SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 28, 1996 (January 2, 1996)
PARKER & PARSLEY PETROLEUM COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 1-10695 75-2570602
(State or other jurisdiction of Commision (I.R.S. Employer
incorporation or organization) File Number Identification Number)
303 West Wall, Suite 101, Midland, Texas 79701
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (915) 683-4768
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Page 1 of 12 pages.
ITEM 2. Acquisition or Disposition of Assets
Divestiture of Australasian Assets
On March 28, 1996, the Company completed the sale of certain wholly-owned
Australian subsidiaries to Santos Ltd. for aggregate consideration of $161.7
million which consisted of cash proceeds of $111.1 million for the equity of
such entities, $21.5 million reimbursement of certain intercompany cash
advances, and the assumption of such subsidiaries' net liabilities, exclusive of
oil and gas properties, of $29.1 million. The Company's Australasian properties
were located principally in the Cooper Basin in Central Australia, the Surat
Basin in Northeast Australia, the Carnarvon Basin on the Northwest Shelf off the
coast of Western Australia, the Otway Basin off the coast of South Australia and
the Central Sumatra Basin in Indonesia. At December 31, 1995, the Company's
interests in these properties contained 32.1 million BOE of proved reserves
(consisting of 12.4 million Bbls of oil and 118.3 Bcf of gas), representing
$133.8 million of SEC 10 value (10% of the total SEC 10 value attributable to
the Company's proved oil and gas reserves). During 1995, daily production from
these properties averaged 4,312 Bbls of oil and 23,633 Mcf of gas.
The Company has also entered into an agreement with Phillips Petroleum
International Investment Company to sell another wholly-owned subsidiary, Bridge
Oil Timor Sea, Inc., for additional cash proceeds of $78.6 million. Bridge Oil
Timor Sea, Inc. has a wholly-owned Australian subsidiary, Bridge Oil Timor Sea
Pty Ltd., which owns a 22.5% interest in the ZOCA 19-13 permit in the offshore
Bonaparte Basin in the Zone of Cooperation between Australia and Indonesia. It
is anticipated that this transaction will be completed in June 1996.
Aggregate net cash proceeds from both sales of approximately $203 million,
after payment of certain costs and expenses, will be utilized to reduce the
Company's outstanding bank indebtedness and for general working capital
purposes.
Divestiture of Domestic Assets
The Company regularly reviews its property base for the purpose of
identifying nonstrategic assets, the disposition of which would create
organizational and operational efficiencies. While the Company generally would
not dispose of assets solely for the purpose of reducing debt, such dispositions
can have the result of furthering the Company's objective of financial
flexibility through decreased debt levels. Based on its current domestic
divestiture plan, the Company anticipates realizing asset sale proceeds of
approximately $50 million during 1996. During the three months ended March 31,
1996, the Company received proceeds of $3.8 million from the sale of such
properties and related assets. Subsequent to March 31, 1996, the Company has
sold, or entered into agreements to sell, additional properties, gas plants and
related assets for estimated proceeds of $52.1 million subject to normal
purchase price adjustments. At December 31, 1995, the domestic properties which
the Company has sold, or agreed to sell, contained proved reserves of 5 million
barrels of oil and 38.9 Bcf of gas and had an aggregate SEC 10 value of $51.2
million. The proceeds from such divestitures will initially be used to reduce
outstanding indebtedness and subsequently to provide funding for a portion of
the Company's 1996 capital expenditures including purchases of oil and gas
properties in the Company's core areas.
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ITEM 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information:
The following pro forma financial information for the Company, taking
into account the disposition of the Company's Australasian assets and
certain domestic assets, are included in this Report on the pages
indicated below.
Page
Preliminary Statement 4
Unaudited Pro Forma Combined Balance Sheet as of
March 31, 1996 5
Unaudited Pro Forma Combined Statement of Operations
for the three months ended March 31, 1996 6
Unaudited Pro Forma Combined Statement of Operations
for the year ended December 31, 1995 7
Notes to Unaudited Pro Forma Combined Financial Statements 8
3
Unaudited Pro Forma Combined Financial Statements of the Company
The Unaudited Pro Forma Combined Financial Statements of the Company have
been prepared to give effect to (i) the sale of certain wholly-owned Australian
subsidiaries to Santos Ltd. in March 1996, (ii) the pending sale of Bridge Oil
Timor Sea, Inc. to Phillips Petroleum International Investment Company which is
anticipated to be completed in June 1996 (items (i) and (ii) collectively the
"Australasian Assets"), (iii) the aggregate effect of both completed and pending
sales (evidenced by signed purchase and sale agreements) of certain nonstrategic
domestic oil and gas properties, gas plants, and related assets during the
period from January 2, 1996 to May 31, 1996 (collectively the "1996 Assets
Sold"), and (iv) the aggregate effect of completed sales of certain nonstrategic
domestic oil and gas properties, gas plants, and related assets during the year
ended December 31, 1995 (collectively the "1995 Assets Sold"). The Unaudited Pro
Forma Combined Financial Statements of the Company are not necessarily
indicative of the financial results for the periods presented had the sale of
the Australasian Assets, the 1996 Assets Sold, and the 1995 Assets Sold taken
place on January 1, 1995. In addition, future results may vary significantly
from the results reflected in the accompanying Unaudited Pro Forma Combined
Financial Statements because of normal production declines, changes in product
prices and future acquisitions and divestitures, among other factors. This
information should be read in conjunction with the Consolidated Financial
Statements of the Company (and the related notes) included in the Annual Report
on Form 10-K for the year ended December 31, 1995 and in the Quarterly Report on
Form 10-Q for the three months ended March 31, 1996.
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PARKER & PARSLEY PETROLEUM COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
as of March 31, 1996
(in thousands)
ASSETS
The Pro Forma Pro Forma
Company Entries Combined
Current assets:
Cash and cash equivalents $ 26,298 $ 30,074 (a) $ 56,372
Restricted cash 20,447 20,447
Accounts receivable:
Trade, net 35,879 (7,000)(a) 28,879
Affiliates 1,060 1,060
Oil and gas sales 35,008 35,008
Assets held for resale 3,679 (3,679)(a) -
Inventories 5,936 5,936
Deferred income taxes 1,800 1,800
Other current assets 2,068 2,068
--------- ---------
Total current assets 132,175 151,570
--------- ---------
Property, plant and equipment, at cost:
Oil and gas properties, using the
successful efforts method of
accounting:
Proved properties 1,316,147 (61,715)(a) 1,254,432
Unproved properties 6,595 (3,255)(a) 3,340
Natural gas processing facilities 59,331 (1,317)(a) 58,014
Accumulated depletion, depreciation
and amortization (401,618) 29,162 (a) (372,456)
--------- ---------
980,455 943,330
--------- ---------
Other property and equipment, net 28,513 (850)(a) 27,663
Other assets, net 15,657 15,657
--------- ---------
$1,156,800 $1,138,220
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt $ 1,701 $ 1,701
Distributable litigation settlement 18,567 18,567
Undistributed unit purchases 1,880 1,880
Accounts payable:
Trade 48,653 48,653
Affiliates 1,210 1,210
Domestic and foreign income taxes 47 2,000 (a) 2,047
Other current liabilities 33,315 (9,589)(a) 23,726
--------- ---------
Total current liabilities 105,373 97,784
--------- ---------
Long-term debt, less current
maturities 416,832 (100,000)(a) 316,832
Other noncurrent liabilities 11,854 11,854
Deferred income taxes 12,200 9,200 (a) 21,400
Preferred stock of subsidiary 188,820 188,820
Stockholders' equity:
Preferred stock - -
Common stock 364 364
Additional paid-in capital 453,554 453,554
Treasury stock, at cost (6,917) (6,917)
Unearned compensation (1,729) (1,729)
Retained earnings (deficit) (23,551) 79,809 (a) 56,258
--------- ---------
Total stockholders' equity 421,721 501,530
--------- ---------
Commitments and contingencies - -
--------- ---------
$1,156,800 $1,138,220
========= =========
See accompanying notes to unaudited pro forma combined financial statements.
5
PARKER & PARSLEY PETROLEUM COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Three months ended March 31, 1996
(in thousands, except share and per share data)
1996
The Australasian Assets Pro Forma Pro Forma
Company Assets Sold Entries Combined
Revenues:
Oil and gas $ 98,025 $(10,591) $(5,476) $ 81,958
Natural gas processing 5,419 - (494) 4,925
Interest and other 1,167 (130) - 338 (c) 1,375
Gain on disposition of
assets 13,671 (11,022) (2,649) -
--------- ------- ------ ---------
118,282 (21,743) (8,619) 88,258
--------- ------- ------ ---------
Cost and expenses:
Oil and gas production 30,494 (3,300) (3,070) 24,124
Natural gas processing 3,198 - (339) 2,859
Depletion, depreciation
and amortization 31,179 (4,217) (1,341) 25,621
Exploration and abandonments 4,986 (1,435) (644) 2,907
General and administrative 6,360 (1,549) - 4,811
Interest 14,682 (1,100) - (3,207)(b) 10,375
Other 373 - - 373
--------- ------- ------ ---------
91,272 (11,601) (5,394) 71,070
--------- ------- ------ ---------
Income from continuing
operations before income
taxes 27,010 (10,142) (3,225) 17,188
Income tax provision (12,300) 6,400 - (100)(e) (6,000)
--------- ------- ------ ---------
Income from continuing
operations $ 14,710 $ (3,742) $(3,225) $ 11,188
========= ======= ====== =========
Income from continuing
operations per share:
Primary $ .41 $ .31
========= =========
Fully diluted $ .39 $ .31
========= =========
Weighted average shares
outstanding 35,591,835 35,591,835
========== ==========
See accompanying notes to unaudited pro forma combined financial statements.
6
PARKER & PARSLEY PETROLEUM COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Year ended December 31, 1995
(in thousands, except share and per share data)
1996 1995
The Australasian Assets Assets Pro Forma Pro Forma
Company Assets Sold Sold Entries Combined
Revenues:
Oil and gas $ 375,720 $(45,805) $(23,241) $(29,524) $ 277,150
Natural gas processing 33,258 - (1,362) (15,799) 16,097
Gas marketing 76,784 - - - 76,784
Interest and other 11,364 (3,850) - - 4,461 (c) 11,975
Gain on disposition of
assets 16,620 888 - (17,508) -
---------- ------- ------- ------- ----------
513,746 (48,767) (24,603) (62,831) 382,006
---------- ------- ------- ------- ----------
Cost and expenses:
Oil and gas production 130,905 (12,418) (13,473) (17,494) 87,520
Natural gas processing 25,865 - (1,033) (14,799) 10,033
Gas marketing 75,664 - - - 75,664
Depletion, depreciation
and amortization 159,058 (22,256) (10,751) (10,611) 115,440
Impairment of oil and gas
properties and natural
gas processing facilities 130,494 - (20,916) (2,801) 106,777
Exploration and
abandonments 25,409 (13,563) (465) (168) 11,213
General and
administrative 39,552 (6,443) - - 33,109
Interest 65,449 (5,077) - - 11,606 (d) 42,339
(29,639)(b)
Other 11,357 - - - 11,357
---------- ------- ------- ------- ----------
663,753 (59,757) (46,638) (45,873) 493,452
---------- ------- ------- ------- ----------
Loss from continuing
operations before
income taxes (150,007) 10,990 22,035 (16,958) (111,446)
Income tax benefit 45,900 - - - (6,900)(e) 39,000
---------- ------- ------- ------- ----------
Loss from continuing
operations $ (104,107) $ 10,990 $ 22,035 $(16,958) $ (72,446)
========== ======= ======= ======= ==========
Loss from continuing
operations per share $ (2.95) $ (2.05)
========== ==========
Weighted average shares
outstanding 35,274,214 35,274,214
========== ==========
See accompanying notes to unaudited pro forma combined financial statements.
7
PARKER & PARSLEY PETROLEUM COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 1995 and March 31, 1996
Note 1. Basis of Presentation
The accompanying unaudited pro forma combined financial information of
Parker & Parsley Petroleum Company ("the Company") is presented to reflect (i)
the sale of certain wholly-owned Australian subsidiaries to Santos Ltd. in March
1996, (ii) the pending sale of Bridge Oil Timor Sea, Inc. to Phillips Petroleum
International Investment Company which is anticipated to be completed in June
1996 (items (i) and (ii) collectively the "Australasian Assets"), (iii) the
aggregate effect of both completed and pending sales (evidenced by a signed
purchase and sale agreement) of certain nonstrategic domestic oil and gas
properties, gas plants, and related assets during the period from January 2,
1996 to May 31, 1996 (collectively the "1996 Assets Sold"), and (iv) the
aggregate effect of sales of certain nonstrategic domestic oil and gas
properties, gas plants, and related assets during the year ended December 31,
1995 (collectively the "1995 Assets Sold"). The unaudited pro forma combined
balance sheet is presented as if the sale of the Australasian Assets and the
1996 Assets Sold occurred at the balance sheet date and the unaudited pro forma
combined statements of operations are presented as if the sale of the
Australasian Assets, the 1996 Assets Sold, and the 1995 Assets Sold occurred on
January 1, 1995.
The Company - Represents the consolidated balance sheet of Parker &
Parsley Petroleum Company as of March 31, 1996 and the consolidated
statements of operations of Parker & Parsley Petroleum Company for the
three months ended March 31, 1996 and the year ended December 31, 1995.
Australasian Assets - Reflects the results of operations (before
income taxes) for the three months ended March 31, 1996 and the year ended
December 31, 1995 from the oil and gas properties and related assets prior
to their sale in 1996.
1996 Assets Sold - Reflects the results of operations (before income
taxes) for the three months ended March 31, 1996 and the year ended
December 31, 1995 from the oil and gas properties, gas plants, related
assets and contract rights prior to their sale in 1996.
1995 Assets Sold - Reflects the results of operations (before income
taxes) for the year ended December 31, 1995 from the oil and gas
properties, gas plants, related assets and contract rights prior to their
sale in 1995.
Note 2. Pro Forma Entries
(a) To record the sales of Bridge Oil Timor Sea, Inc. and the 1996 Assets Sold
(including the related income tax effects) that were pending at March 31,
1996. Of the aggregate proceeds received of $130.1 million, $100 million
8
PARKER & PARSLEY PETROLEUM COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 1995 and March 31, 1996
was utilized to reduce amounts outstanding under the Company's bank credit
facility, and $30.1 million was utilized to increase cash and cash
equivalents.
(b) To adjust interest expense resulting from the application of that portion
of the sales proceeds necessary to retire the Company's outstanding bank
indebtedness. The proceeds applied in 1996 of $225 million from the sale of
the Australasian Assets and the 1996 Assets Sold resulted in a reduction in
interest expense of $3.2 million. The proceeds applied in 1995 of $328.3
million from the sale of the Australasian Assets, the 1996 Assets Sold and
the 1995 Assets Sold resulted in a reduction of interest expense of $29.6
million. The reductions in interest expense were calculated utilizing the
Company's weighted average rate on its bank indebtedness of 6.37% for the
three months ended March 31, 1996 and 7.18% for the year ended December 31,
1995, respectively.
(c) To adjust interest income as a result of investing the sales proceeds
received in excess of the amounts used to retire the Company's outstanding
bank indebtedness. Such excess cash proceeds exceeded outstanding bank
indebtedness by an average amount of $30.1 million during the quarter ended
March 31, 1996 and $89.4 million during the year ended December 31, 1995.
The Company typically invests excess cash in a Treasury Securities money
fund which had an average yield of 4.49% during the quarter ended March 31,
1996 and 4.98% during the year ended December 31, 1995.
(d) To adjust interest expense and amortization of debt issuance costs
associated with (i) the issuance in April 1995 of $150 million 8-7/8%
Senior Notes due April 15, 2005 (an additional $3.4 million in interest
expense) and (ii) the issuance in August 1995 of $150 million 8-1/4% Senior
Notes due August 15, 2007 (an additional $8.2 million in interest expense).
(e) To adjust income tax expense for each tax jurisdiction.
Note 3. Income Taxes
The Company accounts for income taxes pursuant to the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("Statement 109"). In accordance with Statement 109, the Company prepares
separate tax calculations for each tax jurisdiction in which the Company is
subject to income taxes.
The Company's tax provision for the quarter ended March 31, 1996 of $12.3
million included a provision of $6.4 million related to the write-off of certain
net operating loss carryforwards which, with the sale of the Australasian
Assets, will not be utilized in the future.
9
PARKER & PARSLEY PETROLEUM COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 1995 and March 31, 1996
Note 4. Income (Loss) from Continuing Operations per Share
Income (loss) from continuing operations per share is calculated based on
the weighted average number of shares and share equivalents, if more than 3%
dilutive, outstanding during the period. Fully diluted loss per common and
common equivalent share is not presented for the year ended December 31, 1995
since the effect would be antidilutive.
Note 5. Oil and Gas Reserve Data
The following unaudited pro forma supplemental information regarding the
oil and gas activities of the Company is presented pursuant to the disclosure
requirements promulgated by the Securities and Exchange Commission and Statement
of Financial Accounting Standards No. 69, "Disclosures About Oil and Gas
Producing Activities". The pro forma combined reserve information is presented
as if the sale of the Australasian Assets, 1996 Assets Sold, and 1995 Assets
Sold had occurred on January 1, 1995. Information for oil is presented in
barrels (Bbls) and for gas in thousands of cubic feet (Mcf).
The Company emphasizes that reserve estimates are inherently imprecise and
subject to revision and that estimates of new discoveries are more imprecise
than those of producing oil and gas properties. Accordingly, the estimates are
expected to change as future information becomes available; such changes could
be significant.
Quantities of oil and gas reserves
Set forth below is a pro forma summary of the changes in the net quantities
of oil and natural gas reserves for the year ended December 31, 1995.
Oil Gas
(Bbls) (Mcf)
------- -------
(in thousands)
Balance, January 1, 1995 107,272 582,884
Revisions of previous estimates 26,913 132,362
Purchase of minerals-in-place 4,309 82,713
New discoveries and extensions 761 6,015
Production (9,398) (64,218)
Sales of minerals-in-place - -
------- -------
Balance, December 31, 1995 129,857 739,756
======= =======
Standardized measure of discounted future net cash flows
The standardized measure of discounted future net cash flow is computed by
applying year-end prices of oil and gas (with consideration of price changes
10
PARKER & PARSLEY PETROLEUM COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 1995 and March 31, 1996
only to the extent provided by contractual arrangements) to the estimated future
production of oil and gas reserves less estimated future expenditures (based on
year-end costs) to be incurred in developing and producing the proved reserves
discounted using a rate of 10% per year to reflect the estimated timing of the
future cash flows. Future income taxes are calculated by comparing discounted
future cash flows to the tax basis of oil and gas properties plus available
carryforwards and credits and applying the current tax rate to the difference.
December 31, 1995
-----------------
(in thousands)
Oil and Gas Producing Activities:
Future cash inflows $ 3,963,270
Future production costs (1,535,210)
Future development costs (157,675)
------------
Future net cash flows before taxes 2,270,385
10% annual discount factor (1,089,835)
------------
Discounted future cash flows before taxes 1,180,550
Discounted future income taxes (126,903)
------------
Standardized measure of discounted future
net cash flows $ 1,053,647
============
Changes relating to the standardized measure of discounted future net cash flows
The principal sources of the change in the pro forma combined standardized
measure of discounted future net cash flows for the year ended December 31, 1995
are as follows (in thousands):
Oil and gas sales, net of production costs $ (189,630)
Net changes in prices and production costs 198,560
Extensions and discoveries 12,321
Sales of minerals-in-place -
Purchases of minerals-in-place 53,628
Revisions of estimated future development costs (43,722)
Revisions of previous quantity estimates 255,014
Accretion of discount 80,367
Changes in production rates, timing and other 10,337
------------
Change in present value of future net revenues 376,875
Net change in present value of future income taxes (115,276)
------------
261,599
Balance, beginning of year 792,048
------------
Balance, end of year $ 1,053,647
============
11
PARKER & PARSLEY PETROLEUM COMPANY
S I G N A T U R E S
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 hereunto duly authorized.
PARKER & PARSLEY PETROLEUM COMPANY
Date: June 12, 1996 By: /s/ Steven L. Beal
-------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer
12