<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1998 COMMISSION FILE NUMBER 0-5426
THE WISER OIL COMPANY
A DELAWARE CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 55-0522128
8115 PRESTON ROAD, SUITE 400
DALLAS, TEXAS 75225
TELEPHONE (214) 265-0080
Former name, former address and former fiscal year, if changed since last
report. NONE
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, and (2) has been subject to such filing requirements
for the past 90 days.
x
----- ----
Yes No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at September 30, 1998
------------- ---------------------------------
$3 par value 8,951,965
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<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The consolidated condensed financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
reflect all adjustments which are, in the opinion of management, necessary to
fairly present such information. Although the Company believes that the
disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including significant accounting
policies, normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K.
2
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------------- -------------
(000's) except share data
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................... $ 1,346 $ 13,255
Accounts receivable.......................................... 9,397 13,765
Inventories.................................................. 928 1,007
Income taxes receivable...................................... 2,070 725
Prepaid expenses............................................. 1,438 438
--------- ---------
Total current assets....................................... 15,179 29,190
--------- ---------
Property, Plant and Equipment, at cost:
Oil and gas properties (successful efforts method)........... 366,443 346,655
Other properties............................................. 5,522 5,399
--------- ---------
371,965 352,054
Accumulated depreciation, depletion and amortization......... (147,316) (131,346)
--------- ---------
Net property, plant and equipment............................ 224,649 220,708
Other Assets.................................................. 3,726 4,658
--------- ---------
$ 243,554 $ 254,556
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable............................................. $ 10,302 $ 18,396
Accrued liabilities.......................................... 1,759 2,985
--------- ---------
Total current liabilities.................................. 12,061 21,381
--------- ---------
Long Term Debt................................................ 143,870 124,304
Deferred Benefit Cost......................................... 1,028 1,169
Deferred Income Taxes......................................... 6,183 10,278
Stockholders' Equity:
Common stock - $3 par value; 20,000,000 shares authorized;
shares issued - 9,128,169; shares outstanding - 8,951,965.... 27,385 27,385
Paid-in capital.............................................. 3,223 3,223
Retained earnings............................................ 51,440 68,630
Foreign currency translation................................. 1,093 915
Treasury stock; 176,204 shares, at cost...................... (2,729) (2,729)
--------- ---------
Total stockholders' equity................................. 80,412 97,424
--------- ---------
$ 243,554 $ 254,556
========= =========
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 are an integral part of
these financial statements.
3
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
(000's except per share data)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales......................... $ 13,338 $ 16,372 $ 45,883 $ 55,641
Dividends and interest.................... 32 407 244 864
Marketable security sales................. - - - 1,813
Other..................................... 463 248 1,140 2,108
-------- -------- -------- --------
13,833 17,027 47,267 60,426
-------- -------- -------- --------
Costs and Expenses:
Production and operating.................. 7,581 6,407 20,016 19,968
Purchased natural gas..................... 334 377 1,072 1,150
Depreciation, depletion and amortization.. 6,500 5,318 20,162 16,328
Exploration............................... 3,526 2,181 10,533 6,320
General and administrative................ 2,591 2,225 7,570 7,156
Interest expense.......................... 3,387 3,289 9,760 6,644
-------- -------- -------- --------
23,919 19,797 69,113 57,566
-------- -------- -------- --------
Earnings (Loss) Before Income Taxes......... (10,086) (2,770) (21,846) 2,860
Income Tax Expense (Benefit)................ (1,933) (892) (5,462) 541
-------- -------- -------- --------
NET INCOME (LOSS)........................... (8,153) (1,878) (16,384) 2,319
Retained Earnings, beginning of period...... 59,862 70,045 68,630 66,385
Dividends Paid.............................. (269) (269) (806) (806)
-------- -------- -------- --------
Retained Earnings, end of period............ $ 51,440 $ 67,898 $ 51,440 $ 67,898
======== ======== ======== ========
Weighted Average Outstanding Shares......... 8,952 8,950 8,952 8,950
======== ======== ======== ========
Earnings (Loss) Per Share:
Basic..................................... $ (0.91) $ (0.21) $ (1.83) $ 0.26
======== ======== ======== ========
Diluted................................... $ (0.91) $ (0.21) $ (1.83) $ 0.26
======== ======== ======== ========
Cash Dividends Per Share.................... $ 0.03 $ 0.03 $ 0.09 $ 0.09
======== ======== ======== ========
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 are an integral part of
these financial statements.
4
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
---------------------
1998 1997
---------- ---------
(000's)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss)............................................. $(16,384) $ 2,319
Adjustments to reconcile net income to operating cash flows:
Depreciation, depletion and amortization.................... 20,162 16,328
Deferred income taxes....................................... (4,095) 29
Marketable securities and property sale gains............... (571) (3,750)
Foreign currency translation................................ 178 (22)
Exploration expense......................................... 10,533 6,320
Amortization of other assets................................ 418 67
Other Changes:
Accounts receivable....................................... 4,368 2,398
Inventories............................................... 79 (313)
Income taxes receivable................................... (1,345) 498
Prepaid expenses.......................................... (1,000) 11
Other assets.............................................. 578 -
Accounts payable.......................................... (8,094) (2,067)
Accrued liabilities....................................... (1,226) 3,693
Deferred benefits cost.................................... (141) 147
-------- --------
Operating Cash Flows................................... 3,460 25,658
-------- --------
Cash Flows From Investing Activities:
Capital and exploration expenditures.......................... (37,012) (58,299)
Proceeds from sales of property, plant and equipment.......... 2,963 3,107
Proceeds from marketable securities sales..................... - 1,929
-------- --------
Investing Cash Flows................................... (34,049) (53,263)
-------- --------
Cash Flows From Financing Activities:
Long term debt issued......................................... 19,486 125,000
Payments on long term debt.................................... - (78,654)
Debt issuance costs and fees.................................. - (5,210)
Common stock issued........................................... - 162
Dividends paid................................................ (806) (806)
-------- --------
Investing Cash Flows................................... 18,680 40,492
-------- --------
Net Increase (Decrease) In Cash.................................. (11,909) 12,887
Cash and Cash Equivalents, beginning of period................... 13,255 5,870
-------- --------
Cash and Cash Equivalents, end of period......................... $ 1,346 $ 18,757
======== ========
</TABLE>
The notes to financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 are an integral part of these
financial statements.
5
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income"("SFAS 130") which
establishes standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. Comprehensive
income includes net income and other comprehensive income, which includes, but
is not limited to, unrealized gains for marketable securities and future
contracts, foreign currency translation adjustments and minimum pension
liability adjustments. The impact of adopting SFAS No. 130 on the nine months
ended September 30, 1998 and September 30, 1997 is as follows:
September 30,
--------------------
1998 1997
---------- --------
Net Income (Loss)............................... $(16,384) $2,319
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments...... 178 (22)
Unrealized gains on marketable securities..... - (360)
-------- ------
Comprehensive income (loss)..................... $(16,206) $1,937
======== ======
NOTE 2. NEW ACCOUNTING STANDARDS
During 1998, the Financial Accounting Standards Board issued SFAS No. 131
"Disclosure about Segments of an Enterprise and Related Information", SFAS No.
132 "Employers' Disclosure about Pensions and Other Postretirement Benefits" and
SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities". The
new disclosure requirements of SFAS No. 131 and 132 are not expected to
materially change the Company's disclosures and SFAS No. 133 is not applicable
to the Company at this time.
6
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3. SUMMARY OF GUARANTIES OF 9 1/2% SENIOR SUBORDINATED NOTES
In May 1997, the Company issued $125 million aggregate principal amount of
its 9 1/2% Senior Subordinated Notes due 2007 pursuant to an offering exempt
from registration under the Securities Act of 1933. The notes are unsecured
obligations of the Company, subordinated in right of payment to all existing and
any future senior indebtedness of the Company. The notes rank pari passu with
any future senior subordinated indebtedness and senior to any future junior
subordinated indebtedness of the Company. The notes are fully and
unconditionally guaranteed, jointly and severally, on an unsecured, senior
subordinated basis by certain wholly owned subsidiaries of the Company (the
"Subsidiary Guarantors"). At the time of the initial issuance of the notes,
Wiser Oil Delaware, Inc., The Wiser Marketing Company, Wiser Delaware LLC,
T.W.O.C., Inc. and The Wiser Oil Company of Canada were the Subsidiary
Guarantors (the "Initial Subsidiary Guarantors"). Except for five wholly owned
subsidiaries that are inconsequential to the Company on a consolidated basis,
the Initial Subsidiary Guarantors comprise all of the Company's direct and
indirect subsidiaries.
Sections 13 and 15(d) of the Securities Exchange Act of 1934 require
presentation of the following unaudited summarized financial information of the
Subsidiary Guarantors. The Company has not presented separate financial
statements and other disclosures concerning each Subsidiary Guarantor because
such information is not material to investors. There are no significant
contractual restrictions on distributions from each of the Subsidiary Guarantors
to the Company.
7
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
THE WISER OIL COMPANY
SUBSIDIARY GUARANTORS
--------------------------------------------
The Wiser
WISER T.W.O.C. MARKETING COMBINED
Canada(1) INC. COMPANY TOTAL
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
(000's)
REVENUES
- --------
FOR THE QUARTER ENDED SEPTEMBER 30,1998...... $ 3,014 $ - $ 493 $ 3,507
For the quarter ended September 30, 1997..... 3,867 49 554 4,470
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1998.. 10,573 1 1,593 12,167
For the nine months ended September 30,1997.. 11,268 1,957 1,641 14,866
INCOME (LOSS) BEFORE INCOME TAXES
- ---------------------------------
FOR THE QUARTER ENDED SEPTEMBER 30,1998...... $(1,530) $ (6) $ 27 $(1,509)
For the quarter ended September 30, 1997..... (255) 44 65 (146)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1998.. (3,016) (14) 183 (2,847)
For the nine months ended September 30,1997.. (3,176) 1,944 181 (1,051)
NET INCOME (LOSS)
- -----------------
FOR THE QUARTER ENDED SEPTEMBER 30,1998...... $(1,071) $ (4) $ 19 $(1,056)
For the quarter ended September 30, 1997..... (179) 31 46 (102)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1998.. (2,111) (10) 128 (1,993)
For the nine months ended September 30,1997.. (2,223) 1,361 127 (735)
CURRENT ASSETS
- --------------
SEPTEMBER 30,1998............................ $ 2,974 $ 18 $ 260 $ 3,252
December 31, 1997............................ 4,808 44 165 5,017
TOTAL ASSETS
- ------------
SEPTEMBER 30,1998............................ $52,708 $ 18 $ 619 $53,345
December 31, 1997............................ 52,083 44 492 52,619
CURRENT LIABILITIES
- -------------------
SEPTEMBER 30,1998............................ $ 4,684 $ - $ 314 $ 4,998
December 31, 1997............................ 6,646 - 250 6,896
NONCURRENT LIABILITIES
- ----------------------
SEPTEMBER 30,1998............................ $ - $ - $ - $ -
December 31, 1997............................ 9,474 - - 9,474
STOCKHOLDER'S EQUITY
- --------------------
SEPTEMBER 30,1998............................ $48,024 $ 18 $ 305 $48,347
December 31, 1997............................ 35,963 44 242 36,249
</TABLE>
(1) Includes the accounts of Wiser Oil Delaware, Inc., Wiser Delaware LLC and
The Wiser Oil Company of Canada.
See other notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
8
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
Revenues for the third quarter of 1998 decreased $3.2 million or 19% from
the third quarter of 1997, due primarily to lower oil prices. Oil sales for the
third quarter of 1998 were $3.2 million lower than the third quarter of 1997 as
the average price received for oil sales in the third quarter of 1998 was $11.96
per barrel, down $5.34 per barrel or 31% from the third quarter of 1997. Net oil
production for the third quarter of 1998 was 556,000 barrels, down 2% from
570,000 barrels in the third quarter of 1997. Gas sales for the third quarter of
1998 were $0.2 million higher than the third quarter of 1997. Net gas production
for the third quarter of 1998 was 3,516 MMCF, up 605 MMCF or 21% from the third
quarter of 1997 due primarily to additional production from wells drilled in
South Texas and new production from the Portage field in Canada. The average
price received for gas sales during the third quarter of 1998 was $1.69 per mcf,
a decrease of $0.28 per mcf or 14% from the third quarter of 1997. During the
third quarter of 1998, there were no adjustments to oil and gas sales from the
Company's hedging activities compared to a reduction of $0.3 million in oil and
gas sales in the third quarter of 1997. There were no sales of marketable
securities in the third quarter of 1998 and 1997, respectively.
Production and operating expense for the third quarter of 1998 increased
$1.2 million or 18% primarily as a result of acquiring additional working
interests in the Wellman field. On a BOE basis (excluding 137 MMCF and 162 MMCF
of gas purchased for resale during the third quarter of 1998 and 1997,
respectively), production and operating expense during the third quarter of 1998
increased to $6.33 per BOE or 7% from $5.91 per BOE during the third quarter of
1997. Depreciation, depletion and amortization, ("DD&A") for the third quarter
of 1998, increased $1.2 million or 22% over the third quarter of 1997 due
primarily to higher DD&A from the Maljamar field in New Mexico. Exploration
expense for the third quarter of 1998 was $3.5 million, up $1.3 million from the
third quarter of 1997 due primarily to higher dry hole expense in Peru and South
Texas. General and administrative expense in the third quarter of 1998 was $0.4
million higher than the third quarter of 1997 due to bad debt expense and
increased salaries and wages. Interest expense during the third quarter of 1998
was $0.1 million or 3% higher than the third quarter of 1997 due to borrowings
under the Credit Agreement in the third quarter of 1998. The effective income
tax rate during the third quarter of 1998 was 19% compared to 32% in the third
quarter of 1997.
The Company realized a net loss of $8.2 million and net loss per share of
$0.91 in the third quarter of 1998 compared to a net loss of $1.9 million and
net loss per share of $0.21 during the third quarter of 1997. The Company's
Canadian operations incurred a pre-tax loss of $1.5 million during the third
quarter of 1998 compared to a pre-tax loss of $0.2 million during the third
quarter of 1997.
9
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
Revenues for the first nine months of 1998 decreased $13.2 million or 22%
from the first nine months of 1997, due primarily to lower oil and gas prices.
Oil sales for the first nine months of 1998 were $9.7 million lower than the
first nine months of 1997 as the average price received for oil sales in the
first nine months of 1998 was $12.87 per barrel, down $5.30 per barrel or 29%
from the first nine months of 1997. Net oil production for the first nine
months of 1998 was 1,831,000 barrels, up slightly from 1,830,000 barrels in the
first nine months of 1997. Gas sales for the first nine months of 1998 were $0.9
million higher than the first nine months of 1997 as net gas production for the
first nine months of 1998 was 10,714 MMCF, up 1,740 MMCF or 19% from the first
nine months of 1997 due primarily to additional production from wells drilled in
South Texas and new production from the Portage field in Canada. The average
price received for gas sales during the first nine months of 1998 was $1.87 per
mcf, a decrease of $0.27 per mcf or 13% from the first nine months of 1997.
During the first nine months of 1998, there were no adjustments to oil and gas
sales from the Company's hedging activities compared to a reduction of $2.1
million in oil and gas sales in the first nine months of 1997. The Company
liquidated its remaining portfolio of marketable securities during 1997.
Accordingly, there were no sales of marketable securities in the first nine
months of 1998 compared to $1.8 million in gain from sales of marketable
securities in the first nine months of 1997.
Production and operating expense for the first nine months of 1998 was
$20.0 million, up slightly from the first nine months of 1997 primarily as a
result of acquiring additional working interests in the Wellman field offset by
cost cutting measures implemented at the Maljamar and Wellman fields. On a BOE
basis (excluding 442 MMCF and 463 MMCF of gas purchased for resale during the
first nine months of 1998 and 1997, respectively), production and operating
expense during the first nine months of 1998 decreased to $5.29 per BOE from
$5.74 per BOE during the first nine months of 1997. DD&A for the first nine
months of 1998, increased $3.8 million or 23% over the first nine months of 1997
due primarily to higher DD&A from the Maljamar field in New Mexico and from the
South Texas properties acquired in June 1997. Exploration expense for the first
nine months of 1998 was $10.5 million, up $4.2 million from the first nine
months of 1997 due primarily to higher dry hole and seismic expense. General and
administrative expense in the first nine months of 1998 was $0.4 million higher
than the first nine months of 1997 due to bad debt expense and increased
salaries and wages. Interest expense during the first nine months of 1998 was
$9.8 million, up $3.1 million or 47% from the first nine months of 1997 due to
the increase in long term debt associated with the issuance of $125 million of
Senior Subordinated Notes in May 1997 and borrowings under the Credit Agreement
in the first nine months of 1998. The effective income tax rate during the first
nine months of 1998 was 25% compared to 19% in the first nine months of 1997.
The Company realized a net loss of $16.4 million and net loss per share of
$1.83 in the first nine months of 1998 compared to net income of $2.3 million
and earnings per share of $0.26 during the first nine months of 1997. The
Company's Canadian operations incurred a pre-tax loss of $3.0 million
10
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(CONTINUED)
during the first nine months of 1998 compared to a pre-tax loss of $3.2 million
during the first nine months of 1997.
Operating cash flows during the first nine months of 1998 were $3.5
million, down $22.2 million from the first nine months of 1997 primarily as a
result of decreased oil and gas sales combined with higher interest expense and
a reduction in accounts payable. Capital and exploration expenditures during
the first nine months of 1998 were $37.0 million, down $21.3 million from $58.3
million during the first nine months of 1997. In light of the reduced cash flows
received in 1998 compared to 1997, the Company has reduced its capital and
exploration budget for 1998 by approximately $10 million. On a cash basis, the
Company paid $0.2 million and $6.2 million in interest expense in the third
quarter of 1998 and nine months ended September 30, 1998, respectively. No
income taxes were paid in the third quarter of 1998 or the nine months ended
September 30, 1998.
Effective September 30, 1998 the Credit Agreement was amended to relax
certain financial ratios related to Consolidated Funded Debt and Consolidated
Interest Coverage from September 30, 1998 through March 30,1999. In addition,
the Borrowing Base under the Credit Agreement was reduced from $80 million to
$25 million effective September 30, 1998.
On November 10, 1998, the Company borrowed $6.0 million under the Credit
Agreement to refinance certain short term obligations and for general corporate
purposes. Accordingly, $4.5 million of short term obligations were classified
as long term debt at September 30, 1998.
YEAR 2000 ISSUE
The Company has assessed and continues to assess the impact of the year 2000
("Y2K") issue on its reporting systems and operations. The Y2K issue exists
because many computer systems and applications currently use two-digit date
fields to designate a year. As the century date occurs, two-digit date systems
will recognize the year 2000 as 1900 or not at all. This inability to recognize
the year 2000 may cause systems to process critical financial and operational
information incorrectly. The Company anticipates that its significant computer
systems and software used in both office and field locations will be Y2K
compliant during 1998. Management does not estimate future expenditures related
to the Y2K issue to be material.
11
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The information required by this Item 6 (a) is set forth in the Index
to Exhibits accompanying this quarterly report and is incorporated
herein by reference.
(b) Reports on Form 8-K
None.
12
<PAGE>
THE WISER OIL COMPANY
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.
THE WISER OIL COMPANY
--------------------------
(Registrant)
Date: November 12, 1998 /s/ Andrew J. Shoup, Jr.
-----------------------------------------
Andrew J. Shoup, Jr.
President and
Chief Executive Officer
Date: November 12, 1998 /s/ Lawrence J. Finn
-----------------------------------------
Lawrence J. Finn
Vice President, Finance and
Chief Financial Officer
13
<PAGE>
THE WISER OIL COMPANY
THE WISER OIL COMPANY
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------ -------
4.13a + First Amendment to Credit Agreement dated September 30, 1998
among The Wiser Oil Company, as borrowers, and NationsBank of
Texas, N.A., as agent, and The Financial Institutions Listed on
the Signature Pages thereto, as Banks.
27 Financial Data Schedule
+ Filed herewith.
14
<PAGE>
EXHIBIT 4.13a
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (this "First Amendment") is
entered into as of the 30th day of September, 1998, by and among The Wiser Oil
Company, a Delaware corporation ("Borrower"), NationsBank, N.A. (successor by
merger to NationsBank of Texas, N.A.), as Agent ("Agent"), and NationsBank, N.A.
(successor by merger to NationsBank of Texas, N.A.) and Bank of Montreal, as
Banks ("Banks").
W I T N E S S E T H
WHEREAS, Borrower, Agent and Banks are parties to that certain Credit
Agreement dated as of December 23, 1997 (as amended, the "Credit Agreement")
(unless otherwise defined herein, all terms used herein with their initial
letter capitalized shall have the meaning given such terms in the Credit
Agreement); and
WHEREAS, pursuant to the Credit Agreement, Banks have made a certain Loan
to Borrower and provided certain other credit accommodations to Borrower; and
WHEREAS, the Borrower has requested that certain of the financial covenants
in the Credit Agreement be amended to relax the Company's obligations
thereunder; and
WHEREAS, the Borrower has advised the Banks that Borrower is preparing a
written plan identifying and analyzing certain strategic actions Borrower
intends to undertake to enhance Borrower's financial condition; and
WHEREAS, the Banks have agreed to amend the financial covenants pursuant to
Borrower's request but on the conditions that, among other things, (a) certain
other provisions of the Credit Agreement be amended in certain respects, (b)
Borrower agrees to provide Banks with a copy of the strategic plan referenced in
the preceding paragraph, and (c) the Borrower and each Subsidiary of Borrower
execute and deliver to Agent for the ratable benefit of Banks, deeds of trust,
mortgages and other security documents creating first and prior liens and
security interest on certain oil and gas properties owned by Borrower and its
Subsidiaries; and
WHEREAS, Borrower and Banks intend to establish the Borrowing Base in
effect under the Credit Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrower, Agent and Banks hereby agree as follows:
Section 1. Amendments. In reliance on the representations, warranties,
covenants and agreements contained in this First Amendment, the Credit Agreement
shall be amended effective September 30, 1998 (the "Effective Date") in the
manner provided in this Section 1.
1.1. Additional Definitions. Section 1.1 of the Credit Agreement shall be
amended to add the definitions of "First Amendment," "Initial Mortgaged
Properties," "Redetermination," "Reserve Update," "Scheduled Redetermination,"
"Security Documents," "Special Redetermination," "Secondary Mortgaged
Properties," and "Strategic Plan" which shall read in full as follows:
1
<PAGE>
"First Amendment" means that certain First Amendment to Credit
Agreement dated as of September 30, 1998 among Borrower, Agent and Banks.
"Initial Mortgaged Properties" means all right, title and interest of
Borrower and the Subsidiary Guarantors in and to the oil and natural gas
fields described on Schedule 1 to the First Amendment.
"Redetermination" means any redetermination of the Borrowing Base
pursuant to Section 3.2 or 3.3.
"Reserve Update" means a report to be delivered by Borrower to each
Bank pursuant to Section 3.1 hereof which shall be prepared by Borrower's
in-house engineering staff and which shall set forth in reasonable detail
any material changes to the reserve information set forth in the Reserve
Report most recently delivered to Banks pursuant to Section 3.1 hereof,
including (a) the results of Borrower's and its Subsidiaries' drilling
activity, and (b) any material deviation in actual results from the
information projected in such Reserve Report with respect to production
volumes, product prices and operating costs.
"Scheduled Redetermination" means any redetermination of the Borrowing
Base pursuant to Section 3.2.
"Secondary Mortgaged Properties" means all right, title and interest
of Borrower and the Subsidiary Guarantors in and to the oil and natural gas
fields described in Schedule 2 to the First Amendment.
"Security Documents" has the meaning assigned to such term in Section
3A.1(a).
"Special Redetermination" means any redetermination of the Borrowing
Base pursuant to Section 3.3.
"Strategic Plan" means a written plan which Borrower has advised the
Banks Borrower is preparing which, when complete, will set forth certain
strategic actions Borrower intends to pursue to enhance Borrower's
financial position and operating results.
1.2 Amendment to Definitions. The definitions of "Agent," "Determination
Date," and "Loan Papers," contained in Section 1.1 of the Credit Agreement shall
be amended to read in full as follows:
"Agent" means NationsBank, N.A., successor by merger to NationsBank of
Texas, N.A., in its capacity as agent for Banks hereunder or any successor
thereto.
"Determination Date" means (a) each November 30, February 28, May 31
and August 31 commencing November 30, 1998, and (b) with respect to any
Special Redetermination, the effective date of any redetermination of the
Borrowing Base made pursuant to a Special Redetermination as specified in
any notice of such redetermination delivered by Agent to Borrower pursuant
to Section 3.2 hereof.
"Loan Papers" means this Agreement, the First Amendment, the Notes,
each Subsidiary Guaranty, all Security Documents now or at any time
hereafter delivered pursuant to Article IIIA, and all other certificates,
documents or instruments delivered in connection with this Agreement, as
the foregoing may be amended from time to time.
2
<PAGE>
1.3 Amendment to Cross Reference. Section 2.5 shall be amended to change
the reference to "Section 3.3" therein from Section 3.3 to Section 3.4.
1.4 Borrowing Base. Article III of the Credit Agreement shall be amended
to read in full as follows:
"ARTICLE III
Borrowing Base
SECTION 3.1. Reserve Report; Reserve Update; Proposed Borrowing Base.
As soon as available and in any event by February 20 and August 20 of each
year, Borrower shall deliver to each Bank a Reserve Report prepared as of
the immediately preceding January 1 and July 1 respectively. In addition
to the foregoing, as soon as available and in any event by April 15 and
October 15 of each year commencing October 15, 1998, Borrower shall deliver
to each Bank a Reserve Update prepared as of the immediately preceding
April 1 and October 1, respectively, which shall set forth the information
described in the definition of such term contained in Section 1.1 hereof.
Simultaneously with the delivery to Agent and each Bank of each Reserve
Report and Reserve Update, Borrower shall notify each Bank of the amount of
the Borrowing Base which Borrower requests become effective on or prior to
the next Determination Date (or such date promptly following such
Determination Date as Required Banks shall elect)."
SECTION 3.2. Scheduled Redeterminations of the Borrowing Base;
Procedures and Standards. Based in part on the Reserve Reports and Reserve
Updates made available to Banks pursuant to Section 5.1, Banks shall
redetermine the Borrowing Base on or prior to the next Determination Date
(or such date promptly thereafter as reasonably possible based on the
engineering and other information available to Banks). Any Borrowing Base
which becomes effective as a result of any Redetermination of the Borrowing
Base shall be subject to the following restrictions: (a) such Borrowing
Base shall not exceed the Borrowing Base requested by Borrower pursuant to
Sections 3.1 or 3.3 (as applicable), (b) such Borrowing Base shall not
exceed the Total Commitment then in effect, (c) such Borrowing Base shall
not exceed the Maximum Borrowing Base at any time after the Conversion
Date, (d) to the extent such Borrowing Base represents an increase from the
Borrowing Base in effect prior to such Redetermination, such Borrowing Base
shall be approved by all Banks, and (e) any Borrowing Base which represents
a decrease in the Borrowing Base in effect prior to such Redetermination,
or a reaffirmation of such prior Borrowing Base, shall be approved by Banks
holding seventy five percent (75%) of the Total Commitment. Each
Redetermination shall be made by Banks in their sole discretion. Without
limiting such discretion, Borrower acknowledges and agrees that Banks (i)
may make such assumptions regarding appropriate existing and projected
pricing for Hydrocarbons as they deem appropriate in their sole discretion,
(ii) may make such assumptions regarding projected rates and quantities of
future production of Hydrocarbons from the Mineral Interests owned by
Borrower and the Subsidiaries as they deem appropriate in their sole
discretion, (iii) may consider the projected cash requirements of Borrower
and its Subsidiaries, (iv) will not consider any asset other than Proved
Mineral Interests owned by Borrower and its Subsidiary Guarantors which are
subject to first and prior Liens in favor of Agent for the ratable benefit
of Banks to the extent required by Article IIIA hereof, and (v) may make
such other assumptions, considerations and exclusions as Banks deem
appropriate in the exercise of their sole discretion. It is further
3
<PAGE>
acknowledged and agreed that each Bank may consider such other credit
factors as it deems appropriate in the exercise of its sole discretion and
shall have no obligation in connection with any Redetermination to approve
any increase from the Borrowing Base in effect prior to such
Redetermination. Promptly following any Redetermination of the Borrowing
Base, Agent shall notify Borrower of the amount of the Borrowing Base as
redetermined, which Borrowing Base shall be effective as of the date
specified in such notice, and shall remain in effect for all purposes of
this Agreement until the next Redetermination."
SECTION 3.3 Special Redetermination. (a) In addition to Scheduled
Redeterminations, Required Banks shall be permitted to make a Special
Redetermination of the Borrowing Base once in each calendar year. Any
request by Required Banks pursuant to this Section 3.3(a) shall be
submitted to Agent and Borrower.
(b) In addition to Scheduled Redeterminations, Borrower shall be
permitted to request a Special Redetermination of the Borrowing Base once
in each calendar year. Such request shall be submitted to Agent and
Required Banks and at the time of such request Borrower shall deliver to
each Bank a Reserve Report. Together with such request, Borrower shall
also notify each Bank of the Borrowing Base requested by Borrower in
connection with such Special Redetermination.
(c) Any Special Redetermination shall be made by Banks in accordance
with the procedures and standards set forth in Section 3.2; provided, that,
no Reserve Report will be required to be delivered to Banks in connection
with any Special Redetermination requested by Required Banks pursuant to
clause (a) above.
SECTION 3.4. Borrowing Base Deficiency. (a) If a Borrowing Base
Deficiency exists as a result of a Redetermination of the Borrowing Base,
Borrower shall either (i) on or before the thirtieth (30th) day following
the effective date of such Redetermination, make a prepayment of principal
on the Loan in an amount equal to the amount of such Borrowing Base
Deficiency, or (ii) make six (6) equal consecutive monthly prepayments of
principal on the Loan, each of which shall be in the amount of one sixth
(1/6th) of such Borrowing Base Deficiency. The first of such six (6)
prepayments shall be due on the thirtieth (30th) day following the
effective date of such Redetermination and each subsequent prepayment shall
be due on the same day of each month thereafter (or if there is no
corresponding day of any subsequent month, then on the last day of such
month).
(b) If a pre-existing Borrowing Base Deficiency increases as a result
of any Redetermination of the Borrowing Base, then, in addition to any
mandatory prepayments required pursuant to this Section 3.4 as a result of
such preexisting Borrowing Base Deficiency, Borrower shall either (i) on or
before the thirtieth (30th) day following the effective date of such
Redetermination, make a principal payment on the Loan in an amount equal to
the amount of such increase in such Borrowing Base Deficiency, or (ii) make
six equal consecutive monthly prepayments of principal of the Loan, each of
which shall be in an amount equal to one sixth (1/6th) of the increase in
such Borrowing Base Deficiency. The first of such six (6) prepayments
shall be due on the thirtieth (30th) day following the effective date of
such Redetermination and each subsequent prepayment shall be due on the
same day of each month thereafter (or if there is no corresponding day of
any subsequent month, then on the last day of such month).
4
<PAGE>
(c) If a Borrowing Base Deficiency occurs or an existing Borrowing
Base Deficiency increases as a result of any quarterly reduction of the
Maximum Borrowing Base, then, on the date of such quarterly reduction in
the Maximum Borrowing Base, Borrower shall make a prepayment of principal
on the Loan in the amount of such Borrowing Base Deficiency. For purposes
of this Section 3.4(c) and Section 3.4(a) and (b) above, if (i) the
effective date of any Redetermination is also the date of any quarterly
reduction in the Maximum Borrowing Base, and (ii) the Borrowing Base in
effect immediately prior to such Redetermination is higher than the amount
of the Maximum Borrowing Base as reduced on the effective date of any
Redetermination, then the reduction in the Borrowing Base which becomes
effective as a result of such Redetermination will be deemed to have
resulted from the reduction in the Maximum Borrowing Base to the extent of
the difference between the Borrowing Base in effect immediately prior to
the effective date of any Redetermination and the Maximum Borrowing Base in
effect as reduced on the effective date of such Redetermination.
SECTION 3.5. Borrowing Base in Effect from Effective Date of First
Amendment. Notwithstanding anything to the contrary contained herein, the
Borrowing Base shall be $25,000,000 for the period commencing on the
Effective Date of the First Amendment and continuing until the first
Redetermination thereafter."
1.5 Collateral. The Credit Agreement shall be amended to add a new
Article IIIA thereto which shall read in full as follows:
"ARTICLE IIIA
Collateral and Guarantees
SECTION 3A.1. Security. (a) The Obligations shall be secured by
first and prior Liens (subject only to Permitted Encumbrances) covering and
encumbering the Initial Mortgaged Properties, the Secondary Mortgaged
Properties and such other Mineral Interests owned by Borrower and its
Subsidiaries which are specified by Required Banks from time to time.
Promptly following the Effective Date of the First Amendment, and in all
events not later than October 16, 1998 (in the case of the Initial
Mortgaged Properties) and October 23, 1998 (in the case of the Secondary
Mortgaged Properties), Borrower shall execute and deliver and shall cause
each of the Subsidiary Guarantors to execute and deliver, to Agent for the
ratable benefit of each Bank, mortgages, deeds of trust, security
agreements, assignments of production and financing statements and such
other documents, instruments, agreements, assignments, conveyances,
amendments and other writings, including, without limitation, UCC-1
financing statements (each duly authorized and executed) (the "Security
Documents") as Agent shall deem necessary or appropriate all in form and
substance acceptable to Agent to grant, evidence and perfect first and
prior Liens in all Initial Mortgaged Properties and Secondary Mortgaged
Properties.
(b) In addition to the Security Documents required by Section 3A.2(a),
Borrower shall execute and deliver to Agent, for the ratable benefit of
each Bank, such additional Security Documents granting, evidencing and
perfecting the Liens required by Section 6.1(a) preceding with respect to
such other Mineral Interests as Agent or Required Banks shall specify from
time to time.
5
<PAGE>
(c) Any time Borrower is required to execute and deliver or cause its
Subsidiaries to execute and deliver Security Documents to Agent pursuant to
this Section 6.1, Borrower shall also deliver to Agent (i) such evidence of
title as Agent shall deem necessary or appropriate to verify Borrower's and
its Subsidiaries' title to the Mineral Interests which are subject to such
Security Document (including, to the extent so requested by Agent, title
opinions issued to Agent by title attorneys acceptable to Agent in is sole
discretion, and (ii) opinions of counsel addressed to Agent and each Bank
with respect to the validity, perfection and enforceability of the Liens
created by such Security Documents and such other matters regarding such
Security Documents as Agent shall reasonably request.
SECTION 3A.2. Guarantees. Payment and performance of the Obligations
shall be fully guaranteed by each Subsidiary Guarantor pursuant to a
Subsidiary Guaranty."
1.6 Reporting Requirements. Section 8.1 of the Credit Agreement shall be
amended to add a new clause (1) thereto which shall read in full as follows:
"(1) as soon as available, and in all events not later than November
30, 1998, a copy of the Strategic Plan."
1.7 Financial Covenants. Sections 10.2 and 10.3 of the Credit Agreement
shall be amended to read in full as follows:
"Section 10.2 Ratio of Consolidated Funded Debt to Consolidated Total
Capital of Borrower. Borrower's Consolidated Funded Debt will not exceed
(a) seventy percent (70%) of Borrower's Consolidated Total Capital at any
time through and including March 30, 1999, or (b) sixty five percent (65%)
of Borrower's Consolidated Total Capital at any time on or after March 31,
1999.
Section 10.3 Consolidated Interest Coverage Ratio. Borrower will not
permit its Consolidated Interest Coverage Ratio (as defined in the
Subordinate Note Indenture) to be less than (a) 2.0 to 1 as of the end of
any fiscal quarter through and including, December 31, 1998, or (b) 2.5 to
1 as of the end of any fiscal quarter ending after December 31, 1998."
1.8 Amendment to Default Section. Section 11.1 of the Credit Agreement
shall be amended to (a) delete the word "or" at the end of clause (i) thereof,
(b) to insert the word "or" after the semicolon at the end of clause (j)
thereof, and (c) to add a new clause (k) which shall read in full as follows:
"(k) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit
Party, or any Credit Party shall deny that it has any further liability or
obligation under any of the Loan Papers to which it is a party, or any Lien
created by the Loan Papers shall for any reason (other than the release
thereof in accordance with the Loan Papers) cease to be a valid, first
priority, perfected Lien upon any of the Proved Mineral Interests purported
to be covered thereby;"
Section 2. Borrowing Base. The Borrowing Base shall be $25,000,000 from
the Effective Date of this First Amendment until the next Redetermination.
Section 3. Representations and Warranties of Borrower. To induce Banks
and Agent to enter into this First Amendment, Borrower hereby represents and
warrants to Banks and Agent as follows:
6
<PAGE>
(a) Each representation and warranty of Borrower contained in the
Credit Agreement and the other Loan Papers is true and correct on the date
hereof and will be true and correct after giving effect to the amendments
set forth in Section 1 hereof.
(b) After giving effect to this Amendment, no Default or Event of
Default has occurred which is continuing.
(c) The execution, delivery and performance by Borrower of this First
Amendment and each Security Document to be executed pursuant hereto are
within Borrower's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not violate
or constitute a default under any provision of applicable law or any
Material Agreement binding upon Borrower or the Subsidiaries of Borrower or
result in the creation or imposition of any Lien upon any of the assets of
Borrower or the Subsidiaries of Borrower except Permitted Encumbrances.
(d) This First Amendment constitutes the valid and binding obligation
of Borrower enforceable in accordance with its terms and, when executed and
delivered pursuant hereto, each Security Document delivered hereunder will
constitute the valid and binding obligation of Borrower enforceable in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditor's
rights generally, and (ii) the availability of equitable remedies may be
limited by equitable principles of general application.
Section 4. Post Closing Conditions. On or before October 16, 1998,
Borrower shall deliver to Agent, for the benefit of the Banks, in addition to
the Security Documents, opinions and evidence of title required by Section
3A.1(a), (a) such certificates of officers and Governmental Authorities,
certified charter documents, resolutions of directors and other documents as
Agent shall require to evidence the valid organization and existence of Borrower
and the Subsidiary Guarantors and the due authorization, execution and delivery
of this Amendment and the Security Documents to be executed and delivered
pursuant hereto, and (b) an opinion of Thompson & Knight, counsel to Borrower
and the Subsidiary Guarantors with respect to the due authorization, execution,
delivery and enforceability of this Amendment and the Security Documents and
such other matters related thereto as Agent shall require. The failure of
Borrower to timely comply with this Section 4 shall constitute an Event of
Default under and for all purposes of this Agreement and the other Loan Papers.
Section 5. Miscellaneous.
5.1 Reaffirmation of Loan Papers. Any and all of the terms and provisions
of the Credit Agreement and the Loan Papers shall, except as amended and
modified hereby, remain in full force and effect.
5.2 Parties in Interest. All of the terms and provisions of this First
Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
5.3 Legal Expenses. Borrower hereby agrees to pay on demand all
reasonable fees and expenses of counsel to Agent incurred by Agent in connection
with the preparation, negotiation and execution of this First Amendment and all
related documents.
7
<PAGE>
5.4 Counterparts. This First Amendment may be executed in counterparts,
and all parties need not execute the same counterpart; however, no party shall
be bound by this First Amendment until all parties have executed a counterpart.
Facsimiles shall be effective as originals.
5.5 Complete Agreement. THIS FIRST AMENDMENT, THE CREDIT AGREEMENT AND
THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN 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.
5.6 Headings. The headings, captions and arrangements used in this First
Amendment are, unless specified otherwise, for convenience only and shall not be
deemed to limit, amplify or modify the terms of this First Amendment, nor affect
the meaning thereof.
[signature pages to follow]
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed by their respective authorized officers on the date and year
first above written.
BORROWER:
THE WISER OIL COMPANY,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AGENT:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., as Agent
By:
-------------------------------------
Dale Wilson,
Senior Vice President
BANK OF MONTREAL:
By:
-------------------------------------
Its:
------------------------------------
BANK:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., as Agent
By:
-------------------------------------
Dale Wilson,
Senior Vice President
9
<PAGE>
SCHEDULE 1
Field Summary
- --------------------------------------------------------------------------------
Field State County
- --------------------------------------------------------------------------------
Grayburg Jackson New Mexico Eddy
- --------------------------------------------------------------------------------
Maljamar New Mexico Lea
- --------------------------------------------------------------------------------
Dimmit Cherry Canyon Texas Loving
- --------------------------------------------------------------------------------
Wellman Texas Terry
- --------------------------------------------------------------------------------
Dimmit NE Delaware Texas Loving
- --------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE 2
- --------------------------------------------------------------------------------
Field State County
- --------------------------------------------------------------------------------
Blue Creek West Virginia Kahawha
- --------------------------------------------------------------------------------
Basin Fruitland Coal New Mexico Rio Arriba
- --------------------------------------------------------------------------------
Phil Power Texas Refugio
- --------------------------------------------------------------------------------
Blanco Mesaverde New Mexico Rio Arriba
- --------------------------------------------------------------------------------
Viejos Devonian Texas Pecos
- --------------------------------------------------------------------------------
Utility Gas Kentucky Knox
- --------------------------------------------------------------------------------
Basin Dakota New Mexico Rio Arriba
- --------------------------------------------------------------------------------
Slash Ranch Pennsylvanian Texas Loving
- --------------------------------------------------------------------------------
Utility Gas Kentucky Clay
- --------------------------------------------------------------------------------
Worsham-Bayer Ellenburger Texas Reeves
- --------------------------------------------------------------------------------
Utility Gas Kentucky Leslie
- --------------------------------------------------------------------------------
Kay Jay Kentucky Bell
- --------------------------------------------------------------------------------
Hatfield Gap Kentucky Bell
- --------------------------------------------------------------------------------
Various Texas Various
- --------------------------------------------------------------------------------
Various North Dakota Various
- --------------------------------------------------------------------------------
Vidauri Texas Refugio
- --------------------------------------------------------------------------------
Various New Mexico Various
- --------------------------------------------------------------------------------
Blinebry New Mexico Lea
- --------------------------------------------------------------------------------
Slash Ranch Fusselman Texas Loving
- --------------------------------------------------------------------------------
Slash Ranch Ellenburger Texas Loving
- --------------------------------------------------------------------------------
Chapman Deep Fusselman Texas Reeves
- --------------------------------------------------------------------------------
Gaffney Southwest Texas Goliad
- --------------------------------------------------------------------------------
Phil Power Texas Goliad
- --------------------------------------------------------------------------------
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THIRD
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JUL-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1998
<CASH> 1,346 1,346
<SECURITIES> 0 0
<RECEIVABLES> 9,397 9,397
<ALLOWANCES> 0 0
<INVENTORY> 928 928
<CURRENT-ASSETS> 15,179 15,179
<PP&E> 371,965 371,965
<DEPRECIATION> 147,316 147,316
<TOTAL-ASSETS> 243,554 243,554
<CURRENT-LIABILITIES> 12,061 12,061
<BONDS> 143,870 143,870
0 0
0 0
<COMMON> 27,385 27,385
<OTHER-SE> 53,027 53,027
<TOTAL-LIABILITY-AND-EQUITY> 243,554 243,554
<SALES> 13,338 45,883
<TOTAL-REVENUES> 13,833 47,267
<CGS> 7,915 21,088
<TOTAL-COSTS> 23,919 69,113
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,387 9,760
<INCOME-PRETAX> (10,086) (21,846)
<INCOME-TAX> (1,933) (5,462)
<INCOME-CONTINUING> (8,153) (16,384)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,153) (16,384)
<EPS-PRIMARY> (.91) (1.83)
<EPS-DILUTED> (.91) (1.83)
</TABLE>
