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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
COMMISSION FILE NUMBER 333-12707
MARINER ENERGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 86-0460233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
580 WESTLAKE PARK BLVD., SUITE 1300
HOUSTON, TEXAS 77079
(Address of principal executive offices including Zip Code)
(281) 584-5500
(Registrant's telephone number)
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 requirement for the past 90 days. Yes No X
--- ---
Note: The Company is not subject to the filing requirements of the Securities
Exchange Act of 1934. This quarterly report is filed pursuant to contractual
obligations imposed on the Company by an Indenture, dated as of August 1,
1996, under which the Company is the issuer of certain debt.
As of May 10, 2000, there were 1,380 shares of the registrant's common
stock outstanding.
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MARINER ENERGY, INC.
FORM 10-Q
MARCH 31, 2000
TABLE OF CONTENTS
Page
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PART I - FINANCIAL INFORMATION
Item 1. Balance Sheets at March 31, 2000 (unaudited) and December 31, 1999......................................... 1
Statements of Operations for the three months ended March 31, 2000 and 1999 (unaudited).................... 2
Statements of Cash Flows for the three months ended March 31, 2000 and 1999 (unaudited).................... 3
Notes to Financial Statements (unaudited).................................................................. 4
Independent Certified Public Accountants' Report on Review of Interim Financial Information................ 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk................................................ 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ........................................................................................ 12
Item 2. Changes in Securities and Use of Proceeds................................................................. 12
Item 3. Defaults Upon Senior Securities........................................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders....................................................... 12
Item 5. Other Information ........................................................................................ 12
Item 6. Exhibits and Reports on Form 8-K.......................................................................... 12
SIGNATURE ......................................................................................................... 13
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PART I, ITEM 1.
MARINER ENERGY, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
March 31, December 31,
2000 1999
----------- -------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 8 $ 123
Receivables 30,616 23,683
Prepaid expenses and other 5,980 4,891
----------- -------------
Total current assets 36,604 28,697
----------- -------------
PROPERTY AND EQUIPMENT:
Oil and gas properties, at full cost:
Proved 398,797 379,301
Unproved, not subject to amortization 81,161 81,897
----------- -------------
Total 479,958 461,198
Other property and equipment 4,009 3,982
Accumulated depreciation, depletion
and amortization (211,601) (199,233)
----------- -------------
Total property and equipment, net 272,366 265,947
----------- -------------
OTHER ASSETS, Net of amortization 2,733 2,868
----------- -------------
TOTAL ASSETS $ 311,703 $ 297,512
=========== =============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,326 $ 30,269
Accrued liabilities 24,708 25,389
Accrued interest 2,688 5,329
----------- -------------
Total current liabilities 36,722 60,987
----------- -------------
OTHER LIABILITIES 4,816 4,226
LONG-TERM DEBT:
Subordinated notes 99,685 99,673
Revolving credit facility 49,400 42,600
Senior credit facility 25,000 25,000
----------- -------------
Total long-term debt 174,085 167,273
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STOCKHOLDER'S EQUITY
Common stock, $1 par value; 2,000 shares authorized,
1,379 and 1,378 issued
and outstanding at March
31, 2000 and December 31, 1999, respectively 1 1
Additional paid-in capital 202,318 172,318
Accumulated deficit (106,239) (107,293)
----------- -------------
Total stockholder's equity 96,080 65,026
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 311,703 $ 297,512
=========== =============
The accompanying notes are an integral part of these financial statements.
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MARINER ENERGY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS)
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
REVENUES:
Oil sales $ 7,145 $ 1,884
Gas sales 16,134 9,137
------------ ------------
Total revenues 23,279 11,021
------------ ------------
COSTS AND EXPENSES:
Lease operating expenses 4,193 2,575
Depreciation, depletion and amortization 12,927 7,466
General and administrative expenses 1,728 1,538
------------ ------------
Total costs and expenses 18,848 11,579
------------ ------------
OPERATING INCOME (LOSS) 4,431 (558)
INTEREST:
Income 15 10
Expense (3,392) (2,940)
------------ ------------
INCOME (LOSS) BEFORE TAXES 1,054 (3,488)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET INCOME (LOSS) $ 1,054 $ (3,488)
============ ============
The accompanying notes are an integral part of these financial statements.
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MARINER ENERGY, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
Three Months Ended March 31,
----------------------------
2000 1999
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OPERATING ACTIVITIES:
Net Income (loss) $ 1,054 $ (3,488)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation, depletion and amortization 12,970 7,704
Changes in operating assets and liabilities:
Receivables (6,933) 157
Other current assets (1,089) 917
Other assets 135 (38)
Accounts payable and accrued liabilities (24,265) (3,306)
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Net cash provided by (used for) operating activities (18,128) 1,946
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INVESTING ACTIVITIES:
Additions to oil and gas properties (18,760) (23,855)
Additions to other property and equipment (27) (148)
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Net cash used for investing activities (18,787) (24,003)
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FINANCING ACTIVITIES:
Net Proceeds from (repayment of) revolving credit facility 6,800 (900)
Proceeds from sale of stock to Parent 30,000 23,003
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Net cash provided by financing activities 36,800 22,103
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INCREASE (DECREASE) IN CASH AND CASH EQUIV. (115) 46
CASH AND CASH EQUIV. AT BEGINNING OF PERIOD 123 2
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CASH AND CASH EQUIV. AT END OF PERIOD $ 8 $ 48
=========== ==========
The accompanying notes are an integral part of these financial statements.
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MARINER ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The financial statements of Mariner Energy, Inc. (the "Company") included
herein have been prepared, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC"). Accordingly, they reflect all
adjustments (consisting only of normal, recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the financial
results for the interim periods. Certain information and notes normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Form 10-K for the year ended December 31, 1999. The results of
operations and cash flows for the three months ending March 31, 2000 and 1999
are not necessarily indicative of the results for the full year.
2. Oil and Gas Properties
Under the full cost method of accounting for oil and gas properties, the net
carrying value of proved oil and gas properties is limited to an estimate of the
future net revenues, discounted at 10%, from proved oil and gas reserves based
on period-end prices and costs plus the lower of cost or estimated fair value of
unproved properties.
3. Revolving Credit Facility
In April 2000 the Company requested a $10 million borrowing base increase
under the terms of the Revolving Credit Agreement. This increase was approved in
May 2000, raising the borrowing base from $60 million to $70 million.
4. Affiliate Transactions
In March and May of 2000, the Company received cash equity contributions
indirectly from Mariner Energy LLC, the Company's parent ("Parent"), of $30
million and $25 million, respectively. The March equity contribution was used to
reduce accounts payable and accrued liabilities, and the May equity contribution
was used to repay the Company's $25 million Senior Credit Facility with Enron
North America Corp. (ENA). These equity contributions were made with proceeds
from Mariner Energy LLC's three-year $112 million term loan with ENA. Due to
certain restrictions with the Company's Indenture and Revolving Credit
Agreement, neither the cash flows from operations or from asset sales would be
available to repay any portion of this term loan.
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5. Commitments and Contingencies
HEDGING PROGRAM -- The Company conducts a hedging program with respect to
its sales of crude oil and natural gas using various instruments whereby monthly
settlements are based on the differences between the price or range of prices
specified in the instruments and the settlement price of certain crude oil and
natural gas futures contracts quoted on the open market. The instruments
utilized by the Company differ from futures contracts in that there is no
contractual obligation which requires or allows for the future delivery of the
product.
The following table sets forth the Company's position as of March 31,
2000:
PRICE
NOTIONAL -----------------------------
TIME PERIOD QUANTITIES FLOOR CEILING FIXED FAIR VALUE
----------- ---------- ----- ------- ------ ----------
(in millions)
NATURAL GAS (MMBTU)
April 1 - December 31, 2000
Collar purchased 2,263 $2.25 $ 2.49 $ (1.0)
Fixed price swap purchased 7,445 $ 2.18 (5.8)
January 1 - December 31, 2001
Fixed price swap purchased 4,501 2.18 (2.9)
January 1 - December 31, 2002
Fixed price swap purchased 1,831 2.18 (0.9)
CRUDE OIL (MBBLS)
April 1 - December 31, 2000
Fixed price swap purchased 1,155 18.46 (7.8)
Subsequent to March 31, 2000, the Company sold a market sensitive oil swap
for a notional quantity of 423 MBbls at an average price of $24.17 per bbl for
the time period May 1, 2000 through December 31, 2000.
The fair value of our hedging instruments was determined based on a
broker's forward price quote and a NYMEX forward price quote. As of March 31,
2000 a commodity price increase of 10% would have resulted in an unfavorable
change in fair value of $7.5 million and a commodity price decrease of 10% would
have resulted in a favorable change in fair value of $7.5 million.
LITIGATION -- The Company, in the ordinary course of business, is a
claimant and/or a defendant in various legal proceedings, including proceedings
as to which the Company has insurance coverage. The Company does not consider
its exposure in these proceedings, individually and in the aggregate, to be
material.
6. New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which was amended in June 1999 by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133 - an amendment of FASB
Statement No. 133." SFAS No. 133, as amended, is effective for fiscal years
beginning after June 15, 2000 and establishes accounting and reporting standards
for derivative instruments and for hedging activities. The Company is currently
evaluating what effect, if any, SFAS No. 133 will have on the Company's
financial statements. The Company will adopt this statement no later than
January 1, 2001.
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INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT ON REVIEW OF INTERIM FINANCIAL
INFORMATION
Board of Directors and Stockholder
Mariner Energy, Inc.
Houston, Texas
We have reviewed the accompanying balance sheet of Mariner Energy, Inc. as of
March 31, 2000 and the related statements of operations and cash flows for the
three-month periods ended March 31, 2000 and 1999. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists primarily of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with auditing standards generally
accepted in the United Sates of America, the balance sheet as of December 31,
1999, and the related statements of operations, stockholder's equity, and cash
flows for the year ended December 31, 1999 (not presented herein), and in our
report dated March 28, 2000, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1999 is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Houston, Texas
May 11, 2000
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PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following review of operations for the three-month periods ended
March 31, 2000 and 1999 should be read in conjunction with the financial
statements of the Company and Notes thereto included elsewhere in this Form 10-Q
and with the Financial Statements, Notes, and Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999, filed
with the Securities and Exchange Commission on March 30, 2000.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
All statements other than statements of historical fact included in
this quarterly report on Form 10-Q, including, without limitation, statements
contained in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" regarding the Company's financial position, business
strategy, plans and objectives of management of the Company for future
operations, and industry conditions, are forward-looking statements. 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 have been correct, and actual results could differ materially from the
Company's expectations. Factors that could influence these results include, but
are not limited to, oil and gas price volatility, results of future drilling,
availability of drilling rigs, future production and costs, liquidity and other
factors described in the Company's annual report on Form 10-K for the year ended
December 31, 1999, filed with the Securities and Exchange Commission on March
30, 2000.
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RESULTS OF OPERATIONS
The following table sets forth certain information regarding results of
operations for the periods shown:
Three Months Ended March 31,
----------------------------
2000 1999
--------- ---------
Total revenue, $MM $ 23.3 $ 11.0
EBITDA(a), $MM 17.4 6.9
Net income (loss), $MM 1.1 (3.5)
Production:
Oil and condensate (Mbbls) 369 169
Natural Gas (Mmcf) 6,720 4,915
Natural Gas equivalents (Mmcfe) 8,934 5,929
Average realized sales prices:
Oil and condensate ($/Bbl) $ 19.36 $ 11.17
Natural Gas ($/Mcf) 2.40 1.86
Natural Gas equivalents ($/Mcfe) 2.61 1.86
Cash Margin(b) per Mcfe:
Revenue (pre-hedge) $ 3.13 $ 1.86
Hedging impact (0.52) --
Lease operating expenses (0.47) (0.43)
Gross G&A costs (0.44) (0.56)
--------- ---------
Cash Margin $ 1.70 $ 0.87
========= =========
Capital Expenditures, $MM:
Exploration:
Leasehold and G&G costs $ 2.7 $ 4.8
Drilling 1.3 0.6
Development & other 11.7 16.1
Capitalized G&A and interest costs 3.1 2.5
--------- ---------
Total $ 18.8 $ 24.0
========= =========
(a) - EBITDA equals earnings before interest, income taxes, depreciation,
depletion, amortization and impairment of oil and gas properties. EBITDA
should be used as a supplement to, and not as a supplement for, net
earnings and cash provided by operating activities (as disclosed in the
financial statements) in analyzing the Company's results of operations
and liquidity.
(b) - Cash margin measures the net cash generated by a company's operations
during a given period, without regard to the period such cash is
physically received or spent by the company.
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RESULTS OF OPERATIONS FOR THE FIRST QUARTER OF 2000
NET PRODUCTION increased 51% to 8.9 Bcfe for the first quarter of 2000 from
5.9 Bcfe for the first quarter of 1999. Production from our offshore Gulf of
Mexico properties increased to 7.8 Bcfe in the quarter from 3.8 Bcfe in the same
period of 1999, as a result of production from the Dulcimer project at Garden
Banks 367, which began in April 1999, and production from the Pluto project at
Mississippi Canyon 718, which began in December 1999, offset in part by natural
production declines on other producing properties. Our production for the
remainder of 2000 is anticipated to increase, as a result of the expected
commencement of production from the Apia and Black Widow fields in the second
and fourth quarter, respectively.
HEDGING ACTIVITIES for the first quarter of 2000 decreased our average
realized natural gas sales price received by $0.24 per Mcf and revenues by $1.6
million. Hedging related to crude oil during the first quarter of 2000 decreased
our average realized crude oil sales price received by $8.14 per Bbl and
revenues by $3.0 million. There were no hedging activities for natural gas or
crude oil in the same period of 1999.
OIL AND GAS REVENUES increased 112% to $23.3 million for the first quarter of
2000 from $11.0 million for the first quarter of 1999, primarily due to a 51%
increase in production and to a 40% increase in realized prices, to $2.61 per
Mcfe for the first quarter from $1.86 per Mcfe in the same period of 1999.
LEASE OPERATING EXPENSES increased 62% to $4.2 million for the first quarter
of 2000, from $2.6 million for the first quarter of 1999, due to the addition of
four new offshore wells.
DEPRECIATION, DEPLETION, AND AMORTIZATION EXPENSE (DD&A) increased 72% to
$12.9 million for the first quarter of 2000 from $7.5 million for the first
quarter of 1999, as a result of the 51% increase in equivalent volumes produced
and an increase in the unit-of-production depreciation, depletion, and
amortization rate to $1.45 per Mcfe from $1.26 per Mcfe. The higher rate for the
first quarter of 2000 was due to the occurrence of three dry holes since the
first quarter of 1999, and does not include the impact on the rate of two
potentially significant discoveries during the same period for which proved
reserves had not yet been recorded.
GENERAL AND ADMINISTRATIVE EXPENSES, which are net of overhead reimbursements
received by us from other working interest owners, increased 13% to $1.7 million
for the first quarter of 2000 from $1.5 million for the first quarter of 1999,
due to less overhead recoveries from partners during the first quarter of 2000
as compared to the same period in 1999.
INTEREST EXPENSE for the first quarter of 2000 increased 17% to $3.4 million
from $2.9 million in the first quarter of 1999, due to additional borrowings by
us under the $25 million Senior Credit Facility obtained in April 1999.
LOSS BEFORE INCOME TAXES was $1.1 million for the first quarter of 2000, as a
result of the oil and gas revenue increase, offset in part by increased expenses
as discussed above.
LIQUIDITY, CAPITAL EXPENDITURES AND CAPITAL RESOURCES
As of March 31, 2000, we had a working capital deficit of approximately $0.1
million, compared to a working capital deficit of $32.3 million at December 31,
1999. The reduction in the working capital deficit was primarily a result of a
$30.0 million cash equity contribution from our Parent, which was used to reduce
accounts payable and accrued liabilities. Subsequent to March 31, 2000, we
received an additional $25.0 million cash equity contribution from our parent.
The proceeds of this cash equity contribution was used to pay off our Senior
Credit Facility with ENA. We expect our 2000 capital expenditures, including
capitalized indirect costs and reduced by proceeds of any unproved property
dispositions, to be approximately $75 million, which would exceed cash flow from
operations. There can be no assurance that our access to capital will be
sufficient to meet our needs for capital. As such, we may be required to reduce
our planned capital
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expenditures and forego planned exploratory drilling or monetize portions of our
proved reserves or undeveloped inventory if additional capital resources are not
available to us on terms we consider reasonable.
Net cash used by operating activities was $18.1 million in the first three
months of 2000, a decrease of $20.1 million from the same period of 1999. A
period to period increase of approximately $9.8 million in operating cash flow
before changes in operating assets and liabilities was due primarily to higher
production and higher commodity prices. A decrease of $29.9 million in net cash
used for changes in working capital was caused by a paydown of accounts payable
and accrued liabilities with the proceeds of a cash equity contribution from our
parent.
Cash used in investing activities in the first three months of 2000 decreased
to $18.8 million from $24.0 million for the same period in 1999 due primarily to
lower leasehold acquisition and development expenditures.
Cash provided by financing activities was $36.8 million for the first three
months of 2000 compared to $22.1 million for the same period in 1999. Our
primary source of cash for the first three months of 2000 was $30.0 million in
proceeds from a cash equity contribution indirectly from Mariner Energy LLC, and
$6.8 million of additional net borrowings under our Revolving Credit Facility.
The energy markets have historically been very volatile, and there can be no
assurance that oil and natural gas prices will not be subject to wide
fluctuations in the future. To reduce the effects of the volatility of the price
of oil and natural gas on our operating cash flow, management has adopted a
policy of hedging oil and natural gas prices from time to time through the use
of commodity futures, options and swap agreements. While the use of these
hedging arrangements limits the downside risk of adverse price movements, it may
also limit future gains from favorable movements.
The following table sets forth the increase (decrease) in our oil and natural
gas sales as a result of hedging transactions and the effects of hedging
transactions on prices during the periods indicated.
Three Months Ended March 31,
------------------------------
2000 1999
------------ ------------
Decrease in natural gas sales (in thousands)............................... $ (1,638) $ --
Decrease in oil sales (in thousands)....................................... (3,002) --
Effect of hedging transactions on average natural gas sales price
(per Mcf).................................................................. (0.24) --
Effect of hedging transactions on average oil sales price (per Bbl)........ (8.14) --
A table setting forth our open hedging positions as of March 31, 2000 is
contained in footnote 5. "Commitments and Contingencies" in the footnotes to the
financial statements in Part I, Item 1. of this report.
Hedging arrangements for 2000 cover approximately 58% of our anticipated
equivalent production for the year. Hedging arrangements for 2001 and 2002 cover
approximately 15% and 4% of our anticipated equivalent production for those
years, respectively.
Capital expenditures for the first three months of 2000 were $15.7 million
and $3.1 million of capitalized indirect costs. Capital expenditures included
$4.0 million for exploration activities and $11.7 million for development.
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During the three-month period ended March 31, 2000, we announced a late-1999
discovery in the Deepwater Gulf of Mexico on our Devils Tower prospect located
in Mississippi Canyon block 773 in 5,610 feet of water. An appraisal well is
planned for the second quarter of 2000 with a second appraisal well anticipated
in the fourth quarter of 2000. In May 2000 we sold 30% of our 50% working
interest in the discovery, reducing our future development cost investment in
the discovery. During the first quarter of 2000, a successful appraisal well was
also drilled on our Aconcagua prospect located in Mississippi Canyon Block 305
and one unsuccessful Deepwater Gulf exploratory well was drilled. Development
operations were completed on our Apia discovery located in Garden Banks block
73, and production began in late April 2000.
During the remainder of 2000, we expect to complete drilling operations on
two to four exploratory wells, all in the Deepwater Gulf. We also expect to
drill the first appraisal well on the Devils Tower discovery, and to complete
the production well and related facilities necessary for our Black Widow
discovery to commence production in the fourth quarter of 2000. Total capital
expenditures for 2000, including capitalized indirect costs and reduced by
proceeds from sales of unproved property interests, are expected to be
approximately $75 million.
Debt outstanding as of March 31, 2000 was approximately $174.1 million,
including $99.7 million of senior subordinated notes, $49.4 million drawn on the
Revolving Credit Facility, and $25 million drawn on the Senior Credit Facility
with ENA. Following the semi-annual borrowing base redetermination, in May 2000,
the borrowing base under the Revolving Credit Facility was increased from $60
million to $70 million.
In March and May of 2000, we received cash equity contributions indirectly
from Mariner Energy LLC, our parent company, of $30 million and $25 million,
respectively. The March equity contribution was used to reduce accounts payable
and accrued liabilities, and the May equity contribution was used to repay our
$25 million Senior Credit Facility with ENA. These equity contributions were
made with proceeds from Mariner Energy LLC's three-year $112 million term loan
with ENA. Due to certain restrictions with our Indenture and Revolving Credit
Agreement, neither the cash flows from operations or from asset sales would be
available to repay any portion of this term loan.
There can be no assurance that funds available to us under the Revolving
Credit Facility will be sufficient for us to fund our currently planned capital
expenditures. We may be required to reduce our planned capital expenditures and
forego planned exploratory drilling or to monetize portions of our proved
reserves or undeveloped inventory if additional capital resources are not
available to us on terms we consider reasonable.
We believe there will be adequate cash flow in order for us to fund our
remaining planned activities in 2000. A portion of our capital needs during the
remainder of 2000 are expected to be funded by the sale of certain unproved
property interests. Our capital resources still may not be sufficient to meet
our anticipated future requirements for working capital, capital expenditures
and scheduled payments of principal and interest on our indebtedness. There can
be no assurance that anticipated growth will be realized, that our business will
generate sufficient cash flow from operations or that future borrowings or
equity capital will be available in an amount sufficient to enable us to service
our indebtedness or make necessary capital expenditures. In addition, depending
on the levels of our cash flow and capital expenditures (the latter of which
are, to a large extent, discretionary), we may need to refinance a portion of
the principal amount of our senior subordinated debt at or prior to maturity.
However, there can be no assurance that we would be able to obtain financing on
acceptable terms to complete a refinancing.
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PART I, ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
See Part I, Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 21, 2000, Mariner Energy, Inc. sold one share of common stock to its
parent, Mariner Energy LLC for $30,000,000. The proceeds were used to reduce
accounts payable and accrued liabilities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith.
27.1 Financial Data Schedule
(b) The Company filed no Current Reports on Form 8-K during the quarter ended
March 31, 2000.
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SIGNATURE
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.
MARINER ENERGY, INC.
Date: May 14, 2000 /s/ Frank A. Pici
--------------------------------
Frank A. Pici
Vice President of Finance and
Chief Financial Officer
(Principal Financial Officer and
Officer Duly Authorized to Sign
on Behalf of the Registrant)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule