UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1999
Commission File Number 333-42641
RAM Energy, Inc.
(Exact name of registrant as specified in its charter.)
Delaware 52-1535102
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5100 East Skelly Drive, Suite 650
Tulsa, Oklahoma 74135
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(918) 632-0620
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 practical
date:
2,727,000 shares of common stock issued and outstanding
<PAGE>
RAM ENERGY, INC.
FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - December 31, 1998 and
September 30, 1999 (unaudited) 2
Consolidated Statements of Operations - Three months
and nine months ended September 30, 1998 and 1999
(unaudited) 3
Consolidated Statements of Cash Flows - Three months
and nine months ended September 30, 1998 and 1999
(unaudited) 4
Notes to Unaudited Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Other Information
Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
<TABLE>
RAM Energy, Inc.
Consolidated Balance Sheets
(Dollars in Thousands)
<CAPTION>
December 31, September 30,
1998 1999
--------------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 8,603 $ 2,550
Accounts receivable:
Oil and gas sales 3,387 3,303
Joint interest operations, net of allowance
for doubtful accounts of $358 in 1998 and
$377 in 1999 2,117 1,309
Related parties 147 56
Other 115 65
Prepaid expenses and deposits 431 405
-----------------------
Total current assets 14,800 7,688
Properties and equipment, at cost:
Oil and gas properties and equipment, based on
full cost accounting (Note 5) 119,697 114,793
Gathering and disposal systems 39,184 39,531
Other property and equipment 3,781 3,908
-----------------------
162,662 158,232
Less accumulated amortization and depreciation 28,388 37,298
-----------------------
Net properties and equipment 134,274 120,934
Investment in RVC Energy, Inc. (Note 3) 1,307 -
Other assets:
Deferred loan costs, net of accumulated
amortization of $715 in 1998 and $961 in
1999 955 709
Deferred offering costs, net of accumulated
amortization of $395 in 1998 and $747 in 1999 4,307 3,955
Other 808 390
-----------------------
Total assets $156,451 $133,676
=======================
Liabilities and stockholders' deficiency
Current liabilities:
Accounts payable:
Trade $ 6,230 $ 4,030
Oil and gas proceeds due others 4,378 4,465
Related party 826 -
Accrued liabilities:
Compensation 320 113
Interest 4,942 2,035
Other 65 65
Long-term debt due within one year (Note 4) 109 20,198
-----------------------
Total current liabilities 16,870 30,906
Gas balancing liability not expected to be
settled within one year 735 371
Long-term debt due after one year (Note 4) 131,630 106,813
Deferred income taxes 17,056 13,156
Commitments and contingencies 600 600
Stockholders' deficiency:
Preferred stock, $.01 par value; authorized-
5,000,000 shares; none issued - -
Common stock, $.01 par value; authorized-
15,000,000 shares; issued and outstanding-
2,727,000 shares 27 27
Paid-in capital 16 16
Accumulated deficit (10,483) (18,213)
-----------------------
Stockholders' deficiency (10,440) (18,170)
-----------------------
Total liabilities and stockholders' deficiency $ 156,451 $ 133,676
=======================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
RAM Energy, Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in Thousands, Except for Per Share Amounts)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1999 1998 1999
------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues:
Oil and gas sales $ 6,512 $ 5,868 $ 19,108 $ 17,307
Gathering systems 1,853 2,669 4,214 6,638
Other 96 256 181 645
------------------------------------------
Total operating revenues 8,461 8,793 23,503 24,590
Operating expenses:
Oil and gas production expenses 2,055 1,956 6,336 5,770
Gathering system purchases 1,271 1,978 2,884 4,794
Gathering system operations 142 99 332 313
Amortization and depreciation 4,189 3,003 10,448 9,655
General and administrative,
overhead and other expenses,
net of operator's overhead
fees to unrelated interests 853 1,082 2,874 3,367
------------------------------------------
Total operating expenses 8,510 8,118 22,874 23,899
------------------------------------------
Operating income (loss) (49) 675 629 691
Other income (expense):
Interest expense (3,730) (3,861) (9,693) (11,152)
Interest income 109 39 281 138
Equity in net loss of RVC
Energy, Inc. (Note 3) (141) (527) (141) (1,307)
------------------------------------------
Loss before income taxes (3,811) (3,674) (8,924) (11,630)
Income taxes (1,451) (1,185) (3,055) (3,900)
------------------------------------------
Net loss $(2,360) $(2,489) $ (5,869) $ (7,730)
==========================================
Net loss per share $(.87) $(.91) $(2.15) $(2.83)
==========================================
Weighted average shares outstanding 2,727,000 2,727,000 2,727,000 2,727,000
==========================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
RAM Energy, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1999 1998 1999
---------------------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $(2,360) $(2,489) $(5,869) $(7,730)
Adjustments to reconcile net
loss to net cash provided
(used) by operating activities:
Equity in net loss of RVC Energy, Inc. 141 527 141 1,307
Provision for doubtful
accounts receivable and other - 11 - 19
Amortization of Senior Notes
discount included in interest
expense 51 48 106 118
Amortization and depreciation:
Oil and gas properties and
equipment 3,444 2,274 8,593 7,460
Gathering and disposal systems 488 488 1,138 1,463
Senior Notes fees 115 117 284 352
Credit facility fees 92 82 267 246
Other property and equipment 50 41 166 134
Deferred income taxes (1,451) (1,185) (3,055) (3,900)
Cash provided (used) by
changes in operating assets and liabilities:
Prepaid expenses and deposits 665 50 579 26
Accounts receivable (1,387) 110 (1,298) 1,014
Accounts payable (267) 1,626 411 (2,939)
Accrued liabilities and other (2,750) (2,923) 1,189 (3,114)
Gas balancing liability (114) (233) (295) (364)
---------------------------------------
Total adjustments (923) 1,033 8,226 1,822
---------------------------------------
Net cash provided (used) by
operating activities (3,283) (1,456) 2,357 (5,908)
Cash flows from investing activities
Payments for acquisition of
Carlton Resources Corporation
(net of cash acquired) (Note 2) - - (42,600) -
Payment for investment in RVC
Energy, Inc. (Note 2) (2,000) - (2,000) -
Payments for oil and gas
properties and equipment (11,655) (1,679) (19,277) (2,777)
Proceeds from sales of oil and
gas properties and equipment 1,500 1,018 1,601 2,659
Payments for gathering and
disposal systems (68) (9) (71) (347)
Payments for other property
and equipment (68) (13) (267) (145)
Proceeds from sales of other
property and equipment - - - 18
Payments for other assets (175) - (482) (30)
Proceeds from sales of other assets - 125 53 323
---------------------------------------
Net cash used by investing activities (12,466) (558) (63,043) (299)
Cash flows from financing activities
Proceeds from Senior Notes
Offering, net of discount - - 113,328 -
Payments of deferred offering costs - - (5,008) -
Principal payments on other
long-term debt (34) (4,905) (62,081) (4,985)
Proceeds from borrowings on
other long-term debt 9,016 81 19,095 139
Proceeds from volumetric
production payment - 5,000 - 5,000
Payments for Preferred Stock redemption - - (2,074) -
Payments for loan origination fees (7) - (118) -
---------------------------------------
Net cash provided by financing activities 8,975 176 63,142 154
---------------------------------------
Increase (decrease) in cash
and cash equivalents (6,774) (1,838) 2,456 (6,053)
Cash and cash equivalents at
beginning of period 10,478 4,388 1,248 8,603
---------------------------------------
Cash and cash equivalents at
end of period $3,704 $2,550 $3,704 $2,550
=======================================
</TABLE>
See accompanying notes.
<PAGE>
RAM Energy, Inc.
Notes to Unaudited Consolidated Financial Statements
1. Summary of Significant Accounting Policies, Organization and
Basis of Financial Statements
The accompanying unaudited consolidated financial statements
present the results of operations and cash flows of RAM Energy,
Inc. (the "Company") for the three- and nine-month periods ended
September 30, 1998 and 1999. These financial statements include
all adjustments, consisting of normal and recurring adjustments,
which, in the opinion of management, were necessary for a fair
presentation of the financial position and the results of
operations for the indicated periods. The results of operations
for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results to be expected for the full
year ending December 31, 1999. Certain reclassifications have
been made to the prior period statements to conform with current
year presentation. Reference is made to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 for an
expanded discussion of the Company's financial disclosures and
accounting policies.
Nature of Operations and Organization
RAM Energy, Inc. operates exclusively in the upstream segment of
the oil and natural gas industry with activities including the
drilling, completion and operation of oil and natural gas wells,
and operation of gathering and disposal systems. The Company
conducts the majority of its operations in the states of
Oklahoma, Texas and New Mexico. Additionally, the Company owns
and operates an oil and gas gathering system and a saltwater
disposal operation in north central Oklahoma (the "Gathering
System"). The Gathering System purchases, transports and markets
oil and gas production and disposes of salt water from properties
owned by the Company and other oil and gas companies.
Principles of Consolidation
The consolidated financial statements include the accounts of its
majority or wholly-owned subsidiaries including the operations of
Carlton Resources Corporation since its acquisition effective
March 1, 1998 (Note 2). All significant intercompany transactions
have been eliminated.
2. Business Acquisition
On February 24, 1998, the Company acquired Carlton Resources
Corporation ("Carlton") in a stock acquisition accounted for as a
purchase, for approximately $41.6 million (after defined working
capital adjustments of $1 million). The operations of Carlton are
included in the accompanying financial statements since March 1,
1998. The allocation of the purchase price to the assets and
liabilities acquired was as follows (in thousands):
Properties and equipment:
Oil and gas properties $24,000
Pipeline gathering systems 39,000
--------
63,000
Other assets and liabilities, net (844)
Deferred income tax liability (20,556)
--------
Purchase price $41,600
========
The following unaudited pro forma data presents the results of
the Company's operations for the nine months ended September 30,
1998, as if the acquisition had occurred on January 1, 1998. The
pro forma results of operations are presented for comparative
purposes only and are not necessarily indicative of the results
which would have been obtained had the acquisition been
consummated as presented. The following data reflect pro forma
adjustments to include the operating activity of Carlton adjusted
to reflect the Company's adjusted basis since acquisition and
additional interest related to the acquisition (in thousands,
except per share).
Operating revenues $25,769
========
Net loss $(6,483)
========
Net loss per common share $(2.38)
========
3. Equity Investee - RVC Energy, Inc.
In August 1998, the Company acquired 49.5% of the voting common
stock and all of the nonvoting common stock of RVC Energy, Inc.
("RVC"). RVC is an unrestricted affiliate of the Company and is
accounted for under the equity method of accounting. Summarized
income statement information for RVC for the nine months ended
September 30, 1999 is as follows (in thousands):
Operating revenues $5,909
=======
Operating loss $(994)
=======
Net loss $(2,237)
=======
RVC has a $50 million credit facility ($38 million outstanding at
September 30, 1999) secured by RVC's oil and gas properties. RVC
did not make payments due under this facility in 1999 and is also
not compliant with certain other covenants. As a result, RVC's
creditors may demand payment in full or seek other remedies
available under the terms of the credit facility. The management
of RVC is presently negotiating with the creditors and the final
outcome of these negotiations cannot be determined at this time.
The Company has recognized as an impairment approximately
$200,000 during the three months ended September 30, 1999 to
reduce its remaining carrying value in RVC to zero.
4. Long-term Debt
By agreement effective August 12, 1999, the Company and its Banks
amended the Company's Credit Facility to (i) provide for
repayment of the outstanding advances ($25 million at June 30,
1999) under the Credit Facility in installments during the period
ending June 30, 2000, (ii) permit the sale by the Company of
certain of its oil and gas properties, with 75% of the sale
proceeds to be applied toward the next principal reduction
installment, (iii) provide for mandatory prepayments of principal
out of 40% of the Company's monthly excess cash flow (defined
generally as gross revenues less operating expenses, production
and ad valorem taxes, general and administrative expenses,
approved capital expenditures and principal and interest payments
under the Credit Facility), (iv) limit general and administrative
expenses to essentially current levels, and (v) provide for an
interest rate equal to Union Bank's base rate plus 2%. Under the
amendment either Bank may, at any time, decline its pro rata
share of any required installment or prepayment in which event
the Company's installment or prepayment obligation will be
reduced by the amount so declined.
By agreement effective September 30, 1999, the Company and its
Banks further amended the credit facility to provide that payment
of $4.5 million of the volumetric production payment proceeds
(Note 5) satisfied the Company's September 30 principal reduction
obligation under the amended credit facility, and to provide for
repayment in full of the remaining principal balance ($20.1
million at September 30, 1999) by December 31, 1999. The Company
expects to fund the required repayment through property sales
proceeds or by refinancing its existing credit facility with
other banks or lenders.
5. Volumetric Production Payment
On September 28, 1999, the Company entered into a nonrecourse
volumetric production payment agreement (the "Production
Payment") with Duke Energy Corporation ("Duke"), pursuant to
which the Company will deliver to Duke 2.8 Bcf of natural gas
produced from certain of the Company's properties over a five-
year period. Such volumes were excluded from the Company's proved
reserves at September 30, 1999. Proceeds of the Production
Payment were $5 million and were recorded as a reduction of oil
and gas properties on the accompanying consolidated balance
sheets. Of the proceeds, $4.5 million was paid by the Company on
September 30, 1999 to reduce the outstanding principal balance
under its credit facility (Note 4).
6. Financial Instruments
The carrying amounts reported in the balance sheets for cash and
cash equivalents, trade receivables and payables, installment
notes and capital leases, and variable rate long-term debt
approximate their fair values. The carrying value of interest
rate swap agreements at December 31, 1998 and September 30, 1999
exceeded the fair value by approximately $419,000 and $125,000,
respectively, representing the amount the Company would be
required to pay to terminate the contracts at such date. The
carrying value of the Senior Notes exceeded the fair value at
December 31, 1998 and September 30, 1999 by approximately $37.4
million and $55.1 million, respectively, based on quoted market
prices.
7. Contingencies
In 1996, the Company's predecessor sold an oil and gas property
located in Louisiana state waters in Plaquemines Parish. The
property included several currently uneconomical wells for which
the Company estimates the plugging and abandonment ("P&A")
obligation is approximately $1,020,000. The purchaser provided a
letter of credit and a bond totaling $420,000 to ensure funding
of a portion of the P&A obligation. The P&A obligation would
revert to the Company in the event the purchaser does not
complete the required P&A activities. As a result, the Company
has recorded a contingent liability of $600,000, which is
included in the accompanying consolidated balance sheets.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
RAM Energy, Inc., ("RAM" or the "Company") is an independent
oil and gas company engaged in the acquisition, development and
production of oil and gas properties primarily in the Mid-
Continent Area and the Permian Basin. The Company also operates
gathering and disposal systems in Oklahoma.
Historically the Company has added reserves mainly through
acquisitions and development. The Company intends to continue to
pursue attractive oil and gas acquisitions, development drilling
and exploratory opportunities.
The Company's revenue, profitability and cash flow are
substantially dependent upon prevailing prices for oil and gas
and the volumes of oil and gas it produces. In addition, the
Company's proved reserves and oil and gas production will decline
as oil and gas are produced unless the Company is successful in
acquiring producing properties or conducts successful exploration
and development drilling activities.
The Company uses the full cost method of accounting for its
investment in oil and gas properties. Under the full cost method
of accounting, all costs of acquisition, exploration and
development of oil and gas reserves are capitalized into a "full
cost pool" as incurred, and properties in the pool are amortized
and charged to operations using the future recoverable units of
production method based on the ratio of current production to
total proved reserves, computed based on current prices and
costs. Significant downward revisions of quantity estimates or
declines in oil and gas prices that are not offset by other
factors could result in a writedown for impairment of the
carrying value of oil and gas properties. Once incurred, a
writedown of oil and gas properties is not reversible at a later
date, even if oil or gas prices increase.
The Company operates a 169-mile gathering system that
transports gas in one transportation line and liquids in the form
of salt water and oil in a separate transportation line. Fees
are based on various contracts at both fixed prices per unit of
volume, and percentage of sales proceeds for gas. The system
serves both the Company and third parties, but reported revenues
are those derived from third parties only. The system is
obligated to deliver 10 thousand Mmbtu's daily at the tail-gate
and purchases outside gas to satisfy that obligation. The
Company acquired the system and oil and gas reserves in an
acquisition made in late February, 1998. The results of
operations discussed below include the operations of that
acquisition since March 1998.
RAM has entered into hedging arrangements for natural gas
production from October, 1999 through March 2000 on 2,140,000
Mmbtu that provide an average floor price of $2.289 per Mmbtu.
Results of Operations
Three Months Ended September 30, 1999 Compared to Three Months
Ended September 30, 1998
Operating Revenues. Operating revenues increased by $332,000,
or 4%, for the three months ended September 30, 1999, compared to
the year earlier period. Operating revenues are comprised of Oil
and Gas sales, Gathering systems, and Other.
The following table summarizes oil and gas production volumes,
average sales prices and period to period comparisons, including
the effect on operating revenues, for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended 1999 Compared to 1998
September 30 -------------------------------
------------------ % Increase Operating Revenue
1998 1999 (Decrease) Increase (Decrease)
---- ---- ---------- -------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Production volumes:
Natural gas (Mmcf) 2,173 2,023 ( 6.9) $(340)
Oil (Mmbls) 141 77 (45.0) (712)
Average sale prices:
Natural gas (per Mcf) $2.27 $2.15 ( 5.1) (233)
Oil (per Bbl) 11.24 19.55 73.9 643
</TABLE>
Oil and gas revenues were lower in the third quarter of 1999
as compared to the third quarter of 1998 with an 18% decrease in
production, partially offset by a 9% increase in realized prices,
both on an Mcfe basis. 40% of the production decrease was due to
properties sold by the Company during the second quarter of 1999.
Average daily production was 27 million cubic feet of natural gas
equivalent in the third quarter of 1999 compared to 33 million
cubic feet of natural gas equivalent during the third quarter of
1998. Total natural gas production decreased by 7% and oil
production decreased 45% for the comparable periods. The average
realized sales price for natural gas was $2.15 per Mcf for the
quarter ended September 30, 1999, compared to $2.27 per Mcf for
the year-ago quarter, a decrease of 5.1%. The average realized
oil price for the quarter ended September 30, 1999 was $19.55 per
Bbl, and for the quarter ended September 30, 1998 was $11.24 per
Bbl, a 74% increase.
Gathering System. Revenues from this source were $1,853,000
for the three months ended September 30, 1998 and were $2,669,000
for the three months ended September 30, 1999. Outside
purchases were $1,271,000 for the third quarter of 1998 and
system operating costs were $142,000, whereas for the three
months ended September 30, 1999 the outside purchases totaled
$1,978,000 and system operating costs were $99,000. The cash
margin from the gathering system increased from $440,000 for the
three months ended September 30, 1998 to $592,000 for the three
months ended September 30, 1999.
Other. Other revenue increased $160,000, or 167%, from
$96,000 for the quarter ended September 30, 1998 to $256,000 for
the quarter ended September 30, 1999. The primary cause of this
increase was management fees received from an affiliated company.
Oil and Gas Production Expense. Oil and gas production
expense decreased by $99,000, or 5%, for the three months ended
September 30, 1999, compared to the same period in 1998. The
decrease in oil and gas production expense was due primarily to
the sale of high operating expense properties during the second
quarter of 1999.
Depreciation and Amortization ("D&A") Expense.
Depreciation and amortization expenses decreased $1.186 million,
or 28%, for the third quarter of 1999 over the same period in
1998, and was $1.21 per Mcfe for the 1999 quarter, a decrease of
$.18 per Mcfe, or 13%, compared to the $1.39 per Mcfe for the
1998 quarter. For oil and gas D&A only, the results were $0.91
per Mcfe for the 1999 quarter compared with $1.14 per Mcfe for the
1998 quarter, a 20% decrease.
G & A Expense. General and administrative expense
increased $229,000, or 27%, in the three months ended September
30, 1999 as compared with the 1998 period. In the third quarter
of 1999 the Company recorded reduced overhead reimbursements due
to operated properties sold during the second quarter of 1999.
Interest Expense. Interest expense was virtually unchanged
for the quarter-to-quarter comparison, at approximately $3.8
million for the three months ended September 30, 1998 and 1999.
Income Taxes. In connection with acquisition made in late
February 1998, the Company recorded deferred income taxes
related to the excess of financial bases of net assets acquired
(principally properties and equipment) over their respective
bases for income tax purposes. Such net liability results in the
Company providing for income taxes or credits after the date of
the acquisition.
Net Loss. Due to the factors described above, net loss
increased $129,000, or 5%, from a net loss of $2.36 million for
the third quarter of 1998, to a net loss of $2.49 million for the
same period of 1999.
Nine Months Ended September 30, 1999 Compared to Nine Months
Ended September 30, 1998
Operating Revenues. Operating revenues increased by $1.087
million, or 6%, for the nine months ended September 30, 1999,
compared to the year earlier period. Operating revenues are
comprised of Oil and gas sales, Gathering systems, and Other.
The following table summarizes oil and gas production volumes,
average sales prices and period to period comparisons, including
the effect on operating revenues, for the periods indicated:
<TABLE>
<CAPTION>
Nine Months Ended 1999 Compared to 1998
September 30, --------------------------------
------------------ % Increase Operating Revenue
1998 1999 (Decrease) Increase (Decrease)
---- ---- ---------- -------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Production volumes:
Natural gas (Mmcf) 6,466 6,263 (3.1) $(447)
Oil (Mmbls) 403 281 (30.2) (1,482)
Average sale prices:
Natural gas (per Mcf) $2.20 $2.11 (3.7) (505)
Oil (per Bbl) 12.20 14.46 18.5 635
</TABLE>
Oil and gas revenues were lower in the first nine months of
1999 as compared to the same period of 1998 with an 11% decrease
in production and a 1% increase in realized prices, both on an
Mcfe basis. 34% of the production decrease was due to properties
sold by the Company during the second quarter of 1999. Average
daily production was 29 million cubic feet of natural gas
equivalent in the first nine months of 1999 compared to 32.5
million cubic feet of natural gas equivalent during the same
period of 1998, a decrease of 11%. Total natural gas production
decreased by 3% and oil production decreased 30% for the
comparable periods. The average realized sales price for natural
gas was $2.11 per Mcf for the first nine months of 1999, compared
to $2.20 per Mcf for the year-ago period, a decrease of 4%. The
average realized oil price for the nine months ended September
30, 1999 was $14.46 per Bbl, and for the nine months ended
September 30, 1998 was $12.20 per Bbl, a 19% increase.
Gathering System. Revenues from this source were $4,214,000
for the nine months ended September 30, 1998 and were $6,638,000 for
the nine months ended September 30, 1999. Outside purchases were
$2,884,000 for the first nine months of 1998 and system operating
costs were $332,000, whereas for the nine months ended September
30, 1999 the outside purchases totaled $4,794,000 and system
operating costs were $313,000. The cash margin from the
gathering system increased from $998,000 for the nine months
ended September 30, 1998 to $1.531 million for the nine months
ended September 30, 1999.
Other. Other revenue increased $464,000, or 256%. from
$181,000 for the nine months ended September 30, 1998 to $645,000
for the nine months ended September 30, 1999. The primary cause
of this increase was management fees received from an affiliated
company.
Oil and Gas Production Expense. Oil and gas production
expense decreased by $566,000, or 9%, for the nine months ended
September 30, 1999, compared to the same period in 1998. The
decrease in oil and gas production expense was due primarily to
the sale of high operating expense properties during the second
quarter of 1999.
Depreciation and Amortization ("D&A") Expense.
Depreciation and amortization expenses decreased $793,000, or 8%,
for the first nine months of 1999 over the same period in 1998,
and was $1.21 per Mcfe for the 1999 nine months, an increase of
$.03 per Mcfe, or 3%, compared to the $1.18 per Mcfe for the 1998
period. For oil and gas D&A only, the results were $.94 per Mcfe
for the first nine months of 1999 compared with $.97 per Mcfe for
the 1998 period, a 4% decrease.
G & A Expense. General and administrative expense
increased $493,000, or 17%, in the nine months ended September
30, 1999 as compared with the 1998 period. For the nine months
ended September 30, 1999 the Company recorded reduced overhead
reimbursements due to operated properties sold during the second
quarter of 1999.
Interest Expense. Interest expense increased to $11.15
million for the nine months ended September 30, 1999 compared to
$9.69 million for the comparable period of the preceding year.
This increase was attributable to higher average outstanding
indebtedness and higher effective interest rates.
Income Taxes. In connection with acquisition made in late
February 1998, the Company recorded deferred income taxes
related to the excess of financial bases of net assets acquired
(principally properties and equipment) over their respective
bases for income tax purposes. Such net liability results in the
Company providing for income taxes or credits after the date of
the acquisition.
Net Loss. Due to the factors described above, net loss
increased $1.861 million, or 32%, from a net loss of $5.869
million for the first nine months of 1998, to a net loss of
$7.730 million for the same period of 1999.
Liquidity and Capital Resources
As of September 30, 1999 the Company had cash and cash
equivalents of $2.55 million.
As of September 30, 1999 the Company had $128 million of
indebtedness outstanding. This was comprised of $108 million of
Senior Notes due 2008 issued in late February, 1998, and $20
million of advances under the Credit Facility discussed below.
Pursuant to the Indenture governing the Senior Notes, the Company
may incur up to $30.0 million in Permitted Indebtedness (as
defined). Subject to certain limitations in the Indenture, the
Company may incur additional indebtedness, including indebtedness
under the Credit Facility. See "-- Credit Facility."
On September 28, 1999, the Company entered into a non-recourse
volumetric production payment agreement (the "Production
Payment") with a unit of Duke Energy Corporation ("Duke"),
pursuant to which the Company will deliver to Duke 2.8 Bcf of
natural gas produced from certain of the Company's properties
over a 5-year period. Proceeds of the Production Payment were $5
million, of which $4.5 million was paid by the Company on
September 30, 1999 to reduce to $20.1 million the outstanding
principal balance under its Credit Facility. See "-- Credit
Facility."
Funding for the Company's business activities has historically
been provided by operating cash flow and reserve-based bank
borrowings. The Company regularly engages in discussions
relating to potential acquisitions of oil and gas properties or
companies engaged in the oil and gas business. The Company has
no present agreement, commitment or understanding with respect to
any such acquisitions. Any future acquisitions may require
additional financing which will be dependent upon financing
arrangements, if any, available at the time.
Credit Facility. The Company has a $50 million credit
facility ("Credit Facility") with Union Bank of California, N.A.
and Den norske Bank ASA (the "Banks"), pursuant to which $20.1
million was outstanding at September 30, 1999. Advances under
the Credit Facility are secured by a lien on all oil and gas
reserves, wells, personal property and contract rights of the
Company with the exception of those properties covered by the
Production Payment. The amount of credit available at any time
under the Credit Facility may not exceed the borrowing base,
which presently is $25 million but may be redetermined semi-
annually. The Credit Facility contains customary covenants
which, among other things, require periodic financial and reserve
reporting and limit the Company's incurrence of additional
indebtedness, liens, dividends, loans, mergers, transactions with
affiliates, investments and sales of assets.
By agreement effective August 12, 1999, the Company and the
Banks amended the Credit Facility to (i) provide for repayment of
the outstanding advances under the Credit Facility in
installments during the period ending June 30, 2000, (ii) permit
the sale by the Company of certain of its oil and gas properties,
with 75% of the sale proceeds to be applied toward the next
principal reduction installment, (iii) provide for mandatory
prepayments of principal out of 40% of the Company's monthly
excess cash flow (defined generally as gross revenues less
operating expenses, production and ad valorem taxes, general and
administrative expenses, approved capital expenditures and
principal and interest payments under the Credit Facility), (iv)
limit general and administrative expenses to essentially current
levels, and (v) provide for an interest rate equal to Union
Bank's base rate plus 2%. Under the amendment either Bank may,
at any time, decline its pro rata share of any required
installment or prepayment in which event the Company's
installment or prepayment obligation will be reduced by the
amount so declined.
By agreement effective September 30, 1999, the Company and the
Banks further amended the Credit Facility to provide that payment
of $4.5 million of the Production Payment proceeds described
above satisfied the Company's September 30 principal reduction
obligation under the credit facility, and to provide for
repayment in full of the remaining balance by December 31, 1999.
The Company expects to fund the required repayment through
property sale proceeds or by refinancing its existing credit
facility with other banks or lenders.
Net Cash from Operating Activities. For the three months
ended September 30, 1999 net cash used in the Company's operating
activities was $1.456 million compared to $3.283 million used in
operations during the comparable period in 1998, a change of
$1.827 million. The primary cause of this change was due to an
increase in Accounts Receivable during the 1998 period of $1.0
million due to a purchase price adjustment related to the
February 1998 acquisition.
Net Cash from Investing Activities. For the three months
ended September 30, 1998 net cash used in the Company's investing
activities was $12.466 million, comprised of payments for oil and
gas well drilling activities - $5.155 million, investment in an
affiliate - $2.0 million, and the purchase of proved undeveloped
reserves - $6.5 million. This compares with $558,000 used
in investing activities during the 1999 quarter, comprised
primarily of $1.679 million used in drilling and development
activities offset by $1.018 million of proceeds from the sale of
oil and gas properties. At current prices and without additional
financing, the Company has budgeted $3.5 million for capital
expenditures in 1999, exclusive of acquisitions. The Company
expects to use cash flow from operations, cash balances and
property sales to fund these expenditures.
Net Cash from Financing Activities. For the three months
ended September 30, 1998 net cash provided by the Company's
financing activities was $8.975 million, comprised primarily of
proceeds from bank borrowings to fund the purchase of undeveloped
reserves and invest in an affiliate. By comparison, for the
quarter ended September 30, 1999 net cash provided by the
Company's financing activities was $176,000 comprised principally
of $5.0 million from the Production Payment described above, and
repayment on its Credit Facility of $4.905 million.
Year 2000
General. The Company has assessed the effects of Year 2000 on
its information technology ("IT") and non-IT systems and the
systems of others on which it depends. IT systems include
telecommunications and computers. Non-IT systems include
microcontrollers or other date-sensitive electronic devices used
in flow control or measurement of hydrocarbons employed in the
oil and gas producing industry. The Company owns or operates few
non-IT devices.
Company Readiness. All of the Company's telephone systems,
computers and computer operating systems are Year 2000 compliant.
The Company's mainframe application software is also Year 2000
compliant.
Readiness of Others. It is possible that non-compliance with
Year 2000 issues of other companies from which the Company
receives revenues, payments (through IT) or flow control or
measurement devices upon which it depends (non-IT), could delay
the Company's receipt of revenue attributable to its oil and gas
production. The Company currently believes that any such delay
will not materially and adversely affect the Company's financial
condition, results of operations or liquidity. The Company has
surveyed each of its major sources of revenue and cost
reimbursement, and each provider of flow control and measurement
devices, to determine the status of such parties' Year 2000
compliance and the potential effects of their non-compliance on
the Company's future financial condition, results of operations
and liquidity. All of the companies surveyed expect to be
substantially compliant before the end of the year.
Contingency Plans. The Company has no need for a contingency
plan for conversion of its own business application software.
With regard to contingency plans for the failure, or possible
failure, of others, each major source of funds or non-IT
dependence has been surveyed and expects to be compliant.
This document contains 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. The forward-looking statements contained in this
release are statements that involve risks and uncertainties
including, but not limited to, market demand, the effect of
economic conditions, the result of financing efforts and risks
detailed in RAM's Securities and Exchange Commission Filings.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
The carrying amounts reported in the balance sheets for cash and
cash equivalents, trade receivables and payables, installment notes
and capital leases, and variable rate long-term debt approximate their
fair values. The carrying value of interest rate swap agreements at
December 31, 1998 and September 30, 1999 exceeded the fair value
by approximately $419,000 and $125,000, respectively, representing
the amount the Company would be required to pay to terminate the
contracts at such date. The carrying value of the Senior Notes
exceeded the fair value at December 31, 1998 and September 30, 1999
by approximately $37.4 million and $55.1 million, respectively,
based on quoted market prices.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibit is filed as a part of this report:
Exhibit
Number Description
- ------- -----------------------------------------
10.12.2 Amendment No. 4 and Consent and Waiver dated effective as
of September 2, 1999 by Union Bank of California, N.A. and
Den norske Bank ASA (collectively, the "Banks") in favor of
RAM Energy, Inc., a Delaware corporation ("Borrower") (1)
10.12.3 Amendment No. 5 and Consent and Waiver dated effective as
of September 28, 1999 by Union Bank of California, N.A. and
Den norske Bank ASA (collectively, the "Banks") in favor of
RAM Energy, Inc., a Delaware corporation ("Borrower") (1)
10.12.4 Amendment No. 6 and Consent and Waiver dated effective as
of September 30, 1999 by Union Bank of California, N.A. and
Den norske Bank ASA (collectively, the "Banks") in favor of
RAM Energy, Inc., a Delaware corporation ("Borrower") (1)
27 Financial Data Schedule (1)
_______________
(1) Filed herewith.
(b) Report on Form 8-K
None
<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.
RAM ENERGY, INC.
(Registrant)
Date: November 15, 1999 By: LARRY E. LEE
Larry E. Lee
President and Chief Executive
Officer
By: JOHN M. LONGMIRE
John M. Longmire
Senior Vice President and
Treasurer and Chief Financial
Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Method of Filing
- ------- ----------------------- ------------------------------
10.12.2 Amendment No. 4 and Consent and Filed herewith electronically
Waiver dated effective as of
September 2, 1999 by Union Bank of
California, N.A. and Den norske
Bank ASA (collectively, the "Banks")
in favor of RAM Energy, Inc., a
Delaware corporation ("Borrower")
10.12.3 Amendment No. 5 and Consent and Filed herewith electronically
Waiver dated effective as of
September 28, 1999 by Union Bank of
California, N.A. and Den norske
Bank ASA (collectively, the "Banks")
in favor of RAM Energy, Inc., a
Delaware corporation ("Borrower")
10.12.4 Amendment No. 6 and Consent and Filed herewith electronically
Waiver dated effective as of
September 30, 1999 by Union Bank of
California, N.A. and Den norske
Bank ASA (collectively, the "Banks")
in favor of RAM Energy, Inc., a
Delaware corporation ("Borrower")
27 Financial Data Schedule Filed herewith electronically
EXHIBIT 10.12.2
AMENDMENT NO. 4
This Amendment No. 4 dated as of September 2, 1999
("Amendment") is by Union Bank of California, N.A. and Den
norske Bank ASA (collectively, the "Banks") in favor of RAM
Energy, Inc., a Delaware corporation ("Borrower").
INTRODUCTION
A. The Borrower, the Banks and Union Bank of
California, N.A., as agent for the Banks (the "Agent"), have
entered into the Second Amended and Restated Credit
Agreement dated as of February 3, 1998, as amended by
Amendment No. 1 and Waiver dated as of August 17, 1998,
Amendment No. 2 and Waiver dated as of March 31, 1999, and
Amendment No. 3 and Consent and Waiver dated as of August
12, 1999 (the "Credit Agreement").
B. The Borrower has requested that the Banks amend
certain provisions of the Credit Agreement.
THEREFORE, the Agent, the Borrower and the Banks hereby
agree as follows:
Section 1. Definitions; References. Unless
otherwise defined in this Amendment, each term used in this
Amendment which is defined in the Credit Agreement has the
meaning assigned to such term in the Credit Agreement.
Section 2. Amendments. In Section 1.01 of the Credit
Agreement, the definition of "Working Capital Deficit" is
amended in its entirety as follows:
"Working Capital Deficit" means the amount by
which (a) the consolidated current liabilities of
the Borrower and the Guarantors (excluding the
current portion of the Credit Obligations but
including all accrued interest) exceeds (b) the
consolidated current assets of the Borrower and
the Guarantors.
Section 3. Effectiveness. This Amendment shall
become effective upon the date first set forth above when
the Agent shall have received from the Borrower duly and
validly executed originals of this Amendment and shall apply
to the fiscal quarter ended June 30, 1999 and thereafter.
Section 4. Representations and Warranties. The
Borrower represents and warrants that (a) the Liens under
the Security Documents are valid and subsisting and secure
the Borrower's obligations under the Credit Agreement, (b)
the representations and warranties of the Borrower contained
in the Credit Documents are true and correct as of the date
hereof, except as otherwise previously disclosed to the
Agent, and (c) after giving effect to this Amendment, no
Default has occurred and is continuing as of the date
hereof.
Section 5. Choice of Law. This Amendment shall be
governed by and construed and enforced in accordance with
the laws of the State of Texas.
Section 6. Counterparts. This Amendment may be
signed in any number of counterparts, each of which shall be
an original. Delivery of an executed counterpart of this
Amendment by facsimile shall be effective as delivery of a
manually executed counterpart of this Amendment.
This written agreement and the Credit Documents, as defined in the
Credit Agreement, represent the final agreement among the parties and may
not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties.
There are no unwritten oral agreements between the parties.
EXECUTED as of the date first set forth above.
UNION BANK OF CALIFORNIA, N.A.
By: CARL STUTZMAN
Carl Stutzman
Senior Vice President and Manager
By: DUSTIN GASPARI
Dustin Gaspari
Assistant Vice President
DEN NORSKE BANK ASA
By: CHARLES E. HALL
Name: Charles E. Hall
Title: Senior Vice President
By: ALFRED C. JONES
Name: Alfred C. Jones
Title: Senior Vice President
Acknowledged and accepted this
2nd day of September, 1999.
RAM ENERGY, INC.
By: LARRY E. LEE
Larry E. Lee
President
EXHIBIT 10.12.3
AMENDMENT NO. 5 AND CONSENT AND WAIVER
This Amendment No. 5 and Consent and Waiver dated effective
as of September 28, 1999 ("Amendment") is by Union Bank of
California, N.A. and Den norske Bank ASA (collectively, the
"Banks") in favor of RAM Energy, Inc., a Delaware corporation
("Borrower").
INTRODUCTION
A. The Borrower, the Banks and Union Bank of California,
N.A., as agent for the Banks (the "Agent"), have entered into the
Second Amended and Restated Credit Agreement dated as of
February 3, 1998, as amended by Amendment No. 1 and Waiver dated
as of August 17, 1998, Amendment No. 2 and Waiver dated as of
March 31, 1999, Amendment No. 3 and Consent and Waiver dated as
of August 12, 1999 and Amendment No. 4 dated as of September 2,
1999 (the "Credit Agreement").
B. The Borrower wishes to sell certain of its production
volumes from the South Thomas, East Cheyenne and Wickham Ranch
Fields in Blaine, Custer and Roger Mills Counties, Oklahoma to
Duke Energy Merchant Finance, L.L.C. ("Duke") in exchange for the
payment by Duke to the Borrower of a production payment ("Duke
Production Payment") and the Banks have consented to the Duke
Production Payment pursuant to the terms and conditions of
Amendment No. 3 and Consent and Waiver dated as of August 12,
1999 ("Amendment No. 3").
C. In connection with the Duke Production Payment, the
Borrower is required to grant a security interest to Duke in the
Borrower's right, title and interest in and to the South Thomas,
East Cheyenne and Wickham Ranch Fields in Blaine, Custer and
Roger Mills Counties, Oklahoma in order to secure the Borrower's
obligations to deliver certain of its production volumes from
such fields (the "Duke Liens"). In addition, the Borrower's
obligations in connection with the Duke Production Payment (the
"Duke Debt") constitute Debt as defined in the Credit Agreement.
The granting of the Duke Liens and the Duke Debt violate several
provisions of the Credit Agreement and the other Credit
Documents, including, but not limited to, Section 6.01 and 6.02
of the Credit Agreement.
D. The Banks are willing to consent to the Duke Liens and
the Duke Debt and to make certain other amendments subject to the
terms of this Agreement.
THEREFORE, the Agent, the Borrower and the Banks hereby
agree as follows:
Section 1. Definitions; References. Unless otherwise
defined in this Amendment, each term used in this Amendment which
is defined in the Credit Agreement has the meaning assigned to
such term in the Credit Agreement.
Section 2. Consent and Waiver. The Banks hereby (a)
consent to the granting of the Duke Liens and the incurrence of
the Duke Debt as described above and (b) waive any and all
defaults arising or which may have heretofore arisen under
Section 6.01, 6.02 or any other provision of the Credit Agreement
resulting from the execution, delivery or performance of the
transactions and agreements in connection with the Duke
Production Payment; provided that the Duke Production Payment
satisfies the terms and conditions of Amendment No. 3, including,
without limitation, that (i) the Net Cash Proceeds from the Duke
Production Payment are deposited directly by Duke into Account
No. 0880423444, "UBOC CL RAM Energy" maintained at Union Bank of
California, N.A. and (ii) the Borrower receives Net Cash
Proceeds in an amount greater than or equal to $4,500,000.00.
This waiver is limited to the extent described herein and shall
not be construed to be a consent to or a waiver of any other
actions prohibited by the Credit Agreement. The Agent and each
of the Banks reserves the right to exercise any rights and
remedies available to it in connection with any future defaults
with respect to Section 6.01 or 6.02 of the Credit Agreement or
any other provision of any Credit Document. Further, if any such
transaction is not completed as described above, all consents
granted hereunder shall be void. For purposes of this Section 2,
"Net Cash Proceeds" has the meaning give to such term in
Amendment No. 3.
Section 3. Amendments. The Credit Agreement shall, subject
to the terms of this Amendment, be amended as follows:
(a) Section 1.01. Section 1.01 shall be amended by adding
the following new definition in alphabetical order where
appropriate:
"Duke" means Duke Energy Merchant Finance, L.L.C.
"Duke Production Payment" means the sale by the Borrower of
certain of its production volumes from the South Thomas, East
Cheyenne and Wickham Ranch Fields in Blaine, Custer and Roger
Mills Counties, Oklahoma to Duke in exchange for the payment by
Duke to the Borrower of a production payment.
(b) Section 6.01. Section 6.01 is hereby amended by
deleting the "and" at the end of subsection (g) thereof,
replacing the period at the end of subsection (h) thereof with ";
and" and by adding the following new subsection (i):
(i) Liens granted by the Borrower to Duke to secure
the obligations of the Borrower in connection with the Duke
Production Payment; provided that each such Lien only
encumbers the Borrower's interest in the South Thomas, East
Cheyenne and Wickham Ranch Fields in Blaine, Custer and
Roger Mills Counties, Oklahoma subject to the Duke
Production Payment.
(c) Section 6.02. Section 6.02 is hereby amended by
deleting the "and" at the end of subsection (f) thereof,
replacing the period at the end of subsection (g) thereof with ";
and" and by adding the following new subsection (h):
(h) Debt incurred by the Borrower in connection with
the Duke Production Payment provided that such Debt shall
not be increased so that the amount of such Debt becomes
greater than the outstanding amount of such Debt on the date
of Amendment No. 5 and Consent and Waiver dated as of
September 28, 1999.
Section 4. Effectiveness. This Amendment shall become
effective upon the date first set forth above when the Agent
shall have received from the Borrower and each of the Banks duly
and validly executed originals of this Amendment.
Section 5. Representations and Warranties. The Borrower
represents and warrants that (a) the execution, delivery and
performance of the Duke Production Payment and this Amendment are
within the corporate power and authority of the Borrower and have
been duly authorized by appropriate proceedings, (b) the Liens
under the Security Documents are valid and subsisting and secure
the Borrower's obligations under the Credit Agreement, (c) the
representations and warranties of the Borrower contained in the
Credit Documents are true and correct as of the date hereof,
except as otherwise previously disclosed to the Agent, and (d) no
Default has occurred and is continuing as of the date hereof.
Section 6. Choice of Law. This Amendment shall be
governed by and construed and enforced in accordance with the
laws of the State of Texas.
Section 7. Counterparts. This Amendment may be signed
in any number of counterparts, each of which shall be an
original. Delivery of an executed counterpart of this Amendment
by facsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.
This written agreement and the Credit Documents, as defined in the Credit
Agreement, represent the final agreement among the parties and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties.
There are no unwritten oral agreements between the parties.
EXECUTED as of the date first set forth above.
UNION BANK OF CALIFORNIA, N.A.
By: CARL STUTZMAN
Name: Carl Stutzman
Title: Senior Vice President
By: DUSTIN GASPARI
Name: DUSTIN GASPARI
Title: Assistant Vice President
DEN NORSKE BANK ASA
By: J. MORTEN KREUTZ
Name: J. Morten Kreutz
Title: First Vice President
By: LASSE WAGENE
Name: Lasse Wagene
Title: Vice President
Acknowledged and accepted this
28th day of September, 1999.
RAM ENERGY, INC.
By: LARRY E. LEE
Larry E. Lee
President
EXHIBIT 10.12.4
AMENDMENT NO. 6
This Amendment No. 6 dated effective as of September 30,
1999 ("Amendment") is by Union Bank of California, N.A. and Den
norske Bank ASA (collectively, the "Banks") in favor of RAM
Energy, Inc., a Delaware corporation ("Borrower").
INTRODUCTION
A. The Borrower, the Banks and Union Bank of California,
N.A., as agent for the Banks (the "Agent"), have entered into the
Second Amended and Restated Credit Agreement dated as of
February 3, 1998, as amended by Amendment No. 1 and Waiver dated
as of August 17, 1998, Amendment No. 2 and Waiver dated as of
March 31, 1999, Amendment No. 3 and Consent and Waiver dated as
of August 12, 1999, Amendment No. 4 dated as of September 2, 1999
and Amendment No. 5 and Consent and Waiver dated as of September
28, 1999 (as amended, the "Credit Agreement").
B. The Borrower has requested that the Banks amend certain
provisions of the Credit Agreement.
C. The Banks are willing to consent to such amendments
subject to the terms of this Amendment.
THEREFORE, the Agent, the Borrower and the Banks hereby
agree as follows:
Section 1. Definitions; References. Unless otherwise
defined in this Amendment, each term used in this Amendment which
is defined in the Credit Agreement has the meaning assigned to
such term in the Credit Agreement.
Section 2. Amendments. The Credit Agreement shall, subject
to the terms of this Amendment, be amended as follows:
(a) Section 4(a) of Amendment No. 3 and Consent and Waiver
is amended (i) to reduce the amount of mandatory prepayment due
September 30, 1999, from $10,000,000 to $4,905,000, and (ii) to
delete each of the other mandatory prepayments due on December
31, 1999, March 31, 2000 and June 30, 2000.
(b) Section 3(e) of Amendment No. 3 and Consent and Waiver
is amended to conform the reference to the prepayment due
September 30, 1999, to the reduced amount set out in subparagraph
(a) next above.
(c) The applicable provisions of the Credit Agreement are
amended to authorize the release and distribution of (i)
$2,500,000 of the funds in the Cash Collateral Account to Den
Norske Bank ASA and $2,000,000 of the funds in the Cash
Collateral Account to Union Bank of California, N.A.,
respectively, as a prepayment of their outstanding Revolving
Advances and permanent reduction of their Revolving Commitments
and in satisfaction of the mandatory prepayment due on September
30, 1999 and (ii) all amounts remaining in the Cash Collateral
Account to the Borrower up to but not to exceed the sum of
$505,000.
(d) The definition of "Revolving Maturity Date" in Section
1.01 of the Credit Agreement is amended by replacing "February 2,
2003" with "December 31, 1999".
Section 3. Effectiveness. This Amendment shall become
effective upon the date first set forth above when the Agent
shall have received from the Borrower and each of the Banks duly
and validly executed originals of this Amendment.
Section 4. Representations and Warranties. The Borrower
represents and warrants that (a) the execution, delivery and
performance of this Amendment are within the corporate power and
authority of the Borrower and have been duly authorized by
appropriate proceedings, (b) the Liens under the Security
Documents are valid and subsisting and secure the Borrower's
obligations under the Credit Agreement, (c) the representations
and warranties of the Borrower contained in the Credit Documents
are true and correct as of the date hereof, except as otherwise
previously disclosed to the Agent, and (d) no Default has
occurred and is continuing as of the date hereof.
Section 5. Choice of Law. This Amendment shall be
governed by and construed and enforced in accordance with the
laws of the State of Texas.
Section 6. Counterparts. This Amendment may be signed
in any number of counterparts, each of which shall be an
original. Delivery of an executed counterpart of this Amendment
by facsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.
This written agreement and the Credit Documents, as defined in the Credit
Agreement, represent the final agreement among the parties and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties.
There are no unwritten oral agreements between the parties.
EXECUTED as of the date first set forth above.
UNION BANK OF CALIFORNIA, N.A.
By: CARL STUTZMAN
Name: Carl Stutzman
Title: Senior Vice President
By: DUSTIN GASPARI
Name: Dustin Gaspari
Title: Assistant Vice President
DEN NORSKE BANK ASA
By: J. MORTEN KREUTZ
Name: J. Morten Kreutz
Title: First Vice President
By: LASSE WAGENE
Name: Lasse Wagene
Title: Vice President
Acknowledged and accepted this
30th day of September, 1999.
RAM ENERGY, INC.
By: LARRY E. LEE
Larry E. Lee
President
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,550
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<RECEIVABLES> 4,612
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<PP&E> 158,232
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