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): May 12, 1999
FORTUNE NATURAL RESOURCES CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 1-12334 95-4114732
(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
(1) Fortune's press release made May 12, 1999 to report exploration
results follows:
Fortune Natural Resources Corporation (AMEX SYMBOL: FPX) today announced
an interest in two new discovery wells, results of other recent discoveries
placed on production and results of other oil and gas operations undertaken
during the first few months of 1999.
GULF OF MEXICO ACTIVITY
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BAY MARCHAND BLOCK "5" - OFFSHORE LOUISIANA - STATE WATERS (NEW
DISCOVERIES):
SL 14498-#1: In July 1997, Fortune sold its 10% working interest in State
Lease 14498, Offshore Louisiana (previously referred to as the DABM Prospect),
for a small cash consideration and retained an overriding royalty of one half of
one percent. Late last year, the purchaser successfully drilled a new discovery
well, the 14498-#1, and encountered 285' of net pay in nine pay zones in late
1998. The initial discovery well was recently completed and is expected to
commence production in mid-June when a platform on the lease has been
refurbished and upgraded to handle expected production rates.
SL 14498-#3: During the first quarter of 1999, a second discovery well was
drilled, the 14498-#3, in a separate fault block on the lease. The well
encountered 154' of net pay in one zone. This well has also just been completed
and is expected to commence production along with the 14498-#1 in mid-June 1999
from the upgraded platform.
SOUTH TIMBALIER BLOCK "86" - OFFSHORE LOUISIANA - FEDERAL OCS:
OCS-G 14520-#2: The OCS-G 14520 #2 discovery well at South Timbalier Block
"86" (previously referred to as the Polaris Prospect), which was drilled in the
fourth quarter of 1998 and encountered approximately 60 feet of net pay in the
P-95 sand and 23 feet of net pay in the BP sand, has been completed and placed
on production about three months ahead of schedule. Platform hook-up is complete
and the well is currently producing at a rate of approximately 15 million cubic
feet of natural gas and 100 barrels of condensate per day through a 24/64" choke
with flowing tubing pressure of 3,500 pounds. Fortune owns a 3.167% overriding
royalty interest before payout, which converts to a 4% overriding royalty after
payout. This Gulf of Mexico discovery is not associated with Fortune's producing
interest in South Timbalier Block "76", which is located approximately 25 miles
away.
TEXAS GULF COAST AND STATE WATERS ACTIVITY:
ESPIRITU SANTO BAY - CALHOUN COUNTY, TEXAS - TRANSITION ZONE:
210-#5 AND 216-#16 WELLS - GRASS ISLAND FIELD: During the first quarter of
1999, the Company participated in the completion of the 210-#5 and 216-#16 wells
at the Grass Island field. The wells are currently producing at rates of 850 MCF
and 550 MCF per day, respectively, from the lower most pay zone in each well.
Fortune owns an approximate 8% working interest in the 210-#5 well and an
approximate 4% working interest in the 216-#16 well. Fortune has a lower
interest in these wells, as compared to its other prospects in the Espiritu
Santo Bay Project, due to pooling its interest with interests owned previously
by others in the shallow Grass Island field.
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164-4 WELL - SHARK PROSPECT UPDATE: The operator has advised the Company
that required plugging operations are underway at the 164-4 well where the
Company and its partners encountered a blowout last year. The Company and its
partners are awaiting final approval from the insurance companies so we can
commence re-drill operations on the Shark Prospect.
LA ROSA - REFUGIO COUNTY, TEXAS - ONSHORE:
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B. D. ROOKE #C-5 WELL: Within the last month, a successful re-completion
was made in the next shallowest productive zone in the #C-5 well. The new zone's
production was brought on at a rate of 2 million cubic feet of natural gas per
day on a 28/64" choke but has subsequently been restricted to approximately 1.2
million cubic feet of natural gas and 16 barrels of oil per day on a 20/64"
choke. Fortune owns an 18.75% working interest in this well. The La Rosa #C-5
was originally drilled in August 1998, logged multiple pay zones and was
originally completed in the lowest productive zone.
J. W. SPAULDING-#12 WELL: Last week, a successful re-completion was made
in the next shallowest productive zone in the Spaulding-#12 well and is
producing approximately 1.0 million cubic feet of natural gas and 50 barrels of
condensate per day on a 12/64" choke. Fortune owns a 20.69% working interest in
this well. The Spaulding-#12 was originally drilled in July 1998, logged
multiple pay zones and was originally completed in the lowest productive zone.
LA ROSA - MICHNA-#11 WELL: The next new exploration well at La Rosa is the
Michna-#11 well. The new well is scheduled to spud during the second quarter of
1999.
MISSISSIPPI ONSHORE - BLACK WARRIOR BASIN:
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BACON PROSPECT - ANDERSON #24-7 WELL - CHICKASAW COUNTY, MISSISSIPPI: The
Anderson #24-7 was logged and completed on December 28, 1998 with three pay
zones totaling approximately 29' of net pay. A completion attempt was made last
month in the lowest zone with limited hydrocarbon entry into the wellbore. An
artificial fracture stimulation was designed to frac the lowest zone, which is
common procedure in the area, and the procedure was completed last week. The
well is currently making some gas (approx. 150 mcf/d) while continuing to
recover frac fluids. Gathering lines are currently being installed and it is
anticipated the well will be placed on production within the next few weeks.
Fortune owns a 10% working interest in the discovery.
(2) Fortune's press release made May 13, 1999 to report first quarter
results follows:
Fortune Natural Resources Corporation (AMEX SYMBOL: FPX) announced today
its financial results for the quarter ended March 31, 1999.
The Company incurred a net loss for the first quarter of 1999 of $553,000,
or $0.05 per share, compared to a net loss of $739,000, or $0.06 per share, for
the first quarter of 1998.
Primarily as a result of lower oil and gas prices and Fortune's sale of
its East Bayou Sorrel field, oil and gas revenues for the first quarter of 1999
decreased 64% to $255,000, compared to $706,000 reported for the first quarter
of 1998. Oil prices declined 30% while gas prices declined 24% for the first
quarter of 1999 versus 1998. The sale of East Bayou Sorrel was the primary
contributor to the decrease in oil production of 85% and gas production of 27%
for the first quarter of 1999 versus 1998. Offsetting the decreased oil and gas
revenues were decreases in production and operating expense of 61%;
depreciation, depletion and amortization of 63%; and general and administrative
expense of 37% for the first quarter of 1999 versus 1998.
3
Fortune Natural Resources Corporation is an independent oil and gas
exploration and production company with its principal properties located onshore
and offshore Louisiana and Texas. Certain statements in this news release
regarding future expectations and plans may be regarded as "forward looking
statements" within the meaning of the Securities Exchange Act of 1934. They are
subject to various risks, such as operating hazards, drilling risks, and other
uncertainties inherent in the business of exploring for, developing and
producing oil and gas which may be beyond Fortune's control. For a discussion of
the contingencies and uncertainties affecting future events and forward-looking
statements, see Fortune's latest Report on Form 10-K, as well as other filings
with the Securities and Exchange Commission. There can be no assurance that
Fortune will be successful in meeting its expectations.
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Company Contact: J. Michael Urban
Vice President and CFO
(281) 872-1170
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FORTUNE NATURAL RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share figures)
Three Months Ended
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March 31, March 31,
1999 1998
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(Unaudited)
REVENUES
Sales of oil and gas, net of royalties $ 255 $ 706
Other income 15 17
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270 723
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COSTS AND EXPENSES
Production and operating 90 227
Provision for depletion, depreciation
and amortization 210 570
General and administrative 291 459
Note restructuring cost 61 -
Interest paid in cash 97 110
Interest - amortization of deferred financing cost 74 96
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823 1,462
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Loss before provision for income taxes (553) (739)
Provision for income taxes - -
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Net loss $ (553) $ (739)
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Weighted average number of common
shares outstanding (thousands) 12,138,000 12,122,000
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Net loss per common share $ (0.05) $ (0.06)
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Net cash provided by (used in) -
Operating activities $ (226,000) $ (308,000)
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Investing activities $ (197,000) $3,842,000
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Financing activities $ - $ (529,000)
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SUMMARY OF BALANCE SHEETS
March 31, December 31,
1999 1998
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Current assets $ 1,367 $ 1,887
Property and equipment, net 6,443 6,456
Total assets 7,886 8,492
Current liabilities 419 563
Long-term debt 3,225 3,225
Total net stockholders' equity 4,242 4,704
PRODUCTION DATA
Three Months Ended
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March 31, March 31,
1999 1998
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Net production:
Oil (Bbl) 3,300 21,400
Gas (Mcf) 122,800 168,900
Average sales prices for period:
Oil (Bbl) $ 9.99 $ 14.28
Gas (Mcf) 1.80 2.37
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
None.
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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/ J. Michael Urban
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J. Michael Urban
Vice President and Chief Financial Officer
Date: May 13, 1999
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