-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VUxwQP8q5KmDekxa/VngTvWJJCoEa3C/o56Z5k7Uz5lrBr2sOEoIkQPTxr6IWte9 qYyohPmupRYc+Xo3/jS7hg== 0000890566-97-001049.txt : 19970509 0000890566-97-001049.hdr.sgml : 19970509 ACCESSION NUMBER: 0000890566-97-001049 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS MERIDIAN RESOURCES CORPORATION CENTRAL INDEX KEY: 0000869369 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760319553 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10671 FILM NUMBER: 97598338 BUSINESS ADDRESS: STREET 1: 15995 N BARKERS LANDING STE 300 CITY: HOUSTON STATE: TX ZIP: 77079 BUSINESS PHONE: 7135588080 MAIL ADDRESS: STREET 2: 15995 N BARKERS LANDING SUITE 300 CITY: HOUSTON STATE: TX ZIP: 77079 FORMER COMPANY: FORMER CONFORMED NAME: TEXAS MERIDIAN RESOURCES ACQUISITION CORPORATION DATE OF NAME CHANGE: 19600201 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: MARCH 31, 1997 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _________________ Commission file number: 1-10671 TEXAS MERIDIAN RESOURCES CORPORATION (Exact name of registrant as specified in its charter) TEXAS 76-0319553 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 15995 N. BARKERS LANDING, SUITE 300, HOUSTON, TEXAS 77079 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 281-558-8080 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 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 [_] Number of shares of common stock outstanding at May 1, 1997 14,393,304 Page 1 of 13 TEXAS MERIDIAN RESOURCES CORPORATION QUARTERLY REPORT ON FORM 10-Q INDEX Page Number ------ PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 1997 and 1996 ............... 3 Consolidated Balance Sheets as of March 31, 1997 (unaudited) and December 31, 1996 ........................................ 4 Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 1997 and 1996 ................... 6 Notes to Consolidated Financial Statements (unaudited) .......... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................ 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............................. 12 SIGNATURE ................................................................ 13 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. TEXAS MERIDIAN RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) THREE MONTHS ENDED MARCH 31, --------------------- 1997 1996 ------- -------- (in thousands, except for per share information) REVENUES: Oil and natural gas .......................... $ 8,131 $ 4,626 Interest and other ........................... 198 453 ------- -------- 8,329 5,079 ------- -------- COSTS AND EXPENSES: Oil and natural gas operating ................ 368 199 Severance and ad valorem taxes ............... 662 310 Depletion, depreciation and amortization .......................... 2,657 2,017 General and administrative ................... 1,413 923 Interest ..................................... -- 1 ------- -------- 5,100 3,450 ------- -------- INCOME BEFORE INCOME TAXES ...................... 3,229 1,629 ------- -------- INCOME TAX EXPENSE: Current ...................................... -- (26) Deferred ..................................... 1,130 280 ------- -------- 1,130 254 ------- -------- NET INCOME ...................................... $ 2,099 $ 1,375 ======= ======== Net income per common and common equivalent share .................. $ 0.13 $ 0.09 ======= ======== Weighted average number of common and common equivalent shares ..................... 15,900 15,628 ======= ======== See notes to consolidated financial statements. 3 TEXAS MERIDIAN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, DECEMBER 31, 1997 1996 --------- --------- (unaudited) (in thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents ..................... $ 5,709 $ 17,267 Accounts receivable (less allowance for doubtful receivables of $121,000) .......... 7,145 7,116 Due from affiliates ........................... 1,076 857 Prepaid expenses and other .................... 301 105 --------- --------- Total current assets .................... 14,231 25,345 --------- --------- PROPERTY AND EQUIPMENT: Oil and natural gas properties, full cost method (including $35,319,000 [1997] and $29,718,000 [1996] not subject to depletion) .............................. 108,234 92,902 Land .......................................... 478 478 Equipment ..................................... 2,946 2,628 --------- --------- 111,658 96,008 Less accumulated depletion and depreciation ... (21,134) (18,506) --------- --------- 90,524 77,502 --------- --------- OTHER ASSETS ..................................... 385 415 --------- --------- $ 105,140 $ 103,262 ========= ========= See notes to consolidated financial statements. 4 TEXAS MERIDIAN RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) MARCH 31, DECEMBER 31, 1997 1996 --------- --------- (unaudited) (in thousands) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable .............................. $ 11,457 $ 4,225 Revenues and royalties payable ................ 4,550 5,530 Accrued liabilities ........................... 3,704 11,752 --------- --------- Total current liabilities .................. 19,711 21,507 --------- --------- DEFERRED INCOME TAXES ............................ 4,510 3,380 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $1.00 par value (25,000,000 shares authorized, none issued and outstanding) ............... -- -- Common stock, $0.01 par value (100,000,000 shares authorized, 14,453,302 [1997] and 14,453,298 [1996] issued ............... 146 145 Additional paid-in capital .................... 75,816 75,265 Accumulated earnings .......................... 6,487 4,388 Unamortized deferred compensation ............. (450) (343) --------- --------- 81,999 79,455 Treasury stock, at cost (60,000 shares) ....... (1,080) (1,080) --------- --------- Total stockholders' equity .................... 80,919 78,375 --------- --------- $ 105,140 $ 103,262 ========= ========= See notes to consolidated financial statements. 5 TEXAS MERIDIAN RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) THREE MONTHS ENDED MARCH 31, -------------------- 1997 1996 -------- -------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income ....................................... $ 2,099 $ 1,375 Adjustments to reconcile net income to net cash provided by operating activities: Depletion and depreciation .................... 2,628 1,996 Amortization of other assets .................. 29 21 Deferred income taxes ......................... 1,130 280 Non-cash compensation ......................... 445 -- Changes in assets and liabilities: Accounts receivable ........................... (29) (827) Due from affiliates ........................... (219) (583) Prepaid expenses and other current assets ..... (196) 21 Accounts payable .............................. 7,232 2,298 Revenues and royalties payable ................ (980) 865 Accrued liabilities ........................... (21) 40 -------- -------- Net cash provided by operating activities ........ 12,118 5,486 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment additions .............. (23,676) (9,597) -------- -------- Net cash used in investing activities ............ (23,676) (9,597) -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS ............. (11,558) (4,111) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........................... 17,267 35,658 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................. $ 5,709 $ 31,547 ======== ======== See notes to consolidated financial statements. 6 TEXAS MERIDIAN RESOURCES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION These consolidated financial statements reflect the accounts of Texas Meridian Resources Corporation (the "Company" or "TMRC") and its subsidiaries after elimination of all significant intercompany transactions and balances. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in TMRC's Annual Report on Form 10-K for the year ended December 31, 1996, as filed with the Securities and Exchange Commission ("SEC"). The financial statements included herein as of March 31, 1997, and for the three month periods ended March 31, 1997 and 1996 are unaudited, and, in the opinion of management, the information furnished reflects all material adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. 2. NET INCOME PER SHARE Net income per share is calculated by dividing net income by the weighted average common shares and (in periods in which they have a dilutive effect) common share equivalents outstanding during the period, excluding shares held in treasury. Shares of common stock issuable under stock options, warrants and stock rights are treated as common share equivalents when dilutive. For the periods presented, there is no difference between primary and fully diluted net income per share. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following is a discussion of the Company's financial operations for the three months ended March 31, 1997 and 1996. The notes to the Company's consolidated financial statements included in this report, as well as the Company's Annual Report on Form 10-K for the year ended December 31, 1996 (and the notes attached thereto), should be read in conjunction with this discussion. OVERVIEW Results for the first quarter of 1997 reflected a continuing increase in the Company's oil and natural gas production. Oil production was up 76% for the first three months of 1997 compared to the first three months of 1996 and natural gas production was up 16% for the first three months of 1997 compared to the first three months of 1996. These increases in production reflected the continuing increase in exploration and development activities by the Company and the addition of new producing wells during the last twelve months. Late in the first quarter of 1997, the Company placed on production two new oil wells. These new wells are expected to partially offset declines in production from other wells. The Company currently has three wells in the process of being drilled and anticipates spudding two additional wells before the end of the second quarter. Although there can be no assurance as to the results of the Company's current drilling program, the increase in the Company's exploration activities is expected to result in increased revenue and income for the remainder of 1997 and into 1998. Future results, however, will be subject to the level of success in the program and prevailing prices of crude oil and natural gas. LIQUIDITY AND CAPITAL RESOURCES During the first three months of 1997, the Company's liquidity needs were met from oil and natural gas production sales and from cash reserves. As of March 31, 1997, the Company had a cash balance of $5.7 million and a negative working capital of $5.5 million. The decrease in both the cash balance and working capital reflects capital expenditures related to the Company's increasing exploration activities. In order to provide the Company with additional funds to finance its future exploration and development program and to satisfy working capital needs, the Company's operating subsidiary, Texas Meridian Resources Exploration, Inc. ("TMRX"), maintains a line of credit with The Chase Manhattan Bank ("Chase"). TMRX's obligations under this facility are guaranteed by the Company and secured by the stock of TMRX and certain other subsidiaries of the Company. Borrowings under the credit agreement mature on December 31, 1999. Under this facility, the Company may borrow, on a revolving basis, up to $20 million, subject to satisfaction of a borrowing base as determined from time to time by The Chase Manhattan Bank. The initial 8 borrowing base under the facility was established at $7.5 million and is subject to increase based on the Company's reserves. Based on discussions with Chase, the Company believes that its reserves would support an increase in its borrowing base to an amount in excess of $20 million. The Company intends to increase the borrowing base during the remainder of the year as needed to fund its 1997 exploration program. Capital expenditures for the first quarter of 1997 consisted of $15.3 million for property and equipment additions related to exploration and development of various prospects, including lease, seismic data acquisitions, drilling and completion costs. The Company has budgeted approximately $50 million in capital expenditures during 1997 for the further development and drilling of its south Louisiana and southeast Texas prospects as well as costs associated with additional acquisition of leases, seismic data and interpretive work. Future cash requirements will be provided from existing cash, cash flow from current properties and newly-drilled properties developed on the Company's exploration prospects and anticipated borrowings under the Company's credit facility with The Chase Manhattan Bank. In management's opinion, the Company has sufficient capital resources available to it to fund its 1997 development and drilling plans and other obligations and liquidity. Cash requirements beyond 1997 will be dependent upon the success of the Company's current drilling program and the nature and extent of capital expenditures that might be required for exploration and development activities at that time. It is the policy of the Company to retain its existing cash for reinvestment in the businesses of the Company and not to pay dividends with respect to its common stock in the foreseeable future. 9 RESULTS OF OPERATIONS OPERATING REVENUES. First quarter 1997 oil and natural gas revenues increased $3.5 million as compared to first quarter 1996 revenues due to increases in both production and average prices. Oil and natural gas production rose by 76% and 16%, respectively, due in large part to the successful completion of several new wells. Natural gas prices rose by 37% over the same time period due to, among other things, higher demand and lower storage levels to satisfy supply needs. Oil prices also increased, by 17% over prices for the first quarter of 1996. The following table summarizes operating revenues, production volumes and average sales prices for the Company for the three months ended March 31, 1997 and 1996. THREE MONTHS ENDED MARCH 31, 1997 ------------------ 1997 PERCENTAGE 1997 1996 INCREASE INCREASE -------- -------- -------- -------- Volume: Oil (Mbbl) .......................... 153 87 66 76% Natural Gas (Mmcf) .................. 1,442 1,246 196 16% Average Price Per Unit: Oil (Bbl) ........................... $ 22.48 $ 19.28 $ 3.20 17% Natural Gas (Mcf) ................... $ 3.25 $ 2.37 $ 0.88 37% Gross Revenues (000's): Oil ................................. $ 3,439 $ 1,677 $ 1,762 105% Natural Gas ......................... 4,692 2,949 1,743 59% -------- -------- -------- -------- Total ......................... $ 8,131 $ 4,626 $ 3,505 76% ======== ======== ======== ======== OPERATING EXPENSES. Oil and natural gas operating expenses increased $0.2 million to $0.4 million for the three months ended March 31, 1997, compared to $0.2 million for the three months ended March 31, 1996. The increase was primarily due to added operating expenses related to the additional wells brought on production during the last twelve months. SEVERANCE AND AD VALOREM TAXES. Severance and ad valorem taxes increased $0.4 million for the current quarter as compared to the same period in 1996. This increase is a direct result of the increase in producing wells and revenues and an increased level of oil production in Louisiana, which has the highest severance tax rate for all of the Company's production. INTEREST AND OTHER INCOME. Interest and other income during the first quarter 1997 decreased $0.3 million from the comparable period in 1996. This decrease was the result of a decrease in average cash balances reflecting the Company's increase in capital expenditures. 10 DEPLETION, DEPRECIATION AND AMORTIZATION. Depletion, depreciation and amortization expense increased during the first quarter of 1997 to $2.7 million from $2 million for the same period of 1996. This increase was primarily a result of increased capital expenditures subject to depletion and increased total production. The natural gas equivalent production for the three months ended March 31, 1997, was 2,360 MMCFE as compared to 1,768 MMCFE for the three months ended March 31, 1996. The Company uses the unit of production method of depletion of its oil and natural gas properties. GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense increased $0.5 million for the first quarter of 1997 as compared to the first quarter of 1996. The increase is due primarily to an increase in salaries and wages and related employee costs associated with the Company's expanded exploration activities and overall growth. INCOME TAX EXPENSE. The provision for deferred income taxes was $1.1 million for the first quarter of 1997 as compared to $0.3 million for the first quarter of 1996. The deferred income tax increase is due to the Company's increase in net income and due to prior years' loss carryforwards having been fully utilized for accounting purposes in 1996. FORWARD-LOOKING INFORMATION From time-to-time, the Company may make certain statements that contain "forward-looking" information as defined in the Private Securities Litigation Reform Act of 1995 and that involves risk and uncertainty. These forward-looking statements may include, but are not limited to exploration and seismic acquisition plans, anticipated results from current and future exploration prospects, the anticipated results of wells based on logging data and production tests, future sales of production, earnings, margins, production levels and costs, market trends in the oil and natural gas industry and the exploration and development sector thereof, environmental and other expenditures and various business trends. Forward-looking statements may be made by management orally or in writing including, but not limited to, the Management's Discussion and Analysis of Financial Condition and Results of Operations section and other sections of the Company's filings with the Securities and Exchange Commission under the Securities Act of 1933 and the Securities and Exchange Act of 1934. Actual results and trends in the future may differ materially depending on a variety of factors including, but not limited to, the success of the Company's exploration and development program, changes in the price of oil and natural gas, world-wide political stability and economic growth, the Company's successful execution of internal exploration, development and operating plans, environmental regulation and costs, regulatory uncertainties and legal proceedings. 11 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. 27.1 Financial Data Schedule (b) Reports on Form 8-K. The Registrant filed no reports on Form 8-K during the quarter covered by this report. 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TEXAS MERIDIAN RESOURCES CORPORATION AND SUBSIDIARIES (Registrant) Date: MAY 8, 1997 By: LLOYD V. DELANO Lloyd V. DeLano Vice President (Chief Financial and Accounting Officer) 13 EX-27.1 2
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 5,709 0 7,145 121 0 14,231 111,658 21,134 105,140 19,711 0 0 0 146 80,773 105,140 8,131 8,329 3,529 3,529 0 0 0 3,229 1,130 2,099 0 0 0 2,099 .13 .13
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