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 quarterly period ended September 30, 2002
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File Number: 1-7940
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Goodrich Petroleum Corporation
(Exact name of registrant as specified in its charter)
Delaware 76-0466193
- ----------------------------------------- -------------------------------
(State or other jurisdiction of I.R.S. Employer ID. No.
incorporation or organization)
808 Travis Street, Suite 1320, Houston, Texas 77002
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(713)780-9494
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
None
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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. [X] Yes [ ] No
At November 14, 2002, there were 17,914,325 shares of Goodrich Petroleum
Corporation common stock outstanding.
1
GOODRICH PETROLEUM CORPORATION
FORM 10-Q
September 30, 2002
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
September 30, 2002 (Unaudited) and December 31, 2001............ 4-5
Consolidated Statements of Operations (Unaudited)
Nine Months Ended September 30, 2002 and 2001................... 6
Three Months Ended September 30, 2002 and 2001.................. 7
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 2002 and 2001................... 8
Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Unaudited)
Nine Months Ended September 30, 2002 and 2001................... 9
Notes to Consolidated Financial Statements......................... 10-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 14-19
Item 3. Quantitative and Qualitative Disclosure about Market Risk 19-21
Item 4. Controls and Procedures 21
PART II - OTHER INFORMATION 22
Item 1. Legal Procedings. 22
Item 2. Changes in Securities and Use of Proceeds. 22
2
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
3
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
2002 2001
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents...........................$ 304,486 $ 248,701
Accounts receivable
Trade and other, net of allowance................. 2,975,907 825,593
Accrued oil and gas revenue....................... 1,553,319 3,456,210
Fair value of oil and gas derivatives............. --- 13,000
Prepaid insurance and other......................... 800,784 139,452
------------ -----------
Total current assets........................... 5,634,496 4,682,956
------------ -----------
PROPERTY AND EQUIPMENT
Oil and gas properties (successful efforts method).. 103,068,422 108,019,749
Furniture, fixtures and equipment................... 527,463 321,393
------------ -----------
103,595,885 108,341,142
Less accumulated depletion, depreciation
and amortization.................................. (37,356,000) (33,247,502)
------------ -----------
Net property and equipment........................ 66,239,885 75,093,640
------------ -----------
OTHER ASSETS
Restricted cash..................................... 2,039,000 2,039,000
Deferred taxes...................................... 403,977 207,605
Other............................................... 243,979 220,730
------------ -----------
Total other assets............................. 2,686,956 2,467,335
------------ -----------
TOTAL ASSETS..............................$ 74,561,337 $ 82,243,931
=========== ===========
See notes to consolidated financial statements.
4
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
September 30, December 31,
2002 2001
------------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.....................................$ 2,768,597 $ 2,398,437
Accrued liabilities.................................. 1,130,238 1,693,674
Fair value of oil and gas derivatives................ 796,508 ---
Current portion other non-current liabilities........ 125,000 124,875
----------- ----------
Total current liabilities.................. 4,820,343 4,216,986
----------- ----------
LONG TERM DEBT........................................ 17,000,000 24,500,000
OTHER NON-CURRENT LIABILITIES
Production payment payable........................... 1,056,677 1,264,729
Accrued abandonment costs............................ 4,633,923 4,341,669
STOCKHOLDERS' EQUITY
Preferred stock; authorized 10,000,000 shares:
Series A convertible preferred stock, par value
$1.00 per share; issued and outstanding 791,968
and 791,968 shares (liquidation preference $10
per share, aggregating to $7,919,680)............. 791,968 791,968
Common stock; par value $0.20 per share:
Authorized 50,000,000 shares; issued and
outstanding 17,914,325 and 17,896,356 shares...... 3,582,864 3,579,271
Additional paid-in capital........................... 52,333,738 52,279,331
Accumulated deficit.................................. (9,140,445) (8,738,473)
Accumulated other comprehensive income............... (517,731) 8,450
------------ ----------
Total stockholders' equity................. 47,050,394 47,920,547
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...........$ 74,561,337 $ 82,243,931
=========== ===========
See notes to consolidated financial statements.
5
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
September 30,
2002 2001
----------- ----------
REVENUES
Oil and gas sales................................. $ 13,118,118 $ 24,029,405
Other............................................. 147,609 154,208
---------- -----------
Total revenues................................ 13,265,727 24,183,613
---------- -----------
EXPENSES
Lease operating expense........................... 5,805,347 4,733,427
Production taxes.................................. 1,156,321 1,457,000
Depletion, depreciation and amortization.......... 4,052,194 5,038,843
Exploration....................................... 1,046,367 3,253,732
Interest expense.................................. 749,773 918,809
General and administrative........................ 3,177,356 2,252,700
---------- -----------
Total costs and expenses..................... 15,987,358 17,654,511
---------- -----------
GAIN ON SALE OF ASSETS............................. 2,843,808 71,986
---------- -----------
INCOME BEFORE INCOME TAXES......................... 122,177 6,601,088
Income taxes...................... ............... (42,762) (2,310,381)
---------- -----------
NET INCOME........................................ 79,415 4,290,707
Preferred stock dividends....................... 481,387 2,848,073
---------- -----------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK....... (401,972) 1,442,634
========== ===========
BASIC INCOME (LOSS) PER AVERAGE COMMON SHARE....... (.02) .08
========== ===========
DILUTED INCOME (LOSS) PER AVERAGE COMMON SHARE..... (.02) .07
========== ===========
AVERAGE COMMON SHARES OUTSTANDING - BASIC.......... 17,840,491 17,167,718
========== ===========
AVERAGE COMMON SHARES OUTSTANDING - DILUTED........ 17,840,491 20,099,393
========== ===========
See notes to consolidated financial statements.
6
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30,
2002 2001
----------- --------
REVENUES
Oil and gas sales.................................$ 4,239,650 $ 7,678,211
Other ........................................... 18,370 70,241
---------- ----------
Total revenues............................... 4,258,020 7,748,452
---------- ----------
EXPENSES
Lease operating expense........................... 1,779,529 1,655,790
Production taxes.................................. 354,573 442,285
Depletion, depreciation and amortization.......... 1,201,020 1,881,258
Exploration....................................... 285,947 537,276
Interest expense.................................. 217,933 321,571
General and administrative........................ 957,329 811,899
---------- ----------
Total costs and expenses..................... 4,796,331 5,650,079
---------- ----------
GAIN (LOSS) ON SALE OF ASSETS...................... (80,393) ---
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES.................. (618,704) 2,098,373
Income taxes...................................... 216,546 (734,432)
---------- ----------
NET INCOME (LOSS)................................... (402,158) 1,363,941
Preferred stock dividends......................... 158,366 154,798
---------- ----------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK........ (560,524) 1,209,143
========== ==========
BASIC INCOME (LOSS) PER AVERAGE COMMON SHARE........ (.03) .07
========== ==========
DILUTED INCOME (LOSS) PER AVERAGE COMMON SHARE...... (.03) .06
========== ==========
AVERAGE COMMON SHARES OUTSTANDING - BASIC........... 17,914,325 17,763,136
========== ==========
AVERAGE COMMON SHARES OUTSTANDING - DILUTED......... 17,914,325 20,610,805
See notes to consolidated financial statements.
7
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2002 2001
---------- --------
OPERATING ACTIVITIES
Net income............................................$ 79,415 $ 4,290,707
Adjustments to reconcile net income to cash
provided by operating activities:
Depletion, depreciation and amortization............ 4,052,194 5,038,843
Deferred income taxes............................... 42,762 2,310,381
Amortization of leasehold costs..................... 348,686 769,402
Amortization of production payment discount......... 70,558 92,931
Amortization of deferred debt financing............. 108,135 39,750
Gain on sale of assets.............................. (2,843,808) (71,986)
Capital expenditures charged to income.............. --- 1,566,736
Other............................................... --- 20,745
Net change in:
Accounts receivable................................. (247,423) (358,593)
Prepaid insurance and other......................... (748,523) 99,452
Accounts payable.................................... 370,160 810,761
Accrued liabilities................................. (533,439) 252,488
----------- -----------
Net cash provided by operating activities.......... 698,717 14,861,617
----------- -----------
INVESTING ACTIVITIES
Proceeds from sale of assets.......................... 12,822,591 451,986
Capital expenditures.................................. (5,233,526) (26,155,337)
----------- -----------
Net cash provided by/(used in) investing activities 7,589,065 (25,703,351)
----------- -----------
FINANCING ACTIVITIES
Proceeds from public offering of common stock......... --- 15,000,000
Principal payments of bank borrowings.................(13,000,000) (13,690,000)
Proceeds from bank borrowings......................... 5,500,000 9,725,000
Payment of debt and equity financing costs............ --- (1,695,323)
Exercise of stock purchase warrants................... --- 210,233
Exercise of stock options............................. 28,000 11,563
Net change in restricted cash......................... --- (1,255,000)
Production payments................................... (278,610) (397,568)
Preferred stock dividends............................. (481,387) (471,532)
----------- -----------
Net cash (used in)/provided by financing activities (8,231,997) 7,437,373
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS............. 55,785 (3,404,361)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...... 248,701 3,531,763
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............$ 304,486 $ 127,402
=========== ===========
See notes to consolidated financial statements.
8
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity and Comprehensive Income
Nine Months Ended September 30, 2002 and 2001
(Unaudited)
Series A Series B
Preferred Stock Preferred Stock Common Stock
--------------- --------------- ------------
Balance at December 31, 2000.... 791,968 $ 791,968 660,839 $ 660,839 13,318,920 $ 2,663,784
Net Income.................... --- --- --- --- --- ---
Other Comprehensive Income(Loss);
Net of Tax
Cumulative Effect of Accounting
Change....................... --- --- --- --- --- ---
Net Derivative Gain........... --- --- --- --- --- ---
Reclassification Adjustment... --- --- --- --- --- ---
Total Comprehensive Income.... --- --- --- --- --- ---
Issuance of Common Stock...... --- --- --- --- 3,000,000 600,000
Conversion of Series B Preferred
Stock to Common Stock....... --- --- (660,839) (660,839) 1,189,510 237,902
Preferred Stock Dividends..... --- --- --- --- --- ---
Director Stock Grant.......... --- --- --- --- 5,130 1,026
Exercise of Stock Warrants.... --- --- --- --- 252,000 50,400
Exercise of Stock Options..... --- --- --- --- 7,500 1,500
------- --------- -------- -------- ---------- ---------
Balance at September 30, 2001... 791,968 $ 791,968 --- $ --- 17,773,060 $ 3,554,612
======= ========= ======== ======== ========== =========
Balance at December 31, 2001.... 791,968 791,968 --- --- 17,896,356 3,579,271
Net Income.................... --- --- --- --- --- ---
Other Comprehensive Income(Loss);
Net of Tax
Net Derivative Gain(Loss)..... --- --- --- --- --- ---
Reclassification Adjustment... --- --- --- --- --- ---
Total Comprehensive Income.... --- --- --- --- --- ---
Preferred Stock Dividends..... --- --- --- --- --- ---
Director Stock Grant.......... --- --- --- --- 7,302 1,460
Exercise of Stock Options..... --- --- --- --- 10,667 2,133
------- --------- -------- -------- ---------- ---------
Balance at September 30, 2002... 791,968 $ 791,968 --- $ --- 17,914,325 $ 3,582,864
======= ========= ======== ======== ========== =========
Accumulated
Additional Other Total
Paid-In Accumulated Comprehensive Stockholders'
Capital Deficit Income Equity
------- ------- -------------- ------
Balance at December 31, 2000.... $ 39,348,013 $ (10,859,388) $ --- $ 32,605,216
Net Income.................... --- 4,290,707 --- 4,290,707
Other Comprehensive Income (Loss);
Net of Tax
Cumulative Effect of Accounting
Change....................... --- --- (2,535,469) (2,535,469)
Net Derivative Gain........... --- --- 2,041,626 2,041,626
Reclassification Adjustment... --- --- 820,597 820,597
---------
Total Comprehensive Income.... --- --- --- 4,617,461
Issuance of Common Stock...... 12,469,170 --- --- 13,069,170
Conversion of Series B Preferred
Stock to Common Stock...... 317,937 --- --- (105,000)
Preferred Stock Dividends..... --- (471,532) --- (471,532)
Director Stock Grant.......... 28,974 --- --- 30,000
Exercise of Stock Warrants.... 129,833 --- --- 180,233
Exercise of Stock Options..... 10,063 --- --- 11,563
--------- ------------ ----------- ----------
Balance at September 30, 2001... $ 52,303,990 $ (7,040,213) 326,754 $ 49,937,111
========== ============ =========== ==========
Balance at December 31, 2001.... 52,279,331 (8,738,473) 8,450 47,920,547
Net Income.................... --- 79,415 --- 79,415
Other Comprehensive Income(Loss);
Net of Tax................
Net Derivative Gain(Loss)..... --- --- (474,204) (474,204)
Reclassification Adjustment... --- --- (51,977) (51,977)
----------
Total Comprehensive Income.... --- --- --- (446,766)
Preferred Stock Dividends..... --- (481,387) --- (481,387)
Director Stock Grant.......... 28,540 --- --- 30,000
Exercise of Stock Options..... 25,867 --- --- 28,000
--------- ------------ ----------- ----------
Balance at September 30, 2002... $ 52,333,738 $ (9,140,445) (517,731) $ 47,050,394
========== ============= =========== ==========
See notes to consolidated financial statements.
9
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2002 and 2001
(Unaudited)
NOTE A - Basis of Presentation
- ------------------------------
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to rules
and regulations of the Securities and Exchange Commission; however, the Company
believes the disclosures which are made are adequate to make the information
presented not misleading. The financial statements and footnotes included in
this Form 10-Q should be read in conjunction with the financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 2001.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position of the
Company as of September 30, 2002 and the results of its operations for the three
and nine months ended September 30, 2002 and 2001.
The results of operations for the three and nine month periods ended
September 30, 2002 are not necessarily indicative of the results to be expected
for the full year.
NOTE B - Sale of Oil and Gas Properties to Related Party
- --------------------------------------------------------
On March 12, 2002, the Company, in an effort to monetize a portion of the
value created in its Burrwood and West Delta fields and enhance its liquidity
position, completed the sale of a thirty percent (30%) working interest in the
existing production and shallow rights, and a fifteen percent (15%) working
interest in the deep rights below 10,600 feet, in its Burrwood and West Delta 83
fields for $12 million to Malloy Energy Company, LLC led by Patrick E. Malloy,
III and participated in by Sheldon Appel and Joe Austin, all members of the
Company's Board of Directors. The Company received net proceeds from the sale of
approximately $11.8 million after purchase price adjustments. The sale price was
determined by discounting the present value of the acquired interest in the
fields' proved, probable and possible reserves using prevailing oil and gas
prices. The Company has retained a sixty-five percent (65%) working interest in
the existing production and shallow rights, and a thirty-two and one-half
percent (32.5%) working interest in the deep rights after the close of the
transaction. In conjunction with the sale, Malloy Energy Company, LLC, provided
a $7.7 million line of credit. The $7.7 million line of credit, which will
reduce to $5.0 million on January 1, 2003, is subordinate to the Company's
senior facility and can be used for acquisitions, drilling, development, and
general corporate purposes until December 31, 2004. Malloy Energy Company, LLC,
retains the option, during the two-year period, to convert the amount
outstanding under the credit line, and/or provide cash on any unused credit up
to a maximum of $7.7 million in the first year, reduced to $5.0 million after
10
December 31, 2002, into working interests in any acquisition(s) the Company may
make in Louisiana prior to January 1, 2005. The conversion of the credit line
will be on a pro-rata basis with the Company and may not exceed a maximum of
$7.7 million reduced to $5.0 million after December 31, 2002, or thirty percent
(30%) of any potential acquisition(s).
The Company recorded a gain of approximately $2.4 million in the first
quarter as a result of the sale. The Company used the proceeds to reduce
outstanding debt under its credit facility by approximately $12 million.
In addition, the Company sold other non-core oil and gas properties in the
nine months ended September 30, 2002 for $978,000 and recorded a gain of
approximately $447,000.
NOTE C - Net Income (Loss) Per Share
- ------------------------------------
Net income (loss) was used as the numerator in computing basic and diluted
income per common share for the three and nine months ended September 30, 2002
and 2001. The following table reconciles the weighted-average shares outstanding
used for these computations.
Three months Nine months
ended September 30, ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
Basic Method............... 17,914,325 17,763,136 17,840,491 17,167,718
Dilutive Stock Warrants.... --- 2,728,026 --- 2,760,321
Dilutive Stock Options..... --- 119,643 --- 171,354
------------ ------------ ----------- -----------
Diluted Method............. 17,914,325 20,610,805 17,840,491 20,099,393
========== ============ -=========== ===========
The computation of earnings per share in the consolidated Statement of
Income for the three and nine months ended September 30, 2001 and September 30,
2002, respectively, did not consider convertible preferred stock convertible
into 330,013 shares of common stock because the effects of the securities would
have been antidilutive. The computation of loss per share in the consolidated
Statements of Income for the three and nine months ended September 30, 2002, did
not consider stock warrants convertible into 2,055,649 and 2,210,775 shares of
common stock respectively, and stock options convertible into 71,662 and 63,424
shares of common stock respectively, because the effects of these convertible
securities would have been antidilutive.
NOTE D - Credit Facility
- ------------------------
On November 9, 2001, the Company established a new credit facility with BNP
Paribas Bank, with an initial borrowing base of $25,000,000. The current
borrowing base, taking into effect the sale of a 30% interest in the Burrwood
and West Delta 83 fields, is $21,000,000 and will remain effective until the
next borrowing base redetermination initially scheduled to take place on or
before September 30, 2002. Due to recent drilling activities, BNP Paribas Bank
agreed to extend the borrowing base redetermination date and is currently
reviewing the borrowing base and will inform the Company of the new borrowing
11
base when they complete their review. Interest on the credit facility will
accrue at a rate calculated at the option of the Company as either the BNP
Paribas Bank base rate plus 0.00% to 0.50%, or LIBOR plus 1.50% - 2.50%
depending on borrowing base utilization. Interest on LIBOR-Rate borrowings is
due and payable on the last day of its respective Interest Period. Interest on
each Base-Rate borrowing is due and payable on the last day of each quarter. The
credit facility will mature on November 8, 2004. The credit facility requires
that the Company pay a quarterly commitment fee equal to 0.375% per annum based
on the Company's borrowing base utilization. Prior to maturity, no payments are
required so long as the maximum borrowing base amount exceeds the amounts
outstanding under the credit facility. The credit facility requires the Company
to monitor tangible net worth and maintain certain financial statement ratios at
certain levels. Substantially all the Company's assets are pledged to secure the
credit facility. At September 30, 2002, the Company had approximately $4,000,000
available under its borrowing base.
NOTE E - New Accounting Pronouncements
- --------------------------------------
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
141, "Business Combinations" ("SFAS No. 141") immediately upon release and
(SFAS) No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142") on
January 1, 2002. SFAS No. 141 requires that all business combinations be
accounted for under the purchase method of accounting and that certain acquired
intangible assets in a business combination be recognized and reported as assets
apart from goodwill. SFAS No. 142 requires that amortization of goodwill be
replaced with periodic tests of the goodwill's impairment at least annually in
accordance with the provisions of SFAS No. 142, and that intangible assets other
than goodwill be amortized over their useful lives. The Company does not have
any identified intangible assets nor any goodwill as of December 31, 2001 or
September 30, 2002. The adoption of SFAS No. 141 and SFAS No. 142 had no
significant impact on the Company's financial statements.
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets (SFAS No. 144) addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. This Statement requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of the asset exceeds the fair value of the asset. SFAS
No. 144 requires companies to separately report discontinued operations and
extends that reporting to a component of an entity that either has been disposed
of (by sale, abandonment, or in a distribution to owners) or is classified as
held for sale. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. The Company adopted SFAS No.
144 on January 1, 2002. The adoption of SFAS No. 144 had no significant impact
on the Company's financial statements.
In addition, Statement of Financial Accounting Standard No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS No. 143") has been issued.
SFAS No. 143 requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
12
estimate of fair value can be made. The statement is effective on January 1,
2003. The Company is currently assessing the impact that this statement will
have on its financial statements.
In April 2002, SFAS No. 145, Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections was issued.
SFAS No. 145 rescinds SFAS No. 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. SFAS No. 145 amends SFAS
No. 13 to require that certain lease modifications that have economic effects
similar to sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. The various provisions of this pronouncement have
different effective dates. The Company does not expect the adoption of SFAS No.
145 to have any significant impact on the Company's financial statements.
On July 30, 2002, SFAS No. 146, Accounting for Costs Associated with Exit
or Disposal Activities was issued. SFAS No. 146 requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31, 2002. The Company has not yet determined what, if any, impact the adoption
of this statement may have on its financial statements.
NOTE F - Commitments and Contingencies
- --------------------------------------
The U.S. Environmental Protection Agency ("EPA") has identified the Company
as a potentially responsible party ("PRP") for the cost of clean-up of
"hazardous substances" at an oil field waste disposal site in Vermilion Parish,
Louisiana. The Company has estimated that the remaining cost of long-term
clean-up of the site will be approximately $4.5 million with the Company's
percentage of responsibility to be approximately 3.05%. As of September 30,
2002, the Company has paid approximately $321,000 in costs related to this
matter and has $122,500 accrued for the remaining liability. These costs have
not been discounted to their present value. The EPA and the PRPs will continue
to evaluate the site and revise estimates for the long-term clean-up of the
site. There can be no assurance that the cost of clean-up and the Company's
percentage responsibility will not be higher than currently estimated. In
addition, under the federal environmental laws, the liability costs for the
clean-up of the site is joint and several among all PRPs. Therefore, the
ultimate cost of the clean-up to the Company could be significantly higher than
the amount presently estimated or accrued for this liability.
13
Management's Discussion and Analysis of Financial
Condition and Results of Operations
-----------------------------------
Nine months ended September 30, 2002 versus nine months
ended September 30, 2001
Total revenues for the nine months ended September 30, 2002 amounted to
$13,266,000 and were $10,918,000 lower than the $24,184,000 for the nine months
ended September 30, 2001 due primarily to the sale of thirty percent (30%) of
Burrwood/West Delta 83 field on March 12, 2002 and lower oil and gas prices. Oil
and gas sales were $13,118,000 for the first nine months of 2002 compared to
$24,029,000 for the first nine months of 2001, or $10,911,000 lower. Oil and gas
revenues were also reduced during the period due to a majority of the Company's
oil and gas production being shut in temporarily as a result of Hurricane
Isidore. Oil and gas sales decreased by $266,000 in the nine months ended
September 30, 2002 compared to a reduction of $1,256,000 in the prior period as
a result of settlement of the Company's outstanding futures contracts.
The following table reflects the production volumes and pricing information
for the periods presented.
Nine months Nine months
ended September 30, 2002 ended September 30, 2001
Production Average Price Production Average Price
---------- ------------- ---------- -------------
Gas (Mcf)......... 1,812,619 $ 2.88 2,785,221 $ 4.55
Oil (Bbls)........ 346,808 22.75 436,088 26.07
Lease operating expense was $5,805,000 for the nine months ended September
30, 2002, versus $4,733,000 for the nine months ended September 30, 2001, or
$1,072,000 higher due primarily to significantly increased costs associated with
salt water disposal in the Burrwood and West Delta 83 fields, higher well
insurance costs and transition costs associated with the Company assuming
operations of its oil and gas properties from a contract operator on June 1,
2002, partially offset by the sale of a thirty percent (30%) working interest in
the Burrwood and West Delta fields on March 12, 2002. Work was completed at the
end of the second quarter to alleviate higher costs associated with compression
and salt-water disposal. Production taxes amounted to $1,156,000 for the nine
months ended September 30, 2002 compared to $1,457,000 or $301,000 lower due
primarily to lower oil and gas sales in the current period. Depletion,
depreciation and amortization was $4,052,000 for the nine months ended September
30, 2002, versus $5,039,000 for the nine months ended September 30, 2001, or
$987,000 lower due primarily to lower production volumes in the first nine
months of 2002 versus 2001.
Exploration expense for the nine months ended September 30, 2002 was
$1,046,000 versus $3,254,000 for the same period of 2001 or $2,208,000 lower due
primarily to dry hole and seismic costs of $0, and $120,000, respectively, in
the current period versus $1,567,000 and $532,000 for the same period in 2001.
14
Interest expense was $750,000 in the nine months ended September 30, 2002
compared to $919,000 in the nine months ended September 30, 2001, or $169,000
lower due to higher average debt outstanding and a higher effective interest
rate for the nine months ended September 30, 2001.
General and administrative expenses amounted to $3,177,000 in the nine
months ended September 30, 2002 versus $2,253,000 in the nine months ended
September 30, 2001 or $924,000 higher due primarily to additional salaries as a
result of taking over operations from the Company's contract operator and legal
costs of approximately $757,000 attributable to pending litigation against the
operator and joint owner of the Company's Lafitte field.
Three months ended September 30, 2002 versus three months
ended September 30, 2001
Total revenues for the three months ended September 30, 2002 amounted to
$4,258,000 and were $3,490,000 lower than the $7,748,000 for the three months
ended September 30, 2001 due primarily to the sale of 30% of Burrwood/West Delta
83 field on March 12, 2002 and lower oil and gas sales. Oil and gas sales were
$4,240,000 for the quarter ended September 30, 2002 compared to $7,678,000 for
the quarter ended September 30, 2001 or $3,438,000 lower due primarily to the
March 12, 2002 sale and also lower oil prices, partially offset by higher gas
prices. Oil and gas sales were also negatively impacted during the 2002 period
by Hurricane Isidore as a majority of the Company's wells were shut in for
approximately nine days. Oil and gas sales decreased by $80,000 in the three
months ended September 30, 2002 compared to an increase of $198,000 in the same
period in 2001 as a result of settlement of the Company's outstanding futures
contracts.
The following table reflects the production volumes and pricing information
for the periods presented.
Three months Three months
ended September 30, 2002 ended September 30, 2001
Production Average Price Production Average Price
Gas (Mcf)............ 561,258 3.32 1,088,781 $ 3.17
Oil (Bbls)........... 101,951 23.29 166,087 25.44
Lease operating expense was $1,780,000 for the three months ended September
30, 2002, versus $1,656,000 for the three months ended September 30, 2001, or
$124,000 higher due primarily to higher well insurance costs and continuing
transition costs associated with the Company assuming operations of its oil and
gas properties from a contract operator on June 1, 2002, partially offset by the
sale of a thirty percent (30%) working interest in the Burrwood and West Delta
Fields on March 12, 2002. Production taxes were $355,000 for the three months
ended September 30, 2002 compared to $442,000 for the three months ended
September 30, 2001 or $87,000 lower due primarily to lower oil and gas sales in
the current period. Depletion, depreciation and amortization was $1,201,000 for
the three months ended September 30, 2002, versus $1,881,000 for the three
months ended September 30, 2001, or $680,000 lower due primarily to lower
production volumes in the third quarter 2002 versus 2001.
15
The Company incurred $286,000 of exploration expense in the third quarter
of 2002, compared to $537,000 in the third quarter of 2001, or $251,000 lower
primarily due to seismic costs of $6,000, prospect depletion of $126,000 and dry
hole costs of $0 in the third quarter of 2002 versus $66,000, $274,000 and
$24,000 respectively in 2001.
Interest expense was $218,000 in the three months ended September 30, 2002
compared to $322,000 in the third quarter of 2001, or $104,000 lower due to
higher average debt outstanding and a higher effective interest rate in the 2001
period.
General and administrative expense amounted to $957,000 in the three months
ended September 30, 2002 versus $812,000 in the third quarter of 2001 or
$145,000 higher due primarily to additional salaries as a result of taking over
operations from the Company's contract operator and legal costs of approximately
$94,000 attributable to pending litigation against the operator and joint owner
of the Company's Lafitte field.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities was $699,000 in the nine months
ended September 30, 2002 compared to net cash provided by operating activities
of $14,862,000 in the nine months ended September 30, 2001. The Company's
accompanying consolidated statements of cash flows identify major differences
between net income and net cash provided by operating activities for each of the
periods presented.
Net cash provided by investing activities totaled $7,589,000 for the nine
months ended September 30, 2002 compared to net cash used in investing
activities of $25,703,000 in 2001. The nine months ended September 30, 2002
reflects capital expenditures totaling $5,234,000 and proceeds from the sale of
oil and gas properties of $12,823,000. The nine months ended September 30, 2001
consists of capital expenditures totaling $26,155,000 and proceeds from the sale
of oil and gas properties of $452,000.
Net cash used in financing activities was $8,232,000 for the nine months
ended September 30, 2002 as compared to net cash provided by financing
activities of $7,437,000 in the prior year period. The 2002 amount includes pay
downs by the Company under its line of credit of $13,000,000. The 2002 amount
also includes proceeds from bank borrowings of $5,500,000 and production
payments of $279,000 as well as preferred stock dividends of $481,000 and
exercise of stock options of $28,000. The 2001 amounts consist of proceeds from
the issuance of common stock of $15,000,000 and pay downs by the Company under
its line of credit of $13,690,000. The 2001 amount also includes proceeds from
bank borrowings of $9,725,000, the payment of debt financing and public offering
costs of $1,695,000, changes in restricted cash of $1,255,000, and production
payments of $398,000. In addition, the 2001 amount includes preferred stock
dividends of $472,000 and proceeds from the exercise of stock warrants and
employee stock options of $210,000 and $12,000, respectively.
16
Sale of Oil and Gas Properties to Related Party
- -----------------------------------------------
On March 12, 2002, the Company, in an effort to monetize a portion of the
value created in its Burrwood and West Delta fields and enhance its liquidity
position, completed the sale of a thirty percent (30%) working interest in the
existing production and shallow rights, and a fifteen percent (15%) working
interest in the deep rights below 10,600 feet, in its Burrwood and West Delta 83
fields for $12 million to Malloy Energy Company, LLC led by Patrick E. Malloy,
III and participated in by Sheldon Appel and Joe Austin, all members of the
Company's Board of Directors. The Company received net proceeds from the sale of
approximately $11.8 million after purchase price adjustments. The sale price was
determined by discounting the present value of the acquired interest in the
fields' proved, probable and possible reserves using prevailing oil and gas
prices. The Company has retained a sixty-five percent (65%) working interest in
the existing production and shallow rights, and a thirty-two and one-half
percent (32.5%)working interest in the deep rights after the close of the
transaction. In conjunction with the sale, Malloy Energy Company, LLC, provided
a $7.7 million line of credit. The $7.7 million line of credit, which will
reduce to $5.0 million on January 1, 2003, is subordinate to the Company's
senior facility and can be used for acquisitions, drilling, development, and
general corporate purposes until December 31, 2004. Malloy Energy Company, LLC,
retains the option, during the two-year period, to convert the amount
outstanding under the credit line, and/or provide cash on any unused credit up
to a maximum of $7.7 million in the first year, reduced to $5.0 million after
December 31, 2002, into working interests in any acquisition(s) the Company may
make in Louisiana prior to January 1, 2005. The conversion of the credit line
will be on a pro-rata basis with the Company and may not exceed a maximum of
$7.7 million reduced to $5.0 million after December 31, 2002, or thirty percent
(30%) of any potential acquisition(s).
The Company recorded a gain of approximately $2.4 million in the first
quarter as a result of the sale. The Company used the proceeds to reduce
outstanding debt under its credit facility to $12.5 million.
In addition, the Company sold other non-core oil and gas properties in the
nine months ended 2002 for $978,000 and recorded a gain of approximately
$447,000.
Credit Facility
- ---------------
On November 9, 2001, the Company established a new credit facility with BNP
Paribas Bank, with an initial borrowing base of $25,000,000. The current
borrowing base, taking into effect the sale of a 30% interest in the Burrwood
and West Delta 83 fields, is $21,000,000 and will remain effective until the
next borrowing base redetermination initially scheduled to take place on or
before September 30, 2002. Due to recent drilling activities, BNP Paribas Bank
agreed to extend the borrowing base redetermination date and is currently
reviewing the borrowing base and will inform the Company of the new borrowing
base when they complete their review. Interest on the credit facility will
accrue at a rate calculated at the option of the Company as either the BNP
Paribas Bank base rate plus 0.00% to 0.50%, or LIBOR plus 1.50% - 2.50%
depending on borrowing base utilization. Interest on LIBOR-Rate borrowings is
due and payable on the last day of its respective Interest Period. Interest on
17
each Base-Rate borrowing is due and payable on the last day of each quarter. The
credit facility will mature on November 8, 2004. The credit facility requires
that the Company pay a quarterly commitment fee equal to 0.375% per annum
commitment fee each quarter based on the Company's borrowing base utilization.
Prior to maturity, no payments are required so long as the maximum borrowing
base amount exceeds the amounts outstanding under the credit facility. The
credit facility requires the Company to monitor tangible net worth and maintain
certain financial statement ratios at certain levels. Substantially all the
Company's assets are pledged to secure the credit facility. At September 30,
2002, the Company had approximately $4,000,000 available under its line of
credit.
Capital Expenditures
- --------------------
The Company had $5,200,000 in capital expenditures in the nine months ended
September 30, 2002. The Company's budget for 2002 capital expenditures was set
at the beginning of the year at $15,000,000. The budget is under constant review
during the year and could change due to actual and estimated cash flow,
commodity prices, business opportunities, and other factors. The Company expects
to fund capital expenditures for the remainder of 2002 from operating cash flow,
cash, bank borrowings and borrowings under its line of credit with Malloy Energy
Company, LLC, if necessary.
Accounting Matters
------------------
New Accounting Pronouncements
- -----------------------------
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 141, "Business Combinations" ("SFAS No. 141") immediately upon release and
(SFAS) No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142") on
January 1, 2002. SFAS No. 141 requires that all business combinations be
accounted for under the purchase method of accounting and that certain acquired
intangible assets in a business combination be recognized and reported as
assets apart from goodwill. SFAS No. 142 requires that amortization of goodwill
be replaced with periodic tests of the goodwill's impairment at least annually
in accordance with the provisions of SFAS No. 142 and that intangible assets
other than goodwill be amortized over their useful lives. The Company does not
have any identified intangible assets nor any goodwill as of December 31, 2001
or September 30, 2002. The adoption of SFAS No. 141 and 142 had no significant
impact on the Company's financial statements.
In addition, Statement of Financial Accounting Standard No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS No. 143") has been issued.
SFAS No.143 requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The statement is effective on January 1,
2003. The Company has not yet determined what, if any, impact the adoption of
this statement may have on its financial statements.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No. 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
18
assets. This Statement requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the asset. SFAS No. 144 requires companies to separately
report discontinued operations and extends that reporting to a component of an
entity that either has been disposed of (by sale, abandonment, or in a
distribution to owners) or is classified as held for sale. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell. The Company adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS
No. 144 had no significant impact on the Company's financial statements.
In April 2002, SFAS No. 145, Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections was issued
("SFAS No. 145"). SFAS No. 145 rescinds SFAS No. 4, which required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effect. SFAS No. 145 amends
SFAS No. 13 to require that certain lease modifications that have economic
effects similar to sale-leaseback transactions be accounted for in the same
manner as sale-leaseback transactions. The various provisions of this
pronouncement have different effective dates. The Company does not expect the
adoption of SFAS No. 145 to have any significant impact on the Company's
financial statements.
On July 30, 2002, SFAS No. 146, Accounting for Costs Associated with Exit
or Disposal Activities ("SFAS No. 146") was issued. SFAS No. 146 requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. The Company has not yet determined what, if
any, impact the adoption of this statement may have on its financial statements.
Quantitative and Qualitative Disclosures About Market Risk
Debt and debt-related derivatives
- ---------------------------------
The Company is exposed to interest rate risk on its long-term debt with
variable interest rates. Based on the overall interest rate exposure on variable
rate debt at September 30, 2002, a hypothetical 2% change in the interest rates
of 200 Basis points would increase interest expense by approximately $278,000
for the nine months ended September 30, 2002.
Hedging Activity
- ----------------
The Company enters into futures derivative contracts with certain of its
production. The derivatives are indexed to NYMEX Henry Hub for natural gas, and
NYMEX at Cusing for oil. The Company enters into hedging activities in order to
secure an acceptable future price relating to a portion of future production.
19
The primary objective of the hedging activities is to protect against decreases
in price during the term of the hedge.
At September 30, 2002, the Company's open forward position on its
outstanding crude oil hedging contracts was as follows:
(a) 300 barrels of oil per day "swap" at $26.42 for October through
November 2002;
(b) 300 barrels of oil per day "swap" at $26.39 for October through
November 2002;
(c) 300 barrels of oil per day "swap" at $28.75 for October 2002;
(d) 200 barrels of oil per day "swap" at $30.85 for November 2002;
(e) 300 barrels of oil per day "swap" at $28.80 for December 2002 through
February 2003;
(f) 200 barrels of oil per day "swap" at $29.07 for December 2002 through
February 2003;
(g) 100 barrels of oil per day "swap" at $28.95 for December 2002 through
February 2003;
(h) 300 barrels of oil per day "swap" at $27.45 for March 2003 through May 2003;
The fair value of the crude oil hedging contracts in place at September 30,
2002 resulted in a liability of $186,000. A 10% increase in the average NYMEX
price of crude oil would have increased this liability by $368,000 while a 10%
decrease would have reduced the liability by $367,000 and created an asset of
$181,000.
As of September 30, 2002, the Company's open forward positions on its
outstanding natural gas hedging contracts were as follows:
(a) 2000 MMBtu per day with a no cost collar of $2.50 to $3.18 per Mmbtu
through December 31, 2002;
(b) 1333 MMBtu per day with a no cost collar of $2.75 to $3.09 per Mmbtu
through December 31, 2002;
(c) 1,200 MMBtu per day "swap" at $2.87 for October through November 2002;
(d) 1,500 MMBtu per day "swap" at $2.89 for October through November 2002;
(e) 3,000 MMBtu per day "swap" at $3.50 for December 2002 through February 2003;
and
(f) 3,000 MMBtu per day with a no cost collar of $3.50 to $5.19 per Mmbtu for
January 2003 through December 2003.
The fair value of the natural gas hedging contracts in place at September
30, 2002 resulted in a liability of $610,000. A 10% increase in the average
NYMEX price of natural gas would have increased this liability by $297,000 while
a 10% decrease would have reduced the liability by $294,000.
20
Price fluctuations and the volatile nature of markets
- -----------------------------------------------------
Despite the measures taken by the Company to attempt to control price
risk, the Company remains subject to price fluctuations for natural gas and oil
sold in the spot market. Prices received for natural gas sold on the spot market
are volatile due primarily to seasonality of demand and other factors beyond the
Company's control. Domestic oil and gas prices could have a material adverse
effect on the Company's financial position, results of operations and quantities
of reserves recoverable on an economic basis.
Disclosure Regarding Forward-Looking Statement
- ----------------------------------------------
Certain statements in this quarterly report on Form 10-Q regarding future
expectations and plans for future activities may be regarded as "forward looking
statements" within the meaning of Private Securities Litigation Reform Act of
1995. They are subject to various risks, such as financial market conditions,
operating hazards, drilling risks and the inherent uncertainties in interpreting
engineering data relating to underground accumulations of oil and gas, as well
as other risks discussed in detail in the Company's Annual Report on Form 10-K
and other filings with the Securities and Exchange Commission. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct.
Controls and Procedures
-----------------------
Company management, including the Principal Executive Officer and the
acting Principal Financial Officer, have evaluated the effectiveness of
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
on that evaluation, these officers have concluded that the disclosure controls
and procedures are effective in ensuring that all material information required
to be filed in this quarterly report has been made known to them in a timely
fashion. There have been no significant changes in internal controls, or in
factors that could significantly affect internal controls, subsequent to the
date the evaluation was completed.
21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On February 8, 2000, the Company commenced a suit against the operator and joint
owner of the Lafitte Field, alleging certain items of misconduct and violations
of the letter agreement associated with the joint acquisition. The suit is
ongoing and as the Company is the plaintiff in this action, this action is not
expected to have a significantly adverse impact on the operations or financial
position of the Company.
On November 1, 2002, the 125th District Court of Harris County, Texas, set a
date in December 2002 for the jury trial on damages, and ruled as follows:
1. The Sale and Assignment between Goodrich Petroleum Company ("Goodrich")
and the operator of the Lafitte field dated September 23, 1999 assigned
to Goodrich the same rights to the 3-D seismic data that the operator
had pursuant to the operator's data use license from Texaco Exploration
and Production. (TEPI").
2. Also pursuant to the terms of that Sale and Assignment, Goodrich is
required to post 49% of the bond liability to TEPI at such time that
TEPI requests it. The Court has not determined whether TEPI has already
issued the type of request that would require Goodrich to post the 49%
of the bond liability to TEPI.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(b) Reports on Form 8-K
None.
22
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.
GOODRICH PETROLEUM CORPORATION
(registrant)
November 14, 2002 /s/ Walter G. Goodrich
- ------------------------------- -------------------------------------------
Date Walter G. Goodrich, President and
Chief Executive Officer
November 14, 2002 /s/ Robert C. Turnham
- ------------------------------- -------------------------------------------
Date Robert C. Turnham, Executive Vice-
President and Chief Operating Officer
23
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert C. Turnham, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Goodrich
Petroleum Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a)designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b)evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c)presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Robert C. Turnham
- ---------------------
Robert C. Turnham
Acting Principal Financial Officer
24
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Walter G. Goodrich, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Goodrich
Petroleum Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a)designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b)evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c)presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
d)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
e)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Walter G. Goodrich
- ----------------------
Walter G. Goodrich
Principal Executive Officer
25