<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 1995 OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERION FROM ______ TO _____
Commission file number 1-7792
Pogo Producing Company
(Exact name of registrant as specified in its charter)
Delaware 74-1659398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Greenway Plaza, Suite 2700
Houston, Texas 77046-0504
(Address of principal executive offices) (Zip Code)
(713) 297-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days: Yes X No
Registrant's number of common shares outstanding
as of March 31, 1995: 32,813,886
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Pogo Producing Company and Subsidiaries
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
--------------- ---------------
(Expressed in thousands, except per share amounts)
<S> <C> <C>
Revenues:
Oil and gas $ 41,710 $ 37,840
Gains on sales 100 52
_____________ _______________
Total 41,810 37,892
------------- ---------------
Operating Costs and Expenses:
Lease operating 8,487 6,656
General and administrative 4,341 3,819
Exploration 1,375 733
Dry hole and impairment 1,428 1,390
Depreciation, depletion and amortization 18,457 11,758
------------- ---------------
Total 34,088 24,356
------------- ---------------
Operating Income 7,722 13,536
Interest:
Charges (2,791) (2,517)
Income 41 15
Capitalized 143 147
------------- ---------------
Income Before Income Taxes 5,115 11,181
Income Tax Expense (1,684) (3,903)
------------- ---------------
Net Income $ 3,431 $ 7,278
============= ===============
Primary and Fully Diluted
Earnings Per Common Share $ 0.10 $ 0.22
============= ===============
Dividends Per Common Share $ 0.03 $ -
============= ===============
Weighted Average Number of
Common Stock and Common
Stock Equivalent Shares Outstanding 33,357 33,253
</TABLE>
See accompanying notes to consolidated financial statements.
- 1 -
<PAGE>
Pogo Producing Company and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------- -------------
(Unaudited)
(Expressed in thousands, except share amounts)
<S> <C> <C>
Assets
Current Assets:
Cash and cash investments $ 3,966 $ 2,922
Accounts receivable 20,155 28,915
Other receivables 18,541 14,717
Inventories 3,692 2,422
Other 329 745
------------- -------------
Total current assets 46,683 49,721
------------- _____________
Property and Equipment:
Oil and gas, on the basis of successful efforts accounting
Proved properties being amortized 929,187 913,865
Unproved properties and properties
under development, not being amortized 6,242 6,890
Other, at cost 8,291 8,268
-------------- -------------
943,720 929,023
Less--accumulated depreciation, depletion and
amortization, including $5,198 and $5,040,
respectively, applicable to other property 709,538 691,110
-------------- -------------
234,182 237,913
-------------- -------------
Other 10,714 11,192
-------------- -------------
$ 291,579 $ 298,826
============== =============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 7,309 $ 8,065
Other payables 8,642 26,497
Current portion of long-term debt 911 1,282
Accrued interest payable 1,200 1,583
Accrued payroll and related benefits 1,303 1,237
Other 25 40
-------------- -------------
Total current liabilities 19,390 38,704
Long-Term Debt 158,249 149,249
Deferred Federal Income Tax 38,299 36,487
Deferred Credits 9,119 10,349
-------------- -------------
Total liabilities 225,057 234,789
-------------- -------------
Shareholders' Equity:
Preferred stock, $1 par; 2,000,000 shares authorized - -
Common stock, $1 par; 43,333,333 shares authorized,
32,829,461 and 32,825,836 shares issued, respectively 32,830 32,826
Additional capital 130,709 130,675
Retained earnings (deficit) (96,693) (99,140)
Treasury stock, at cost (324) (324)
-------------- -------------
Total shareholders' equity 66,522 64,037
-------------- -------------
$ 291,579 $ 298,826
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
- 2 -
<PAGE>
Pogo Producing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1995 1994
------------- --------------
(Expressed in thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 49,981 $ 31,717
Operating, exploration, and general
and administrative expenses paid (14,959) (10,565)
Interest paid (3,174) (1,267)
Settlement of natural gas transportation and exchange imbalance - (2,168)
Other 427 340
------------- --------------
Net cash provided by operating activities 32,275 18,057
------------- --------------
Cash Flows from Investing Activities:
Capital expenditures (30,618) (22,685)
Purchase of proved reserves (4,171) -
Proceeds from the sales of properties 100 52
------------- --------------
Net cash used in investing activities (34,689) (22,633)
------------- --------------
Cash Flows from Financing Activities:
Proceeds from issuance of new debt - 86,250
Net borrowings (payments) under revolving credit agreement 7,000 (67,000)
Net borrowings under uncommitted lines of credit with banks 2,000 -
Interest bearing loan to a joint venture partner (4,171) -
Payment of debt issue expenses - (2,156)
Payment of cash dividend on common stock (984) -
Purchase of 8% debentures due 2005 (410) -
Proceeds from exercise of stock options 23 1,222
------------- --------------
Net cash provided by financing activities 3,458 18,316
------------- --------------
Net Increase in Cash and Cash Investments 1,044 13,740
Cash and Cash Investments at the Beginning of the Year 2,922 6,713
------------- --------------
Cash and Cash Investments at the End of the Period $ 3,966 $ 20,453
============= ==============
Reconciliation of Net Income to Net
Cash Provided by Operating Activities:
Net income $ 3,431 $ 7,278
Adjustments to reconcile net income to
net cash provided by operating activities -
Gains from the sales of properties (100) (52)
Depreciation, depletion and amortization 18,457 11,758
Dry hole and impairment 1,428 1,390
Interest capitalized (143) (147)
Deferred federal income taxes 1,827 3,468
Change in operating assets and liabilities 7,375 (5,638)
------------- --------------
Net cash provided by operating activities $ 32,275 18,057
============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
Pogo Producing Company and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------------------------------
1995 1994
-------------------------- -----------------------------
Shares Amount Shares Amount
---------- ------------ ---------- -------------
(Expressed in thousands, except share amounts)
<S> <C> <C> <C> <C>
Common Stock:
$1.00 par - 43,333,333 shares authorized
Balance at beginning of year 32,825,836 $ 32,826 32,449,197 $ 32,449
Stock options exercised 3,625 4 110,330 111
---------- ------------ ---------- -------------
Issued at end of period 32,829,461 32,830 32,559,527 32,560
---------- ------------ ---------- -------------
Additional Capital:
Balance at beginning of year 130,675 125,919
Stock options exercised 34 1,417
------------ -------------
Balance at end of period 130,709 127,336
------------ -------------
Retained Earnings (Deficit):
Balance at beginning of year (99,140) (124,241)
Net income 3,431 7,278
Dividends ($0.03 per common share) (984) -
------------ -------------
Balance at end of period (96,693) (116,963)
------------ -------------
Treasury Stock:
Balance at beginning of year (15,575) (324) (15,575) (324)
Activity during period - - - -
---------- ------------ ---------- -------------
Balance at end of period (15,575) (324) (15,575) (324)
---------- ------------ ---------- -------------
Common stock outstanding,
at the end of the period 32,813,886 32,543,952
========== ==========
Total Shareholders' Equity $ 66,522 $ 42,609
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
- 4 -
<PAGE>
Pogo Producing Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(1) General Information -
The consolidated financial statements included herein have been
prepared by Pogo Producing Company (the "Company") without audit and include
all adjustments (of a normal and recurring nature) which are, in the opinion
of management, necessary for the fair presentation of interim results which
are not necessarily indicative of results for the entire year. The financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's latest annual report.
(2) Long-Term Debt -
Long-term debt and the amount due within one year at March 31,
1995 and December 31, 1994, consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
-------------- -------------
(Expressed in thousands)
<S> <C> <C>
Senior debt --
Bank revolving credit agreement
LIBO Rate based loans, borrowings at March 31, 1995 and
December 31, 1994 at average interest rate of 7.63% $ 19,000 $ 14,000
Prime rate based loan, borrowing at March 31, 1995 at
an interest rate of 9% 2,000 --
Uncommitted credit lines with banks, borrowings at March 31,
1995 and December 31, 1994 at average interest rates of
6.98% and 7.21%, respectively 9,000 7,000
-------------- -------------
Total senior debt 30,000 21,000
-------------- -------------
Subordinated debt --
5 1/2% Convertible subordinated notes due 2004 86,250 86,250
8% Convertible subordinated debentures due 2005 42,910 43,281
-------------- -------------
Total subordinated debt 129,160 129,531
-------------- -------------
Total debt 159,160 150,531
Amount due within one year consisting of the sinking fund
requirement on the 8% Debentures (911) (1,282)
-------------- -------------
Long-term debt $ 158,249 $ 149,249
============== =============
</TABLE>
On March 16, 1994, the Company issued $86,250,000 of 5 1/2%
Convertible Subordinated Notes due 2004 (the "5 1/2% Notes"). The 5 1/2%
Notes are convertible into common stock of the Company at a price of
$22.188 per share. The proceeds from the issuance of the 5 1/2% Notes
were used to retire the remaining balance of the Company's 10.25%
Convertible Subordinated Notes due 1999 (the "10.25% Notes") and to
reduce the amount outstanding under the Company's bank revolving
credit agreement. Refer to Note 3 of the Notes to Consolidated Financial
Statements included in the Company's latest annual report for a further
discussion of the bank revolving credit agreement and the 8% Convertible
Subordinated Debentures due 2005 (the "8% Debentures").
- 5 -
<PAGE>
Pogo Producing Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(3) Earnings per Share -
Earnings per common and common equivalent share (primary earnings
per share) are based on the weighted average number of shares of common
stock and common equivalent shares outstanding during the periods. The
dilutive effect of stock options was considered in the earnings per share
reported for the periods. The 8% Debentures are common stock equivalents
and were anti-dilutive in all periods. Earnings per common and common
equivalent share assuming full dilution (fully diluted earnings per share)
considered the 10.25% Notes (retired on April 18, 1994) which were
anti-dilutive in all periods in which they were outstanding and the 5 1/2%
Notes (issued on March 16, 1994) which were dilutive in the 1994 period but
anti-dilutive in the 1995 period. Earnings per share are based on the
following:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1995 1994
------------- ---------------
(Expressed in thousands)
<S> <C> <C>
Earnings applicable to common stock:
Primary $ 3,431 $ 7,278
============= ===============
Fully diluted $ 3,431 $ 7,413
============= ===============
Weighted average number of common
stock and common equivalent
shares outstanding:
Primary 33,357 33,253
============= ===============
Fully diluted 33,420 33,944
============= ===============
</TABLE>
- 6 -
<PAGE>
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This discussion should be read in conjunction
with Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the
Company's annual report on Form 10-K for the year
ended December 31, 1994.
Results of Operations -
The Company reported net income for the
first quarter of 1995 of $3,431,000 or $0.10 per share
(on both a primary and fully diluted basis) compared to net income
for the first quarter of 1994 of $7,278,000 or $0.22
per share (primary and fully diluted).
Primary earnings per share are based on the
weighted average number of shares of common and common
equivalent shares outstanding for the first quarter
of 1995 of 33,357,000, compared to 33,253,000
for the first quarter of 1994. The increase in the
weighted average number of common and common equivalent
shares outstanding for the first quarter of 1995,
compared to the first quarter of 1994, resulted largely from the
issuance of shares of common stock upon the exercise
of stock options pursuant to the Company's
stock option plans.
The Company's total revenues for the first
quarter of 1995 were $41,810,000, an increase of
approximately 10% from total revenues of
$37,892,000 for the first quarter of 1994. The
increase in the Company's total revenues for the first
quarter of 1995, compared to the first quarter of
1994, resulted primarily from increased natural gas and liquid
hydrocarbon (including crude oil, condensate and natural gas
liquids ("NGL")) production, together with increased average
prices that the Company received for its crude oil and condensate
production which was partially offset by substantial declines in the average
price that the Company received for its natural gas production volumes.
The following table reflects an analysis of differences
in the Company's oil and gas revenues (expressed
in thousands of dollars) between the first quarter of 1995 and
the first quarter of 1994:
<TABLE>
<CAPTION>
1st Qtr '95
Compared to
1st Qtr '94
-----------
<S> <C>
Increase (decrease) in oil and gas revenues
resulting from differences in :
Natural gas --
Price . . . . . . . . . . . . . . . . $ (6,377)
Production . . . . . . . . . . . . . . 4,468
---------
(1,909)
---------
Crude oil and condensate --
Price . . . . . . . . . . . . . . . . 3,536
Production . . . . . . . . . . . . . . 1,706
---------
5,242
---------
NGL and other, net . . . . . . . . . . . 537
---------
Increase in oil and gas revenues . . . . $ 3,870
=========
</TABLE>
The average price per thousand cubic feet ("Mcf") that
the Company received for its natural gas production substantially
decreased during the first quarter of 1995, compared to the first
quarter of 1994, averaging $1.58 per Mcf for the first quarter of
1995, compared to $2.20 per Mcf for the first quarter of 1994, a
decrease of approximately 28%. The Company believes that the
decrease in the average price that it received for its natural gas
production during the first quarter of 1995, compared
to the first quarter of 1994, was primarily related to
substantially milder weather this winter compared to last year
and increased availability of supplies of natural gas in the
United States. The Company's natural gas production during the
first quarter of 1995 averaged 145.2 million cubic feet ("MMcf")
per day, an increase of approximately 28% from an average of 113.7
MMcf per day that the Company produced during
the first quarter of 1994. The increase in the Company's
natural gas production during the first quarter of 1995, compared to
the first quarter of 1994, resulted primarily
from natural gas production from the Company's Eugene Island
295 "B" platform which did not commence production until late February
1994, and the continued success of the Company's ongoing active
offshore and onshore drilling and workover programs, which was
partially offset by a natural decline in deliverability from some
of the Company's more mature properties.
- 7 -
<PAGE>
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
As of May 1, 1995, the Company had entered into forward sales
contracts with various parties on a portion of its daily natural gas
production through September 30, 1995 (with contracts totaling
approximately 25 MMcf per day in April and decreasing on a quarterly
basis to approximately 15 MMcf per day) at varying monthly contract prices
ranging from approximatley $1.89 per Mcf to $1.83 per Mcf.
The average price received by the Company for its crude
oil and condensate production during the first quarter of 1995 was $17.52
per barrel, an increase of approximately 26% from
the average price of $13.90 per barrel that the Company
received for its crude oil and condensate production during the first
quarter of 1994. The Company's crude oil and condensate production
during the first quarter of 1995 averaged 11,942 barrels per day, an
increase of approximately 10% from an average of 10,860 barrels per
day during the first quarter of 1994. The increase in the Company's
crude oil and condensate production during the first quarter of 1995,
compared to the first quarter of 1994, resulted primarily from an
increased interest in, and development drilling on, certain
offshore Gulf of Mexico Main Pass area blocks. As of May 1, 1995, the
Company was not a party to any crude oil swap agreements.
The Company's NGL and other, net revenues for the first quarter
of 1995 increased $537,000 from the first quarter of 1994.
The increase in the Company's NGL revenues for the first
quarter of 1995, compared to the first quarter of 1994, resulted primarily
from increased NGL production from the Company's New Mexico properties
which was partially offset by a decrease in various miscellaneous net
revenue items.
The Company's average liquid hydrocarbons (including
crude oil, condensate and NGL) production during the first quarter
of 1995 was 14,227 barrels per day, an increase of
approximately 14% from an average liquid hydrocarbons production
of 12,502 barrels per day during the first quarter of 1994.
Lease operating expenses for the first quarter of
1995 were $8,487,000, an increase of approximately 28% from lease
operating expenses of $6,656,000 for the first quarter of 1994.
The increase in lease operating expenses for the first quarter
of 1995, compared to the first quarter of 1994, resulted primarily
from the Company's increased operating activity generally,
coupled with its increased ownership interest in certain of its properties
as a result of the acquistion of such interests since the first quarter
of 1994 and, to a lesser extent, increased maintenance costs
on existing properties. These increases were partially offset by decreased
company labor costs and decreased salt water disposal costs on the
Company's New Mexico properties.
General and administrative expenses for the first
quarter of 1995 were $4,341,000, an increase of approximately 14% from
general and administrative expenses of $3,819,000 for the first
quarter of 1994. The increase in general and administrative
expenses for the first quarter of 1995, compared to the first
quarter of 1994, was related to, among other things, an increase
in the Company's work force resulting from increased activity, normal
salary and concomitant benefit expense adjustments and increased
insurance premiums resulting from the Company's increased drilling and
operating activity.
Exploration expenses consist primarily of delay rentals and
geological and geophysical costs which are expensed as incurred.
Exploration expenses for the first quarter of 1995 were $1,375,000, an
increase of approximately 88% from exploration expenses of $733,000
for the first quarter of 1994. The increase in exploration expenses
for the first quarter of 1995, compared to the first quarter of 1994,
resulted primarily from increased geophysical activity by the Company,
including the costs of conducting and processing certain proprietary
3-D seismic surveys on Company leases in South Texas and West Texas, for
which there were no comparable first quarter 1994 expenses. However,
the increase in exploration expenses for the first quarter of 1995,
compared to the first quarter of 1994, was partially offset by a decrease
in exploration expenses attributable to the Company's oil and
gas concession in the Kingdom of Thailand.
Dry hole and impairment expenses relate to costs of
unsuccessful wells drilled, along with impairments to the associated
unproved property costs and impairments to previously proved property
costs as a result of decreases in expected reserves. The Company's dry
hole and impairment expenses for the first quarter of 1995 were
$1,428,000, an increase of approximately 3% from dry hole and
impairment expenses of $1,390,000 for the first quarter of 1994.
- 8 -
<PAGE>
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
The Company accounts for its oil and gas activities using the
successful efforts method of accounting. Under the successful
efforts method, lease acquisition costs and all development costs are
capitalized. Unproved properties are reviewed quarterly to determine
if there has been impairment of the carrying value, with any such
impairment charged to expense in the period. Exploratory drilling
costs are capitalized until the results are determined. If proved
reserves are not discovered, the exploratory drilling costs are
expensed. Other exploratory costs are expensed as incurred.
The provision for depreciation, depletion and amortization
("DD&A") is based on the capitalized costs mentioned in the preceding
paragraph plus future costs to abandon offshore wells and platforms
and is determined on a field-by-field basis using the units of
production method. The Company's DD&A expense for the first quarter of
1995 was $18,457,000, an increase of approximately 57% from DD&A
expense of $11,758,000 for the first quarter of 1994. The increase
in DD&A expense for the first quarter of 1995, compared to the first
quarter of 1994, resulted primarily from an increase in the Company's
composite DD&A rate and, to a lesser extent, increased production of oil
and gas from the Company's properties. The composite DD&A rate for all
of the Company's producing fields for the first quarter of 1995 was $0.88
per equivalent Mcf ($5.29 per equivalent barrel), an increase of
approximately 29% from a composite DD&A rate of $0.68 per equivalent
Mcf ($4.11 per equivalent barrel) for the first quarter of 1994. The
increase in the composite DD&A rate for all of the Company's producing
fields for the first quarter of 1995, compared with the first quarter
of 1994, resulted primarily from the increased percentage of the
Company's production that is attributable to certain on the Company's
newer fields that have higher DD&A rates than the Company's historical
composite DD&A rate.
The Company produced 20,749,000 equivalent Mcf (3,458,000 equivalent
barrels) during the first quarter of 1995, an increase of approximately
22% from the 16,986,000 equivalent Mcf (2,831,000 equivalent barrels)
produced by the Company during the first quarter of 1994.
During the first quarter of 1995, the Company adopted Financial
Accounting Standard No. 121 (Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of("SFAS 121")). SFAS 121
requires the Company to review its oil and gas properties whenever events
or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. If the carrying amount of any of the
Company's oil and gas properties (determined on a field by field
basis) is greater than its fair market value, an impairment loss
is recognized. Adoption of SFAS 121 did not have a material effect on
the Company's financial statements for the quarter ended March 31, 1995.
Interest charges for the first quarter of 1995 were
$2,791,000, an increase of approximately 11% from interest charges of
$2,517,000 for the first quarter of 1994. The increase in interest
charges for the first quarter of 1995, compared to the first quarter
of 1994, resulted primarily from increased levels of debt outstanding,
increased debt issue amortization expenses and increased commitment
fees resulting from increased availability under the Company's revolving
credit facility, which was partially offset by lower average interest
rate levels on the debt outstanding.
As of April 1, 1995, the Company was a party to an interest rate
swap agreement. The swap agreement, which terminates on March 10, 1998,
effectively changes the interest rate paid by the Company on $5,000,000
of debt from a market based variable rate to a fixed rate of 7.2%.
Income tax expense for the first quarter of 1995 was $1,684,000,
a decrease of approximately 57% from income tax expense of $3,903,000 for
the first quarter of 1994. The decrease in income tax expense for the first
quarter of 1995, compared to the first quarter of 1994, resulted primarily
from decreased pre-tax income.
Liquidity and Capital Resources -
The Company's Condensed Consolidated Statement of Cash Flows for
the three months ended March 31, 1995 reflects net cash provided by
operating activities of $32,275,000. In addition to net cash provided by
operating activities, the Company received $100,000 from the sale of
certain non-strategic properties and $23,000 from the exercise of stock
options. The Company also had net borrowings of $9,000,000 under
its revolving credit facility and uncommitted lines of
- 9 -
<PAGE>
Pogo Producing Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
credit with banks. During the first three months of 1995, the Company
invested $30,618,000 of such cash flow in capital projects, purchased
certain proved reserves for $4,171,000, made a short term interest bearing
loan to a joint venture partner of $4,171,000 that was subsequently repaid,
expended $410,000 on the repurchase of certain of its 8% Debentures
in open market transactions, and paid a $0.03 per share dividend to
holders of the Company's common stock. Of the $30,618,000 invested
in capital projects, $23,259,000 was applicable to 1994 capital projects
and $7,359,000 was applicable to 1995 capital projects. As of
March 31, 1995, the Company's cash and cash investments were $3,966,000
and its long-term debt stood at $158,249,000.
The Company's capital and exploration budget for 1995, which does
not include any amounts which may be expended for the purchase of proved
reserves or any interest which may be capitalized resulting from projects
in progress, was established by the Company's Board of Directors in January
1995, at $100,000,000. In addition to anticipated capital and
exploration expenses, other material 1995 cash requirements that the
Company currently anticipates include ongoing operating, general and
administrative, income tax, and interest expense, a $3,000,000 sinking fund
payment on the 8% Debentures (for which the Company may tender all or a
portion of the $2,089,000 face amount of 8% Debentures that it currently
holds) and payments of dividends on its common stock,
including a $.03 per share dividend on its common stock to be paid on
May 31, 1995 to stockholders of record as of May 8, 1995. The Company
currently anticipates that cash provided by operating activities and funds
available under its revolving credit facility and uncommitted lines of
credit with banks will be sufficient to fund the Company's ongoing expenses,
its 1995 capital and exploration budget, any currently anticipated
costs associated with the Company's Tantawan project in Thailand during
1995 and anticipated future
dividend payments. In this regard, the Company reinstated the practice
of declaring a quarterly cash dividend in the third quarter of 1994.
However, the declaration and payment of future dividends will depend
upon, among other things, the Company's future earnings and financial
condition, liquidity and capital requirements, the general economic
and regulatory climate and other factors deemed relevant by the Company's
Board of Directors.
- 10 -
<PAGE>
Pogo Producing Company and Subsidiaries
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
3(a) -- Restated Certificate of Incorporation of
Pogo Producing Company.
(B) Reports on Form 8-K
A report on Form 8-K was filed on February 24, 1995 setting
forth under Item 5 thereof, certain information regarding the
time and location of the registrant's annual meeting of
stockholders.
-11-
<PAGE>
Pogo Producing Company and Subsidiaries
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.
Pogo Producing Company
(Registrant)
/s/ THOMAS E. HART
Thomas E. Hart
Vice President and Controller
/s/ D. STEPHEN SLACK
D. Stephen Slack
Senior Vice President, Chief
Financial Officer and Treasurer
Date: May 10, 1995
-12-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO.
3(a) -- Restated Certificate of Incorporation of Pogo
Producing Company.
RESTATED CERTIFICATE OF INCORPORATION
OF
POGO PRODUCING COMPANY
Pogo Producing Company, a corporation organized and
existing under and by virtue of the General Corporation Law of the
State of Delaware, Does Hereby Certify:
FIRST: The name of the corporation is Pogo
Producing Company.
SECOND: The name under which the corporation was
originally incorporated is Pennzoil Offshore Company. The date
of filing of its original certificate of incorporation with the
Secretary of State of the State of Delaware was February 19, 1970.
THIRD: This Restated Certificate of Incorporation was
duly adopted by the Board of Directors of the corporation in
accordance with Section 245 of the General Corporation Law of the
State of Delaware.
FOURTH: This Restated Certificate of Incorporation
only restates and integrates and does not further amend the
provisions of the corporation's certificate of incorporation as
heretofore amended or supplemented and there is no discrepancy
between those provisions and the provisions of this Restated
Certificate of Incorporation.
FIFTH: The text of the Certificate of Incorporation
of the corporation as heretofore amended or supplemented is
hereby restated to read as herein set forth in full:
ARTICLE I
The name of the corporation is Pogo Producing Company.
ARTICLE II
The address of its registered office in the State of Delaware
is located at No. 100 West Tenth Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted by the corporation is to engage in any lawful business,
act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
ARTICLE IV
A. The total number of shares of all classes of stock
which the corporation shall have authority to issue is 102,000,000
shares, divided into 100,000,000 shares of Common Stock of the
par value of $1 per share (Common Stock) and 2,000,000 shares
of Preferred Stock of the par value of $1 per share (Preferred
Stock). (Amended 4/25/95)
The Preferred Stock may be issued in one or more series
and the Preferred Stock of each such series shall have such
designations, preferences and relative, participating, optional,
redemption, conversion, exchange and other special rights, and
qualifications, limitations or restrictions thereof, as may be fixed
by the Board of Directors pursuant to the authority so to do which
is hereby expressly vested in it and stated and expressed in a
resolution or resolutions adopted by the Board of Directors
providing for the issuance of Preferred Stock of such series.
Except as otherwise provided in any resolution of the Board
of Directors providing for the issuance of any particular series of
Preferred Stock, Preferred Stock redeemed or otherwise acquired
by the corporation shall assume the status of authorized but
unissued Preferred Stock and may thereafter, subject to the
provisions of this Article IV and of any restrictions contained in
any resolution of the Board of Directors providing for the issuance
of any particular series of Preferred Stock, be reissued in the same
manner as other authorized but unissued Preferred Stock.
Except as otherwise specifically required by law or as
specifically provided herein or in any resolution of the Board of
Directors providing for the issuance of any particular series of
Preferred Stock, the exclusive voting power of the corporation shall
be vested in the Common Stock of the corporation. Each share of
Common Stock shall entitle the holder thereof to one vote at all
meetings of the stockholders of the corporation.
B. Except as otherwise provided in this Article IV, the
affirmative vote of the holders of not less than 80% of the
outstanding shares of Common Stock and of not less than 80% of
the outstanding shares of Preferred Stock outstanding and entitled
to vote, such Common Stock and Preferred Stock voting separately
and not as one class, shall be required:
(i) for a merger or consolidation of the corporation with
or into any other corporation, or
(ii) for any sale or lease of all or any substantial part of
the assets of the corporation to any other corporation,
person or other entity, or
(iii) any sale or lease to the corporation or any subsidiary
thereof of any assets (except assets having an aggregate fair
market value of less than $5,000,000) in exchange for
voting stock (or securities convertible into or exchangeable
for voting stock or options, warrants, or rights to purchase
voting stock or securities convertible into voting stock) of
the corporation or any subsidiary of the corporation by any
other corporation, person or entity,
if as of the record date for the determination of stockholders
entitled to notice thereof and to vote thereon, or as of the time the
Board of Directors shall have approved a memorandum of
understanding, or the corporation shall have entered into any
agreement, with respect to any such transaction for which the vote
or consent of the holders of no class or series of stock of the
corporation is otherwise required by law, the Certificate of
Incorporation or any other contract or agreement, such other
corporation, person or entity which is party to such a transaction
is the beneficial owner, directly or indirectly, of 5% or more of the
outstanding shares of any class or series of voting stock of the
corporation. Such affirmative vote or consent shall be in addition
to the vote or consent of the holders of any class or series of stock
of the corporation otherwise required by law or the Certificate of
Incorporation or the resolution or resolutions providing for the
issuance of such class or series which have been adopted by the
Board of Directors or any agreement between the corporation and
any national securities exchange.
For purposes of this Article IV any corporation, person or
other entity shall be deemed to be the beneficial owner of any
shares of stock of the corporation:
(i) which it owns directly, whether or not of record, or
(ii) which it has the right to acquire pursuant to any
agreement or understanding or upon exercise of conversion
rights, exchange rights, warrants or options or otherwise,
or
(iii) which are beneficially owned, directly or indirectly
(including shares deemed to be owned through application
of clause (ii) above), by any "affiliate" or "associate" as
those terms are defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934
as in effect on June 1, 1977, or
(iv) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of
clause (ii) above), by any other corporation, person or
entity with which it or its "affiliate" or "associate" has any
agreement or arrangement or understanding for the purpose
of acquiring, holding, voting, or disposing of stock of the
corporation.
For the purposes of this Article IV, the outstanding shares
of any class or series of stock of the corporation shall include
shares deemed owned through the application of clauses (ii), (iii)
and (iv) above, but shall not include any other shares which may
be issuable pursuant to any agreement or upon exercise of
conversion or exchange rights, warrants, options or otherwise. As
used in this Article IV, the term "subsidiary" shall mean a
corporation, at least 40% of the voting power of the capital stock
(that is, voting power entitled to be exercised in the election of
directors, but excluding voting power entitled so to be exercised
only upon the happening of some contingency unless such
contingency shall have occurred and is continuing) of which, shall
be owned by this corporation or by one or more subsidiaries or by
this corporation and one or more subsidiaries.
The Board of Directors shall have the power and duty to
determine for the purposes of this Article IV on the basis of
information known to this corporation whether
(i) such other corporation, person or other entity
beneficially owns more than 5% of the outstanding shares
of any class or series of voting stock of the corporation,
(ii) a corporation, person or entity is an "affiliate" or
"associate" (as defined herein) of another,
(iii) the assets being acquired by the corporation, or any
subsidiary thereof, have an aggregate fair market value of
less than $5,000,000, and
(iv) the memorandum of understanding referred to in
Paragraph (4) below is substantially consistent with the
transaction covered thereby.
Any such determination shall be conclusive and binding for all
purposes of this Article IV.
The provisions of this Article IV otherwise requiring an
80% vote of the holders of Common Stock and Preferred Stock
shall not apply to:
(i) any merger or consolidation of this corporation with,
or any sale or lease to this corporation or any subsidiary
thereof of any assets of, or any sale or lease by this
corporation or any subsidiary thereof of any of its assets to,
any corporation, person or entity if the Board of Directors
of this corporation has approved a memorandum of
understanding with such other corporation, person or entity
with respect to such transaction prior to the time that such
other corporation, person or entity shall have become a
beneficial owner of more than 5% of the outstanding shares
of any class or series of voting stock of this corporation, or
(ii) any merger or consolidation of this corporation with,
or any sale or lease to this corporation or any subsidiary
thereof of any assets of, or any sale or lease by this
corporation or any subsidiary thereof of any of its assets to
any subsidiary of this corporation.
ARTICLE V
[The provision of the original Certificate of Incorporation
naming the incorporator is omitted pursuant to Section 245(c) of
the General Corporation Law of the State of Delaware.]
ARTICLE VI
In furtherance of, and not in limitation of, the powers
conferred by statute, the Board of Directors is expressly authorized
to make, alter or repeal the by-laws of the corporation.
ARTICLE VII
No contract or other transaction between the corporation
and any other corporation and no other act of the corporation with
relation to any other corporation shall, in the absence of fraud, in
any way be invalidated or otherwise affected by the fact that any
one or more of the directors of the corporation are pecuniarily or
otherwise interested in, or are directors or officers of, such other
corporation. Any director of the corporation individually, or any
firm or association of which any director may be a member, may
be a party to, or may be pecuniarily or otherwise interested in, any
contract or transaction of the corporation, provided that the fact
that he individually or as a member of such firm or association is
such a party or so interested shall be disclosed or shall have been
known to the Board of Directors or a majority of such members
thereof as shall be present at any meeting of the Board of Directors
at which action upon any such contract or transaction shall be
taken; any director of the corporation who is also a director or
officer of such other corporation or who is such a party or so
interested may be counted in determining the existence of a quorum
at any meeting of the Board of Directors which shall authorize any
such contract or transaction, and may vote thereat to authorize any
such contract or transaction, with like force and effect as if he
were not such director of officer of such other corporation or not
so interested. Any director of the corporation may vote upon any
contract or other transaction between the corporation and any
subsidiary or affiliated corporation without regard to the fact that
he is also a director of such subsidiary or affiliated corporation.
ARTICLE VIII
The Corporation reserves the right, subject to any express
provisions or restrictions contained in the Certificate of
Incorporation or Bylaws of the Corporation, to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed herein or
by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation; provided that the provisions set
forth in Articles IV (Section B only), IX, X and in this Article VIII
may not be amended, altered, changed or repealed in any respect
unless such action is approved by the affirmative vote of the
holders of not less than 80% of the outstanding shares of Common
Stock and of not less than 80% of the outstanding shares of
Preferred Stock, voting separately and not as one single class.
ARTICLE IX
The number of directors which shall constitute the whole
Board of Directors of the Corporation shall be not less than three
(3) nor more than thirteen (13) as specified from time to time in
the Bylaws of the Corporation, except in the case of an increase in
the number of directors by reason of any default provisions with
respect to any outstanding series of Preferred Stock. The Board is
divided into three classes, being Class I, Class II and Class III.
The number of directors in each class shall be the whole number
contained in the quotient arrived at by dividing the authorized
number of directors by three and if a fraction is also contained in
such quotient, then if such fraction is one-third (1/3) the extra
director shall be a member of Class III and if the fraction is two-
thirds (2/3) one of the directors shall be a member of Class III and
the other shall be a member of Class II. Each director shall serve
for a term ending on the third annual meeting following the annual
meeting at which such director was elected; provided, however,
that the directors first elected to Class I shall serve for a term
ending on the annual meeting next ensuing, the directors first
elected to Class II shall serve for a term ending on the second
annual meeting following the meeting at which such directors were
first elected, and the directors first elected to Class III shall serve
a full term as hereinabove provided. The foregoing
notwithstanding, each director shall serve until his successor shall
have been qualified, or until he shall be disabled or shall otherwise
be removed.
For purposes of the preceding paragraph, reference to the
first election of directors shall signify the first election of directors
concurrent with the approval by stockholders of this Article IX. At
each annual election held thereafter, the directors chosen to succeed
those whose terms then expire shall be identified as being of the
same class as the directors they succeed. If for any reason the
number of directors in the various classes shall not conform with
the formula set forth in the preceding paragraph, the Board of
Directors may redesignate any director into a different class in
order that the balance of directors in such classes shall conform
thereto.
The greater of (a) four directors, or (b) a majority of the
directors at anytime in office, shall constitute a quorum for the
transaction of business, and if at any meeting of the Board of
Directors there shall be less than such a quorum, a majority of
those present may adjourn the meeting from time to time. Every
act or decision done or made by a majority of the directors present
at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors unless a greater
number be required by law or by this Certificate of Incorporation.
No director of the Corporation shall be removed from his
office as a director by vote or other action of stockholders or
otherwise except for cause.
A director need not be a stockholder. The election of
Directors need not be by ballot unless the Bylaws should so
require.
ARTICLE X
No action required to be taken or which may be taken at
any annual or special meeting of stockholders of this corporation
may be taken without a meeting, and the powers of stockholders to
consent in writing, without a meeting, to the taking of any action
is specifically denied."
ARTICLE XI (Added by Amendment dated 10/8/86)
No director of the Corporation shall be personally liable to
the Corporation or any of its stockholders for monetary damages
for breach of fiduciary duty as a director involving any act or
omission of any such director occurring on or after September 30,
1986; provided, however, that the foregoing provision shall not
eliminate or limit the liability of a director (i) for any breach of
such director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Title 8, Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which such
director derived an improper personal benefit. Any repeal or
modification of this Article by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
IN WITNESS WHEREOF, said Pogo Producing Company
has caused this certificate to be executed in its corporate name by
William E. Gipson, its President, and its corporate seal to be
hereunto affixed and attested by Hunter L. Martin, Jr., its
Secretary, this 3rd day of October, 1977.
POGO PRODUCING COMPANY
By /s/ William E. Gipson
William E. Gipson
President
ATTEST: /s/ Hunter L. Martin, Jr.
Hunter L. Martin, Jr.
Secretary
[Seal]
CORPORATE SEAL
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Financial Data Schedule contains summary financial information extracted
from the Consolidated Financial Statements (Unaudited) of Pogo Producing
Company, including the Consolidated Balance Sheets as of March 31, 1995
and the Consolidated Statements of Income for the three months
ended March 31, 1995, and is qualified in its entirety by reference
to such Consolidated Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,966
<SECURITIES> 0
<RECEIVABLES> 38,696
<ALLOWANCES> 0<F1>
<INVENTORY> 3,692
<CURRENT-ASSETS> 46,683
<PP&E> 943,720
<DEPRECIATION> 709,538
<TOTAL-ASSETS> 291,579
<CURRENT-LIABILITIES> 19,390
<BONDS> 158,249
<COMMON> 32,830
0
0
<OTHER-SE> 33,692
<TOTAL-LIABILITY-AND-EQUITY> 291,579
<SALES> 41,710<F2>
<TOTAL-REVENUES> 41,810
<CGS> 8,487<F3>
<TOTAL-COSTS> 8,487<F3>
<OTHER-EXPENSES> 25,601<F4>
<LOSS-PROVISION> 0<F5>
<INTEREST-EXPENSE> 2,791
<INCOME-PRETAX> 5,115
<INCOME-TAX> 1,684
<INCOME-CONTINUING> 3,431
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,431
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
<FN>
<F1>This amount is not disclosed on the face of the Consolidated
Financial Statements due to lack of materiality, but is included as
a contra-asset in Accounts Receivable.
<F2>Does not include Gains on Sales.
<F3>Includes Lease Operating Expense, but excludes General and
Administrative, Exploration, Dry Hole and Impairment and Depreciation,
Depletion and Amortization Expenses.
<F4>Includes General and Administrative, Exploration, Dry Hole and
Impairment and Depreciation, Depletion and Amortization Expenses.
<F5>This amount is not disclosed on the face of the Consolidated Financial
Statements due to lack of materiality, but is included in Oil and Gas
Revenues.
</FN>
</TABLE>
