-----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, ANwBLePSW/v3bLnkex+jArKUvEGIt1sExhOfnVH8Klz82FoOPu0g86Gu+h2xosM8 843SOan81SG1QW2EseXqbQ== 0000943861-98-000041.txt : 19980817 0000943861-98-000041.hdr.sgml : 19980817 ACCESSION NUMBER: 0000943861-98-000041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOODRICH PETROLEUM CORP CENTRAL INDEX KEY: 0000943861 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760466193 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12719 FILM NUMBER: 98687900 BUSINESS ADDRESS: STREET 1: 333 TEXAS STREET STREET 2: SUITE 1375 CITY: SHREVEPORT STATE: LA ZIP: 71101-5319 BUSINESS PHONE: 3184291375 MAIL ADDRESS: STREET 1: 333 TEXAS STREET STREET 2: SUITE 1375 CITY: 333 TEXAS STREET STATE: LA ZIP: 71101-5319 EX-27.1 1 FINANCIAL DATA SCHEDULE
5 0000943861 GOODRICH PETROLEUM CORPORATION 6-mos Dec-31-1998 Jan-01-1998 Jun-30-1998 263,181 548,600 3,213,357 24,989 0 4,086,689 46,752,116 11,020,273 40,069,281 7,036,109 23,500,000 0 1,546,318 1,049,541 6,937,313 40,069,281 4,405,084 4,702,180 0 7,857,780 0 0 803,682 (3,959,282) 0 0 0 0 0 (3,959,282) (.88) 0
EX-27.2 2 RESTATED FINANCIAL DATA SCHEDULE
5 0000943861 GOODRICH PETROLEUM CORPORATION 6-mos Dec-31-1997 Jan-01-1997 Jun-30-1997 333,476 633,000 3,842,834 24,989 0 4,924,573 37,945,076 6,698,859 39,501,180 4,599,064 18,000,000 0 1,547,318 1,046,481 14,308,317 39,501,180 6,415,189 6,665,874 0 5,223,645 0 0 686,196 756,033 0 0 0 0 0 756,033 .03 0
EX-27.3 3 RESTATED FINANCIAL DATA SCHEDULE
5 0000943861 GOODRICH PETROLEUM CORPORATION 3-mos Dec-31-1997 Jan-01-1997 Mar-31-1997 1,200,493 675,200 3,201,146 24,945 0 5,235,796 36,510,199 5,784,656 39,481,573 4,186,970 18,000,000 0 1,551,149 8,360,902 7,302,292 39,481,573 3,433,643 3,597,419 0 2,540,749 0 0 319,712 736,958 0 0 0 0 0 736,958 .09 0
10-Q 4 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 --------------------------------------- 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: 1-7940 ------------------------------------------------ Goodrich Petroleum Corporation (Exact name of registrant as specified in its charter) Delaware 76-0466193 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer ID. No.) 5847 San Felipe, Suite 700, Houston, Texas 77057 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (713) 780-9494 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) None - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No At July 31, 1998, there were 5,247,703 shares of Goodrich Petroleum Corporation common stock outstanding. 1 GOODRICH PETROLEUM CORPORATION FORM 10-Q June 30, 1998 INDEX Page No. PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets June 30, 1998 (Unaudited) and December 31, 1997....................... 3-4 Consolidated Statements of Operations (Unaudited) Six Months Ended June 30, 1998 and 1997............................... 5 Three Months Ended June 30, 1998 and 1997................................ 6 Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 1998 and 1997............................... 7 Consolidated Statements of Stockholders' Equity (Unaudited) Six Months Ended June 30, 1998 and 1997............................... 8 Notes to Consolidated Financial Statements............................... 9-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 11-14 PART II - OTHER INFORMATION 15 Item 1. Legal Proceedings. Item 2. Changes in Securities. Item 3. Defaults Upon Senior Securities. Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Information. Item 6. Exhibits and Reports on Form 8-K. 2 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
June 30, December 31, 1998 1997 -------- ------------ (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents.......................... $ 263,181 $ 793,358 Marketable equity securities....................... 548,600 844,000 Accounts receivable Trade and other, net of allowance................ 2,347,827 1,354,776 Accrued oil and gas revenue...................... 840,541 1,641,969 Prepaid insurance.................................. 85,540 174,201 Other ............................................. 1,000 4,000 ---------- ---------- Total current assets......................... 4,086,689 4,812,304 ----------- ---------- PROPERTY AND EQUIPMENT Oil and gas properties (successful efforts method). 46,560,624 41,154,687 Furniture, fixtures and equipment.................. 191,492 180,966 ----------- ----------- 46,752,116 41,335,653 Less accumulated depletion, depreciation and amortization................................. (11,020,273) (8,869,783) ----------- ----------- Net property and equipment................... 35,731,843 32,465,870 ----------- ----------- OTHER ASSETS......................................... 250,749 259,744 ----------- ----------- TOTAL ASSETS....................... $ 40,069,281 $37,537,918 =========== ===========
See notes to consolidated financial statements. 3 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Continued)
June 30, December 31, 1998 1997 ----------- ------------ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable................................. $ 3,782,545 $ 1,996,887 Accrued liabilities.............................. 3,253,564 2,708,355 ----------- ----------- Total current liabilities.................. 7,036,109 4,705,242 ----------- ----------- LONG TERM DEBT ................................. 23,500,000 18,500,000 STOCKHOLDERS' EQUITY Preferred stock; authorized 10,000,000 shares: Series A convertible preferred stock, par value $1.00 per share; issued and out- standing 796,318 shares (liquidation preference $10 per share, aggregating to $7,963,180)................................ 796,318 796,318 Series B convertible preferred stock, par value $1.00 per share; issued and out- standing 750,000 shares (liquidation preference $10 per share, aggregating to $7,500,000)................................ 750,000 750,000 Common stock, par value $0.20 per share; authorized 25,000,000 shares; issued and outstanding 5,247,703 and 5,232,403 shares............................ 1,049,541 1,046,481 Additional paid-in capital........................ 15,226,027 15,146,095 Accumulated deficit............................... (8,077,714) (3,490,618) Accumulated other comprehensive income............ (211,000) 84,400 ----------- ----------- Total stockholders' equity.................. 9,533,172 14,332,676 ----------- ----------- TOTAL LIABILITIES AND STOCK- HOLDERS' EQUITY...................... $ 40,069,281 $ 37,537,918 =========== ===========
See notes to consolidated financial statements. 4 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Six Months Ended June 30, -------------------------- 1998 1997 ----------- ----------- REVENUES Oil and gas sales.............................. $ 4,405,084 5,596,188 Pipeline joint venture......................... --- 819,001 Other.......................................... 297,096 250,685 ----------- ----------- Total revenues........................... 4,702,180 6,665,874 ----------- ----------- EXPENSES Lease operating expense and production taxes... 1,287,314 1,085,281 Depletion, depreciation and amortization....... 2,102,268 2,649,929 Exploration.................................... 3,171,425 399,038 Interest expense............................... 803,682 686,196 General and administrative..................... 1,296,773 1,089,397 ----------- ----------- Total costs and expenses................. 8,661,462 5,909,841 ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES............... (3,959,282) 756,033 Income taxes .................................. --- --- ---------- ----------- NET INCOME (LOSS)............................... (3,959,282) 756,033 Preferred stock dividends...................... 627,814 577,417 ----------- ----------- EARNINGS (LOSS) APPLICABLE TO COMMON STOCK .................................. $ (4,587,096) 178,616 =========== =========== BASIC EARNINGS (LOSS) PER AVERAGE COMMON SHARE .................................. $ (.88) .03 ============ =========== DILUTED EARNINGS (LOSS) PER AVERAGE COMMON SHARE .................................. $ (.88) .03 ============ =========== AVERAGE COMMON SHARES OUTSTANDING .................................. 5,235,824 5,226,159
See notes to consolidated financial statements. 5 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Three Months Ended June 30, --------------------------- 1998 1997 ----------- ----------- REVENUES Oil and gas sales............................... $ 2,015,860 2,713,055 Pipeline joint venture.......................... --- 268,491 Other........................................... 248,537 86,909 ----------- ----------- Total revenues............................ 2,264,397 3,068,455 ----------- ----------- EXPENSES Lease operating expense and production taxes.... 613,547 532,440 Depletion, depreciation and amortization........ 975,702 1,358,214 Exploration..................................... 2,560,555 262,626 Interest expense................................ 418,107 366,484 General and administrative...................... 647,253 529,616 ----------- ----------- Total costs and expenses.................. 5,215,164 3,049,380 ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES................ (2,950,767) 19,075 Income taxes ................................... --- --- ----------- ----------- NET INCOME (LOSS)................................ (2,950,767) 19,075 Preferred stock dividends....................... 313,902 314,102 ----------- ----------- LOSS APPLICABLE TO COMMON STOCK.................. $ (3,264,669) (295,027) =========== =========== LOSS PER AVERAGE COMMON SHARE.................... $ (.62) (.06) =========== =========== AVERAGE COMMON SHARES OUTSTANDING ................................. 5,242,270 5,226,748
See notes to consolidated financial statements. 6 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, ------------------------ 1998 1997 ---------- ---------- OPERATING ACTIVITIES Net income (loss)................................... $ (3,959,282) 756,033 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion, depreciation and amortization......... 2,102,268 2,649,929 Amortization of leasehold costs.................. 295,247 116,141 Amortization of deferred debt financing costs.... --- 27,694 Gain on sale of oil and gas properties........... (4,206) (18) Capital expenditures charged to income........... 2,588,062 14,609 Payment of contingent liability.................. (107,625) (82,751) Payment of other liabilities..................... (160,518) (160,520) ---------- ---------- 753,946 3,321,117 Net change in (exclusive of acquisition in 1997): Accounts receivable.............................. (191,623) (300,709) Prepaid insurance and other...................... 91,661 100,214 Accounts payable................................. (1,051,251) (780,397) Accrued liabilities.............................. 38,021 755,821 ---------- ---------- Net cash provided by (used in) operating activities.................. (359,246) 3,096,046 --------- ---------- INVESTING ACTIVITIES Proceeds from sales of oil and gas properties....... 49,091 370,000 Acquisition of oil and gas properties............... (129,325) (1,516,866) Exploration and drilling capital expenditures paid.. (4,462,883) (1,918,919) ---------- ---------- Net cash used in investing activities..... (4,543,117) (3,065,785) ---------- ---------- FINANCING ACTIVITIES Proceeds from bank borrowings....................... 5,500,000 9,000,000 Principal payments of bank borrowings............... (500,000) (8,463,919) Preferred stock dividends........................... (627,814) (577,417) ---------- ---------- Net cash provided by (used in) financing activities.................. 4,372,186 (41,336) ---------- ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS.................................... (530,177) (11,075) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................. 793,358 344,551 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................... $ 263,181 333,476 ========== ========== NON-CASH INVESTING ACTIVITIES - Accrued capital expenditures........................ 3,695,232 1,497,665
See notes to consolidated financial statements. 7 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity Three Months Ended March 31, 1998 and 1997 (Unaudited)
Series A Series B Preferred Stock Preferred Stock Common Stock --------------- --------------- ------------ Number of Par Number of Par Number of Par Shares Value Shares Value Shares* Value* ------ ----- ------ ----- ------- ------ Balance at December 31, 1996..... 801,149 $ 801,149 --- $ --- 5,225,564 $ 1,045,113 Net income....................... --- --- --- --- --- --- Unrealized appreciation of marketable securities available for sale.. --- --- --- --- --- --- Issuance of Series B Preferred Stock.......................... --- --- 750,000 750,000 --- --- Preferred Stock dividends........ --- --- --- --- --- --- Conversion of preferred stock to common stock................... (3,831) (3,831) --- --- 2,993 599 Employee stock grants............ --- --- --- --- 3,846 769 -------- --------- ----------- ------------ ----------- ------------ Balance at June 30, 1997......... 797,318 $ 797,318 750,000 $ 750,000 5,232,403 $ 1,046,481 ======== ========= =========== ============ =========== ============ Balance at December 31, 1997..... 796,318 $ 796,318 750,000 $ 750,000 5,232,403 $ 1,046,481 Net loss......................... --- --- --- --- --- --- Unrealized depreciation of marketable securities available for sale.. Preferred stock dividends........ --- --- --- --- 15,300 3,060 Employee and director stock grants -------- --------- ----------- ------------ ----------- ------------ Balance at June 30, 1998......... 796,318 $ 796,318 750,000 $ 750,000 5,247,703 $ 1,049,541 ======== ========= =========== ============ =========== ============
Accumulated Other Comprehensive Income - Unrealized Additional Gain (Loss) on Total Paid-In Accumulated Marketable Stockholders' Capital* Deficit Equity Securities Equity ---------- ----------- -------------------- ------------- Balance at December 31, 1996..... $ 8,375,282 $ (896,444) $ (189,900) $ 9,135,200 Net income....................... --- 756,033 --- 756,033 Unrealized appreciation of marketable securities available for sale.. --- --- 63,300 63,300 Issuance of Series B Preferred Stock.......................... 6,750,000 --- --- 7,500,000 Preferred stock dividends........ --- (577,417) --- (577,417) Conversion of preferred stock to common stock................... 3,232 --- --- --- Employee stock grants............ 24,231 --- --- 25,000 ------------ ----------- ------------ ----------- Balance at June 30, 1997........ $ 15,152,745 $ (717,828) $ (126,600) $ 16,902,116 =========== ============ ============== =============== Balance at December 31, 1997..... $ 15,146,095 $ (3,490,618) $ 84,400 $ 14,332,676 Net loss......................... --- (3,959,282) --- (3,959,282) Unrealized depreciation of marketable securities available for sale.. --- --- (295,400) (295,400) Preferred stock dividends........ --- (627,814) --- (627,814) Employee and director stock grants 79,932 --- --- 82,992 ----------- ------------ ------------- -------------- Balance at June 30, 1998........ $ 15,226,027 $ (8,077,714) $ (211,000) $ 9,533,172 =========== ============ ============= ==============
* All 1997 share and dollar amounts have been restated to retroactively reflect the March 1998 reverse stock split. See notes to consolidated financial statements. 8 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1998 and 1997 (Unaudited) NOTE A - Basis of Presentation - ------------------------------ Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission; however, the Company believes the disclosures which are made are adequate to make the information presented not misleading. The financial statements and footnotes included in this Form 10-Q should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1997. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of June 30, 1998 and the results of its operations for the six and three months ended June 30, 1998 and 1997. The results of operations for the six and three month periods ended June 30, 1998 are not necessarily indicative of the results to be expected for the full year. NOTE B - Commitments and Contingencies - -------------------------------------- The U.S. Environmental Protection Agency ("EPA") has identified the Company as a potentially responsible party ("PRP") for the cost of clean-up of "hazardous substances" at an oil field waste disposal site in Vermilion Parish, Louisiana. The Company has estimated that the remaining cost of long-term clean-up of the site will be approximately $4.5 million with the Company's percentage of responsibility to be approximately 3.05%. As of June 30, 1998, the Company has paid approximately $321,000 in costs related to this matter and has $92,000 accrued for the remaining liability. These costs have not been discounted to their present value. The EPA and the PRPs will continue to evaluate the site and revise estimates for the long-term clean-up of the site. There can be no assurance that the cost of clean-up and the Company's percentage responsibility will not be higher than currently estimated. In addition, under the federal environmental laws, the liability costs for the clean-up of the site is joint and several among all PRPs. Therefore, the ultimate cost of the clean-up to the Company could be significantly higher than the amount presently estimated or accrued for this liability. 9 NOTE C - Income Taxes - --------------------- No provision for income taxes has been recorded for the Company for the six and three months ended June 30, 1997 due to its ability to utilize net operating loss carryforwards to offset financial taxable income. NOTE D - Pro Forma Financial Results of Operations - -------------------------------------------------- Selected results of operations on a pro forma basis for the six months ended June 30, 1997 as if the La/Cal II Acquisition had occurred on January 1, 1997 are as follows: Revenues............................. $ 7,187,000 Net income........................... 991,000 Earnings applicable to common stock..................... 361,200 Basic and diluted earnings per average common share............. $ .07 NOTE E - Stockholders' Equity - ----------------------------- On March 12, 1998, the Company effected a one for eight reverse stock split of its common stock. All share and per share amounts of prior periods presented have been adjusted to retroactively give effect to the reverse stock split. NOTE F - Comprehensive Income - ----------------------------- Comprehensive income for the three and six months ended June 30, 1998 and 1997 is as follows:
Six Months Ended Three Months Ended June 30, June 30, ---------------- -------------------- 1998 1997 1998 1997 --------- --------- ---------- -------- Net income (loss) $ (3,959,282) 756,033 (2,950,767) 19,075 Other comprehensive income - Unrealized appreciation (depreciation) on mar- ketable equity securities (295,400) 63,300 (295,400) 63,300 ----------- --------- ----------- -------- Comprehensive income (loss) $ (4,254,682) 819,333 (3,246,167) 82,375 =========== ========= =========== ========
10 Management's Discussion and Analysis of Financial Condition and Results of Operations 1997 Acquisition - ---------------- On January 31, 1997, the Company acquired the oil and gas properties of La/Cal Energy Partners II ("La/Cal II") and certain working interest owners (the "La/Cal II Properties") for a purchase price of $16.5 million ("La/Cal II Acquisition"). The purchase price was comprised of $1.5 million cash, the assumption of $7.5 million of La/Cal II long-term debt and the issuance of 750,000 shares of Series B convertible preferred stock of the Company ("Series B Preferred Stock") with an aggregate liquidation value of $7.5 million. In connection with the La/Cal II Acquisition, the Company's borrowing base was increased to $22.5 million and the Company borrowed an additional $9 million under its bank credit facility, which was used to repay $7.5 million of La/Cal II debt and to pay the $1.5 million cash portion of the purchase price. The Series B Preferred Stock has a dividend rate of 8.25% per annum and each share of Series B Preferred Stock is convertible into 1.12 shares of common stock. Such shares are redeemable by the Company after January 31, 2001 at $10.00 per share. Changes in Results of Operations - -------------------------------- Six months ended June 30, 1998 versus six months ended June 30, 1997 Total revenues for the six months ended June 30, 1998 amounted to $4,702,000 and were $1,964,000 lower than the $6,666,000 for the six months ended June 30, 1997 due to lower oil and gas revenues and the loss of revenues from the pipeline joint venture. Oil and gas sales were $1,191,000 lower due primarily to lower oil prices along with decreased gas production of approximately 13%. Revenues from the pipeline joint venture were $0 in the first six months of 1998 compared to $819,000 in 1997 due to the sale of the asset in the fourth quarter of 1997. The following table reflects the production volumes and pricing information for the periods presented.
Six months Six months ended June 30, 1998 ended June 30, 1997 ------------------- ------------------- Production Average Price Production Average Price ---------- ------------- ---------- ------------- Gas (Mcf).......... 1,106,260 $ 2.27 1,269,607 $ 2.33 Oil (Bbls)......... 136,152 13.87 138,087 19.06 Lease operating expense and production taxes were $1,287,000 for the six months ended June 30, 1998, versus $1,085,000 for the six months ended June 30, 1997,
11 or $202,000 higher due primarily to the Company not incurring in the 1997 period ad valorem taxes related to the La/Cal II properties which were the responsibility of the La/Cal II partners. Depletion, depreciation and amortization was $2,102,000 for the six months ended June 30, 1998, versus $2,650,000 for the six months ended June 30, 1997, or $548,000 lower due to no amortization of the pipeline joint venture in the current period compared to $566,000 in the same period a year ago. Exploration expense for the six months ended June 30, 1998 was $3,171,000 versus $399,000 for the same period of 1997, or $2,772,000 higher due primarily to dry hole costs of $2,107,000 in the current period compared to $14,000 for the same period of 1997. Additionally, seismic costs of $575,000 were incurred for the six months ended June 30, 1998 versus $127,000 in the same period in 1997. Interest expense was $804,000 in the six months ended June 30, 1998 compared to $686,000 in the six months ended June 30, 1997 due to higher average debt outstanding for the six months ended June 30, 1998. General and administrative expenses amounted to $1,297,000 in the six months ended June 30, 1998 versus $1,089,000 in the six months ended June 30, 1997 due largely to expenses associated with the addition of six employees in May 1997. The Company's preferred stock dividends amounted to $628,000 for the six months ended June 30, 1998 compared to $577,000 for the prior year. The increase is due to six months of dividends being paid on the Company's Series B Preferred Stock in the current year versus five months in the prior year. Three months ended June 30, 1998 versus three months ended June 30,1997 Total revenues for the three months ended June 30, 1998 amounted to $2,264,000 and were $804,000 lower than the $3,068,000 for the three months ended June 30, 1997. Oil and gas sales were $697,000 lower due primarily to lower oil prices and decreased gas production of approximately 18%. Revenues from the pipeline joint venture were $0 in the second quarter of 1998 compared to $268,000 in 1997 due to the sale of the asset in the fourth quarter of 1997. The following table reflects the production volumes and pricing information for the periods presented.
Three months Three months ended June 30, 1998 ended June 30, 1997 ------------------- ------------------- Production Average Price Production Average Price ---------- ------------- ---------- ------------- Gas (Mcf).......... 561,957 $ 2.13 681,729 $ 2.15 Oil (Bbls)......... 65,789 12.49 71,730 17.36
12 Lease operating expense and production taxes were $614,000 for the three months ended June 30, 1998, versus $532,000 for the three months ended June 30, 1997, or $81,000 higher. Depletion, deprecation and amortization was $976,000 for the three months ended June 30, 1997, versus $1,358,000 for the three months ended June 30, 1997, or $383,000 lower than the second quarter of 1997 due to no amortization of the pipeline joint venture in the current period compared to $174,000 in the same period a year ago and the 1997 period containing $98,000 of accelerated depletion on a well that was to be plugged and abandoned. The Company incurred $2,561,000 of exploration expense in the second quarter of 1998, compared to $263,000 in the second quarter of 1997, or $2,298,000 higher primarily due to dry hole costs of $2,107,000 in the second quarter of 1998 versus $14,000 in 1997. Interest expense was $418,000 in the three months ended June 30, 1998 compared to $366,000 in the second quarter of 1997 due to higher average debt outstanding for the quarter ended June 30, 1998. General and administrative expenses amounted to $647,000 in the three months ended June 30, 1998 versus $530,000 in the second quarter of 1997. Liquidity and Capital Resources - ------------------------------- Net cash used in operating activities was $359,000 in the six months ended June 30, 1998 compared to net cash provided by operating activities of $3,096,000 in the six months ended June 30, 1997. The Company's accompanying consolidated statements of cash flows identify major differences between net income and net cash provided by operating activities for each of the periods presented. Net cash used in investing activities totaled $4,543,000 for the six months ended June 30, 1998 compared to $3,066,000 in 1997. The six months ended June 30, 1998 is composed almost entirely of cash paid for exploration and drilling capital expenditures in the period of $4,463,000. The six months ended June 30, 1997 reflects $1,919,000 in exploration and drilling capital expenditures and $1,517,000 of cash paid in connection with the purchase of oil and gas properties offset by $370,000 in proceeds from the sale of certain oil and gas properties located in Montana. Net cash provided by financing activities was $4,372,000 for the six months ended June 30, 1998 as compared to net cash used of $41,000 in the prior year period. The 1998 amount includes borrowings of $5,500,000 by the Company under its line of credit and pay downs under this line of credit of $500,000. The 1997 amount included the borrowing of $9,000,000 by the Company under its line of credit which was used to payoff the debt assumed from La/Cal II and to pay the cash portion of the purchase price. The 1997 amount also includes pay downs of $1,000,000 and the payoff of La/Cal II debt of $7,464,000. The 1998 period also includes preferred dividends of $628,000 (six months), whereas the 1997 period contains dividends of $577,000 (five months). 13 The Company has a credit facility with a bank which provides for a total borrowing base determined by the bank every six months based in part, on the Company's oil and gas reserve information. Such borrowing base is currently $26,000,000. The maturity date for all amounts drawn under the bank credit facility is June 1, 2000. Interest is based on either of two methods at the option of the Company: the bank's prime lending rate or LIBOR plus 2%. Interest rates are set on specific draws for one, two, three or six month periods, also at the option of the Company. The Company's credit facility requires that minimum net worth and debt service ratios be maintained by the Company. Accordingly, the Company had $533,172 available for the payment of dividends at June 30, 1998. The amount outstanding under this facility as of June 30, 1998 was $23,500,000. The Company had $8,287,440 in capital expenditures in the six months ended June 30, 1998. The Company's budget for 1998 capital expenditures was set at the beginning of the year at $12,500,000. Such budget is under constant review during the year and could change due to actual and estimated cash flow, commodity prices, borrowing capacity and other factors. The Company expects to fund capital expenditures for the remainder of 1998 from operating cash flow and borrowings under its bank credit facility. The Company has assessed its electronic operating systems to identify those that are not Year 2000 compliant, is developing plans to correct noncompliant systems, and has started correcting certain systems. Due to the nature of the systems involved, the cost of this effort is expected to be insignificant. The Company is also in the process of communicating with significant vendors and business partners to determine its risks relative to these third parties' systems on which the Company relies. Although the Company expects to have all of its systems compliant by mid 1999, there can be no assurance that the Company will not be adversely affected if internal or third-party operating systems encounter Year 2000 problems. Disclosure Regarding Forward-Looking Statements - ----------------------------------------------- Certain statements in this quarterly report on Form 10-Q regarding future expectations and plans for future activities may be regarded as "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They are subject to various risks, such as financial market conditions, operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, as well as other risks discussed in detail in the Company's Annual Report or Form 10-K and other filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Shareholders of the Company was held on May 20, 1998. Set forth below is a brief description of each matter acted upon at the meeting and the number of votes cast for, against or withheld, and abstaining or not voting as to each matter. Election of Class III Directors and Class I Director - ---------------------------------------------------- FOR WITHHELD Jeff Benhard (Class I) 4,635,034 25,206 Benjamin F. Edwards, II 4,633,489 26,751 Walter G. Goodrich 4,635,376 24,864 Arthur A. Seeligson 4,528,968 113,272 Adoption of the Goodrich Petroleum Corporation Nonemployee Directors - -------------------------------------------------------------------------------- Compensation Plan - ----------------- FOR AGAINST WITHHELD 4,065,003 578,202 17,035 Ratification of the appointment of KPMG Peat Marwick LLP as the Company's - -------------------------------------------------------------------------------- independent auditors for 1998 - ----------------------------- FOR AGAINST WITHHELD NON-VOTE 4,631,948 22,173 5,119 1,000 Item 5. Other Information. Not applicable. 15 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 4.1 - Amendment letter dated July 9, 1998 related to the Credit Agreement between Goodrich Petroleum Company of Louisiana, GPC, Inc. of Louisiana and Compass Bank. 27.1 - Financial Data Schedule 27.2 - Restated Financial Data Schedule for Quarter ending June 30, 1997 27.3 - Restated Financial Data Schedule for Quarter ending March 31, 1997 (b) Reports on Form 8-K None. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GOODRICH PETROLEUM CORPORATION (registrant) August 13, 1998 /s/ Walter G. Goodrich --------------- ---------------------------------- Date Walter G. Goodrich, President and Chief Executive Officer August 13, 1998 /s/ Roland L. Frautschi --------------- ---------------------------------- Date Roland L. Frautschi, Senior Vice President, Chief Financial Officer and Treasurer 17 EX-4.1 5 LETTER OF AMENDMENT TO CREDIT AGREEMENT Exhibit 4.1 July 9, 1998 Mr. Roland Frautschi Chief Financial Officer Goodrich Petroleum Corporation 333 Texas Street, Suite 1375 Shreveport, LA 71101-2300 Re: Credit Agreement by and between Patrick Petroleum Corporation of Michigan ("Borrower") and Compass Bank-Houston ("Lender"), dated August 16, 1998 (as subsequently, amended, restated, or supplemented, the "Credit Agreement"). Dear Roland: Effective June 30, 1998, Section 6.11 of the Credit Agreement shall be amended to read as follows: "6.11 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net ------------------------------- Worth at any time to be less than $9,000,000.00 plus, for all fiscal quarters ending on or after June 30, 1998, 50% of positive Consolidated Net Income and 100% of all cash equity proceeds, net of expenses incurred in connection with the offering transaction." The scope of this amendment is expressly limited to the matters addressed herein and these amendments shall not serve as a waiver of any past, present, or future breach, Default, or Event of Default under the Credit Agreement, except to the extent, if any, that any such breach, Default, or Event of Default is remedied by the effect of this amendment. Please not that all capitalized terms used but not defined herein shall have the meanings attributed thereto in the Credit Agreement. Kindly acknowledge your agreement and acceptance of the above by initialing page 1 of this document below and executing page 2 of the document in the space provided. Please send a copy of the executed document via facsimile to (713) 968-8292 and forward the signed original to my attention. Sincerely, COMPASS BANK By: /s/ John Lozano ----------------- John Lozano Banking Officer Page Two AGREED TO AND ACCEPTED AS OF THIS 10th DAY OF JULY, 1998: GOODRICH PETROLEUM COMPANY OF LOUISIANA GPC, INC. OF LOUISIANA By: /s/ Roland Frautschi --------------------- Roland Frautschi Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----