SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2000
FORTUNE NATURAL RESOURCES CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 1-12334 95-4114732
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
515 W. Greens Road, Suite 720, Houston, Texas 77067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 872-1170
Registrant's telecopier number, including area code: (281) 872-1213
N/A
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
AUGUST 9, 2000 - HOUSTON, TEXAS - FORTUNE NATURAL RESOURCES CORPORATION
(NASDAQ OTC BB SYMBOL: FPXA) announced today its financial results for the
quarter ended June 30, 2000.
Second quarter 2000 versus second quarter of 1999
-------------------------------------------------
Fortune incurred a net loss of $135,000, or $0.01 per share for the second
quarter of 2000, compared to a net loss of $393,000, or $0.03 per share, for the
same period in 1999. The 66% lower net loss in the second quarter of 2000 versus
the same 1999 period results primarily from higher oil and gas prices and a
reduction in most costs in 2000.
Fortune's oil and gas revenues increased 56% to $657,000 in the second
quarter of 2000 versus 1999 as higher oil and gas prices offset lower oil and
gas production. Gas prices increased 49% to $3.41 per Mcf during the second
quarter of 2000 versus $2.28 per Mcf for the same 1999 period. Oil prices
increased 66% to $29.40 per Bbl versus $17.75 per Bbl for 1999. Gas production
of 163,700 Mcf for the second quarter of 2000 increased 7% from the prior year
while oil production decreased 18% to 3,400 Bbls.
The producing well at South Timbalier 86 contributed significantly to the
improved second quarter 2000 operating results. This well was recompleted in
early 2000 and began producing at substantially higher rates in February 2000.
The recompletion increased the well's production from an estimated 4 million
cubic feet per day before the workover to approximately 18 million cubic feet of
gas per day by March 2000. By June 2000, the well was producing at approximately
20 million cubic feet of gas per day and 100 barrels of oil per day. Fortune
owns an overriding royalty interest in the well of 3.167% before payout and 4%
after payout. It appears that the well paid out in May 2000. Fortune did not
learn of the recompletion until after we released our first quarter 2000
results; consequently $80,000 and 29,000 Mcfe of first quarter revenue and
production, respectively, from this well were recorded in the second quarter.
Second quarter 2000 operating results were not significantly impacted by
the recent exploration discoveries such as the Cadiz Brooks #1 well, the La Rosa
C-7 well, and workover successes at La Rosa because these operations were
completed late in the second quarter. These wells are expected to have a greater
impact on operating results in the third quarter of 2000.
General and administrative expense and cash interest expense decreased 17%
and 29%, respectively, for the second quarter of 2000 versus 1999. The lower
interest expense results from the conversion of $930,000 of debt to common stock
in the first quarter of 2000. Production and operating expense increased 43%
because of higher production taxes, higher workover expense and more producing
wells in 2000 versus 1999.
2
At June 30, 2000 Fortune reported net working capital of $954,000 which
represents a slight increase over March 31, 2000 and a 216% increase over
December 31, 1999. The increase results from the $763,000 of net equity proceeds
raised primarily during the first quarter of this year and higher cash flow
realized during the second quarter of 2000. High oil and gas prices, lower costs
and the underaccrual discussed above resulted in Fortune realizing positive cash
flow before changes in operating assets and liabilities of $139,000 during the
second quarter of 2000. This cash flow exceeded the corresponding negative cash
flow reported for the first quarter of 2000, allowing Fortune to report positive
cash flow before changes in operating assets and liabilities of $53,000 for the
first six months of 2000.
Year-to-date 2000 vs. 1999
--------------------------
Fortune's net loss for the first six months of 2000 decreased 47% to
$497,000, or $0.03 per share, compared to a net loss of $944,000, or $0.08 per
share, for the same period in 1999. The lower 2000 loss results primarily from
higher oil and gas prices and a reduction in most costs.
Fortune's oil and gas revenues increased 50% to $1,016,000 in the first
six months of 2000 versus 1999 as higher oil and gas prices offset lower oil and
gas production. Gas prices increased 52% to $3.14 per Mcf during the first six
months of 2000 versus $2.07 per Mcf for the same 1999 period. Oil prices
increased 99% to $28.43 per Bbl versus $14.30 per Bbl for 1999. Gas production
decreased 5% to 262,800 Mcf while oil production decreased 10% to 6,700 Bbls for
the first six months of 2000 as compared to the same period in 1999.
General and administrative expense and cash interest expense decreased 13%
and 29%, respectively, for the first six months of 2000 versus 1999. General and
administrative expense is lower as a result of Fortune's cost reduction efforts
in 1999 and 2000. The lower interest expense results from the $930,000
conversion of debt to common stock in the first quarter of 2000. Production and
operating expense increased 41% because of higher production taxes, higher
workover expense and more wells producing in 2000 versus 1999.
The 2000 loss of $ 497,000 also includes a $118,000 extraordinary loss
attributable to the non-cash premium paid to the noteholders who converted their
$930,000 of notes to common stock during the first quarter of 2000.
President's remarks
-------------------
"While we are pleased with the financial improvements in the second
quarter 2000 that provided the Company with its best quarterly results in more
than two years," Fortune's President and CEO, Tyrone J. Fairbanks announced, "we
are even more encouraged by the continued increase in production and prices
which should be reflected in our third quarter results. The Company has made a
number of new discoveries and effected recompletions in June and July which have
dramatically improved our fundamentals from late last year. Fortune continues
its exploration involvement with a portfolio that includes a blend of lower risk
wells and high impact projects."
3
FORTUNE NATURAL RESOURCES CORPORATION is an independent oil and gas
exploration and production company with its principal properties located onshore
and offshore Louisiana and Texas. Certain statements in this news release
regarding future expectations and plans may be regarded as "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. They are subject to various
risks, such as operating hazards, drilling risks, and other uncertainties
inherent in the business of exploring for, developing and producing oil and gas
which may be beyond the Company's control. For a discussion of the contingencies
and uncertainties affecting future events and forward-looking statements, see
Fortune's most recent Annual Report on Form 10-KSB/A, as well as other filings
with the Securities and Exchange Commission. There can be no assurance that
Fortune will be successful in meeting its expectations.
*********
Company Contact: J. Michael Urban
Vice President and CFO
(281) 872-1170
4
FORTUNE NATURAL RESOURCES CORPORATION
Consolidated Statements of Operations
($ in thousands, except per share figures)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
(Unaudited)
REVENUES
Sales of oil and gas, net of royalties $ 657 $ 421 $ 1,016 $ 676
Other income 5 9 11 24
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662 430 1,027 700
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COSTS AND EXPENSES
Production and operating 162 113 285 202
Provision for depletion, depreciation
and amortization 269 230 419 440
General and administrative 297 357 564 648
Debt conversion expense - - - 61
Interest paid in cash 69 97 138 194
Interest - amortization of deferred
financing cost - 26 - 99
-------- -------- -------- --------
797 823 1,406 1,644
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Loss before income taxes and extraordinary item (135) (393) (379) (944)
Provision for income taxes - - - -
-------- -------- -------- --------
Loss before extraordinary item (135) (393) (379) (944)
Extraordinary loss on early extinguishment of debt - - (118) -
-------- -------- -------- --------
Net loss $ (135) $ (393) $ (497) $ (944)
======== ======== ======== ========
Weighted average number of common
shares outstanding (thousands) 16,358 12,194 15,328 12,166
======== ======== ======== ========
Net loss per common share (basic and diluted)
Loss before extraordinary item $ (0.01) $ (0.03) $ (0.02) $ (0.08)
Net loss per common share $ (0.01) $ (0.03) $ (0.03) $ (0.08)
======== ======== ======== ========
Net cash provided by (used in) -
Operating activities
Before changes in operating assets and liabilities $ 53 $ (311)
======== ========
After changes in operating assets and liabilities $ (167) $ (506)
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Investing activities $ (224) $ (309)
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Financing activities $ 763 $ -
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SUMMARY OF BALANCE SHEETS
June 30, 2000 December 31, 1999
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Net working capital $ 954 $ 302
Property and equipment, net 5,929 6,124
Total assets 7,162 6,805
Long-term debt 2,295 3,235
Net stockholders'equity 4,588 3,242
PRODUCTION DATA
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
Net production:
Oil (Bbl) 3,400 4,100 6,700 7,500
Gas (Mcf) 163,700 152,500 262,800 275,400
Average sales prices for period:
Oil ($/Bbl) $29.40 $17.75 $28.43 $14.30
Gas ($/Mcf) 3.41 2.28 3.14 2.07
5
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
None.
6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORTUNE NATURAL RESOURCES CORPORATION
By: /s/ Dean W. Drulias
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Dean W. Drulias
Executive Vice President and General Counsel
Date: August 9, 2000