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 MARCH 31, 1996
[ ] 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 April 30, 1996
Common Stock, $1.00 par value 423,540 shares
BONRAY DRILLING CORPORATION
Index
Page
Number
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PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets at March 31,
1996 and June 30, 1995.
Condensed Consolidated Statements of Operations for the
three and nine months ended March 31, 1996 and 1995.
Consolidated Statements of Cash Flows for the nine months
ended March 31, 1996 and 1995.
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 March 31, 1996 is unaudited)
(Dollars in thousands)
March 31, June 30,
1996 1995
Assets
Current assets:
Cash and cash equivalents $ 21 $ 160
Accounts receivable, net 1,886 2,139
Drilling contracts in progress - 21
Prepaid expenses 123 94
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Total current assets 2,030 2,414
Properties and equipment, net 8,071 8,233
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Total assets $10,101 $10,647
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,011 $ 965
Note payable on short term line of credit 150 -
Current portion of long term obligations 333 551
Accrued liabilities:
Salaries and wages 109 163
Workers' compensation insurance 214 66
Other 191 161
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Total current liabilities 2,008 1,906
Obligations due after one year 181 693
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)
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8,004 8,140
Less - cost of 9,200 treasury shares 92 92
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Total stockholders' equity 7,912 8,048
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Total liabilities and stockholders'
equity $10,101 $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 Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Contract drilling
operations $ 2,252 $ 1,831 $ 7,491 $ 5,855
Gain (loss) on
disposal of assets (7) 12 (17) 1,030
Other 18 52 62 151
------- ------- ------- -------
2,263 1,895 7,536 7,036
Costs and expenses:
Contract drilling
operations 1,747 1,516 6,041 4,703
General and
administrative 221 191 712 594
Depreciation 295 241 919 833
------- ------- ------- -------
2,263 1,948 7,672 6,130
------- ------- ------- -------
Net income (loss) before
taxes - (53) (136) 906
Federal income taxes
current - - - 30
------- ------- ------- -------
Net income (loss) $ - $ (53) $ (136) $ 876
======= ======= ======= =======
Net income (loss) per share $ - $ (.12) $ (.32) $ 2.07
======= ======= ======= =======
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)
Nine Months Ended
March 31,
1996 1995
---- ----
Cash flows from operating activities:
Cash received from customers $ 8,049 $ 8,070
Cash paid to suppliers and employees (7,188) (7,890)
Cash received from settlement of insurance claims - 11
Interest received 4 33
Interest paid (48) (13)
Other cash receipts 73 134
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Net cash provided by operating
activities 890 345
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Cash flows from investing activities:
Proceeds from sales of assets 17 1,616
Capital expenditures (787) (1,592)
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Net cash provided (used) by
investing activities (770) 24
------- -------
Cash flows from financing activities:
Proceeds from short term borrowings 150 -
Repayment of short term borrowings (409) (165)
------- -------
Net cash used by financing activities (259) (165)
------- -------
Net increase (decrease) in cash and cash
equivalents (139) 204
Cash and cash equivalents at beginning of period 160 9
------- -------
Cash and cash equivalents at end of period $ 21 $ 213
======= =======
Reconciliation of net loss to net cash provided
by operating activities:
Net income (loss) $ (136) $ 876
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 919 833
Change in assets and liabilities:
Decrease (increase) in current assets:
Accounts receivable 253 (587)
Drilling contracts in progress 21 (8)
Prepaid expenses and taxes (29) 3
Increase (decrease) in current liabilities:
Accounts payable 46 (51)
Accrued liabilities 124 202
Loss (gain) on disposal of assets 17 (1,030)
Obligations due after one year (321) 36
Other (4) 71
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Total adjustments 1,026 (531)
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Net cash provided by operating activities $ 890 $ 345
======= =======
Disclosure of non cash investing activities:
During the quarter ended March 31, 1995, the Company acquired property,
plant and equipment by assuming debt of $828,000.
The accompanying notes are an integral part of these financial statements.
BONRAY DRILLING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1996
1. In the opinion of the Company the accompanying unaudited condensed
financial statements contain all adjustments (consisting of primarily
normal recurring accruals) necessary to present fairly the financial
position as of March 31, 1996 and June 30, 1995, the results of operations
for the three and nine months ended March 31, 1996 and 1995 and the
changes in financial position for the nine 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 nine month periods ended
March 31, 1996 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.
BONRAY DRLLING CORPORATION
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company reported net working capital March 31, 1996 of $22,000 and
a current ratio of 1.01 to 1, compared to net working capital of $340,000
and a current ratio of 1.16 to 1 at December 31, 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 $150,000 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 third quarter of
fiscal year 1996 were $2,252,000, compared to $2,879,000 reported last
quarter and $1,831,000 reported for the same period last year.
Gross income from drilling operations, excluding depreciation was
$505,000 which compares to a gross income of $536,000 last quarter and gross
income of $315,000 for the same quarter last year. Rig utilization during
the third quarter of fiscal year 1996 was 38.75% compared to 41.38% last
quarter and 42.56% 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.
Nine Months Ended Three Months Ended
3/31/96 3/31/95 3/31/96 12/31/95 3/31/95
------- ------- ------- -------- -------
Revenue
Daywork 72.0% 87.1% 78.7% 54.0% 90.6%
Footage 15.8% 11.4% 21.0% 14.3% 9.4%
Turnkey 12.2% 1.5% .3% 31.7% 0.0%
Operating Profit
Daywork 84.2% 91.6% 94.7% 66.0% 92.3%
Footage 8.3% 7.3% 7.2% 11.5% 7.1%
Turnkey 7.5% 1.1% (1.9)% 22.5% 0.6%
Depreciation for the quarter was $295,000, which is $54,000 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 $90,000 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 March 31, 1996.
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: May 14, 1996 By: RICHARD B. HEFNER
Richard B. Hefner, President and
Chief Executive Officer
Date: May 14, 1996 By: JOANNE BELCHER
Joanne Belcher, Controller and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Method of Filing
- ------- ----------------
27. Financial Data Schedule Filed herewith electronically