UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934
For the quarterly period ended September 30, 1997
-----------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934
For the transition period from to
--------------------- ----------------------
Commission File Number: 1-7940
-------------------------------------------------------
Goodrich Petroleum Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 76-0466913
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)
5847 San Felipe, Suite 700, Houston, Texas 77057
- --------------------------------------------------------------------------------
(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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common shares outstanding as of November 3, 1997: 41,859,222
1
GOODRICH PETROLEUM CORPORATION
FORM 10-Q
September 30, 1997
INDEX
Page No.
--------
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets
September 30, 1997 (Unaudited) and December 31, 1996............... 3-4
Consolidated Statements of Operations (Unaudited)
Nine Months Ended September 30, 1997 and 1996...................... 5
Three Months Ended September 30, 1997 and 1996..................... 6
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1997 and 1996...................... 7
Consolidated Statements of Stockholders' Equity (Unaudited)
Nine Months Ended September 30, 1997 and 1996...................... 8
Notes to Consolidated Financial Statements............................ 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 11
PART II - OTHER INFORMATION 16
Item 1. LEGAL PROCEEDINGS.
Item 2. CHANGES IN SECURITIES.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Item 5. OTHER INFORMATION.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
2
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ........................ $ 522,247 $ 344,551
Marketable equity securities ..................... 717,400 569,700
Accounts receivable
Trade and other, net of allowance .............. 1,329,057 744,221
Accrued oil and gas revenue .................... 1,824,452 1,482,503
Accrued pipeline joint venture ................. 258,000 532,000
Prepaid insurance ................................ 149,484 235,578
Other ............................................ 25,500 4,888
---------- ----------
Total current assets ..................... 4,826,140 3,913,441
---------- ----------
PROPERTY AND EQUIPMENT
Oil and gas properties (successful efforts method) 39,898,104 19,129,512
Furniture, fixtures and equipment ................ 173,276 107,056
---------- -----------
40,071,380 19,236,568
Less accumulated depletion, depreciation
and amortization ............................... (7,792,865) (4,918,856)
---------- -----------
Net property and equipment ................. 32,278,515 14,317,712
---------- -----------
OTHER ASSETS
Investment in pipeline joint venture, net......... 2,875,714 3,616,360
Deferred charges and other investments............ 264,241 551,471
---------- ----------
3,139,955 4,167,831
---------- ----------
TOTAL ASSETS......................... $40,244,610 $22,398,984
========== ==========
See notes to consolidated financial statements.
3
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................ $ 3,032,827 $ 1,108,534
Accrued liabilities............................. 1,785,564 1,994,730
--------- ----------
Total current liabilities................. 4,818,391 3,103,264
--------- ----------
LONG TERM DEBT ................................... 19,000,000 10,000,000
OTHER LIABILITIES ................................... --- 160,520
STOCKHOLDERS' EQUITY
Series A convertible preferred stock, par value
$1.00 per share; authorized 10,000,000
shares; issued and outstanding 796,318 and
801,149 shares (liquidation preference $10
per share, aggregating to $7,963,180 and
$8,011,490).................................... 796,318 801,149
Series B convertible preferred stock, par value
$1.00 per share; authorized 10,000,000
shares; issued and outstanding 750,000
shares (liquidation preference $10 per
share, aggregating to $7,500,000).............. 750,000 ---
Common stock, par value - $0.20 per share;
authorized 100,000,000 shares; issued and
outstanding 41,859,222 and 41,804,510 shares... 8,371,845 8,360,902
Additional paid-in capital........................ 7,820,731 1,059,493
Accumulated deficit............................... (1,270,475) (896,444)
Unrealized loss on marketable equity securities... (42,200) (189,900)
---------- ----------
Total stockholders' equity................ 16,426,219 9,135,200
---------- ----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY.................... $40,244,610 $22,398,984
========== ==========
See notes to consolidated financial statements.
4
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
September 30,
-------------------
1997 1996
---- ----
REVENUES
Oil and gas sales............................. $ 8,342,881 5,454,441
Pipeline joint venture........................ 1,085,167 1,093,297
Other......................................... 408,389 459,218
---------- ----------
Total revenues.......................... 9,836,437 7,006,956
---------- ----------
EXPENSES
Lease operating expense and production taxes.. 1,644,768 1,145,016
Depletion, depreciation and amortization...... 3,850,957 2,681,208
Exploration................................... 1,055,160 953,095
Interest expense.............................. 1,065,148 611,447
General and administrative.................... 1,703,127 1,511,268
---------- ----------
Total costs and expenses................ 9,319,160 6,902,034
---------- ----------
INCOME BEFORE INCOME TAXES......................... 517,277 104,922
Income taxes ................................. --- ---
---------- ----------
NET INCOME ........................................ 517,277 104,922
Preferred stock dividends..................... 891,308 484,610
---------- ----------
LOSS APPLICABLE TO COMMON STOCK.................... $ (374,031) (379,688)
========== ==========
LOSS PER AVERAGE COMMON SHARE...................... (.01) (.01)
========== ==========
AVERAGE COMMON SHARES
OUTSTANDING................................... 41,825,983 41,804,510
========== ==========
See notes to consolidated financial statements.
5
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30,
--------------------
1997 1996
--------------------
REVENUES
Oil and gas sales............................. $ 2,746,693 1,671,302
Pipeline joint venture........................ 266,166 267,396
Other......................................... 157,704 254,751
---------- ----------
Total revenues.......................... 3,170,563 2,193,449
---------- ----------
EXPENSES
Lease operating expense and production taxes.. 559,487 440,183
Depletion, depreciation and amortization...... 1,201,028 817,144
Exploration................................... 656,122 188,316
Interest expense.............................. 378,952 198,914
General and administrative.................... 613,730 437,856
---------- ----------
Total costs and expenses................ 3,409,319 2,082,413
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES.................. (238,756) 111,036
Income taxes ................................. --- ---
---------- ----------
NET INCOME (LOSS).................................. (238,756) 111,036
Preferred stock dividends..................... 313,891 160,190
---------- ----------
LOSS APPLICABLE TO COMMON STOCK.................... $ (552,647) (49,154)
========== ==========
LOSS PER AVERAGE COMMON SHARE...................... $ (.01) ---
========== ==========
AVERAGE COMMON SHARES
OUTSTANDING ................................. 41,859,222 41,804,510
========== ==========
See notes to consolidated financial statements.
6
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months
Ended September 30,
--------------------
1997 1996
--------------------
OPERATING ACTIVITIES
Net income....................................... $ 517,277 104,922
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, depreciation and amortization....... 3,850,957 2,681,208
Amortization of leasehold costs................ 192,345 143,882
Amortization of deferred debt financing costs.. 27,694 55,713
Gain on sale of oil and gas properties......... (18) (95,252)
Capital expenditures charged to income......... 486,667 510,637
Payment of contingent liability................ (82,751) (11,713)
Payment of other liabilities................... (240,779) (295,552)
----------- ----------
4,751,392 3,093,845
Changes in current assets and liabilities
(exclusive of acquisition):
Accounts receivable............................ 375,373 239,529
Prepaid insurance and other.................... 77,150 118,691
Accounts payable............................... 1,924,293 (273,091)
Accrued liabilities............................ (151,618) (36,613)
----------- -----------
Net cash provided by operating activities... 6,976,590 3,142,361
----------- ----------
INVESTING ACTIVITIES
Proceeds from sales of oil and gas properties..... 370,000 325,629
Capital expenditures.............................. (6,019,396) (3,127,952)
Cash paid in connection with business combination. (9,250,540) (45,372)
----------- -----------
Net cash used in investing activities........ (14,899,936) (2,847,695)
----------- -----------
FINANCING ACTIVITIES
Proceeds from bank borrowings..................... 10,000,000 800,000
Principal payments of bank borrowings............. (1,000,000) (750,000)
Payment of debt financing costs................... --- (10,256)
Retirement of preferred stock..................... (7,650) (74,362)
Preferred stock dividends......................... (891,308) (484,610)
----------- -----------
Net cash provided by
(used in) financing activities.......... 8,101,042 (519,228)
----------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................................. 177,696 (224,562)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD............................... 344,551 613,450
----------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD.....................................$ 522,247 388,888
=========== ==========
See notes to consolidated financial statements.
7
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30 1997 and 1996
(Unaudited)
Series A Series B
Preferred Stock Preferred Stock Common Stock
-------------------- ------------------- ---------------------
Number Number Number
of Shares Par Value of Shares Par Value of Shares Par Value
--------- --------- --------- --------- --------- ---------
Balance at December 31, 1995. 734,859 $ 734,859 --- $ --- 41,804,510 $ 8,360,902
Net income................... --- --- --- --- --- ---
Unrealized appreciation of
marketable securities
available for sale......... --- --- --- --- --- ---
Preferred stock dividends.... --- --- --- --- --- ---
Retirement of preferred stock (10,000) (10,000) --- --- --- ---
Reinstatement of preferred
stock under appraisal
rights..................... 76,290 76,290 --- --- --- ---
-------- -------- ------- -------- ---------- ----------
Balance at September 30, 1996 801,149 $ 801,149 --- $ --- 41,804,510 $ 8,360,902
======== ======== ======= ======== ========== ==========
Balance at December 31, 1996. 801,149 $ 801,149 --- $ --- 41,804,510 $ 8,360,902
Net income................... --- --- --- --- --- ---
Unrealized appreciation of
marketable securities
available for sale......... --- --- --- --- --- ---
Issuance of Series B
Preferred Stock............ --- --- 750,000 750,000 --- ---
Preferred stock dividends.... --- --- --- --- --- ---
Conversion of preferred stock
to common stock........... (3,831) (3,831) --- --- 23,944 4,789
Employee stock grants........ --- --- --- --- 30,768 6,154
Retirement of preferred stock (1,000) (1,000) --- --- --- ---
-------- -------- ------- -------- ---------- ----------
Balance at September 30, 1997 796,318 $ 796,318 750,000 $ 750,000 41,859,222 $ 8,371,845
======== ======== ======= ======== ========== ==========
Unrealized
Gain(Loss)on
Additional Marketable Total
Paid-In Accumulated Equity Stockholders'
Capital Deficit Securities Equity
---------- ----------- ------------ ------------
Balance at December 31, 1995 $1,200,140 $ (633,089) $ --- $ 9,662,812
Net income................... --- 104,922 --- 104,922
Unrealized appreciation of
marketable securities
available for sale......... --- --- 42,200 42,200
Preferred stock dividends.... --- (484,610) --- (484,610)
Retirement of preferred stock (64,362) --- --- (74,362)
Reinstatement of preferred
stock under appraisal
rights..................... (76,290) --- --- ---
---------- -------- --------- ----------
Balance at September 30, 1996 $1,059,488 $(1,012,777) $ 42,200 $ 9,250,962
========= ========== ========= ==========
Balance at December 31, 1996. $1,059,493 $ (896,444) $ (189,900) $ 9,135,200
Net income................... --- 517,277 --- 517,277
Unrealized appreciation of
marketable securities
available for sale......... --- --- 147,700 147,700
Issuance of Series B
Preferred Stock............ 6,750,000 --- --- 7,500,000
Preferred stock dividends.... --- (891,308) --- (891,308)
Conversion of preferred stock
to common stock........... (958) --- --- ---
Employee stock grants........ 18,846 --- --- 25,000
Retirement of preferred stock (6,650) --- --- (7,650)
--------- -------- --------- ----------
Balance at September 30, 1997 $7,820,731 $(1,270,475) $ (42,200) $ 16,426,219
========= ========== ========= ==========
See notes to consolidated financial statements.
8
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997 and 1996
(Unaudited)
NOTE A - BASIS OF PRESENTATION
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
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, 1996.
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, 1997 and the results of its operations for the nine and three
months ended September 30, 1997 and 1996.
The results of operations for the nine and three month periods ended September
30, 1997 are not necessarily indicative of the results to be expected for the
full year.
NOTE B - ACQUISITION OF OIL AND GAS PROPERTIES
On January 31, 1997, the Company acquired the oil and gas properties of La/Cal
Energy Partners II ("La/Cal II") and certain working interest owners for a
purchase price of $16.5 million ("La/Cal II Acquisition"). The purchase price
was comprised of $1.5 million cash, the assumption of $7.5 million of La/Cal II
long-term debt and the issuance of 750,000 shares of Series B convertible
preferred stock of the Company ("Series B Preferred Stock") with an aggregate
liquidation value of $7.5 million. In connection with the La/Cal II Acquisition,
the Company borrowed an additional $9 million under its bank credit facility,
which was used to repay $7.5 million of La/Cal II debt and to pay the $1.5
million cash portion of the purchase price. The Series B Preferred Stock has a
dividend rate of 8.25% per annum and each share of Series B Preferred Stock is
convertible into 8.92 shares of common stock. Such shares are redeemable by the
Company after January 31, 2001 at $10.00 per share.
NOTE C - 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 PRPs have estimated that the remaining cost of long-term clean-up of the
site will be approximately $3.5 million with the Company's percentage of
9
responsibility to be approximately 3.05%. As of September 30, 1997, the Company
has paid approximately $211,000 in costs related to this matter and accrued an
additional $199,000 for the remaining liability. The EPA and PRPs will continue
to evaluate the site and revise estimates for the long-term clean-up of the
site. These costs have not been discounted to their present value. 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 for costs related to the clean-up
of the site is borne jointly and severally among all PRPs. Therefore, the
ultimate cost of the clean-up to the Company could be significantly higher than
the amount presently accrued for this liability.
Additionally, the Company is party to a number of lawsuits arising in the normal
course of business. The Company has defended and intends to continue to defend
these actions vigorously and believes, based on currently available information,
that adverse results or settlements, if any, in excess of insurance coverage or
amounts already provided, will not be material to its financial position or
results of operations.
NOTE D - INCOME TAXES
No provision for income taxes has been recorded for the Company due to its
ability to utilize net operating loss carryforwards to offset financial taxable
income.
NOTE E - PRO FORMA FINANCIAL RESULTS OF OPERATIONS
Selected results of operations on a pro forma basis as if the acquisition
transactions had occurred on January 1, 1997 for the nine months ended September
30, 1997 and January 1, 1996 for the nine months ended September 30, 1996
follow:
For the nine months For the nine months
ended ended
September 30, 1997 September 30, 1996
------------------- -------------------
Revenues................... $ 10,357,543 10,144,544
Net income................. 751,761 749,405
Loss applicable to
common stock......... (191,110) (199,268)
Loss per average
common share........ $ --- ---
NOTE F - SUBSEQUENT EVENT
On October 16, 1997, the Company sold its 20% interest in an natural gas
pipeline joint venture. The adjusted sales price was $3,564,000 and the Company
expects to recognize a gain on the sale (both pre-tax and after-tax) in the
fourth quarter of approximately $700,000.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
1997 ACQUISITION
On January 31, 1997, the Company acquired the oil and gas properties of La/Cal
Energy Partners II ("La/Cal II") and certain working interest owners (the
"La/Cal II Properties") for a purchase price of $16.5 million ("La/Cal II
Acquisition"). The purchase price was comprised of $1.5 million cash, the
assumption of $7.5 million of La/Cal II long-term debt and the issuance of
750,000 shares of Series B convertible preferred stock of the Company ("Series B
Preferred Stock") with an aggregate liquidation value of $7.5 million. In
connection with the La/Cal II Acquisition, the Company borrowed an additional $9
million under its bank credit facility, which was used to repay $7.5 million of
La/Cal II debt and to pay the $1.5 million cash portion of the purchase price.
The Series B Preferred Stock has a dividend rate of 8.25% per annum and each
share of Series B Preferred Stock is convertible into 8.92 shares of common
stock. Such shares are redeemable by the Company after January 31, 2001 at
$10.00 per share.
CHANGES IN RESULTS OF OPERATIONS
Nine Months Ended September 30, 1997 Versus Nine Months Ended September 30,1996
Total revenues for the nine months ended September 30, 1997 amounted to
$9,836,000 and were $2,829,000 higher than the $7,007,000 for the nine months
ended September 30, 1996. Oil and gas sales were $2,888,000 higher due
substantially to increased revenues as a result of the La/Cal II Acquisition
(effective January 31, 1997) along with increased gas volumes on the
pre-acquisition properties.
The following table reflects the production volumes and pricing information for
the periods presented.
Nine months Nine months
ended September 30, 1997 ended September 30, 1996
---------------------------- ---------------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
Gas (Mcf)......... 1,878,128 $ 2.41 1,194,704 $ 2.44
Oil (Bbls)........ 208,707 18.33 126,139 20.14
Lease operating expense and production taxes were $1,645,000 for the nine months
ended September 30, 1997, versus $1,145,000 for the nine months ended September
30, 1996, or $500,000 higher due primarily to the addition of the La/Cal II
Properties. Depletion, deprecation and amortization was $3,851,000 for the nine
11
months ended September 30, 1997, versus $2,681,000 for the nine months ended
September 30, 1996, or $1,170,000 higher than the nine months ended 1996 due
substantially to the addition of the La/Cal II Properties. Included in
depletion, depreciation and amortization is depletion of oil and gas properties
of $3,071,000 and $1,908,000, respectively. The 1997 amount includes $113,000
related to accelerated depletion on a well to be plugged and abandoned. The
Company incurred $1,055,000 of exploration expense in the nine months ended
September 30 1997, versus $953,000 in 1996, or $102,000 lower, such amounts
included dry hole costs of $487,000 in the first nine months of 1997 versus
$511,000 in 1996.
Interest expense was $1,065,000 in the nine months ended September 30, 1997
compared to $611,000 in the nine months of 1996 due to borrowings by the Company
of $9,000,000 on January 31, 1997 in connection with the La/Cal II Acquisition,
resulting in higher average debt outstanding.
General and administrative expenses amounted to $1,703,000 in the nine months
ended September 30, 1997 versus $1,511,000 in 1996.
The Company's preferred stock dividends amounted to $891,000 for the nine months
ended September 30, 1997 compared to $485,000 in 1996. The increase was due to
dividends paid on the Company's Series B Convertible Preferred Stock issued on
January 31, 1997 in connection with the La/Cal II Acquisition.
Three Months Ended September 30, 1997 Versus Three Months
Ended September 30,1996
Total revenues for the three months ended September 30, 1997 amounted to
$3,171,000 and were $978,000 higher than the $2,193,000 for the three months
ended September 30, 1996. Oil and gas sales were $1,075,000 higher due primarily
to increased oil and gas revenues as a result of the La/Cal II Acquisition along
with increased gas volumes on the pre-acquisition properties offset, somewhat by
lower oil prices received.
The following table reflects the production volumes and pricing information for
the periods presented.
Three months Three months
ended September 30, 1997 ended September 30, 1996
--------------------------- ----------------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
Gas (Mcf).......... 608,521 $ 2.55 381,139 $ 2.26
Oil (Bbls)......... 70,620 16.89 39,093 20.75
Lease operating expense and production taxes were $559,000 for the three months
ended September 30, 1997, versus $440,000 for the three months ended September
30, 1996, or $119,000 higher due substantially to the addition of the La/Cal II
Properties. Depletion, deprecation and amortization was $1,201,000 for the three
months ended September 30, 1997, versus $817,000 for the three months ended
12
September 30, 1996, or $384,000 higher than the third quarter of 1996 due
primarily to the addition of the La/Cal II Properties. Included in depletion,
depreciation and amortization is depletion of oil and gas properties of
$1,013,000 and $619,000, respectively. The Company incurred $656,000 of
exploration expense in the third quarter of 1997, versus $188,000 in the third
quarter of 1996, or $468,000 higher primarily due to dry hole costs of $473,000
in the third quarter of 1997 versus $0 in 1996.
Interest expense was $379,000 in the three months ended September 30, 1997
compared to $199,000 in the third quarter of 1996 due to the Company carrying an
additional $9,000,000 in debt during the 1997 quarter as the result of
additional borrowings in connection with the La/Cal II Acquisition, resulting in
higher average debt outstanding.
General and administrative expenses amounted to $613,000 in the three months
ended September 30, 1997 versus $438,000 in the third quarter of 1996.
The Company's preferred stock dividends amounted to $314,000 for the three
months ended September 30, 1997 compared to $160,000 for the prior year. The
increase is due to dividends paid on the Company's Series B Preferred Stock
issued on January 31, 1997 in connection with the La/Cal II Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $6,977,000 in the nine months
ended September 30, 1997 compared to $3,142,000 in the nine months ended
September 30, 1996. 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 used in investing activities totaled $14,900,000 for the first nine
months of 1997 compared to $2,848,000 in 1996. The nine months ended September
30, 1997 reflects $9,251,000 cash paid in connection with the La/Cal II
Acquisition and $6,019,000 in capital expenditures offset by $370,000 in
proceeds from the sale of certain oil and gas properties located in Montana. The
nine months ended September 30, 1996 reflects $3,128,000 in capital expenditures
offset by $326,000 in proceeds from the sale of certain oil and gas properties
in Montana and North Dakota.
Net cash provided by financing activities was $8,101,000 for the current period
as compared to net cash used in financing activities of $519,000 in the prior
year period. The 1997 amount included the borrowing of $9,000,000 by the Company
under its line of credit which was used to payoff the debt assumed in the La/Cal
II Acquisition and to pay the cash portion of the purchase price. The current
period also includes preferred dividends of $891,000 (Series A and Series B),
whereas the prior year period consists primarily of preferred stock dividends of
$485,000 (Series A only).
13
The Company has a credit facility with a bank which provides for a total
borrowing base determined by the bank every six months based in part, on the
Company's oil and gas reserve information. Such borrowing base was $21,000,000
at September 30, 1997. The maturity date for all amounts drawn under the bank
credit facility is June 1, 2000. Interest is based on either of two methods at
the option of the Company: the bank's prime lending rate or LIBOR plus 2%.
Interest rates are set on specific draws for one, two, three or six month
periods, also at the option of the Company. The Company's credit facility
requires that minimum net worth and debt service ratios be maintained by the
Company. Accordingly, the Company had $1,548,000 available for the payment of
dividends at September 30, 1997. The amount outstanding under this facility as
of September 30, 1997 was $19,000,000.
The Company had $6,019,000 in capital expenditures in the nine months ended
September 30, 1997. The Company plans to incur capital expenditures in the
amount of approximately $1,500,000 in the remainder of 1997. The Company expects
to fund such expenditures from operating cash flows and additional borrowings
under its line of credit.
SUBSEQUENT EVENT
On October 16, 1997, the Company sold its 20% interest in a natural gas pipeline
joint venture. The adjusted sales price was $3,564,000 and the Company expects
to recognize a gain on the sale (both pre-tax and after-tax) in the fourth
quarter of approximately $700,000. The majority of the proceeds were used to pay
down the Company's line of credit by $2,500,000. Upon the completion of the
sale, the Company's borrowing base under its line of credit was reduced to
$19,000,000.
RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share." The
purpose of SFAS No. 128 is to simplify computation of earnings per share ("EPS")
and to make the U.S. standard for computing EPS compatible with the EPS
standards of other countries and with that of the International Accounting
Standards Committee. The effective date for the application of SFAS No. 128 is
for both interim and annual periods after December 15, 1997. Earlier application
is not permitted. The Company does not expect the application of SFAS No. 128 to
have a material impact on its EPS calculation.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this news release regarding future expectations and plans
for future activities may be regarded as "forward looking statements" within the
meaning of the 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
14
engineering data relating to underground accumulations of oil and gas, as well
as other risks discussed in detail in the Company's Annual Report or 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.
15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
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
4.1 Fourth Amendment to Credit Agreement between Goodrich
Petroleum Company of Louisiana, GPC, Inc. of Louisiana
and Compass Bank dated January 31, 1997.
4.2 Fifth Amendment to Credit Agreement between Goodrich
Petroleum Company of Louisiana, GPC, Inc. of Louisiana
and Compass Bank dated January 31, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
16
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 4, 1997 /s/ Walter G. Goodrich
- -------------------------------- ---------------------------------
Date Walter G. Goodrich, President and
Chief Executive Officer
November 4, 1997 /s/ Roland L. Frautschi
- -------------------------------- ---------------------------------
Date Roland L. Frautschi, Senior Vice
President, Chief Financial Officer
and Treasurer
17