-----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, KXtLbYbYSPv6SJxkFQMiLTT3t5UkTSSOOeooXeWaJySiSK/tcPTOnCpEjZXQPbfa SWBaf/yNryONan3sRLQBYw== 0000943861-99-000021.txt : 19990817 0000943861-99-000021.hdr.sgml : 19990817 ACCESSION NUMBER: 0000943861-99-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 99690024 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 6-MOS Dec-31-1999 Jan-01-1999 Jun-30-1999 45,938 0 1,643,542 24,989 0 1,778,455 54,997,772 16,750,471 40,453,212 20,375,189 16,300,000 0 1,546,318 1,055,541 1,176,164 40,453,212 5,607,822 5,771,226 0 5,781,824 519,495 0 1,082,172 1,612,265 0 0 0 0 0 1,612,265 (.43) (.43)
10-Q 2 SECOND QUARTER 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, 1999 ------------------------------------------------- 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 (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 August 13, 1999, there were 5,277,703 shares of Goodrich Petroleum Corporation common stock outstanding. 1 GOODRICH PETROLEUM CORPORATION FORM 10-Q June 30, 1999 INDEX Page No. PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets June 30, 1999 (Unaudited) and December 31, 1998................ 3-4 Consolidated Statements of Operations (Unaudited) Six Months Ended June 30, 1999 and 1998........................ 5 Three Months Ended June 30, 1999 and 1998...................... 6 Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 1999 and 1998........................ 7 Consolidated Statements of Stockholders' Equity (Unaudited) Six Months Ended June 30, 1999 and 1998........................ 8 Notes to Consolidated Financial Statements........................ 9-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 12-16 Item 3. Quantitative and Qualitative Disclosures about Market Risk 16 PART II - OTHER INFORMATION 18 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, 1999 1998 ----------- ------------ (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents..........................$ 45,938 $ 95,630 Marketable-equity securities....................... --- 358,700 Accounts receivable Trade and other, net of allowance................ 414,118 2,197,179 Accrued oil and gas revenue...................... 1,204,435 1,089,226 Prepaid insurance.................................. 113,964 184,898 ----------- ----------- Total current assets......................... 1,778,455 3,925,633 ----------- --------- PROPERTY AND EQUIPMENT Oil and gas properties (successful efforts method). 54,798,931 53,320,832 Furniture, fixtures and equipment.................. 198,841 195,279 ----------- ----------- 54,997,772 53,516,111 Less accumulated depletion, depreciation and amortization................................. (16,750,471) (13,720,009) ------------ ----------- Net property and equipment................... 38,247,301 39,796,102 ----------- ----------- OTHER ASSETS........................................ 427,456 314,853 ----------- ----------- TOTAL ASSETS.........................$ 40,453,212 $ 44,036,588 =========== ===========
See notes to consolidated financial statements. 3 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Continued)
June 30, December 31, 1999 1998 ---------- ------------ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt.............. $ 12,600,000 $ 29,500,000 Accounts payable............................... 6,736,208 7,763,507 Accrued liabilities............................ 1,038,981 1,813,693 ---------- ----------- Total current liabilities................ 20,375,189 39,077,200 ---------- ----------- LONG TERM DEBT .................................. 16,300,000 --- 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......................... 1,055,541 1,049,541 Additional paid-in capital......................... 15,250,027 15,226,027 Accumulated deficit............................ (14,073,863) (12,461,598) Accumulated other comprehensive income......... --- (400,900) ----------- ----------- Total stockholders' equity..................... 3,778,023 4,959,388 ----------- ----------- TOTAL LIABILITIES AND STOCK HOLDERS' EQUITY................... $ 40,453,212 $ 44,036,588 =========== ===========
See notes to consolidated financial statements. 4 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Six Months Ended June 30, -------------------- 1999 1998 -------- -------- REVENUES Oil and gas sales...................................$ 5,607,822 4,405,084 Other ....................................... 163,404 297,096 ---------- ---------- Total revenues................................ 5,771,226 4,702,180 ----------- ---------- EXPENSES Lease operating expense and production taxes........ 1,367,534 1,287,314 Depletion, depreciation and amortization............ 2,466,956 2,102,268 Exploration......................................... 822,074 3,171,425 Interest expense.................................... 1,082,172 803,682 General and administrative.......................... 1,125,260 1,296,773 ----------- ---------- Total costs and expenses...................... 6,863,996 8,661,462 ----------- ---------- LOSS ON SALE OF ASSETS............................... (519,495) --- ----------- ---------- LOSS BEFORE INCOME TAXES............................. (1,612,265) (3,959,282) Income taxes ....................................... --- --- ----------- ---------- NET LOSS ........................................... (1,612,265) (3,959,282) Preferred stock dividends (1999 amounts in arrears). 627,824 627,814 ----------- ---------- LOSS APPLICABLE TO COMMON STOCK......................$ (2,240,089) (4,587,096) =========== ========== BASIC LOSS PER AVERAGE COMMON SHARE..................$ (.43) (.88) =========== ========== DILUTED LOSS PER AVERAGE COMMON SHARE................$ (.43) (.88) =========== ========== AVERAGE COMMON SHARES OUTSTANDING.................... 5,254,501 5,235,824
See notes to consolidated financial statements. 5 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Three Months Ended June 30, ---------------------- 1999 1998 -------- -------- REVENUES Oil and gas sales....................................$ 2,784,953 2,015,860 Other........... .................................... 44,577 248,537 --------- ---------- Total revenues................................. 2,829,530 2,264,397 --------- ---------- EXPENSES Lease operating expense and production taxes......... 700,780 613,547 Depletion, depreciation and amortization............. 1,158,403 975,702 Exploration.......................................... 423,293 2,560,555 Interest expense..................................... 561,692 418,107 General and administrative........................... 561,378 647,253 --------- ---------- Total costs and expenses....................... 3,405,546 5,215,164 --------- ---------- LOSS BEFORE INCOME TAXES.............................. (576,016) (2,950,767) Income taxes ........................................ --- --- --------- -------- NET LOSS ........................................... (576,016) (2,950,767) Preferred stock dividends (1999 amounts in arrears).. 313,912 313,902 --------- ---------- LOSS APPLICABLE TO COMMON STOCK.......................$ (889,928) (3,264,669) ========== ========== LOSS PER AVERAGE COMMON SHARE.........................$ (.17) (.62) ========== ========== AVERAGE COMMON SHARES OUTSTANDING .................................... 5,261,221 5,242,270
See notes to consolidated financial statements. 6 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, ---------------------- 1999 1998 -------- -------- OPERATING ACTIVITIES Net loss..............................................$(1,612,265) (3,959,282) Adjustments to reconcile net loss to net cash provided (used in) by operating activities: Depletion, depreciation and amortization............. 2,466,956 2,102,268 Amortization of leasehold costs...................... 563,506 295,247 Loss on sale of assets............................... 519,495 (4,206) Capital expenditures charged to income............... 43,922 2,588,062 Director stock grant................................. 30,000 79,932 Payment of contingent liability...................... --- (107,625) Payment of other liabilities......................... --- (160,518) ---------- ---------- 2,011,614 833,878 Net change in: Accounts receivable.................................. 1,667,852 (191,623) Prepaid insurance and other.......................... (41,669) 91,661 Accounts payable..................................... (1,027,299) (1,051,251) Accrued liabilities.................................. (774,712) (41,911) ---------- ---------- Net cash provided by (used in) operating activities. 1,835,786 (359,246) ---------- ---------- INVESTING ACTIVITIES Proceeds from sales of assets......................... 240,105 49,091 Acquisition of oil and gas properties................. --- (129,325) Exploration and drilling capital expenditures paid.... (1,525,583) (4,462,883) ---------- ---------- Net cash used in investing activities............... (1,285,478) (4,543,117) ---------- ---------- FINANCING ACTIVITIES Proceeds from bank borrowings......................... --- 5,500,000 Principal payments of bank borrowings................. (600,000) (500,000) Preferred stock dividends --- (627,814) ---------- ---------- Net cash provided by (used in) financing activities. (600,000) 4,372,186 ---------- ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS.............. (49,692) (530,177) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....... 95,630 793,358 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.............$ 45,938 263,181 ========== ========== NON-CASH INVESTING ACTIVITIES Accrued capital expenditures.......................... --- 3,695,232
See notes to consolidated financial statements. 7 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity Six Months Ended June 30, 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............................ --- --- --- --- --- --- Unrealized depreciation of marketable securities available for sale..... --- --- --- --- --- --- Preferred stock dividends........... --- --- --- --- --- --- Employee and director stock grants.. --- --- --- --- 15,300 3,060 -------- --------- ----------- ------------ ----------- ------------ Balance at June 30, 1998............ 796,318 $ 796,318 750,000 $ 750,000 5,247,703 $ 1,049,541 ======== ========= =========== ============ =========== ============ Balance at December 31, 1998........ 796,318 $ 796,318 750,000 $ 750,000 5,247,705 $ 1,049,541 Net loss............................ --- --- --- --- --- --- Directors Stock Grant............... --- --- --- --- 30,000 6,000 Realized loss on sale of marketable securities............. --- --- --- --- --- --- -------- --------- ----------- ------------ ----------- ------------ Balance at June 30, 1999............ 796,318 $ 796,318 750,000 $ 750,000 5,277,705 $ 1,055,541 ======== ========= =========== ============ =========== ============
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............................ --- (3,959,282) --- (3,959,282) Unrealized depreciation of marketable securities available for sale..... --- --- (295,400) (295,400) Preferred stock dividends........... --- (313,912) --- (313,912) 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 =========== ============ ============== =============== Balance at December 31, 1998........ $ 15,226,027 $ (12,461,598) $ (400,900) $ 4,959,388 Net loss............................ --- (1,612,265) --- (1,612,265) Directors Stock Grant............... 24,000 --- --- 30,000 Realized loss on sale of marketable securities............. --- --- 400,900 400,900 ----------- ------------ ------------- -------------- Balance at June 30, 1999............ $ 15,250 027 $ (14,073,863) $ --- $ 3,778,023 =========== ============ ============= ==============
*Dividends are cumulative and arrearages amounted to $627,824, or $.12 per share at June 30, 1999. See notes to consolidated financial statements. 8 GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 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 June 30, 1999 and the results of its operations for the six and three months ended June 30, 1999 and 1998. The results of operations for the six and three-month periods ended June 30, 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. 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 9 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. 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 $12,600,000, and exceed current assets by $18,597,000. Additionally, the Company is unable to incur additional debt under its credit facility. Additionally, the Company is unable to incur additional debt at the parent company level 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 with and/or acquisitions by other entities; 4) reducing operating costs; 5) 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. 10 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 June 30, 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 six months ended June 30, 1999 and 1998 due to its incurring a net loss for each period. A valuation allowance has been provided for the amount of net operating losses incurred. NOTE F - Loss Per Share - ----------------------- During 1999, the Company suspended dividend payments on its Series A and Series B convertible preferred stock. Dividends on both classes of its preferred stock are cumulative and arrearages amounted to $628,000 at June 30,1999. Accordingly, undeclared dividends held in arrears have been added to the Company's net loss in computing loss per share amounts applicable to common stockholders. 11 Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations ----------------------------------- Changes in Results of Operations - -------------------------------- Six months ended June 30, 1999 versus six months ended June 30, 1998 Total revenues for the six months ended June 30, 1999 amounted to $5,771,000 and were $1,069,000 higher than the $4,702,000 for the six months ended June 30, 1998 due to higher oil and gas revenues. Oil and gas sales were $1,203,000 higher due primarily to higher oil and gas production partially offset by lower oil and gas prices. Oil and gas sales were higher by approximately $350,000 due to the recording of previously suspended oil and gas sales. The following table reflects the production volumes and pricing information for the periods presented.
Six months Six months ended June 30, 1999 ended June 30, 1998 ------------------- ------------------- Production Average Price Production Average Price ---------- ------------- ---------- ------------- Gas (Mcf)...... 1,564,419 $ 1.95 1,106,260 $ 2.27 Oil (Bbls)..... 203,326 12.60 136,152 13.87
Lease operating expense and production taxes were $1,368,000 for the six months ended June 30, 1999, versus $1,287,000 for the six months ended June 30, 1998, or $81,000 higher due primarily to higher oil and gas sales. Depletion, depreciation and amortization was $2,467,000 for the six months ended June 30, 1999, versus $2,102,000 for the six months ended June 30, 1998, or $365,000 higher due to slightly higher depletion rates and higher volumes in the first six months of 1999 versus 1998. Exploration expense for the six months ended June 30, 1999 was $822,000 versus $3,171,000 for the same period of 1998, or $2,349,000 lower due primarily to dry hole costs of $5,000 in the current period compared to $2,042,000 for the same period of 1998. Additionally, seismic costs and prospect depletion were of $73,000 and $564,000 for the six months ended June 30, 1999 versus $575,000 and $295,000 in the same period in 1998. Interest expense was $1,082,000 in the six months ended June 30, 1999 compared to $804,000 in the six months ended June 30, 1998 due to higher average debt outstanding for the six months ended June 30, 1999. General and administrative expenses amounted to $1,125,000 in the six months ended June 30, 1999 versus $1,297,000 in the six months ended June 30, 1998. 12 The Company incurred a loss on the sale of marketable equity securities of $519,000 for the six months ended June 30, 1999. 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 dividends are cumulative and arrearages amounted to $628,000 at June 30, 1999. The Company has no plans to reinstate the cash dividends in the foreseeable future. Preferred stock dividends amount to $628,000 for the six months ended June 30, 1998. Three months ended June 30, 1999 versus three months ended June 30,1998 Total revenues for the three months ended June 30, 1999 amounted to $2,830,000 and were $566,000 higher than the $2,264,000 for the three months ended June 30, 1998. Oil and gas sales were $769,000 higher due primarily to higher oil prices and increased oil and gas production. The following table reflects the production volumes and pricing information for the periods presented.
Three months Three months ended June 30, 1999 ended June 30, 1998 ------------------- ------------------- Production Average Price Production Average Price ---------- ------------- ---------- ------------- Gas (Mcf)....... 679,463 $ 2.11 561,957 $ 2.13 Oil (Bbls)...... 88,706 15.25 65,789 12.49
Lease operating expense and production taxes were $701,000 for the three months ended June 30, 1999, versus $614,000 for the three months ended June 30, 1998, or $87,000 higher due to higher oil and gas sales. Depletion, deprecation and amortization was $1,158,000 for the three months ended June 30, 1999, versus $976,000 for the three months ended June 30, 1998, or $182,000 higher than the second quarter of 1998 due to higher production volumes in the second quarter of 1999 versus 1998. The Company incurred $423,000 of exploration expense in the second quarter of 1999, compared to $2,561,000 in the second quarter of 1998, or $2,138,000 lower primarily due to dry hole costs of $2,107,000 in the second quarter of 1998 versus $0 in 1999. Interest expense was $562,000 in the three months ended June 30, 1999 compared to $418,000 in the second quarter of 1998 due to higher average debt outstanding for the quarter ended June 30, 1999. 13 General and administrative expenses amounted to $561,000 in the three months ended June 30, 1999 versus $647,000 in the second quarter of 1998. Liquidity and Capital Resources - ------------------------------- Net cash provided by operating activities was $1,836,000 in the six months ended June 30, 1999 compared to net cash used in operating activities of $359,000 in the six months ended June 30, 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 $1,285,000 for the six months ended June 30, 1999 compared to $4,543,000 in 1998. The six months ended June 30, 1999 reflects capital expenditures paid totaling $1,526,000 and proceeds from the sales of marketable equitable securities of $240,000. The six months ended June 30, 1998 reflects $4,463,000 in exploration and drilling capital expenditures paid and $129,000 of cash paid in connection with the purchase of oil and gas properties offset by $49,000 in proceeds from the sale of certain oil and gas properties. Net cash used in financing activities was $600,000 for the six months ended June 30, 1999 as compared to net cash provided by financing activities of $4,372,000 in the prior year period. The 1999 amount includes pay downs of $600,000 by the Company under its line of credit. The 1998 amount included the borrowing of $5,500,000 by the Company under its line of credit and pay downs under its line of credit of $500,000. The 1999 period reflects no preferred dividends, whereas the 1998 period contains dividends of $628,000. On May 12, 1999 the Company signed a definitive agreement with Compass Bank to restructure its existing credit facility. 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 14 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. Substantially all of the Company's assets are pledged to secure this credit facility. 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 with and/or acquisitions by other entities; 4) reducing operating costs; 5) 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 $1,526,000 in capital expenditures in the three months ended June 30, 1999, related primarily to recompletion of existing wells and maintenance of existing leases. Year 2000 - --------- The Company's senior financial management has taken responsibility for identifying, addressing and monitoring its Year 2000 issues and has assessed the ability of its various electronic operating systems, and those of significant third parties, to appropriately consider periods and dates after December 31, 1999. These individuals report to the Audit Committee of the Board of Directors on a periodic basis. The Company 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 15 necessary to achieve Year 2000 compliance timely. The Company has taken steps necessary, including upgrades of application software and hardware, to ensure its electronic operating systems comply with Year 2000 issues. A contingency plan has been developed to address the likelihood that problems could arise associated with non-compliance. The estimated costs associated with becoming Year 2000 compliant are not expected to be material to the Company. 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 - ------------- On July 28, 1999 the Company was notified by the New York Stock Exchange that the Exchange had revised its minimum financial criteria for listed companies and the time frame required for listed companies to become compliant. In addition the Company was informed that it was not in compliance with the revised criteria. The Company plans to submit a revised 12-18 month business plan to the Exchange in response to the notice. As described above, the Company's liquidity situation may make it difficult for the Company to adhere to this business plan. If the Company fails to do so, there can be no assurance that the New York Stock Exchange will not delist the Company's common stock. 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. Quantitative and Qualitative Disclosures about Market Risk Debt --------------------------------------------------------------- and Debt Related Derivatives ---------------------------- The Company is exposed to interest rate risk on its short-term and long-term debt with variable interest rates ($28,900,000 at June 30, 1999). Based on the overall interest rate exposure on variable rate debt at June 30, 1999 a hypothetical 2% change in interest rates would increase interest expense by approximately $578,000. 16 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 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. 17 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, 1999. 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 --- -------- Sheldon Appel 4,514,698 47,121 Jeff Benhard 4,514,684 47,135 Ratification of the appointment of KPMG Peat Marwick LLP as the Company's - -------------------------------------------------------------------------------- independent auditors for 1999 - ----------------------------- FOR AGAINST WITHHELD --- ------- -------- 4,561,819 20,948 15,579 Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 27.1 - Financial Data Schedule (b) Reports on Form 8-K None. 18 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, 1999 /s/ Walter G. Goodrich - -------------------- --------------------------------- Date Walter G. Goodrich, President and Chief Executive Officer August 13, 1999 /s/ Roland L. Frautschi - -------------------- -------------------------------- Date Roland L. Frautschi, Senior Vice President, Chief Financial Officer and Treasurer 19 -----END PRIVACY-ENHANCED MESSAGE-----