SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT 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 period from to
Commission file number 0-9408
PRIMA ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 84-1097578
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1801 Broadway, Suite 500, Denver CO 80202
(Address of principal executive offices) (Zip Code)
(303) 297-2100
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed from
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 requirements for the past 90 days.
Yes [x] No [ ]
As of May 1, 1995 the Registrant had 3,880,396 shares of Common Stock,
$0.015 Par Value, outstanding.
PRIMA ENERGY CORPORATION
INDEX
Part I - Financial Information Page
Item 1. Financial Statements
Unaudited consolidated balance sheets . . . . . . . . . 3
Unaudited consolidated statements of income . . . . . . 5
Unaudited consolidated statements of cash flows . . . . 6
Notes to unaudited consolidated financial statements . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . 8
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 12
PRIMA ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
MARCH 31, DECEMBER 31,
1995 1994
CURRENT ASSETS
Cash and cash equivalents........................ $ 903,000 $ 1,558,000
Available for sale securities, at market......... 956,000 895,000
Receivables (net of allowance for doubtful
accounts: 3/31/95, $46,000; 12/31/94, $49,000). 2,524,000 3,425,000
Tubular goods inventory.......................... 409,000 478,000
Deferred tax asset............................... 165,000 174,000
Other............................................ 324,000 254,000
Total current assets....................... 5,281,000 6,784,000
OIL AND GAS PROPERTIES, at cost, accounted
for using the full cost method................. 41,662,000 40,686,000
Less accumulated depreciation,
depletion and amortization..................... (14,797,000) (13,672,000)
Oil and gas properties - net............... 26,865,000 27,014,000
PROPERTY AND EQUIPMENT, at cost
Oilfield service equipment....................... 1,818,000 1,800,000
Furniture and equipment.......................... 506,000 500,000
Field office, shop and land...................... 339,000 300,000
2,663,000 2,600,000
Less accumulated depreciation.................... (1,519,000) (1,437,000)
Property and equipment - net............... 1,144,000 1,163,000
OTHER ASSETS
Cash, designated................................. 596,000 457,000
Other............................................ 312,000 298,000
Total other assets......................... 908,000 755,000
$34,198,000 $35,716,000
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (cont'd.)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER 31,
1995 1994
CURRENT LIABILITIES
Accounts payable................................. $ 311,000 $ 3,110,000
Amounts payable to oil and gas property owners... 1,114,000 1,364,000
Production taxes payable......................... 1,121,000 1,109,000
Accrued and other liabilities.................... 369,000 353,000
Total current liabilities.................. 2,915,000 5,936,000
NOTE PAYABLE - BANK.............................. 600,000 1,000,000
PRODUCTION TAXES, non-current.................... 1,465,000 1,139,000
DEFERRED TAX LIABILITY........................... 2,573,000 2,288,000
Total liabilities.......................... 7,553,000 10,363,000
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value,
2,000,000 shares authorized;
no shares issued or outstanding................ 0 0
Common stock, $0.015 par value, 5,000,000
shares authorized; 3,880,396 shares
issued and outstanding......................... 58,000 58,000
Additional paid-in capital....................... 4,251,000 4,251,000
Retained earnings................................ 22,449,000 21,192,000
Unrealized loss on available for sale securities. (113,000) (148,000)
Total stockholders' equity................. 26,645,000 25,353,000
$ 34,198,000 $ 35,716,000
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1995 1994
REVENUES
Oil and gas sales................................ $ 3,295,000 $ 3,035,000
Trading revenues................................. 1,576,000 934,000
Oilfield services................................ 496,000 595,000
Management and operator fees..................... 263,000 265,000
Interest and dividend income..................... 26,000 31,000
Other............................................ 46,000 (71,000)
5,702,000 4,789,000
EXPENSES
General, administrative and cost of
oilfield services.............................. 856,000 861,000
Depreciation, depletion and amortization......... 1,206,000 1,061,000
Lease operating expense.......................... 391,000 359,000
Production taxes................................. 209,000 220,000
Cost of trading.................................. 1,408,000 778,000
4,070,000 3,279,000
INCOME BEFORE INCOME TAXES....................... 1,632,000 1,510,000
PROVISION FOR INCOME TAXES....................... 375,000 295,000
NET INCOME....................................... $ 1,257,000 $ 1,215,000
NET INCOME PER COMMON SHARE AND COMMON
SHARE EQUIVALENT:
Primary.................................. $ 0.32 $ 0.31
Fully Diluted............................ $ 0.32 $ 0.31
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
AND COMMON SHARE EQUIVALENTS:
Primary.................................. 3,880,396 3,893,445
Fully Diluted............................ 3,883,266 3,888,700
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1995 1994
OPERATING ACTIVITIES
Net income ...................................... $ 1,257,000 $ 1,215,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization...... 1,206,000 1,061,000
Deferred income taxes......................... 282,000 162,000
Other......................................... 174,000 245,000
2,919,000 2,683,000
Changes in current assets and liabilities:
Receivables................................... 901,000 (635,000)
Inventory..... ............................... 69,000 61,000
Other current assets.......................... (70,000) (31,000)
Payables...................................... (3,037,000) (1,291,000)
Accrued and other liabilities................. 16,000 (68,000)
Net cash provided by operating activities. 798,000 719,000
INVESTING ACTIVITIES
Additions to oil and gas properties.............. (976,000) (1,821,000)
Purchases of other property...................... (63,000) (38,000)
Purchases of available for sale securities........ (14,000) (15,000)
Proceeds from sales of available for sale securities 0 25,000
Proceeds from sales of other property............ 0 4,000
Net cash used by investing activities..... (1,053,000) (1,845,000)
FINANCING ACTIVITIES
Payments on line of credit....................... (400,000) 0
Net cash used by financing activities.... (400,000) 0
DECREASE IN CASH AND CASH EQUIVALENTS............ (655,000) (1,126,000)
CASH AND CASH EQUIVALENTS, beginning of period... 1,558,000 2,425,000
CASH AND CASH EQUIVALENTS, end of period.........$ 903,000 $ 1,299,000
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The financial information contained herein is unaudited but includes
all adjustments (consisting of only normal recurring accruals) which, in
the opinion of management, are necessary to present fairly the information
set forth. The consolidated financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements which are
included in the Annual Report on Form 10-K of Prima Energy Corporation for
the year ended December 31, 1994.
The results for interim periods are not necessarily indicative of
results to be expected for the fiscal year of the Company ending December
31, 1995. The Company believes that the three month report filed on Form
10-Q is representative of its financial position, its results of operations
and its cash flows for the periods ended March 31, 1995 and 1994 covered
thereby.
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of Prima Energy Corporation ("Prima") and its subsidiaries, herein
collectively referred to as the "Company." All significant intercompany
transactions have been eliminated. Certain amounts in prior years have
been reclassified to conform with the classifications at March 31, 1995.
3. NOTE PAYABLE - BANK
Note payable of $600,000 at March 31, 1995 and $1,000,000 at December
31, 1994 consisted of borrowings under an $8,000,000 unsecured line of
credit with a commercial bank. The note bears interest at the bank's prime
rate (9.0% at March 31, 1995), with interest payable monthly. Funds are
available on a revolving basis until April 30, 1996. The balance of
principal plus accrued interest is payable at maturity, May 1, 1996.
<PAGE>
PRIMA ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's principal internal sources of liquidity are cash flows
from operations and existing cash and cash equivalents. Net cash provided
by operating activities for the three months ended March 31, 1995 was
$798,000 compared to $719,000 for the same three month period of 1994. Net
working capital at March 31, 1995 was $2,366,000 compared to $848,000 at
December 31, 1994. Current liabilities at March 31, 1995 decreased from
December 31, 1994 levels by $3,021,000 while current assets decreased by
$1,503,000 for the same period. The increase in working capital of
$1,518,000 was generated by cash flows from operations during the quarter
ended March 31, 1995.
The Company has external borrowing capacity through an $8,000,000
unsecured line of credit with a commercial bank. Revolving funds available
on the line of credit were $7,400,000 at March 31, 1995. The Company
reduced the amount owing on the line of credit by $400,000 during the first
quarter of 1995.
The Company invested $1,039,000 in property and equipment during the
quarter ended March 31, 1995 compared to $1,859,000 for the 1994 quarter.
The Company expended $524,000 during the 1995 quarter for undeveloped
acreage, $452,000 for its proportionate share of the costs of drilling and
completing wells and $63,000 for other property and equipment. These
expenditures compare to $1,773,000 for well costs, $48,000 for undeveloped
acreage and $38,000 for other equipment in the 1994 quarter. The Company
participated in the drilling of seven non-operated development wells
(.90 net) during the 1995 quarter, two in the Wind River Basin in central
Wyoming and five in the Bonny Field in eastern Colorado. The five Bonny
Field wells were completed and placed on production in April 1995. The Wind
River Basin wells were completed and are currently being tested. Two wells
which were in progress at December 31, 1994 in the Wattenberg Field in Weld
County, Colorado were also completed and placed on production during the first
quarter of 1995. Well costs are down substantially in the first quarter of
1995 as the Company has elected to defer its 1995 drilling program in the
Wattenberg Area of northeastern Colorado until late summer or early fall in
anticipation of a better natural gas market.
The Company regularly reviews opportunities for acquisition of assets
or companies related to the oil and gas industry which could expand or
enhance its existing business. The Company expects its operations,
including acquisition, drilling, completion and recompletion well costs,
will be financed by funds provided by operations, working capital,
additional borrowings on the line of credit, various cost-sharing
arrangements, or from other financing alternatives.
Results of Operations
For the quarter ended March 31, 1995, the Company earned net income of
$1,257,000, or $.32 per share, on revenues of $5,702,000, compared to net
income of $1,215,000, or $.31 per share on revenues of $4,789,000 for the
comparable quarter of 1994. Expenses were $4,070,000 for the 1995 quarter
compared to $3,279,000 for the 1994 quarter. Revenues increased $913,000,
or 19.1%, expenses increased $791,000, or 24.1% and net income increased
$42,000, or 3.5%. The increase in both revenues and expenses is primarily
attributable to increased trading and costs of trading of natural gas.
Oil and gas sales for the quarter ended March 31, 1995 were $3,295,000
compared to $3,035,000 for the same period of 1994, an increase of $260,000
or 8.6%. The increase is attributable to increased production of oil and
natural gas and increased prices for oil, which more than offset a
substantial decline in natural gas prices. The Company's net natural gas
production was 1,117,000 Mcf and 999,000 Mcf for the first quarters of 1995
and 1994, respectively, an increase of 118,000 Mcf or 11.8%. Its net oil
production was 87,000 barrels compared to 85,000 barrels for the same
periods, an increase of 2,000 barrels or 2.4%. The average price received
for natural gas production was $1.63 per Mcf for the 1995 quarter compared
to $1.94 per Mcf for the 1994 quarter, a decrease of $.31 per Mcf or 16%.
Approximately 3% of the natural gas production at March 31, 1995 is
attributable to production sold under a fixed contract price of $5.90 per
Mmbtu. The average price for the Company's natural gas production exclusive
of the fixed price contract gas was $1.52 for the 1995 quarter. The
average price received for oil in 1995 was $17.00 per barrel compared to
$12.86 per barrel for the same period of 1994, an increase of $4.14 per
barrel or 32.2%.
Trading revenues and cost of trading represent the marketing of third
party natural gas by Prima Natural Gas Marketing, Inc., a wholly owned
subsidiary. Trading revenues were $1,576,000 for the three months ended
March 31, 1995, a $642,000 increase (68.7%) over the $934,000 reported for
the three months ended March 31, 1994. The Company marketed 760,000
Mmbtu's for the first quarter of 1995 compared to 395,000 Mmbtu's marketed
during the comparable quarter of 1994. Costs of trading were $1,408,000
for the 1995 quarter compared to $778,000 for the 1994 quarter, an increase
of $630,000 or 81%. Trading activities fluctuate with natural gas markets
and the Company's ability to develop markets that meet the Company's
trading criteria.
Oilfield services represent the revenues earned by Action Oilfield
Services, Inc., a wholly owned subsidiary. These revenues include well
servicing fees from completion and swab rigs, trucking, water hauling and
rental equipment, and other related activities. Revenues were $496,000 for
the quarter ended March 31, 1995 compared to $595,000 for the comparable
quarter of 1994. This $99,000, or 16.6% decrease in revenues is
attributable to decreased activity in the Wattenberg Field area where the
service company is active. This decline in activity is due at least in
part to the decline in natural gas prices incurred during the winter of
1994/1995, and is expected to continue at least through the early summer of
1995. For the quarter ended March 31, 1995, 20% of the fees billed by
Action were for Company owned wells compared to 33% for the quarter ended
March 31, 1994. The Company's share of fees paid to Action on Company
owned properties and the costs associated with providing the services are
eliminated in consolidation. The services performed for the Company have
declined because the Company has elected to defer its 1995 Wattenberg
drilling program until later in the year with the expectation that natural
gas prices will improve.
Management and operator fees are earned pursuant to the Company's
roles as operator for approximately 300 oil and natural gas wells located
primarily in the Wattenberg Field area of Weld County, Colorado and as
managing venturer of a joint venture which owns gas gathering and pipeline
facilities in the Bonny Field in Yuma County, Colorado. The Company is a
working interest owner in each of the operated wells. The Company is paid
operating and management fees by the other working interest owners in the
properties. Fees fluctuate with the number of wells operated, the
percentage working interest in a property owned by third parties, and the
amount of drilling activity during the period. Fees for 1995 were $263,000
compared to $265,000 for 1994, a decrease of $2,000. The decrease is
attributable to reduced drilling activity during the current quarter.
General, administrative and cost of oilfield services includes the
costs of payroll, insurance, rent, office, maintenance, etc. as well as the
direct and indirect expenses of the Company's service business. These
expenses were $856,000 for the quarter ended March 31, 1995 compared to
$861,000 for the quarter ended March 31, 1994, a decrease of $5,000.
Although costs of oilfield services have declined in total due to the
reduced activity of the service business as explained above, the amounts
attributable to Company owned wells have also declined, resulting in less
costs being eliminated in consolidation.
Lease operating expenses and production taxes ("LOE") were $600,000
for the 1995 quarter compared to $579,000 for the 1994 quarter, an increase
of $21,000 or 3.6%. Depreciation, depletion and amortization ("DD&A") was
$1,206,000 for the first quarter of 1995 compared to $1,061,000 for the
first quarter of 1994, an increase of $145,000 or 13.7%. Both expense
categories have increased due to increased production. Production for the
quarter ended March 31, 1995 was 273,000 BOE compared to 252,000 BOE for
the quarter ended March 31, 1994. LOE per equivalent barrel of production
was $2.20 for the first quarter of 1995 compared to $2.30 for the
comparable quarter of 1994. DD&A applicable to oil and gas properties was
$4.12 per equivalent barrel of production for the 1995 quarter compared to
$3.91 per equivalent barrel of production for the 1994 quarter. Depreciation
of other property and equipment was $81,000 and $77,000 for the quarters
ended March 31, 1995 and 1994, respectively.
The provision for income taxes increased $80,000 to $375,000 for the
three months ended March 31, 1995 compared to $295,000 for the three months
ended March 31, 1994. A portion of the increase is attributable to the
increase in net income before income taxes, which totaled $1,632,000 for
the 1995 quarter compared to $1,510,000 for the 1994 quarter, an increase
of $122,000, or 8%. The balance of the increase is attributable to a
higher effective income tax rate in 1995. The effective income tax rate
for the first quarter of 1995 is 23% compared to 19.5% for the 1994
quarter. Effective tax rates are affected by amounts of temporary and
permanent differences in financial and taxable income and by statutory
depletion deductions and section 29 tax credits.
The Company's main source of revenues is from the sale of oil and
natural gas production. Levels of revenues and earnings are affected by
prices at which oil and natural gas are sold. As a result, the Company's
operating results for any period are not necessarily indicative of future
operating results because of fluctuations in oil and natural gas prices and
production volumes.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No exhibits are required to be filed herewith pursuant to
rule 601 of Regulation S-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the Registrants'
fiscal quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
PRIMA ENERGY CORPORATION
(Registrant)
Date May 4, 1995 By Richard H. Lewis
Richard H. Lewis,
President and
Principal Financial Officer
