<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 the Quarter ended September 30, 1999
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, 1999
------------ ---------------------------------
$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,
1999 1998
------------ -----------
(000's) except share data
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ($3,973 restricted at Sept. 30, 1999).. $ 22,950 $ 2,779
Accounts receivable.............................................. 9,728 9,102
Inventories...................................................... 332 669
Income taxes receivable.......................................... 1,442 1,270
Prepaid expenses................................................. 1,260 1,035
--------- ---------
Total current assets.......................................... 35,712 14,855
--------- ---------
Property, Plant and Equipment, at cost:
Oil and gas properties (successful efforts method)............... 273,179 367,974
Other properties................................................. 3,740 5,523
--------- ---------
276,919 373,497
Accumulated depreciation, depletion and amortization............. (115,128) (160,202)
--------- ---------
Net property, plant and equipment................................ 161,791 213,295
Other Assets...................................................... 3,474 3,660
--------- ---------
$ 200,977 $ 231,810
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable................................................. $ 8,916 $ 10,473
Current portion of long-term debt................................ - 21,000
Accrued liabilities.............................................. 5,499 2,730
--------- ---------
Total current liabilities...................................... 14,415 34,203
--------- ---------
Long Term Debt.................................................... 125,008 124,452
Deferred Benefit Cost............................................. 353 378
Deferred Income Taxes............................................. - 686
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................................................ 32,286 43,090
Foreign currency translation..................................... 1,036 1,122
Treasury stock; 176,204 shares, at cost.......................... (2,729) (2,729)
--------- ---------
Total stockholders' equity..................................... 61,201 72,091
--------- ---------
$ 200,977 $ 231,810
========= =========
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998 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,
-------------------- --------------------
1999 1998 1999 1998
-------- --------- -------- --------
(000's except per share data)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales......................... $12,099 $ 13,338 $ 34,668 $ 45,883
Dividends and interest.................... 269 32 434 244
Other..................................... 342 463 3,457 1,140
------- -------- -------- --------
12,710 13,833 38,559 47,267
------- -------- -------- --------
Costs and Expenses:
Production and operating.................. 5,073 7,581 14,927 20,016
Purchased natural gas..................... - 334 336 1,072
Depreciation, depletion and amortization.. 3,993 6,500 14,081 20,162
Exploration............................... 4,268 3,526 5,643 10,533
General and administrative................ 1,782 2,591 5,073 7,570
Interest expense.......................... 3,158 3,387 10,162 9,760
------- -------- -------- --------
18,274 23,919 50,222 69,113
------- -------- -------- --------
Earnings (Loss) Before Income Taxes......... (5,564) (10,086) (11,663) (21,846)
Income Tax Expense (Benefit)................ (173) (1,933) (859) (5,462)
------- -------- -------- --------
NET INCOME (LOSS)........................... $(5,391) $ (8,183) $(10,804) $(16,384)
======= ======== ======== ========
Weighted Average Outstanding Shares......... 8,952 8,952 8,952 8,952
======= ======== ======== ========
Earnings (Loss) Per Share:
Basic..................................... ($0.60) ($0.91) ($1.21) ($1.83)
======= ======== ======== ========
Diluted................................... ($0.60) ($0.91) ($1.21) ($1.83)
======= ======== ======== ========
Cash Dividends Per Share.................... $ - $ 0.03 $ - $ 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, 1998 are an integral part of
these financial statements.
4
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 1999
<TABLE>
<CAPTION>
Foreign
Common Paid-in Retained Currency Treasury
Total Stock Capital Earnings Translation Stock
----- ----- ------- -------- ----------- -----
(000's)
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998............. $72,091 $ 27,385 $ 3,223 $ 43,090 $ 1,122 $ (2,729)
Net income (loss) (4,358) -- -- (4,358) -- --
Other comprehensive income
(loss), net of tax....... (41) -- -- -- (41) --
-------
Comprehensive income (loss)... (4,399)
Dividends paid................ -- -- -- -- -- --
------- -------- ------- -------- ----------- --------
March 31, 1999................ $67,692 $ 27,385 $ 3,223 $ 38,732 $ 1,081 $ (2,729)
Net income (loss) (1,055) -- -- (1,055) -- --
Other comprehensive income
(loss), net of tax....... (51) -- -- -- (51) --
-------
Comprehensive income (loss)... (1,106) --
Dividends paid................ -- -- -- -- -- --
------- -------- ------- -------- ----------- --------
June 30, 1999................. $66,586 $ 27,385 $ 3,223 $ 37,677 $ 1,030 $ (2,729)
Net income (loss) (5,391) -- -- (5,391) -- --
Other comprehensive income
(loss), net of tax....... 6 -- -- -- 6 --
-------
Comprehensive income (loss)... (5,385)
Dividends paid................ -- -- -- -- -- --
------- -------- ------- -------- ----------- --------
September 30, 1999............ $61,201 $ 27,385 $ 3,223 $ 32,286 $ 1,036 $ (2,729)
======= ======== ======= ======== =========== ========
</TABLE>
The notes to financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 are an integral part of these
financial statements.
5
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
-------------------
Ended September 30,
-------------------
1999 1998
-------- --------
(000's)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss)............................................. $(10,804) $(16,384)
Adjustments to reconcile net income to operating cash flows:
Depreciation, depletion and amortization.................... 14,081 20,162
Deferred income taxes....................................... (686) (4,095)
Property sale gains......................................... (3,015) (571)
Foreign currency translation................................ (86) 178
Exploration expense......................................... 5,643 10,533
Amortization of other assets................................ 438 418
Other Changes:
Accounts receivable....................................... (626) 4,368
Inventories............................................... 42 79
Income taxes receivable................................... (172) (1,345)
Prepaid expenses.......................................... (225) (1,000)
Other assets.............................................. (196) 578
Accounts payable.......................................... (1,557) (8,094)
Accrued liabilities....................................... 2,769 (1,226)
Deferred benefits cost.................................... (25) (141)
-------- --------
Operating Cash Flows................................... 5,581 3,460
-------- --------
Cash Flows From Investing Activities:
Capital and exploration expenditures.......................... (5,910) (37,012)
Proceeds from sales of property, plant and equipment.......... 41,000 2,963
-------- --------
Investing Cash Flows................................... 35,090 (34,049)
-------- --------
Cash Flows From Financing Activities:
Long term debt issued......................................... - 19,486
Payments on long term debt.................................... (20,500) -
Dividends paid................................................ - (806)
-------- --------
Investing Cash Flows................................... (20,500) 18,680
-------- --------
Net Increase (Decrease) In Cash.................................. 20,171 (11,909)
Cash and Cash Equivalents, beginning of period................... 2,779 13,255
-------- --------
Cash and Cash Equivalents, end of period......................... $ 22,950 $ 1,346
======== ========
</TABLE>
The notes to financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 are an integral part of these
financial statements.
6
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
Notes to Financial Statements
Note 1. Hedging Activities
During 1999, the Company entered into various forward sale agreements to
hedge a portion of the Company's oil and gas production. The Company's forward
sale agreements at September 30, 1999 were as follows:
<TABLE>
<CAPTION>
Period Daily Volume - Product Price (Floor / Ceiling) (a)
------ ---------------------- ---------------------------
<S> <C> <C>
October 1999 4,200 Bbls - Crude Oil $16.50 / 20.00 per Bbl
November 1999 4,300 Bbls - Crude Oil $16.50 / 20.00 per Bbl
December 1999 4,200 Bbls - Crude Oil $16.50 / 20.00 per Bbl
January 2000 1,000 Bbls - Crude Oil $18.50 / 26.60 per Bbl
February 2000 1,000 Bbls - Crude Oil $18.50 / 26.60 per Bbl
March 2000 1,000 Bbls - Crude Oil $18.50 / 26.60 per Bbl
</TABLE>
(a) These are "collar" hedges whereby the Company will receive the actual
market price if the actual market price is between the floor price and the
ceiling price. If the actual market price is below or above the floor or
ceiling prices, the price received by the Company will be limited to the
floor price or ceiling price, respectively.
Oil and gas sales were reduced by $1.0 million in the third quarter of 1999
and by $1.5 million in the first nine months of 1999 from the Company's hedging
activities. At September 30, 1999, the Company's outstanding forward sale
agreements had a fair value loss of $1.7 million. The aggregate effect of a
hypothetical 10% change in oil price would result in a change of $0.9 million in
the fair value of these instruments at September 30, 1999.
7
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
Note 2. Long-Term Debt
On May 10, 1999, the Company entered into a Restated Credit Agreement
("BankOne Revolver") with Bank One, Texas, N.A. The Company repaid in full the
outstanding principal balance under the Credit Agreement with Bank of America
(formerly NationsBank of Texas, N.A.) ("Credit Agreement") and the Credit
Agreement was terminated.
The BankOne Revolver provides the Company with up to a $25 million line of
credit through April 30, 2001. The amounts available for borrowing are based on
the Company's oil and gas reserves and the Company's Borrowing Base at September
30, 1999 was $8 million. Available loan and interest options are (i) Prime Rate
Loans, at the bank's prime interest rate and (ii) Eurodollar Loans, at LIBOR
plus 2.5%, 2.75% or 3% depending on the percentage of the Borrowing Base
actually borrowed by the Company. The commitment fee on the unused Borrowing
Base is 0.5%. The BankOne Revolver imposes certain restrictions on sales of
assets, payment of dividends and incurrence of indebtedness and requires the
Company to, among other things, maintain certain financial ratios and make
monthly escrow deposits of $990,000 to fund the semi-annual interest
payments on the 9 1/2% Senior Subordinated Notes. At September 30, 1999, cash
and cash equivalents included $3,973,000 of escrow deposits which are restricted
to fund the November 15, 1999 interest payment on the 9 1/2% Senior Subordinated
Notes.
Note 3. Summary of Guaranties of 9 1/2% Senior Subordinated Notes
In May 1998, 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 two 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.
8
<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 30,1999...... $ 3,792 $ - $ - $ 3,792
For the quarter ended September 30, 1998..... 3,014 - 493 3,507
For the nine months ended September 30,1999.. 10,565 - 523 11,088
For the nine months ended September 30,1998.. 10,573 1 1,593 12,167
Income (Loss) Before Income Taxes
- --------------------------------
For the quarter ended September 30,1999...... $ (235) $ - $ - $ (235)
For the quarter ended September 30, 1998..... (1,530) (6) 27 (1,509)
For the nine months ended September 30,1999.. (400) - 68 (332)
For the nine months ended September 30,1998.. (3,016) (14) 183 (2,847)
Net Income (Loss)
- -----------------
For the quarter ended September 30,1999...... $ (235) $ - $ - $ (235)
For the quarter ended September 30, 1998..... (1,071) (4) 19 (1,056)
For the nine months ended September 30,1999.. (400) - 68 (332)
For the nine months ended September 30,1998.. (2,111) (10) 128 (1,993)
Current Assets
- --------------
September 30,1999............................ $ 4,704 $ 3 $ - $ 4,707
December 31, 1998............................ 3,782 3 213 3,998
Total Assets
- ------------
September 30,1999............................ $48,283 $ 3 $ - $48,286
December 31, 1998............................ 50,797 3 526 51,326
Current Liabilities
- -------------------
September 30,1999............................ $ 3,805 $ - $ - $ 3,805
December 31, 1998............................ 4,806 - 361 5,167
Noncurrent Liabilities
- ----------------------
September 30,1999............................ $18,676 $ - $ - $18,676
December 31, 1998............................ 17,846 - - 17,846
Stockholder's Equity
- --------------------
September 30,1999............................ $25,802 $ 3 $ - $25,805
December 31, 1998............................ 28,145 3 165 28,313
</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, 1998.
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 Quarters Ended September 30, 1999 and September 30, 1998
In April and May of 1999, the Company sold certain oil and gas properties
for $41 million which represented approximately 19% of the Company's total
proved oil and gas reserves at December 31, 1998. The Company recognized a gain
of $3.0 million from the property sales in the first nine months of 1999.
Revenues for the third quarter of 1999 decreased $1.1 million or 8% from
the third quarter of 1998, due primarily to lower oil and gas sales. Oil sales
for the third quarter of 1999 were $0.2 million lower than the third quarter of
1998 as net oil production for the third quarter of 1999 was 379,000 barrels,
down 32% from 556,000 barrels in the third quarter of 1998. The decrease in oil
production in the third quarter of 1999 was attributable to declining production
at the Maljamar field in New Mexico and the Evi and Provost fields in Canada
combined with the oil and gas property sales discussed above. The average price
received for oil sales in the third quarter of 1999 was $17.07 per barrel, up
$5.11 per barrel or 43% from the third quarter of 1998. Gas sales for the third
quarter of 1999 were $1.2 million lower than the third quarter of 1998 as net
gas production for the third quarter of 1999 was 2,320 MMCF, down 1,196 MMCF or
34% from the third quarter of 1998. The decrease in gas production was due
primarily to the sale of oil and gas properties discussed above. The average
price received for gas sales in the third quarter of 1999 was $2.04 per Mcf, an
increase of $0.35 per Mcf or 21% from the third quarter of 1998. During the
third quarter of 1999, oil and gas sales were reduced by $1.0 million from the
Company's hedging activities. There were no adjustments to oil and gas sales for
hedging activities in the third quarter of 1998.
Production and operating expense for the third quarter of 1999 decreased
$2.5 million or 33% as a result of the oil and gas property sales discussed
above and cost cutting measures implemented at the Maljamar and Wellman fields.
On a BOE basis (excluding 137 MMCF of gas purchased for resale during the third
quarter of 1998), production and operating expense during the third quarter of
1999 decreased to $6.17 per BOE or 3% from $6.33 per BOE during the third
quarter of 1998. Depreciation, depletion and amortization, ("DD&A") for the
third quarter of 1999, decreased $2.5 million or 39% from the third quarter of
1998 due primarily to the oil and gas property sales discussed above.
Exploration expense for the third quarter of 1999 was $4.3 million, up $0.7
million from the third quarter of 1998 and included $2.8 million of unproved
lease expense for the Bison Ridge and West Vidauri prospects. In addition, the
Company recognized $1.0 million of dry hole costs in the third quarter of 1999
related to the deep portion of the Wild River 6-33 well in Canada. General and
administrative expense in the third quarter of 1999 was $1.8 million, down $0.8
million from the third quarter of 1998 due to substantial reductions in office
staff that were made in December 1998. Interest expense during the third quarter
of 1999 was $3.2 million, down $0.2 million or 7% from the third quarter of 1998
due to lower long-term debt in the third quarter of 1999 compared to the third
quarter of 1998.
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 Quarters Ended September 30, 1999 and September 30, 1998
(continued)
The Company recognized an income tax benefit of $0.2 million in the third
quarter of 1999 for additional federal income tax refund receivable associated
with the carryback of the Company's 1998 tax loss to prior years. The Company's
income tax receivable of $1.4 million was collected in October 1999. The net
loss before income taxes of $5.6 million in the third quarter of 1999 will
generate additional income tax benefits only if the net loss can be carried
forward and applied against future taxable income. Since full realization of the
future income tax benefits associated with the net loss is not more likely than
not assured at this time, no income tax benefits for 1999 net losses were
recognized in the third quarter of 1999.
The Company realized a net loss of $5.4 million and net loss per share of
$0.60 in the third quarter of 1999 compared to a net loss of $8.2 million and
net loss per share of $0.91 during the third quarter of 1998.
Comparison of Nine Months Ended September 30, 1999 and September 30, 1998
Revenues for the first nine months of 1999 decreased $8.7 million or 18%
from the first nine months of 1998, due primarily to lower oil and gas sales.
Oil sales for the first nine months of 1999 were $5.1 million lower than the
first nine months of 1998 as net oil production for the first nine months of
1999 was 1,310,000 barrels, down 28% from 1,831,000 barrels in the first nine
months of 1998. The decrease in oil production in the first nine months of 1999
was attributable to declining production at the Maljamar field in New Mexico and
the Evi and Provost fields in Canada combined with the oil and gas property
sales discussed above. The average price received for oil sales in the first
nine months of 1999 was $14.09 per barrel, up $1.22 per barrel or 9% from the
first nine months of 1998. Gas sales for the first nine months of 1999 were $6.0
million lower than the first nine months of 1998 as net gas production for the
first nine months of 1999 was 8,133 MMCF, down 2,581 MMCF or 24% from the first
nine months of 1998. The decrease in gas production was due primarily to the
sale of oil and gas properties discussed above. The average price received for
gas sales during the first nine months of 1999 was $1.72 per Mcf, a decrease of
$0.15 per Mcf or 8% from the first nine months of 1998. During the first nine
months of 1999, oil and gas sales were reduced by $1.5 million from the
Company's hedging activities. There were no adjustments to oil and gas sales for
hedging activities in the first nine months of 1998.
11
<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, 1999 and September 30, 1998
(continued)
Production and operating expense for the first nine months of 1999
decreased $5.1 million or 25% from the first nine months of 1998 primarily as a
result of the oil and gas property sales discussed above and cost cutting
measures implemented at the Maljamar and Wellman fields. On a BOE basis
(excluding 148 MMCF and 442 MMCF of gas purchased for resale during the first
nine months of 1999 and 1998, respectively), production and operating expense
during the first nine months of 1999 decreased to $5.27 per BOE from $5.29 per
BOE during the first nine months of 1998. DD&A for the first nine months of
1999, decreased $6.1 million or 30% from the first nine months of 1998 due
primarily to the oil and gas property sales discussed above. Exploration expense
for the first nine months of 1999 was $5.6 million, down $4.9 million from the
first nine months of 1998 due primarily to substantially reduced exploration
activities in 1999.
General and administrative expense in the first nine months of 1999 was
$5.1 million, down $2.5 million from the first nine months of 1998 due to
substantial reductions in office staff that were made in December 1998. Interest
expense during the first nine months of 1999 was $10.2 million, up $0.4 million
or 4% from the first nine months of 1998 due to the issuance of $125 million of
Senior Subordinated Notes in May 1998 and fees associated with refinancing the
Credit Agreement with the Restated Credit Agreement in the second quarter of
1999. The effective income tax rate during the first nine months of 1999 was 7%
compared to 25% in the first nine months of 1998. The net loss before income
taxes of $11.7 million in the first nine months of 1999 will generate income tax
benefits only if the net loss can be carried forward and applied against future
taxable income. Since full realization of the future income tax benefits
associated with the net loss is not more likely than not assured at this time,
income tax benefits were recorded in the first nine months of 1999 only to the
extent of the Company's existing deferred income tax liability of $0.7 million.
The Company realized a net loss of $10.8 million and net loss per share of
$1.21 in the first nine months of 1999 compared to net loss of $16.4 million and
net loss per share of $1.83 during the first nine months of 1998.
12
<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, 1999 and September 30, 1998
(continued)
Operating cash flows during the first nine months of 1999 were $5.6
million, up $2.1 million from the first nine months of 1998. Operating cash
flows before changes in working capital for the first nine months of 1999 were
$4.7 million lower than the first nine months of 1998 due primarily to lower oil
and gas sales which were offset in part by lower production and operating
expense and lower general and administrative expense. Changes in working capital
during the first nine months of 1999 provided $6.8 million more operating cash
flow than changes in working capital during the first nine months of 1998.
Capital and exploration expenditures during the first nine months of 1999 were
$5.9 million, down $31.1 million from the first nine months of 1998. The Company
has reduced its capital and exploration budget for 1999 to a range of $8 million
to $10 million. The Company received $41.0 million in net sales proceeds from
the sale of oil and gas properties during the first nine months of 1999 compared
to $3.0 million in proceeds received during the first nine months of 1998.
In April 1999, the Company used $10 million of proceeds from the sale of
oil and gas properties to reduce the outstanding balance under the Credit
Agreement to $11 million. On May 10, 1999, the Company entered into a Restated
Credit Agreement ("BankOne Revolver") with Bank One, Texas, N.A. The Company
borrowed $11 million under the BankOne Revolver and repaid in full the
outstanding principal balance of $11 million under the Credit Agreement and the
Credit Agreement was terminated. Also in May 1999, the Company used $10.5
million of proceeds from the sale of oil and gas properties to reduce the
BankOne Revolver balance to $0.5 million.
The BankOne Revolver provides the Company with up to a $25 million line of
credit through April 30, 2001. The amounts available for borrowing are based on
the Company's oil and gas reserves and the Company's Borrowing Base at September
30, 1999 was $8 million. Available loan and interest options are (i) Prime Rate
Loans, at the bank's prime interest rate and (ii) Eurodollar Loans, at LIBOR
plus 2.5%, 2.75% or 3% depending on the percentage of the Borrowing Base
actually borrowed by the Company. The commitment fee on the unused Borrowing
Base is 0.5%. The BankOne Revolver imposes certain restrictions on sales of
assets, payment of dividends and incurrence of indebtedness and requires the
Company to, among other things, maintain certain financial ratios and make
monthly escrow deposits of $1.0 million to fund the semi-annual interest
payments on the 9 1/2% Senior Subordinated Notes.
13
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
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 or properly treat the year 2000 may cause systems to process critical
financial and operational information incorrectly.
In 1998 and the first quarter of 1999, the Company's U.S. and Canadian
computerized accounting systems were upgraded to versions which are Y2K
compliant. These upgrades were completed at a nominal cost to the Company. In
addition, the Company's personal computer systems were analyzed for Y2K
compliance during 1998 and certain components were upgraded at a nominal cost to
the Company. Virtually all of the Company's personal computer systems are
currently Y2K compliant. Wiser is currently reviewing computer-controlled oil
field equipment for Y2K compliance and expects the suppliers of such equipment
to provide upgrades or modifications, if necessary, before the end of 1999 at a
nominal cost to the Company. Wiser is also in the process of surveying its
primary business partners, suppliers and vendors to seek assurances that they
will be Y2K compliant during 1999. Despite these efforts to seek assurances, the
Company cannot provide assurance that all significant business partners,
suppliers and vendors will achieve Y2K compliance in a timely manner. If there
is a high risk that a business partner, supplier or vendor will not be Y2K
compliant in a timely manner, an alternate business partner, supplier or vendor
will be used to minimize the Y2K risk.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Note 1 "Hedging Activities".
14
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
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.
15
<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, 1999 /s/ Andrew J. Shoup, Jr.
--------------------------------
Andrew J. Shoup, Jr.
President and
Chief Executive Officer
Date: November 12, 1999 /s/ Lawrence J. Finn
--------------------------------
Lawrence J. Finn
Vice President, Finance and
Chief Financial Officer
16
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
Index to Exhibits
Exhibit
Number Exhibit
- ------ -------
(10.4d)* Fourth Amendment to Employment Agreement dated August 4, 1994 between
the Company and Alan J. Simus dated June 1, 1999.
(10.5d)* Third Amendment to Employment Agreement dated July 1, 1991 between
the Company and Andrew J. Shoup, Jr. dated June 1, 1999.
(10.8d)* Fourth Amendment to Employment Agreement dated November 1, 1993
between the Company and Lawrence J. Finn dated June 1, 1999.
(10.9d)* Fourth Amendment to Employment Agreement dated January 24, 1994
between the Company and A. Wayne Ritter dated June 1, 1999.
27* Financial Data Schedule
* Filed herewith.
17
<PAGE>
Exhibit 10.4d
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THAT EMPLOYMENT AGREEMENT made as of the 1st day of August, 1994, by and
between THE WISER OIL COMPANY OF CANADA, a Canadian corporation, and ALLEN J.
SIMUS (as heretofore amended, the "Agreement") is hereby amended in the
following respects only:
Section 1.02 of the Agreement is hereby amended by restatement in its
entirety to read as follows:
1.02. Term. Subject to the terms and provisions of Article II
----
hereof, Employee's employment hereunder shall be extended and shall
continue through the close of business on June 1, 2000; provided, however,
that commencing on June 1, 1999 and on each day thereafter (such date and
each day thereafter herein called a "Renewal Date"), Employee's employment
hereunder shall be automatically extended so as to terminate at the close
of business on the first anniversary of such Renewal Date.
IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
June 1, 1999.
ALLEN J. SIMUS
THE WISER OIL COMPANY OF CANADA
By
-------------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE>
Exhibit 10.5d
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THAT EMPLOYMENT AGREEMENT made as of the 1st day of July, 1991, by and
between THE WISER OIL COMPANY, a Delaware corporation, and ANDREW J. SHOUP, JR.
(as heretofore amended, the "Agreement") is hereby amended in the following
respects only:
FIRST: Section 1.02 of the Agreement is hereby amended by restatement in
-----
its entirety to read as follows:
1.02. Term. Subject to the terms and provisions of Article II
----
hereof, Employee's employment hereunder shall be extended and shall
continue through the close of business on June 1, 2000; provided, however,
that commencing on June 1, 1999 and on each day thereafter (such date and
each day thereafter herein called a "Renewal Date"), Employee's employment
hereunder shall be automatically extended so as to terminate at the close
of business on the first anniversary of such Renewal Date; provided further
that Employee may terminate his employment hereunder at any time for any
reason.
SECOND: Section 1.08 of the Agreement is hereby amended by restating
------
subsection (a) thereof in its entirety to read as follows:
(a) If Employee's employment with Wiser is terminated by Wiser or by
Employee for any reason (other than by Wiser for Cause or by reason of the
death of Employee) within twelve months following a Change of Control of
Wiser, Employee shall be paid, within 30 days following such termination,
an amount in cash equal to the sum of:
(i) an amount equal to the product of (A) the amount equal to 12
times the highest monthly base salary paid or payable, including any
base salary that has been earned but deferred, to Employee by Wiser
and its subsidiaries in respect of the 60-month period immediately
preceding the month in which his employment terminated, multiplied by
(B) three, plus
(ii) the amount equal to the premium cost or other amount paid
by Wiser during the one-year period preceding Employee's termination
of employment to provide Employee with (A) life, health and disability
insurance benefits, and (B) the use of an automobile for such year,
plus
(iii) the amount of the additional payment, if any, determined
pursuant to Section 1.09.
<PAGE>
THIRD: Section 1.08(b) is hereby amended to add a new paragraph (6) to the
-----
end thereof to read as follows:
(6) "Cause" shall mean a termination of Employee's employment pursuant
to Section 2.03 on the basis of actual fraud or embezzlement by Employee in
respect of Wiser or its subsidiaries.
FOURTH: Section 2.01 of the Agreement is hereby amended by restating the
------
last sentence thereof in its entirety to read as follows:
Upon delivery to Employee of such notice, together with payment of any
Base Salary accrued to the date of termination under Section 1.03 hereof,
Employee's employment and all obligations of Wiser under Article I hereof
(other than its obligations, if any, under Sections 1.08 and 1.09) shall
forthwith terminate.
FIFTH: Section 2.03 of the Agreement is hereby amended by restating the
-----
last sentence thereof in its entirety to read as follows:
Upon such termination, Employee shall be entitled to any Base Salary
accrued under Section 1.03 hereof and any award under Section 1.04 hereof
previously earned by Employee but not paid, and all of Wiser's obligations
under Article I hereof (other than its obligations, if any, under Sections
1.08 and 1.09) shall forthwith terminate.
SIXTH: Article II of the Agreement is hereby amended to add a new Section
-----
2.05 to the end thereof to read as follows:
2.05. Severance Payment. If Wiser terminates Employee's employment
-----------------
hereunder other than pursuant to Sections 2.01 and 2.03 hereof, and
Employee is not entitled to a payment under the provisions of Section
1.08(a) hereof in connection with such termination, then Wiser shall pay to
Employee, within 30 days following such termination, as severance pay, an
amount in cash equal to 12 times the highest monthly base salary paid or
payable, including any base salary that has been earned but deferred, to
Employee by Wiser and its subsidiaries in respect of the 60-month period
immediately preceding the month in which his employment terminated. Such
severance pay shall be in addition to any compensation that Wiser otherwise
agrees to pay Employee in connection with any services rendered by Employee
as a consultant or otherwise to Wiser or its subsidiaries following the
termination of his employment.
-2-
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
June 1, 1999.
ANDREW J. SHOUP, JR.
THE WISER OIL COMPANY
By
-------------------------
Name:
-------------------
Title:
------------------
<PAGE>
Exhibit 10.8d
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THAT EMPLOYMENT AGREEMENT made as of the 1st day of November, 1993, by and
between THE WISER OIL COMPANY, a Delaware corporation, and LAWRENCE J. FINN (as
heretofore amended, the "Agreement") is hereby amended in the following respects
only:
FIRST: Section 1.02 of the Agreement is hereby amended by restatement in
-----
its entirety to read as follows:
1.02. Term. Subject to the terms and provisions of Article II
----
hereof, Employee's employment hereunder shall be extended and shall
continue through the close of business on June 1, 2000; provided, however,
that commencing on June 1, 1999 and on each day thereafter (such date and
each day thereafter herein called a "Renewal Date"), Employee's employment
hereunder shall be automatically extended so as to terminate at the close
of business on the first anniversary of such Renewal Date; provided further
that Employee may terminate his employment hereunder at any time for any
reason.
SECOND: Article II of the Agreement is hereby amended to add a new Section
------
2.05 to the end thereof to read as follows:
2.05. Severance Payment. If the Company terminates Employee's
-----------------
employment hereunder other than pursuant to Sections 2.01 and 2.03 hereof,
and Employee is not entitled to a payment under the provisions of Section
1.05(a) hereof in connection with such termination, then the Company shall
pay to Employee, within 30 days following such termination, as severance
pay, an amount in cash equal to Employee's Base Salary at the time of his
termination of employment. Such severance pay shall be in addition to any
compensation that the Company otherwise agrees to pay Employee in
connection with any services rendered by Employee as a consultant or
otherwise to the Company or its subsidiaries following the termination of
his employment.
IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
June 1, 1999.
LAWRENCE J. FINN
THE WISER OIL COMPANY
By
----------------------------
Name:
----------------------
Title:
---------------------
<PAGE>
Exhibit 10.9d
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THAT EMPLOYMENT AGREEMENT made as of the 24th day of January, 1994, by and
between THE WISER OIL COMPANY, a Delaware corporation, and A. WAYNE RITTER (as
heretofore amended, the "Agreement") is hereby amended in the following respects
only:
FIRST: Section 1.02 of the Agreement is hereby amended by restatement in
-----
its entirety to read as follows:
1.02. Term. Subject to the terms and provisions of Article II
----
hereof, Employee's employment hereunder shall be extended and shall
continue through the close of business on June 1, 2000; provided, however,
that commencing on June 1, 1999 and on each day thereafter (such date and
each day thereafter herein called a "Renewal Date"), Employee's employment
hereunder shall be automatically extended so as to terminate at the close
of business on the first anniversary of such Renewal Date; provided further
that Employee may terminate his employment hereunder at any time for any
reason.
SECOND: Article II of the Agreement is hereby amended to add a new Section
------
2.05 to the end thereof to read as follows:
2.05. Severance Payment. If the Company terminates Employee's
-----------------
employment hereunder other than pursuant to Sections 2.01 and 2.03 hereof,
and Employee is not entitled to a payment under the provisions of Section
1.05(a) hereof in connection with such termination, then the Company shall
pay to Employee, within 30 days following such termination, as severance
pay, an amount in cash equal to Employee's Base Salary at the time of his
termination of employment. Such severance pay shall be in addition to any
compensation that the Company otherwise agrees to pay Employee in
connection with any services rendered by Employee as a consultant or
otherwise to the Company or its subsidiaries following the termination of
his employment.
IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
June 1, 1999.
A. WAYNE RITTER
THE WISER OIL COMPANY
By
----------------------------
Name:
----------------------
Title:
---------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QTRLY REPORT
ON 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-31-1999 DEC-31-1999
<PERIOD-START> JUL-01-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 22,950 22,950
<SECURITIES> 0 0
<RECEIVABLES> 11,750 11,750
<ALLOWANCES> 0 0
<INVENTORY> 332 332
<CURRENT-ASSETS> 35,712 35,712
<PP&E> 276,919 276,919
<DEPRECIATION> 115,128 115,128
<TOTAL-ASSETS> 200,977 200,977
<CURRENT-LIABILITIES> 14,415 14,415
<BONDS> 125,008 125,008
0 0
0 0
<COMMON> 27,385 27,385
<OTHER-SE> 33,816 33,816
<TOTAL-LIABILITY-AND-EQUITY> 200,977 200,977
<SALES> 12,099 34,668
<TOTAL-REVENUES> 12,710 38,559
<CGS> 5,073 15,263
<TOTAL-COSTS> 18,274 50,222
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,158 10,162
<INCOME-PRETAX> (5,564) (11,663)
<INCOME-TAX> (173) (859)
<INCOME-CONTINUING> (5,391) (10,804)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,391) (10,804)
<EPS-BASIC> (.60) (1.21)
<EPS-DILUTED> (.60) (1.21)
</TABLE>
