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, 1997
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 1-7792
Pogo Producing Company
(Exact name of registrant as specified in its charter)
Delaware 74-1659398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Greenway Plaza, Suite 2700
Houston, Texas 77046-0504
(Address of principal executive offices) (Zip Code)
(713) 297-5000
(Registrant's telephone number, including area code)
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 requirement for the past 90 days: Yes X No
Registrant's number of common shares outstanding
as of June 30, 1997: 33,380,326
Part I. Financial Information
Pogo Producing Company and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- -------------------------------
1997 1996 1997 1996
------------- --------------- ----------- --------------
(Expressed in thousands, except per share amounts)
Revenues:
Oil and gas $ 75,281 $ 51,543 $ 136,595 $ 99,760
Gains (losses) on sales 1,459 -- 1,459 (165)
------------- --------------- ----------- --------------
Total 76,740 51,543 138,054 99,595
------------- --------------- ----------- --------------
Operating Costs and Expenses:
Lease operating 16,191 9,205 28,488 18,080
General and administrative 5,121 4,383 10,957 9,804
Exploration 4,053 3,966 5,953 7,876
Dry hole and impairment 4,086 2,568 5,007 5,118
Depreciation, depletion and amortization 28,457 15,793 46,877 31,506
------------- --------------- ----------- --------------
Total 57,908 35,915 97,282 72,384
------------- --------------- ----------- --------------
Operating Income 18,832 15,628 40,772 27,211
------------- --------------- ----------- --------------
Interest:
Charges (5,536) (3,172) (9,831) (6,184)
Income 73 124 129 139
Capitalized 760 1,004 2,630 1,830
------------- --------------- ----------- --------------
Income Before Income Taxes 14,129 13,584 33,700 22,996
Income Tax Expense (4,955) (4,647) (11,708) (7,794)
------------- --------------- ----------- --------------
Income Before Extraordinary Loss 9,174 8,937 21,992 15,202
Extraordinary Loss on
Early Extinguishment of Debt -- (821) -- (821)
------------- --------------- ----------- --------------
Net Income $ 9,174 $ 8,116 $ 21,992 $ 14,381
============= =============== =========== ==============
Primary Earnings Per Share:
Income before extraordinary loss $ 0.27 $ 0.26 $ 0.64 $ 0.44
Extraordinary loss -- (0.02) -- (0.02)
------------- --------------- ----------- --------------
Net Income $ 0.27 $ 0.24 $ 0.64 $ 0.42
============= =============== =========== ==============
Fully Diluted Earnings Per Share:
Income before extraordinary loss $ 0.26 $ 0.25 $ 0.62 $ 0.44
Extraordinary loss -- (0.02) -- (0.02)
------------- --------------- ----------- --------------
Net Income $ 0.26 $ 0.23 $ 0.62 $ 0.42
============= =============== =========== ==============
Dividends Per Common Share $ 0.03 $ 0.03 $ 0.06 $ 0.06
============= =============== =========== ==============
See accompanying notes to consolidated financial statements.
- 1 -
Pogo Producing Company and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
1997 1996
-------------- -------------
(Unaudited)
(Expressed in thousands,
except share amounts)
Assets
Current Assets:
Cash and cash investments $ 23,505 $ 3,054
Accounts receivable 35,980 30,031
Other receivables 40,811 35,027
Inventory - Product 5,688 --
Inventories - Tubulars 8,457 6,165
Other 1,101 641
------------- -------------
Total current assets 115,542 74,918
------------- -------------
Property and Equipment:
Oil and gas, on the basis of successful efforts accounting
Proved properties being amortized 1,224,391 1,079,523
Unevaluated properties and properties
under development, not being amortized 68,366 111,192
Other, at cost 11,290 8,773
-------------- -------------
1,304,047 1,199,488
Less--accumulated depreciation, depletion and
amortization, including $5,345 and $4,822,
respectively, applicable to other property 861,875 814,623
-------------- -------------
442,172 384,865
-------------- -------------
Other 27,308 19,459
-------------- -------------
$ 585,022 $ 479,242
============== =============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable - operating activities $ 11,872 $ 7,676
Accounts payable - investing activities 29,005 56,961
Accrued interest payable 2,850 1,957
Accrued payroll and related benefits 2,444 1,490
Other 165 163
-------------- -------------
Total current liabilities 46,336 68,247
Long-Term Debt 338,205 246,230
Deferred Federal Income Tax 60,174 46,321
Deferred Credits 11,694 11,162
-------------- -------------
Total liabilities 456,409 371,960
-------------- -------------
Shareholders' Equity:
Preferred stock, $1 par; 2,000,000 shares authorized -- --
Common stock, $1 par; 100,000,000 shares
authorized, 33,395,901 and
33,321,381 shares issued, respectively 33,396 33,321
Additional capital 140,806 139,337
Retained earnings (deficit) (45,085) (65,075)
Currency translation adjustment (180) 23
Treasury stock, at cost (324) (324)
-------------- -------------
Total shareholders' equity 128,613 107,282
-------------- -------------
$ 585,022 $ 479,242
============== =============
See accompanying notes to consolidated financial statements.
- 2 -
Pogo Producing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
-----------------------------------
1997 1996
-------------- --------------
(Expressed in thousands)
Cash Flows from Operating Activities:
Cash received from customers $ 124,958 $ 94,723
Operating, exploration, and general
and administrative expenses paid (41,202) (36,546)
Interest paid (8,938) (6,185)
Federal income taxes received (paid) 2,537 (6,000)
Other (3,548) (1,632)
-------------- --------------
Net cash provided by operating activities 73,807 44,360
-------------- --------------
Cash Flows from Investing Activities:
Capital expenditures (112,617) (64,089)
Purchase of proved reserves (28,617) --
Proceeds from the sales of properties 100 100
-------------- --------------
Net cash used in investing activities (141,134) (63,989)
-------------- --------------
Cash flows from Financing Activities:
Proceeds from issuance of new debt 100,000 115,000
Borrowings under senior debt agreements 345,000 78,000
Payments under senior debt agreements (353,000) (116,000)
Payments of cash dividends on common stock (2,002) (1,984)
Purchase of 8% debentures due 2005 -- (40,699)
Payment of debt issue expenses (2,975) (2,875)
Proceeds from exercise of stock options 958 2,518
-------------- --------------
Net cash provide by financing activities 87,981 33,960
-------------- --------------
Effect of Exchange Rate Changes (203) 23
-------------- --------------
Net Increase in Cash and Cash Investments 20,451 14,354
Cash and Cash Investments at the Beginning of the Year 3,054 4,481
-------------- --------------
Cash and Cash Investments at the End of the Period $ 23,505 $ 18,835
============== ==============
Reconciliation of Net Income to Net
Cash Provided by Operating Activities:
Net income $ 21,992 $ 14,381
Adjustments to reconcile net income to
net cash provided by operating activities -
Extraordinary loss on early extinguishment
of debt (net of tax) -- 821
(Gains) losses from the sales of properties (1,459) 165
Depreciation, depletion and amortization 46,877 31,506
Dry hole and impairment 5,007 5,118
Interest capitalized (2,630) (1,830)
Deferred federal income taxes 14,414 2,212
Change in operating assets and liabilities (10,394) (8,013)
-------------- --------------
Net Cash Provided by Operating Activities $ 73,807 $ 44,360
============== ==============
See accompanying notes to consolidated financial statements.
- 3 -
Pogo Producing Company and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)
Six Months Ended June 30,
--------------------------------------------------------------
1997 1996
-------------------------- -----------------------------
Shares Amount Shares Amount
---------- ------------ ---------- -------------
(Expressed in thousands, except share amounts)
Common Stock:
$1.00 par - 100,000,000 shares authorized
Balance at beginning of year 33,321,381 $ 33,321 33,006,972 $ 33,007
Conversion of 2004 Notes 1,126 1 -- --
Stock options exercised 73,394 74 206,430 207
---------- ------------ ---------- -------------
Issued at end of period 33,395,901 33,396 33,213,402 33,214
---------- ------------ ---------- -------------
Additional Capital:
Balance at beginning of year 139,337 132,881
Conversion of 2004 Notes 24 --
Stock options exercised 1,445 3,547
-------------- -------------
Balance at end of period 140,806 136,428
-------------- -------------
Retained Earnings (Deficit):
Balance at beginning of year (65,075) (93,856)
Net income 21,992 14,381
Dividends ($0.06 per common share) (2,002) (1,984)
------------ -------------
Balance at end of period (45,085) (81,459)
------------ -------------
Treasury Stock:
Balance at beginning of year (15,575) (324) (15,575) (324)
Activity during period -- -- -- --
---------- ------------ ---------- -------------
Balance at end of period (15,575) (324) (15,575) (324)
---------- ------------ ---------- -------------
Cumulative Foreign
Currency Translation
Balance at beginning of year 23 --
Activity during the period (203) 23
------------ -------------
Balance at end of period (180) 23
------------ -------------
Common Stock Outstanding,
at the End of the Period 33,380,326 33,197,827
========== ==========
Total Shareholders' Equity $ 128,613 $ 87,882
============ =============
See accompanying notes to consolidated financial statements.
- 4 -
Pogo Producing Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(1) General Information -
The consolidated financial statements included herein have been
prepared by Pogo Producing Company (the "Company") without audit and
include all adjustments (of a normal and recurring nature) which are, in
the opinion of management, necessary for the fair presentation of interim
results which are not necessarily indicative of results for the entire
year. The financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's latest annual report.
(2) Long-Term Debt -
Long-term debt and the amount due within one year at June 30,
1997 and December 31, 1996, consists of the following:
June 30, December 31,
1997 1996
-------------- -------------
(Expressed in thousands)
Senior debt --
Bank revolving credit agreement
Prime rate based loans, borrowing at
interest rates of 8.5% and 8.25%, respectively $ 2,000 $ 13,000
LIBO Rate based loans, borrowings at average
interest rates of 6.75% and 6.59%, respectively 25,000 22,000
Uncommitted credit lines with banks, borrowings at
average interest rates of 6.59% and 7.0%, respectively 10,000 10,000
-------------- -------------
Total senior debt 37,000 45,000
-------------- -------------
Subordinated debt --
8 3/4% Senior subordinated notes due 2007 100,000 --
5 1/2% Convertible subordinated notes due 2004 86,205 86,230
5 1/2% Convertible subordinated notes due 2006 115,000 115,000
-------------- -------------
Total subordinated debt 301,205 201,230
-------------- -------------
Long-term debt $ 338,205 $ 246,230
============== =============
Effective August 1, 1997, the Company entered into an amended and
restated credit agreement (the "Credit Agreement"). The Credit Agreement
provides for an unsecured $250,000,000 revolving/term credit facility which
will be fully revolving until July 1, 2000, after which the balance will
be due in eight quarterly term loan installments, commencing October 31, 2000.
The amount that may be borrowed under the Credit Agreement may not exceed
a borrowing base which is composed of both domestic and Thai properties less,
in certain circumstances, the present value of interest payments on a portion
of certain subordinated indebtedness, including the 2007 Notes.
The domestic borrowing base is determined semi-annually by the lenders
in accordance with the Credit Agreement, based primarily on the discounted
present value of future net revenues from the Company's domestic oil and gas
reserves. The portion of the borrowing base which is composed of properties
located in the Kingdom of Thailand is also determined semi-annually, but may,
at the lenders discretion, be redetermined once more during each semi-annual
period. The value of this portion of the borrowing base is determined by the
lenders applying their usual and customary criteria for
oil and gas evaluation. As of August 1, 1997, the Company's total borrowing
base, including both domestic and Thai properties, exceeded $250,000,000.
The Credit Agreement is governed by various financial and other covenants,
including requirements to maintain positive working capital (excluding
current maturities of debt) and a fixed charge coverage ratio, and
limitations on indebtedness, creation of liens, the prepayment of
- 5 -
Pogo Producing Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(2) Long-Term Debt (Continued)
subordinated debt, the payment of dividends, mergers and consolidations,
investments and asset dispositions. In addition, the Company is prohibited
from pledging borrowing base properties as security for other debt.
Borrowings under the Credit Agreement currently bear interest at a base
(prime) rate or LIBOR plus 5/8%, at the Company's option. A commitment fee
on the unborrowed amount under the Credit Agreement is also charged. The
commitment fee is currently 0.25% per annum on the unborrowed amount under
the Credit Agreement that is designated as "active" and 0.10% per annum
on the unborrowed amount under the Credit Agreement that is designated as
"inactive." Of the $250,000,000 that is currently available under the
Credit Agreement (subject to borrowing base limitations), $125,000,000
is designated as "active" and $125,000,000 is designated as "inactive."
On May 22, 1997, the Company issued $100,000,000 of 8 3/4%
Senior Subordinated Notes due 2007 (the "2007 Notes"). The proceeds from
the issuance of the 2007 Notes were used to repay amounts outstanding under
the Company's bank revolving credit agreement, and to purchase short-term
cash investments. The 2007 Notes bear interest at a rate of 8 3/4%,
payable semi-annually in arrears on May 15 and November 15 of each year,
commencing November 15, 1997. The 2007 Notes are general unsecured senior
subordinated obligations of the Company and are subordinated in
right of payment to the Company's senior indebtedness, which currently
includes its obligations under its bank revolving credit agreement and its
unsecured credit lines, but are senior in right of payment to the Company's
subordinated indebtedness, which currently includes the 2006 Notes
and the 2004 Notes. The Company, at its option, may redeem the 2007 Notes
in whole or in part, at any time on or after May 15, 2002, at a redemption
price of 104.375% of their principal value and decreasing percentages
thereafter. No sinking fund payments are required on the 2007 Notes. The
2007 Notes are redeemable at the option of any holder, upon the occurrence
of a change of control (as defined in the indenture governing the 2007 Notes),
at 101% of their principal amount. The indenture governing the 2007 Notes
also imposes certain covenants on the Company (as more fully described therein)
that are customary for senior subordinated indebtedness generally,
including covenants limiting: incurrence of indebtedness, including senior
indebtedness; restricted payments; the issuance and sales of restricted
subsidiary capital stock; transactions with affiliates; liens; disposition
of proceeds of asset sales; non-guarantor restricted subsidiaries; dividends
and other payment restrictions affecting restricted subsidiaries; and mergers,
consolidations and the sale of assets.
Refer to Note 3 of the Notes to Consolidated Financial
Statements included in the Company's latest annual report for a further
discussion of the bank revolving credit agreement, the 5 1/2%
Convertible Subordinated Notes due 2004 (the "2004 Notes") and the 5 1/2%
Convertible Subordinated Notes due 2006 (the "2006 Notes").
- 6 -
Pogo Producing Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(3) Earnings per Share -
Earnings per share (in thousands, except per share amounts) are based on
the following:
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
------------------------------- ---------------------------
Income Shares Per Share Income Shares Per Share
---------- ---------- --------- -------- -------- ---------
Earnings and shares outstanding $ 9,174 33,369 $ 21,992 33,359
Effect of dilutive securities:
Options to at average price -- 784 -- 806
_________ _________ ________ _______
Primary earnings per share $ 9,174 34,153 $ 0.27 $ 21,992 34,165 $ 0.64
======= =======
Options at closing price -- 15 -- 7
2004 Notes 771 3,886 1,541 3,886
--------- --------- -------- -------
Fully diluted earnings per share $ 9,945 38,054 $ 0.26 $ 23,533 38,058 $ 0.62
========= ========= ======= ======== ======= =======
Antidilutive securities --
Options at average price -- 80 $ 41.84 -- 80 $ 41.84
2006 Notes 1,028 2,726 $ 0.38 2,056 2,726 $ 0.75
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
------------------------------- ---------------------------
Income(a) Shares Per Share Income(a) Shares Per Share
---------- ---------- --------- -------- -------- ---------
Earnings and shares outstanding $ 8,937 33,156 $ 15,202 33,110
Effect of dilutive securities:
Options at average price -- 820 -- 795
--------- --------- -------- ------
Primary earnings per share $ 8,937 33,976 $ 0.26 $ 15,202 33,905 $ 0.44
======= =======
Options at closing price -- 36 -- 29
2004 Notes 771 3,887 1,542 3,887
--------- --------- -------- -------
Fully diluted earnings per share $ 9,708 37,899 $ 0.25 $ 16,744 37,821 $ 0.44
========= ========= ======= ======== ======= =======
Antidilutive securities --
8% Debentures 546 1,063 $ 0.51 1,092 1,063 $ 1.03
2006 Notes 144 382 $ 0.38 144 191 $ 0.75
- ----------------
(a) Income before extraordinary loss
The 8% Debentures (retired on June 28, 1996) were common stock
equivalents. The 2004 Notes and the 2006 Notes (issued on June 18, 1996)
are not common stock equivalents.
- 7 -
Pogo Producing Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
Earnings per Share ("SFAS 128"). It is effective for periods ending after
December 15, 1997, and early adoption is not permitted. The following is the
pro forma effect (in thousands, except per share amounts) of applying the
provisions of SFAS 128 to the periods indicated:
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
------------------------------- ---------------------------
(Pro Forma) (Pro Forma)
------------------------------- ---------------------------
Income Shares Per Share Income Shares Per Share
---------- ---------- --------- -------- -------- ---------
Basic earnings per share -- $ 9,174 33,369 $ 0.27 $ 21,992 33,359 $ 0.66
======= =======
Effect of dilutive securities:
Options at average price -- 784 -- 806
2004 Notes 771 3,886 1,541 3,886
--------- --------- -------- -------
Diluted earnings per share $ 9,945 38,039 $ 0.26 $ 23,533 38,051 $ 0.62
========= ========= ======= ======== ======= =======
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
------------------------------- ---------------------------
(Pro Forma) (Pro Forma)
------------------------------- ---------------------------
Income(a) Shares Per Share Income(a) Shares Per Share
---------- ---------- --------- -------- -------- ---------
Basic earnings per share -- $ 8,937 33,156 $ 0.27 $ 15,202 33,110 $ 0.46
======= =======
Effect of dilutive securities:
Options at average price -- 820 -- 795
2004 Notes 771 3,887 1,542 3,887
--------- --------- -------- -------
Diluted earnings per share $ 9,708 37,863 $ 0.26 $ 16,744 37,792 $ 0.44
========= ========= ======= ======== ======= =======
- ----------------
(a) Income before extraordinary loss
- 8 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This discussion should be read in conjunction
with Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the
Company's annual report on Form 10-K for the year
ended December 31, 1996. Certain statements contained herein are "Forward
Looking Statements" and are thus prospective. As further discussed in the
Company's annual report on Form 10-K, such forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by
such forward-looking statements.
RESULTS OF OPERATIONS --
INCOME AND REVENUE DATA
NET INCOME
The Company reported net income for the
second quarter of 1997 of $9,174,000 or $0.27 per share
($0.26 on a fully diluted basis) compared to net income
for the second quarter of 1996 of $8,116,000 or $0.24
per share ($0.23 on a fully diluted basis). For the
first six months of 1997, the Company reported net
income of $21,992,000 or $0.64 per share ($0.62 on a fully diluted
basis) compared to net income for the first six months
of 1996 of $14,381,000 or $0.42 per share (on both a primary and a
fully diluted basis). The Company recorded an extraordinary loss
during the second quarter of 1996 of $821,000, or $0.02 per share
related to early retirement of the Company's 2005 Debentures with
the proceeds from the Company's issuance of its 2006 Notes on
June 18, 1996. Earnings per share are based on the
weighted average number of common and common
equivalent shares outstanding for the second quarter and
first six months of 1997 of 34,153,000 and
34,165,000, respectively, compared to 33,976,000 and
33,905,000, respectively, for the second quarter and
first six months of 1996. The increases in the
weighted average number of common and common equivalent
shares outstanding for the 1997 periods, compared to
the 1996 periods, resulted primarily from the issuance of
shares of common stock upon the exercise of stock options
pursuant to the Company's stock option plans. Earnings per share
computations on a fully diluted basis in the 1997 periods
primarily reflect additional shares of common stock issuable
upon the assumed conversion of the Company's 2004 Notes
(the only convertible securities of the Company that were
dilutive during any of the periods presented) and the
elimination of related interest requirements, as adjusted for
applicable federal income taxes. The weighted average
number of shares of common and common equivalent shares
outstanding on a fully diluted basis for the second
quarter and first six months of 1997 were 38,054,000 and
38,058,000, respectively, compared to 37,899,000 and
37,821,000 respectively, for the second quarter and
first six months of 1996. Earnings applicable to common stock,
assuming full dilution and, with respect to the 1996 periods,
after giving effect to an extraordinary loss of $821,000,
for the second quarter and first six months of
1997 were $9,945,000 and $23,533,000, respectively,
compared to $8,887,000 and $15,923,000, respectively, for
the second quarter and first six months of 1996.
- 9 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
REVENUES
TOTAL REVENUES
The Company's total revenues for the second
quarter of 1997 were $76,740,000, an increase of
approximately 49% compared to total revenues of
$51,543,000 for the second quarter of 1996. The
Company's total revenues for the first six
months of 1997 were $138,054,000, an increase of approximately 39%
compared to total revenues of $99,595,000 for the first six
months of 1996. The increase in the Company's total revenues for
the second quarter and first six months of 1997, compared to the
second quarter and first six months of 1996, resulted primarily
from increases in the the Company's natural gas and liquid hydrocarbon
(including crude oil, condensate and natural gas liquid ("NGL"))
production volumes, that were only partially offset by decreases in
the average price that the Company received for such production.
In addition, the total revenues for the second quarter and first six
months of 1997 were positively affected by a $1,600,000 non-recurring
gain recorded in connection with the sale of certain excess equipment,
while the Company's total revenues for the first six months of of 1996
were adversely affected by a $165,000 loss resulting from the sale of a
non-strategic property.
OIL AND GAS REVENUES.
The following table reflects an analysis
of differences in the Company's oil and gas revenues (expressed
in thousands of dollars) between the second quarter and
first six months of 1997 and the same periods in the
preceding year.
2nd Qtr '97 6 mos. '97
Compared to Compared to
2nd Qtr '96 6 mos. '96
----------- ----------
Increase (decrease) in total revenues
resulting from differences in :
Natural gas --
Price . . . . . . . . . . . . . . . . $ (1,649) $ (535)
Production . . . . . . . . . . . . . . 21,467 27,074
--------- ---------
19,818 26,539
--------- ---------
Crude oil and condensate --
Price . . . . . . . . . . . . . . . . (4,848) (2,465)
Production . . . . . . . . . . . . . . 6,432 10,723
--------- ---------
1,584 8,258
--------- ---------
NGL and other, net . . . . . . . . . . . 2,336 2,038
--------- ---------
Increase in oil and gas revenues . . . . $ 23,738 $ 36,835
========= =========
- 10 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
NATURAL GAS PRICES. Prices per thousand cubic feet ("Mcf") that
the Company received for its natural gas production during the second
quarter of 1997 averaged $2.14 per Mcf, a decrease of approximately
7% from an average price of $2.31 per Mcf that the Company received for its
production during the second quarter of 1996. Prices that the
Company received for its natural gas production during
the first six months of 1997 averaged $2.34 per Mcf, a decrease
of approximately 1% from an average price of $2.36 per Mcf that the
Company received for its domestic natural gas production during the
first six months of 1996.
DOMESTIC PRICES. prices that the Company received for its
domestic natural gas
production during the second quarter of 1997 averaged $2.15 per Mcf,
a decrease of approximately 7% from an average price of $2.31 per Mcf
that the Company received for its domestic natural gas production
during the second quarter of 1996. Prices that the
Company received for its domestic natural gas production during
the first six months of 1997 averaged $2.41 per Mcf, an increase
of approximately 2% from an average price of $2.36 per Mcf that the
Company received for its domestic natural gas production during the
first six months of 1996.
THAILAND PRICES. The Company's Tantawan Field located in the
Kingdom of Thailand commenced production of natural gas and liquid
hydrocarbons in February
1997. During the second quarter of 1997, the price that the Company
received under its long term gas sales contract for natural gas production
from the Tantawan Field averaged approximately 54 Thai Baht per Mcf.
At the then prevailing currency exchange rates of approximately 25.5 Baht
to the dollar, this equaled approximately $2.12 per Mcf. In early July
1997, the government of the Kingdom of Thailand announced that the value
of the Baht would be set against the dollar and other currencies
under a "managed float" arrangement. Since that time, the value of the Baht
has declined. As of July 31, 1997, the prevailing currency exchange rate
was approximately 32 Baht to the dollar. The Company cannot predict what
the Baht to dollar exchange rate may be in the future. Moreover, it is
anticipated that this exchange rate will remain volatile.
NATURAL GAS PRODUCTION. The Company's natural gas production
during the second quarter of 1997 averaged 216.8 million cubic feet
("MMcf") per day, an increase of approximately 103% from an average of
106.6 MMcf per day that the Company produced during the second
quarter of 1996. The Company's natural gas production
during the first six months of 1997 averaged 173.5 MMcf
per day, an increase of approximately 59% from an
average of 108.9 MMcf per day that the Company
produced during the first six months of 1996.
DOMESTIC PRODUCTION. The Company's domestic natural gas
production during the second quarter of 1997 averaged 177.8 MMcf per
day, an increase of approximately
67% from an average of 106.6 MMcf per day that the Company produced
during the second quarter of 1996. The Company's domestic natural gas
production during the first six months of 1997 averaged 145.1 MMcf
per day, an increase of approximately 33% from an average of 108.9 MMcf
per day that the Company produced during the first six months of 1996.
The increase in the Company's natural gas production during
the second quarter and first six months of 1997, compared to
the second quarter and first six months of 1996, was related in large
measure to production from the Company's East Cameron Block 334 "E" platform,
which commenced production in April 1997, and, to a lesser extent, the
results of successful drilling in the Company's Lopeno Field in South Texas
and its Eugene Island Block 261 field, that
- 11 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
was only partially offset by the anticipated decline from certain of the
Company's properties. As of August 1, 1997, the Company was not a party
to any future natural gas sales contracts.
THAILAND PRODUCTION. The Company commenced production from
its Tantawan Field early in
February 1997. Following a field startup phase which ended on
March 15, 1997, production from the Tantawan Field stabilized. During
the second quarter of 1997, the Company's share of natural gas
production from the Tantawan Field averaged approximately 39 MMcf per day.
The Company anticipates that production will remain at approximately this
level until October 1997, when, in accordance with the long term gas sales
contract with the Petroleum Authority of Thailand for the Tantawan Field,
natural gas production from the field is anticipated to increase to
approximately 45 MMcf per day (net to the Company's working interest).
CRUDE OIL AND CONDENSATE PRICES. Prices received by the Company for
its crude oil and condensate production during the second quarter of 1997
averaged $18.35 per barrel, a decrease of approximately 19% from
the average price of $22.58 per barrel that the Company
received during the second quarter of 1996. Prices that the
Company received for its crude oil and condensate production during
the first six months of 1997 averaged $20.14 per barrel, a decrease of
approximately 5% from an average price of $21.14 per barrel
that the Company received during the first six months of 1996.
DOMESTIC PRICES. Prices received by the Company for its domestic
crude oil and condensate production during the second quarter of 1997
averaged $18.54 per barrel, a decrease of approximately 18% from
the average price of $22.58 per barrel that the Company
received during the second quarter of 1996. Prices that the
Company received for its domestic crude oil and condensate production during
the first six months of 1997 averaged $20.40 per barrel, a decrease of
approximately 4% from an average price of $21.14 per barrel
that the Company received during the first six months of 1996.
THAILAND PRICES. Since the inception of production from the
Tantawan Field, crude
oil and condensate has been stored in a Floating Production, Storage and
Offloading System (the "FPSO") until an economic quantity was accumulated
for offloading and sale. The first such sale of crude oil and condensate
from the Tantawan Field occurred in July 1997. Prices that the Company
recorded for its crude oil and condensate production stored on the FPSO
for the second quarter and first six months of 1997, were $17.26 and
$18.15, respectively. Prices that the Company currently expects to receive
for such production (and in fact did receive for its July 1997 sale) are
based on world benchmark prices, which are denominated in dollars.
CRUDE OIL AND CONDENSATE PRODUCTION. The Company's crude oil and
condensate production during the second quarter of 1997 averaged 16,457
barrels per day, an increase of approximately 23% from an average of
12,605 barrels per day during the second quarter of 1996. The Company's
crude oil and condensate production during the first six months of 1997
averaged 15,273 barrels per day, an increase of approximately 25% from
an average of 12,247 barrels per day during the first six months of 1996.
- 12 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
DOMESTIC PRODUCTION. The Company's domestic crude oil and
condensate production during the second quarter of 1997 averaged 14,065
barrels per day, an increase of approximately 12% from an average of
12,605 barrels per day during the second quarter of 1996. The Company's
domestic crude oil and condensate production during the first six months
of 1997 averaged 13,531 barrels per day, an increase of approximately 25%
from an average of 12,247 barrels per day during the first six months
of 1996. The increase in the Company's domestic crude oil and condensate
production during the second quarter and first six months of 1997,
compared to the second quarter and first six months of 1996, resulted
primarily from the success of the Company's ongoing development drilling
and workover program in the offshore and onshore Gulf of Mexico regions.
THAILAND PRODUCTION. The Company commenced production from its
Tantawan Field early in February 1997. Following a field startup phase
which ended on March 15, 1997, production from the Tantawan Field
stabilized. During the second quarter of 1997, the Company's share of
crude oil and condensate production production from the Tantawan Field
averaged approximately 2,392 barrels per day.
NGL PRODUCTION AND "OTHER" NET REVENUE ITEMS. The Company's
oil and gas revenues, and total liquid hydrocarbon
production volumes reflect the production and sale of NGL by the Company.
In addition, the Company's oil and gas revenues for the second quarter
and first six months of 1997 and 1996 also reflect adjustments for
various miscellaneous items of a non-recurring nature.
Liquid products are often extracted from its natural gas streams
and sold separately as NGL. All of the Company's NGL production comes
from its domestic operations. The prices that the Company typically
receives for its NGL production is related to crude oil prices. However,
because NGL is extracted from liquid rich natural gas, the Company's NGL
production volumes correlate most closely with increases (or decreases)
from certain of the Company's natural gas fields. Natural gas production
from the Company's East Cameron Block 334 "E" platform is considered
to be relatively rich in NGL.
The Company's NGL and "other" net revenues for the second quarter
and first six months of 1997 increased $2,336,000 and $2,038,000,
from the second quarter and first six months of 1996, respectively.
The increase in the Company's NGL and "other" net revenues for the second
quarter and first six months of 1997, compared to the second quarter
and first six months of 1996, was primarily related to an increase in
the Company's NGL production from the Company's East Cameron 334 "E" platform,
that was only partially offset by a decrease in the average price that the
Company received for its NGL production.
TOTAL LIQUID HYDROCARBON PRODUCTION. The Company's average
liquid hydrocarbon (including crude oil, condensate and NGL) production
during the second quarter of 1997 was 20,997 barrels per day, an increase of
approximately 39% from an average liquid hydrocarbon production
of 15,077 barrels per day during the second quarter of 1996.
The Company's average liquid hydrocarbon production during the first six
months of 1997 was 18,122 barrels per day, an increase of approximately
25% from an average liquid hydrocarbon production
of 14,475 barrels per day during the first six months of 1996.
- 13 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OPERATING COSTS AND EXPENSES
LEASE OPERATING EXPENSES
Lease operating expenses for the second quarter of
1997 were $16,191,000, an increase of approximately 76% from lease
operating expenses of $9,205,000 for the second quarter of 1996.
Lease operating expenses for the first six months of 1997 were
$28,488,000, an increase of approximately 58% from lease operating
expenses of $18,080,000 for the first six months of 1996.
The increases in lease operating expenses for the second quarter
and first six months of 1997, compared to the second quarter
and first six months of 1996, resulted primarily from
expenses related to the leasing of equipment (principally the FPSO);
increased operating activity by the Company and its industry partners;
and increased costs to the Company (and the entire offshore oil
industry) due to a shortage of qualified offshore
service contractors and equipment, which has permitted such contractors
to increase the costs of their services.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the second
quarter of 1997 were $5,121,000, an increase of approximately 17% from
general and administrative expenses of $4,383,000 for the second
quarter of 1996. General and administrative expenses for
the first six months of 1997 were $10,957,000, an increase of approximately
12% from general and administrative expenses of $9,804,000 for the first
six months of 1996. The increases in general and administrative expenses
for the second quarter and first six months of 1997, compared with the
second quarter and first six months of 1996,
were related to, among other things, an increase in the size of the Company's
work force and leased office space in the United States and Bangkok,
Thailand and normal salary and concomitant benefit expense adjustments that
were partially offset by decreases in miscellaneous general and administrative
expense items.
EXPLORATION EXPENSES
Exploration expenses consist primarily of delay rentals and
geological and geophysical costs which are expensed as incurred.
Exploration expenses for the second quarter of 1997 were $4,053,000, an
increase of approximately 1% from exploration expenses of $3,996,000
for the second quarter of 1996. The increase in exploration expenses
for the second quarter of 1997, compared to the second quarter of 1996,
resulted primarily from increased geophysical activity by the Company in
the Gulf of Mexico and an increase in delay rentals, which was not entirely
offset by a decrease in geophysical activity in other areas in which the
Company is currently conducting geophysical operations. Exploration
expenses for the first six months of 1997 were $5,953,000, a decrease of
approximately 24% from exploration expenses of $7,876,000 for the first
six months of 1996. The decrease in exploration expenses for the first
six months of 1997, compared to the first six months of 1996, resulted
primarily from a decrease in expenses resulting from the completion of
a 3-D seismic survey by the Company on its leases in South Louisiana and
East Texas in the first six months of 1996, which was partially offset
by increased expenses resulting from geophysical activity by the Company
in the Gulf of Mexico; and also by increased delay rental payments.
- 14 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
DRY HOLE AND IMPAIRMENT EXPENSES
Dry hole and impairment expenses relate to costs of
unsuccessful wells drilled, along with impairments due to decreases in
expected reserves from producing wells. The Company's dry
hole and impairment expenses for the second quarter of 1997 were
$4,086,000, an increase of approximately 59% from dry hole and
impairment expenses of $2,568,000 for the second quarter of 1996. The
Company's dry hole and impairment expenses for the first six months of
1997 were $5,007,000, a decrease of approximately 2% from dry hole and
impairment expenses of $5,118,000 for the first six months of 1996.
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES
The Company accounts for its oil and gas activities using the
successful efforts method of accounting. Under the successful
efforts method, lease acquisition costs and all development costs are
capitalized. Unproved properties are reviewed whenever events or
changes in circumstances indicate that the carrying amount of such asset
may not be recoverable. Unproved properties are reviewed quarterly, with
any such impairment charged to expense in the period. Exploratory drilling
costs are capitalized until the results are determined. If proved
reserves are not discovered, the exploratory drilling costs are
expensed. Other exploratory costs are expensed as incurred.
The provision for depreciation, depletion and amortization
("DD&A") is based on the capitalized costs, as determined in the preceding
paragraph, plus future costs to abandon offshore wells and platforms, and
is determined on a cost center by cost center (generally, a field by field)
basis using the units of production method. The Company's DD&A expense
for the second quarter of
1997 was $28,457,000, an increase of approximately 80% from DD&A
expense of $15,793,000 for the second quarter of 1996. The Company's
DD&A expense for the first six months of 1997 was $46,877,000, an
increase of approximately 49% from DD&A expense of $31,506,000 for the
first six months of 1996. The increases in DD&A expense for the second
quarter and first six months of 1997, compared to the second
quarter and first six months of 1996, resulted
primarily from increased production of oil and gas from the Company's
properties and, to a much lesser extent, a slight increase in the Company's
composite DD&A rate. The composite DD&A rate for all of the
Company's producing fields for the second quarter of 1997 was $0.90
per equivalent Mcf ($5.38 per equivalent barrel), an increase of
approximately 3% from a composite DD&A rate of $0.87 per equivalent
Mcf ($5.22 per equivalent barrel) for the second quarter of 1996.
The composite DD&A rate for all of the Company's producing fields for
the first six months of 1997 was $0.90 per equivalent Mcf ($5.41 per equivalent
barrel), an increase of approximately 3% from a composite DD&A rate of $0.87
per equivalent Mcf ($5.24 per equivalent barrel) for the first six
months of 1996. The increase in the composite DD&A rate for all of the
Company's producing fields for the second quarter and the first six months
of 1997, compared to the second quarter and
first six months of 1996, resulted primarily from an increased percentage
of the Company's production coming from certain of the Company's fields
that have DD&A rates that are higher than the Company's recent historical
composite rate and a corresponding decrease in the percentage of the
Company's production coming from fields that have DD&A rates that are
lower than the
- 15 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Company's recent historical composite DD&A rate. The
Company produced 31,197,000 equivalent Mcf (5,200,000 equivalent
barrels) during the second quarter of 1997, an increase of approximately
74% from the 17,932,000 equivalent Mcf (2,989,000 equivalent barrels)
produced by the Company during the second quarter of 1996.
The Company produced 51,178,000 equivalent Mcf (8,530,000
equivalent barrels) during the first six months of 1997, an increase of
approximately 44% from the 35,628,000 equivalent Mcf (5,938,000 equivalent
barrels) produced by the Company during the first six months of 1996.
INTEREST
INTEREST CHARGES
The Company incurred interest charges for the
second quarter of 1997 of $5,536,000, an increase of approximately 75%
from interest charges of $3,172,000 for the second quarter of 1996.
Interest charges incurred by the Company for the first six months
of 1997 were $9,831,000, an increase of approximately 59% from interest
charges of $6,184,000 for the first six months of 1996.
The increases in interest charges for the second quarter and first six
months of 1997, compared to the second quarter and first six months of 1996,
resulted primarily from an increase in the average amount of the Company's
outstanding debt and, to a lesser extent, increased amortization and debt
issuance expenses resulting from the issuance of the 2006 Notes, that were
partially offset by lower average interest rate levels on the debt
outstanding (resulting primarily from the retirement of the 8% Debentures
and the issuance of the 2006 Notes that bear interest at a 5-1/2% annual
interest rate).
CAPITALIZED INTEREST EXPENSE
Capitalized interest expense for
the second quarter of 1997 was $760,000, a decrease of approximately
24% from capitalized interest expense of $1,004,000 for the first quarter
of 1996. The decrease in capitalized interest expense for the second
quarter of 1997, compared to the second quarter of 1996, resulted
primarily the cessation of the requirement to capitalize interest expense
attributable to capital expenditures on properties once production
commences from such properties. A substantial percentage of the
Company's capitalized interest
expense during 1996 and most of the first quarter of 1997 resulted
from capitalization of interest related to capital expenditures for the
development of the Tantawan Field (which commenced production in early
February 1997) and the East Cameron Block 334 "E" platform field (which
commenced production in early April 1997). Capitalized interest expense
for the first six months of 1997 was $2,630,000, an increase of
approximately 44% from capitalized interest expense of $1,830,000 for the
first six months of 1996. For the reasons enumerated above, the increase
in capitalized interest
expense for the first six months of 1997, compared to the first six months
of 1996, resulted primarily from the requirement to capitalize interest
expense attributable to capital expenditures on non-producing properties,
principally capital expenditures related to the Company's development of
the Tantawan Field and the East Cameron Block 334 "E" platform during the
first quarter of 1997, which substantially exceeded the Company's capital
expenditures on non-producing properties (principally the Tantawan Field)
during the first six months of 1996.
- 16 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
As of August 1, 1997, the Company was a party to an interest rate
swap agreement. The swap agreement, which terminates on March 10, 1998,
effectively changes the interest rate that the Company would pay on
$5,000,000 of debt from a market based variable rate to a fixed rate of 7.2%.
INCOME TAX EXPENSE
Income tax expense for the second quarter of 1997 was
$4,955,000, an increase of approximately 7% from income tax expense
of $4,647,000 for the second quarter of 1996. Income tax expense
for the first six months of 1997 was $11,708,000, an increase of
approximately 50% from income tax expense of $7,794,000 for the
first six months of 1996. The increase in income tax expense for the
second quarter and first six months of 1997, compared to the second
quarter and first six months of 1996, resulted primarily
from increased pre-tax income.
LIQUIDITY AND CAPITAL RESOURCES --
CASH FLOWS
The Company's Condensed Consolidated Statement of Cash Flows for
the six months ended June 30, 1997, reflects net cash provided by operating
activities of $73,807,000 (including an income tax refund of $7,037,000
which was partially offset by a payment of estimated income taxes of
$4,500,000). In addition to net cash provided by operating
activities, the Company received net proceeds of $97,270,000 from the
issuance of the 2007 Notes on May 22, 1997, $958,000 from the exercise
of stock options and $100,000 from the sale of certain non-strategic
properties.
During the first six months of 1997, the Company invested $112,617,000
of such cash flow in capital projects, repaid a net $8,000,000
under its revolving credit facility and paid $2,002,000 ($0.03 per share
for each of the first two quarters of 1997) in cash dividends to
holders of the Company's common stock. Of the $112,617,000
invested in capital projects, $56,961,000 was applicable to 1996 capital
projects and $55,656,000 was applicable to 1997
capital projects. As of June 30, 1997, the Company's cash and cash
investments were $23,505,000 and its long-term debt stood at $338,205,000.
FUTURE CAPITAL REQUIREMENTS
The Company's capital and exploration budget for 1997, which
does not include any amounts that may be expended for the purchase of
proved reserves or any interest which may be capitalized resulting from
projects in progress, was established by the Company's Board of Directors
at $210,000,000. In addition to anticipated
capital and exploration expenses, other material 1997 cash requirements
that the Company currently anticipates include ongoing operating, general
and administrative, income tax, interest expense and the payment of
dividends on its common stock,
including a $.03 per share dividend on its common stock to be paid on
August 22, 1997 to stockholders of record as of August 8, 1997.
The Company currently anticipates that its available cash and cash
investments, cash provided by operating
activities and funds available under
its revolving credit facility and
- 17 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
uncommitted lines of credit with banks will be sufficient to fund
the Company's ongoing expenses, its 1997 capital and exploration
budget, any currently anticipated costs associated with the Company's
Thailand projects during 1997 and anticipated future
dividend payments. The declaration of future dividends will depend upon,
among other things, the Company's future earnings and financial condition,
liquidity and capital requirements, the general economic and regulatory
climate and other factors deemed relevant by the Company's Board of
Directors.
NEW DEBT INSTRUMENTS
2007 NOTES
On May 22, 1997, the Company issued $100,000,000 of 8 3/4%
Senior Subordinated Notes due 2007 (the "2007 Notes"). The proceeds from
the issuance of the 2007 Notes were used to repay amounts outstanding under
the Company's bank revolving credit agreement, and to purchase short-term
cash investments. The 2007 Notes bear interest at a rate of 8 3/4%,
payable semi-annually in arrears on May 15 and November 15 of each year,
commencing November 15, 1997. The 2007 Notes are general unsecured senior
subordinated obligations of the Company and are subordinated in
right of payment to the Company's senior indebtedness, which currently
includes its obligations under its bank revolving credit agreement and its
unsecured credit lines, but are senior in right of payment to its
subordinated indebtedness, which currently includes the 2006 Notes
and the 2004 Notes. The Company, at its option, may redeem the 2007 Notes
in whole or in part, at any time on or after May 15, 2002, at a redemption
price of 104.375% of their principal value and decreasing percentages
thereafter. No sinking fund payments are required on the 2007 Notes. The
2007 Notes are redeemable at the option of any holder, upon the occurrence
of a change of control (as defined in the indenture governing the 2007 Notes),
at 101% of their principal amount. The indenture governing the 2007 Notes
also imposes certain covenants on the Company (as more fully described therein)
that are customary for senior subordinated indebtedness generally,
including covenants limiting: incurrence of indebtedness, including senior
indebtedness; restricted payments; the issuance and sales of restricted
subsidiary capital stock; transactions with affiliates; liens; disposition
of proceeds of asset sales; non-guarantor restricted subsidiaries; dividends
and other payment restrictions affecting restricted subsidiaries; and mergers,
consolidations and the sale of assets.
AMENDED AND RESTATED CREDIT AGREEMENT
Effective August 1, 1997, the Company entered into an amended and
restated credit agreement (the "Credit Agreement"). The Credit Agreement
provides for an unsecured $250,000,000 revolving/term credit facility which
will be fully revolving until July 1, 2000, after which the balance will
be due in eight quarterly term loan installments, commencing October 31, 2000.
The amount that may be borrowed under the Credit Agreement may not exceed
a borrowing base which is composed of both domestic and Thai properties less,
in certain circumstances, the present value of interest payments on a portion
of certain subordinated indebtedness, including the 2007 Notes.
The domestic borrowing base is determined semi-annually by the lenders
in accordance with the Credit Agreement, based primarily on the discounted
present value of future net revenues from the Company's domestic oil and gas
reserves. The portion of the borrowing base which is composed of properties
- 18 -
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
located in the Kingdom of Thailand is also determined semi-annually, but may,
at the lenders discretion, be redetermined once more during each semi-annual
period. The value of this portion of the borrowing base is determined by the
lenders applying their usual and customary criteria for
oil and gas evaluation. As of August 1, 1997, the Company's total borrowing
base, including both domestic and Thai properties, exceeded $250,000,000.
The Credit Agreement is governed by various financial and other covenants,
including requirements to maintain positive working capital (excluding
current maturities of debt) and a fixed charge coverage ratio, and
limitations on indebtedness, creation of liens, the prepayment of
subordinated debt, the payment of dividends, mergers and consolidations,
investments and asset dispositions. In addition, the Company is prohibited
from pledging borrowing base properties as security for other debt.
Borrowings under the Credit Agreement currently bear interest at a base
(prime) rate or LIBOR plus 5/8%, at the Company's option. A commitment fee
on the unborrowed amount under the Credit Agreement is also charged. The
commitment fee is currently 0.25% per annum on the unborrowed amount under
the Credit Agreement that is designated as "active" and 0.10% per annum
on the unborrowed amount under the Credit Agreement that is designated as
"inactive." Of the $250,000,000 that is currently available under the
Credit Agreement (subject to borrowing base limitations), $125,000,000
is designated as "active" and $125,000,000 is designated as "inactive."
- 19 -
Pogo Producing Company and Subsidiaries
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security-Holders
The registrant held it annual meeting of stockholders in
Houston, Texas on April 22, 1997. The following sets forth
the items that were put to a vote of the stockholders and
the results thereof concerning:
(A) the election of four directors, each for a term of
three years. Proxies for the meeting were solicited
pursuant to Regulation 14A under the Securities Exchange
Act of 1934. There were no solicitations in opposition
to management's nominees as listed in the proxy statement
and all such nominees were elected;
(B) the appointment of Arthur Andersen LLP, independent
public accountants, to audit the financial statements
of the registrant for the year 1997, with 31,153,313
shares of stock cast for the appointment, 17,034 against
the appointment, and 13,873 abstentions and broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
4(a) -- Amended and Restated Credit Agreement dated as of
August 1, 1997, among Pogo Producing Company,
certain commercial lending institutions, Bank of
Montreal as the Agent and Banque Paribas as the
Co-Agent.
27 -- Financial Data Schedule
(B) Reports on Form 8-K
None
- 20 -
Pogo Producing Company and Subsidiaries
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.
Pogo Producing Company
Registrant
/s/ THOMAS E. HART
Thomas E. Hart
Vice President and Controller
/s/ JOHN W. ELSENHANS
John W. Elsenhans
Vice President - Finance
and Treasurer
Date: August 8, 1997
- 21 -