================================================================================
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 SEPTEMBER 30, 1997 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 September 30, 1997
------------- ---------------------------------
$3 par value 8,950,090
================================================================================
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)
SEPTEMBER 30, DECEMBER 31,
(000's) except share data 1997 1996
----------------- -----------------
Assets
Current Assets:
Cash and cash equivalents $ 18,757 $ 5,870
Accounts receivable 11,693 14,091
Inventories 1,602 1,289
Prepaid expenses 462 473
------------------ ------------------
Total Current Assets 32,514 21,723
------------------ ------------------
Marketable Securities 6,512 7,176
Property, Plant and Equipment, at cost:
Oil and gas properties (successful efforts method) 335,253 306,716
Other properties 5,042 4,974
------------------ ------------------
340,295 311,690
Accumulated depreciation, depletion and amortization (126,096) (131,972)
------------------ ------------------
Net Property, Plant and Equipment 214,199 179,718
Other Assets 4,423 -
------------------ ------------------
$ 257,648 $ 208,617
================== ==================
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 12,929 $ 14,996
Accrued income taxes 2,195 1,697
Accrued liabilities 5,230 1,537
------------------ ------------------
Total current liabilities 20,354 18,230
------------------ ------------------
Long Term Debt 124,280 78,654
Deferred Benefit Cost 1,643 1,496
Deferred Income Taxes 10,816 10,975
Stockholders' Equity:
Common stock - $3 par value
20,000,000 shares authorized; 9,126,294 and 9,115,572 shares
issued
At September 30, 1997 and December 31, 1996, respectively;
8,950,090 and 8,939,368 shares outstanding at September 30, 1997
and December 31, 1996, respectively 27,379 27,347
Paid-in capital 3,208 3,078
Retained earnings 67,898 66,385
Marketable securities valuation adjustment 3,968 4,328
Foreign currency translation 831 853
Treasury stock; 176,204 shares, at cost (2,729) (2,729)
------------------ ------------------
Total stockholders' equity 100,555 99,262
------------------ ------------------
$ 257,648 $ 208,617
================== ==================
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 are an integral part of
these financial statements.
3
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE NINE MONTHS
-------------------- -------------------
Ended September 30, ENDED SEPTEMBER 30,
------------------- -------------------
(000's except per share data) 1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Oil and gas sales $ 16,372 $ 17,713 $ 55,641 $ 50,186
Dividends and interest 407 157 864 555
Marketable security sales gains - 805 1,813 7,637
Other 248 793 2,108 1,020
-------- -------- -------- --------
17,027 19,468 60,426 59,398
-------- -------- -------- --------
Costs and Expenses:
Production and operating 6,407 6,606 19,968 18,097
Purchased natural gas 377 272 1,150 914
Depreciation, depletion and amortization 5,318 4,922 16,328 14,772
Impairments - - - 12,112
Exploration 2,181 805 6,320 3,001
General and administrative 2,225 1,900 7,156 6,840
Interest expense 3,289 1,391 6,644 4,119
-------- -------- -------- --------
19,797 15,896 57,566 59,855
-------- -------- -------- --------
Income (Loss) Before Income Taxes (2,770) 3,572 2,860 (457)
Income Tax Expense (Benefit) (892) 1,127 541 954
-------- -------- -------- --------
NET INCOME (LOSS) (1,878) 2,445 2,319 (1,411)
Retained Earnings, beginning of period 70,045 56,638 66,385 61,030
Dividends Paid (269) (269) (806) (805)
-------- -------- -------- --------
Retained Earnings, end of period $ 67,898 $ 58,814 $ 67,898 $ 58,814
======== ======== ======== ========
Average Outstanding Shares 8,950 8,939 8,950 8,939
======== ======== ======== ========
Earnings (Loss) Per Share $ (0.21) $ 0.27 $ 0.26 $ (0.16)
======== ======== ======== ========
Cash Dividends Per Share $ 0.03 $ 0.03 $ 0.09 $ 0.09
======== ======== ======== ========
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 are an integral part of
these financial statements.
4
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
(000's) 1997 1996
---- ----
Cash Flows From Operating Activities:
Net income (loss) $ 2,319 $ (1,411)
Adjustments to reconcile net income to operating cash flows:
Depreciation, depletion and amortization 16,328 14,772
Deferred income taxes 29 (150)
Marketable securities & property sale gains (3,750) (7,752)
Amortization of debt issuance costs 67 -
Foreign currency translation (22) (4)
Exploration expense 6,320 3,001
Property impairments - 12,112
Other Changes -
Accounts receivable 2,398 (782)
Inventories (313) 48
Prepaid expenses 11 230
Other assets - 441
Accounts payable (2,067) 1,384
Accrued income taxes 498 (553)
Accrued liabilities 3,693 56
Deferred benefits cost 147 252
-------- --------
Operating Cash Flows 25,658 21,644
-------- --------
Cash Flows From Investing Activities:
Capital and exploration expenditures (58,299) (31,838)
Proceeds from sales of property, plant and equipment 3,107 264
Proceeds from marketable security sales 1,929 8,284
-------- --------
Investing Cash Flows (53,263) (23,290)
-------- --------
Cash Flows From Financing Activities:
Long term debt issued 125,000 19,000
Payments on long term debt (78,654) (16,171)
Debt issuance costs and fees (5,210) -
Common stock issued 162 -
Dividends paid (806) (805)
-------- --------
Financing Cash Flows 40,492 2,024
-------- --------
Net Increase In Cash 12,887 378
Cash and Cash Equivalents, beginning of year 5,870 1,397
-------- --------
Cash and Cash Equivalents, end of period $ 18,757 $ 1,775
======== ========
The notes to financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 are an integral part of these
financial statements.
5
THE WISER OIL COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Revenues for the third quarter of 1997 decreased $2.4 million from the
third quarter of 1996, due primarily to reduced oil revenues and the absence of
marketable security sale gains in the third quarter of 1997. On a BOE basis,
net production was 1,112 MBOE for the third quarter of 1997, down 96 MBOE or 8%
from the third quarter of 1996. Oil sales for the third quarter of 1997 were
down $2.3 million from the third quarter of 1996 due to lower oil production and
lower prices received for oil sales. Net oil production for the third quarter
of 1997 was 570,000 bbls, down 75,000 bbls or 12% from the third quarter of 1996
and the average price received for oil sales in the third quarter of 1997 was
$17.30 per bbl, down $1.64 per bbl or 9% from the third quarter of 1996. The
decrease in oil production is attributable primarily to the sale of properties
in Michigan in the first half of 1997 and reduced production from the Wellman
Unit. Gas sales in the third quarter of 1997 were up $1.4 million over the
third quarter of 1996 due to higher production and higher prices received for
gas sales. Net gas production for the third quarter of 1997 was 2,911 MMcf, up
75 MMcf or 3% from the third quarter of 1996 and the average price received in
the third quarter of 1997 was $1.97 per Mcf, up $.45 per Mcf or 30% from the
third quarter of 1996. Natural gas liquids (NGL) sales for the third quarter of
1997 were down $0.4 million from the third quarter of 1996 due primarily to
reduced production attributable to the Wellman Unit.
Adjustments to oil and gas sales from the Company's hedging activities
resulted in a reduction of $0.3 million in oil and gas sales during the third
quarter of 1997 as compared to a reduction of $1.9 million during the third
quarter of 1996. The Company did not have any marketable security sales gains
in the third quarter of 1997 compared to $0.8 million of gains in the third
quarter of 1996. The Company plans to liquidate its remaining portfolio of
marketable securities during 1997.
Production and operating expense for the third quarter of 1997 decreased
$.2 million or 3% from the third quarter of 1996. On a BOE basis (excluding 162
MMcf and 141 MMcf of natural gas purchased for resale during the third quarter
of 1997 and 1996, respectively), production and operating expense during the
third quarter of 1997 increased to $5.91 per BOE, up 6% from $5.57 per BOE
during the third quarter of 1996. The increase in production and operating
expense per BOE during the third quarter of 1997 is attributable primarily to
reduced production volumes without a corresponding reduction in production and
operating expense. Depreciation, depletion and amortization ("DD&A") for the
third quarter of 1997 increased $0.4 million or 8% over the third quarter of
1996, primarily as a result of higher DD&A from Canadian oil and gas properties.
Exploration expense for the third quarter of 1997 increased $1.4 million or 171%
as compared to the third quarter of 1996, primarily as a result of higher
geological and geophysical expenses. General and administrative expense during
the third quarter of 1997 increased $0.3 million or 17% as compared to the third
quarter of 1996, primarily as a result of higher payroll costs. Interest
expense during the third quarter of 1997 was $1.9 million or 136% higher than
the third quarter of 1996 due to the increase in long term debt associated with
the issuance of $125 million of Senior Subordinated Notes in May 1997.
6
THE WISER OIL COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
(continued)
The Company realized a net loss of $1.9 million and loss per share of $0.21
during the third quarter of 1997, compared to net income of $2.4 million and
earnings per share of $0.27 during the third quarter of 1996. The Company's
Canadian operations incurred a net loss of $0.2 million during the third quarter
of 1997, compared to a net loss of $0.3 million during the third quarter of
1996.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Revenues for the first nine months of 1997 increased $1.0 million or 2%
from the first nine months of 1996, due primarily to higher oil and gas sales.
Oil and gas sales for the first nine months of 1997 were up $5.5 million over
the same period in 1996 primarily as a result of higher gas prices. On a BOE
basis, net production was 3,556 MBOE for the first nine months of both 1997 and
1996. Net oil production was 1,830 Mbbls for the fist nine months of 1997, up
68 Mbbls or 3.8% over 1996. The increase in net oil production over 1996 is
attributable primarily to the Maljamar field. The average price received for
oil sales during the first nine months of 1997 was $18.17 per Bbl, a decrease of
$0.23 per Bbl or 1.2% from the first nine months of 1996. Net gas production
for the first nine months of 1997 was 8,974 MMcf, down 252 MMcf or 3% from the
first nine months of 1996. The average price received for gas sales during the
first nine months of 1997 was $2.14 per Mcf, up $0.56 per Mcf or 35% from the
first nine months of 1996. Adjustments to oil and gas sales from the Company's
hedging activities resulted in a reduction of $2.1 million in oil and gas sales
during the first nine months of 1997 as compared to a reduction of $4.5 million
during the same period in 1996. Marketable security sales gains were down 76%
to $1.8 million during the first nine months of 1997 compared to $7.6 million
during the first nine months of 1996. The Company plans to liquidate its
remaining portfolio of marketable securities during 1997. Other revenues during
the first nine months of 1997 includes a pretax gain of $1.8 million from the
sale of oil and gas properties, primarily located in Michigan.
Production and operating expense for the first nine months of 1997
increased $1.9 million or 10% over the first nine months of 1996. The increase
was due primarily to additional development wells completed at the Maljamar
properties and workover and repair operations at the Wellman Unit. On a BOE
basis (excluding 463 MMcf and 410 MMcf of natural gas purchased for resale
during the first nine months of 1997 and 1996, respectively), production and
operating expense increased to $5.74 per BOE or 11% during the first nine months
of 1997 from $5.19 per BOE during the same period in 1996. DD&A for the first
nine months of 1997 increased $1.6 million or 11% over the first nine months of
1996, primarily as a result of higher DD&A from Canadian oil and gas properties.
Exploration expense for the first nine months of 1997 increased $3.3 million or
111% as compared to the same period in 1996, primarily as a result of $1.2
million in dry hole expense for the South Lakeside prospect in Cameron Parish,
Louisiana and higher geological and geophysical expenses. General and
administrative expense during the first nine months of 1997 was slightly higher
than the same period in 1996 due primarily to higher payroll costs. Interest
expense during the first nine months of 1997 was up $2.5 million or 61% over the
same period in 1996 due to the increase in long term debt associated with the
issuance of $125 million of Senior Subordinated Notes in May 1997.
7
THE WISER OIL COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
(continued)
The Company realized net income of $2.3 million and earnings per share of
$0.26 during the first nine months of 1997, compared to a net loss of $1.4
million and loss per share of $0.16 during the first nine months of 1996. The
Company's Canadian operations incurred a net loss of $3.2 million during the
first nine months of 1997, compared to a net loss of $6.2 million during the
first nine months of 1996.
Operating cash flows during the first nine months of 1997 were $25.7
million, up $4.0 million from the first nine months of 1996 primarily as a
result of changes in working capital components. Capital and exploration
expenditures of $58.3 million during the first nine months of 1997 were $26.5
million higher than the same period in 1996 due primarily to the $15.0 million
acquisition of oil and gas properties in Refugio and Goliad counties in Texas,
additional secondary recovery facilities at Maljamar and higher exploration
expense. On May 21, 1997, the Company issued $125 million of 9 1/2% Senior
Subordinated Notes that are due in 2007. The Company used $77.0 million of
proceeds from the Notes to repay all of the outstanding indebtedness under the
Credit Agreement.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. 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 certain 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 two 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
such information is 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
SUBSIDIARY GUARANTORS
-------------------------------------------------------------
(000's) THE WISER
WISER T.W.O.C MARKETING COMBINED
CANADA(1) INC. COMPANY TOTAL
-------------------------------------------------------------
Revenues
For the Quarter Ended September 30, 1997 $ 3,867 $ 48 $ 552 $ 4,467
For the Quarter Ended September 30, 1996 4,438 924 423 5,785
For the Nine Months Ended September 30, 1997 11,268 2,215 1,640 15,123
For the Nine Months Ended September 30, 1996 12,504 8,082 1,410 21,996
INCOME (LOSS) BEFORE INCOME TAXES
For the Quarter Ended September 30, 1997 $ (255) $ 44 $ 63 $ (148)
For the Quarter Ended September 30, 1996 (322) 920 48 646
For the Nine Months Ended September 30, 1997 (3,176) 2,205 181 (790)
For the Nine Months Ended September 30, 1996 (6,210) 8,069 194 2,053
NET INCOME (LOSS)
For the Quarter Ended September 30, 1997 $ (217) $ 38 $ 53 $ (126)
For the Quarter Ended September 30, 1996 (322) 785 41 504
For the Nine Months Ended September 30, 1997 (2,700) 1,874 154 (672)
For the Nine Months Ended September 30, 1996 (6,210) 6,859 165 814
CURRENT ASSETS
September 30, 1997 $ 4,295 $ 184 $ 156 $ 4,635
December 31, 1996 4,958 53 170 5,181
TOTAL ASSETS
September 30, 1997 $ 46,535 $6,696 $ 569 $ 53,800
December 31, 1996 39,132 7,229 718 47,079
CURRENT LIABILITIES
September 30, 1997 $ 5,757 $ - $ 300 $ 6,057
December 31, 1996 4,931 - 508 5,439
NONCURRENT LIABILITIES
September 30, 1997 $ 3,212 $2,040 $ - $ 5,252
December 31, 1996 52,439 2,227 - 54,666
STOCKHOLDER'S EQUITY (DEFICIT)
September 30, 1997 $ 37,566 $4,656 $ 269 $ 42,491
December 31, 1996 (18,238) 5,002 210 (13,026)
(1) Includes the accounts of Wiser Oil Delaware, Inc., Wiser Delaware LLC and
The Wiser Oil Company of Canada.
See other notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
9
THE WISER OIL COMPANY
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
-------------------
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.
THE WISER OIL COMPANY
----------------------------------------
(Registrant)
Date: November 14, 1997 /s/ Andrew J. Shoup, Jr.
----------------------------------------
Andrew J. Shoup, Jr.
President and
Chief Executive Officer
Date: November 14, 1997 /s/ Lawrence J. Finn
----------------------------------------
Lawrence J. Finn
Vice President, Finance and
Chief Financial Officer
10
THE WISER OIL COMPANY
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------ -------
27 Financial Data Schedule
11