EXHIBIT 99.2
DALEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(stated in thousands of dollars)
Three Months
Ended March 31
----------------------
1995 1994
-------- --------
REVENUES:
Natural gas $ 19,140 $ 38,516
Oil and gas liquids 9,658 13,611
Other 69 885
-------- --------
28,867 53,012
-------- --------
OPERATING EXPENSES:
Lease operating 8,536 13,689
General and administrative 4,280 4,761
Depreciation, depletion and amortization 19,603 28,889
Exploration 2,695 3,770
-------- --------
35,114 51,109
-------- --------
OPERATING INCOME (LOSS) (6,247) 1,903
-------- --------
OTHER INCOME (EXPENSE)
Interest expense (2,119) (1,392)
Interest income 155 525
Other, net 144 140
-------- --------
(1,820) (727)
-------- --------
EARNINGS (LOSS) BEFORE TAXES (8,067) 1,176
INCOME TAX BENEFIT (EXPENSE):
Current 5,727 5,439
Deferred (1,316) (4,574)
-------- --------
4,411 865
-------- --------
NET EARNINGS (LOSS) $ (3,656) $ 2,041
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DALEN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(stated in thousands of dollars)
March 31 December 31
1995 1994
-------- -----------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 5,653 $ 10,888
Accounts receivable
Oil and gas 11,875 20,009
Trade 6,798 6,030
Affiliates 14,708 7,616
Inventories 1,876 2,125
Prepaid expenses 2,437 3,635
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Total current assets 43,347 50,303
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PROPERTY AND EQUIPMENT
Oil and gas properties,
based on successful efforts method 802,337 787,579
Other property and equipment 6,700 6,671
--------- ---------
809,037 794,250
Less: Accumulated depreciation,
depletion and amortization (381,754) (362,548)
--------- ---------
Net property and equipment 427,283 431,702
--------- ---------
OTHER ASSETS 540 655
--------- ---------
TOTAL ASSETS $ 471,170 $ 482,660
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LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 11,954 $ 15,394
Interest payable 65 67
Accrued liabilities 10,190 10,998
--------- ---------
Total current liabilities 22,209 26,459
--------- ---------
DEFERRED INCOME TAXES 73,845 72,529
ABANDONMENT, DISMANTLEMENT AND OTHER LIABILITIES 8,964 13,864
LONG-TERM DEBT 115,000 115,000
STOCKHOLDER'S EQUITY
Common stock 1 1
Additional paid-in capital 335,470 335,470
Accumulated deficit (84,319) (80,663)
--------- ---------
Total stockholder's equity 251,152 254,808
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 471,170 $ 482,660
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DALEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(stated in thousands dollars)
Three Months
Ended March 31
---------------------
1995 1994
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (3,656) $ 2,041
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion and amortization 19,603 28,889
Deferred income taxes 1,316 4,574
Dry hole expense 933 952
Surrendered leases and other impairments 584 1,381
Loss (gain) on sale of assets (3) (10)
Other (1,309) (532)
-------- --------
17,468 37,295
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (3,540) 5,211
Decrease in prepaid expenses 1,198 798
Increase (decrease) in accounts payable (3,413) 170
Decrease in interest payable (2) (30)
Decrease in accrued liabilities and other (559) (4,360)
-------- --------
Net cash provided by operating activities 11,152 39,084
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (16,350) (12,358)
Decrease in drilling well accrual (60) (1,576)
Proceeds from sale of property and equipment 23 207
-------- --------
Net cash used in investing activities (16,387) (13,727)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (5,235) 25,357
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,888 48,117
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,653 $ 73,474
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DALEN CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
1. The accompanying consolidated financial statement of DALEN Corporation
and Subsidiaries (the "Company") have not been audited by independent
public accountants. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the results of operations for the interim periods
included herein have been made. Certain information and footnote
disclosures normally included in the consolidated financial statements
have been omitted. These consolidated financial statements should be
read in conjunction with the audited consolidated financial statements
and notes thereto included elsewhere in this Form 8-K.
2. In April 1995, Enserch Exploration, Inc., 99.2% owned by ENSERCH
Corporation, entered into a definitive agreement to acquire 100% of the
capital stock of the Company for $340 million plus the assumption of $115
million of bank debt.
3. In the third quarter of 1994, the Company sold certain oil and gas
properties that did not fit within the Company's current business
strategy. The Company sold the properties, which had a net book value
of $131.7 million, to unrelated third parties for $134.0 million in cash,
resulting in a pre-tax gain of $2.3 million. As a result of the sale,
operating results for the three months ended March 31, 1995 are not
comparable to the three months ended March 31, 1994.