent, if negative); plus (iii) ---- seventy-five percent (75.0%) of the cumulative net proceeds received by Borrower at any time after March 31, 1994 from the sale of any equity securities issued by Borrower or any of its Subsidiaries." Section 2.4. Amendment to Events of Default and Remedies. ------------------------------------------- Section 8.1(k) of the Original Agreement is hereby amended in its entirety to read as follows: "Any event occurs which would require Borrower to redeem for cash the Preferred Stock, the Additional Preferred Stock or any subordinated notes which may have been issued in exchange for the Preferred Stock or which gives the holders of the Preferred Stock, the Additional Preferred Stock or any subordinated notes which may have been issued in exchange for the Preferred Stock the right to demand such redemption (excluding any event which would require Borrower to redeem, or which gives the holder the right to demand that the Borrower redeem, the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower as permitted under Section 6.2(a)); or " ARTICLE III. Conditions of Effectiveness --------------------------- Section 3.1. Effective Date. This Amendment shall become effective as of -------------- the date first above written when, and only when, (I) Agent shall have received, at Agent's office, a counterpart of this Amendment executed and delivered by Borrower and Majority Lenders and (ii) Agent shall have additionally received each of the following, each document (unless otherwise indicated) being dated the date of receipt thereof by Agent, duly authorized, executed and delivered, and in form and substance satisfactory to Agent: (a) a certificate of the Secretary of Borrower dated the date of this Amendment certifying that: (A) the resolutions adopted by the Board of Directors of Borrower attached as Exhibit 1 to the Omnibus Certificate of Borrower dated September 2, 1994 (the "Original Certificate") have not been amended or revoked, and continue in full force and effect, (B) the incumbency and authorization of the officers of Borrower authorized to sign Loan Documents, with signature specimens of such officers, contained in the Original Certificate has not been amended and continues in full force and effect, (C) copies of the certified charter documents of Borrower (including by-laws), attached as Exhibits H and O to the Original Certificate have not been amended or revoked since the date of the Original Certificate, and continue in full force and effect, (D) no Default that has not been expressly waived by Lenders exists on and as of the date hereof and (E) all of the representations and warranties set forth in Article IV hereof and Article V of the Original Agreement are true and correct at and as of their respective times of effectiveness and (b) such supporting documents as Agent may reasonably request. Section 3.2. Amendment Fee. Borrower shall pay to Agent on the date ------------- hereof, for distribution to each Lender, an amendment fee equal to five-one hundredths of one percent (0.05%) of the Commitment (as of the date hereof) of such Lender. In the event (a) any part of the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower is redeemed rather than converted and (b) Borrower does not receive before the 30th day following the Redemption Date, at least an amount equal to the Redemption Amount in proceeds (net of expenses incurred) from the sale or sales of its common or preferred stock made after the Redemption Date, Borrower shall pay to Agent on the 31st day following the Redemption Date, for distribution to each Lender, an additional amendment fee equal to five-one hundredths of one percent (0.05%) of the Commitment (as of the date hereof) of such Lender. 53 ARTICLE IV. Representations and Warranties ------------------------------ Section 4.1. Representations and Warranties of Borrower. In order to ------------------------------------------ induce each Lender to enter into this Amendment, Borrower represents and warrants to each Lender that: (a) The representations and warranties contained in each subsection of Section 5.1 of the Original Agreement are true and correct at and as of the time of the effectiveness hereof. (b) Borrower is duly authorized to execute and deliver this Amendment and is and will continue to be duly authorized to borrow monies and to perform its obligations under the Loan Agreement. Borrower has duly taken all corporate action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the obligations of Borrower hereunder and thereunder. (c) The execution and delivery by Borrower of this Amendment, the performance by Borrower of its obligations hereunder and the consummation of the transactions contemplated hereby do not and will not conflict with any provision of law, statute, rule or regulation or of the articles of incorporation and bylaws of Borrower, or of any material agreement, judgment, license, order or permit applicable to or binding upon Borrower, or result in the creation of any lien, charge or encumbrance upon any assets or properties of Borrower. Except for those which have been obtained, no consent, approval, authorization or order of any court or governmental authority or third-party is required in connection with the execution and delivery by Borrower of this Amendment or to consummate the transactions contemplated hereby. (d) When duly executed and delivered, this Amendment and the Loan Agreement will be a legal and binding obligation of Borrower, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and by equitable principles of general application. (e) The audited annual Consolidated financial statements of Borrower dated as of December 31, 1993 and the unaudited quarterly Consolidated financial statements of Borrower dated as of June 30, 1994 fairly present Borrower's Consolidated financial position at such dates and the Consolidated results of Borrower's operations and changes in Borrower's Consolidated cash flow for the respective periods thereof. Copies of such financial statements have heretofore been delivered to each Lender. Since June 30, 1994, no material adverse change has occurred in the financial condition or businesses or in the Consolidated financial condition or businesses of Borrower. ARTICLE V. Miscellaneous ------------- Section 5.1. Ratification of Agreements. The Original Agreement as hereby -------------------------- amended and each other Loan Document affected hereby are ratified and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document shall be deemed to be a reference to the Original Agreement as hereby amended. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Agent or Lenders under the Loan Agreement or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement or any other Loan Document. Section 5.2. Survival of Agreements. All representations, warranties, ---------------------- covenants and agreements of Borrower herein shall survive the execution and delivery of this Amendment and the performance hereof, including without limitation the making or granting of the Loans, and shall further survive until all of the Obligations are paid in full. All statements and agreements contained in any certificate or instrument delivered by Borrower or any Related Person hereunder or under the Loan Agreement to any Lender shall be deemed to constitute representations and warranties by, and/or agreements and covenants of, Borrower under this Amendment and under the Loan Agreement. Section 5.3. Loan Documents. This Amendment is a Loan Document, and all -------------- provisions in the Loan Agreement pertaining to Loan Documents apply hereto. 54 Section 5.4. Governing Law. This Amendment shall be governed by and ------------- construed in accordance with the laws of the State of Texas and any applicable laws of the United States of America in all respects, including construction, validity and performance. Section 5.5. Counterparts. This Amendment may be separately executed in ------------ counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above by their duly authorized officers. WESTERN GAS RESOURCES, INC. By: /s/ SIGNATURE ------------------------------------- Name: Title: NATIONSBANK OF TEXAS, N.A., as Agent, Issuing Bank and Lender By: /s/ SIGNATURE ------------------------------------- Name: Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ SIGNATURE ------------------------------------- Name: Title: BANK OF MONTREAL By: /s/ SIGNATURE ------------------------------------- Name: Title: THE FIRST NATIONAL BANK OF BOSTON By: /s/ SIGNATURE ------------------------------------- Name: Title: 55 CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /s/ SIGNATURE ------------------------------------- Name: Title: CIBC INC. By: /s/ SIGNATURE ------------------------------------- Name: Title: COLORADO NATIONAL BANK By: /s/ SIGNATURE ------------------------------------- Name: Title: SOCIETE GENERALE, SOUTHWEST AGENCY By: /s/ SIGNATURE ------------------------------------- Name: Title: 56 CONFIRMATION, ACKNOWLEDGMENT AND CONSENT OF GUARANTORS Each of the undersigned (collectively "Guarantors") hereby (I) acknowledges and consents to the foregoing First Amendment to First Restated Loan Agreement (Revolver); (ii) confirms the Restated Guaranty dated as of September 2, 1994 executed by such Guarantor in favor of Agent and the Lenders pursuant to the Original Agreement; and (iii) agrees that each of such Guarantor's obligations and covenants with respect to such Restated Guaranty shall remain in full force and effect after the execution of such Amendment. William J. Krysiak, Vice President-Finance of Western Gas Resources Oklahoma, Inc., Western Gas Resources Texas, Inc., Western Gas Resources Storage, Inc., Mountain Gas Resources, Inc., MGTC, Inc. and MIGC, Inc., is executing this Confirmation, Acknowledgment and Consent of Guarantors in his capacity of officer of each such corporation. Dated as of the 2nd day of December, 1994. WESTERN GAS RESOURCES OKLAHOMA, INC. WESTERN GAS RESOURCES TEXAS, INC. WESTERN GAS RESOURCES STORAGE, INC. MOUNTAIN GAS RESOURCES, INC. MGTC, INC. MIGC, INC. By: /s/ SIGNATURE ------------------------------------- William J. Krysiak, Vice President- Finance 57 EX-10.35 3 3RD AMENDMENT, 3RD RE LOAN AGREEMENT THIRD AMENDMENT TO THIRD RESTATED LOAN AGREEMENT (TERM) THIS THIRD AMENDMENT TO THIRD RESTATED LOAN AGREEMENT (TERM) (herein called the "Amendment") made as of the 2nd day of December 1994, by and among Western Gas Resources, Inc., a Delaware corporation ("Borrower"), NationsBank of Texas, N.A., a national banking association, as Agent ("Agent"), and NationsBank of Texas, N.A., Bankers Trust Company, Bank of Montreal and CIBC Inc. (herein, collectively referred to as "Lenders"), W I T N E S S E T H: WHEREAS, Borrower, Agent and Lenders have entered into that certain Third Restated Loan Agreement (Term) dated as of August 31, 1993, as amended by that certain First Amendment to Third Restated Loan Agreement (Term) dated as of December 31, 1993, and that certain Second Amendment to Third Restated Loan Agreement (Term) dated as of September 2, 1994, among Borrower, Agent and Lenders (as amended to the date hereof, the "Original Agreement") for the purpose and consideration therein expressed, whereby Lenders made loans to Borrower as therein provided; and WHEREAS, Borrower, Agent and Lenders desire to amend the Original Agreement as expressly set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Agreement and in consideration of the loans which may hereafter be made by Lenders to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I. Definitions and References -------------------------- Section 1.1. Terms Defined in the Original Agreement. Unless the context --------------------------------------- otherwise requires or unless otherwise expressly defined herein, the terms defined in the Original Agreement shall have the same meanings whenever used in this Amendment. Section 1.2. Other Defined Terms. Unless the context otherwise requires, ------------------- the following terms when used in this Amendment shall have the meanings assigned to them in this Section 1.2. "Loan Agreement" shall mean the Original Agreement as amended hereby. ARTICLE II. Amendments ---------- Section 2.1. Amendment to Defined Terms. -------------------------- (a) The last sentence of the definition of "Debt to Capitalization Ratio" contained in Section 1.1 of the Original Agreement is hereby amended in its entirety to read as follows: "As used in this definition, "Adjusted Funded Debt of Borrower" means, at the time of determination, the sum of (1) Funded Debt (excluding the Indebtedness described in Section 5.2(b)(ix)) plus (2) Excess Working Capital Deficit." (b) The following definition of "Redemption Amount" is hereby added to Section 1.1 of the Original Agreement immediately following the definition of "Prepayment Calculation Date": "Redemption Amount" means the aggregate amount of all sums paid by ----------------- Borrower to the holder of the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower in connection with the redemption of such stock." (c) The following definition of "Redemption Date" is hereby added to Section 1.1 of the Original Agreement immediately following the definition of "Redemption Amount": 58 Exhibit 10.35 "Redemption Date" means the date on which any portion of the 7.25% --------------- Cumulative Senior Perpetual Convertible Preferred Stock of Borrower is redeemed." Section 2.2. Amendment to Covenant Regarding Limitation on Dividends and ----------------------------------------------------------- Distributions. ------------- Section 5.2(a) of the Original Agreement is hereby amended in its entirety to read as follows: "(a) Limitation on Dividends and Distributions. Except for payments by ----------------------------------------- Borrower to its stockholders which are permitted under the following sentences of this subsection and do not otherwise violate any provisions of this Agreement and except for dividends paid to Borrower by its Subsidiaries or to MIGC by MGTC, none of Borrower and its Subsidiaries will declare or pay any dividends on, or make any other distribution in respect of, any class of its capital stock or any partnership or other interest in it, other than the distribution of common stock pursuant to the conversion or exchange of Preferred Stock, nor will any of Borrower and its Subsidiaries directly or indirectly make any capital contribution to or purchase, redeem, acquire or retire any shares of the capital stock of or partnership interest in any of Borrower and its Subsidiaries (whether such interests are now or hereafter issued, outstanding or created), other than pursuant to the redemption of the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower, or cause or permit any reduction or retirement of the capital stock of or partnership interest in any of Borrower and its Subsidiaries. Borrower may make any of the payments, distributions, capital contributions or purchases described above in this Section 5.2(a), so long as (I) no Default or Event of Default has occurred and is continuing at the time such dividends are declared and paid and (ii) such repurchases and dividends declared or paid by Borrower since March 31, 1994, other than the Redemption Amount, together with all investments Borrower has made in accordance with the provisions of Section 5.2(f)(v), do not, in the aggregate, exceed the sum of (A) $35,000,000; plus (B) fifty percent (50.0%) of Borrower's Consolidated ---- cumulative net income earned after March 31, 1994 if such figure is positive (zero percent, if negative); plus (C) fifty percent (50.0%) of the cumulative ---- net proceeds, in excess of the Redemption Amount, received by Borrower and its Subsidiaries at any time after March 31, 1994 from the sale of any equity securities issued by Borrower or any of its Subsidiaries." Section 2.3. Amendment to Covenant Regarding Tangible Net Worth. -------------------------------------------------- The definition of "Tangible Net Worth Minimum" contained in the last sentence of Section 5.2(j) of the Original Agreement is hereby amended in its entirety to read as follows: "As used in this subsection the term "Tangible Net Worth Minimum" means the sum of (I) $400,000,000 less the Redemption Amount; plus (ii) fifty percent ---- (50.0%) of Borrower's Consolidated cumulative net income earned after March 31, 1994, if such figure is positive (zero percent, if negative); plus (iii) ---- seventy-five percent (75.0%) of the cumulative net proceeds received by Borrower at any time after March 31, 1994 from the sale of any equity securities issued by Borrower or any of its Subsidiaries." Section 2.4. Amendment to Events of Default and Remedies. ------------------------------------------- Section 7.1(k) of the Original Agreement is hereby amended in its entirety to read as follows: "Any event occurs which would require Borrower to redeem for cash the Preferred Stock, the Additional Preferred Stock or any subordinated notes which may have been issued in exchange for the Preferred Stock or which gives the holders of the Preferred Stock, the Additional Preferred Stock or any subordinated notes which may have been issued in exchange for the Preferred Stock the right to demand such redemption (excluding any event which would require Borrower to redeem, or which gives the holder the right to demand that the Borrower redeem, the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower as permitted under Section 5.2(a)); or " 59 ARTICLE III. Conditions of Effectiveness --------------------------- Section 3.1. Effective Date. This Amendment shall become effective as of -------------- the date first above written when, and only when, (I) Agent shall have received, at Agent's office, a counterpart of this Amendment executed and delivered by Borrower and each Majority Lenders, and (ii) Agent shall have additionally received each of the following, each document (unless otherwise indicated) being dated the date of receipt thereof by Agent, duly authorized, executed and delivered, and in form and substance satisfactory to Agent: (a) a certificate of the Secretary of Borrower dated the date of this Amendment certifying that: (A) the resolutions adopted by the Board of Directors of Borrower attached as Exhibit 1 to the Omnibus Certificate of Borrower dated September 2, 1994 (the "Original Certificate") have not been amended or revoked, and continue in full force and effect, (B) the incumbency and authorization of the officers of Borrower authorized to sign Loan Documents, with signature specimens of such officers, contained in the Original Certificate has not been amended and continues in full force and effect, (C) copies of the certified charter documents of Borrower (including by-laws), attached as Exhibits H and O to the Original Certificate have not been amended or revoked since the date of the Original Certificate, and continue in full force and effect, (D) no Default that has not been expressly waived by Lenders exists on and as of the date hereof and (E) all of the representations and warranties set forth in Article IV hereof and Article V of the Original Agreement are true and correct at and as of their respective times of effectiveness and (b) such supporting documents as Agent may reasonably request. Section 3.2. Amendment Fee. Borrower shall pay to Agent on the date ------------- hereof, for distribution to each Lender, an amendment fee equal to five-one hundredths of one percent (0.05%) of the outstanding principal balance of such Lender's Loans (as of the date hereof). In the event (a) the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock of Borrower is redeemed rather than converted and (b) Borrower does not receive before the 30th day following the Redemption Date, at least an amount equal to the Redemption Amount in proceeds (net of expenses incurred) from the sale or sales of its common or preferred stock made after the Redemption Date, Borrower shall pay to Agent on the 31st day following the Redemption Date, for distribution to each Lender, an additional amendment fee equal to five-one hundredths of one percent (0.05%) of the outstanding principal balance of such Lender's Loans (as of the date hereof). ARTICLE IV. Representations and Warranties ------------------------------ Section 4.1. Representations and Warranties of Borrower. In order to ------------------------------------------ induce each Lender to enter into this Amendment, Borrower represents and warrants to each Lender that: (a) The representations and warranties contained in each subsection of Section 4.1 of the Original Agreement are true and correct at and as of the time of the effectiveness hereof. (b) Borrower is duly authorized to execute and deliver this Amendment and is and will continue to be duly authorized to borrow monies and to perform its obligations under the Loan Agreement. Borrower has duly taken all corporate action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the obligations of Borrower hereunder and thereunder. (c) The execution and delivery by Borrower of this Amendment, the performance by Borrower of its obligations hereunder and the consummation of the transactions contemplated hereby do not and will not conflict with any provision of law, statute, rule or regulation or of the articles of incorporation and bylaws of Borrower, or of any material agreement, judgment, license, order or permit applicable to or binding upon Borrower, or result in the creation of any lien, charge or encumbrance upon any assets or properties of Borrower. Except for those which have been obtained, no consent, approval, authorization or order of any court or governmental authority or third-party is required in connection with the execution and delivery by Borrower of this Amendment or to consummate the transactions contemplated hereby. 60 (d) When duly executed and delivered, this Amendment and the Loan Agreement will be a legal and binding obligation of Borrower, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and by equitable principles of general application. (e) The audited annual Consolidated financial statements of Borrower dated as of December 31, 1993 and the unaudited quarterly Consolidated financial statements of Borrower dated as of June 30, 1994 fairly present Borrower's Consolidated financial position at such dates and the Consolidated results of Borrower's operations and changes in Borrower's Consolidated cash flow for the respective periods thereof. Copies of such financial statements have heretofore been delivered to each Lender. Since June 30, 1994, no material adverse change has occurred in the financial condition or businesses or in the Consolidated financial condition or businesses of Borrower. ARTICLE V. Miscellaneous ------------- Section 5.1. Ratification of Agreements. The Original Agreement as hereby -------------------------- amended and each other Loan Document affected hereby are ratified and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document shall be deemed to be a reference to the Original Agreement as hereby amended. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Agent or Lenders under the Loan Agreement or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement or any other Loan Document. Section 5.2. Survival of Agreements. All representations, warranties, ---------------------- covenants and agreements of Borrower herein shall survive the execution and delivery of this Amendment and the performance hereof, including without limitation the making or granting of the Loans, and shall further survive until all of the Obligations are paid in full. All statements and agreements contained in any certificate or instrument delivered by Borrower or any Related Person hereunder or under the Loan Agreement to any Lender shall be deemed to constitute representations and warranties by, and/or agreements and covenants of, Borrower under this Amendment and under the Loan Agreement. Section 5.3. Loan Documents. This Amendment is a Loan Document, and all -------------- provisions in the Loan Agreement pertaining to Loan Documents apply hereto. Section 5.4. Governing Law. This Amendment shall be governed by and ------------- construed in accordance with the laws of the State of Texas and any applicable laws of the United States of America in all respects, including construction, validity and performance. Section 5.5. Counterparts. This Amendment may be separately executed in ------------ counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Amendment. 61 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above by their duly authorized officers. WESTERN GAS RESOURCES, INC. By: /s/ SIGNATURE ------------------------------------- Name: Title: NATIONSBANK OF TEXAS, N.A. By: /s/ SIGNATURE ------------------------------------- Name: Title: BANKERS TRUST COMPANY By: /s/ SIGNATURE ------------------------------------- Name: Title: BANK OF MONTREAL By: /s/ SIGNATURE ------------------------------------- Name: Title: CIBC INC. By: /s/ SIGNATURE ------------------------------------- Name: Title: 62 CONFIRMATION, ACKNOWLEDGMENT AND CONSENT OF GUARANTORS Each of the undersigned (collectively "Guarantors") hereby (I) acknowledges and consents to the foregoing Third Amendment to Third Restated Loan Agreement (Term); (ii) confirms the Restated Guaranty dated as of August 31, 1993 executed by such Guarantor in favor of Agent and the Lenders pursuant to the Original Agreement; and (iii) agrees that each of such Guarantor's obligations and covenants with respect to each such Restated Guaranty shall remain in full force and effect after the execution of such Amendment. William J. Krysiak, Vice President-Finance of Western Gas Resources Oklahoma, Inc., Western Gas Resources Texas, Inc., Western Gas Resources Storage, Inc., Mountain Gas Resources, Inc., MGTC, Inc. and MIGC, Inc., is executing this Confirmation, Acknowledgment and Consent of Guarantors in his capacity of officer of each such corporation. Dated as of the 2nd day of December, 1994. WESTERN GAS RESOURCES OKLAHOMA, INC. WESTERN GAS RESOURCES TEXAS, INC. WESTERN GAS RESOURCES STORAGE, INC. MOUNTAIN GAS RESOURCES, INC. MGTC, INC. MIGC, INC. By: /s/ SIGNATURE ------------------------------------- William J. Krysiak, Vice President- Finance 63 EX-11.1 4 COMPUTATION PER SHARE WESTERN GAS RESOURCES, INC. COMPUTATION OF PER SHARE EARNINGS DECEMBER 31, 1994
Weighted Average Shares Of Earnings Common Per Share Stock Net Of Common Outstanding Income Stock ------------- ----------- --------- Net income......................................................... $ 7,364,000 Weighted average shares of common stock outstanding................ 25,695,760 Less preferred stock dividends: 7.25% cumulative senior perpetual convertible preferred stock..... (2,900,000) $2.28 cumulative preferred stock.................................. (3,193,752) $2.625 cumulative convertible preferred stock..................... (6,118,000) ----------- ----------- 25,695,760 $(4,847,752) =========== =========== Basic earnings per share of common stock........................... $(0.19) ====== Assume exercise of common stock equivalents: Weighted average shares of common stock outstanding............... 25,695,760 (Anti-dilutive common stock equivalents are not used in this calculation) $5.40 employee stock options....................................... 58,915 Key employee stock options......................................... 4,368 Director stock options............................................. 6,031 ----------- ----------- 25,765,074 $(4,847,752) =========== =========== Primary earnings per share of common stock......................... $(0.19) ====== Assume no conversion of anti-dilutive convertible preferred stock Assume exercise of common stock equivalents: Weighted average shares of common stock outstanding............... 25,695,760 (Anti-dilutive common stock equivalents are not used in this calculation) $5.40 employee stock options....................................... 53,753 Director stock options............................................. 3,591 ----------- ----------- 25,753,104 $(4,847,752) =========== =========== Fully diluted earnings per share of common stock................... $(0.19) ======
64 Exhibit 11.1 EX-21.1 5 SUBSIDIARIES SUBSIDIARIES OF WESTERN GAS RESOURCES, INC. NAME OF SUBSIDIARY RELATIONSHIP ------------------ ------------ 1) MIGC, Inc. Wholly-owned subsidiary of Western Gas Resources, Inc. 2) MGTC, Inc. Wholly-owned subsidiary of MIGC, Inc. 3) Western Gas Resources - Texas, Inc. Wholly-owned subsidiary of Western Gas Resources, Inc. 4) Williston Gas Company 50%-owned joint venture of Western Gas Resources, Inc. 5) Western Gas Resources Storage, Inc. Wholly-owned subsidiary of Western Gas Resources, Inc. 6) Centre Court Travel Wholly-owned subsidiary of Western Gas Resources, Inc. 7) Rising Star Pipeline Corporation Wholly-owned subsidiary of Western Gas Resources, Inc. 8) Setting Sun Pipeline Corporation Wholly-owned subsidiary of Western Gas Resources, Inc. 9) Western Gas Resources - Wholly-owned subsidiary of Western Louisiana, Inc. Gas Resources, Inc. 10) Western Gas Resources - Oklahoma, Wholly-owned subsidiary of Western Inc. Gas Resources, Inc. 11) Westana Gathering Company A general partnership with Western Gas Resources, Inc. as general partner 12) Mountain Gas Resources, Inc. Wholly-owned subsidiary of Western Gas Resources, Inc. 13) Mountain Gas Transportation, Inc. Wholly-owned subsidiary of Mountain Gas Resources, Inc. 14) Green River Gathering Company A general partnership between Western Gas Resources, Inc. and Mountain Gas Resources, Inc. 15) Western Gas Resources Power Wholly-owned subsidiary of Western Marketing, Inc. Gas Resources, Inc. 65 Exhibit 21.1 EX-23.1 6 CONSENT OF INDEPENDENT AUDITORS Consent of Independent Accountants We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statements on Form S-3 (No. 33-66516 and No. 33-54741) and in the Registration Statement on From S-8 (No. 33-67834) of Western Gas Resources, Inc. of our report dated March 24, 1995 appearing on page 24 of this Form 10-K. PRICE WATERHOUSE LLP Denver, Colorado March 28, 1995 66 Exhibit 23.1 EX-27 7 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1994 DEC-31-1994 8,708 0 134,444 0 53,430 197,949 1,062,246 (179,537) 1,167,362 238,430 418,000 2,574 0 456 433,653 1,167,362 1,052,244 1,063,489 853,398 853,398 166,651 0 31,916 11,524 4,160 7,364 0 0 0 7,364 (0.19) (0.19)