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 June 30, 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 July 31, 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 4. Submission of Matters to a Vote of Security Holders. . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PRIMA ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, DECEMBER 31,
1995 1994
CURRENT ASSETS
Cash and cash equivalents........................ $ 1,374,000 $ 1,558,000
Available for sale securities, at market......... 994,000 895,000
Receivables (net of allowance for doubtful
accounts: 6/30/95, $46,000; 12/31/94, $49,000). 1,794,000 3,425,000
Tubular goods inventory.......................... 436,000 478,000
Deferred tax asset............................... 171,000 174,000
Other............................................ 215,000 254,000
Total current assets........................ 4,984,000 6,784,000
OIL AND GAS PROPERTIES, at cost, accounted
for using the full cost method.................. 42,784,000 40,686,000
Less accumulated depreciation,
depletion and amortization..................... (15,740,000) (13,672,000)
Oil and gas properties - net..................... 27,044,000 27,014,000
PROPERTY AND EQUIPMENT, at cost
Oilfield service equipment....................... 1,778,000 1,800,000
Furniture and equipment.......................... 511,000 500,000
Field office, shop and land...................... 339,000 300,000
2,628,000 2,600,000
Less accumulated depreciation.................... (1,522,000) (1,437,000)
Property and equipment - net................ 1,106,000 1,163,000
OTHER ASSETS
Cash, designated................................. 190,000 457,000
Other............................................ 310,000 298,000
Total other assets.......................... 500,000 755,000
$ 33,634,000 $ 35,716,000
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (cont'd.)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
1995 1994
CURRENT LIABILITIES
Accounts payable................................. $ 325,000 $ 3,110,000
Amounts payable to oil and gas property owners... 700,000 1,364,000
Production taxes payable......................... 1,218,000 1,109,000
Accrued and other liabilities.................... 338,000 353,000
Total current liabilities................... 2,581,000 5,936,000
NOTE PAYABLE - BANK.............................. 0 1,000,000
PRODUCTION TAXES, non-current.................... 605,000 1,139,000
DEFERRED TAX LIABILITY........................... 2,785,000 2,288,000
Total liabilities......................... 5,971,000 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, 8,000,000
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................................ 23,450,000 21,192,000
Unrealized loss on available for sale securities. (96,000) (148,000)
Total stockholders' equity.................. 27,663,000 25,353,000
$ 33,634,000 $ 35,716,000
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
REVENUES
Oil and gas sales...... $ 2,780,000 $ 2,921,000 $ 6,075,000 $ 5,956,000
Trading revenues....... 477,000 844,000 2,053,000 1,777,000
Oilfield services...... 296,000 435,000 792,000 1,030,000
Management and
operator fees....... 293,000 256,000 556,000 521,000
Interest and dividend
income.............. 25,000 42,000 51,000 74,000
Other.................. 83,000 193,000 129,000 122,000
3,954,000 4,691,000 9,656,000 9,480,000
EXPENSES
General, administrative
and cost of oilfield
services............ 748,000 896,000 1,604,000 1,756,000
Depreciation, depletion
and amortization..... 1,024,000 1,035,000 2,230,000 2,096,000
Lease operating
expense............. 411,000 358,000 802,000 717,000
Production taxes....... 183,000 226,000 392,000 447,000
Cost of trading........ 297,000 693,000 1,705,000 1,471,000
2,663,000 3,208,000 6,733,000 6,487,000
INCOME BEFORE INCOME
TAXES............... 1,291,000 1,483,000 2,923,000 2,993,000
PROVISION FOR INCOME
TAXES............... 290,000 290,000 665,000 585,000
NET INCOME............. $ 1,001,000 $ 1,193,000 $ 2,258,000 $ 2,408,000
NET INCOME PER SHARE:
Primary............. $ 0.26 $ 0.31 $ 0.58 $ 0.62
Fully Diluted....... $ 0.26 $ 0.31 $ 0.58 $ 0.62
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING AND
COMMON SHARE EQUIVALENTS:
Primary............. 3,894,748 3,880,396 3,881,971 3,886,390
Fully Diluted....... 3,900,104 3,895,610 3,900,104 3,895,610
See accompanying notes to unaudited consolidated financial statements.
PRIMA ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
1995 1994
OPERATING ACTIVITIES
Net income ...................................... $ 2,258,000 $ 2,408,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization...... 2,230,000 2,096,000
Deferred income taxes......................... 478,000 299,000
Other......................................... (285,000) (191,000)
4,681,000 4,612,000
Changes in current assets and liabilities:
Receivables................................. 1,631,000 183,000
Inventory................................... 42,000 21,000
Other current assets........................ 39,000 (71,000)
Payables.................................... (3,340,000) (1,448,000)
Accrued and other liabilities............... (15,000) (393,000)
Net cash provided by operating activities. 3,038,000 2,904,000
INVESTING ACTIVITIES
Additions to oil and gas properties.............. (2,098,000) (2,940,000)
Purchases of other property...................... (113,000) (236,000)
Purchases of available for sale securities....... (25,000) (35,000)
Proceeds from sales of available for sale
securities.................................... 0 29,000
Proceeds from sales of other property............ 14,000 4,000
Net cash used by investing activities..... (2,222,000) (3,178,000)
FINANCING ACTIVITIES
Payments on line of credit....................... (1,000,000) (1,000,000)
Net cash used by financing activities.... (1,000,000) (1,000,000)
DECREASE IN CASH AND CASH EQUIVALENTS............ (184,000) (1,274,000)
CASH AND CASH EQUIVALENTS, beginning of period... 1,558,000 2,425,000
CASH AND CASH EQUIVALENTS, end of period......... $ 1,374,000 $ 1,151,000
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 six 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 June 30, 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 June 30, 1995.
3. NOTE PAYABLE - BANK
Note payable of $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 June 30, 1995), with
interest payable monthly. At June 13, 1995, the line of credit agreement was
amended to extend the date on which funds are available on a revolving basis
to April 30, 1997 and the maturity date for outstanding principal and accrued
interest to May 1, 1997. There was no balance owing on the line of credit at
June 30, 1995.
4. OFFICE LEASE
The Company renewed its corporate office lease effective December 1, 1995 for
a term of five years. Future minimum annual rentals approximate $130,000.
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 six months ended June 30, 1995 was $3,038,000
compared to $2,904,000 for the same six month period of 1994. Net working
capital at June 30, 1995 was $2,403,000 compared to $848,000 at December 31,
1994. Current liabilities at March 31, 1995 decreased from December 31, 1994
levels by $3,355,000 while current assets decreased by $1,800,000 for the
same period. The increase in working capital of $1,555,000 was generated by
cash flows from operations during the six months ended June 30, 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 $8,000,000 at June 30, 1995. The Company reduced the amount
owing on the line of credit by $1,000,000 during the first six months of
1995.
The Company invested $2,211,000 in property and equipment during the six
months ended June 30, 1995 compared to $3,176,000 for the 1994 six month
period. The Company expended $1,225,000 during the 1995 six month period for
undeveloped acreage, $873,000 for its proportionate share of the costs of
drilling and completing wells and $113,000 for other property and equipment.
These expenditures compare to $2,824,000 for well costs, $116,000 for
undeveloped acreage and $236,000 for other equipment in the 1994 six month
period. The Company participated in the drilling of nineteen non-operated
development wells during the 1995 period, four (0.24 net) in the Wind River
Basin in central Wyoming and fifteen (2.325) in the Bonny Field in eastern
Colorado. In the Wind River Basin, two of the wells are producing, one is
waiting on completion and one is waiting on pipeline hook-up. At the Bonny
Field, all fifteen wells are now on production. The Company also
participated in the drilling of one operated exploratory well (.375 net) in
Wyoming. The well was plugged and abandoned.
During the first six months of 1995, the Company did not drill any wells in
the Wattenberg Field area of northeastern Colorado, the predominate area of
the Company's drilling and production activities over the past several years.
The decision to defer drilling of wells in the Wattenberg Field area was
based, among other things, on low natural gas prices which negatively affect
the economics of wells in this area, a decision to expand efforts in areas
other than Wattenberg, and further evaluation of prior drilling results. The
Company's future drilling plans in Wattenberg will be largely dependent on
higher natural gas prices and other factors necessary to improve well
economics.
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, borrowings on the
line of credit, various cost-sharing arrangements, or from other financing
alternatives.
Results of Operations
For the quarter ended June 30, 1995, the Company earned net income of
$1,001,000, or $.26 per share, on revenues of $3,954,000, compared to net
income of $1,193,000, or $.31 per share on revenues of $4,691,000 for the
comparable quarter of 1994. Expenses were $2,663,000 for the 1995 second
quarter compared to $3,208,000 for the 1994 second quarter. Revenues
decreased $737,000, or 15.7%, expenses decreased $545,000, or 17.0%, and net
income decreased $192,000, or 16.1%.
For the six months ended June 30, 1995, the Company earned net income of
$2,258,000, or $.58 per share, on revenues of $9,656,000, compared to net
income of $2,408,000, or $.62 per share on revenues of $9,480,000 for the six
months ended June 30, 1994. Expenses were $6,733,000 for the 1995 six month
period compared to $6,487,000 for the 1994 six month period. Revenues
increased $176,000, or 1.9%, expenses increased $246,000, or 3.8%, and net
income decreased $150,000, or 6.2%.
Oil and gas sales for the quarter ended June 30, 1995 were $2,780,000
compared to $2,921,000 for the same quarter of 1994, a decrease of $141,000
or 4.8%. The Company's net natural gas production was 1,016,000 Mcf and
1,062,000 Mcf for the second quarters of 1995 and 1994, respectively, a
decrease of 46,000 Mcf or 4.3%. Its net oil production was 69,000 barrels
compared to 76,000 barrels for the same periods, a decrease of 7,000 barrels
or 9.2%. The average price received for natural gas production was $1.50 per
Mcf for the 1995 quarter compared to $1.66 per Mcf for the 1994 quarter, a
decrease of $.16 per Mcf or 9.6%. The average price received for oil in the
second quarter of 1995 was $18.06 per barrel compared to $15.35 per barrel
for the second quarter of 1994, an increase of $2.71 per barrel or 17.7%.
Oil and gas sales for the six months ended June 30, 1995 were $6,075,000
compared to $5,956,000 for the six months ended June 30, 1994, an increase of
$119,000 or 2.0%. The Company's net natural gas production was 2,134,000 Mcf
and 2,065,000 Mcf for the first six months of 1995 and 1994, respectively, an
increase of 69,000 Mcf or 3.3%. Its net oil production was 156,000 barrels
compared to 160,000 barrels for the same six month periods, a decrease of
4,000 barrels or 2.5%. The average price received for natural gas production
was $1.57 per Mcf for the six months ended June 30, 1995 compared to $1.79
per Mcf for the six months ended June 30, 1994, a decrease of $.22 per Mcf or
12.3%. Approximately 3% of the natural gas production at June 30, 1995 was
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 $1.44 per Mcf for the six months ended
June 30,1995. The average price received for oil for the first six months of
1995 was $17.47 per barrel compared to $14.04 per barrel for the same period
of 1994, an increase of $3.43 per barrel or 24.4%.
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 $477,000 for the three months ended June 30, 1995, a
$367,000 decrease (43.5%) from the $844,000 reported for the three months
ended June 30, 1994. The Company marketed 209,000 MMBtu's for the second
quarter of 1995 compared to 371,000 MMBtu's marketed during the comparable
quarter of 1994. Costs of trading were $297,000 for the 1995 quarter
compared to $693,000 for the 1994 quarter, a decrease of $396,000 or 57.1%.
Trading revenues were $2,053,000 for the six months ended June 30, 1995, an
increase of $276,000 or 15.5% over the $1,777,000 reported for the six
months ended June 30, 1994. The Company marketed 969,000 MMBtu's for the six
month period of 1995 compared to 766,000 MMBtu's marketed during the
comparable period of 1994. Costs of trading were $1,705,000 for the 1995 six
month period compared to $1,471,000 for the 1994 six month period, an
increase of $234,000 or 15.9%. 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 $296,000 for the quarter ended
June 30, 1995 compared to $435,000 for the comparable quarter of 1994, a
decrease of $139,000, or 32.0%. Oilfield services revenues were $792,000 for
the six months ended June 30, 1995 compared to $1,030,000 for the comparable
six month period of 1994, a decrease of 238,000 or 23.1%. These decreases in
revenues for both the quarter and six month periods are 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 latter part of 1994 and continuing
into 1995, which resulted in a significant decline in drilling activity in
the area. For the quarter ended June 30, 1995, 20.9% of the fees billed by
Action were for Company owned wells compared to 29.6% for the quarter ended
June 30, 1994. For the six months ended June 30, 1995, 20.4% of the fees
billed by Action were for Company owned wells compared to 31.7% for the six
months ended June 30, 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 not drilled any wells in the Wattenberg
Field area in 1995.
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 the quarter ended June 30, 1995 were $293,000
compared to $256,000 for the 1994 quarter, an increase of $37,000. Fees for
the six months ended June 30, 1995 were $556,000 compared to $521,000 for the
1994 six month period, an increase of $35,000.
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
$748,000 for the quarter ended June 30, 1995 compared to $896,000 for the
quarter ended June 30, 1994, a decrease of $148,000, or 16.5%. Costs for the
six months ended June 30, 1995 have decreased $152,000, or 8.7%, to
$1,604,000 from $1,756,000 at June 30, 1994. The Company has sought to
reduce its costs consistent with the reduced activity levels.
Lease operating expenses and production taxes ("LOE") were $594,000 for the
quarter ended June 30, 1995 compared to $584,000 for the quarter ended June
30, 1994, an increase of $10,000 or 1.7%. Depreciation, depletion and
amortization ("DD&A") was $1,024,000 for the second quarter of 1995 compared
to $1,035,000 for the second quarter of 1994, a decrease of $11,000 or 1.1%.
Production for the quarter ended June 30, 1995 was 239,000 BOE compared to
253,000 BOE for the quarter ended June 30, 1994. LOE per equivalent barrel
of production was $2.49 for the second quarter of 1995 compared to $2.31 for
the comparable quarter of 1994. DD&A applicable to oil and gas properties
was $3.95 per equivalent barrel of production for the 1995 quarter compared
to $3.75 per equivalent barrel of production for the 1994 quarter.
Depreciation of other property and equipment was $81,000 and $86,000 for the
quarters ended June 30, 1995 and 1994, respectively.
LOE was $1,194,000 for the six months ended June 30, 1995 compared to
$1,164,000 for the six months ended June 30, 1994, an increase of $30,000 or
2.6%. DD&A was $2,230,000 for the six month period of 1995 compared to
$2,096,000 for the six month period of 1994, an increase of $134,000 or 6.4%.
Production for the 1995 six month period was 511,000 BOE compared to 505,000
BOE for the 1994 six month period. LOE per equivalent barrel of production
was $2.34 for 1995 compared to $2.31 for 1994. DD&A applicable to oil and
gas properties was $4.05 per equivalent barrel of production for 1995
compared to $3.83 per equivalent barrel of production for 1994. Depreciation
of other property and equipment was $162,000 and $163,000 for the six months
ended June 30, 1995 and 1994, respectively.
The provision for income taxes was $290,000 for both the quarters ended June
30, 1995 and June 30, 1994. The provision for the six months ended June 30,
1995 was $665,000 compared to $585,000 for the same six month period of 1994.
Income before income taxes decreased by $192,000 for the 1995 quarter, but
the effective tax rate increased to 22.5% from 19.6%. Income before income
taxes for the six month period of 1995 decreased by $70,000, but the
effective tax rate increased to 22.8% from 19.6%. 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, production volumes and
drilling activity.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On June 8, 1995, the Company held an annual meeting of stockholders. The
following table sets forth certain information relating to each matter voted
upon at the meeting.
Votes
Votes Votes Withheld/ Broker
Matters Voted Upon For Against Abstain Non-Votes
Election of George L. Seward 3,433,136 6,979
as Class I Director.
Ratification of the selection 3,415,956 3,803 20,356
of Deloitte & Touche as
independent auditors for 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed herewith pursuant to rule 601 of Regulation
S-K or are incorporated by reference to previous filings.
Exhibit No. Document
10.951 First Amendment to Trinity Place Office Lease
10.952 Line of Credit Letter Agreement
27 Financial Data Schedules
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the Registrants' fiscal quarter
ended June, 30, 1995.
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 August 10, 1995 By /s/Richard H. Lewis
Richard H. Lewis,
President and
Principal Financial Officer
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
PRIMA ENERGY CORPORATION'S JUNE 30, 1995 FORM 10-Q AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
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<SECURITIES> 994000
<RECEIVABLES> 1840000
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<INVENTORY> 436000
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<PP&E> 45412000
<DEPRECIATION> (17262000)
<TOTAL-ASSETS> 33634000
<CURRENT-LIABILITIES> 2581000
<BONDS> 0
<COMMON> 58000
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<TOTAL-LIABILITY-AND-EQUITY> 33634000
<SALES> 8128000
<TOTAL-REVENUES> 9656000
<CGS> 5129000
<TOTAL-COSTS> 5129000
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 2923000
<INCOME-TAX> 665000
<INCOME-CONTINUING> 2258000
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<NET-INCOME> 2258000
<EPS-PRIMARY> .58
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FIRST AMENDMENT OF TRINITY PLACE OFFICE LEASE
THIS FIRST AMENDMENT TO TRINITY PLACE OFFICE LEASE (this "Amendment") is
entered into for reference purposes only as of the 5th day of July, 1995
between 1801 BROADWAY ASSOCIATES, L.P., a California limited partnership
("Landlord"), and PRIMA ENERGY CORPORATION, a Delaware corporation
("Tenant").
RECITALS:
A. E.R.I.C. Trinity Place Corporation, Landlord's predecessor in
interest, and Tenant entered into that certain Office Lease, dated October
3, 1988 (the "Lease"), pursuant to which Landlord leased to Tenant and
Tenant leased from Landlord those certain premises situated in the City and
County of Denver, State of Colorado, commonly known as Suite 500, 1801
Broadway, Denver, Colorado 80202 (the "Leased Premises"), on the terms and
conditions set forth in the Lease.
B. Landlord and Tenant desire to enter into this Amendment and extend the
term of the Lease as set forth below.
AGREEMENT:
NOW, THEREFORE, for the covenants and conditions contained herein and for
other good and valuable considerations, the receipt and sufficiency of
which is hereby acknowledged, Landlord and Tenant agree to amend the Lease
as follows:
1. Term. The term of the Lease is hereby extended until November
30, 2000 (the "Expiration Date"). The period beginning on December 1, 1995
(the "Extension Period Commencement Date") and ending on the Expiration
Date is hereinafter referred to as the "Extension Period".
2. Base Rent. Commencing on the Extension Period Commencement Date and on
the first day of the month thereafter, Tenant shall pay Landlord Base Rent
pursuant to the following schedule:
12/01/95 - 11/30/96 $10,252.38
12/01/96 - 11/30/97 10,496.48
12/01/97 - 11/30/98 10,740.58
12/01/98 - 11/30/99 10,984.69
12/01/99 - 11/30/00 11,228.79
3. 1995 Base Year. During the Extension Period, the "Base Year", as
defined in Section 6.9A of the Base Lease, shall be the calendar year 1995.
4. Improvement to Leased Premises. Prior to the Extension Period
Commencement Date, Landlord shall complete the following improvements to
the Leased Premises (the "Landlord Improvements"): (a) replace all
flooring in the Leased Premised, including the carpet in the elevator lobby
and VCT tiles, of a like kind and quality as is currently installed, (b)
repaint the existing painted portions of the Leased Premises that require
repainting, and (c) perform other miscellaneous improvements to the Leased
Premises pursuant to a "punchlist" to be agreed upon by Landlord and
Tenant, provided the cost for said miscellaneous improvements does not
exceed $5,000. Except as set forth in this Section 4, Tenant shall accept
the Leased Premises during the Extension Period in its "as-is" condition.
5. First Right to Rent. In the event that Tenant elects to exercise its
Right to Rent pursuant to Section 3 of the Addendum to Lease, the rental
rate for said space shall be equal to the then current rate that Landlord
is asking for similarly situated space in the Building.
6. Parking. If tenant fails to lease one or more parking spaces
currently leased pursuant to that certain Trinity Parking Agreement, dated
August 22, 1988, between Tenant and E.R.I.C. Trinity Place Corporation,
Tenant forfeits its right to lease said spaces and releases Landlord from
its obligation to reserve the same for Tenant.
7. Notices. The addresses for Landlord's notices set forth in Section
23.16 of the Lease shall be of no further force and effect. From and after
the date of this Amendment, all notices to Landlord shall be given to the
following Address:
1801 Broadway Associates, L.P.
clo Miller-Anschutz Properties, LLC
4643 South Ulster Street, Suite 1500
Denver, Colorado 80237
Attention: James H. Miller
with a copy to:
Vector Property Services, LLC
1200 17th Street, Suite 1130
Denver, Colorado 80202
Attention: Property Management
8. Miscellaneous:
a. The Lease as modified herein remains in full force and effect and
is hereby ratified by Landlord and Tenant. In the event of any conflict
between the Lease and this Amendment, the terms and conditions of this
Amendment shall control. Capitalized terms not defined herein shall have
the same meaning as set forth in the Lease.
b. This Amendment is binding upon and inures to the benefit of the
parties hereto and their heirs, personal representatives, successors and
assigns.
c. Except as expressly provided herein, Tenant has not assigned or
transferred any interest in the Lease and has full power and authority to
execute this Amendment.
d. Tenant has no known claims of any kind or nature against
Landlord arising from or under the Lease and there are no agreements
between the Landlord and Tenant other than the Lease as amended by this
Amendment.
e. Sections 2, 4, 5, 7, and 8 of the Addendum to the Lease are
terminated and of no further force or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the dates below their respective signatures. This Amendment
shall be deemed effective upon delivery of a fully executed copy hereof to
both parties.
1801 BROADWAY ASSOCIATES, L.P., a California limited
partnership
By: M/A MANAGEMENT LLC, a Utah limited liability
Company
Its: General Partner
By: /s/ Donald Spiegleman
Date: July 7, 1995
"Landlord"
PRIMA ENERGY CORPORATION, a Delaware corporation
By: /s/ Richard H. Lewis
Richard H. Lewis
Date: July 6, 1995
LINE OF CREDIT LETTER AGREEMENT
Norwest Bank Colorado, N.A.
Denver
1740 Broadway
Denver, Colorado 80274
303/861-8811
June 13, 1995
Mr. Richard H. Lewis
President
Prima Energy Corporation
Prima Oil and Gas Company
1801 Broadway, Suite 500
Denver, Colorado 80202
Dear Mr. Lewis:
Norwest Bank Colorado, National Association, is pleased to commit to making
a working capital line of credit available to Prima Energy Corporation and
Prima Oil & Gas Company. The borrowing facility will be subject to the
following:
I. TERMS
BORROWERS
Prima Energy Corporation, a Delaware Corporation, and
Prima Oil & Gas Company, a Colorado Corporation.
LENDER
Norwest Bank Colorado, National Association ("Norwest")
COMMITMENT AMOUNT
Not to exceed $8,000,000, represented by a Promissory Note dated as of May
1, 1995 ("Note").
RATE
Interest shall accrue at an annual rate equal to the fluctuating prime rate
established from time to time by Norwest, payable monthly on the last day
of each calendar month.
FEES
None.
SECURITY
Unsecured.
STRUCTURE
Funds will be available on a revolving basis through April 30, 1997 (the
"revolving period"). All outstanding balances due May 1, 1997. During
the revolving period, the Borrowers may borrow, repay and reborrow funds
as long as the aggregate outstanding amount (including letters of credit)
does not exceed the Commitment Amount. The facility could be extended to
allow the continuation of the revolving period through April 30, 1998 and
maturity of May 1, 1998.
PURPOSE
General working capital purposes in support of Borrowers' operations,
including acquisition of oil and gas properties and related assets.
Additionally, the line may also be used for the issuance of letters of
credit. In no event will the line be used for the purpose of purchasing or
carrying "margin stock" in violation of Regulations G, U, or X of the Board
of Governors of the Federal Reserve System.
MATURITY DATE
The end of the revolving period is April 30, 1997; maturity is May 1, 1997.
Letters of credit issued under this facility may not be issued past April
30, 1997 and must fully expire on or before May 1, 1997, or the letters of
credit be fully secured by cash deposits.
II. CONDITIONS PRECEDENT
The provisions of this letter will serve as the terms of the borrowing
arrangements and will be hereafter referred to as the Agreement. Prior to
any funds being made available, the Borrowers will execute and deliver to
Norwest, in form and substance satisfactory to Norwest, a Promissory Note
and this Agreement.
III. COVENANTS
Unless Norwest shall otherwise consent in writing, and so long as any debt
remains outstanding or the commitment still available, the Borrowers will
comply with the following:
1. Borrowers will:
(a) submit annual audited consolidated financial statements within 90 days
after each fiscal year-end.
(b) submit quarterly company prepared consolidated financial statements
within 45 days after each quarter-end.
(c) maintain at all times, consolidated Total Shareholders' Equity of not
less than $23,000,000 plus 75% of net income after December 31, 1994.
(d) maintain at all times, the ratio of their consolidated current assets
to current liabilities (excluding the current portion of the debt described
herein) of not less than 1.2:1.
(e) maintain at all times, a ratio of Total Shareholders' Equity to Total
Liabilities of at least 1:1.
(f) upon the occurrence of any Event of Default which is not remedied
within 30 days, provide Norwest, within 30 business days of Norwest's request
and at Borrowers' expense, a valid perfected first lien, on terms
and conditions satisfactory to Norwest, on sufficient proved developed
producing oil and gas properties, so as to secure the remainder of any debt
outstanding under this Agreement.
2. Borrowers will not:
(a) make loans or advances to any third party, outside of the normal
course of business.
(b) reorganize or merge with any other entity.
(c) change its business.
(d) sell, lease, assign, transfer or otherwise dispose of in any fiscal
year, any of their oil or gas properties having, in the aggregate, a net
present value of greater than $500,000.
(e) create, incur, assume or suffer to exist any mortgage, deed of trust,
pledge, lien, security interest, or other charge or encumbrance of any
nature on any of its oil and gas properties excluding liens in favor of
Norwest and oil, gas and mineral leases, permits, gas sales and
transportation contracts or similar agreements (specifically including that
certain Gas Sales Agreement dated May 24, 1989, by and between Colorado
Power Partnership, K N Production Company, and Prima Oil and Gas Company,
with attachments) entered into in the ordinary course of business.
(f) incur other debt (other than trade payables incurred during the normal
course of business) in excess of S1,000,000 in the aggregate outstanding at
any one time.
IV. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement and the Note:
1. Borrowers shall fail to pay when due any principal, interest, or other
amount payable under this Agreement, or any promissory notes executed or
guaranteed by any of the Borrowers in favor of Norwest, before the
expiration of 10 days after such payment is due.
2. Any representation or warranty made by Borrowers hereunder or in any
related collateral security or other documents entered into with Norwest
shall prove to be at any time incorrect in any significant respect.
3. Borrowers shall fail to observe or perform any obligation, agreement,
or other provision contained herein or in any other contract or instrument
executed in connection herewith.
4. Any default or defined Event of Default under any security agreement,
deed of trust, promissory note, or other contract or instrument executed by
the Borrowers pursuant to, or as required by, this Agreement.
5. Borrowers shall fail immediately to pay and discharge any judgment or
levy of any attachment, execution or other process against any of the
assets of any of the Borrowers, or such judgment shall not be satisfied,
within 10 days after the entry thereof.
6. Either Borrower shall: (a) become insolvent, or suffer or consent to
or apply for the appointment of a receiver, trustee, custodian or
liquidator for itself or any of its property, or generally fail to pay its
debts as they become due, or make a general assignment for the benefit of
creditors; or (b) file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of
the United States Code, as recodified from time to time ("Bankruptcy
Code"), or as now or hereafter in effect, or any involuntary petition or
proceeding pursuant to said Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy or reorganization or other relief for
debtors is filed or commenced against either Borrower; or (c) file any
answer admitting the jurisdiction of the court and the material allegations
of any such involuntary petition; or (d) be adjudicated as bankrupt, under
said Bankruptcy Code or any other state or federal law relating to
bankruptcy, reorganization, or other relief for debtors.
7. Norwest, in good faith, considers Norwest's prospect of or right to
payment or performance under this Agreement or the Note to be impaired.
8. Any change in the Borrowers' management control wherein Richard H.
Lewis ceases to be president and chief executive officer of each of them.
Notwithstanding the Remedies as listed below, Norwest may not accelerate
the maturity of the note or cease making advances hereunder for at least
60 days from the death or incapacitation of Richard H. Lewis, provided no
other Event of Default exists hereunder.
V. REMEDIES
If any Event of Default shall occur, any indebtedness of the Borrowers
under this Agreement, any other contract or instrument executed in
conjunction herewith or the Note, any term of the Note to the contrary
notwithstanding, shall at Norwest's option and without notice, become
immediately due and payable without presentment, demand, or protest or
notice of dishonor, all of which are hereby expressly waived by Borrowers.
In addition, the obligation, if any, of Norwest to permit further
borrowings hereunder shall immediately cease and terminate and Norwest
shall have all rights, powers and remedies available under this Agreement,
the Note or other contracts or instruments executed in connection herewith,
or accorded by law, including without limitation the right to resort to any
or all of the collateral and to exercise any or all of its rights, powers,
or remedies at any time and from time to time after the occurrence of any
Event of Default.
All rights, powers, and remedies of Norwest in connection with this
Agreement, the Note or any other contract or instrument on which the
Borrowers may at any time be obligated to Norwest (or any holder thereof)
are cumulative and not exclusive and shall be in addition to any other
rights, powers, or remedies provided by law or equity, including without
limitation the right to set off any liability owing by Norwest to either
of the Borrowers (including sums deposited in any deposit account of
Borrowers with Norwest) against any liability of the Borrowers to Norwest.
VI. WAIVER
No delay, failure, or discontinuance by Norwest, or any holder of the Note,
in exercising any right, power, or remedy under this Agreement, the Note or
any other contract or instrument on which the Borrowers may at any time be
obligated to Norwest (or any holder thereof) shall affect or operate as a
waiver of such right, power or remedy. Any waiver, permit, consent, or
approval of any kind by Norwest (or any holder of the Note), or of any
provisions or conditions of, or any breach or default under this Agreement,
the Note or any other contract or instrument on which any of the Borrowers
may at any time be obligated, must be in writing and shall be effective
only to the extent set forth in such writing.
VII. NOTICES
All notices, requests, and demands given to or made upon the respective
parties must be in writing and shall be deemed to have been given or made:
(1) at the time of personal delivery thereof, (2) or two days after any of
the same are deposited in the U.S. Mail, first class and postage prepaid,
addressed as follows:
Borrowers: Prima Energy Corporation
Prima Oil and Gas Company
1801 Broadway, Suite 500
Denver, Colorado 80202
Bank: Norwest Bank Colorado, N.A.
Energy and Minerals
1740 Broadway
Denver, Colorado 80274-8699
or other such address as any party may designate by written notice to all
other parties.
VIII. SUCCESSORS, ASSIGNMENTS
This Agreement shall be binding on and inure to the benefit of the heirs,
executors, administrators, legal representatives, successors, and assigns
of the parties, provided, however, that this Agreement may not be assigned
by the Borrowers without the prior written consent of Norwest. Norwest
reserves the right to sell, assign, transfer, negotiate, or grant
participations in all or any part of, or any interest in, Norwest's rights
and benefits under this Agreement, the Note or any contracts or instruments
relating thereto. In connection therewith, Norwest may disclose all
documents and information which Norwest now has or may hereafter acquire
relating to the loan or the Note, the Borrowers or their business, or any
collateral required hereunder.
IX. SEVERABILITY OF PROVISIONS
If any of the provisions of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be in effective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or any remaining provisions of this Agreement.
X. COLORADO LAW APPLICABLE
This Agreement, the Note, and any contracts or instruments relating
thereto, shall be governed by and construed in accordance with the laws of
the State of Colorado, except to the extent that Norwest has greater rights
or remedies under federal law or the law of any jurisdiction in which the
collateral properties are located, in which case such choice of Colorado
law shall not be deemed to deprive Norwest of such rights and remedies as
may be available under such law.
This Agreement, the Note and any contracts or instruments relating thereto,
represent the entire agreement between the parties, and it is expressly
understood that all prior conversations or memoranda between the parties
regarding the terms of this Agreement shall be superseded by this
Agreement. Any amendment, approval, or waiver by Norwest of the terms of
this Agreement, the Note and any contracts or instruments relating thereto,
must be in writing or confirmed in writing, and shall be effective only to
the extent specifically set forth in such writing. This Agreement, in
conjunction with the Note and any contracts or instruments relating
thereto, is in lieu of a formal credit agreement and shall serve to
evidence the terms of the entire agreement between the parties.
XI. PAYMENT OF COSTS, EXPENSES AND FEES
The Borrowers will pay all out-of-pocket costs and expenses incurred by
Norwest in connection with the preparation of this Agreement, the Note and
the Security Documents, and any amendments or supplements thereto, and the
preparation, recordation and filing of the Security Documents (whether or
not the transactions hereby contemplated shall be consummated), and the
perfection and enforcement of the rights of Norwest in connection with this
Agreement and any of the Security Documents or with the Note issued
hereunder, including, but not limited to, the fees and out-of-pocket costs
and expenses of Norwest's counsel.
Please acknowledge your acceptance of and agreement to the terms of this
agreement by dating and executing where indicated This commitment will
expire, if not accepted and closed by July 14, 1995.
Sincerely,
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By: /s/ Thomas M. Foncannon
Thomas M. Foncannon
Vice President
Energy & Minerals
AGREED TO AND ACCEPTED THIS 13TH DAY OF JUNE, 1995.
By: /s/ Richard H. Lewis
Richard H. Lewis, President
Prima Energy Corporation
By: /s/ Richard H. Lewis
Richard H. Lewis, President
Prima Oil and Gas Company
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER)
The foregoing instrument was acknowledged before me this 13th day of June,
1995 by Richard H. Lewis, President of Prima Energy Corporation and Prima
Oil & Gas Company.
Witness by hand and official seal.
SEAL
Notary Public
My commission expires:
