-----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, TKXJ4SHihuTiIPgEYuTIfKTzhwdZVdbV6i2jas4TWICMXCNbbqsUsrdhtCUJjVG4 56WQ9gsQYZ4inztKIK4Dpw== 0000943861-99-000016.txt : 19990517 0000943861-99-000016.hdr.sgml : 19990517 ACCESSION NUMBER: 0000943861-99-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: 99621785 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 FDS
5 0000943861 GOODRICH PETROLEUM CORPORATION 1 U.S. Dollars 3-mos Dec-31-1999 Jan-01-1999 Mar-31-1999 1 358,183 0 1,863,354 24,989 0 2,345,978 54,573,894 15,318,583 42,276,169 20,452,130 17,500,000 0 1,546,318 1,049,541 1,728,180 42,276,169 2,822,869 2,941,696 0 2,937,970 0 0 520,480 (1,036,249) 0 0 0 0 0 (1,036,249) (.20) 0
10-Q 2 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934 For the quarterly period ended March 31, 1999 ----------------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 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 (I.R.S. Employer ID. No.) incorporation or organization) 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 May 6, 1999 there were 5,247,705 shares of Goodrich Petroleum Corporation common stock outstanding. 1 GOODRICH PETROLEUM CORPORATION FORM 10-Q March 31, 1998 INDEX Page No. PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets March 31, 1999 (Unaudited) and December 31, 1998.............. 3-4 Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 1999 and 1998.................... 5 Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 1999 and 1998.................... 6 Consolidated Statements of Stockholders' Equity (Unaudited) Three Months Ended March 31, 1999 and 1998.................... 7 Notes to Consolidated Financial Statements....................... 8-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 11-15 PART II - OTHER INFORMATION 16 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
March 31, December 31, 1999 1998 ----------- ------------ (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents.......................... $ 358,183 $ 95,630 Marketable equity securities....................... - 0 - 358,700 Accounts receivable Trade and other, net of allowance................ 736,631 2,197,179 Accrued oil and gas revenue...................... 1,101,734 1,089,226 Prepaid insurance.................................. 149,430 184,898 ----------- ----------- Total current assets......................... 2,345,978 3,925,633 ----------- ----------- PROPERTY AND EQUIPMENT Oil and gas properties (successful efforts method). 54,675,053 53,320,832 Furniture, fixtures and equipment.................. 198,841 195,279 ----------- ----------- 54,873,894 53,516,111 Less accumulated depletion, depreciation and amortization................................. (15,318,583) (13,720,009) ----------- ----------- Net property and equipment................... 39,555,311 39,796,102 ----------- ----------- OTHER ASSETS........................................ 374,880 314,853 ----------- ----------- TOTAL ASSETS.......................... $ 42,276,169 $ 44,036,588 =========== ===========
See notes to consolidated financial statements. 3 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Continued)
March 31, December 31, 1999 1998 ----------- ------------ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long term debt............... $ 12,000,000 $ 29,500,000 Accounts payable................................ 7,033,804 7,763,507 Accrued liabilities............................. 1,418,326 1,813,693 ----------- ----------- Total current liabilities................. 20,452,130 39,077,200 ----------- ----------- LONG TERM DEBT ............................... 17,500,000 --- 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 5,232,403 shares.......... 1,049,541 1,049,541 Additional paid-in capital...................... 15,226,027 15,226,027 Accumulated deficit............................. (13,497,847) (12,461,598) Accumulated other comprehensive income.......... --- (400,900) ----------- ----------- Total stockholders' equity................ 4,324,039 4,959,388 ----------- ----------- TOTAL LIABILITIES AND STOCK- HOLDERS' EQUITY.................... $ 42,276,169 $ 44,036,588 =========== ===========
See notes to consolidated financial statements. 4 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, ---------------------------- 1999 1998 ----------- ------------ REVENUES Oil and gas sales.............................. $ 2,822,869 2,389,224 Other.......................................... 118,827 48,559 ----------- ----------- Total revenues........................... 2,941,696 2,437,783 ----------- ----------- EXPENSES Lease operating expense and production taxes... 666,754 673,767 Depletion, depreciation and amortization....... 1,308,553 1,126,566 Exploration.................................... 398,781 610,870 Interest expense............................... 520,480 385,575 General and administrative..................... 563,882 649,520 ----------- ----------- Total costs and expenses................. 3,458,450 3,446,298 ----------- ----------- LOSS ON SALE OF ASSETS.......................... (519,495) --- ----------- ----------- LOSS BEFORE INCOME TAXES........................ (1,036,249) (1,008,515) Income taxes .................................. --- --- ----------- ----------- NET LOSS ..................................... (1,036,249) (1,008,515) Preferred stock dividends...................... --- 313,912 ----------- ----------- LOSS APPLICABLE TO COMMON STOCK .................................. $ (1,036,249) (1,322,427) =========== =========== BASIC LOSS PER AVERAGE COMMON SHARE .................................. $ (.20) (.25) =========== =========== DILUTED LOSS PER AVERAGE COMMON SHARE .................................. $ (.20) (.25) =========== =========== AVERAGE COMMON SHARES OUTSTANDING .................................. 5,247,705 5,229,307 =========== =========== See notes to consolidated financial statements.
5 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, ------------------------ 1999 1998 ----------- ----------- OPERATING ACTIVITIES Net loss........................................... $ (1,036,249) (1,008,515) Adjustments to reconcile net loss to net cash provided by operating activities: Depletion, depreciation and amortization....... 1,308,553 1,126,566 Amortization of leasehold costs................ 290,021 123,774 Loss on sale of asset.......................... 519,495 --- Capital expenditures charged to income......... 4,564 364,470 Payment of contingent liability................ --- (1,703) Payment of other liabilities................... --- (80,260) ----------- ---------- 1,086,384 524,332 Net change in: Accounts receivable............................ 1,448,040 1,741,539 Prepaid insurance and other.................... (24,559) 46,836 Accounts payable............................... (580,358) (58,090) Accrued liabilities............................ (395,367) (627,141) ----------- ---------- Net cash provided by operating activities... 1,534,140 1,627,476 ----------- ---------- INVESTING ACTIVITIES Proceeds from sales of assets...................... 240,105 --- Capital expenditures............................... (1,511,692) (3,106,922) ----------- ---------- Net cash used in investing activities....... (1,271,587) (3,106,922) ----------- ---------- FINANCING ACTIVITIES Proceeds from bank borrowings...................... --- 1,500,000 Principal payments of bank borrowings.............. --- (500,000) Preferred stock dividends.......................... --- (313,912) ----------- ---------- Net cash provided by financing activities.. --- 686,088 ----------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................... 262,553 (793,358) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................ 95,630 793,358 ----------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD...................................... $ 358,183 --- =========== ==========
See notes to consolidated financial statements. 6 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity Three Months Ended March 31, 1999 and 1998 (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, 1997..... 796,318 $ 796,318 750,000 $ 750,000 5,232,403 $ 1,046,481 Net loss......................... --- --- --- --- --- --- Preferred stock dividends........ --- --- --- --- --- --- -------- --------- ----------- ------------ ----------- ------------ Balance at March 31, 1998........ 796,318 $ 796,318 750,000 $ 750,000 5,232,403 $ 1,046,481 ======== ========= =========== ============ =========== ============ Balance at December 31, 1998..... 796,318 $ 796,318 750,000 $ 750,000 5,247,705 $ 1,049,541 Net loss......................... --- --- --- --- --- --- Realized loss on sale of marketable securities.......... --- --- --- --- --- --- -------- --------- ----------- ------------ ----------- ------------ Balance at March 31, 1999........ 796,318 $ 796,318 750,000 $ 750,000 5,247,705 $ 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, 1997..... $ 15,146,095 $ (3,490,618) $ 84,400 $ 14,332,676 Net loss......................... --- 1,008,515 --- (1,008,515) Preferred stock dividends........ --- (313,912) --- (313,912) ----------- ----------- ------------- --------------- Balance at March 31, 1998........ $ 15,146,095 $ (4,813,045) $ (84,400) $ 13,010,249 =========== ============ ============== =============== Balance at December 31, 1998..... $ 15,226,027 $ (12,461,598) $ (400,900) $ 4,959,388 Net loss......................... --- (1,036,249) --- (1,036,249) Realized loss on sale of marketable securities.......... --- --- 400,900 400,900 ----------- ------------ ------------- -------------- Balance at March 31, 1999........ $ 15,226,027 $ (13,497,847) $ - 0 - $ 4,324,039 =========== ============ ============= ==============
*Dividends are cumulative and arrearages amounted to $313,912, or $.06 per share at March 31, 1999 See notes to consolidated financial statements. 7 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements March 31, 1999 and 1998 (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, 1998. 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 March 31, 1999 and the results of its operations for the three months ended March 31, 1999 and 1998. The results of operations for the three-month period ended March 31, 1999 are not necessarily indicative of the results to be expected for the full year. NOTE B - Indebtedness - --------------------- On May 12, 1999 the Company signed a definitive agreement with Compass Bank to restructure its existing credit facility. Accordingly, $17,500,000 previously shown as current maturities at December 31, 1998 is now shown in long-term debt at March 31, 1999. The credit facility provides for a borrowing base facility of $20,500,000 with monthly reductions of $50,000 beginning on April 1, 1999 and May 1, 1999, $200,000 on June 1, 1999 and $300,000 on July 1, 1999 and each month thereafter. Semi-annual borrowing base determinations will be made beginning July 1, 1999 based in part on the Company's oil and gas reserve information. The maturity date for amounts drawn under the bank Borrowing Base facility is February 1, 2001. Interest on such facility is based on LIBOR plus 2%, and rates are set on specific draws for one, two, three or six month periods at the option of the Company. The facility also establishes a Tranche A in the amount of $9,000,000. The maturity date for the Tranche A facility is December 1, 1999. The Tranche A requires that excess cash flow from operations, as defined in the agreement, be applied to outstanding principal and interest until the maturity date, with interest based on the Compass Bank Index Rate plus 2%. The credit facility requires the net proceeds of asset sales be used to extinguish outstanding principal and interest under the borrowing base facility 8 and Tranche A. Additionally, under the terms of the terms of the credit facility, the Company may not make any distributions or pay dividends, including dividends on any class of its preferred stock, until Tranche A is paid in full. Substantially all of the Company's assets are pledged to secure this credit facility. NOTE C - Liquidity and Management's Plan - ---------------------------------------- The unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern. The following discusses the Company's current liquidity and management's plan. Liquidity - As disclosed in Note B, the Company's current liabilities --------- include current maturities of long term debt in the amount of $12,000,000, and exceed current assets by $18,106,000. Additionally, the Company is unable to incur additional debt under its credit facility or from any other sources until such time as its stockholders' equity balance is greater than the liquidation preference of the Series A Preferred Stock of approximately $7.9 million. Management's Plan - Due to the Company's existing current working capital ------------------ deficiency, required pay downs under its credit facility and the restrictions imposed by the Series A Preferred Stock, management is exploring a number of alternatives that are directed toward making the Company profitable and improving its liquidity. The principal strategies include: 1) raising additional capital through the issuance of equity securities; or a combination of equity and subordinated debt; 2) acquisition of value enhancing oil and gas properties that offer additional development opportunities and increased cash flow; 3) mergers and/or acquisitions by other entities; 4) reducing operating costs; 5) sale of certain oil and gas properties; 6) renegotiation or amendment of the Company's credit facility and capital structure As with any plan of this nature, its ultimate realization will depend upon the cooperation of creditors, potential investors and others. As a result, the outcome of the plan cannot presently be determined and no adjustments related to the specific considerations of management's plan have been made in the accompanying consolidated financial statements. Should the plan not be completed, the Company may not be able to liquidate liabilities as they come due. 9 NOTE D - 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 March 31, 1999, 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. NOTE E - Income Taxes - --------------------- No provision for income taxes has been recorded for the Company for the three months ended March 31, 1999 and 1998 due to its incurring a net loss for each period. 10 Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations ----------------------------------- Changes in Results of Operations - -------------------------------- Three months ended March 31, 1999 versus three months ended March 31,1998 Total revenues for the three months ended March 31, 1999 amounted to $2,942,000 and were $504,000 higher than the $2,438,000 for the three months ended March 31, 1998 due to higher oil and gas revenues. Oil and gas sales were $434,000 higher due primarily to the recording of previously suspended oil and gas sales of approximately $350,000 on certain properties until the Company's ownership in the properties was perfected. Additionally, oil and gas sales were higher due to increased volumes, partially offset by significantly lower oil and gas prices for the current period. The Company incurred a loss on the sale of marketable equity securities of $519,000 for the three months ended March 31, 1999. The following table reflects the production volumes and pricing information for the periods presented.
Three months Three months ended March 31, 1999 ended March 31, 1998 Production Average Price Production Average Price Gas (Mcf)......... 884,956 $ 1.82 544,303 $ 2.43 Oil (Bbls)........ 114,620 10.55 70,363 15.16
Lease operating expense and production taxes were $667,000 for the three months ended March 31, 1999, versus $674,000 for the three months ended March 31, 1998. Depletion, depreciation and amortization was $1,309,000 for the three months ended March 31, 1999 versus $1,127,000 for the three months ended March 31, 1998, or $182,000 higher due to slightly higher depletion rates and higher volumes in the first quarter of 1999 versus 1998. Exploration expense in the first quarter of 1999 was $399,000 versus $611,000 in the first quarter of 1998, or $212,000 lower due primarily to seismic costs and prospect depreciation of $34,000 and $290,000 respectively, in the first quarter of 1999 versus $437,000 and $124,000 respectively, in the same period in 1998. Interest expense was $520,000 in the three months ended March 31, 1999 compared to $386,000 in the first quarter of 1998 due to higher average debt outstanding for the quarter ended March 31, 1999. General and administrative expenses amounted to $564,000 in the three months ended March 31, 1999 versus $649,000 in the first quarter of 1998. 11 On March 23, 1999 the Company announced that it suspended payment of its regular quarterly cash dividend on both classes of its preferred stock. This measure was taken to conserve cash for corporate and operating purposes. The Company has no plans to reinstate the cash dividends in the foreseeable future. Preferred stock dividends amount to $314,000 for the three months ended March 31, 1998. Liquidity and Capital Resources - ------------------------------- Net cash provided by operating activities was $1,534,000 in the three months ended March 31, 1999 compared to $1,627,000 in the three months ended March 31, 1998. 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 $1,272,000 for the first quarter of 1999 compared to $3,107,000 in 1998. The three months ended March 31, 1999 reflects capital expenditures totaling $1,512,000 and proceeds from the sale of marketable equity securities of $240,000. The three months ended March 31, 1998 consists of capital expenditures of $3,107,000. Net cash provided by financing activities was $-0- for the current period as compared to $686,000 in the prior year period. The 1998 amount includes borrowings of $1,500,000 by the Company under its line of credit and pay downs under this line of credit of $500,000. On May 12, 1999 the Company signed a definitive agreement with Compass Bank to restructure its existing credit facility. Accordingly, $17,500,000 previously shown as current maturities at December 31, 1998 is now shown in long-term debt at March 31, 1999. The credit facility provides for a borrowing base facility of $20,500,000 with monthly reductions of $50,000 beginning on April 1, 1999 and May 1, 1999, $200,000 on June 1, 1999 and $300,000 on July 1, 1999 and each month thereafter. Semi-annual borrowing base determinations will be made beginning July 1, 1999 based in part on the Company's oil and gas reserve information. The maturity date for amounts drawn under the bank Borrowing Base facility is February 1, 2001. Interest on such facility is based on LIBOR plus 2%, and rates are set on specific draws for one, two, three or six month periods at the option of the Company. The facility also establishes a Tranche A facility in the amount of $9,000,000. The maturity date for the Tranche A facility is December 1, 1999. The Tranche A requires that excess cash flow from operations, as defined in the agreement, be applied to outstanding principal and interest until the maturity date, with interest based on the Compass Bank Index Rate plus 2%. The credit facility requires the net proceeds of asset sales be used to extinguish outstanding principal and interest under the borrowing base facility and Tranche A. Additionally, under the terms of the credit facility, the Company may not make any distributions or pay dividends, including dividends on any class of its preferred stock, until Tranche A is paid in full. 12 The terms of the Company's Series A Preferred Stock provide that the Company will not incur additional debt until after such time as it reports financial results which show the Company's stockholders' equity to be less than the liquidation preference of the Series A Preferred Stock. As of March 31, 1999 the Company's stockholders' equity was approximately $4.3 million and the liquidation preference on the outstanding shares of the Series A Preferred Stock was approximately $7.9 million. As a result, the Company is unable to incur additional debt under its credit facility or from other sources at the present time. Due to the Company's existing current working capital deficiency, required pay downs under its credit facility and the restrictions imposed by the Series A Preferred Stock, management is exploring a number of alternatives that are directed toward making the Company profitable and improving its liquidity. The principal strategies include: 1) raising additional capital through the issuance of equity securities; or a combination of equity and subordinated debt; 2) acquisition of value enhancing oil and gas properties that offer additional development opportunities and increased cash flow; 3) mergers and/or acquisitions by other entities; 4) reducing operating costs; 5) sale of certain oil and gas properties; 6) renegotiation or amendment of the Company's credit facility and capital structure As with any plan of this nature, its ultimate realization will depend upon the cooperation of creditors, potential investors and others. As a result, the outcome of the plan cannot presently be determined and no adjustments related to the specific considerations of management's plan have been made in the accompanying consolidated financial statements. Should the plan not be completed, the Company may not be able to liquidate liabilities as they come due. In addition, the Company's current liquidity situation and its agreement with Compass Bank have resulted in a suspension of new drilling expenditures until such time as certain aforementioned principle strategies have been effected. The Company incurred $1,512,000 in capital expenditures in the three months ended March 31, 1999, related primarily to recompletion of existing wells and maintenance of existing leases. Year 2000 - --------- The Company is in the process of assessing the ability of its various electronic operating systems, and those of significant third parties, to appropriately consider periods and dates after December 31, 1999. The Company's senior financial management has taken responsibility for identifying, addressing and monitoring its Year 2000 issues. These individuals report to the Audit Committee of the Board of Directors on a periodic basis. For Company systems identified as not being Year 2000 compliant, the Company has developed plans to correct these systems and expects to be compliant on the systems by the end of the second quarter of 1999. 13 As for third parties with which the Company has a material relationship, the Company is in various stages of discussions and conclusions related to the ability of those third parties to become compliant and the related timing thereof. The estimated costs associated with becoming Year 2000 compliant are not expected to be material to the Company. The Company has begun, but not yet completed, a comprehensive analysis of the operational problems and costs (including loss of revenues) that would be reasonably likely to result from the failure by the Company and certain third parties to complete efforts necessary to achieve Year 2000 compliance timely. A contingency plan has not been developed for dealing with the most reasonably likely worst case scenario, and such scenario has not yet been clearly identified. The Company currently plans to complete such analysis and contingency planning by the end of the second quarter of 1999. The failure to correct a material Year 2000 problem could result in an interruption in, or failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers and customers, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition. The Company's Year 2000 efforts are expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem. The Company believes that, with the implementation of new business systems and completion of the various above-mentioned tasks as scheduled, the possibility of interruptions to normal operations should be significantly reduced. Stock Listing - ------------- The Company has been notified by the NASDAQ Stock Market that it may not be able to sustain compliance with certain of the Market's listing requirements for its Series A Preferred Stock. The Company plans to submit a business plan to the Market in response to the notice. Disclosure Regarding Forward-Looking Statement - ---------------------------------------------- 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 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 14 engineering data relating to underground accumulations of oil and gas, as well as other risks discussed in detail in the Company's Annual Report on 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. 15 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. None. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 4.1 - Amendment to Credit Agreement between Goodrich Petroleum Company, LLC and Compass dated May 1, 1999 27 - Financial Data Schedule (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) May 14, 1999 /s/ Walter G. Goodrich - --------------------- ---------------------------------- Date Walter G. Goodrich, President and Chief Executive Officer May 14, 1999 /s/ Roland L. Frautschi - --------------------- ---------------------------------- Date Roland L. Frautschi, Senior Vice President, Chief Financial Officer and Treasurer 17 EX-4.1 3 AMENDMENT TO CREDIT AGREEMENT EIGHTH AMENDMENT TO CREDIT AGREEMENT This EIGHTH AMENDMENT TO CREDIT AGREEMENT (this "Eighth Amendment") is made and entered into effective as of May 1, 1999, by and between GOODRICH PETROLEUM COMPANY, L.L.C. ("GP"), a Louisiana limited liability company, successor by merger to GOODRICH PETROLEUM COMPANY OF LOUISIANA, a Nevada corporation ("GPCL"), (the "Borrower"), GOODRICH PETROLEUM CORPORATION, a Delaware corporation, ("Goodrich"), and COMPASS BANK, an Alabama state chartered banking institution (the "Lender"). W I T N E S S E T H: WHEREAS, GPCL, GPC, Inc. of Louisiana (which was merged into GPCL), the Lender, and Goodrich are parties to the Credit Agreement dated August 16, 1995, as amended by First Amendment to Credit Agreement dated as of December 15, 1995, and Letter Amendment dated March 26, 1996, and Second Amendment to Credit Agreement dated as of June 1, 1996, and Letter Amendment dated November 12, 1996, and by Third Amendment to Credit Agreement dated as of January 31, 1997, and by Fourth Amendment to Credit Agreement dated as of June 1, 1997 and by Fifth Amendment to Credit Agreement dated as of October 16, 1997, and as amended by Letter Amendment dated February 25, 1998, and as amended by Sixth Amendment to Credit Agreement dated as of March 27, 1998, and as further amended by Seventh Amendment to Credit Agreement dated as of December 21, 1998 (as amended, the "Agreement"), pursuant to which the Lender has extended credit to GPCL and GP and Goodrich has guaranteed the payment and performance of certain indebtedness and other obligations of GPCL and GP to the Lender; and WHEREAS, the parties hereto desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in the Agreement and this Eighth Amendment, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION I.1 Terms Defined Above. As used herein, each of the terms "Agreement," "Borrower," "Eighth Amendment," "GP," "GPCL", "Goodrich," and "Lender" shall have the meaning assigned to such term hereinabove. I.2 Terms Defined in Agreement. As used herein, each term defined in the Agreement shall have the meaning assigned thereto in the Agreement, unless expressly provided herein to the contrary. 1 I.3 References. References in this Eighth Amendment to Article or Section numbers shall be to Articles and Sections of this Eighth Amendment, unless expressly stated to the contrary. References in this Eighth Amendment to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof," and "hereunder" shall be to this Eighth Amendment in its entirety and not only to the particular Article or Section in which such reference appears. I.4 Articles and Sections. This Eighth Amendment, for convenience only, has been divided into Articles and Sections and it is understood that the rights, powers, privileges, duties, and other legal relations of the parties hereto shall be determined from this Eighth Amendment as an entirety and without regard to such division into Articles and Sections and without regard to headings prefixed to such Articles and Sections. I.5 Number and Gender. Whenever the context requires, reference herein made to the single number shall be understood to include the plural and likewise the plural shall be understood to include the singular. Words denoting sex shall be construed to include the masculine, feminine, and neuter, when such construction is appropriate, and specific enumeration shall not exclude the general, but shall be construed as cumulative. Definitions of terms defined in the singular and plural shall be equally applicable to the plural or singular, as the case may be. ARTICLE II AMENDMENTS The Borrower, Guarantor and the Lender hereby amend the Agreement in the following particulars: 2.01 Amendment of Section 1.2. Section 1.2 of the Agreement is hereby amended as follows: The following definitions are added, deleted and/or amended to read as follows: "Commitment Termination" Date shall mean February 1, 2001. "Debt Service" shall mean, for any period and with respect to Indebtedness of Goodrich on a consolidated basis, the sum of (a) all principal payments made during such period other than with respect to the Obligations plus (b) required principal payments with respect to the Obligation. For purposes of this definition required payments under Tranche A will not be considered. "Excess Cash Flow" shall mean Net Income as reported for the Borrower (and its parent on a consolidated basis) plus: (a) depreciation, depletion, amortization and other non-cash expenses and (b) reported losses on the sale of assets; less (w) non-cash income, (x) reported gains on the sale of assets, 2 (y) approved budgeted capital expenditures, and (z) the monthly principal reductions set forth in Section 2.23. "Net Income" shall mean, for any period, the net income of the Borrower for such period, determined in accordance with GAAP. "Tranche A Principal" shall mean the sum of $9,000,000. 2.02 Addition of Section 2.4A. Section 2.4A shall be added to the Agreement to read as follows: "2.4A Repayment of Tranche A Principal and Interest. Accrued and unpaid interest at the Index Rate plus two percent (2%) on Tranche A Principal shall be due and payable monthly commencing on the first day of June, 1999, and continuing on the first day of each calendar month thereafter until December 1, 1999, when all accrued interest and principal shall be due and payable. Any payments on Tranche A Principal shall permanently reduce Tranche A Principal by a like amount. Borrower shall not be allowed to reborrow under the Tranche A Principal." 2.03 Amendment of Section 2.7(a). Section 2.7(a) of the Agreement shall be amended to read as follows: "2.7 Borrowing Base Determinations. (a) The Borrowing Base as of March 29, 1999, is acknowledged by the Borrower and the Lender to be $20,500,000. The Borrowing Base shall be reduced on April 1 and May 1, 1999, by $50,000 each date and on June 1, 1999, by $200,000. Commencing on July 1, 1999, and continuing on the first day of each calendar month thereafter until the earlier of the date such amount is redetermined or the Commitment Termination Date, the amount of the Borrowing Base shall be reduced by $300,000." 2.04 Addition of Section 2.23. Section 2.23 shall be added to the Agreement to read as follows: "2.23 Excess Cash Flow Application. Beginning May 1, 1999, and continuing on the first day of each month thereafter until the earlier of December 1, 1999, or the payment in full of Tranche A Principal together with all accrued interest, the Excess Cash Flow shall be applied as follows: (a) Up to $200,000 of Excess Cash Flow: 100% shall be applied to Tranche A Principal; (b) Excess Cash Flow over $200,000 and up to $500,000: 75% shall be applied to Tranche A Principal with the balance being retained by the Borrower for working capital and other general corporate purposes; 3 (c) Excess Cash Flow in excess of $500,000: 50% shall be applied to Tranche A Principal with the balance being retained by the Borrower for working capital and other general corporate purposes. Provided, however, if the application of this provision in regard to Excess Cash Flow results in cash on hand of the Borrower (and/or its parent on a consolidated basis) being less than $100,000, the amount of the payment set forth in this section shall be reduced to the extent necessary to allow cash on hand to be at least $100,000." 2.05 Addition of Section 5.20. Section 5.20 shall be added to the Agreement to read as follows: "5.20 Additional Reporting Requirements. (A) Deliver to the Lender within 45 days of each month end the following: (i) a monthly statement of the calculation of Excess Cash Flow; (ii) a capital expenditure budget for the next six month period. The amount of such capital expenditure budget shall be subject to the approval of the Lender and such approval shall be effective for a period of six months from the date of such approval or until such time as an increase is requested and if actual capital expenditures do not exceed the approved budgeted amount, the determination of capital expenditures shall be at the sole discretion of the Borrower; (iii) a report of monthly production of its Oil and Gas Properties, setting forth production volumes for oil, gas, other hydrocarbons and water, broken out by major fields. (B) Deliver to the Lender within 15 days of each month end a report setting forth all accounts payable with amounts due and aged according to invoice date." 2.06 Addition of Section 5.21. Section 5.21 shall be added to the Agreement to read as follows: "5.21 Asset Sales Proceeds. Upon the sale of any Property, 100% of the net proceeds from such sale shall be applied as follows: (i) first, to reduce the Borrowing Base to the extent of the allocated Borrowing Base value for such Property as decided by the Lender in its sole discretion; and (ii) the remainder to be applied to Tranche A Principal." 4 2.07 Addition of Section 5.22. Section 5.22 shall be added to the Agreement to read as follows: "5.22 Cash Collateral Account. (a) The Borrower shall establish a cash collateral account with the Lender, being account number ________ in the name of the Borrower. The Borrower shall send notices to purchasers of production representing a minimum of 90% of sales proceeds (based on average over the prior six months) to begin immediately to remit via wire transfer the proceeds from production into the above account. Such notices shall be in the form on the attached Exhibit A. Borrower will execute a Collateral Assignment of Deposit Accounts and Security Agreement pledging the above account as well as any other account with the Lender." (b) The Borrower and the Lender acknowledge that the Collateral is comprised of Borrower's undivided interest in Oil and Gas Properties and accordingly cash deposited in the Cash Collateral Account may include the interests of other Persons ("Other Revenues"). The Lender agrees that if it receives appropriate evidence that a part of such funds are Other Revenues, such funds will be released to such Persons. The Lender shall not be liable, however, for any actions by the Lender which are taken in compliance with the terms of this Agreement and the Security Instruments with respect to the Other Revenues in the Cash Collateral Account which are taken before the Lender received such evidence that such funds are Other Revenues." 2.08 Amendment of Section 6.7. Section 6.7 of the Agreement shall be amended to read as follows: "6.7 Dividends and Distributions. Neither the Borrower nor the Guarantor shall declare, pay or make, whether in cash or other Property, any dividend or distribution on any membership interest or any share of its capital stock at any time Tranche A Principal is outstanding or at any time that a Default or Event of Default exists or would occur as a result thereof." 2.09 Amendment of Section 6.11. Section 6.11 is amended to read as follows: "6.11 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at any time to be less than $3,750,000 plus, for all fiscal quarters ending subsequent to December 31, 1998, plus 50% of positive Consolidated Net Income and 100% of all cash equity proceeds. 2.10 Addition of Section 6.13. Section 6.13 shall be added to the Agreement to read as follows: "6.13 Accounts Payable. Permit vendor accounts as they apply to the Borrower payable to exceed $2,500,000 as of June 30, 1999." 5 2.11 Additions to Section 7.1. Section 7.1 of the Agreement shall be amended to read as follows by adding the following subparagraph: "(m) an Event of Default shall occur automatically and without any further notice to the Borrower if any reduction in the Borrowing Base as described in Section 2.7(a) is not made on the first day of each month beginning 2:00 p.m. central time on June 1, 1999; and (n) an Event of Default shall occur automatically and without any further notice should the payment of royalties on its Oil and Gas Properties not be made when due." ARTICLE III CONDITIONS The obligation of the Lender to amend the Agreement as provided herein is subject to the fulfillment of the following conditions precedent: III.1 Receipt of Documents and Other Items. The Lender shall have received, reviewed, and approved the following documents and other items, appropriately executed when necessary and in form and substance satisfactory to the Lender: (a) multiple counterparts of this Eighth Amendment executed by the Borrower and Goodrich, as requested by the Lender; and (b) a current list (including addresses) of purchasers of production; (c) Collateral Assignment of Deposit Accounts and Security Agreement from the Borrower pledging certain accounts with the Lender; (d) Security Agreement (Pledge of Certificate of Ownership) with blank power of sale from the Guarantor, as Debtor, to the Lender, as Secured Party pledging 100% of its interest in the Borrower; (e) six month capital budget of the Borrower acceptable to the Lender prior to the execution of the First Amendment and which shall be subject to the terms of Section 5.20; and (f) such other agreements, documents, items, instruments, opinions, certificates, waivers, consents, and evidence as the Lender may reasonably request. III.2 Accuracy of Representations and Warranties. The representations and warranties contained in Article IV of the Agreement and in 6 any other Loan Document shall be true and correct, except as affected by the transactions contemplated in the Agreement and this Eighth Amendment. III.3 Matters Satisfactory to Lender. All matters incident to the consummation of the transactions contemplated hereby shall be satisfactory to the Lender. ARTICLE IV REPRESENTATIONS AND WARRANTIES Each of the Borrower and Goodrich hereby expressly re-makes, in favor of the Lender, all of the representations and warranties set forth in Article IV of the Agreement and set forth in any other Loan Document to which it is a party, and represents and warrants that all such representations and warranties remain true and unbreached, except as affected by the transactions contemplated in the Agreement and this Eighth Amendment. ARTICLE V RATIFICATION Each of the parties hereto does hereby adopt, ratify, and confirm the Agreement and the other Loan Documents to which it is a party, in all things in accordance with the terms and provisions thereof, as amended by this Eighth Amendment and the documents executed in connection herewith. ARTICLE VI MISCELLANEOUS VI.1 Scope of Amendment. The scope of this Eighth Amendment is expressly limited to the matters addressed herein and this Eighth Amendment shall not operate as a waiver of any past, present, or future breach, Default, or Event of Default under the Agreement, except to the extent, if any, that any such breach, Default, or Event of Default is remedied by the effect of this Eighth Amendment. VI.2 Agreement as Amended. All references to the Agreement in any document heretofore or hereafter executed in connection with the transactions contemplated in the Agreement shall be deemed to refer to the Agreement as amended by this Eighth Amendment. VI.3 Parties in Interest. All provisions of this Eighth Amendment shall be binding upon and shall inure to the benefit of the Borrower, the Lender, Goodrich, and their respective successors and permitted assigns. VI.4 Rights of Third Parties. All provisions herein are imposed solely and exclusively for the benefit of the parties hereto and their respective successors and permitted assigns. No other Person shall have standing to require satisfaction of such provisions in accordance with their terms and any or all of such provisions may be freely waived in whole or in part by the Lender at any time if in its sole discretion it deems it advisable to do so. 7 VI.5 Entire Agreement. THIS EIGHTH AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, AMONG SUCH PARTIES REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS EIGHTH AMENDMENT, THE AGREEMENT, AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES. VI.6 Governing Law. THIS EIGHTH AMENDMENT AND ALL ISSUES ARISING IN CONNECTION HEREWITH AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW. VI.7 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS EIGHTH AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN HOUSTON, HARRIS COUNTY, TEXAS. EACH OF THE BORROWER AND GOODRICH HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON, HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS SECTION. VI.8 Waiver of Rights to Jury Trial. EACH OF THE BORROWER, GOODRICH, AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF THIS EIGHTH AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS EIGHTH AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS EIGHTH AMENDMENT. IN WITNESS WHEREOF, this Eighth Amendment is executed effective as of the date first hereinabove written. BORROWER: GOODRICH PETROLEUM COMPANY, L.L.C. By: ------------------------------- Roland L. Frautschi Management Committee Member 8 GUARANTOR: GOODRICH PETROLEUM CORPORATION By: ------------------------------- Roland L. Frautschi Chief Financial Officer and Treasurer LENDER: COMPASS BANK By: ------------------------------- Dorothy Marchand Wilson Senior Vice President 9 EIGHTH AMENDMENT TO CREDIT AGREEMENT between GOODRICH PETROLEUM COMPANY, L.L.C. and COMPASS BANK Effective as of May 1, 1999 EXHIBIT A [FORM OF LETTER] Re: Owner Number REMITTANCE ADDRESS CHANGE NOTICE Dear Gentlemen: Effective immediately please wire amounts to Goodrich Petroleum Company, L.L.C. at the following account. Goodrich Petroleum Company, L.L.C. Account Number ____________ Compass Bank ABA Number _____________ Please note that going forward, these remittance instructions cannot be changed without written notice from both Goodrich Petroleum Company, L.L.C. and Compass Bank. If you have any questions or need additional information before changing the address please call me at (318) 429-1375. Sincerely, - ------------------------ 333 Texas Street, Suite 1350 - Shreveport, Louisiana 71101 Telephone: (318) 429-1375 - Telecopy: (318) 429-2296 A-i -----END PRIVACY-ENHANCED MESSAGE-----