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 PERIOD ENDED DECEMBER 31, 1995.
[ ] 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 0-9953
BONRAY DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1086424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4701 N. E. 23rd Street, Oklahoma City, Oklahoma 73121
(Address of principal executive offices, including zip code)
405/424-4327
(Registrant's telephone number, including area code)
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 _____.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Class Outstanding at January 31, 1996
Common Stock, $1.00 par value 423,540 shares
BONRAY DRILLING CORPORATION
Index
Page
Number
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets at December 31,
1995 and June 30, 1995.
Condensed Consolidated Statements of Operations for the
three and six months ended December 31, 1995 and 1994.
Consolidated Statements of Cash Flows for the six months
ended December 31, 1995 and 1994.
Notes to Condensed Consolidated Financial Statements.
Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Items 1 through 5 have been omitted since the items are
either inapplicable or the answer is negative.
PART I. FINANCIAL INFORMATION
BONRAY DRILLING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Information at December 31, 1995 is unaudited)
(Dollars in thousands)
December 31, June 30,
1995 1995
__________ ________
Assets
- --------
Current assets:
Cash and cash equivalents $ 37 $ 160
Accounts receivable, net 2,259 2,139
Drilling contracts in progress 64 21
Prepaid expenses 108 94
---------- ----------
Total current assets 2,468 2,414
Properties and equipment, net 8,061 8,233
---------- ----------
Total assets $ 10,529 $10,647
========== =========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 1,114 $ 965
Notes payable 50 -
Current portion of long term obligations 473 551
Accrued liabilities:
Salaries and wages 145 163
Workers' compensation insurance 187 66
Payroll and other taxes 16 61
Other 143 100
---------- ----------
Total current liabilities 2,128 1,906
---------- ----------
Obligations due after one year 489 693
Stockholders' equity:
Common stock, $1.00 par value; 800,000
shares authorized, 432,740 shares
issued 433 433
Capital in excess of par value 12,497 12,497
Accumulated deficit (4,926) (4,790)
---------- ----------
8,004 8,140
Less - cost of 9,200 treasury shares 92 92
---------- ----------
Total stockholders' equity 7,912 8,048
---------- ---------
Total liabilities and stockholders'
equity $ 10,529 $10,647
========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements.
BONRAY DRILLING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
Revenues:
Contract drilling
operations $ 2,879 $ 1,813 $ 5,239 $ 4,024
Gain (loss) on
disposal of assets (3) 1,016 (10) 1,018
Other 33 80 44 99
-------- -------- -------- --------
2,909 2,909 5,273 5,141
Costs and expenses:
Contract drilling
operations 2,343 1,477 4,294 3,187
General and
administrative 255 210 491 403
Depreciation 307 222 624 592
-------- --------- -------- --------
2,905 1,909 5,409 4,182
-------- -------- -------- ---------
Net income (loss) before
taxes 4 1,000 (136) 959
Federal income taxes
current - 30 - 30
-------- -------- -------- --------
Net income (loss) $ 4 $ 970 $ (136) $ 929
======== ======== ======== ========
Net income (loss) per
share $ .01 $ 2.29 $ (.32) $ 2.19
======== ======== ========= ========
Average shares
outstanding 423,540 423,540 423,540 423,540
======== ======== ======== =======
See accompanying Notes to Condensed Consolidated Financial Statements.
BONRAY DRILLING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
December 31,
------------
1995 1994
---- ----
Cash flows from operating activities:
Cash received from customers $ 5,287 $ 5,289
Cash paid to suppliers and employees (4,757) (5,007)
Interest received 3 2
Interest paid (35) (11)
Other cash receipts 56 114
-------- --------
Net cash provided by operating
activities 554 387
-------- --------
Cash flows from investing activities:
Proceeds from sales of assets 8 1,717
Capital expenditures (466) (438)
-------- --------
Net cash provided (used) by investing
activities (458) 1,279
-------- --------
Cash flows from financing activities:
Proceeds from short term borrowings 50 -
Payments on notes payable (269) (165)
--------- --------
Net cash used by financing activities (219) (165)
-------- --------
Net increase (decrease) in cash and cash
equivalents (123) 1,501
Cash and cash equivalents at beginning of period 160 9
-------- --------
Cash and cash equivalents at end of period $ 37 $ 1,510
======== ========
Reconciliation of net loss to net cash provided
by operating activities:
Net income (loss) $ (136) $ 929
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 624 592
Change in assets and liabilities:
Decrease (increase) in current assets:
Accounts receivable (120) (157)
Drilling contracts in progress (43) 34
Prepaid expenses and taxes (14) 12
Increase (decrease) in current liabilities:
Accounts payable 149 80
Accrued liabilities 101 (20)
Loss (gain) on disposal of assets 10 (1,018)
Obligations due after one year (13) 33
Other (4) (98)
-------- --------
Total adjustments 690 (542)
-------- --------
Net cash provided by operating activities $ 554 $ 387
======== ========
The accompanying notes are an integral part of these financial statements.
BONRAY DRILLING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 1995
1. In the opinion of the Company the accompanying unaudited condensed
financial statements contain all adjustments (consisting primarily of
normal recurring accruals) necessary to present fairly the financial
position as of December 31, 1995 and June 30, 1995, the results of
operations for the three and six months ended December 31, 1995 and
1994 and the changes in financial position for the six month periods
then ended. The condensed balance sheet at June 30, 1995 was derived
from information obtained from audited financial statements as of
that date.
2. The results of operations for the three and six month periods ended
December 31, 1995 are not necessarily indicative of the results to be
expected for the full year.
3. Net income per common share is computed on the basis of the weighted
average shares of common stock outstanding.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company reported net working capital at December 31, 1995 of
$340,000 and a current ratio of 1.16 to 1, compared to net working capital
of $508,000 and a current ratio of 1.27 to 1 at June 30, 1995.
The energy industry remains generally depressed and is not expected
to improve in the near future. Most of the Company's customers pay for
services on a basis of 60 to 90 days. Due to the inordinate delay in
collecting receivables, the Company has a line of credit at a local bank.
The agreement with the bank provides for credit up to $750,000 at a rate
1/2% above the national prime lending rate and requires the Company to
pledge up to 75% of its receivables. The agreement expires October 31,
1996. At the end of the quarter, the Company had $50,000 of borrowings
under this agreement.
Management will continue to exercise tight controls in order to
minimize expenses without affecting productivity and by making only those
capital expenditures required to maintain the rigs in good operating
condition.
Results of Operations
Revenues from contract drilling operations for the second quarter of
fiscal year 1996 were $2,879,000, compared to $2,360,000 reported last
quarter and $1,813,000 reported for the same period last year.
Gross income from drilling operations, excluding depreciation was
$536,000 which compares to a gross income of $409,000 last quarter and
gross income of $336,000 for the same quarter last year. Rig utilization
during the second quarter of fiscal year 1996 was 41.38% compared to 43.99%
last quarter and 38.39% for the same period last year.
Daywork contracts generally provide for the payment of a certain
amount per day without a limit on the time necessary to drill a well to its
contract depth. Daywork contracts transfer certain risks associated with
the drilling activity to the Company's customers.
For footage contracts, the Company earns (at an agreed depth) a
specific amount per foot drilled without regard to the problems it may
encounter in the drilling process or the amount of drilling time necessary
to achieve the contract depth. For turnkey contracts, the Company agrees
to drill to a specified depth for a specified amount. It may also agree to
provide additional materials and services in connection with the completion
of a well which presents the opportunity for additional profits. Turnkey
and footage contracts generally do not provide compensation for drilling
delays or problems encountered in the drilling process, thus shifting
certain risks to the Company.
The following table shows the composition of revenue and operating
profit from drilling contracts by type of contract. No allocation of
corporate overhead, interest, or depreciation is reflected in the
computations.
Six Months Ended Three Months Ended
12/31/95 12/31/94 12/31/95 9/30/95 12/31/94
-------- -------- -------- ------- --------
Revenue
- -------
Daywork 69.1% 85.5% 54.0% 87.5% 75.8%
Footage 13.5% 12.3% 14.3% 12.5% 19.3%
Turnkey 17.4% 2.2% 31.7% 0.0% 4.9%
Operating Profit
- ----------------
Daywork 79.0% 91.2% 66.0% 94.4% 84.5%
Footage 8.8% 7.4% 11.5% 5.6% 12.3%
Turnkey 12.2% 1.4% 22.5% 0.0% 3.2%
Depreciation for the quarter was $307,000, which is $85,000 more than
the same quarter a year ago. Both quarters include a charge to
depreciation on stacked or mothballed rigs. Depreciation of these inactive
rigs and equipment is $69,000 for the current quarter.
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 - There were no reports on Form 8-K filed for the
three months ended December 31, 1995.
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.
BONRAY DRILLING CORPORATION
Date: February 12, 1996 By: RICHARD B. HEFNER
Richard B. Hefner, President and
Chief Executive Officer
Date: February 12, 1996 By: JOANNE BELCHER
Joanne Belcher, Controller and
Chief Accounting Officer