UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
December 16, 1999
(Date of earliest event reported)
BURLINGTON RESOURCES INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9971 91-1413284
(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
5051 Westheimer, Suite 1400, Houston, Texas 77056
(Address of principal executive offices, zip code)
Registrant's telephone number including area code:
(713) 624-9500
Item 5. OTHER EVENT
On December 16, 1999, BR announced preliminary estimates of year-end 1999
reserves and disclosed that 1999 reserve revisions included performance related
downward adjustments associated with certain properties located on the Gulf of
Mexico Shelf and in the Permian Basin. BR also announced that it would record a
one-time, non-cash charge of approximately $225 million ( pretax) to reduce the
carrying value of the affected properties in accordance with Statement of
Financial Accounting Standards No. 121.
A copy of the Press Release has been included as an exhibit to this report.
Item 7. EXHIBIT
(c) Exhibit
Exhibit 99.1 - Press Release of BR dated December 16, 1999
FORWARD-LOOKING STATEMENTS
This report (including the exhibits) contains projections and other
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. These projections and statements reflect BR's current
views with respect to future events and financial performance. No assurances can
be given, however, that these events will occur or that these projections will
be achieved and actual results could differ materially from those projected as a
result of certain factors. A discussion of these factors is included in the
companies' 1998 Form 10-K.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BURLINGTON RESOURCES INC.
(Registrant)
By /s/Philip W. Cook
Philip W. Cook
Vice President, Controller and
Chief Accounting Officer
Date: December 20, 1999
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EXHIBIT INDEX
Exhibit
Number Exhibit Page
99.1 Press Release dated December 16, 1999 5
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EXHIBIT 99.1
BR ANNOUNCES PRELIMINARY ESTIMATES OF YEAR-END 1999 RESERVES
Houston, Texas, December 16, 1999. Burlington Resources Inc. (NYSE:BR)
("BR") today announced that it expected to replace approximately 140% of its
1999 worldwide oil and gas production at an average reserve replacement cost of
approximately $0.72 per thousand cubic feet of natural gas equivalent (MCFE).
The Company said its proved oil and gas reserves as of year-end 1999 are
expected to exceed 10.2 trillion cubic feet of natural gas equivalent (TCFE),
approximately 4% above year-end 1998 totals. Reserves added through extensions
and discoveries, or "drill bit" additions, are expected to total over 1,250
billion cubic feet of natural gas reserves (BCFE); reserves added through
acquisitions are estimated at 200 BCFE; and net negative reserve revisions are
expected to total 140 BCFE. BR indicated that the estimated year-end reserve
balances for both 1999 and 1998 include the reserves of Poco Petroleums Ltd.
("Poco"), which was acquired by BR in a pooling of interests transaction in
November of 1999. Production for the combined company is expected to total
approximately 925 BCFE for 1999.
BR said that its reserve revisions include performance related downward
adjustments associated with certain properties located on the Gulf of Mexico
Shelf and in the Permian Basin. These adjustments were necessitated by
accelerating decline on the Gulf of Mexico Shelf properties and poorer than
expected waterflood response on a secondary recovery project in West Texas. The
Company indicated that it would record a one-time, non-cash charge of
approximately $225 million (pretax) in the fourth quarter of 1999 to reduce the
carrying value of the affected properties in accordance with Statement of
Financial Accounting Standards No. 121. The Company also indicated that fourth
quarter 1999 results would include a one-time charge for costs associated with
the Poco acquisition totaling $40 million (pretax).
BR's total oil and gas capital expenditures for 1999 are estimated at $940
million. Exclusive of acquisitions, the 1999 internal oil and gas capital
expenditures are estimated to be approximately $800 million, down 40% from the
comparable total for 1998. Reserve replacement costs (which include the effect
of reserve revisions) are expected to average approximately $0.72 per MCFE, with
finding and development costs per MCFE (which excludes acquisitions) averaging a
similar amount.
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BR reported that proved reserve acquisitions during 1999 totaled
approximately 200 BCFE at a cost of $135 million, or $0.68/MCFE. On a standalone
basis, BR acquired 140 BCFE of proved reserves at an average cost of $0.50/MCFE,
while Poco acquired 60 BCFE at an average cost of approximately $1.10/MCFE.
These acquisitions augmented BR's reserve, land and infrastructure positions in
key core operating areas.
BR indicated that, excluding the results of Poco's operations, net reserves
added from all sources are expected to total 1,100 BCFE, resulting in a reserve
replacement ratio of approximately 150%. Reserves added through extensions and
discoveries, or "drill bit" additions, are expected to total 1,060 BCFE;
reserves added through acquisitions totaled 140 BCFE; and net negative reserve
revisions are expected to total approximately 90 BCFE. Reserve replacement costs
(which include the effect of reserve revisions) for BR on a standalone basis are
expected to average $0.60 per MCFE, with finding and development costs per MCFE
(which exclude acquisitions) also averaging $0.60 per MCFE.
Bobby Shackouls, Chairman, President and CEO of BR said, "We are very
pleased with our overall operating results in 1999. With our high-graded
investment program, we were able to reduce our internal oil and gas capital
spending by 40% in comparison to 1998 while improving our reserve replacement
performance substantially. Our finding and development costs are significantly
below our average for the last several years. This is clear evidence that our
fiscal discipline aimed at improving financial returns on the capital we invest
is working.
"Undoubtedly, the downward reserve revisions associated with our Gulf of
Mexico Shelf operations were, in part, related to our decision to scale back
investments there. However, the steeper than anticipated declines that we have
continued to experience on the Shelf have reinforced our view that we made the
right decision in redirecting that capital to higher return projects with
lasting value creation prospects. We believe that the impact of future natural
production declines in this area will be less than we have experienced this
year, and will be more than offset by production growth elsewhere in our
operations.
"We are pleased to see the long-term value generating projects which were
funded in our 1999 program begin to bear fruit. We brought East Irish Sea
production onstream ahead of schedule, we again achieved record production in
the San Juan Basin, we expanded our Madden field operations substantially and we
made major strides toward first production in Algeria. Our financial strength
allowed us to take advantage of several value-added property acquisition
opportunities that have solidified our position in several core areas. Finally,
with the Poco acquisition, we have expanded our company's growth potential
significantly in an area which allows us to capitalize on some of our existing
organizational competencies."
Schedule is attached.
FORWARD-LOOKING STATEMENTS
This press release may contain projections and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Any such projections or statements reflect the Company's
current views with respect to future events and financial performance. No
assurances can be given, however, that these events will occur or that such
projections will be achieved and actual results could differ materially from
those projected. A discussion of important factors that could cause actual
results to differ materially from those projected is included in the Company's
periodic reports filed with the Securities and Exchange Commission.
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Burlington Resources Inc.
Preliminary
Estimated Proved Reserves
BCFE
BR BR Canada* Total
-- ---------- -----
December 31, 1998 8,020 1,855 9,875
Revisions of previous estimates (90) (50) (140)
Extensions, discoveries and other additions 1,060 190 1,250
Production (730) (195) 925)
Purchases of reserves in place 140 60 200
Sales of reserves in place - (10) (10)
----- ----- -----
December 31, 1999 8,400 1,850 10,250
===== ===== ======
Estimated Costs Incurred
(In Millions) BR BR Canada* Total
- ------------- -- ---------- -----
Oil and Gas
Exploration $ 180 $ 85 $ 265
Development 405 135 540
Reserve Acquisitions 70 65 135
-- -- ---
Year Ended December 31, 1999 $ 655 $ 285 $ 940
===== ===== ======
*Parent Company of Poco Petroleums Ltd.
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