<PAGE>
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 March 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 333-31375*
-------------
FORMAN PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0954774
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (Identification No.)
650 POYDRAS STREET - SUITE 2200
NEW ORLEANS, LOUISIANA 70130-6101
(Address of principal executive offices) (Zip code)
(504) 586-8888
(Registrant's telephone number, including area code)
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 [_]
As of May 10, 1999, there were 76,800 shares of the Registrant's Voting Common
Stock, no par value, and 13,200 shares of the Registrant's Non-voting Common
Stock, no par value, outstanding.
* The Commission file number refers to a Form S-4 Registration Statement filed
by the Company under the Securities Act of 1933, which became effective
September 26, 1997.
<PAGE>
FORMAN PETROLEUM CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
PART I
Page No.
Item 1. Financial Information:
Balance Sheets as of March 31, 1999 and
December 31, 1998 1
Statement of Operations and Accumulated
Deficit for the Three Month Periods
Ended March 31, 1999 and March 31, 1998 2
Statement of Cash Flows for the Three Month
Periods Ended March 31, 1999 and
March 31, 1998 3
Notes to Financial Statements 4-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-18
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 18
PART II
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of
Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 20-22
Signatures 23
ii
<PAGE>
PART I
ITEM 1. FINANCIAL INFORMATION
FORMAN PETROLEUM CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------ ------------------
<S> <C> <C>
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 279,244 $ 1,474,488
Accounts receivable 78,567 47,830
Oil and gas revenue receivable 1,318,796 656,433
Unbilled well costs 20,063 11,324
Prepaid expenses 303,846 297,154
Advance to operator 486,911 1,200,000
------------ ------------
Total current assets 2,487,427 3,687,229
------------ ------------
PROPERTY AND EQUIPMENT, at cost:
Oil and gas properties, full cost method 79,374,879 77,067,569
Unevaluated oil and gas properties 5,217,859 4,485,359
Other property and equipment 1,720,533 1,718,757
------------ ------------
86,313,271 83,271,685
Less - accumulated depreciation, depletion and amortization (60,952,228) (59,511,084)
------------ ------------
Net property and equipment 25,361,043 23,760,601
------------ ------------
OTHER ASSETS:
Deferred financing costs
(net of accumulated amortization) 5,119,819 5,360,234
Recapitalization costs - 384,313
Funds on deposit in escrow 498,058 493,481
------------ ------------
TOTAL ASSETS $ 33,466,347 $ 33,685,858
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
--------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 4,108,379 $ 2,378,512
Interest payable 7,874,970 5,512,640
Undistributed oil and gas revenues 1,161,728 1,590,223
Current portion of note payables 68,388,212 68,309,653
------------ ------------
Total current liabilities 81,533,289 77,791,028
------------ ------------
Notes payable (long-term portion) 14,008 17,121
Mandatorily redeemable Preferred Stock, no par value,
1,000,000 authorized shares, 200,000 shares outstanding 12,844,277 12,360,322
STOCKHOLDERS' DEFICIT:
Common stock, no par value, authorized 1,000,000
shares; issued and outstanding 90,000 shares 1,000 1,000
Treasury stock (10) (10)
Accumulated deficit (60,926,217) (56,483,603)
------------ ------------
Total stockholder's deficit (60,925,227) (56,482,613)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $ 33,466,347 $ 33,685,858
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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FORMAN PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------------------
1999 1998
--------------------- ---------------------
<S> <C> <C>
Revenues:
Oil and gas sales $ 2,602,557 $ 4,207,558
Interest income 4,792 164,693
Overhead reimbursements 13,945 20,363
Other income 4,493 (16,871)
------------ -----------
Total revenues 2,625,787 4,375,743
------------ -----------
Costs and expenses:
Production taxes 124,905 156,697
Lease operating expenses 926,288 904,544
General and administrative expenses 618,230 528,996
Interest expense 2,582,642 2,448,324
Recapitalization expense 650,822 -
Depreciation, depletion and amortization 1,681,558 2,550,993
------------ -----------
Total expenses 6,584,445 6,589,554
------------ -----------
Net loss from operations (3,958,658) (2,213,811)
Provision for income taxes - -
------------ -----------
Net loss (3,958,658) (2,213,811)
Preferred stock dividends (473,539) (408,698)
------------ -----------
Net loss attributable to common shares $ (4,432,197) $(2,622,509)
============ ===========
Net loss per share $(49.25) $(29.14)
============ ===========
Weighted average shares outstanding 90,000 90,000
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
FORMAN PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,958,658) $(2,213,811)
Adjustments to reconcile net loss to net cash provided
by operating activities-
Depreciation and amortization 1,681,558 2,550,993
Withdrawal from interest escrow account - 2,449,601
Write-off of recapitalization costs 384,313
Change in assets and liabilities-
(Increase) in oil and gas revenue receivable (662,363) (85,550)
(Increase) in accounts receivable (30,737) (13,619)
(Increase) in unbilled well costs and prepaids (8,739) (162)
(Increase) in prepaid expenses (6,692) -
Increase in interest payable 2,362,330 -
Increase (Decrease) in accounts payable 1,729,867 (219,611)
(Decrease) Increase in undistributed oil and gas revenues (428,495) 213,383
Decrease in advance to operator 713,089 -
Increase in notes payable 75,446 -
----------- -----------
Net cash provided by operating activities 1,850,919 2,681,224
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to oil and gas properties (3,039,810) (3,059,404)
(Increase) Reduction in escrow account (4,577) 48,882
Purchase of other property and equipment (1,776) (23,171)
----------- -----------
Net cash used in investing activities (3,046,163) (3,033,693)
----------- -----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repayment of notes payable - (2,941)
Deferred financing costs - (8,904)
----------- -----------
Net cash used in financing activities - (11,845)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,195,244) (364,314)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,474,488 457,869
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 279,244 $ 93,555
=========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest $ - $ -
=========== ===========
Income taxes $ - $ -
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FORMAN PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
1. INTERIM FINANCIAL STATEMENTS
The financial statements of the Company at March 31, 1999 and for the three
month period then ended are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim periods. The financial statements should be read in
conjunction with the financial statements and notes thereto, for the year ended
December 31, 1998 contained in the Company's Form 10-K (file number 333-31375)
filed with the Commission on March 31, 1999.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings Per Share", which simplifies the computation of
earnings per share ("EPS"). SFAS 128 is effective for financial statements
issued for periods ending after December 15, 1997, and requires restatement for
all prior period EPS data presented. EPS calculated under SFAS 128 is the same
as those indicated on the Statement of Operations for the respective periods.
3. ISSUANCE OF NOTES
On June 3, 1997 the Company completed the private sale to Jefferies & Company,
Inc. ("Jefferies") of 70,000 units ("Note Units") consisting of $70 million
principal amount of 13.5% Senior Secured Notes due 2004, Series A (the "13.5%
Notes") and warrants to purchase 29,067 shares of Common Stock, no par value
(the "Common Stock"), of the Company at a price of $65,667,000 in a transaction
not registered under the Securities Act (the "Act") in reliance upon Section
4(2) of the Act and Rule 506 of Regulation D under the Act. Jefferies thereupon
offered and resold the Note Units only to qualified institutional buyers and a
limited number of institutional accredited investors at an initial price to such
purchasers of $68,467,000. Concurrently with the offering of the Note Units,
the Company completed a private sale to Jefferies of 200,000 units ("Equity
Units") consisting of 200,000 shares of Series A Cumulative Preferred Stock (the
"Preferred Stock") and warrants to purchase 14,533 shares of Common Stock. The
Equity Units were sold to Jefferies for $9,200,000 in a transaction not
registered under the Securities Act in reliance upon Section 4 (2) of the Act
and Rule 506 of Regulation D under the Act. Jefferies thereupon offered and
resold the Equity Units only to qualified institutional buyers and a limited
number of institutional accredited investors at an initial price to such
purchasers of $10,000,000. The offerings and sale of the Note Units and the
Equity Units are referred to herein as the "Offerings".
4
<PAGE>
The net proceeds to the Company from the Offerings were approximately $74.9
million. A portion of the net proceeds (approximately $9.5 million) was
segregated into a capitalized interest account to pay interest on the Notes
through June 1, 1998. The Company used the remaining net proceeds of the
Offerings as follows: (i) approximately $35.2 million was used to repay all of
the outstanding indebtedness (including accrued interest and associated fees)
due under the Endowment Energy Partners ("EEP) and Endowment Energy Co-
Investment Partnership ("EECIP") loans; (ii) approximately $10.5 million was
used to repay all of the outstanding indebtedness (including accrued interest
and associated fees) due under the Joint Energy Development Investments Limited
Partnership loan; (iii) $2.6 million was used to purchase from EEP and EECIP a
7.5% overriding royalty interest in the Company's Lake Enfermer Field, Manila
Village Field and Boutte Field; (iv) $5.0 million was used in connection with
the Company's acquisition from Forman Petroleum Corporation II ("FPCII"), a
company whose sole stockholder is McLain J. Forman (the Company's Chairman and
principal stockholder), all of FPCII's interest in the Bayou Fer Blanc Field and
the West Gueydan Field, of which $1.5 million was paid to FPCII, $1.0 million
was used to pay bank debt and $2.5 million was used to pay trade payables to
third parties; (v) Jefferies received a fee of $1.9 million for financial
advisory services provided to the Company and also received a warrant to
purchase 4,844 shares of Common Stock at the initial exercise price of $1.00 per
share; and (vi) $0.9 million was used to pay expenses of the Offerings. The
remaining net proceeds from the Offerings of $9.4 million were used for capital
expenditures, working capital and other general corporate purposes.
4. INCOME TAXES
As discussed in Note 3, the Company issued a second class of stock on June 3,
1997, effectively terminating its S Corporation election. As a result, the
Company is subject to Federal and state income taxes for the results of
operations subsequent to June 2, 1997. In addition, due to the termination of
the Company's status as an S Corporation for federal income tax purposes, the
Company was also required to establish a net deferred tax liability calculated
at the applicable Federal and state tax rates resulting primarily from financial
reporting and income tax reporting basis differences in oil and gas properties.
Accordingly, a net deferred tax liability of $5,081,000 was accrued at June 3,
1997. The Company has a net deferred tax asset at March 31, 1999 that has been
fully reserved due to the Company's operating losses.
5. PER SHARE AMOUNTS
Historical and pro forma net loss per share amounts are calculated by dividing
historical and pro forma net loss by the weighted average number of common
shares outstanding (90,000 for each period presented).
5
<PAGE>
6. FORWARD-LOOKING STATEMENTS
The discussion of Liquidity and Capital Resources in Notes 7 and 8 to these
Financial Statements includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in Notes 7 and 8 are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, such forward-looking statements
are based on numerous assumptions (some of which may prove to be incorrect) and
are subject to risks and uncertainties which could cause the actual results to
differ materially from the Company's expectations. Such risks and uncertainties
include, but are not limited to, the timing and extent of changes in commodity
process for oil and gas, the need to develop and replace reserves, environmental
risks, drilling and operating risks, risks related to exploration and
development, uncertainties about the estimates of reserves, competition,
government regulations and the ability of the Company to meet its stated
business goals, issues and problems which may develop as the Company continues
to assess its Year 2000 readiness, as well as other risks and uncertainties
discussed in the Company's filings with the Securities and Exchange Commission
(the "Cautionary Statements"). The Company undertakes no obligation to update
or revise any forward-looking statements, whether as a result of changes in
actual results, changes in assumptions or other factors affecting such
statements. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.
7. LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficit at March 31, 1999 of $79 million,
resulting primarily from declines in both prices and production from 1998
levels, and from the acceleration of long term debt due to the default discussed
in Note 8 below.
The Company believes that its cash on hand plus the expected normal cash flow
from operations and available vendor financing will be not sufficient to fund
its working capital needs for the remainder of 1999, even though exploration and
development projects have been deferred. As expected, the receipt of the
advance payment for the December 1998 gas previously reported will negatively
impact the Company's ability to make the next scheduled interest payment on the
Notes due on June 1, 1999, as well as subsequent payments. In addition, the
Company has not paid the December, 1998 interest due. Pending the
Recapitalization (defined below), the company intends to use available funds for
exploration and development projects.
The foregoing uncertainties raise substantial doubt as to the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
The foregoing discussion includes many forward looking statements which are
subject to the risks and uncertainties noted above in "Forward-Looking
Statements" which could cause the actual results to differ materially from the
Company's expectations.
6
<PAGE>
8. RECENT DEVELOPMENTS
The company has experienced financial difficulties since the sale in 1997 of the
Company's 13.5% Notes and the Company's Preferred Stock. As previously
reported, the Company engaged Oppenheimer on October 16, 1998 as the Company's
exclusive financial advisor in connection with the possible Recapitalization of
the Company.
The Company's financial difficulties are serious. On December 30, 1998, the
Company announced the nonpayment of the December 1, 1998 installment of interest
due on the 13.5% Notes within the thirty-day grace period provided for such
payments. The Company does not presently have the funds to make the December 1,
1998 interest installment on the 13.5% Notes and does not anticipate having
sufficient funds to do so at any time in the near future. In fact, pending the
Recapitalization, the Company intends to continue to use available funds for
exploration and development projects. On March 10, 1999, the Trustee declared
an Event of Default under the Indenture with respect to the 13.5% Notes as a
result of the nonpayment of the December 1, 1998 interest installment and
declared the unpaid principal and accrued and unpaid interest on the 13.5% Notes
to be due and payable. Certain holders of the 13.5% Notes have requested that
the Trustee withdraw the notice of acceleration. There can be no assurance that
the Trustee will withdraw the notice or that the Trustee will not pursue
available remedies under the Indenture arising upon an Event of Default,
including but not limited to filing suit against the Company to recover the
whole amount of principal and interest.
The Company's financial difficulties have also seriously impaired its ability to
make the capital investments necessary to maintain or expand its asset base of
oil and gas reserves. The Company has previously used funds that would have
otherwise have been available to pay a portion of the December 1, 1998 interest
installment for two exploration and development projects. The first project was
the drilling and successful completion of a gas well in the Boutte Field. The
second project was a well in the West Gueydan Field being drilled by another
operator in which the Company has a 50% working interest. Expenditures in
connection with these two projects through April 30, 1999 were $2.7 million,
with an additional $1.6 million expected over the balance of 1999. Three
additional wells in other fields at an aggregate estimated cost of $6.2 million
have been scheduled by the Company for drilling in 1999, pending the results of
the Recapitalization.
The Company entered into a Memorandum of Understanding dated April 27, 1999 (the
"Memorandum") with certain holders of the Company's 13.5% Senior Secured Notes
Due June 1, 2004 (the "Noteholders") and certain holders of the Company's Series
A Cumulative Preferred Stock (the "Preferred Stockholders") with respect to a
proposed restructuring of the Company (the "Recapitalization"). The Board of
Directors of the Company has approved the Memorandum.
The Company has agreed in the Memorandum to solicit acceptances of a prepackaged
plan of reorganization under Chapter 11 of the United States Bankruptcy Code.
The provisions of the Memorandum shall form the basis for the Company's
prepackaged plan of reorganization (the "Plan"). The Company has agreed to
commence solicitation on or before July 26, 1999, provided that the Noteholders,
the Preferred Stockholders, and the Company have reached an agreement on all of
the terms of the Plan. Once the consents of the holders of the Notes and
Preferred Stock that are necessary to satisfy Section 1126(c) of the Bankruptcy
Code have been
7
<PAGE>
obtained, the Company has agreed to file with the bankruptcy court a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code,
together with the Plan and related documents, including, without limitation, a
disclosure statement. By execution of the Memorandum, each of the Noteholders
and Preferred Stockholders has agreed to vote for the Plan, provided it complies
in all respects with the terms of the Memorandum.
In accordance with the terms of the Memorandum, the Company has executed a stay
of the previously reported litigation currently pending against Jefferies &
Company, Inc. in the United States District Court for the Eastern District of
Louisiana, Civil Action No. 98-3070, Section "N" in order to enable all parties
to execute such documents and instruments as may be necessary to pursue
confirmation of the Plan.
The Company intends, absent unusual circumstances, to refrain from making any
further announcements or reports with respect to the Recapitalization unless and
until the Company commences solicitation of acceptances of the Plan. There can
be no assurance that the Company will consummate the Recapitalization. If the
Recapitalization is not completed, the Company may be forced to restructure the
Company's outstanding obligations within a Chapter 11 bankruptcy.
The foregoing discussion includes many forward looking statements which are
subject to the risks and uncertainties noted above in "Forward-Looking
Statements" which could cause the actual results to differ materially from the
Company's expectations.
9. LEGAL PROCEEDINGS
As previously reported, the Company filed a Complaint on Friday, October 16,
1998 against Jefferies & Company, Inc. ("Jefferies") in the United States
District Court in and for the Eastern District of Louisiana. The Complaint
asserts causes of action against Jefferies for breach of fiduciary duty, breach
of contract, detrimental reliance, negligence, intentional misrepresentation,
and negligent misrepresentation in connection with a 1997 offering of the 13.5%
Notes and the Preferred Stock by the Company. The Company is seeking damages in
an amount to be determined at trial. Although the Company is confident that the
Complaint is well founded in law and fact, there can be no assurance that the
Company will prevail in the lawsuit.
In accordance with the terms of the Memorandum, the Company has executed a stay
of the litigation currently pending against Jefferies in order to enable all
parties to execute such documents and instruments as may be necessary to pursue
confirmation of the Plan.
The Company is not otherwise a party to any material pending legal proceeding,
other than ordinary routine litigation incidental to its business that
management believes would not have a material adverse effect on its financial
condition or results of operations.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion is intended to assist in an understanding of the
Company's historical financial position and the results of operations for the
three-month periods ended March 31, 1999 and 1998. The financial statements of
the Company at March 31, 1999 and for the three month period then ended are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the interim
periods. The financial statements should be read in conjunction with the
financial statements and notes thereto, for the year ended December 31, 1998
contained in the Company's Annual Report on Form 10-K (file number 333-31375)
filed with the Commission on March 31, 1999. The Company's historical financial
statements and notes thereto included elsewhere in this quarterly report contain
detailed information that should be referred to in conjunction with the
following discussion.
RISK FACTORS
A detailed discussion of risks and uncertainties which could affect the
Company's future results and the forward looking statements contained in this
report can be found in the "Item 1. Business - Risk Factors" section of the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
Those risks and uncertainties remain applicable to the Company's operations. In
addition, the risks and uncertainties noted therein with respect to "Substantial
Leverage", "Substantial Capital Requirements", and "Technological Changes" are
supplemented by the additional risks and uncertainties with respect to liquidity
and Year 2000 readiness noted in the "Management Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
section of this report.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations, including but not limited to the discussions of Liquidity and
Capital Resources and Year 2000 Disclosure, includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements other than statements of historical fact included in the
discussions are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
such forward-looking statements are based on numerous assumptions (some of which
may prove to be incorrect) and are subject to risks and uncertainties which
could cause the actual results to differ materially from the Company's
expectations. Such risks and uncertainties include, but are not limited to, the
timing and extent of changes in commodity process for oil and gas, the need to
develop and replace reserves, environmental risks, drilling and operating risks,
risks related to exploration and development, uncertainties about the estimates
of reserves, competition, government regulations and the ability of the Company
to meet its stated business goals, issues and problems which may develop as the
Company continues to assess its Year 2000 readiness, as well as other risks and
uncertainties discussed in this and the Company's other filings with the
Securities and Exchange Commission
9
<PAGE>
(the "Cautionary Statements"). The Company undertakes no obligation to update or
revise any forward-looking statements, whether as a result of changes in actual
results, changes in assumptions or other factors affecting such statements. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
RESULTS OF OPERATIONS
The following table sets forth certain operating information with respect to the
oil and gas operations of the Company for the three-month periods ended March
31, 1999 and 1998:
Three Months Ended
March 31,
---------------------------------------
1999 1998
----------------- -------------------
Sales:
Oil (Bbls) 85,570 100,593
Gas (Mcf) 787,510 1,180,613
Oil and Gas (BOE) 216,822 297,362
Sales Revenue:
Total Oil Sales $ 902,000 $1,409,071
Total Gas Sales 1,700,557 2,798,487
---------- ----------
Total Sales $2,602,557 $4,207,558
Average Sales Prices:
Oil (per Bbl) $ 10.54 $ 14.01
Gas (per Mcf) $ 2.16 $ 2.37
Per BOE $ 12.00 $ 14.15
Average Costs (per BOE):
Severance Taxes $ 0.58 $ 0.53
Lease operating expenses $ 4.27 $ 3.04
General and Administrative Exp. $ 2.85 $ 1.78
Depreciation, depletion and amort. $ 7.76 $ 8.58
10
<PAGE>
Revenues - The following table reflects an analysis of differences in the
Company's oil and gas revenues between the three month period ended March 31,
1999 and the comparable period in 1998:
FIRST QUARTER
1999 COMPARED TO
FIRST QUARTER 1998
-------------------
Increase (decrease) in oil and gas
Revenues resulting from differences in:
Crude oil and condensate -
Prices $ (296,815)
Production (210,256)
-----------
(507,071)
Natural gas -
Prices (166,130)
Production (931,800)
-----------
(1,097,930)
-----------
Increase (decrease) in oil and gas revenues $(1,605,001)
============
For the quarter ended March 31, 1999, total oil and gas revenues decreased $1.6
million from revenues for the first quarter of 1998. Oil production for the
quarter ended March 31, 1999 decreased 15% from the comparable quarter in 1998,
and gas production between comparable periods decreased 33%. The decrease in oil
and gas production resulted primarily from decreased production from the
Simoneaux #7 and the Lafourche Realty A-2 wells. Oil prices for the quarter
ended March 31, 1999 declined 25%, to $10.54 per Bbl from $14.01 per Bbl from
the first quarter of 1998. Gas prices also declined during the quarter ended
March 31, 1999 to $2.16 per Mcf from $2.37 per Mcf for the first quarter of
1998.
LEASE OPERATING EXPENSES - On a BOE basis, lease operating expenses experienced
a 40% increase, to $4.27 per BOE for the three months ended March 31, 1999 from
$3.04 per BOE in the comparable 1998 period. For the quarter ended March 31,
1999, lease operating expenses were 2% higher than the comparable quarter in
1998. The increase for the quarter ended March 31, 1999 resulted primarily from
increased operating cost for the Lafourche Realty A-2 well.
SEVERANCE TAXES - The effective severance tax rate as a percentage of oil and
gas revenues increased to 4.8% for the three months ended March 31, 1999 from
3.7% for the comparable period in 1998. This relatively low effective rate is
attributable to wells that have a state severance tax exemption under
Louisiana's severance tax abatement program, combined with the fact that, on a
value basis, the Company's production is approximately two-thirds natural gas,
which is taxed at a lower effective rate than oil.
GENERAL AND ADMINISTRATIVE EXPENSES - For the three months ended March 31, 1999
general and administrative ("G&A") expenses were $2.85 per BOE, a 60% increase
from the $1.78 per BOE for the first three months of 1998. For the first three
months of 1999, G&A increased 17%, from $529,000 in 1998 to $618,000 in 1999.
The first quarter increase in G&A per BOE in 1999 was primarily the result of a
decrease in production during the first quarter of 1999 as compared to the
comparable 1998 first quarter. The increase in actual G&A expenses for the
three month period ended March 31, 1999 was primarily the result of additions to
staff.
11
<PAGE>
RECAPITALIZATION COSTS - The Company incurred $266,500 of costs directly
associated with the recapitalization of the Company during the first quarter of
1999. Based on the terms of the Memorandum of Understanding discussed in Note 8
to the financial statements, the Company has expensed these recapitalization
costs currently. In addition, the Company wrote off the $384,300 of accumulated
recapitalization costs that were capitalized as of December 31, 1998.
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE - For the three months ended
March 31, 1999 depreciation, depletion and amortization ("DD&A") expense
decreased 34% from the comparable 1998 period. The DD&A decrease from the first
quarter of 1998 to 1999 is attributable to the Company's decreased production
and related future capital costs between the comparable periods for 1998 and
1999.
On a BOE basis, which reflects the decreases in production, the DD&A rate for
the first three months of 1999 was $7.76 per BOE compared to $8.58 per BOE for
the same period in 1998, a decrease of 10%.
INTEREST EXPENSE - For the three months ended March 31, 1999 interest expense
increased to $2.6 million from $2.4 million for the comparable 1998 period. This
increase in interest expense is due primarily to additional interest in 1999
relating to vendor financing (see LIQUIDITY AND CAPITAL RESOURCES).
NET LOSS FROM OPERATIONS - Due to the factors described above, the net loss from
operations for the three months ended March 31, 1999 was $3.3 million, an
increase of $1.1 million over the net loss of $2.2 million reported for the
first three months of 1998.
INCOME TAX EXPENSE - The Company issued a second class of stock on June 3, 1997,
effectively terminating its S Corporation election. As a result, the Company is
subject to Federal and state income taxes for the results of operations
subsequent to June 2, 1997. In addition, due to the termination of the
Company's status as an S Corporation for federal income tax purposes, the
Company was also required to establish a net deferred tax liability calculated
at the applicable Federal and state tax rates resulting primarily from financial
reporting and income tax reporting basis differences in oil and gas properties.
Accordingly, a net deferred tax liability of $5,081,000 was accrued at June 3,
1997. The Company has a net deferred tax asset at March 31, 1999 that has been
fully reserved due to the Company's operating losses.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AND CASH FLOW - The Company had a working capital deficit at
March 31, 1999 of $79 million, resulting primarily from declines in both prices
and production and from the acceleration of long term debt due to the default
discussed in Note 8 to the financial statements. The Company's realized oil and
gas prices declined another 25% and 9%, respectively, from the first quarter of
1998 to the first quarter of 1999. During the same period oil production
declined 15% and gas production declined 33%. The combination of these further
declines in both prices and production during the first quarter of 1999
significantly reduced the Company's revenues from production, from $4.2 million
in the first quarter of 1998 to $2.6 million in the first quarter of 1999.
12
<PAGE>
The Company believes that its cash on hand plus the expected normal cash flow
from operations and available vendor financing will be not sufficient to fund
its working capital needs for the remainder of 1999, even though exploration and
development projects have been deferred. As expected, the receipt of the
advance payment for the December 1998 gas previously reported likely will
negatively impact the Company's ability to make the next scheduled interest
payment on the notes due June 1, 1999, as well as subsequent payments. In
addition, the Company has not paid the December, 1998 interest due. Pending the
Recapitalization, the Company intends to use available funds for exploration and
development projects.
The Company entered into a Memorandum of Understanding dated April 27, 1999 (the
"Memorandum") with certain holders of the Company's 13.5% Senior Secured Notes
Due June 1, 2004 (the "Noteholders") and certain holders of the Company's Series
A Cumulative Preferred Stock (the "Preferred Stockholders") with respect to a
proposed restructuring of the Company (the "Recapitalization"). The Board of
Directors of the Company has approved the Memorandum.
The Company has agreed in the Memorandum to solicit acceptances of a prepackaged
plan of reorganization under Chapter 11 of the United States Bankruptcy Code.
The provisions of the Memorandum shall form the basis for the Company's
prepackaged plan of reorganization (the "Plan"). The Company has agreed to
commence solicitation on or before July 26, 1999, provided that the Noteholders,
the Preferred Stockholders, and the Company have reached an agreement on all of
the terms of the Plan. Once the consents of the holders of the Notes and
Preferred Stock that are necessary to satisfy Section 1126(c) of the Bankruptcy
Code have been obtained, the Company has agreed to file with the bankruptcy
court a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code, together with the Plan and related documents, including,
without limitation, a disclosure statement. By execution of the Memorandum,
each of the Noteholders and Preferred Stockholders has agreed to vote for the
Plan, provided it complies in all respects with the terms of the Memorandum.
In accordance with the terms of the Memorandum, the Company has executed a stay
of the previously reported litigation currently pending against Jefferies &
Company, Inc. in the United States District Court for the Eastern District of
Louisiana, Civil Action No. 98-3070, Section "N" in order to enable all parties
to execute such documents and instruments as may be necessary to pursue
confirmation of the Plan.
The Company intends, absent unusual circumstances, to refrain from making any
further announcements or reports with respect to the Recapitalization unless and
until the Company commences solicitation of acceptances of the Plan. There can
be no assurance that the Company will consummate the Recapitalization. If the
Recapitalization is not completed, the Company may be forced to restructure the
Company's outstanding obligations within a Chapter 11 bankruptcy.
The foregoing discussion includes many forward looking statements which are
subject to the risks and uncertainties noted above in "Forward-Looking
Statements" which could cause the actual results to differ materially from the
Company's expectations.
13
<PAGE>
The following summary table reflects comparative cash flows for the Company for
the three month periods ended March 31, 1999 and 1998:
THREE MONTHS ENDED
MARCH 31,
---------------------------
(IN THOUSANDS)
---------------------------
1999 1998
----------- ---------
Net cash provided by operating activities $ 1,850 $ 2,681
Net cash (used) by investing activities (3,046) (3,034)
Net cash provided by financing activities -0- (12)
For the three months ended March 31, 1999 net cash provided by operating
activities decreased to $1.85 million from $2.68 million during the comparable
period in 1998.
Cash used in investing activities was virtually unchanged during the first three
months of 1999 from the comparable period in 1998.
During the three months ended March 31, 1999 financing activities had no effect
on cash flow, as compared to a $12,000 decrease in cash flow from financing
activities during the comparable period in 1998.
LONG-TERM FINANCING - On June 3, 1997 the Company completed the private sale to
Jefferies & Company, Inc. ("Jefferies") of 70,000 units ("Note Units")
consisting of $70 million principal amount of the Series A Notes and warrants to
purchase 29,067 shares of Common Stock, no par value (the "Common Stock"), of
the Company at a price of $65,667,000 in a transaction not registered under the
Securities Act (the "Act") in reliance upon Section 4(2) of the Act and Rule 506
of Regulation D under the Act. Jefferies thereupon offered and resold the Note
Units only to qualified institutional buyers and a limited number of
institutional accredited investors at an initial price to such purchasers of
$68,467,000. Concurrently with the offering of the Note Units, the Company
completed a private sale to Jefferies of 200,000 units ("Equity Units")
consisting of 200,000 shares of Series A Cumulative Preferred Stock and warrants
to purchase 14,533 shares of Common Stock. The Equity Units were sold to
Jefferies for $9,200,000 in a transaction not registered under the Securities
Act in reliance upon Section 4 (2) of the Act and Rule 506 of Regulation D under
the Act. Jefferies thereupon offered and resold the Equity Units only to
qualified institutional buyers and a limited number of institutional accredited
investors at an initial price to such purchasers of $10,000,000.The offerings
and sale of the Note Units and the Equity Units are referred to herein as the
"Offerings". On November 5, 1997 the Company completed an exchange offer of its
13.5% Senior Secured Notes due 2004, Series B (the "Series B Notes") that were
registered under the Securities Act of 1933, for the Series A Notes. The Series
A Notes and the Series B Notes are collectively referred to as the "Notes".
The net proceeds to the Company from these Offerings were approximately $74.9
million. A portion of the net proceeds (approximately $9.5 million) was
segregated into a capitalized interest account to pay interest on the Notes
through June 1, 1998. The Company used the remaining net proceeds of the
Offerings as follows: (i) approximately $35.2 million was used to repay all of
the outstanding indebtedness (including accrued interest and associated fees)
due under the EEP and EECIP loans; (ii) approximately $10.5 million was used to
repay all of the
14
<PAGE>
outstanding indebtedness (including accrued interest and associated fees) due
under the JEDI loan; (iii) $2.6 million was used to purchase from EEP and EECIP
a 7.5% overriding royalty interest in the Company's Lake Enfermer Field, Manila
Village Field and Boutte Field; (iv) $5.0 million was used in connection with
the Company's acquisition from Forman Petroleum Corporation II ("FPCII"), a
company whose sole stockholder is McLain J. Forman (the Company's Chairman and
principal stockholder), all of FPCII's interest in the Bayou Fer Blanc Field and
the West Gueydan Field, of which $1.5 million was paid to FPCII, $1.0 million
was used to pay bank debt and $2.5 million was used to pay trade payables to
third parties; (v) Jefferies received a fee of $1.9 million for financial
advisory services provided to the Company and also received a warrant to
purchase 4,844 shares of Common Stock at the initial exercise price of $1.00 per
share; and (vi) $0.9 million was used to pay expenses of the Offerings. The
remaining net proceeds from the Offerings of $9.4 million were used for capital
expenditures, working capital and other general corporate purposes.
FULL COST POOL WRITE-DOWN - The Company uses the full cost method of accounting
for its investment in oil and natural gas properties. Under the full cost method
of accounting, all costs of acquisition, exploration and development of oil and
natural gas reserves are capitalized into a "full cost pool" as incurred, and
properties in the pool are depleted and charged to operations using the future
gross revenue method based on the ratio of current gross revenue to total proved
future gross revenues, computed based on current prices. To the extent that such
capitalized costs (net of accumulated depreciation, depletion and amortization)
less deferred taxes exceed the present value (using a 10% discount rate) of
estimated future net cash flow from proved oil and natural gas reserves, and the
lower of cost and fair value of unproved properties after income tax effects,
excess costs are charged to operations as a write down of the full cost pool.
Once incurred, a write down of oil and natural gas properties is not reversible
at a later date even if oil or natural gas prices increase. The Company was not
required to make a write down in its asset base at the end of the first quarter
of 1999 or the comparable period in 1998, although it did record a writedown of
$ 19.6 million during the year ended December 31, 1998.
HEDGING ACTIVITIES - With the objective of achieving more predictable revenues
and cash flows and reducing the exposure to fluctuations in oil and natural gas
prices, the Company has entered into hedging transactions of various kinds with
respect to both oil and natural gas. While the use of these hedging
arrangements limits the downside risk of reverse price movements, it may also
limit future revenues from favorable price movements. During 1997 and 1998, the
Company entered into forward sales arrangements with respect to a portion
(between 30-50%) of its estimated natural gas sales. As of May 1999, the
Company has open forward sales arrangements for the months, volumes and prices
as indicated in the following table:
VOLUME PERCENT OF PRICE
MONTH YEAR (MCF) PRODUCTION PER MCF
- ----- ---- ------ ---------- -------
May 1999 90,000 23% $1.85
May 1999 77,500 20% $2.39
The Company hedged about 30% of its estimated net oil production during the
first six months of 1997,but it did not hedge any oil production during 1998 and
has no outstanding oil hedges as of May, 1999. The Company continuously
reevaluates its hedging program in light of market conditions, commodity price
forecasts, capital spending and debt service requirements. The
15
<PAGE>
Company may hedge additional volumes through the remainder of 1999 or it may
determine from time to time to terminate its then existing hedging positions.
RECENT ACCOUNTING PRONOUNCEMENTS - In June 1998 the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities. The Statement
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
Statement 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the Statement as of the beginning of any fiscal
quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and
thereafter). Statement 133 cannot be applied retroactively. Statement 133 must
be applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the company's election, before January
1, 1998).
The Company has not yet quantified the impact of adopting Statement 133 on its
financial statements and has not determined the timing of or method of adoption
of Statement 133. However, the Statement is unlikely to significantly increase
volatility in earnings and other comprehensive income, since the Company does
not anticipate entering into material amounts of such investments in the future.
DISTRICT COURT COMPLAINT - The Company filed a Complaint on Friday, October 16,
1998 against Jefferies & Company, Inc. ("Jefferies") in the United States
District Court in and for the Eastern District of Louisiana. The Complaint
asserts causes of action against Jefferies for breach of fiduciary duty, breach
of contract, detrimental reliance, negligence, intentional misrepresentation,
and negligent misrepresentation in connection with a 1997 debt and equity
offering by the Company. The Company is seeking damages in an amount to be
determined at trial. Although the Company is confident that the Complaint is
well founded in law and fact, there can be no assurance that the Company will
prevail in the lawsuit.
In accordance with the terms of the Memorandum, the Company has executed a stay
of the litigation currently pending against Jefferies in order to enable all
parties to execute such documents and instruments as may be necessary to pursue
confirmation of the Plan.
YEAR 2000 DISCLOSURE - In August, 1998, the Securities and Exchange commission
issued a release that included guidance for Year 2000 ("Y2K") disclosure in the
MD&A portion of periodic filings under the securities Exchange Act of 1934, as
amended. In accordance with this release, the following information is provided
relating to the Company's Y2K issues:
1. Readiness - The Company has reviewed the status of all of its information
---------
technology ("IT") systems and has either received certification from third-
party
16
<PAGE>
vendors and/or certified to its satisfaction that these IT systems are Y2K
compatible. Concerning the Company's non-IT systems, the Company is
currently assessing the extent to which any such non-IT systems may exist
within the Company's operations and whether such systems are Y2K compatible.
This assessment is scheduled to be completed by May 31, 1999. Following
completion of this assessment, the Company will determine the most cost-
effective method of bringing all such non-IT systems into compliance. This
process is scheduled to be completed by the end of the second quarter, 1999.
The Company has, to date, identified only one third party issue that would
have a direct material effect and must, therefore, be clarified. This issue
involves the oil and natural gas pipeline companies where they are the sole
pipeline within a producing field for delivery of the Company's oil or
natural gas. The Company is preparing an appropriate questionnaire for these
third parties and will assess each third party's respective readiness based
on the responses to these questionnaires. The Company can provide no
assurance that the Company's key suppliers and customers have, or will have,
technology systems, information technology systems, and products that are
Y2K compliant. Any Y2K compliance problems facing such key suppliers and
customers could have a material adverse effect on the Company's business,
financial condition, and results of operations.
2. Cost to Address Company's Y2K Issues - The Company has not incurred any
------------------------------------
material costs to date related to Y2K issues, and at this time it does not
anticipate any material costs will be incurred to fix as yet unidentified
Y2K issues. The costs of these projects and the dates on which the Company
plans to complete modifications and replacements are based on management's'
best estimates, the estimates of any third-party specialists who assist the
Company, the modification plans of third parties and other factors. However,
these estimates of future Y2K-related costs may change when the assessments
of non-IT systems and third party issues are completed, and actual results
could differ materially from those estimates.
3. Risks - The Company's most reasonably likely worst case Y2K scenario at this
-----
time would be that one or more of the oil or natural gas pipelines serving
the Company's producing properties would be unable to continue to take
delivery of oil or natural gas produced by the Company due to a Y2K problem
within a third party's pipeline system. The third party questionnaire
described in Item 1 above is intended to determine the extent of this risk
and the alternatives available to reduce or eliminate this risk. While the
Company believes the likelihood of the above occurring to be low, there can
be no assurance that the Company will not be materially adversely affected
by Y2K problems.
4. Contingency Plans - The Company presently does not have a contingency plan.
-----------------
The development of a contingency plan to handle the most reasonably likely
worst case Y2K scenario is dependent upon the completion of the assessments
of the non-IT systems and the third party questionnaires. The Company
currently expects to have such a contingency plan in place by the end of the
second quarter of 1999. When completed, it is intended that the Company's
written Y2K contingency plan will include identified "point persons" to
contact in the event of a Y2K problem, as well
17
<PAGE>
as the availability of back-up systems. Due to the nature of the open issues
at this time, which involve only non-IT systems and third party issues, the
Company does not currently anticipate the need for any third party
consultants for remediation efforts.
The foregoing discussion includes many forward looking statements which are
subject to the risks and uncertainties noted above in "Forward-Looking
Statements" which could cause the actual results to differ materially from the
Company's expectations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company's revenues are derived from the sale of oil and natural gas
production. From time to time, the Company enters into hedging transactions
which fix, for specific periods and specific volumes of production, the prices
the Company will receive for its production. These agreements reduce the
Company's exposure to decreases in the commodity prices on the hedged volumes,
while also limiting the benefit the Company might otherwise have received from
increases in commodity prices of the hedged production.
The Company uses hedging transactions for price protection purposes on a limited
amount of its future production and does not use these agreements for
speculative or trading purposes. The impact of hedges is recognized in oil and
gas sales in the period the related production revenues are accrued.
Based on projected annual production volumes for 1999, a 10% decline in the
prices the Company receives for its oil and natural gas production would have an
approximate $3.6 million negative impact on the Company's discounted future net
revenues. This impact of a hypothetical 10% decline in prices is net of any
incremental gain that would be realized on hedge agreements in place as of May
1, 1999.
18
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
Reference is made to "PART I - FINANCIAL INFORMATION, Item 1. Financial
Statements, Note 9, Legal Proceedings", which is incorporated herein by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
The Company did not pay any preferred stock dividends in the quarter ended March
31, 1999 and has not paid preferred stock dividends since September 1, 1998.
19
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - The following instruments and documents are included as Exhibits
to this Form 10-Q. Exhibits incorporated by reference are so indicated by
parenthetical information:
EXHIBIT
NO. EXHIBIT
- ------- -------
3(i) Restated Articles of Incorporation dated July 2, 1997 (filed as
Exhibit 3(i) to the Registration Statement on Form S-4 filed on July
16, 1997 and is incorporated herein by reference (File No. 333-
31375)).
3(ii) Bylaws (filed as Exhibit 3(ii) to the Registration Statement on Form
S-4 filed on July 16, 1997 and is incorporated herein by reference
(File No. 333-31375)).
4.1 Indenture dated as of June 3, 1997 by and among Forman Petroleum
Corporation, as issuer, and U.S.Trust Company of Texas, N.A. as
trustee (filed as Exhibit 4.1 to the Registration Statement on Form
S-4 filed on July 16, 1997 and is incorporated herein by reference
(File No. 333-31375)).
4.2 Act of Mortgage, Security Agreement, Assignment of Production and
Financing Statement dated November 21, 1996, by Forman Petroleum
Corporation for the benefit of Joint Energy Development Investments
Limited Partnership (filed as Exhibit 4.2) to the Registration
Statement on Form S-4 filed on July 16, 1997 and is incorporated
herein by reference (File No. 333-31375)).
4.3 Act of First Amendment to Mortgage, Security Agreement, Assignment
of Production and Financing Statement dated December 23, 1996, by
and among Forman Petroleum Corporation and Joint Energy Development
Investments Limited Partnership (filed as Exhibit 4.3 to the
Registration Statement on Form S-4 filed on July 16, 1997 and is
incorporated herein by reference (File No. 333-31375)).
4.4 Act of Second Amendment to Mortgage, Security Agreement, Assignment
of Production and Financing Statement dated June 3, 1997, by and
among Forman Petroleum Corporation and U.S. Trust Company of Texas,
N.A. (filed as Exhibit 4.4 to the Registration Statement on Form S-4
filed on July 16, 1997 and is incorporated herein by reference (File
No. 333-31375)).
4.5 Act of Assignment of Note and Liens dated June 3, 1997, by and among
Joint Energy Development Investments Limited Partnership, as
assignor, and U.S. Trust Company of Texas, N.A., as assignee (filed
as Exhibit 4.5 to the Registration Statement on Form S-4 filed on
July 16, 1997 and is incorporated herein by reference (File No. 333-
31375)).
20
<PAGE>
4.6 Act of Mortgage, Security Agreement, Assignment of Production and
Financing Statement dated July 30, 1997, by Forman Petroleum
Corporation for the benefit of U.S. Trust Company of Texas, N.A. as
Trustee under the Indenture (filed as Exhibit 4.6 to the
Registration Statement on Form S-4 filed on July 16, 1997 and is
incorporated herein by reference (File No. 333-31375)).
10.1 Registration Rights Agreement dated June 3, 1997 by and between
Forman Petroleum Corporation and Jefferies & Company, Inc. regarding
Notes and Warrants to purchase Common Stock (filed as Exhibit 10.1
to the Registration Statement on Form S-4 filed on July 16, 1997 and
is incorporated herein by reference (File No. 333-31375)).
10.2 Registration Rights Agreement dated June 3, 1997 by and between
Forman Petroleum Corporation and Jefferies & Company, Inc. regarding
Series A Cumulative Preferred Stock and warrants to purchase Common
Stock (filed as Exhibit 10.2 to the Registration Statement on Form
S-4 filed on July 16, 1997 and is incorporated herein by reference
(File No. 333-31375)).
10.3 Warrant Agreement dated June 3, 1997 by and between Forman Petroleum
Corporation and U.S. Trust Company of Texas, N.A. regarding warrants
issued in connection with the issuance of Series A Cumulative
Preferred Stock (filed as Exhibit 10.3 to the Registration Statement
on Form S-4 filed on July 16, 1997 and is incorporated herein by
reference (File No. 333-31375)).
10.4 Warrant Agreement dated June 3, 1997 by and between Forman Petroleum
Corporation and U.S. Trust Company of Texas, N.A. regarding warrants
issued in connection with the issuance of Old Notes (filed as
Exhibit 10.4 to the Registration Statement on Form S-4 filed on July
16, 1997 and is incorporated herein by reference (File No. 333-
31375)).
10.5 Memorandum of Understanding dated April 27, 1999 (filed as Exhibit
10.5 to the Current Report on Form 8-K dated April 27, 1999)
27 Financial Data Schedule
99.1 Press Release (regarding engagement of CIBC Oppenheimer Corp.)(filed
as Exhibit 99.1 to the Current Report on Form 8-K filed on October
20, 1998)
99.2 Complaint against Jefferies & Company, Inc. filed on October 16,
1998 in the United States District Court in and for the Eastern
District of Louisiana (filed as Exhibit 99.2 to the Current Report
on Form 8-K filed on October 20, 1998)
99.3 Press Release (regarding lawsuit against Jefferies & Company,
Inc.)(filed as Exhibit 99.3 to the Current Report on Form 8-K filed
on October 20, 1998)
99.4 Press Release (regarding nonpayment of the December 1, 1998
installment of interest due on the Notes) (filed as Exhibit 99.4 to
the Current Report on Form 8-K filed on December 1, 1998)
21
<PAGE>
99.5 Press Release (regarding nonpayment of the December 1, 1998
installment of interest due on the Notes within the thirty day grace
period) (filed as Exhibit 99.5 to the Current Report on Form 8-K
filed on December 30, 1998)
(b) REPORTS ON FORM 8-K
1. Current Report on Form 8-K dated April 27, 1999 reporting the
execution by the Company of the Memorandum of Understanding.
22
<PAGE>
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.
Forman Petroleum Corporation
Date: May 13, 1999 By: /s/ McLain J. Forman
--------------------
McLain J. Forman
Chairman of the Board, Chief
Executive Officer and President
By: /s/ Michael H. Price
--------------------
Michael H. Price
Chief Financial Officer
23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORMAN
PETROLEUM FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 DEC-31-1998
<CASH> 279,244 1,474,488
<SECURITIES> 0 0
<RECEIVABLES> 78,567 47,830
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,487,427 3,687,229
<PP&E> 86,313,271 83,271,685
<DEPRECIATION> 60,952,228 59,511,084
<TOTAL-ASSETS> 33,466,347 33,685,858
<CURRENT-LIABILITIES> 81,533,289 77,791,028
<BONDS> 0 0
12,844,277 12,360,322
0 0
<COMMON> 1,000 1,000
<OTHER-SE> (60,926,217) (56,483,603)
<TOTAL-LIABILITY-AND-EQUITY> 33,466,347 33,685,858
<SALES> 2,602,557 15,950,329
<TOTAL-REVENUES> 2,625,787 16,275,843
<CGS> 1,051,193 3,900,037
<TOTAL-COSTS> 6,584,445 46,813,745
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,582,642 10,122,131
<INCOME-PRETAX> (3,958,658) (30,537,902)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,958,658) (30,537,902)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,958,658) (30,537,902)
<EPS-PRIMARY> (49.25) (358.52)
<EPS-DILUTED> (49.25) (358.52)
</TABLE>
