- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26662
PANACO, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43 - 1593374
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1050 West Blue Ridge Boulevard, PANACO Building,
Kansas City, Missouri 64145-1216
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 942 - 6300
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 _______ .
23,962,813 shares of the registrant's $.01 par value Common Stock were
outstanding at May 15, 1998.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PANACO, Inc.
Consolidated Condensed Balance Sheets
(Unaudited)
ASSETS
As of As of
March 31, 1998 December 31, 1997
CURRENT ASSETS
Cash and cash equivalents $ 27,906,000 $ 36,909,000
Accounts receivable 10,901,000 9,735,000
Prepaid and other 321,000 626,000
------------- --------------
Total current assets 39,128,000 47,270,000
----------- --------------
OIL AND GAS PROPERTIES, AS DETERMINED BY THE
SUCCESSFUL EFFORTS METHOD OF ACCOUNTING
Oil and gas properties, proved 218,786,000 198,840,000
Oil and gas properties, unproved 10,736,000 12,947,000
Less: accumulated depletion, depreciation
and amortization (105,281,000) (99,239,000)
------------- --------------
Net oil and gas properties 124,241,000 112,548,000
------------- --------------
PROPERTY, PLANT AND EQUIPMENT
Pipelines and equipment 15,010,000 14,875,000
Less: accumulated depreciation (1,764,000) (1,416,000)
------------- --------------
Net property, plant and equipment 13,246,000 13,459,000
------------- --------------
OTHER ASSETS
Deferred debt costs, net 3,669,000 3,813,000
Restricted deposits and other 3,103,000 2,539,000
------------- --------------
Total other assets 6,772,000 6,352,000
------------- --------------
TOTAL ASSETS $ 183,387,000 $ 179,629,000
============= ==============
PANACO, Inc.
Consolidated Condensed Balance Sheets
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
As of As of
March 31, 1998 December 31, 1997
CURRENT LIABILITIES
Accounts payable 24,558,000 17,225,000
Interest payable - 2,416,000
Current portion of long-term debt - -
-------------- --------------
Total current liabilities 24,558,000 19,641,000
-------------- --------------
LONG-TERM DEBT 104,200,000 101,700,000
DEFERRED INCOME TAXES 1,827,000 3,100,000
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred Shares, $.01 par value,
5,000,000 shares authorized; no
shares issued and outstanding - -
Common Shares, $.01 par value,
40,000,000 shares authorized;
23,920,282 and 23,913,531 shares
issued and outstanding, respectively 239,000 239,000
Additional paid-in capital 69,076,000 69,041,000
Retained earnings (deficit) (16,513,000) (14,092,000)
-------------- -------------
Total stockholders' equity 52,802,000 55,188,000
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 183,387,000 $ 179,629,000
============== ==============
PANACO, Inc.
Consolidated Statements of Income (Operations)
For the Three Months Ended March 31,
(Unaudited)
1998 1997
------------ ------------
REVENUES
Oil and natural gas sales 11,195,000 $ 8,067,000
COSTS AND EXPENSES
Lease operating expense 3,836,000 2,911,000
Depletion, depreciation & amortization 6,974,000 3,113,000
General and administrative expense 516,000 198,000
Production and ad valorem taxes 200,000 85,000
Exploratory dry hole expense 1,013,000 67,000
Geological and geophysical expense 252,000 -
------------ ------------
Total 12,791,000 6,374,000
------------ ------------
OPERATING INCOME (LOSS) (1,596,000) 1,693,000
------------ ------------
OTHER INCOME (EXPENSE)
Unrealized gain on investment in common stock - 60,000
Interest income 424,000 42,000
Interest expense (2,514,000) (963,000)
------------ ------------
Total (2,090,000) (861,000)
------------ ------------
INCOME BEFORE (LOSS) INCOME TAXES (3,686,000) 832,000
INCOME TAX (BENEFIT) (1,273,000) -
------------ ------------
NET INCOME (LOSS) $(2,413,000) $ 832,000
============ ============
Net income (loss) per share $ (0.10) $ 0.05
============ ============
Basic Shares Outstanding 23,970,962 16,102,553
============ ============
Diluted Shares Outstanding 23,970,962 16,138,901
============ ============
PANACO, Inc.
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
Amount ($)
Number of Additional Retained
Common Common Paid-in Earnings
Shares Stock Capital (Deficit)
----------------- ----------------- ----------------- -----------------
Balances, December 31, 1997 23,913,531 $ 239,000 $ 69,041,000 $(14,092,000)
Net Loss - - - (2,421,000)
Common shares issued - director
stock bonuses 6,751 - 35,000 -
----------------- ----------------- ----------------- -----------------
Balance, March 31, 1998 23,920,282 $ 239,000 $ 69,076,000 $(16,513,000)
================= ================= ================= =================
PANACO, Inc.
Consolidated Statement of Cash Flows
For the Three Months Ended March 31,
(Unaudited)
1998 1997
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2,413,000) $ 832,000
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion, depreciation and amortization 6,974,000 3,113,000
Exploratory dry hole expense 1,013,000 67,000
Deferred Income tax benefit (1,273,000) -
Unrealized gain on investment in common stock - (60,000)
Other, net - 9,000
Changes in operating assets and liabilities:
Accounts receivable (1,166,000) 174,000
Prepaid and other (108,000) 223,000
Accounts payable 6,320,000 980,000
Interest payable (2,416,000) (282,000)
----------------- -----------------
Net cash provided by operating activities 6,931,000 5,056,000
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of oil and gas properties - 23,000
Capital expenditures and acquisitions (17,870,000) (3,649,000)
Decrease/(increase) in restricted deposits (564,000) 531,000
----------------- -----------------
Net cash used by investing activities (18,434,000) (3,095,000)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock offering, net - 22,077,000
Long term debt proceeds 2,500,000 1,500,000
Repayment of long-term debt - (26,000,000)
----------------- -----------------
Net cash used by financing activities 2,500,000 (2,423,000)
----------------- -----------------
NET INCREASE (DECREASE) IN CASH (9,003,000) (462,000)
CASH AT BEGINNING OF YEAR 36,909,000 1,736,000
----------------- -----------------
CASH AT MARCH 31 $ 27,906,000 $ 1,274,000
================= =================
PANACO, Inc.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position as of March 31, 1998 and December 31, 1997 and the results of
operations and cash flows for the periods ended March 31, 1998 and 1997. Most
adjustments made to the financial statements are of a normal, recurring nature.
Although the Company believes that the disclosures are adequate to make the
information presented not misleading, certain information and footnote
disclosures, including significant accounting policies, normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (the "SEC"). A more complete
description of the accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in Form 10-K for the year ended
December 31, 1997. These financial statements should be read in conjunction with
the financial statements and notes included in the Form 10-K.
Note 2 - OIL AND GAS PROPERTIES AND PIPELINES AND EQUIPMENT
The Company utilizes the successful efforts method of accounting for its
oil and gas properties. Under the successful efforts method, lease acquisition
costs are capitalized. Non-drilling exploratory costs including geological and
geophysical costs and delay rentals are expensed. Exploratory drilling costs are
capitalized pending determination of proved reserves. If proved reserves are not
discovered, the exploratory costs are expensed. All development costs are
capitalized. Interest on unproved properties is capitalized based on the
carrying amount of the properties. Provision for depreciation and depletion is
determined on a field-by-field basis using the unit-of-production method.
Estimated future abandonment costs are recorded by charges to depreciation and
depletion expense over the lives of the proved reserves of the properties. The
carrying amounts of proven and unproved properties are reviewed periodically on
a property-by-property basis, based on future net cash flows determined by an
independent engineering firm, with an impairment reserve provided if conditions
warrant.
Pipelines and equipment are carried at cost. Oil and natural gas
pipelines are depreciated on the straight-line method over their estimated
useful lives, primarily fifteen years. Other property is also depreciated on the
straight-line method over their useful lives, ranging from three to seven years.
Note 3 - CASH FLOW INFORMATION
For purposes of the statement of cash flows, the Company considers all
cash investments purchased with original maturities of three months or less to
be cash equivalents. Cash payments for interest totaled $4,930,000 and
$1,245,000 during the first quarter of 1998 and 1997, respectively. No cash
payments for income taxes were made during the first quarter of 1998 or 1997.
Note 4 - RESTRICTED DEPOSITS
The Company is party to various escrow and trust agreements which
provide for monthly deposits into escrow and trust accounts to satisfy future
plugging and abandonment obligations. The terms of the agreements vary as to
deposit amounts, based upon fixed monthly amounts or percentages of the
properties' net income. With respect to plugging and abandonment operations,
funds are partially or completely released upon the presentation by the Company
to the escrow agent or trustee of evidence that the operation was or is being
conducted in compliance with applicable laws and regulations. These amounts are
included on the financial statements as Restricted Deposits.
Note 5 - SUPPLEMENTAL INFORMATION RELATED TO OIL AND GAS PRODUCING ACTIVITIES
The reserve information presented in the following table was prepared
by the Company based upon reports of independent petroleum engineers and are
estimates only and should not be construed as being exact amounts. All reserves
presented are proved reserves that are defined as estimated quantities which
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions.
Proved developed and undeveloped reserves Oil Gas
(Bbls) (Mcf)
December 31, 1997 4,506,000 73,632,000
Production (115,000) (4,257,000)
----------- ------------
Estimated reserves at March 31, 1998 4,391,000 69,375,000
========== ==========
No major discovery or other favorable or adverse event has caused a significant
change in the estimated proved reserves since March 31, 1998. The Company does
not have proved reserves applicable to long-term supply agreements with
governments or authorities. All proved reserves are located in the United
States.
Note 6 - INCOME TAXES
The Company had net operating loss carryforwards for federal income tax
purposes of approximately $40,000,000 at December 31, 1997 which are available
to offset future federal taxable income through 2012. The timing of the
Company's future utilization of net operating loss carry forwards may be limited
on an annual basis due to its issuance of common shares in a public offering and
in the acquisition of Goldking. In connection with the Goldking acquisition the
Company recorded a $3.1 million deferred tax liability based upon the complete
utilization of the Company's deferred tax asset valuation allowance and the
requirement for additional deferred tax liabilities resulting from the
acquisition. The Company recorded an income tax benefit for the first quarter of
1998 which partially offset this deferred tax liability.
Note 7 - SUBSEQUENT EVENTS
On May 14, 1998 the Company announced that it had entered into a
definitive agreement with BP Exploration ("BP") to acquire BP's 100% working
interest in East Breaks Blocks 165 and 209 and 75% working interest in High
Island Block 587. The Company will acquire the properties for $19.5 million in
cash. Included in the acquisition is the production platform, located in 863
feet of water in East Breaks Block 165. The Company will also acquire 31.72
miles of 12" pipeline, with capacity of over 20,000 barrels of oil per day,
which ties the production platform to the High Island Pipeline System, the major
oil transportation system in the area. It will also acquire 9.3 miles of 12 3/4"
pipeline, which ties the production platform to the High Island Offshore System,
the major gas transportation system in the area. The acquisition will be
accounted for using the purchase method and following the closing, expected to
occur before the end of May, the Company will become operator of all three
blocks effective June 1, 1998.
Subsequent to March 31, 1998, it was determined that an additional $2.2
million of exploratory dry hole expense will be incurred during the second
quarter of 1998.
PART I Item 2.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-looking Statements
Forward-looking statements in this Form 10-Q, future filings by the
Company with the Securities and Exchange Commission, the Company's press
releases and oral statements by authorized officers of the Company are intended
to be subject to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward-looking statements
involve risks and uncertainty, including without limitation, the risk of a
significant natural disaster, the inability of the Company to insure against
certain risks, the adequacy of its loss reserves, fluctuations in commodity
prices, the inherent limitations in the inability to estimate oil and gas
reserves, changing government regulations, as well as general market conditions,
competition and pricing. The Company believes that forward-looking statements
made by it are based upon reasonable expectations. However, no assurances can be
given that actual results will not differ materially from those contained in
such forward-looking statements. The words "estimate", "anticipate", "expect",
"predict", "believe" and similar expressions are intended to identify
forward-looking statements.
General
The oil and gas industry has experienced significant volatility in
recent years because of the fluctuatory relationship of the supply of most
fossil fuels relative to the demand for such products and other uncertainties in
the world energy markets. These industry conditions should be considered when
this analysis of the Company's operations is read.
Liquidity and Capital Resources
On October 9, 1997 the Company completed an offering of $100,000,000 10
5/8% Senior Subordinated Notes due 2004. Interest is payable April 1 and October
1 of each year. The net proceeds of $96,250,000 were used to repay or prepay
substantially all of its outstanding debt in the amount of $55,460,000. The
remaining proceeds are being used primarily for the development and acquisition
of oil and gas properties.
On October 9, 1997 the Company replaced its existing Bank Facility and
entered into a new, five year $75,000,000 revolving credit facility (the "New
Credit Facility") with First Union National Bank, as administrative agent, and
Banque Paribas. The purpose of the New Credit Facility is to provide funds for
working capital support and general corporate purposes and to have available
letters of credit. The borrowing base on May 1, 1998 was $40,000,000. The
Company may elect to pay interest on the New Credit Facility at either the
Bank's prime rate or at the London Interbank Offered Rate on Eurodollar loans
("LIBOR") plus 1 to 1.75%, depending upon the percentage of utilization of the
borrowing base. Eurodollar loans can be for terms of one, two, three or six
months and interest is due at the expiration of the terms of such loans, but no
less frequently than three months.
On March 5, 1997 the Company completed an offering of 8,403,305 common
shares at $4.00 per share, $3.728 net of the underwriter's commission. The
offering consisted of 6,000,000 shares sold by the Company and 2,403,305 shares
sold by shareholders, primarily Amoco Production Company (2,000,000 shares) and
lenders advised by Kayne, Anderson Investment Management, Inc. (373,305 shares).
The Company's net proceeds of $22,000,000 from the offering were used to prepay
$13,500,000 of its 12% subordinated debt and the remaining funds were
temporarily paid on the Company's revolving bank loan and ultimately used for
the development of properties.
At March 31, 1998, 75% of the Company's total assets were represented
by oil and gas properties and pipelines and equipment, net of depreciation,
depletion and amortization.
In 1991 certain lenders received a net profits interest (NPI) in the
West Delta properties. During the quarter ended March 31, 1998, cash payments
with respect to this NPI totaled $114,000.
The product prices received by the Company, including the impact of
hedge transactions discussed below, averaged $2.19 per Mcf for natural gas and
$16.39 per barrel for oil for the quarter ended March 31, 1998.
For 1998 the Company's natural gas hedge transactions are based upon
published gas pipeline index prices. The Company has natural gas hedged in
quantities ranging from 10,000 to 50,000 MMbtu per day in each month in 1998 for
a total of 11,980,000 MMbtu, at pipeline prices averaging approximately $2.05
per MMbtu, for a NYMEX equivalent of approximately $2.20 per MMbtu. Including
hedge transactions that Goldking had in place, the Company has hedged 7,356
MMbtu per day in 1999, all at an average pipeline index swap price of $1.89 per
MMbtu. The Company has hedged 218 MMbtu for each day in 2000 at an average
pipeline index swap price of $1.87. The Company has also hedged its oil prices
by hedging 1,268 Bbls of oil for each day in 1998 at an average swap price of
$19.06 per Bbl, with a 40% participation above $19.28 on 500 of the 1,268 Bbls.
The Company has hedged 223 Bbls of oil for each day in 1999 at an average price
of $17.27 per Bbl and 232 Bbls of oil for each day in 2000 at an average price
of $17.28 per Bbl. For accounting purposes, gains or losses on swap transactions
are recognized in the production month to which a hedge contract relates.
Pursuant to existing agreements the Company is required to deposit
funds in bank trust and escrow accounts to provide a reserve against
satisfaction of its eventual responsibility to plug and abandon wells and remove
structures when certain fields no longer produce oil and gas. The Company has
entered into an escrow agreement with Amoco Production Company under which the
Company deposits, for the life of the fields, in a bank escrow account ten
percent (10%) of the net cash flow, as defined in the agreement, from the Amoco
properties. The Company has established the "PANACO East Breaks 110 Platform
Trust" in favor of the Minerals Management Service of the U.S. Department of the
Interior. This trust required an initial funding of $846,720 in December 1996,
and remaining deposits of $244,320 due at the end of each quarter in 1999 and
$144,000 due at the end of each quarter in 2000 for a total of $2,400,000. In
addition, the Company has $9,250,000 in surety bonds to secure its plugging and
abandonment operations.
Capital expenditures of $17.8 million for the first quarter of 1998
represent an increase of $14.2 million over 1997. These expenditures, funded by
operating cash flows and proceeds from the Senior Note offering, consisted
primarily of drilling and development activities on its oil and natural gas
properties. Of the $18.9 million in capital expenditures, 43% was invested in
the High Island 309 Field, 13% was invested in the Umbrella Point Field, 12% was
invested in the West Cameron 144 Field, 7% was invested in the East Breaks 160
Field with the remaining capital expenditures being incurred primarily on
development of its smaller onshore properties and on exploratory projects.
On May 14, 1998 the Company announced that it had entered into a
definitive agreement with BP Exploration ("BP") to acquire BP's 100% working
interest in East Breaks Blocks 165 and 209 and 75% working interest in High
Island Block 587. The Company will acquire the properties for $19.5 million in
cash. Included in the acquisition is the production platform, located in 863
feet of water in East Breaks Block 165. The Company will also acquire 31.72
miles of 12" pipeline, with capacity of over 20,000 barrels of oil per day,
which ties the production platform to the High Island Pipeline System, the major
oil transportation system in the area. It will also acquire 9.3 miles of 12 3/4"
pipeline, which ties the production platform to the High Island Offshore System,
the major gas transportation system in the area. The acquisition will be
accounted for using the purchase method and following the closing, expected to
occur before the end of May, the Company will become operator of all three
blocks effective June 1, 1998.
Results of Operations
For the three months ended March 31, 1998 and 1997:
"Oil and natural gas sales" increased 39% for the first quarter of 1998
despite decreases in natural gas and oil prices. A significant increase in
natural gas and an increase in oil production brought about the increase in oil
and natural gas sales. The increases would have been higher had several
successful wells drilled during the first quarter of 1998 produced for the
entire quarter.
Production. Natural gas production increased 95% to 4,257,000 Mcf in
1998 from 2,180,000 Mcf in 1997. The Company's 1997 successful developmental
drilling in the High Island 309 Field accounted for an increase of 1,519,000 Mcf
in 1998. The success was continued in 1998 with eight additional successful
wells, which produced for only a portion of the first quarter of 1998. Also,
results for 1998 include 292,000 Mcf of natural gas production from the former
Goldking properties, acquired on July 31, 1997. Results for 1998 include only a
small amount of production from a successful well completed in the Umbrella
Point Field in January. The well was placed on production February 25 at a
restricted rate. This well is currently producing over 17,000 Mcf of natural gas
per day and over 340 barrels of condensate per day. Results for 1998 also
include production from a successful well drilled in West Cameron Block 144,
which was placed on production in February.
Oil production increased 43% in 1998 to 115,000 barrels, from 81,000
barrels in 1997. The former Goldking properties, acquired on July 31, 1997 added
31,000 Bbls of oil production in 1998.
Prices. Average natural gas prices, net of the impacts of hedging
transactions, decreased 27% in 1998, from $2.99 per Mcf in 1997 to $2.19 in
1998. The 1998 natural gas hedge program had the effect of increasing the
natural gas price realized by $.05 per Mcf , compared to a reduction of $.02 per
Mcf in 1997. The Company has natural gas hedged in quantities ranging from
10,000 to 50,000 MMbtu per day in each month in 1998 for a total of 11,980,000
MMbtu, at pipeline prices averaging approximately $2.05 per MMbtu, for a NYMEX
equivalent of approximately $2.20 per MMbtu.
Average oil prices decreased 15% in 1998 to $16.39 per barrel from
$19.22 per barrel in 1997. The 1998 oil hedge program had the effect of
increasing the net oil price realized by $2.80 per barrel. The Company has
hedged its oil prices on 1,268 Bbls of oil for each day in 1998 at an average
swap price of $19.06 per Bbl, with a 40% participation above $19.28 on 500 of
the 1,268 Bbls.
"Lease operating expenses" decreased to 34% of oil and natural gas
sales, from 36% in 1997. Moreover, on an Mcf equivalent ("Mcfe") basis, lease
operating expenses decreased from $1.09 in 1997 to $0.78 in 1998, even without
the new wells discussed above producing for the full period.
"Depletion, depreciation and amortization" increased $3,861,000 due to
the increase in 1997 production as discussed above. The amount per Mcfe also
increased from $1.17 in 1997 to $1.41 in 1998.
"General and administrative expenses" increased $318,000 in 1998 in
part due to the Goldking Acquisition in July 1997. As a percentage of oil and
natural gas sales and on an Mcfe basis, these expenses also increased to 5% of
oil and natural gas sales from 2% in 1997 and to $0.10 per Mcfe from $0.07 per
Mcfe in 1997.
"Production and ad valorem taxes" increased $115,000 in 1998 to 2% of
oil and natural gas sales from 1% of oil and natural gas sales in 1997. These
expenses also increased from $0.03 per Mcfe in 1997 to $0.04 per Mcfe in 1998.
The increase is due to the former Goldking properties, with all of the
production onshore or in state waters and is subject to severance taxes.
"Exploratory dry hole expense" increased $946,000 due to the Company's
increased exploratory activities in 1998. Of the ten wells the Company drilled
or participated in during the first quarter of 1998, two were exploratory dry
holes. One of the wells was spudded and completed during the first quarter of
1998, the other was spudded but did not reach total depth until the second
quarter of 1998. In each case the wells were operated by third parties and the
Company owned a 10% and 20% working interest in each of the wells. Had these
wells been commercially productive, the cost per unit of the reserves and the
quality of reserves would have enhanced the Company's existing reserve base. The
Company believes that its continued participation in a modest amount of
exploratory activities is an important factor in increasing shareholder value.
"Geological and geophysical expense" during 1998 resulted from the
Company's non-drilling exploratory activities incurred.
"Interest income" increased $382,000 in 1998 primarily due to interest
income earned on the excess proceeds from the Company's Senior Note offering
completed in October 1997.
"Interest expense" increased $1,551,000 in 1998 primarily due to
increased borrowing levels. The increase in borrowing is due to the Company's
Senior Note offering completed in October 1997. The increase in borrowing levels
is somewhat offset by a reduced interest rate on a majority of the Company's
long term debt. In connection with the offering, the Company prepaid or repaid
long term debt, a significant amount of which had rates in excess of the 10 5/8%
rate on the Notes. This included amounts borrowed in connection with the Amoco
acquisition in October 1996 and debt assumed in connection with the Goldking
acquisition in July 1997.
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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.
PANACO, Inc.
Date: May 18, 1998 /s/Todd R.Bart
Todd R. Bart, Chief Financial Officer