<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, 2000 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, 2000
-------------- ---------------------------------
$.01 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,
2000 1999
----------- -----------
(000's) except share data
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents..................................................... $ 31,320 $ 21,447
Restricted cash............................................................... 3,977 992
Accounts receivable........................................................... 14,205 9,565
Inventories................................................................... 328 335
Prepaid expenses.............................................................. 958 379
----------- -----------
Total current assets...................................................... 50,788 32,718
----------- -----------
Property, Plant and Equipment, at cost:
Oil and gas properties (successful efforts method)............................ 288,060 274,760
Other properties.............................................................. 3,998 3,781
----------- -----------
292,058 278,541
Accumulated depreciation, depletion and amortization.......................... (131,503) (118,568)
----------- -----------
Net property, plant and equipment............................................. 160,555 159,973
Other Assets................................................................... 3,499 4,035
----------- -----------
$ 214,842 $ 196,726
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable.............................................................. $ 12,616 $ 11,694
Current portion of long-term debt............................................. 500 500
Dividends payable............................................................. 365 --
Accrued liabilities........................................................... 5,089 2,649
----------- -----------
Total current liabilities................................................... 18,570 14,843
----------- -----------
Long Term Debt................................................................. 124,581 124,526
Deferred Benefit Cost.......................................................... -- 216
Deferred Income Taxes.......................................................... -- --
Stockholders' Equity (Note 2):
Series C convertible preferred stock - $10 par value;
1,000,000 shares authorized; shares issued and outstanding at
September 30, 2000 - 600,000 at $25 liquidation value per share.............. 6,000 --
Common stock - $.01 par value at September 30, 2000 and $3 par
value at December 31, 1999; shares authorized - 30,000,000
at September 30, 2000 and 20,000,000 at December 31, 1999;
shares issued - 9,128,169; shares outstanding - 8,951,965.................... 91 27,385
Paid-in capital............................................................... 38,201 3,223
Retained earnings............................................................. 29,099 28,234
Foreign currency translation.................................................. 1,029 1,028
Treasury stock; 176,204 shares, at cost....................................... (2,729) (2,729)
----------- -----------
Total stockholders' equity.................................................. 71,691 57,141
----------- -----------
$ 214,842 $ 196,726
=========== ===========
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999 are an integral part of
these financial statements.
3
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
---------------------- ---------------------
Ended September 30, Ended September 30,
---------------------- ---------------------
2000 1999 2000 1999
------- ------- ------- --------
(000's except per share data)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales.......................... $17,585 $12,099 $48,463 $ 34,668
Interest income............................ 535 269 1,231 434
Other...................................... 109 342 559 3,457
------- ------- ------- --------
18,229 12,710 50,253 38,559
------- ------- ------- --------
Costs and Expenses:
Production and operating................... 6,150 5,073 17,568 14,927
Purchased natural gas...................... - - - 336
Depreciation, depletion and amortization... 3,803 3,993 11,534 14,081
Property impairments....................... - - 680 -
Exploration................................ 638 4,268 2,878 5,643
General and administrative................. 1,687 1,782 6,863 5,073
Interest expense........................... 3,156 3,158 9,500 10,162
------- ------- ------- --------
15,434 18,274 49,023 50,222
------- ------- ------- --------
Income (Loss) Before Income Taxes............ 2,795 (5,564) 1,230 (11,663)
Income Tax (Benefit)......................... - (173) - (859)
------- ------- ------- --------
Net Income (Loss)............................ 2,795 (5,391) 1,230 (10,804)
Preferred Stock Dividends.................... (265) - (365) -
------- ------- ------- --------
Net Income (Loss) Available to Common Stock.. $ 2,530 $(5,391) $ 865 $(10,804)
======= ======= ======= ========
Weighted Average Outstanding Shares:
Basic....................................... 8,952 8,952 8,952 8,952
======= ======= ======= ========
Diluted..................................... 12,482 8,952 8,952 8,952
======= ======= ======= ========
Earnings (Loss) Per Share:
Basic $ 0.28 ($0.60) $ 0.10 ($1.21)
======= ======= ======= ========
Diluted $ 0.22 ($0.60) $ 0.10 ($1.21)
======= ======= ======= ========
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999 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, 2000
<TABLE>
<CAPTION>
Foreign
Common Preferred Paid-in Retained Currency Treasury
Total Stock Stock Capital Earnings Translation Stock
--------- --------- --------- --------- --------- ------------ ---------
(000's)
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1999..................... $57,141 $ 27,385 $ -- $ 3,223 $28,234 $1,028 $(2,729)
Net (loss) (242) -- -- -- (242) -- --
Other comprehensive income,
net of tax....................... 3 -- -- -- -- 3 --
-------
Comprehensive (loss).................. (239) -- -- -- -- -- --
------- -------- --------- -------- ------- ----------- --------
March 31, 2000........................ 56,902 27,385 -- 3,223 27,992 1,031 (2,729)
Net (loss) (1,323) -- -- -- (1,323) -- --
Other comprehensive income,
net of tax....................... 33 -- -- -- -- 33 --
-------
Comprehensive (loss).................. (1,290)
Issuance of Series C preferred stock
Stock - 600,000 shares, net of
Issuance costs................... 13,675 -- 6,000 7,675 -- -- --
Issuance of warrants.................. 9 -- -- 9 -- -- --
Change in par value of common stock... -- (27,294) -- 27,294 -- -- --
Dividends - preferred stock........... (100) -- -- -- (100) -- --
------- -------- --------- -------- ------- ----------- --------
June 30, 2000......................... 69,196 91 6,000 38,201 26,569 1,064 (2,729)
Net income 2,795 -- -- -- 2,795 -- --
Other comprehensive income,
net of tax....................... (35) -- -- -- -- (35) --
-------
Comprehensive income.................. 2,760
-------
Dividends - preferred stock........... (265) -- -- -- (265) -- --
------- -------- --------- -------- ------- ----------- --------
September 30, 2000.................... $71,691 $ 91 $ 6,000 $ 38,201 $29,099 $ 1,029 $ (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, 1999 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,
-------------------
2000 1999
-------- --------
(000's)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss)............................................. $ 1,230 $(10,804)
Adjustments to reconcile net income to operating cash flows:
Depreciation, depletion and amortization.................... 11,534 14,081
Deferred income taxes....................................... - (686)
Property sale gains......................................... (11) (3,015)
Foreign currency translation................................ 1 (86)
Property impairments and abandonments....................... 2,201 3,072
Amortization of other assets................................ 507 438
Other Changes:
Restricted cash........................................... (2,985) (3,973)
Accounts receivable....................................... (4,640) (798)
Inventories............................................... 7 42
Prepaid expenses.......................................... (579) (225)
Other assets.............................................. 84 (196)
Accounts payable.......................................... 922 (1,557)
Accrued liabilities....................................... 2,440 2,769
Deferred benefits cost.................................... (216) (25)
-------- --------
Operating Cash Flows................................... 10,495 (963)
-------- --------
Cash Flows From Investing Activities:
Capital expenditures.......................................... (14,317) (3,339)
Proceeds from sales of property, plant and equipment.......... 11 41,000
-------- --------
Investing Cash Flows................................... (14,306) 37,661
-------- --------
Cash Flows From Financing Activities:
Payments on long term debt.................................... - (20,500)
Preferred stock issued, net of issuance costs................. 13,675 -
Warrants for common stock issued.............................. 9 -
-------- --------
Investing Cash Flows................................... 13,684 (20,500)
-------- --------
Net Increase In Cash............................................. 9,873 16,198
Cash and Cash Equivalents, beginning of period................... 21,447 2,779
-------- --------
Cash and Cash Equivalents, end of period......................... $ 31,320 $ 18,977
======== ========
</TABLE>
The notes to financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 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
As of November 10, 2000 the Company's hedging arrangements were as follows:
<TABLE>
<CAPTION>
Crude Oil: Daily Volume Price per Bbl
---------- ------------ ----------------------------
<S> <C> <C>
October 1, 2000 to December 31, 2000 3,300 Bbls $19.78
January 1, 2001 to June 30, 2001 1,750 Bbls $28.10
January 1, 2001 to June 30, 2001 1,000 Bbls $25.00 floor, $32.00 ceiling
Natural Gas Daily Volume Price per MMBTU
----------- ------------ ----------------------------
January 1, 2001 to December 31, 2001 10,000 MMBTU $4.00 floor, $6.10 ceiling
</TABLE>
During the first nine months of 2000, oil and gas sales were reduced $8.1
million from the Company's hedging activities. Based on September 30, 2000 NYMEX
futures prices, the fair value of the Company's hedging arrangements at
September 30, 2000 was a loss of $4.1 million. A 10% increase in both the oil
price and the gas price would increase this loss by $2.1 million and a 10%
decrease in both the oil price and the gas price would decrease this loss by
$1.9 million.
Note 3. Net Income per Common Share
Basic net income per common share is computed based on the weighted average
shares of common stock outstanding. Net income per share computations to
reconcile basic and diluted net income consist of the following (in thousands,
except per share data):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss) available to common stock......... $ 2,530 $ (5,391) $ 865 $(10,804)
Plus Income impact of assumed conversions:
Dividends on preferred stock...................... 265 - 365 -
-------- -------- -------- --------
Net income (loss) available to common plus
assumed conversions............................... $ 2,795 $ (5,391) $ 1,230 $(10,804)
======== ======== ======== ========
Basic weighted average shares....................... 8,952 8,952 8,952 8,952
Effect of dilutive securities:
Convertible preferred stock....................... 3,529 - - -
Warrants.......................................... - - - -
Stock options..................................... 1 - - -
-------- -------- -------- --------
Diluted weighted average shares..................... 12,482 8,952 8,952 8,952
======== ======== ======== ========
Net Income (Loss) per Share:
Basic............................................. $ 0.28 $ (0.60) $ 0.10 $ (1.21)
Diluted........................................... 0.22 (0.60) 0.10 (1.21)
</TABLE>
The effect of the convertible preferred stock for the nine months ended
September 30, 2000 was antidilutive.
Note 4. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities" which, as
amended, is effective for all fiscal years beginning after June 15, 2000
(January 1, 2001 for the Company). SFAS No. 133 requires that derivatives be
reported on the balance sheet at fair value and, if the derivative is not
designated as a hedging instrument, changes in fair value must be recognized in
earnings in the period of change. If the derivative is designated as a hedge and
to the extent such hedge is determined to be effective, changes in fair value
are either offset by the change in fair value of the hedged asset or liability
(if applicable) or reported as a component of other comprehensive income in the
period of change, and subsequently recognized in earnings when the offsetting
hedged transaction occurs. The ineffective portion of cash flow hedges will be
recognized in earnings under SFAS No. 133. The definition of derivatives has
also been expanded to include contracts that require physical delivery of oil
and gas if the contract allows for net cash settlement. The Company currently
uses derivatives to hedge oil and gas price risk and gains or losses on such
derivatives are recorded as adjustments to oil and gas sales. Accordingly,
adoption of SFAS No. 133 should not have a significant impact on reported
earnings, but could have a material impact on comprehensive income and the
reported financial position of the Company.
Note 5. Convertible Preferred Stock
On December 13, 1999, the Board of Directors approved the sale of not less than
600,000 shares and not more than 1,000,000 shares of Series C Cumulative
Convertible Preferred Stock ("Preferred Stock") through a private placement to
Wiser Investment Company, LLC ("WIC") for $25 million. The sale of Preferred
Stock was approved by the Company's shareholders' on May 16, 2000, and 600,000
shares were issued to WIC on May 26, 2000 for $15 million, or $25 per share. WIC
has the option, until November 25, 2000, to purchase up to an additional 400,000
shares of Preferred Stock for $10.0 million, or $25 per share. The Preferred
Stock is convertible at the option of the holder into shares of the Company's
common stock at a conversion price of $4.25 per common share, subject to
customary adjustments. The Preferred Stock pays dividends in cash or in shares
of the Company's common stock, at the option of the Company, at an annual rate
of 7%. The holders of the Preferred Stock have the same voting rights as the
holders of the Company's common stock with each share of the Preferred Stock
having one vote for each share of common stock into which it is convertible. The
Company received $13.7 million in net proceeds from the sale of Preferred Stock
to WIC.
7
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
Any shares of Preferred Stock not previously converted will convert
automatically to common stock on May 26, 2003, or whenever the market price of
the Company's common stock exceeds $10.00 per share for a period of 60
consecutive trading days.
In addition, WIC acquired warrants to purchase 445,030 shares of the
Company's common stock at $4.25 per share. If WIC fully exercises its option to
purchase an additional 400,000 shares of Preferred Stock, WIC would be issued
warrants to purchase an additional 296,686 shares of the Company's common stock
at $4.25 per share. The purchase price of the warrants is $0.02 per warrant. The
warrants are not exercisable for two years and will expire after seven years.
In connection with the sale of the Preferred Stock, the Board of Directors
has been changed to include four of the existing directors and three new
directors designated by WIC. The transaction also affected the employment
agreements for all four of the officers of the Company. If an officer's
employment with the Company is terminated by either the Company or the officer
within one year after the transaction, the Company will be required to make a
lump-sum termination payment, as defined in the employment agreement, to the
terminated officer. The total amount of such termination payments for all of the
Company's officers is estimated to be in the range of $2.9 million to $3.1
million. In the second quarter of 2000, three of the Company's four officers
were terminated and the Company recognized $2.2 million of expense related to
such terminations which is included in general and administrative expense in the
Consolidated Statements of Income.
In May 2000, the Company also adopted an amended and restated certificate
of incorporation which increased the number of authorized shares of common stock
from 20,000,000 to 30,000,000, and the number of authorized shares of preferred
stock from 300,000 shares to 1,3000,000 shares. The par value of the common
stock was also decreased from $3.00 per share to $.01 per share.
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
8
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
Notes to Financial Statements (continued)
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.
<TABLE>
<S> <C> <C> <C> <C>
Wiser T.W.O.C. Consolid Consolidated
(000's) Canada(1) Inc. Entries Total
--------- ------- -------- ------------
Revenues
--------
For the quarter ended September 30, 2000...... $ 6,678 $ - $ - $ 6,678
For the quarter ended September 30, 1999...... 3,792 - - 3,792
For the nine months ended September 30,1999... 18,333 - - 18,333
For the nine months ended September 30, 1999.. 10,565 - 523 11,088
Income (Loss) Before Income Taxes
---------------------------------
For the quarter ended September 30, 2000...... 3,670 - - 3,670
For the quarter ended September 30, 1999...... (235) - - (235)
For the nine months ended September 30, 2000.. 6,958 - - 6,958
For the nine months ended September 30, 1999.. (400) - 68 (332)
Net Income (Loss)
-----------------
For the quarter ended September 30, 2000...... 3,670 - - 3,670
For the quarter ended September 30, 1999...... (235) - - (235)
For the nine months ended September 30, 2000.. 6,958 - - 6,958
For the nine months ended September 30, 1999.. (400) - 68 (332)
Cash Flows from Operating Activities
------------------------------------
For the quarter ended September 30, 2000...... 4,823 - - 4,823
For the quarter ended September 30, 1999...... 1,440 - - 1,440
For the nine months ended September 30, 2000.. 11,077 - - 11,077
For the nine months ended September 30, 1999.. 3,548 - 68 3,616
Cash Flows from Investing Activities
------------------------------------
For the quarter ended September 30, 2000...... (2,470) - - (2,470)
For the quarter ended September 30, 1999...... (210) - - (210)
For the nine months ended September 30, 2000.. (8,370) - - (8,370)
For the nine months ended September 30, 1999.. (2,248) - - (2,248)
</TABLE>
9
<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
(000's) Canada(1) Inc. Company Total
--------- ------- --------- --------
<S> <C> <C> <C> <C>
Cash Flows from Financing Activities
------------------------------------
For the quarter ended September 30, 2000............ $ - $ - $ - $ -
For the quarter ended September 30, 1999............ - - - -
For the nine months ended September 30, 2000........ - - - -
For the nine months ended September 30, 1999........ - - - -
Net Increase (Decrease) in Cash
-------------------------------
For the quarter ended September 30, 2000............ 2,353 - - 2,353
For the quarter ended September 30, 1999............ 1,230 - - 1,230
For the nine months ended September 30, 2000........ 2,707 - - 2,707
For the nine months ended September 30, 1999........ 1,300 - 68 1,368
Current Assets
--------------
September 30, 2000.................................. 9,366 2 - 9,368
December 31, 1999................................... 5,357 3 - 5,360
Total Assets
------------
September 30, 2000.................................. 54,294 2 - 54,296
December 31, 1999................................... 47,953 3 - 47,956
Current Liabilities
-------------------
September 30, 2000.................................. 6,563 - - 6,563
December 31, 1999................................... 5,116 - - 5,116
Noncurrent Liabilities
----------------------
September 30,2000................................... 17,471 - - 17,471
December 31, 1999................................... 17,851 - - 17,851
Stockholder's Equity
--------------------
September 30,2000................................... 30,260 2 - 30,262
December 31, 1999................................... 24,986 3 - 24,989
</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, 1999.
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, 2000 and September 30, 1999
Revenues for the third quarter of 2000 increased $5.5 million or 43% from
the third quarter of 1999, due to significantly higher oil and gas prices
received in the third quarter of 2000. Oil sales for the third quarter of 2000
were $1.4 million higher than the third quarter of 1999 as the average price
received for oil sales in the third quarter of 2000 was $21.42 per barrel, up
$4.35 per barrel or 25% from the third quarter of 1999. Net oil production for
the first quarter of 2000 was 370,000 barrels, down 9,000 barrels or 2% from
379,000 barrels in the third quarter of 1999. Gas sales for the third quarter of
2000 were $3.8 million higher than the third quarter of 1999 due to higher
realized prices. The average price received for gas sales in the third quarter
of 2000 was $3.66 per Mcf, an increase of $1.62 per Mcf or 79% from the third
quarter of 1999. Net gas production for the third quarter of 2000 was 2,333
MMCF, up slightly from 2,320 MMCF in the third quarter of 1999. The Company's
hedging activities reduced oil and gas sales by $4.1 million in the third
quarter of 2000 and by $1.0 million in the third quarter of 1999.
Production and operating expense for the third quarter of 2000 increased
$1.1 million or 21% from the third quarter of 1999 and, on a BOE basis,
production and operating expense in the third quarter of 2000 increased to $7.66
per BOE or 24% from $6.17 per BOE during the third quarter of 1999. The increase
in production and operating expense was attributable primarily to the Maljamar
and Wellman fields which were $0.6 million higher in the third quarter of 2000
than the third quarter of 1999. The higher production and operating expense at
the Maljamar and Wellman fields in the third quarter of 2000 was attributable to
well repairs and maintenance at both fields and higher CO2 injection at Wellman.
In addition, production taxes in the third quarter of 2000 were $0.4 million
higher than the third quarter of 1999 due to higher realized oil and gas prices.
Depreciation, depletion and amortization, ("DD&A") for the third quarter of
2000, decreased $0.2 million or 5% from the third quarter of 1999 due primarily
to lower oil production. Exploration expense for the third quarter of 2000 was
$0.6 million, down $3.7 million from the third quarter of 1999 due to reduced
exploration activities in the third quarter of 2000. Exploration expense in the
third quarter of 1999 included $3.8 million of unproved lease expense and dry
hole expense related to the Bison Ridge, West Vidauri and Wild River prospects.
General and administrative expense in the third quarter of 2000 was $1.7
million, down slightly from $1.8 million in the third quarter of 1999. Interest
expense during the third quarter of 2000 was even with the third quarter of
1999.
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 Quarters Ended September 30, 2000 and September 30, 1999
(continued)
At December 31, 1999, the Company had a net operating loss carryforward for
Federal income tax purposes of $13.9 million. The tax benefits of carryforwards
are recorded as an asset to the extent that management assesses the future
utilization of such carryforwards as "more likely than not". When the future
utilization of some portion of the carryforwards is determined not to be "more
likely than not", a valuation allowance is provided to reduce the recorded tax
benefits from such assets. At September 30, 2000 and 1999, a valuation allowance
was provided to reduce deferred tax assets to an amount equal to deferred tax
liabilities. Accordingly, no income tax expense was recognized in the third
quarter of 2000 and income tax benefits were recognized in the third quarter of
1999 only to the extent of the Company's existing deferred income tax liability.
The Company realized net income available for common stock of $2.5 million
and net earnings per share of $0.28 in the third quarter of 2000 compared to a
net loss available for common stock of $5.4 million and net loss per share of
$0.60 during the third quarter of 1999.
Comparison of Nine Months Ended September 30, 2000 and September 30, 1999
Revenues for the first nine months of 2000 increased $11.7 million or 30%
from the first nine months of 1999, due to significantly higher oil and gas
prices received in the first nine months of 2000 which was offset by lower oil
and gas production. Oil sales for the first nine months of 2000 were $6.4
million higher than the first nine months of 1999 as the average price received
for oil sales in the first nine months of 2000 was $22.26 per barrel, up $8.17
per barrel or 57% from the first nine months of 1999. Net oil production for
the first nine months of 2000 was 1,117,000 barrels, down 193,000 barrels or 15%
from 1,310,000 barrels in the first nine months of 1999. The property sales in
the second quarter of 1999 accounted for approximately 55,000 barrels of the
decrease and oil production from the Maljamar and Wellman fields in the first
nine months of 2000 was approximately 83,000 barrels lower than the first nine
months of 1999. Canadian oil production in the first nine months of 2000 was
approximately 64,000 barrels lower than the first nine months of 1999 due
primarily to declining oil production from the Provost and Evi fields. Gas sales
for the first nine months of 2000 were $6.1 million higher than the first nine
months of 1999 due to higher realized prices which was partially offset by lower
gas production. The average price received for gas sales in the first nine
months of 2000 was $2.89 per Mcf, an increase of $1.17 per Mcf or 68% from the
first nine months of 1999. Net gas production for the first nine months of 2000
was 6,937 MMCF, down 1,196 MMCF or 15% from the first nine months of 1999. The
property sales in the second quarter of 1999 accounted for approximately 1,190
MMCF of the decrease in gas production. NGL sales for the first nine months of
2000 were $1.3 million higher than the first nine months of 1999 as the average
price received for NGL
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, 2000 and September 30, 1999
(continued)
sales in the first nine months of 2000 was $21.79 per barrel, an increase of
$10.30 per barrel or 90% from the first nine months of 1999. The Company's
hedging activities reduced oil and gas sales by $8.1 million in the third
quarter of 2000 and by $1.0 million in the third quarter of 1999. Interest
income of $1.2 million in the first nine months of 2000 was $0.8 million higher
than the first nine months of 1999 due to higher average cash balances in the
first nine months of 2000. Other revenues in the first nine months of 1999
included a gain of $2.9 million from property sales.
Production and operating expense for the first nine months of 2000
increased $2.6 million or 18% from the first nine months of 1999 and, on a BOE
basis (excluding 148 MMCF of gas purchased for resale during the first nine
months of 1999), increased to $7.21 per BOE or 37% from $5.27 per BOE. The
increase in production and operating expense was attributable primarily to the
Maljamar and Wellman fields which were $3.6 million higher in the first nine
months of 2000 than the first nine months of 1999 due to well repairs and
maintenance at both fields and higher CO2 injection at Wellman. In addition,
production taxes in the first nine months of 2000 were $0.3 million higher than
the first nine months of 1999 due to higher realized oil and gas prices.
Production and operating expense in the first nine months of 1999 included
approximately $1.2 million associated with the properties sold in the second
quarter of 1999. Depreciation, depletion and amortization, ("DD&A") for the
first nine months of 2000, decreased $2.5 million or 18% from the first nine
months of 1999 due primarily to lower oil and gas production and the property
sales in the second quarter of 1999. The Company recognized impairment expense
of $0.7 million in the first nine months of 2000 for the Elm field in Canada
which was sold in October 2000 at a sales price which was below its carrying
value. There was no impairment expense in the first nine months of 1999.
Exploration expense for the first nine months of 2000 was $2.9 million, down
$2.8 million from the first nine months of 1999 due to decreased exploration
activities in the first nine months of 2000. Exploration expense in the first
nine months of 1999 included $3.8 million of unproved lease expense and dry hole
expense related to the Bison Ridge, West Vidauri and Wild River prospects.
General and administrative expense in the first nine months of 2000 was $6.9
million, up $1.8 million from the first nine months of 1999 due primarily to
$2.2 million of officer termination expense and offset by reduced payroll
expense. Interest expense during the first nine months of 2000 was $9.5 million,
down $0.7 million or 7% from the first nine months of 1999 due to reduced
borrowings in the first nine months of 2000 compared the first nine months of
1999 and fees in the first nine months of 1999 associated with refinancing the
Credit Agreement with NationsBank of Texas, N.A. ("Credit Agreement") with the
Restated Credit Agreement with Bank One, Texas, N.A.
13
<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, 2000 and September 30, 1999
(continued)
At December 31, 1999, the Company had a net operating loss carryforward for
Federal income tax purposes of $13.9 million. The tax benefits of carryforwards
are recorded as an asset to the extent that management assesses the future
utilization of such carryforwards as "more likely than not". When the future
utilization of some portion of the carryforwards is determined not to be "more
likely than not", a valuation allowance is provided to reduce the recorded tax
benefits from such assets. At September 30, 2000 and 1999, a valuation allowance
was provided to reduce deferred tax assets to an amount equal to deferred tax
liabilities. Accordingly, no income tax expense was recognized in the first nine
months of 2000 and income tax benefits were recognized in the first nine months
of 1999 only to the extent of the Company's existing deferred income tax
liability.
The Company realized net income available for common stock of $0.9 million
and net earnings per share of $0.10 in the first nine months of 2000 compared to
a net loss available for common stock of $10.8 million and net loss per share of
$1.21 during the first nine months of 1999.
Operating cash flows during the first nine months of 2000 were $10.5
million, up $11.5 million from the first nine months of 1999 primarily as a
result of increased oil and gas sales which were offset in part by higher
production and operating expense and higher general and administrative expense.
Capital expenditures during the first nine months of 1999 were $14.3 million, up
$11.0 million from the first nine months of 1999. The Company's capital and
exploration budget for 2000 is approximately $23 million. The Company received
$40.9 million in net sales proceeds from the sale of oil and gas properties
during the first nine months of 1999 compared to $0.01 million in proceeds
received during the first nine months of 2000. On a cash basis, the Company paid
$6.0 million in interest expense in the first nine months of 2000 and no income
taxes were paid in the first nine months of 2000.
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
(a) The annual meeting of stockholders of The Wiser Oil Company was held
in Dallas, Texas, at 3:00 p.m., local time, on August 14, 2000.
(b) Proxies were solicited by the Board of Directors of The Wiser Oil
Company pursuant to Regulation 14A under the Securities Exchange Act
of 1934. There was no solicitation in opposition to the Board of
Directors' nominees as listed in the proxy statement and all of such
nominees were duly elected.
(c) Out of a total of 12,481,376 votes, representing one vote per share in
respect to the 8,951,965 shares of Common Stock issued and outstanding
and 3,529,411 votes with respect to the 600,000 shares of Convertible
Preferred Stock issued and outstanding as of the June 26, 2000 record
date, 11,753,202 votes were present in person or by proxy,
representing approximately 94 percent of the total number of votes.
The only matter voted on by the stockholders, as fully described in
the proxy statement for the annual meeting, was the election of C.
Frayer Kimball, III and Scott W. Smith to serve three-year terms on
the Board of Directors of The Wiser Oil Company. The results of voting
were as follows:
<TABLE>
<CAPTION>
Nominee Number of Votes Number of Votes
for Re-election FOR Election WITHHOLDING AUTHORITY
as Director as Director for Election as Director
---------------------- ------------------- --------------------------------
<S> <C> <C>
C. Frayer Kimball, III 11,385,365 367,837
Scott W. Smith 11,423,103 330,099
</TABLE>
The following individuals continued their respective terms of service
as Directors of The Wiser Oil Company following the meeting:
George K. Hickox, Jr.- Chairman
Lorne H. Larson
Jon L. Mosle, Jr.
A. W. Schenck, III
Richard R. Schreiber
15
<PAGE>
The Wiser Oil Company
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
16
<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 13, 2000 /s/ George K. Hickox, Jr.
--------------------------------------
George K. Hickox, Jr.
Chairman of the Board and
Chief Executive Officer
Date: November 13, 2000 /s/ Richard S. Davis
--------------------------------------
Richard S. Davis
Vice President of Finance
17
<PAGE>
The Wiser Oil Company
THE WISER OIL COMPANY
Index to Exhibits
Exhibit
Number Exhibit
------ -------
27* Financial Data Schedule
* Filed herewith.
18
