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, 1995
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 1-7627
WAINOCO OIL CORPORATION
(Exact name of registrant as specified in its charter)
Wyoming 74-1895085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Smith Street, Suite 2100 77002-4367
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 658-9900
Not Applicable
---------------------------------------------------
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. Yes X No . . .
Registrant's number of common shares outstanding as of July 28, 1995:
27,256,002
WAINOCO OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1995
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information 13
Definitions of Terms
mcf = one thousand cubic feet
mmcf = one million cubic feet
mmcfpd = one million cubic feet per day
bbl(s) = barrel(s)
bpd = one barrel per day
mbbls = one thousand barrels
mmcfe = one million cubic feet equivalent
Equivalent information is based on British Thermal Units at a ratio of six
mcf of natural gas to one bbl of oil. All dollar amounts are expressed in
United States dollars unless otherwise indicated as Canadian dollars (C$).
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share)
Six Months Ended Three Months Ended
June 30 June 30
1995 1994 1995 1994
-------- -------- -------- --------
Revenues:
Refined products $156,960 $142,046 $ 89,018 $ 79,748
Oil and gas sales 14,280 19,820 6,582 10,422
Other 6,474 930 4,766 420
-------- -------- -------- --------
177,714 162,796 100,366 90,590
-------- -------- -------- --------
Costs and Expenses:
Refining operating costs 153,516 124,654 83,909 70,990
Oil and gas operating costs 5,426 6,375 2,404 3,142
Selling and general expenses 5,786 5,848 2,703 2,861
Depreciation, depletion and amortization 11,384 12,590 5,269 6,632
-------- -------- -------- --------
176,112 149,467 94,285 83,625
-------- -------- -------- --------
Operating Income 1,602 13,329 6,081 6,965
Interest Expense, Net 10,071 10,241 4,990 5,180
-------- -------- -------- --------
Income (Loss) Before Income Taxes (8,469) 3,088 1,091 1,785
Provision (Benefit) for Income Taxes 68 (388) 37 (216)
-------- -------- -------- --------
Net Income (Loss) $ (8,537) $ 3,476 $ 1,054 $ 2,001
======== ======== ======== ========
Income (Loss) Per Share $ (.31) $ .13 $ .04 $ .07
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except shares)
June 30, 1995 and December 31, 1994 1995 1994
- ------------------------------------ -------- --------
ASSETS
Current Assets:
Cash, including cash equivalents of
$295 in 1995 and $467 in 1994 $ 3,411 $ 5,831
Trade receivables 18,722 17,990
Joint operators and other receivables 2,505 3,209
Inventory of crude oil, products and other 24,270 23,618
Other current assets 862 1,129
-------- --------
Total current assets 49,770 51,777
-------- --------
Property and Equipment, at cost:
Oil and gas properties, on a full-cost basis 214,358 454,559
Refinery and pipeline 135,621 132,872
Furniture, fixtures and other equipment 5,388 5,505
-------- --------
355,367 592,936
Less - Accumulated depreciation, depletion and amortization 150,470 372,937
-------- --------
204,897 219,999
Other Assets 5,587 5,760
-------- --------
$260,254 $277,536
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 31,499 $ 32,991
Oil and gas proceeds payable 3,026 3,421
Accrued interest 5,587 5,602
Accrued turnaround cost 1,722 2,245
Accrued liabilities and other 4,343 5,986
-------- --------
Total current liabilities 46,177 50,245
-------- --------
Long-Term Debt
Revolving credit facilities 7,300 15,000
12% Senior Notes 100,000 100,000
7 3/4% Convertible Subordinated Debentures 46,000 46,000
10 3/4% Subordinated Debentures 9,831 9,797
-------- --------
163,131 170,797
-------- --------
Deferred Credits and Other 6,016 4,627
Deferred Income Taxes 2,418 2,418
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $100 par value, 500,000 shares authorized,
no shares issued 0 0
Common stock, no par, 50,000,000 shares authorized,
27,313,502 shares and 27,310,842 shares issued in
1995 and 1994, respectively 57,172 57,172
Paid-in capital 81,767 81,758
Retained earnings (deficit) (87,441) (78,904)
Cumulative translation adjustment (8,727) (10,307)
Treasury stock, 57,500 and 60,000 shares
in 1995 and 1994, respectively (259) (270)
-------- --------
Total Shareholders' Equity 42,512 49,449
-------- --------
$260,254 $277,536
======== ========
The accompanying notes are an integral part of these financial statements.
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
For the six months ended June 30, 1995 1994
- -------------------------------- -------- --------
OPERATING ACTIVITIES
Net income (loss) $ (8,537) $ 3,476
Depreciation, depletion and amortization 11,384 12,590
Gain on sale of interest in gas marketing company (1,780) 0
Deferred credits and other 547 (960)
-------- --------
1,614 15,106
Change in working capital from operations (224) (5,108)
-------- --------
Net cash provided by operating activities 1,390 9,998
INVESTING ACTIVITIES
Additions to property and equipment (11,287) (13,919)
Sales of oil and gas properties 13,761 810
Sale of interest in gas marketing company 1,824 0
Net cash distributed as operator of properties and other (93) (247)
-------- --------
Net cash (used in) provided by investing activities 4,205 (13,356)
FINANCING ACTIVITIES
Long-term bank borrowings 26,300 11,264
Payments of long-term bank debt (34,000) (7,664)
Other (254) (144)
-------- --------
Net cash provided by financing activities (7,954) 3,456
Effect of exchange rate changes on cash (61) 0
-------- --------
Increase (Decrease) in Cash and Cash Equivalents (2,420) 98
Cash and Cash Equivalents, beginning of period 5,831 3,770
-------- --------
Cash and Cash Equivalents, end of period $ 3,411 $ 3,868
======== ========
The accompanying notes are an integral part of these financial statements.
WAINOCO OIL CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
1. Financial statement presentation and earnings per share
Financial statement presentation
The condensed consolidated financial statements include the accounts
of Wainoco Oil Corporation, a Wyoming Corporation, and its wholly owned
subsidiaries, including Frontier Holdings Inc. (Frontier) and Wainoco Oil &
Gas Company, collectively referred to as Wainoco or the Company. These
financial statements have been prepared by the registrant without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) and include all adjustments (comprised of only normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair 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 such rules and regulations, although Wainoco believes that the
disclosures are adequate to make the information presented not misleading.
It is suggested that the financial statements included herein be read in
conjunction with the financial statements and the notes thereto included in
Wainoco's annual report on Form 10-K for the year ended December 31, 1994.
Earnings per share
Primary and fully diluted earnings per share have been computed on the
weighted average number of common shares outstanding and assume the
exercise of stock option shares for the three months ended June 30, 1995
and the three months and six months ended June 30, 1994. The effect of
dilution for the fully diluted computation was immaterial. No effect was
given for the addition of dilutive stock options for the six months ended
June 30, 1995 as a loss was incurred. The primary and fully diluted
average shares outstanding for the three months and six months ended June
30, 1995 were 27,319,328 and 27,251,760 and in 1994 were 27,404,724 and
27,367,539, respectively.
2. Schedule of major components of inventory
June 30, December 31,
1995 1994
------------ ------------
(in thousands)
Crude oil and raw materials $ 3,385 $ 6,135
Unfinished products 4,169 3,489
Finished products 10,234 7,737
Chemicals and in-transit inventory 1,110 1,277
Repairs and maintenance supplies and other 5,372 4,980
-------- --------
$ 24,270 $ 23,618
======== ========
3. Accounting policy for oil and gas properties
Wainoco follows the accounting policy (commonly referred to as "full-
cost" accounting) of capitalizing costs incurred in the acquisition,
exploration and development of oil and gas reserves. No gains or losses
are recognized upon the sale or disposition of oil and gas properties,
except for significant transactions.
Wainoco computes the provision for depreciation, depletion and
amortization of oil and gas properties, by country, on a quarterly basis
using the composite unit-of-production method based on future gross revenue
attributable to proved reserves.
4. Restructuring of operations
In the second quarter, Wainoco closed the last of the anticipated
sales of United States properties realizing proceeds of $12,908,000. A
loss was accrued for these sales in the fourth quarter of 1994. The sale
of the Conroe field is not contemplated.
Wainoco recorded income from these properties until the property sales
were closed. During the six months and three months ended June 30, 1995,
the Company recorded the following for the properties sold:
June 30, 1995
--------------------------------------
Six Months Ended Three Months Ended
------------------ ------------------
Financial information (in thousands)
Oil and gas revenue $ 2,733 $ 695
Operating costs 1,394 448
DD&A 1,173 194
Production volumes
Oil (bbls) 119,000 24,000
Gas (mmcf) 489 146
5. Nonrecurring transactions
In the first quarter of 1995 the Company received $856,000 in
settlement of a Frontier contract dispute. During the second quarter of
1995 the Company's Canadian operations sold its 9.9% interest in a Canadian
gas marketing company for a net gain of $1,780,000. Additionally, during
the second quarter of 1995 the Company's United States oil and gas
operations recorded $2,206,000 resulting from the settlement of a breach of
contract claim against a former gas purchaser. All such amounts have been
classified as other revenues in the Consolidated Statement of Operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Six months ended June 30, 1995 compared with the same period in 1994
A 37% decrease in refined product spread caused a significant decrease
in refining operating results. This resulted in the Company incurring a
net loss for the six months ended June 30, 1995 of $8,537,000, or $.31 per
share, compared to net income of $3,476,000, or $.13 per share, for the
same period in 1994.
Refining operating income decreased $13,111,000 to a refining
operating loss of $1,377,000 for the six months ended June 30, 1995 due to
extremely poor margins on light refined products, primarily gasoline and
diesel. During the first half of 1995, refined product spread was $3.83
per barrel compared with $6.07 per barrel for the same period in 1994.
Mild winter weather caused excessive nationwide inventory levels of
distillate fuels. Further, nationwide refinery margins in the first
quarter of 1995 were the lowest in several years. Although second quarter
margins improved, continued high refinery output nationwide and increased
product pipeline deliveries into Frontier's marketing area, kept margins
lower than in 1994.
Refined product revenues increased 10% resulting from a 7% increase in
average product sales prices, primarily reflecting an increase in the cost
of crude oil, and a 3% increase in sales volumes. During the first quarter
of 1995, Frontier settled a contract dispute for $856,000 which is included
in other revenues.
Crude oil input averaged 34,410 barrels per day, a 5% increase from
1994 with yields of gasoline and distillate up by 7% and 3%, respectively.
The sweet/sour spread declined to $3.04 per barrel in 1995 from $3.79 per
barrel for the same period in 1994, a result of the increased competition
for heavy crude oils. Refining material costs increased 25% per barrel in
1995 due to higher crude oil prices. Refining operating expenses decreased
5% per barrel reflecting the increase in product sales.
On February 21, 1995, a distributor's natural gas pipeline near the
refinery developed a leak which caused underground migration of the gas and
a subsequent explosion in the electrical area of the diesel hydrotreating
unit. All units, with the exception of the delayed coking unit, were
impacted by the electrical interruption and subsequent repairs. The diesel
hydrotreater was down 18 days causing lower distillate yields than
otherwise achievable. The repair cost for the utility incident totaled
$1.2 million in the first quarter of 1995 and is included in operating
expenses. We are aggressively pursuing the responsible party for
reimbursement of physical damages and lost throughput.
Oil and gas exploration and production segment operating income
increased $1,318,000 to $4,225,000 during the first six months of 1995
compared to the prior year period. Excluding the impact of the gain on the
sale of Canada's interest in a gas marketing company and the contract
settlement gain in the United States, segment income decreased $2,672,000.
The decrease in segment operating income primarily results from lower gas
prices.
Canadian oil and gas revenues decreased 22% primarily the result of a
30% decrease in gas sales as the average price for natural gas declined 37%
to $.89/mcf from $1.42/mcf in the prior year period. In response to the
significant decline in gas prices in 1995, the Company curtailed Canadian
gas production by approximately 4 mmcfpd in February and 5 mmcfpd in March
while continuing to supply certain existing purchasers by acquiring like
replacement gas volumes in the spot market. Canadian oil sales increased
34% as a result of a 25% average oil price increase and an 8% increase in
production volume. In Canada, operating costs increased 5% due to placing
newly discovered areas on stream and adding compression at various mature
areas to maintain or increase gas production levels, subsequent to June 30,
1994.
Canadian depreciation, depletion and amortization (DD&A) increased
slightly in the 1995 first half period as compared to the same period in
1994. However, as a percentage of oil and gas sales, the Canadian oil and
gas DD&A rate increased to 54% from 41%, primarily due to the impact of the
lower 1995 gas prices.
United States oil and gas exploration and production operations have
been significantly curtailed through sales of producing properties.
Excluding the revenues and operating costs applicable to properties sold
and the contract settlement gain, the first half 1995 operating margin
would have been $1,096,000 compared to $653,000 (pro forma results of
properties retained) in the 1994 first half period. This increase results
from both higher oil prices and volumes at the Conroe field.
The provision for income taxes increased as the Alberta Royalty Tax
Credit (ARTC), beginning in 1995, is classified as oil and gas revenue
whereas it was classified as a tax benefit in prior years. The credits
were $307,000 and $501,000 during the first six months of 1995 and 1994,
respectively.
Three months ended June 30, 1995 compared with the same period in 1994
The Company had net income for the three months ended June 30, 1995 of
$1,054,000, or $.04 per share, compared to net income of $2,001,000, or
$.07 per share, for the same period in 1994.
Revenues increased 11% as compared to the same period in 1994,
primarily the result of refined product revenues increasing 12%. The
increase in refined product revenues results from a 6% increase in average
product sales prices, primarily reflecting an increase in the cost of crude
oil, and a 5% increase in sales volumes.
Refining operating income decreased $3,480,000 to $2,438,000 for the
three months ended June 30, 1995. This decrease is the result of the
refined product spread decreasing to $4.32 per barrel in 1995 as compared
to $5.64 in 1994. Although refined product margins improved in the second
quarter of 1995 from the first quarter, they were still lower than the
second quarter of 1994. Increased product availability in Frontier's
market areas kept continued downward pressure on wholesale product prices.
High nationwide refinery output and increased deliveries from product
pipelines into our marketing area kept margins lower. The pressure on
margins in our marketing area has continued into the second half of 1995.
Frontier's operating performance continues to improve as crude oil
input averaged 37,163 bpd, a 10% increase from 1994 with yields of gasoline
and distillate up by 18% and 17%, respectively. Refining material costs
increased 16% per barrel in 1995 due to higher crude oil prices. Refinery
operating expenses decreased 8% per barrel reflecting the increase in
product sales. The sweet/sour spread declined to $2.86 in 1995 from $3.59
per barrel for the same period in 1994, a result of the increased
competition for heavy crude oils.
Oil and gas exploration and production segment operating income
increased $2,569,000 to $4,267,000 during the second quarter of 1995
compared to the prior year period. Excluding the impact of the gain on the
sale of Canada's interest in a gas marketing company and the contract
settlement gain in the United States, segment income decreased $1,417,000.
The decrease in segment operating income primarily results from lower gas
prices.
Canadian oil and gas revenues decreased 22% compared to the prior year
second quarter primarily the result of a 30% decrease in gas sales as the
average price for natural gas declined 38% to $.86/mcf from $1.39/mcf in
the prior year period. Canadian oil sales increased 34% a result of a 15%
average oil price increase and an 16% increase in production volume.
Canadian depreciation, depletion and amortization increased slightly
in the 1995 second quarter period as compared to the same period in 1994.
However, as a percentage of oil and gas sales, the Canadian oil and gas
DD&A rate increased to 51% from 40%, primarily the impact of the lower
second quarter 1995 gas prices.
United States oil and gas exploration and production operations have
been significantly curtailed through sales of producing properties.
Excluding the revenues and operating costs applicable to properties sold
and the contract settlement gain, the second quarter 1995 operating margin
would have been $592,000 compared to $429,000 (pro forma results of
properties retained) in the 1994 second quarter. This increase results
from both higher oil prices and volumes at the Conroe field, the only
significant property retained.
The provision for income taxes increased as the Alberta Royalty Tax
Credit, beginning in 1995, is classified as oil and gas revenue whereas it
was classified as a tax benefit in prior years. The credits were $153,000
and $251,000 during the first quarters of 1995 and 1994, respectively.
OPERATING EARNINGS BY SEGMENT
The following (in thousands) presents the operating income (loss) by
operating segment, by country for the six months and three months ended
June 30, 1995 and 1994. Operating income (loss) is income (loss) before
net interest expense and provision for income taxes and does not include
unallocated net corporate expense of $1,246,000 and $1,312,000 in the six
months ended June 30, 1995 and 1994, respectively, and $624,000 and
$651,000 in the three months ended June 30, 1995 and 1994, respectively.
Oil and Gas
Exploration and Production
----------------------------
United
States
Refining and Other Canada Total
-------- -------- -------- --------
Six Months Ended June 30,
1995 - Operating margin $ 5,110 $ 4,831 $ 8,831 $ 13,662
Selling and general expenses 2,344 1,060 1,136 2,196
Depreciation, depletion
and amortization 4,143 2,231 5,010 7,241
-------- -------- -------- --------
Operating income (loss) $ (1,377) $ 1,540 $ 2,685 $ 4,225
======== ======== ======== ========
1994 - Operating margin $ 17,681 $ 4,246 $ 9,840 $ 14,086
Selling and general expenses 2,248 1,077 1,211 2,288
Depreciation, depletion
and amortization 3,699 3,983 4,908 8,891
-------- -------- -------- --------
Operating income (loss) $ 11,734 $ (814) $ 3,721 $ 2,907
======== ======== ======== ========
Oil and Gas
Exploration and Production
----------------------------
United
States
Refining and Other Canada Total
-------- -------- -------- --------
Three Months Ended June 30,
1995 - Operating margin $ 5,658 $ 3,042 $ 5,353 $ 8,395
Selling and general expenses 1,130 447 502 949
Depreciation, depletion
and amortization 2,090 761 2,418 3,179
-------- -------- -------- --------
Operating income $ 2,438 $ 1,834 $ 2,433 $ 4,267
======== ======== ======== ========
1994 - Operating margin $ 8,902 $ 2,613 $ 4,943 $ 7,556
Selling and general expenses 1,120 484 606 1,090
Depreciation, depletion
and amortization 1,864 2,330 2,438 4,768
-------- -------- -------- --------
Operating income (loss) $ 5,918 $ (201) $ 1,899 $ 1,698
======== ======== ======== ========
REFINING OPERATING STATISTICAL INFORMATION
Six Months Ended Three Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
Raw material input (bpd)
Sweet crude 5,631 6,815 6,265 6,746
Sour crude 28,779 25,941 30,898 26,967
Other feed and blend stocks 5,047 3,530 5,239 2,420
-------- -------- -------- --------
Total 39,457 36,286 42,402 36,133
Manufactured product yields (bpd)
Gasoline 17,061 15,875 18,485 15,723
Distillates 13,513 13,094 15,573 13,325
Asphalt and other 7,430 5,812 6,754 5,418
-------- -------- -------- --------
Total 38,004 34,781 40,812 34,466
Total product sales (bpd)
Gasoline 20,462 19,017 21,534 19,457
Distillates 12,959 12,783 14,176 13,302
Asphalt and other 5,770 6,137 6,554 7,307
-------- -------- -------- --------
Total 39,191 37,937 42,264 40,066
Operating margin information (per sales bbl)
Average sales price $ 22.13 $ 20.69 $ 23.15 $ 21.87
Material costs
(under FIFO inventory accounting) 18.30 14.62 18.83 16.23
Product spread 3.83 6.07 4.32 5.64
Operating expenses excluding depreciation 3.35 3.53 2.99 3.24
Depreciation .57 .52 .53 .50
-------- -------- -------- --------
Operating margin $ (.09) $ 2.02 $ .80 $ 1.90
Manufactured product margin
before depreciation (per bbl) $ .49 $ 2.54 $ 1.33 $ 2.42
Purchase product margin
(per purchased product bbl) $ (.23) $ 1.58 $ 0 $ 1.58
Sweet/sour spread (per bbl) $ 3.04 $ 3.79 $ 2.86 $ 3.59
Average sales price (per sales bbl)
Gasoline $ 25.12 $ 23.09 $ 26.77 $ 24.38
Distillates 22.62 22.06 23.24 23.11
Asphalts and other 10.38 10.38 11.03 12.94
OIL AND GAS EXPLORATION AND PRODUCTION STATISTICAL INFORMATION
Six Months Ended Three Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
Oil and gas revenue (in thousands)
Net oil and condensate sales
Canada $ 1,833 $ 1,364 $ 989 $ 740
United States 4,228 5,060 1,626 2,909
-------- -------- -------- --------
6,061 6,424 2,615 3,649
-------- -------- -------- --------
Net gas sales
Canada 7,409 10,557 3,703 5,256
United States 810 2,839 264 1,517
-------- -------- -------- --------
8,219 13,396 3,967 6,773
-------- -------- -------- --------
$ 14,280 $ 19,820 $ 6,582 $ 10,422
======== ======== ======== ========
Production
Net oil and condensate (bbls)
Canada 125,000 116,000 65,000 56,000
United States 259,000 362,000 96,000 190,000
-------- -------- -------- --------
384,000 478,000 161,000 246,000
======== ======== ======== ========
Net gas (mmcf)
Canada 8,316 7,454 4,312 3,777
United States 496 1,370 150 763
-------- -------- -------- --------
8,812 8,824 4,462 4,540
======== ======== ======== ========
Price
Average oil and condensate sales (per bbl)
before deduction for production taxes
Canada $ 14.68 $ 11.78 $ 15.27 $ 13.33
United States 16.31 13.98 16.98 15.31
Weighted average 15.78 13.45 16.29 14.86
Average gas sales (per mcf) before
deduction for production taxes
Canada $ .89 $ 1.42 $ .86 $ 1.39
United States 1.63 2.07 1.76 1.99
Weighted average .93 1.52 .89 1.49
Canada in Canadian dollars C$ 1.24 C$ 1.93 C$ 1.18 C$ 1.92
The following presents Canadian production information which is
equivalent to reporting used by other Canadian oil and gas companies.
Gross volumes represent the Company's working interest plus associated
freehold, provincial and other royalties.
Six Months Ended Three Months Ended
June 30 June 30
------------------ ------------------
1995 1994* 1995 1994*
-------- -------- -------- --------
Gross volume
Oil (bbls) 141,000 139,000 75,000 68,000
Gas (mmcf) 9,469 8,826 4,848 4,419
Royalty
ARTC oil (bbls) 7,000 0 3,000 0
ARTC gas (mmcf) 206 0 103 0
Other (mmcfe) (1,251) (1,510) (600) (719)
Net volume
Oil (bbls) 125,000 116,000 65,000 56,000
Gas (mmcf) 8,316 7,454 4,312 3,777
Gross revenue
Oil $ 2,075 $ 1,630 $ 1,143 $ 907
Gas 8,365 12,520 4,150 6,161
Royalty
ARTC 307 0 153 0
Other (1,505) (2,229) (754) (1,072)
-------- -------- -------- --------
Net revenue
Oil $ 1,833 $ 1,364 $ 989 $ 740
Gas 7,409 10,557 3,703 5,256
-------- -------- -------- --------
$ 9,242 $ 11,921 $ 4,692 $ 5,996
======== ======== ======== ========
*ARTC was accounted for as a tax credit in 1994, and it was excluded from
net volume and net revenue computations. The 1994 ARTC oil and gas royalty
volumes were 7,000 bbls and 206 mmcf, respectively, for the six-month
period and 3,000 bbls and 103 mmcf, respectively, for the three-month
period.
Wainoco is in the process of selling all of its United States oil and
gas properties, except for its Conroe field reserves and certain other
minor properties. The oil and gas revenues, operating costs and production
for the three months and six months ended June 30, 1995 and 1994 related to
the United States properties to be retained are as follows:
Six Months Ended Three Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
Oil and gas revenues (in thousands)
Net oil and condensate sales $ 2,296 $ 1,784 $ 1,190 $ 1,048
Net gas sales 9 16 5 7
-------- -------- -------- --------
2,305 1,800 1,195 1,055
Operating costs 1,209 1,147 603 626
-------- -------- -------- --------
Operating margin $ 1,096 $ 653 $ 592 $ 429
======== ======== ======== ========
Production
Net oil and condensate (bbls) 140,000 122,000 72,000 69,000
Net gas (mmcf) 7 9 4 3
Price
Average oil and condensate sales (per bbl)
before deduction for production taxes $ 16.39 $ 14.62 $ 16.55 $ 15.17
Average gas sales (per mcf) before
deduction for production taxes 1.33 1.78 1.42 1.64
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1,390,000 for the six
months ended June 30, 1995. In the first six months of 1994, $9,998,000 of
cash flows were provided by operating activities reflecting the stronger
1994 operating results. In the first six months of 1995, the Company
reduced reserved-based borrowings $9,000,000 and increased borrowings under
the Frontier working capital facility by $1,300,000. Reserve-based
borrowing reductions were provided by proceeds from property sales.
During the first six months of 1994, the Company's bank debt increased
$3,600,000.
The Company at June 30, 1995 has $18,047,000 available under its oil
and gas lines of credit and $13,700,000 under the Frontier line of credit.
Effective July 1, 1995, $5 million of available borrowing capacity was
added under the Frontier facility as described in the following paragraph.
The Company had working capital of $3,593,000 at June 30, 1995 compared
with $1,532,000 at December 31, 1994. The estimated five-year maturities
of long-term debt are $2,500,000 in 1996 and 1997 and $5,000,000 in 1998
assuming that the oil and gas reserve-based credit facilities are extended
during the five-year period.
Effective July 1, 1995, the Company amended its Frontier working
capital facility, which extended its revolving period to April 2, 1997,
increased the maximum cash borrowing limit from $15 million to $20 million,
decreased the quarterly commitment fee of .425 of 1% to .4 of 1%, reduced
the standby letters-of-credit issued fee from one and one-half percent to
one and one-quarter percent annually and lowered the interest rate on
borrowings at the Company's option from one and one-quarter percent over
the agent bank's prime rate or two and one-quarter percent over the
reserve-adjusted LIBOR rate to seven-eighths percent over the agent bank's
prime rate or two percent over the reserve-adjusted LIBOR rate.
Additionally, during the quarter the Company received revised borrowing
base amounts of C$33 million and $4 million for its Canadian and U.S.
facilities, respectively.
Investing activities include proceeds from the sale of oil and gas
producing properties and the sale of an interest in a gas marketing company
of $15,585,000 for the six months ended June 30, 1995. Accrued additions
to property and equipment in the first half of 1995 decreased $3,861,000
from the same period in 1994 primarily the result of reduced capital
spending at Frontier. Capital expenditures of approximately $17,200,000
are currently budgeted for 1995, of which $9,120,000 had been accrued as of
June 30, 1995.
In conjunction with the Company's intent to cease all exploration in
the United States and to sell certain of its United States oil and gas
assets, exploration and development activities are now focused in Canada.
Canadian accrued capital expenditures increased from $4,730,000 in the
first half of 1994 to $6,094,000 in the first half of 1995.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings -
None, which in the opinion of management would have a material
impact on the registrant.
ITEM 2. Changes in Securities -
There have been no changes in the constituent instruments
defining the rights of the holders of any class of registered securities
during the current quarter.
ITEM 3. Defaults Upon Senior Securities -
None.
ITEM 4. Submission of Matters to a Vote of Security Holders -
The annual meeting of the registrant was held May 18, 1995 with
no significant proposals brought to a vote of the shareholders.
ITEM 5. Other Information -
None.
ITEM 6. Exhibits and Reports on Form 8-K -
10.01 - First Amending Agreement dated March 31, 1995 to Restated
Credit Agreement dated June 29, 1994 with certain banks and Morgan Bank of
Canada.
10.02 - Amendment No. 1 dated March 15, 1995 to Amended and
Restated Credit Guaranty Agreement dated May 31, 1994 with certain banks
and Morgan Guaranty Trust Company of New York.
10.03 - Letter agreement dated June 8, 1995 to Amended and
Restated Credit Agreement dated June 29, 1994 with certain banks and Morgan
Bank of Canada.
10.04 - Fifth Amendment dated July 1, 1995 to Loan Agreement
dated August 10, 1992 with certain banks and Union Bank.
10.05 - First Amendment to Guaranty dated October 18, 1992, to
Loan Agreement dated August 10, 1992 with certain banks and Union Bank.
10.06 - Second Amendment to Guaranty dated December 31, 1993, to
Loan Agreement dated August 10, 1992 with certain banks and Union Bank.
10.07 - Third Amendment to Guaranty dated July 6, 1994, to Loan
Agreement dated August 10, 1992 with certain banks and Union Bank.
10.08 - Fourth Amendment to Guaranty dated July 1, 1995, to Loan
Agreement dated August 10, 1992 with certain banks and Union Bank.
10.09 - Executive Employment Agreement dated April 3, 1995
between The Company and James R. Gibbs.
10.10 - Executive Employment Agreement dated April 3, 1995
between The Company and Julie H. Edwards.
10.11 - Executive Employment Agreement dated April 3, 1995
between The Company and S. Clark Johnson.
10.12 - Executive Employment Agreement dated April 3, 1995
between The Company and Robert D. Jones.
10.13 - Executive Employment Agreement dated April 3, 1995
between The Company and George E. Aldrich.
10.14 - 1995 Stock Grant Plan for Non-employee Directors.
27 - Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
WAINOCO OIL CORPORATION
By: /s/ George E. Aldrich
- ------------------------------------
George E. Aldrich
Vice President - Controller
Date: August 3, 1995