-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GbA0jRsOV4211Ipr1K1C+leCcUreAkYCDGehV/PX7oUd9bs+l2vWDpFO2/D9UG65 RugiiLkbEI5ysaFfdWCrAg== 0000833320-96-000011.txt : 19960816 0000833320-96-000011.hdr.sgml : 19960816 ACCESSION NUMBER: 0000833320-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURLINGTON RESOURCES INC CENTRAL INDEX KEY: 0000833320 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 911413284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09971 FILM NUMBER: 96613823 BUSINESS ADDRESS: STREET 1: 5051 WESTHEIMER STREET 2: SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7136249500 MAIL ADDRESS: STREET 1: 5051 WESTHEIMER STREET 2: STE 1400 CITY: HOUSTON STATE: TX ZIP: 77056 10-Q 1 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED 06/30/96 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 June 30, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-9971 BURLINGTON RESOURCES INC. (Exact name of registrant as specified in its charter) Delaware 91-1413284 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 5051 Westheimer, Suite 1400, Houston, Texas 77056 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 624-9500 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. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding Common Stock, par value $.01 per share, as of June 30, 1996 125,358,153 PART 1 - FINANCIAL INFORMATION ITEM 1. Financial Statements BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
SECOND QUARTER SIX MONTHS -------------------------- ------------------------- 1996 1995 1996 1995 ----------- ----------- ---------- ----------- (Dollars in Millions, Except per Share Amounts) Revenues ................................................. $ 295 $ 211 $ 551 $ 426 Costs and Expenses ....................................... 199 211 392 424 ----- ----- ----- ----- Operating Income ......................................... 96 -- 159 2 Interest Expense ......................................... 28 28 57 54 Other Income (Expense) - Net ............................. 1 (1) 2 (1) ----- ----- ----- ----- Income (Loss) Before Income Taxes ........................ 69 (29) 104 (53) Income Tax Expense (Benefit) ............................. 21 (31) 18 (50) ----- ----- ----- ----- Net Income (Loss) ........................................ $ 48 $ 2 $ 86 $ (3) ===== ===== ===== ===== Earnings (Loss) per Common Share ......................... $ .38 $ .02 $ .68 $(.02) ===== ===== ===== =====
See accompanying Notes to Consolidated Financial Statements. -2- BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, December 31, 1996 1995 -------- ------------ (Dollars in Millions) ASSETS Current Assets Cash and Short-term Investments ...................................... $ 19 $ 20 Accounts Receivable .................................................. 171 210 Inventories .......................................................... 30 18 Other Current Assets ................................................. 18 17 ------ ------ 238 265 ------ ------ Oil & Gas Properties (Successful Efforts Method) ....................... 5,893 5,870 Other Properties ....................................................... 507 499 ------ ------ 6,400 6,369 Accumulated Depreciation, Depletion and Amortization ............... 2,586 2,602 ------ ------ Properties - Net ................................................ 3,814 3,767 ------ ------ Other Assets ........................................................... 123 133 ------ ------ Total Assets ................................................... $4,175 $4,165 ====== ====== LIABILITIES Current Liabilities Accounts Payable .................................................... $ 218 $ 214 Taxes Payable ....................................................... 79 59 Accrued Interest .................................................... 23 20 Dividends Payable ................................................... 17 17 Other Current Liabilities ........................................... 34 12 ------ ------ 371 322 ------ ------ Long-term Debt ......................................................... 1,358 1,350 ------ ------ Deferred Income Taxes .................................................. 91 110 ------ ------ Other Liabilities and Deferred Credits ................................. 132 163 ------ ------ Commitments and Contingent Liabilities STOCKHOLDERS' EQUITY Common Stock, Par Value $.01 Per Share (Authorized 325,000,000 shares; Issued 150,000,000 shares) ............................................................ 2 2 Paid-in Capital ........................................................ 2,934 2,935 Retained Earnings ...................................................... 253 202 ------ ------ 3,189 3,139 Cost of Treasury Stock (24,641,847 and 23,425,621 shares for 1996 and 1995, respectively) ...................................................... 966 919 ------ ------ Common Stockholders' Equity ............................................ 2,223 2,220 ------ ------ Total Liabilities and Common Stockholders' Equity .............. $4,175 $4,165 ====== ======
See accompanying Notes to Consolidated Financial Statements. -3- BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
SIX MONTHS -------------------- 1996 1995 -------- -------- (Dollars in Millions) Cash Flows From Operating Activities Net Income (Loss).................................................. $ 86 $ (3) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities Depreciation, Depletion and Amortization ........................ 164 191 Deferred Income Taxes ........................................... (19) (66) Exploration Costs ............................................... 23 21 Working Capital Changes Accounts Receivable ........................................... 39 20 Inventories ................................................... (12) 13 Other Current Assets .......................................... (1) (6) Accounts Payable .............................................. 4 57 Taxes Payable ................................................. 20 (17) Accrued Interest .............................................. 3 4 Other Current Liabilities ..................................... 22 (2) Other ........................................................... (57) (11) ----- ----- Net Cash Provided By Operating Activities ................. 272 201 ----- ----- Cash Flows From Investing Activities Additions to Properties ........................................... (316) (302) Proceeds from Sales and Other ..................................... 119 103 ----- ----- Net Cash Used In Investing Activities ..................... (197) (199) ----- ----- Cash Flows From Financing Activities Proceeds from Long-term Financing ................................. 150 150 Reduction in Long-term Debt ....................................... (141) (98) Dividends Paid .................................................... (35) (35) Treasury Stock Transactions - Net ................................. (47) 2 Other ............................................................. (3) (23) ----- ----- Net Cash Used In Financing Activities ..................... (76) (4) ----- ----- Decrease in Cash and Short-term Investments ......................... (1) (2) Cash and Short-term Investments Beginning of Year ................................................. 20 20 ----- ----- End of Period ..................................................... $ 19 $ 18 ===== =====
See accompanying Notes to Consolidated Financial Statements. -4- BURLINGTON RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The 1995 Annual Report on Form 10-K of Burlington Resources Inc. (the "Company") includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report on Form 10-Q ("Quarterly Report"). The financial statements for the periods presented herein are unaudited, condensed and do not contain all information required by generally accepted accounting principles to be included in a full set of financial statements. In the opinion of management, all material adjustments necessary to present fairly the results of operations have been included. All such adjustments are of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year. Earnings (loss) per common share is based on the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding was 127 million for the first six months of 1996 and 1995. 2. DIVESTITURE PROGRAM AND REORGANIZATION On July 11, 1996, the Company announced it will accelerate its on-going divestiture program. Since 1994, the Company has sold over 9,000 wells. Over the next twelve months, the Company plans to sell its interest in approximately 20,000 wells thus reducing its pre-1994 well count over 50 percent. The proved reserves associated with this prospective divestiture approximate 800 BCFE while the related production represents about 10 percent of the Company's currently produced volumes. This accelerated divestiture program will allow the Company to reorganize and reduce the number of its operating areas from five to three. The accelerated divestiture program and reorganization will result in more than a 20 percent reduction in the Company's 1995 level of production expenses and employee count and over a 10 percent reduction in corporate administrative expenses. The Company plans to substantially complete the reorganization prior to the end of the third quarter of 1996 and, accordingly, will record a charge of approximately $30 million for severance and other related exit costs. 3. COMMITMENTS AND CONTINGENT LIABILITIES On August 12, 1996, the 270th Judicial District Court of Harris County, Texas gave its preliminary approval to a settlement in the previously reported lawsuit styled Caroline Altheide, et al. v. Meridian Oil Inc., et al. The settlement is subject to notice to class members and to final approval by the court. If approved, the settlement will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. -5- The Company and its subsidiaries are named defendants in numerous lawsuits and named parties in numerous governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits and other proceedings cannot be predicted with certainty, management expects these matters, including the above-described Altheide litigation, will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition and Liquidity The total long-term debt to capital (total long-term debt and stockholders' equity) ratio at June 30, 1996 and December 31, 1995 was 38 percent. In February 1996, the Company issued $150 million of 6.875% Debentures due February 15, 2026. The net proceeds were used for general corporate purposes, including acquisition of oil and gas properties, repayment of commercial paper, capital expenditures and repurchases of the Company's common stock. The Company's credit facilities are comprised of a $600 million revolving credit agreement that expires in July 2001 and a $300 million revolving credit agreement that expires July 1997. The $300 million revolving credit agreement is renewable annually by mutual consent and was renewed in July 1996. As of June 30, 1996, there were no borrowings outstanding under the credit facilities, although borrowing capacity is reduced by outstanding commercial paper. At June 30, 1996, the Company had outstanding commercial paper borrowings of $11 million at an average interest rate of 5.65 percent. The Company also has the capacity to issue $200 million of debt securities under a shelf registration statement filed with the Securities and Exchange Commission. During the first six months of 1996, the Company repurchased approximately 1.4 million shares of its common stock for $52 million. Since December 1988, the Company repurchased approximately 29 million shares under three 10 million share repurchase authorizations. On July 10, 1996, the Company's Board of Directors authorized the purchase of an additional 10 million shares in the open market from time to time depending on market conditions. Net cash provided by operating activities for the first six months of 1996 was $272 million compared to $201 million in 1995. The increase was primarily due to higher operating income in 1996. Net cash provided by operating activities in 1995 included the sale of a receivable related to a claim resulting from the breach of a take-or-pay gas contract and the sale of gas-in-storage inventory for approximately $39 million and $20 million, respectively. The Company continues to divest marginal and non-strategic properties to maintain its high quality asset base. The Company divested its interest in approximately 3,600 wells and related facilities for approximately $69 million during the first six months of 1996. On July 11, 1996, the Company announced it will accelerate this on-going divestiture program. -6- The Company is involved in certain environmental proceedings and other related matters. Although it is possible that new information or future developments could require the Company to reassess its potential exposure related to these matters, the Company believes, based upon available information, the resolution of these issues will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. Capital Expenditures Capital expenditures for the first six months of 1996 totaled $316 million compared to $302 million in 1995. Capital expenditures are currently projected to be approximately $585 million for all of 1996 and are expected to be primarily for the development and exploration of oil and gas properties, reserve acquisitions, and plant and pipeline expenditures. Capital expenditures will be funded from internal cash flow supplemented, if needed, by external financing. Dividends On July 10, 1996, the Board of Directors declared a common stock quarterly dividend of $.1375 per share, payable October 1, 1996. Results of Operations - Second Quarter 1996 Compared to Second Quarter 1995 The Company reported net income of $48 million or $.38 per share for the second quarter of 1996 compared to net income of $2 million or $.02 per share in 1995. Operating income for the second quarter of 1996 was $96 million compared to $125 thousand in 1995. Revenues were $295 million for the second quarter of 1996 compared to $211 million in 1995. Natural gas sales prices improved 43 percent to $1.75 per MCF and gas sales volumes improved 4 percent to 1,193 MMCF per day which increased revenues $58 million and $5 million, respectively. Average oil sales prices improved 19 percent to $20.29 per barrel and oil sales volumes improved 5 percent to 50.4 MBbls per day which increased revenues $15 million and $4 million, respectively. Gas and oil sales volumes increased primarily due to continued development of the Company's oil and gas properties and producing property acquisitions. Costs and expenses were $199 million for the second quarter of 1996 compared to $211 million in 1995. The decrease is primarily due to the Company's adoption of SFAS No. 121, effective September 30, 1995 which reduced unit-of-production depletion and depreciation costs by $12 million. The effective income tax rate was an expense of 30 percent for the second quarter of 1996 compared to a benefit of 108 percent in 1995. The increased tax expense in 1996 is a result of higher pretax income and a decline in non-conventional fuel tax credits earned. The 1995 beneficial tax rate is due to a 1995 pre-tax loss and the effect of non-conventional fuel tax credits. -7- Results of Operations - Six Months 1996 Compared to Six Months 1995 The Company reported net income of $86 million or $.68 per share for the first six months of 1996 compared to a net loss of $3 million or $.02 per share in 1995. Operating income for the first six months of 1996 was $159 million compared to $2 million in 1995. Revenues were $551 million for the first six months of 1996 compared to $426 million in 1995. Average natural gas sales prices improved 35 percent to $1.65 per MCF and natural gas sales volumes improved 3 percent to 1,186 MMCF per day which increased revenues $93 million and $10 million, respectively. Average oil sales prices improved 14 percent to $19.14 per barrel and oil sales volumes improved 4 percent to 49.2 MBbls per day which increased revenues $21 million and $6 million, respectively. Gas and oil sales volumes increased primarily due to continued development of the Company's oil and gas properties and producing property acquisitions. The revenue increases were partially offset by a $5 million decrease in intrastate natural gas sales and other revenues primarily resulting from the sale of the intrastate pipeline systems in February 1995. Costs and expenses were $392 million for the first six months of 1996 compared to $424 million in 1995. The decrease is primarily due to the Company's adoption of SFAS No. 121, effective September 30, 1995 which reduced unit-of-production depletion and depreciation costs by $24 million. Additionally, general and administrative expenses declined by $8 million and intrastate natural gas purchases decreased $3 million. The decrease was partially offset by a $2 million increase in production and processing related expenses resulting from a 4 percent increase in 1996 production levels. Interest expense was $57 million for the first six months of 1996 compared to $54 million in 1995 due to higher interest rates. The effective income tax rate was an expense of 17 percent for the first six months of 1996 compared to a benefit of 95 percent in 1995. The increased tax expense in 1996 is a result of higher pretax income and a decline in non-conventional fuel tax credits earned. The 1995 beneficial tax rate is due to a 1995 pre-tax loss and the effect of non-conventional fuel tax credits. Other Matters On July 11, 1996, the Company announced it will accelerate its on-going divestiture program. Since 1994, the Company has sold over 9,000 wells. Over the next twelve months, the Company plans to sell its interest in approximately 20,000 wells thus reducing its pre-1994 well count over 50 percent. The proved reserves associated with this prospective divestiture approximate 800 BCFE while the related production represents about 10 percent of the Company's currently produced volumes. This accelerated divestiture program will allow the Company to reorganize and reduce the number of its operating areas from five to three. The accelerated divestiture program and reorganization will result in more than a 20 percent reduction in the Company's 1995 level of production expenses and employee count and over a 10 percent reduction in corporate administrative expenses. The Company plans to substantially complete the reorganization prior -8- to the end of the third quarter of 1996 and, accordingly, will record a charge of approximately $30 million for severance and other related exit costs. Forward-looking Statements This Quarterly Report contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in reports previously filed with the Securities and Exchange Commission. -9- PART II - OTHER INFORMATION ITEM 1. Legal Proceedings See Note 3 of Notes to Consolidated Financial Statements. ITEM 6. Exhibits and Reports on Form 8-K A. Exhibits The following exhibits are filed as part of this report. Exhibit Nature of Exhibit Page 4.1 The Company and its subsidiaries either * have filed with the Securities and Exchange Commission or upon request will furnish a copy of any instrument with respect to long-term debt of the Company. 11.1 Earnings (Loss) Per Share 12 12.1 Ratio of Earnings to Fixed Charges 13 27.1 Financial Data Schedule ** * Exhibit incorporated by reference. ** Exhibit required only for filings made electronically using the Securities and Exchange Commission's EDGAR System. B. Reports on Form 8-K The Company filed a Form 8-K dated June 4, 1996, which included as an exhibit a cautionary statement relating to forward-looking statements. The Company filed a Form 8-K dated July 25, 1996, which included as an exhibit a Press Release dated July 11, 1996 announcing an accelerated divestiture program and reorganization and the authorization to repurchase an additional 10 million shares of common stock. Items 2, 3, 4, and 5 of Part II are not applicable and have been omitted. -10- Pursuant to the requirements of Section 13 (or 15(d)) 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. BURLINGTON RESOURCES INC. (Registrant) By /s/ John E. Hagale ------------------------- John E. Hagale Executive Vice President and Chief Financial Officer By /s/ Hays R. Warden ------------------------- Hays R. Warden Senior Vice President and Controller, and Chief Accounting Officer Date: August 14, 1996 -11- EX-11 2 EARNINGS (LOSS) PER SHARE BURLINGTON RESOURCES INC. EARNINGS (LOSS) PER SHARE EXHIBIT 11.1 (UNAUDITED)
SECOND QUARTER 1996 1995 --------------------------- --------------------------- Earnings Shares Earnings Shares --------------------------- --------------------------- (Dollars in Millions, Except per Share Amounts) Primary earnings (loss) per common share Net earnings (loss) available for common stock and weighted average number of common shares outstanding $ 48 125,847,741 $ 2 126,564,350 Stock options assumed exercised - net - 442,959 - 492,207 ---------- ----------- ---------- ----------- Total net earnings (loss) and primary common shares $ 48 126,290,700 $ 2 127,056,557 ========== =========== ========== =========== Primary earnings (loss) per common share $ .38 $ .02 ========== ========== Fully diluted earnings (loss) per common share Net earnings (loss) available for common stock and weighted average number of common shares outstanding $ 48 125,847,741 $ 2 126,564,350 Stock options assumed exercised - net - 518,857 - 591,774 ---------- ----------- ---------- ----------- Total net earnings (loss) and fully diluted common shares $ 48 126,366,598 $ 2 127,156,124 ========== =========== ========== =========== Fully diluted earnings (loss) per common share $ .38 $ .02 ========== ==========
SIX MONTHS --------------------------------------------------------- 1996 1995 --------------------------- --------------------------- Earnings Shares Loss Shares --------------------------- --------------------------- (Dollars in Millions, Except per Share Amounts) Primary earnings (loss) per common share Net earnings (loss) available for common stock and weighted average number of common shares outstanding $ 86 126,089,794 $ (3) 126,537,339 Stock options assumed exercised - net - 464,492 - 512,395 ---------- ----------- ---------- ----------- Total net earnings (loss) and primary common shares $ 86 126,554,286 $ (3) 127,049,734 ========== =========== ========== =========== Primary earnings (loss) per common share $ .68 $ (.02) ========== ========== Fully diluted earnings (loss) per common share Net earnings (loss) available for common stock and weighted average number of common shares outstanding $ 86 126,089,794 $ (3) 126,537,339 Stock options assumed exercised - net - 703,938 - 512,395 ---------- ----------- ---------- ----------- Total net earnings (loss) and fully diluted common shares $ 86 126,793,732 $ (3) 127,049,734 ========== =========== ========== =========== Fully diluted earnings (loss) per common share $ .68 $ (.02) ========== ==========
-12- EX-12 3 RATIO OF EARNINGS TO FIXED CHARGES BURLINGTON RESOURCES INC. RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1 (UNAUDITED)
Six Months Ended June 30, -------------------- 1996 1995 -------- ------- (Dollars in Millions, Except Ratio Amounts) Earnings Income (Loss) Before Income Taxes ......................... $104 $(53) Add Interest and fixed charges ............................. 57 54 Portion of rent under long-term operating leases representative of an interest factor ......... 3 3 ---- ---- Total Earnings Available for Fixed Charges ................ $164 $ 4 ==== ==== Fixed Charges Interest and fixed charges ................................ $ 57 $ 54 Portion of rent under long-term operating leases representative of an interest factor ............ 3 3 Capitalized interest ...................................... 1 1 ---- ---- Total Fixed Charges ....................................... $ 61 $ 58 ==== ==== Ratio of Earnings to Fixed Charges (1) ....................... 2.69x .06x ==== ====
(1) Earnings Available for Fixed Charges for 1995 are inadequate to cover Fixed Charges in the amount of approximately $54 million. -13- EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STAEMENTS. 1000000 6-MOS DEC-31-1996 JUN-30-1996 19 0 171 0 30 238 6400 2586 4175 371 0 0 0 2 2221 4175 551 551 392 392 (2) 0 57 104 18 86 0 0 0 86 0.68 0.68
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