________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended March 31, 2002 Commission file number 0-5426
THE WISER OIL COMPANY
A DELAWARE CORPORATION
I.R.S. Employer Identification No. 55-0522128
8115 Preston Road, Suite 400
Dallas, Texas 75225
Telephone (214) 265-0080
Former name, former address and former fiscal year, if changed since last
report. NONE
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, and (2) has been subject to such filing requirements
for the past 90 days.
x
----- ____
Yes No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at March 31, 2002
------------- -----------------------------
$.01 par value 9,242,816
________________________________________________________________________________
1
THE WISER OIL COMPANY
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. The financial statements reflect all
adjustments which are, in the opinion of management, necessary to fairly present
such information. 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 such rules and
regulations. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the Company's latest annual report on Form 10-K.
2
THE WISER OIL COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2002 2001
---------- ---------
(OOO's) except share date
Assets
Current Assets:
Cash and cash equivalents ............................................. $ 9,504 $ 12,659
Restricted cash (Note 1) .............................................. 1,200 --
Accounts receivable ................................................... 10,610 14,281
Inventories ........................................................... 557 555
Fair value of derivatives ............................................. -- 1,346
Prepaid expenses ...................................................... 3,718 3,143
--------- ---------
Total current assets ............................................... 25,589 31,984
--------- ---------
Property and Equipment, at cost:
Oil and gas properties (successful efforts method) .................... 363,771 343,623
Other properties ...................................................... 3,963 4,023
--------- ---------
367,734 347,646
Accumulated depreciation, depletion and amortization .................. (129,925) (123,982)
--------- ---------
Net property and equipment ............................................ 237,809 223,664
Other Assets ............................................................... 2,982 3,142
--------- ---------
$ 266,380 $ 258,790
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable ...................................................... $ 21,168 $ 11,685
Fair value of derivatives ............................................. 8,107 946
Dividends payable ..................................................... 431 221
Accrued liabilities ................................................... 7,019 6,655
--------- ---------
Total current liabilities ........................................... 36,725 19,507
--------- ---------
Long-term Debt ............................................................. 147,613 143,463
Deferred Income Taxes ...................................................... 10,206 11,110
Stockholders' Equity:
Series C convertible preferred stock - $10 par value; 1,000,000 shares
authorized; 1,000,000 shares issued and
outstanding at $25 liquidation value per share ....................... 10,000 10,000
Common stock - $.01 par value; 30,000,000 shares authorized;
shares issued - 9,466,920; shares outstanding - 9,242,816 ............ 94 94
Preferred stock discount, net of $3,558,000 and $2,410,000
amortization at March 31, 2002 and December 31, 2001,
respectively ....................................................... (6,448) (7,596)
Paid-in capital ....................................................... 55,887 55,887
Retained earnings ..................................................... 23,762 37,899
Accumulated other comprehensive income ................................ (8,496) (8,611)
Treasury stock - 224,104 shares, at cost .............................. (2,963) (2,963)
--------- ---------
Total stockholders' equity .......................................... 71,836 84,710
--------- ---------
$ 266,380 $ 258,790
========= =========
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 are an integral part of
these financial statements.
3
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months
Ended March 31,
2002 2001
-------- --------
(000's except per share data)
Revenues:
Oil and gas sales .................................... $ 14,357 $ 23,829
Interest income ...................................... 77 540
Other ................................................ 603 130
--------------------
15,037 24,499
====================
Costs and Expenses:
Production and operating ............................. 7,074 6,890
Depreciation, depletion and amortization ............. 5,920 4,191
Loss on derivatives .................................. 7,610 --
Exploration .......................................... 2,090 2,246
General and administrative ........................... 2,435 1,918
Interest expense ..................................... 3,511 3,158
--------------------
28,640 18,403
====================
Earnings (Loss) Before Income Taxes ...................... (13,603) 6,096
Income Tax Benefit ....................................... (1,045) --
--------------------
Net Income (Loss) ........................................ $(12,558) $ 6,096
====================
Earnings (Loss) Per Share:
Basic .................................................. $ (1.53) $ 0.64
====================
Diluted ................................................ $ (1.53) $ 0.48
====================
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 are an integral part of
these financial statements.
4
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 2002
Shares Amount
------ ------
Series C convertible preferred stock, (000's)
- -------------------------------------
$10.00 par value
----------------
Balance at beginning and end of period ........ 1,000 $ 10,000
======== --------
Common stock, $0.01 par value:
- ------------------------------
Balance at beginning and end of period ........ 9,467 94
-------- --------
Preferred stock discount:
- -------------------------
Balance at beginning of period ................ (7,596)
Amortization of preferred stock discount ...... 1,148
--------
Balance at end of period ...................... (6,448)
--------
Paid-in capital:
- ----------------
Balance at beginning and end of period ........ 55,887
--------
Retained earnings:
- ------------------
Balance at beginning of period ................ 37,899
Net loss ...................................... (12,558)
Dividends on preferred stock .................. (431)
Amortization of preferred stock discount ...... (1,148)
--------
Balance at end of period ...................... 23,762
--------
Accumulated other comprehensive income:
- ---------------------------------------
Balance at beginning of period ................ (8,611)
Foreign currency translation adjustment ....... 535
Amortization of derivative fair value ......... (420)
--------
Balance at end of period ...................... (8,496)
--------
Treasury stock:
- ---------------
Balance at beginning and end of period ........ (224) (2,963)
-------- --------
Total Stockholders' Equity ...................... 9,243 $ 71,836
======== ========
Net loss ........................................ $(12,558)
Foreign currency translation adjustment ......... 535
Amortization of derivative fair value ........... (420)
--------
Comprehensive Loss .............................. $(12,443)
========
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 are an integral part of
these financial statements.
5
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended March 31,
---------------
2002 2001
------ ------
(000's)
Cash Flows From Operating Activities:
Net Income (Loss) ......................................................... $(12,558) $ 6,096
Adjustments to reconcile net income (loss) to operating cash flows:
Depreciation, depletion and amortization ................................ 5,920 4,191
Deferred taxes .......................................................... (1,045) --
Property sales gains .................................................... (520) --
Property impairments and abandonments ................................... 334 962
Amortization of other assets ............................................ 199 169
Amortization of other comprehensive income .............................. (420) --
Other Changes:
Restricted cash ....................................................... (1,200) (2,982)
Accounts receivable ................................................... 3,670 3,371
Fair value of derivatives (receivable) ................................ 1,346 --
Inventories ........................................................... (2) 3
Prepaid expenses ...................................................... (575) (1,552)
Other assets .......................................................... (21) 7
Accounts payable ...................................................... 9,483 (6,103)
Fair value of derivatives (payable) ................................... 7,161 -
Accrued liabilities ................................................... 365 2,534
-----------------------
Operating Cash Flows ...................................................... 12,137 6,696
-----------------------
Cash Flows From Investing Activities:
Capital expenditures ...................................................... (21,284) (3,331)
Proceeds from sales of property and equipment ............................. 2,246 --
-----------------------
Investing Cash Flows ............................................... (19,038) (3,331)
-----------------------
Cash Flows From Financing Activities:
Increase in long-term debt ................................................ 4,000 --
Common stock issued........................................................ -- 25
Preferred dividends ....................................................... (221) --
-----------------------
Financing Cash Flows ............................................... 3,779 25
-----------------------
Effect of exchange rate changes on
cash and cash equivalents ................................................. (33) (23)
-----------------------
Net Increase (Decrease) In Cash and Cash Equivalents ......................... (3,155) 3,367
Cash and Cash Equivalents, beginning of period ............................... 12,659 34,144
-----------------------
Cash and Cash Equivalents, end of period ..................................... $ 9,504 $ 37,511
=======================
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 are an integral part of
these financial statements.
6
THE WISER OIL COMPANY
Notes to Financial Statements
Note 1. Hedging Activities
As of May 14, 2002 the Company's hedging arrangements were as follows:
Crude Oil: Daily Volume Price per Bbl
---------- ------------ ---------------------------
April 1, 2002 to June 30, 2002 (d) 1,000 Bbls $22.96
April 1, 2002 to June 30, 2002 (b) 1,000 Bbls $23.00
July 1, 2002 to September 30, 2002(b) 1,000 Bbls $22.00
April 1, 2002 to June 30, 2002 (e) 1,000 Bbls $22.00 floor, $24.95 ceiling
April 1, 2002 to December 31, 2002 (c) 400 Bbls $8.30 differential swap
Natural Gas: Daily Volume Price per MMBTU
------------ ------------ ---------------------------
April 1, 2002 to June 30, 2002 10,000 MMBTU $2.95
April 1, 2002 to June 30, 2002 5,000 MMBTU $3.00
April 1, 2002 to June 30, 2002 (a) 5,000 MMBTU $3.00
April 1, 2002 to June 30, 2002 (a) 5,000 MMBTU $2.94
July 1, 2002 to September 30, 2002 (b) 10,000 MMBTU $3.135
July 1, 2002 to September 30, 2002 (b) 10,000 MMBTU $2.80
April 1, 2002 to June 30, 2002 (e) 5,000 MMBTU $2.30 floor, $2.65 ceiling
October 1, 2002 to December 31, 2002 (e) 5,000 MMBTU $3.15 floor, $4.00 ceiling
January 1, 2003 to December 31, 2003 (e) 10,000 MMBTU $3.25 floor, $4.25 ceiling
(a) This swap is extendable to December 31, 2002 at the same daily
volume and price per mcf or bbl at the option of the counterparty.
(b) This swap is extendable for three additional months at the same
daily volume and price per mcf or bbl at the option of the
counterparty.
(c) Floating price - Wiser receives NYMEX less $8.30 per barrel; Wiser
pays Bow River - Platts (heavy oil) price per barrel.
(d) This swap is extendable to December 31, 2002 at the same daily
volume at a price of $21.95 per bbl at the option of the
counterparty.
(e) These are "collar" hedges whereby the Company contracts to receive
the actual market price if the actual market price is between the
floor price and the ceiling price. If the actual market price is
below or above the floor or ceiling prices, the Company will
receive the floor price or ceiling price, as applicable.
The Company continuously reevaluates its hedging program in light of
market conditions, commodity price forecasts, capital spending and debt service
requirements. If all of the extendable options are exercised by the
counterparties, the Company will have hedged approximately 50% of its projected
oil production and approximately 90% of its projected gas production for 2002.
All of the Company's hedges at March 31, 2002 were designated as fair
value hedges and changes in fair value are recognized in the consolidated
statement of income as derivative gain or loss. Monthly cash settlements of
these hedges are not included in the consolidated statement of income. The
derivative loss for the net change in fair value during the first quarter of
2002 was $7,610,000. In addition, accumulated other comprehensive income at
December 31, 2001 included $802,000 of deferred hedging gain that is being
amortized to oil and gas revenues in 2002. In the first quarter of 2002, the
Company amortized $420,000 of deferred hedging gain into oil and gas revenues.
7
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
Based on March 31, 2002 NYMEX futures prices, the fair value of the
Company's hedging arrangements at March 31, 2002 was a loss of $8.1 million. A
10% increase in both the oil price and the gas price would increase this loss by
$5.3 million and a 10% decrease in both the oil price and the gas price would
decrease this loss by $5.3 million.
As of March 31, 2002, the Company had posted $6.2 million of collateral
with one of the counterparties consisting of a $5.0 million letter of credit and
$1.2 million in cash deposited in a margin account.
Note 2. Summary of Guaranties of 9 1/2% Senior Subordinated Notes
In May 1997, the Company issued $125 million aggregate principal amount
of its 9 1/2% Senior Subordinated Notes due 2007 pursuant to an offering exempt
from registration under the Securities Act of 1933. The notes are unsecured
obligations of the Company, subordinated in right of payment to all existing and
any future senior indebtedness of the Company. The notes rank pari passu with
any future senior subordinated indebtedness and senior to any future junior
subordinated indebtedness of the Company. The notes are fully and
unconditionally guaranteed, jointly and severally, on an unsecured, senior
subordinated basis by wholly owned subsidiaries of the Company (the "Subsidiary
Guarantors"). At the time of the initial issuance of the notes, Wiser Oil
Delaware, Inc., The Wiser Marketing Company, Wiser Delaware LLC, T.W.O.C., Inc.
and The Wiser Oil Company of Canada were the Subsidiary Guarantors (the "Initial
Subsidiary Guarantors"). Except for five wholly owned subsidiaries that are
inconsequential to the Company on a consolidated basis, the Initial Subsidiary
Guarantors comprise all of the Company's direct and indirect subsidiaries.
Sections 13 and 15(d) of the Securities Exchange Act of 1934 require
presentation of the following unaudited summarized financial information of the
Subsidiary Guarantors. The Company has not presented separate financial
statements and other disclosures concerning each Subsidiary Guarantor because
management has determined that they are not material to investors. There are no
significant contractual restrictions on distributions from each of the
Subsidiary Guarantors to the Company.
8
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
Condensed Income Statements for the Wiser Oil Subsidiary Consolidation
Quarter Ended March 31, 2002 (Parent) Guarantors Adjustments Total
--------- ---------- ------------- -----
(000's)
Revenues:
Oil and gas sales $ 8,330 $ 6,027 $ - $ 14,357
Other 149 531 - 680
--------- -------- --------- ---------
Total revenues 8,479 6,558 - 15,037
--------- -------- --------- ---------
Costs and Expenses:
Production and operating 4,507 2,567 - 7,074
DD&A and impairments 2,508 3,412 - 5,920
Loss on derivatives 5,541 2,069 - 7,610
Exploration 1,061 1,029 - 2,090
General and administrative 1,661 774 - 2,435
Interest expense 3,260 251 - 3,511
--------- -------- --------- ---------
Total Expenses 18,538 10,102 - 28,640
--------- -------- --------- ---------
Income (Loss) Before Taxes (10,059) (3,544) - (13,603)
--------- -------- --------- ---------
Net Income (Loss) $ (10,059) $ (2,499) $ - $ (12,558)
========= ======== ========= =========
Condensed Income Statements for the
Quarter Ended March 31, 2001
Revenues:
Oil and gas sales $ 16,646 $ 7,183 $ - $ 23,829
Other 357 313 - 670
--------- -------- --------- ---------
Total revenues 17,003 7,496 - 24,499
--------- -------- --------- ---------
Costs and Expenses:
Production and operating 5,865 1,025 - 6,890
DD&A and impairments 2,517 1,674 - 4,191
Exploration 1,664 582 - 2,246
General and administrative 1,421 497 - 1,918
Interest expense 3,158 - - 3,158
--------- -------- --------- ---------
Total Expenses 14,625 3,778 - 18,403
--------- -------- --------- ---------
Income (Loss) Before Taxes 2,378 3,718 - 6,096
--------- -------- --------- ---------
Net Income (Loss) $ 2,378 $ 3,718 $ - $ 6,096
========= ======== ========= =========
9
The Wiser Oil Company
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
Condensed Statements of Cash Flows for Wiser Oil Subsidiary Consolidation
The Quarter Ended March 31, 2002 (Parent) Guarantors Adjustments Total
--------- ------------ --------------- -----
(000's)
Cash Flows From Operating Activities:
Net income (loss) $ (10,059) $ (2,499) $ - $ (12,558)
Add back reconciling items 2,527 1,941 - 4,468
Other changes 5,116 15,111 - 20,227
--------- ------------ ------- -----------
Operating Cash Flows (2,416) 14,553 - 12,137
--------- ------------ ------- -----------
Cash Flows From Investing Activities:
Capital expenditures (5,127) (16,157) - (21,284)
Proceeds from property sales - 2,246 - 2,246
--------- ------------ ------- -----------
Investing Cash Flows (5,127) (13,911) - (19,038)
--------- ------------ ------- -----------
Cash Flows From Financing Activities:
Increase long-term debt 4,000 - - 4,000
Preferred dividends (221) - - (221)
--------- ------------ ------- -----------
Financing Cash Flows 3,779 - - 3,779
--------- ------------ ------- -----------
Effect of exchange rate changes on
cash and cash equivalents -- (33) - (33)
--------- ------------ ------- -----------
Net Increase (Decrease) in Cash (3,764) 609 - (3,155)
Cash and Cash Equivalents, beginning of year 11,320 1,339 - 12,659
--------- ------------ ------- -----------
Cash and Cash Equivalents, end of year $ 7,556 $ 1,948 $ - $ 9,504
========= ============ ======= ===========
Condensed Statements of Cash Flows for
The Quarter Ended March 31, 2001
Cash Flows From Operating Activities:
Net income (loss) $ 2,378 $ 3,718 $ - $ 6,096
Add back reconciling items 3,287 2,035 - 5,322
Other changes (2,106) (2,616) - (4,722)
--------- ------------ ------- -----------
Operating Cash Flows 3,559 3,137 - 6,696
--------- ------------ ------- -----------
Cash Flows From Investing Activities:
Capital expenditures (2,561) (770) - (3,331)
Proceeds from property sales - - - -
--------- ------------ ------- -----------
Investing Cash Flows (2,561) (770) - (3,331)
--------- ------------ ------- -----------
Cash Flows From Financing Activities:
Intercompany transfers 4,000 (4,000) - -
Common stock issued 25 - - 25
--------- ------------ ------- -----------
Financing Cash Flows 4,025 (4,000) - 25
--------- ------------ ------- -----------
Effect of exchange rate changes on
cash and cash equivalents -- (23) - (23)
--------- ------------ ------- -----------
Net Increase (Decrease) in Cash 5,023 (1,656) - 3,367
Cash and Cash Equivalents, beginning of year 29,518 4,626 - 34,144
--------- ------------ ------- -----------
Cash and Cash Equivalents, end of year $ 34,541 $ 2,970 $ - $ 37,511
========= ============ ======= ===========
10
The Wiser Oil Company
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
Condensed Balance Sheets Wiser Oil Subsidiary Consolidation
March 31, 2002 (Parent) Guarantors Adjustments Total
----------- ---------- --------------- -----
Assets:
Current assets $ 15,513 $ 10,076 $ - $ 25,589
Net property and equipment 123,158 114,651 - 237,809
Other assets 79,576 - (76,594) 2,982
--------- -------- --------- ---------
Total Assets $ 218,247 $124,727 $ (76,594) $ 266,380
========= ======== ========= =========
Liabilities and Stockholders' Equity:
Current liabilities $ 15,652 $ 21,073 $ - $ 36,725
Long-term debt 128,692 18,921 - 147,613
Deferred income taxes - 10,206 - 10,206
Stockholders' equity 73,903 74,527 (76,594) 71,836
--------- -------- --------- ---------
Total Liabilities and Stockholders' Equity $ 218,247 $124,727 $ (76,594) $ 266,380
========= ======== ========= =========
Condensed Balance Sheets
December 31, 2001
Assets:
Current assets $ 18,786 $ 13,198 $ - $ 31,984
Net property and equipment 120,789 102,875 - 223,664
Other assets 79,536 - (76,394) 3,142
--------- --------- --------- ---------
Total Assets $ 219,111 $ 116,073 $ (76,394) $ 258,790
========= ========= ========= =========
Liabilities and Stockholders' Equity:
Current liabilities $ 9,729 $ 9,778 $ - $ 19,507
Long-term debt 124,674 18,789 - 143,463
Deferred income taxes - 11,110 - 11,110
Stockholders' equity 84,708 76,396 (76,394) 84,710
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity $ 219,111 $ 116,073 $ (76,394) $ 258,790
========= ========= ========= =========
See other notes to financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001.
11
THE WISER OIL COMPANY
Note 3. Net Income per Common Share
Basic net income per common share is computed based on the weighted
average shares of common stock outstanding. Net income per share computations to
reconcile basic and diluted net income consist of the following (in thousands,
except per share data):
For the Quarter
Ended March 31,
---------------
2002 2001
-------- --------
Net income (loss) ................................ $(12,558) $ 6,096
Less preferred dividends ......................... (431) (259)
Less amortization of preferred stock discount .... (1,148) --
-------- --------
Net income (loss) available to common stock ...... (14,137) 5,837
Plus: Income impact of assumed conversions:
Dividends and amortization on preferred stock .... 1,579 259
-------- --------
Net income (loss) available to common plus
assumed conversions .......................... $(12,558) $ 6,096
======== ========
Basic weighted average shares .................... 9,243 9,081
Effect of dilutive securities:
Convertible preferred stock .................. 5,882 3,529
Warrants ..................................... 119 140
Stock options ................................ 5 3
-------- --------
Diluted weighted average shares .................. 15,249 12,753
======== ========
Net Income (Loss) per Share:
Basic ........................................ $ (1.53) $ 0.64
Diluted ...................................... (1.53) 0.48
The effect of the dilutive securities for the quarter ended March 31, 2002 was
antidilutive.
Note 4. Long-term Debt
In April 2002, the borrowing base under the revolving credit facility
was reviewed by the banks and tentatively increased from $50 million to $60
million, subject to final approval from all of the participating banks. The
Company expects the new borrowing base to become effective in May 2002 and will
be allocated $40 million for general corporate purposes and $20 million
exclusively for acquisition of oil and gas properties.
12
THE WISER OIL COMPANY
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Comparison of Quarters Ended March 31, 2002 and March 31, 2001
Revenues for the first quarter of 2002 decreased $9.5 million or 39% from
the first quarter of 2001, due to significantly lower oil and gas prices
received in the first quarter of 2002. Increased production partially offset the
decline in prices. Oil revenues for the first quarter of 2002 were $1.9 million
lower than the first quarter of 2001, as the average price received for oil
sales in the first quarter of 2002 was $18.82 per barrel, down $7.71 per barrel
or 29% from the first quarter of 2001. Net oil production for the first quarter
of 2002 was 456,000 barrels, up 62,000 barrels or 16% from 394,000 barrels in
the first quarter of 2001. Oil production from the Hayter field in Canada was
87,000 barrels higher than in the first quarter of 2001 while oil production at
the Maljamar field was 20,000 barrels lower than in the first quarter of 2001.
Gas revenues for the first quarter of 2002 were $7.0 million lower than in the
first quarter of 2001 due to lower realized prices. The average price received
for gas sales during the first quarter of 2002 was $2.03 per mcf, a decrease of
$3.80 per mcf or 65% from the first quarter of 2001. Gas production for the
first quarter of 2002 was 2,724 MMCF, up 582 MMCF or 27% from the first quarter
of 2001. The increase in gas production was attributable primarily to Invasion
Energy Inc. ("Invasion"), which was acquired in May 2001 and produced 753 MMCF
in the first quarter of 2002. Oil and gas sales were increased by $0.4 million
in the first quarter of 2002 and decreased by $1.6 million in the first quarter
of 2001 from the Company's hedging activities.
Production and operating expense for the first quarter of 2002 increased
$0.2 million, or 3% from the first quarter of 2001. Production and operating
expense at Invasion, acquired in May 2001, was $1.0 million for the first
quarter of 2002. Lower oil and gas prices led to decreased production taxes in
the first quarter of 2002 which were $0.7 million lower than the first quarter
of 2001. On a BOE basis, production and operating expense during the first
quarter of 2002 decreased to $7.62 per BOE or 13% from $8.78 per BOE during the
first quarter of 2001. Depreciation, depletion and amortization ("DD&A") for the
first quarter of 2002 increased $1.7 million or 41% from the first quarter of
2001 due primarily to higher production. Exploration expense for the first
quarter of 2002 was $2.1 million, down $0.2 million from the first quarter of
2001. General and administrative expense in the first quarter of 2002 was $2.4
million, up $0.4 million from the first quarter of 2001 due primarily to
increased payroll costs and legal expense associated with the Company's legal
proceedings against Enron North America ("Enron"). Interest expense in the first
quarter of 2002 was $3.5 million, up $0.4 from the first quarter of 2001. The
Company had a net operating loss carryforward for Federal income tax purposes of
$20.0 million at December 31, 2001. The tax benefits of carryforwards are
recorded as an asset to the extent that management assesses the future
utilization of such carryforwards as "more likely than not." When the future
utilization of some portion of the carryforwards is determined not to be "more
likely than not," a valuation allowance is provided to reduce the recorded tax
benefits from such assets. At March 31, 2002, a valuation allowance was provided
to reduce deferred tax assets to an amount equal to deferred tax liabilities.
Accordingly, no U.S. Federal income tax expense or benefit was recognized in the
first quarter of 2002. The Company recognized $1.0 million of deferred Canadian
income tax benefit in the first quarter of 2002 associated with Invasion
operations.
The Company realized a net loss available to common stock of $14.1 million
and a basic loss per share of $1.53 in the first quarter of 2002 compared to net
income of $5.8 million and basic earnings per share of $0.64 during the first
quarter of 2001.
Operating cash flows during the first quarter of 2002 were $12.1 million,
up $5.4 million from the first quarter of 2001. Changes in working capital
increased cash flows from operations by $20.2 million, primarily due to a $9.1
million increase in accounts payable for Invasion and a $7.2 million increase in
fair value of derivative liability. The Company received $2.2 million in sales
proceeds in the first quarter of 2002 associated with the sale of two small
non-strategic properties in Canada. Capital expenditures during the first
quarter of 2002 were $21.3 million, up $18.0 million from $3.3 million in the
first quarter of 2001 due primarily to capital spending at Invasion and in the
Gulf of Mexico. The Company's capital and exploration budget for 2002 is
approximately $30 to $35 million compared to $76.1 million in 2001. The Company
borrowed $4.0 million under its revolving credit facility to fund a portion of
its first quarter 2002 capital expenditures. On a cash basis, the Company paid
$0.85 million in interest expense in the first quarter of 2002 and no income
taxes were paid in the first quarter of 2002. The Company's cash balance at
March 31, 2002 was $10.7 million, including $1.2 million of restricted cash
deposited in a margin account as collateral for hedge exposure at March 31,
2002.
The Company is continuing to pursue collection of its $6.1 million claim
against Enron through the bankruptcy proceedings and anticipates that a portion
of the amount owed to Wiser will be recovered within the next year. The Enron
hedge position was 100% written-off in 2001.
13
THE WISER OIL COMPANY
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Note 1 "Hedging Activities".
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
The information required by this Item 6 (a) is set forth in the
Index to Exhibits accompanying this quarterly report and is
incorporated herein by reference.
(b) Reports on Form 8-K
-------------------
The Company filed a report on Form 8-K on April 11, 2002
disclosing under Item 4 thereof that on April 3, 2002 it
dismissed its independent public accountant, Arthur Andersen LLP,
and retained Ernst & Young LLP as its independent auditors with
respect to the audit of the Company's consolidated financial
statements for its fiscal year ended December 31, 2002.
14
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.
THE WISER OIL COMPANY
-------------------------------------------
(Registrant)
Date: May 14, 2002 /s/ George K. Hickox, Jr.
-------------------------------------------
George K. Hickox, Jr.
Chairman, Chief Executive Officer
and Director (Principal Executive
Officer)
Date: May 14, 2002 /s/ Richard S. Davis
-------------------------------------------
Richard S. Davis
Vice President of Finance
(Principal Financial and
Accounting Officer)
15
THE WISER OIL COMPANY
Index to Exhibits
Exhibit
Number Exhibit
- ------ -------
None
+ Filed herewith.
16