SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event) January 17, 2002
BELDEN & BLAKE CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 0-20100 34-1686642
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5200 Stoneham Road, North Canton, Ohio 44720
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(Address of principal executive offices) (Zip Code)
(330) 499-1660
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Registrant's telephone number, including area code
ITEM 9. REGULATION FD DISCLOSURE
Belden & Blake Corporation ("Belden & Blake" or the "Company") is
furnishing the following information under Item 9 of this Current Report on Form
8-K.
The information in this report is furnished pursuant to Item 9 and shall
not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section,
except if the Company specifically states that the information is to be
considered "filed" under the Securities Exchange Act of 1934 or incorporates it
by reference into a filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934. This report will not be deemed an admission as to the
materiality of any information in the report that is required to be disclosed
solely by Regulation FD.
The information in this document includes forward-looking statements that
are made pursuant to Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements, and the business prospects of
Belden & Blake are subject to a number of risks and uncertainties which may
cause the Company's actual results in future periods to differ materially from
the forward-looking statements contained herein. These risks and uncertainties
include, but are not limited to, the Company's access to capital, the market
demand for and prices of oil and natural gas, the Company's oil and gas
production and costs of operation, results of the Company's future drilling
activities, the uncertainties of reserve estimates and environmental risks.
These and other risks are described in the Company's 10-K and 10-Q reports and
other filings with the Securities and Exchange Commission.
NATURAL GAS HEDGE POSITION MONETIZATION AND RESTRUCTURING
On January 17 and 18, 2002, the Company monetized 9,350 Bbtu (billion
British thermal units) of its 2002 natural gas hedge position at a weighted
average New York Mercantile Exchange ("NYMEX") price of $2.53 per Mmbtu (million
British thermal units) and 3,840 Bbtu of its 2003 natural gas hedge position at
a NYMEX price of $3.01 per Mmbtu. The Company received net proceeds of $22.7
million that will be recognized as natural gas revenue over the contract periods
in 2002 and 2003.
The Company entered into a collar for 9,350 Bbtu of its natural gas
production in 2002 with a ceiling price of $4.00 and a floor price of $2.25 per
Mmbtu. The Company also sold a floor at $1.75 per Mmbtu on this volume of gas.
This aggregate structure, herein referred to as a three-way collar, has the
effect of: 1) setting a maximum price of $4.00 per Mmbtu; 2) floating at prices
from $2.25 to $4.00 per Mmbtu; 3) locking in a price of $2.25 per Mmbtu if
prices are between $1.75 and $2.25 per Mmbtu; and 4) receiving a price of $0.50
per Mmbtu above the price if the price is $1.75 or less. All prices are based on
monthly NYMEX settle. The Company paid $1.0 million for the three-way collar
structure.
The Company used the net proceeds of $21.7 million to pay down on its
credit facility. The Company has a credit facility with a borrowing base of
$100 million. At January 22, 2002, the Company had $2.3 million of outstanding
letters of credit. At January 22, 2002, the outstanding balance under the
credit facility was $37.8 million with $59.9 million of borrowing capacity
available for general corporate purposes.
The following table summarizes, as of January 21, 2002, the Company's
deferred gains on terminated natural gas hedges. Cash has been received and the
deferred gains recorded in accumulated other comprehensive income. The deferred
gains will be recognized as increases to gas revenues during the periods in
which the hedges were originally scheduled to mature.
2002 2003
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FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
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(IN THOUSANDS)
Natural Gas Hedges Terminated
in January 2002 $4,102 $5,271 $5,254 $5,251 $2,861
To manage its exposure to natural gas or oil price volatility, the Company
may partially hedge its physical gas or oil sales prices by selling futures
contracts on the NYMEX or by selling NYMEX based commodity derivative contracts
which are placed with major financial institutions that the Company believes are
minimal credit risks. The contracts may take the form of futures contracts,
swaps, collars or options.
The Company's financial results and cash flows can be significantly
impacted as commodity prices fluctuate widely in response to changing market
conditions. Accordingly, the Company may modify its fixed price contract and
financial hedging positions by entering into new transactions or terminating
existing contracts. The following tables reflect the natural gas volumes and the
weighted average prices under financial hedges (including settled hedges), fixed
price contracts, three-way collars and costless collars at January 21, 2002:
NATURAL GAS SWAPS FIXED PRICE CONTRACTS
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ESTIMATED ESTIMATED
NYMEX PRICE WELLHEAD ESTIMATED WELLHEAD
QUARTER ENDING BBTU PER MMBTU PRICE PER MCF MMCF PRICE PER MCF
- -------------- ----- ----------- ------------- ---------- -------------
March 31, 2002 850 $ 4.95 $ 5.20 1,070 $ 4.48
June 30, 2002 -- -- -- 820 4.20
September 30, 2002 -- -- -- 690 4.32
December 31, 2002 -- -- -- 570 4.49
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850 $ 4.95 $ 5.20 3,150 $ 4.37
=== ====== ====== ===== ======
March 31, 2003 65 $ 2.50
June 30, 2003 65 2.50
September 30, 2003 65 2.50
December 31, 2003 65 2.50
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260 $ 2.50
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THREE-WAY NATURAL GAS COLLARS
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MONTHLY NYMEX SETTLE OF MONTHLY NYMEX SETTLE LOWER
$1.75 OR HIGHER THAN $1.75
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NYMEX
PRICE PER ESTIMATED NYMEX ESTIMATED
MMBTU WELLHEAD PRICE PER WELLHEAD
QUARTER ENDING BBTU FLOOR/CAP PRICE PER MCF MMBTU PRICE PER MCF
- -------------- ----- ------------- ------------- ----------- --------------
March 31, 2002 1,700 $ 2.25 - 4.00 $ 2.50 - 4.25 Monthly Monthly
June 30, 2002 2,550 2.25 - 4.00 2.40 - 4.15 NYMEX NYMEX
September 30, 2002 2,550 2.25 - 4.00 2.40 - 4.15 settle plus settle plus
December 31, 2002 2,550 2.25 - 4.00 2.47 - 4.22 $0.50 $0.65 to $0.75
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9,350 $ 2.25 - 4.00 $ 2.44 - 4.19
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NATURAL GAS COLLARS
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NYMEX
PRICE PER ESTIMATED
MMBTU WELLHEAD
BBTU FLOOR/CAP PRICE PER MCF
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March 31, 2003 1,650 $ 3.40 - 5.23 $ 3.65 - 5.48
June 30, 2003 1,650 3.40 - 5.23 3.55 - 5.38
September 30, 2003 1,650 3.40 - 5.23 3.55 - 5.38
December 31, 2003 1,650 3.40 - 5.23 3.62 - 5.45
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6,600 $ 3.40 - 5.23 $ 3.59 - 5.42
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MCF - THOUSAND CUBIC FEET MMBTU - MILLION BRITISH THERMAL UNITS
MMCF - MILLION CUBIC FEET BBTU - BILLION BRITISH THERMAL UNITS
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 hereunto duly authorized.
Date: January 22, 2002 BELDEN & BLAKE CORPORATION
(Registrant)
By: /s/ Robert W. Peshek
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Robert W. Peshek, Vice President
and Chief Financial Officer