UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 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>
FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Balance Sheets - December 31, 1998 and March 31, 1999 (unaudited)
Statements of Operations - Three months ended March 31, 1998 and
1999 (unaudited)
Statements of Cash Flows - Three months ended March 31, 1998 and
1999 (unaudited)
Notes to Financial Statements (unaudited)
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, March 31,
1998 1999
------------ -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 8,603 $ 1,093
Accounts receivable:
Oil and gas sales 3,387 3,660
Joint interest operations, net of
allowance for doubtful accounts of $358
in 1998 and $363 in 1999 2,117 1,192
Related parties 147 130
Other 115 37
Prepaid expenses and deposits 431 483
--------- ---------
Total current assets 14,800 6,595
Properties and equipment, at cost:
Oil and gas properties and equipment, based
on full cost accounting 119,697 119,975
Gathering and disposal systems 39,184 39,403
Other property and equipment 3,781 3,753
--------- ---------
162,662 163,131
Less accumulated amortization and depreciation 28,388 31,380
--------- ---------
Net properties and equipment 134,274 131,751
Investment in RVC Energy, Inc. (Note 3) 1,307 931
Other assets:
Deferred loan costs, net of accumulated
amortization of $715 in 1998 and $797 in 1999 955 873
Deferred offering costs, net of accumulated
amortization of $395 in 1998 and $512 in 1999 4,307 4,189
Other 808 806
--------- ---------
Total assets $ 156,451 $ 145,145
========= =========
Liabilities and stockholders' deficiency
Current liabilities:
Accounts payable:
Trade $ 6,230 $ 3,109
Oil and gas proceeds due others 4,378 3,823
Related party 826 -
Accrued liabilities:
Compensation 320 113
Interest 4,942 1,860
Other 65 54
Long-term debt due within one year 109 109
--------- ---------
Total current liabilities 16,870 9,068
Gas balancing liability not expected to be
settled within one year 735 735
Long-term debt due after one year 131,630 131,615
Deferred income taxes 17,056 15,756
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) (12,672)
--------- ---------
Stockholders' deficiency (10,440) (12,629)
--------- ---------
Total liabilities and stockholders' deficiency $ 156,451 $ 145,145
========= =========
</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
March 31,
------------------------
1998 1999
------ ------
<S> <C> <C>
Operating revenues:
Oil an gas sales $ 6,095 $ 6,113
Gathering systems 666 1,670
Other 60 187
------- -------
Total operating revenues 6,821 7,970
Operating expenses:
Oil and gas production expenses 1,843 1,867
Gathering system purchases 447 1,159
Gathering system operations 37 97
Amortization and depreciation 2,654 3,284
General and administrative, overhead and
other expenses, net of operator's
overhead fees to unrelated interests 1,109 1,113
------- -------
Total operating expenses 6,090 7,520
------- -------
Operating income 731 450
Other income (expense):
Interest expense (2,382) (3,641)
Interest income 67 78
Equity in loss of RVC Energy, Inc. (Note 3) - (376)
------- -------
Loss before income taxes (1,584) (3,489)
Income taxes (504) (1,300)
------- -------
Net loss $(1,080) $(2,189)
======= =======
Net loss per share-basic and diluted $(.40) $(.80)
======= =======
Weighted average shares outstanding 2,727,000 2,727,000
========= =========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
RAM Energy, Inc.
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three months ended
March 31,
1998 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (1,080) $ (2,189)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Equity in net loss of RVC Energy, Inc. - 376
Provision for doubtful accounts receivable
and other - 8
Amortization of Senior Notes discount included
in interest expense - 39
Amortization and depreciation:
Oil and gas properties and equipment 2,339 2,552
Gathering and disposal systems 163 488
Senior Notes fees - 118
Credit facility fees 84 82
Other property and equipment 68 44
Deferred income taxes (504) (1,300)
Cash provided (used) by changes in operating
assets and liabilities:
Prepaid expenses and deposits 64 (53)
Accounts receivable 572 739
Accounts payable (1,384) (4,645)
Accrued liabilities and other 661 (3,300)
Gas balancing liability (90) 145
--------- ---------
Total adjustments 1,973 (4,707)
--------- ---------
Net cash provided (used) by operating activities 893 (6,896)
Cash flows from investing activities
Payments for acquisition of Carlton Resources
Corporation (net of cash acquired) (Note 2) (42,600) -
Payments for oil and gas properties and equipment (3,585) (378)
Proceeds from sales of oil and gas properties
and equipment 17 30
Payments for other property and equipment (167) (11)
Proceeds from sales of other property and
equipment - 18
Payments for gathering and disposal systems - (219)
Proceeds from sales of other assets 53 -
--------- ---------
Net cash used by investing activities (46,282) (560)
Cash flows from financing activities
Proceeds from Senior Notes Offering, net of
discount 113,328 -
Payments of deferred offering costs (4,416) -
Principal payments on other long-term debt (62,000) (54)
Proceeds from borrowings on other long-term debt 10,079 -
Payments for Preferred Stock Redemption (1,474) -
Payments for loan origination fees (28) -
--------- ---------
Net cash provided (used) by financing activities 55,489 (54)
--------- ---------
Increase (decrease) in cash and cash equivalents 10,100 (7,510)
Cash and cash equivalents at beginning of period 1,248 8,603
--------- ---------
Cash and cash equivalents at end of period $ 11,348 $ 1,093
========= =========
</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. for the
three-month periods ended March 31, 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
months ended March 31, 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. (the "Company") 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
operations of the Company for the three months ended March 31, 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 $ 9,043
=======
Net loss $(1,655)
=======
Net loss per common share $(.61)
=======
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 three months ended
March 31, 1999 is as follows (in thousands):
Operating revenues $1,934
======
Operating loss $ (416)
======
Net loss $ (760)
======
4. 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 March 31, 1999
exceeded the fair value by approximately $419,000 and $600,000,
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 March 31, 1999 by approximately $37.4
million and $43.2 million, respectively, based on quoted market prices.
5. Contingencies
In November 1995, the Company's predecessor entered into a letter
of intent to sell an oil and gas property located in Louisiana
state waters in Plaquemines Parish. The sale was completed in
early 1996. 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.
Item 2. 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 and exploratory
opportunities.
Prior to November 1996 the principal operations of the Company
were that of serving as managing general partner of an
institutional limited partnership. Effective December 1, 1996
the Company acquired substantially all of the partnership's
operations for approximately $59.0 million.
In late February 1998, the Company acquired Carlton Resources
Corporation ("Carlton" or the "Carlton Acquisition"), in an
acquisition of stock accounted for as a purchase, for
approximately $41.6 million, net of working capital adjustments.
With the acquisition of Carlton, the Company acquired reserves
located in the Mid-Continent Area and Permian Basin, as well as
an oil and gas gathering system and salt water disposal facility
located in Oklahoma. The results of operations discussed below
include the operations of Carlton, on a consolidated basis, since
March 1998.
The 169-mile gathering system 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 Carlton Acquisition was financed by completion of the public
issuance of $115.0 million in Senior Notes due 2008 (the "Notes
Offering"). Net proceeds of the Notes Offering were used to
purchase Carlton, to repay existing debt, and for working
capital.
On August 17, 1998, the Company completed a $6.5 million
acquisition of a one-half interest in the proved undeveloped oil
and gas properties of Ricks Exploration, Inc., located in south
Texas ("Ricks" and "Ricks Acquisition"). RAM acquired proved
undeveloped reserves and undeveloped leasehold in this
transaction.
Concurrent with the Ricks Acquisition, RAM invested $2.0 million
in RVC, in exchange for 49.5% of RVC's voting common stock and
certain shares of non-voting common stock. RVC is an
unrestricted affiliate of RAM and is accounted for under the
equity method.
Concurrent with the Ricks Acquisition, RVC acquired the remaining
one-half interest in the proved undeveloped properties of Ricks
and all of Ricks' interest in the proved developed producing oil
and gas properties in the same field for $14.6 million cash. On
August 31, 1998, RVC acquired all of the outstanding common stock
of Comet Petroleum, Inc. ("Comet") for $27.8 million in cash.
RVC funded both acquisitions with equity contributed by its
stockholders and borrowings under its credit facility which are
non-recourse to its stockholders, including the Company. RVC
believes the acquired properties provide opportunities for
reserve additions and increased cash flow from additional
developmental and exploratory drilling.
The oil and gas properties acquired from Ricks and a substantial
portion of the Comet properties are located in the Permian Basin
and are in close proximity to the Company's existing Permian
Basin properties. The Company has been designated as the
operator of all oil and gas properties acquired from Ricks and a
majority of the Comet properties formerly operated by Comet and
its affiliates.
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 has entered into hedging arrangements for natural
gas production from April, 1999 through March 2000 on 5,790,000
Mmbtu that provide an average floor of $2.106 per Mmbtu.
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.
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months
Ended March 31, 1998
Operating Revenues. Operating revenues were $8.0 million for the
quarter ended March 31, 1999, representing an increase of
$1,149,000, or 16.8% over the year earlier period. Results for
the three month period in 1998 include only one month of
operations of Carlton. 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
March 31, --------------------------------
------------------ % Increase Operating Revenue
1998 1999 (Decrease) Increase(Decrease)
------ ------ ---------- ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Production volumes:
Natural gas (Mmcf) 1,870 2,087 11.6 $ 511
Oil (Mbbls) 126 106 (15.9) (267)
Average sales price:
Natural gas (per Mcf) $2.36 $2.39 1.3 63
Oil (per Bbl) 13.37 10.62 (20.6) (291)
</TABLE>
Oil and gas revenues were slightly higher in the first quarter of
1999 as compared to the first quarter of 1998 with a 3.7%
increase in production, offset by a 3.0% decrease in realized
prices, both on an Mcfe basis. Average daily production was 30.2
Mmcfe in the first quarter of 1999 compared to 29.2 Mmcfe during
the first quarter of 1998, an increase of 3.7%. Total natural
gas production increased by 11.6% and oil production decreased
15.9% for the comparable periods. The average realized sales
price for natural gas was $2.39 Mcf for the quarter ended March
31, 1999, compared to $2.36 per Mcf for the year-ago quarter, an
increase of 1.3%. The average realized oil price for the quarter
ended March 31, 1999 was $10.62 per Bbl, and for the quarter
ended March 31, 1998 was $13.37 per Bbl, a 20.6% decrease. The
increase in natural gas production was mainly attributable to the
Carlton Acquisition and the effects of the successful drilling
program in 1998, off-set by the natural decline of the Company's
properties.
Oil and Gas Production Expense. Oil and gas production expense
increased by $24,000, or 1.3%, for the three months ended March
31, 1999, compared to the same period in 1998. The oil and gas
production expense was $.69 per Mcfe for the first three months
of 1999, a decrease from $.70 per Mcfe in the first three months
of 1998. The net increase in oil and gas production expense was
due primarily to the addition of Carlton's operations, offset by
decreases in expense of the Company's base properties resulting
from sales of properties in late 1998 which had high operating
expenses.
Gathering System. The gathering system is a component of
Carlton's operations. Revenues from this source were $666,000
for the month of March 1998 and were $1,670,000 for the three
months ended March 31, 1999. Carlton is obligated to deliver
10,000 Mmbtu's daily at the tail-gate of the system, and
purchases outside gas to satisfy that obligation. Outside
purchases were $447,000 for the month of March 1998 and system
operating costs were $37,000, whereas for the three months ended
March 31, 1999 the outside purchases totaled $1,159,000 and
system operating costs were $97,000.
Depreciation and Amortization ("D&A") Expense. Depreciation
and amortization expenses were $3.3 million, representing an
increase of $630,000, or 24% for the first three months of 1999
over the same period in 1998, and was $1.21 per Mcfe for the 1999
quarter, an increase of $.20, or 19.4% compared to the $1.01 per
Mcfe for the 1998 quarter. This increase is due primarily to the
inclusion of Carlton's operations with a higher purchase price
per Mcfe than the Company's cost basis prior to the acquisition,
as well as the depreciation of Carlton's gathering system. For
oil and gas D&A only, the results were $.94 per Mcfe for the 1999
quarter compared with $.89 per Mcfe for the 1998 quarter
(including one month of Carlton's production), a 5.2% increase.
G & A Expense. General and administrative expense was
virtually unchanged in the first three months of 1999 over the
same period of 1998.
Interest Expense. Interest expense increased to $3.6 million for
the three months ended March 31, 1999 compared to $2.4 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 the Carlton Acquisition, 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 Carlton Acquisition.
Net Loss. Due to the factors described above, net loss
increased $1,109,000, or 103%, from a net loss of $1,080,000 in
the first three months of 1998, to a net loss of $2,189,000 in
the same period of 1999.
Liquidity and Capital Resources
As of March 31, 1999 the Company had cash and cash equivalents of
$1.1 million.
As of March 31, 1999 the Company had $133.0 million ($131.8
million after giving effect to applicable original issue
discount) of indebtedness outstanding. This included $108.0
million of Senior Notes due 2008 issued in late February, 1998,
and $25.0 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."
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 working credit
facility ("Credit Facility") with Union Bank of California, N.A.
("Union Bank") and Den Norske Bank, S.A., which provides for a
$50.0 million revolving commitment payable in full in February
2003. Advances under the Credit Facility bear interest on a
sliding scale based on the ratio of the aggregate amount
outstanding to the borrowing base. The applicable rate may, at
the Company's option, be based either on the Eurodollar rate or
the Union Bank base rate, with the rates ranging from the
Eurodollar rate plus 1.375% to 2.0% or the Union Bank base rate
plus 0.0% to 0.5%. The Company is required to pay a commitment
fee on the amount by which the borrowing base exceeds the
aggregate amount outstanding under the Credit Facility. All
amounts outstanding under the Credit Facility are secured by a
lien on all oil and gas reserves, wells, personal property and
contract rights of the Company.
The amount of credit available at any time under the Credit
Facility may not exceed the borrowing base which, presently, is
$25.0 million, and will 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 indebtedness, liens, dividends,
loans, mergers, transactions with affiliates, investments and
sales of assets.
Net Cash Used in and Provided by Operating Activities. For the
three months ended March 31, 1999 net cash used by the Company's
operating activities was $6.9 million compared to $.9 million
provided by operations during the comparable period in 1998. The
primary uses of cash during the 1999 quarter were reductions in
accounts payable of $4.6 million and accrued interest and other
accrued liabilities of $3.3 million.
Net Cash Used in Investing Activities. For the three months
ended March 31, 1998 net cash used in the Company's
investing activities was $46.3 million, comprised primarily of
the Carlton Acquisition purchase price of $42.6 million, and $3.6
million in drilling activities. This compares with $ .6 million
used in 1999. 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.
Year 2000
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 micro
controllers 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 Year 2000
compliant but presently sorts a two-digit year of "00" before a
two-digit year of "99." Testing of the mainframe business
software will be completed by July 31, 1999 with any necessary
modifications completed by September 30, 1999 at a cost estimated
to be less than $100,000. All of the Company's computers and
operating systems are 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 contingency plan for
conversion of its own business application software, and none
will be formulated. With regard to contingency plans for the
failure, or possible failure, of others, each major source of
funds or non-IT dependence will be handled on a case-by-case
basis, with full preparedness by September 30, 1999.
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 March 31, 1999
exceeded the fair value by approximately $419,000 and $600,000,
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 March 31, 1999 by approximately $37.4 million
and $43.2 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
- ------- -----------------------------------------
27 Financial Data Schedule
(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: May 17, 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
- ------- ----------------------- ------------------------------
27 Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,093
<SECURITIES> 0
<RECEIVABLES> 4,852
<ALLOWANCES> 363
<INVENTORY> 0
<CURRENT-ASSETS> 6,595
<PP&E> 163,131
<DEPRECIATION> (31,380)
<TOTAL-ASSETS> 145,145
<CURRENT-LIABILITIES> 9,068
<BONDS> 131,615
0
0
<COMMON> 27
<OTHER-SE> (12,656)
<TOTAL-LIABILITY-AND-EQUITY> 145,145
<SALES> 7,783
<TOTAL-REVENUES> 7,970
<CGS> 3,123
<TOTAL-COSTS> 7,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8
<INTEREST-EXPENSE> 3,641
<INCOME-PRETAX> (3,489)
<INCOME-TAX> (1,300)
<INCOME-CONTINUING> (2,189)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,189)
<EPS-PRIMARY> (.80)
<EPS-DILUTED> 0
</TABLE>
