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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) NOVEMBER 15, 1999
PRIMA ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 0-9408 84-1097578
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
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 or former address, if changed from last report.)
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PRIMA ENERGY CORPORATION
FORM 8-K
NOVEMBER 15, 1999
ITEM 5. OTHER EVENTS
On November 15, 1999, Prima Energy Corporation, a Delaware corporation,
issued its third quarter earnings press release. The release contained a summary
of financial results for the quarter and nine months ended September 30, 1999.
The release also contained an update of Prima's activities in the Denver, Wind
River and Powder River Basins. A copy of the press release is attached hereto as
Exhibit 99.2
ITEM 7C. EXHIBITS
The following exhibit is filed herewith pursuant to the provisions of
Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
Exhibit
Table No. Document Exhibit No.
--------- -------- -----------
<S> <C> <C>
99 Prima Energy Corporation Press 99.2
Release dated November 15, 1999
</TABLE>
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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 November 29, 1999 By /s/ Richard H. Lewis
--------------------- ----------------------------------
Richard H. Lewis,
President and
Principal Financial Officer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
99.2 Prima Energy Corporation Press
Release dated November 15, 1999
</TABLE>
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EXHIBIT 99.2
November 15, 1999
Denver, Colorado
FOR IMMEDIATE RELEASE
---------------------
PRIMA ENERGY CORPORATION REPORTS
THIRD QUARTER RESULTS AND UPDATES ACTIVITY
FINANCIAL HIGHLIGHTS
Prima Energy Corporation ("Prima"), a Denver based independent oil and
gas company, today announced its results for the quarter and nine months ended
September 30, 1999. For the quarter ended September 30, 1999, Prima reported net
income of $2,389,000, a 91% increase when compared to the $1,250,000 of net
income reported for the third quarter of 1998. Earnings per share were $.41 per
diluted share for the quarter ended September 30, 1999 compared to $.21 for the
prior years quarter. Revenues totaled $8,175,000 for the 1999 quarter compared
to $5,977,000 for the 1998 quarter. Operating cash flow (defined as net income
plus non-cash charges for depreciation, depletion and amortization and deferred
income taxes) totaled $4,743,000 for the third quarter of 1999, a 51% increase
when compared to $3,131,000 for the third quarter of 1998.
The increases in revenues, earnings and cash flows were primarily
attributable to higher product prices, increased production, and increased
oilfield service revenues. The Company's average oil prices were $19.88 and
$12.47 per barrel for the quarters ended September 30, 1999 and 1998,
respectively, an increase of 59%. The average natural gas prices were $2.29 and
$1.91 per Mcf for the same periods, an increase of 20%. The Company's net
natural gas production was 1,755,000 Mcf and 1,662,000 Mcf for the third
quarters of 1999 and 1998. Its net oil production was 75,000 barrels compared to
69,000 barrels for the same periods. Prima's net daily production for the third
quarter of 1999 increased 6% to 23,978 Mcfe per day compared to 22,533 Mcfe per
day in the comparable period of 1998. As previously announced, Prima sold its
interests in the wells in the Bonny Field effective January 1, 1999. After
giving effect to this sale, average daily production increased 11% for the
quarter.
Oilfield service revenues were $1,271,000 for the quarter ended
September 30, 1999 compared to $910,000 for the comparable quarter of 1998, an
increase of $361,000, or 40%. This increase is primarily attributable to the
Company's formation of a new oilfield service company subsidiary, Action Energy
Services, which was formed to provide services in the Powder River Basin area of
Wyoming.
For the nine months ended September 30, 1999, Prima reported net income
of $5,680,000, or $.98 per diluted share, on revenues of $20,810,000, compared
to net income of $6,858,000, or $1.16 per diluted share, on revenues of
$23,592,000 for the nine months ended September 30, 1998. Operating cash flow
totaled $11,421,000 for the first nine months of 1999, compared to $13,547,000
for the first nine months of 1998. Revenues, cash flows and net income were
aided
<PAGE> 2
during the first quarter of 1998 by the receipt of $3,850,000 in proceeds from a
non-recurring early termination of a gas supply contract, which increased net
income by approximately $2,500,000 and earnings per diluted share by $.42.
The Company's average oil prices were $15.41 and $13.35 per barrel for
the nine months ended September 30, 1999 and 1998, respectively, an increase of
15%. The average natural gas prices were $1.95 and $1.98 for the same periods, a
decrease of 2%. The Company's net natural gas production was 5,299,000 Mcf and
4,819,000 Mcf for the first nine months of 1999 and 1998. Its net oil production
was 235,000 barrels compared to 208,000 barrels for the same nine month periods.
Prima's net daily production for the first nine months of 1999 increased 11% to
24,568 Mcfe per day compared to 22,216 Mcfe per day in the comparable period of
1998. After giving effect to the sale of the Bonny wells, average daily
production increased 15% for the nine month period. Oilfield services revenues
were $3,377,000 for the nine months ended September 30, 1999 compared to
$3,027,000 for the comparable nine month period of 1998, an increase of $350,000
or 12%.
Prima closed on the sale of all of its interests in the Bonny Field
acreage, wells, and gathering system for approximately $26 million on January
21, 1999. Prima placed the proceeds from this sale in a like-kind exchange
escrow account with a qualified intermediary. Prima did not close on any of the
identified qualifying properties pursuant to the like-kind exchange provisions
of Section 1031 of the Internal Revenue Code. The funds were disbursed from the
escrow account in July 1999 and will be subject to federal and state income
taxes of approximately $5.7 million after utilization of minimum tax credit
carryforwards.
ACTIVITY UPDATE
DENVER BASIN
Prima, through its wholly owned subsidiary, Prima Oil & Gas Company,
continues to exploit and develop its core property base in the Wattenberg Field
Area of the Denver Basin, where the Company operates 350 wells. Prima's
activities in the Wattenberg Field Area during 1998 and the first nine months of
1999 have concentrated on refrac stimulations in existing wells. Since June 30,
1999, the Company has refraced 20 wells and anticipates doing another 15 by year
end. The Company estimates the average cost to develop these incremental
reserves has approximated $5.00 per BOE. Many of the refracs have targeted wells
that are eligible for Section 29 tax credits of approximately $.65 per Mcf
attributable to production through the year 2002. The refracs completed to date
have resulted in initial average production increases of 180 Mcf of natural gas
and 10 barrels of crude oil per day per well.
In October, the Company commenced a drilling program in the Wattenberg
Area. To date, four wells have been drilled and cased. Three of the wells are
producing at average daily rates of approximately 380 Mcf and 26 barrels each.
The fourth well is waiting on completion. The Company currently anticipates
drilling an additional 15-20 wells in this program. These 7,500-foot wells are
expected to cost approximately $225,000 each, with targeted reserves of
approximately 45,000 BOE per well. It is expected that these wells will be
drilled and completed predominantly in the fourth quarter, enabling Prima to
produce the initial flush production into the winter markets.
The Company drilled two additional wells on its leasehold at Denver
International Airport in August. Both the West Ambush 23-13 and the West Ambush
13-33 have been completed and turned on to production. The wells are still
cleaning up. Prima owns a 100% working interest in each of these wells.
<PAGE> 3
During the first nine months of 1999, Prima's Denver Basin production
was 3.4 Bcf of natural gas and 210,000 barrels of oil compared to 2.8 Bcf of
natural gas and 188,000 barrels of oil in the 1998 period, representing
increases of 22% and 12% respectively. The Denver Basin represents approximately
64% of the Company's 1999 natural gas production and 89% of its oil production.
WIND RIVER BASIN
Prima continues to participate in the development of the Cave Gulch
Field in the Wind River Basin of Wyoming. The Cave Gulch 1-29 LAK, which blew
out late last year, has been successfully re-entered and placed back on
production. The well began producing to a sales line in October at rates of
approximately 11 MMcf of natural gas per day. Prima owns a 4.57% working
interest and 3.69% net revenue interest in this well. During the nine months
ended September 30, 1999, the Company has participated in the drilling of six
(.37 net) non-operated wells, of which three are producing, two are waiting on
completion and one is waiting on pipeline hook-up. The Company has also
participated in three (.18 net) recompletions which have successfully been
placed back on production.
Plans call for the Cave Gulch area to continue to be active through the
end of the year. Prima's production from the Cave Gulch Field was approximately
985,000 Mcf and 4,000 barrels for the first nine months of 1999, representing
approximately 19% of the Company's 1999 natural gas production and 2% of its oil
production.
POWDER RIVER BASIN
Conventional
The Company continues to develop the Cedar Draw Field located 21 miles
northwest of Gillette, in the Powder River Basin of northeastern Wyoming. In
October, Prima participated in the drilling of two non-operated wells in this
area. The Company has a 20% working interest in the Cedar Draw Federal 4-14,
which targeted the Muddy sandstone reservoir at 9,500 feet. It also has a 25%
working interest in the Mooney #11-7, which was also drilled to the Muddy
Formation. Both wells have been drilled and cased and are waiting on completion.
Prima drilled the Barber Trail Federal 34-24 well in July 1999, located 8 miles
southwest of the Cedar Draw Field. Pipe was run on this well to a depth of
10,835 feet. The Company plans to complete the Muddy sandstone reservoir in this
well in the near future. Prima owns a 100% working interest in this Company
operated well.
Prima's production from the Powder River Basin totaled 911,000 Mcf of
natural gas and 21,000 barrels of oil during the first nine months of 1999,
which represented 73% and 40% increases, respectively, over the prior year's
nine-month period. The Basin represents approximately 17% of the Company's 1999
natural gas production and 9% of its oil production.
Coalbed Methane
During 1999, Prima has continued to expand its acreage holdings in the
burgeoning shallow coalbed methane ("CBM") play in the Powder River Basin. The
Company currently has 136,000 net prospective acres under lease, including
36,000 net acres acquired in 1999. The Wyoming Oil and Gas Commission recently
stated that over 3,000 wells have been drilled, with approximately sixty rigs
currently operating in what has become the most active play in the United
States.
<PAGE> 4
The Bureau of Land Management ("BLM") is expected to issue the Record
of Decision any time on the Wyodak Environmental Impact Study ("EIS"). The EIS
was undertaken to review and analyze the environmental impacts of approximately
5,900 wells on approximately 2 million acres of the Powder River Basin's east
flank. A moratorium was placed on issuance of drilling permits on federal
acreage pending completion of the EIS. The Wyoming Oil and Gas Commission has
continued to issue drilling permits on state and fee acreage, having issued over
800 permits in the month of October 1999 alone.
During the week of August 9th, and again during the week of September
7th, the BLM allowed operators to submit Applications for Permits to Drill
(APDs) on federal acreage in anticipation of finalizing the EIS. Prima submitted
APDs in accordance with procedures established by the BLM. The BLM prioritized
all of the APDs submitted on a lottery basis, thereby determining the order in
which the APDs would be processed by BLM's staff. By the end of September, Prima
had submitted in excess of 500 APDs, including 100 APDs on fee and state acreage
which are not subject to the EIS and BLM lottery procedures.
In early November 1999, the BLM stated it has received more APDs on
federal acreage than it will be able to process and issue, and will no longer
accept APDs covering all oil and gas wells in the Buffalo field office effective
November 9, 1999. Currently filed APDs, when combined with state and fee wells,
exceed the 5,890 wells analyzed and provided for in the Wyodak EIS and the
Buffalo Resource Management Plan ("RMP"). Only a portion of the existing coalbed
methane applications on federal acreage will be approved based on the results of
the coalbed methane lottery system and confirmed drainage cases. BLM has stated
that it is currently evaluating various methods, including updating of the
Buffalo RMP, to continue future oil and gas development on federal acreage. The
process is expected to be determined in the near future.
To date, the Company has drilled fifteen CBM test wells These wells
were drilled to enable the Company to begin to test and evaluate its acreage.
The Company is generally very encouraged with the results it has seen, which has
not included pumping or producing any of the wells.
The Company's current plans, which have contingency provisions, provide
for the drilling of approximately 50 CBM wells in 1999 and early 2000, with the
majority planned for the fourth quarter. This program is expected to consist of
a combination of a few initial test wells and several test pilot wells. The
Company's preliminary budget for 2000, which is subject to change based upon
results from ongoing testing and evaluation and the permitting process, provides
for 150 CBM wells, with initial production in the third quarter and then ramping
up throughout the remainder of the year. The majority of these wells are
expected to be drilled on fee and state acreage on which drilling permits are
being issued without delay. Within the Wyodak EIS area, the Company holds
107,000 acres, of which 77% is federal and 23% is fee or state.
Natural gas gathering and pipeline infrastructure within the Powder
River Basin of Wyoming has progressed significantly. Ft. Union Gas Gathering LLC
and Thunder Creek Gas Services have both completed their gathering header
systems and are flowing gas to the Glenrock area. Combined, these systems can
move 900,000 Mcf per day. CMS continues construction of its gathering header
system into the northern and western portions of the play. This gathering header
is near completion and is designed to flow up to 250,000 Mcf per day. The
Medicine Bow lateral from Glenrock to the significant gas trading hub of
Rockport, near Cheyenne, Wyoming, is anticipated to begin service December 1,
1999. This 24-inch pipeline can initially move 260,000 Mcf per day and filings
have already been made to expand to 400,000 Mcf per day.
<PAGE> 5
ANALYST'S CONFERENCE CALL
Finally, Prima noted that it will hold an analyst's conference call on
Thursday, November 18, 1999, at 10:30 a.m. MST. Interested parties may access
the conference call at 1-800-289-0730 (Confirmation #: 833562). Replays will be
available by 1:00 p.m. MST by calling 1-888-203-1112 and using the same
confirmation number (833562). Replays will be available until midnight on
November 25, 1999.
This press release may contain projections or forward-looking statements and is
made pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Any such statements or projections reflect the
Company's current views with respect to future events and financial performance.
No assurances can be given, however, that these events will occur or that such
projections will be achieved and actual results could differ materially from
those projected. Prima does not undertake to update, revise or correct any of
the forward-looking information. A discussion of important factors that could
cause actual results to differ materially from those projected is included in
the Company's periodic reports filed with the Securities and Exchange
Commission.
NASDAQ SYMBOL: PENG
Contacts: Richard H. Lewis, President
Michael J. McGuire, Executive Vice President, Exploration
Michael R. Kennedy, Executive Vice President, Corporate Development
Sandra J. Irlando, Vice President, Accounting
Telephone Number: (303) 297-2100
Website: www.primaenergy.com
<PAGE> 6
PRIMA ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Oil and gas sales .......... $ 5,510,000 $ 4,034,000 $13,933,000 $12,310,000
Oilfield services .......... 1,271,000 910,000 3,377,000 3,027,000
Trading revenues ........... 929,000 655,000 2,010,000 3,235,000
Management and operator fees 99,000 269,000 488,000 783,000
Interest and dividend income 358,000 104,000 964,000 375,000
Other ...................... 8,000 5,000 38,000 3,862,000
----------- ----------- ----------- -----------
Total Revenues ........ 8,175,000 5,977,000 20,810,000 23,592,000
----------- ----------- ----------- -----------
EXPENSES
Depreciation, depletion,
and amortization ......... 1,347,000 1,646,000 4,003,000 4,785,000
Lease operating expense .... 544,000 503,000 1,576,000 1,524,000
Production taxes ........... 468,000 289,000 1,188,000 953,000
Cost of oilfield services .. 795,000 632,000 2,328,000 2,089,000
Cost of trading ............ 1,253,000 733,000 2,354,000 3,177,000
General and administrative . 579,000 571,000 1,771,000 1,548,000
----------- ----------- ----------- -----------
Total Expenses ........ 4,986,000 4,374,000 13,220,000 14,076,000
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES ...... 3,189,000 1,603,000 7,590,000 9,516,000
PROVISION FOR INCOME TAXES ...... 800,000 353,000 1,910,000 2,658,000
----------- ----------- ----------- -----------
NET INCOME ...................... $ 2,389,000 $ 1,250,000 $ 5,680,000 $ 6,858,000
=========== =========== =========== ===========
BASIC NET INCOME PER SHARE ...... $ 0.42 $ 0.22 $ 0.99 $ 1.19
=========== =========== =========== ===========
DILUTED NET INCOME PER SHARE .... $ 0.41 $ 0.21 $ 0.98 $ 1.16
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WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING ............ 5,706,636 5,772,556 5,708,774 5,771,796
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
ASSUMING DILUTION ............. 5,868,740 5,903,492 5,818,933 5,909,711
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PRODUCTION:
Natural gas (Mcfs) ......... 1,755,000 1,662,000 5,299,000 4,819,000
=========== =========== =========== ===========
Oil (Barrels) .............. 75,000 69,000 235,000 208,000
=========== =========== =========== ===========
AVERAGE PRICES:
Natural gas (per Mcf) ...... $ 2.29 $ 1.91 $ 1.95 $ 1.98
=========== =========== =========== ===========
Oil (per Barrel) ........... $ 19.88 $ 12.47 $ 15.41 $ 13.35
=========== =========== =========== ===========
</TABLE>
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PRIMA ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
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(Unaudited)
<S> <C> <C>
ASSETS
Current assets ............................ $33,346,000 $10,673,000
Oil and gas properties - net .............. 33,547,000 52,946,000
Property and equipment - net .............. 4,165,000 2,661,000
Other assets .............................. 257,000 586,000
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Total ............................... $71,315,000 $66,866,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ....................... $ 9,298,000 $ 5,206,000
Note payable .............................. 0 120,000
Non-current ad valorem and production taxes 1,033,000 1,088,000
Deferred income taxes ..................... 4,857,000 9,144,000
Stockholders' equity ...................... 56,127,000 51,308,000
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Total ............................... $71,315,000 $66,866,000
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</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ............................................. $ 5,680,000 $ 6,858,000
Depreciation, depletion and amortization ............... 4,003,000 4,785,000
Deferred income taxes .................................. 1,738,000 1,904,000
Current taxes from sale of oil and gas properties ...... (5,704,000) 0
Other .................................................. (12,000) (81,000)
Net changes in current assets and liabilities .......... 4,051,000 (892,000)
------------ ------------
Net cash provided by operating activities ......... 9,756,000 12,574,000
------------ ------------
INVESTING ACTIVITIES
Proceeds from sales of property ........................ 27,604,000 146,000
Additions to oil and gas properties .................... (11,035,000) (11,599,000)
Other, net ............................................. (2,136,000) (1,435,000)
------------ ------------
Net cash provided by (used by) investing activities 14,433,000 (12,888,000)
------------ ------------
NET FINANCING ACTIVITIES .................................... (1,088,000) (97,000)
------------ ------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS .................................... 23,101,000 (411,000)
CASH AND CASH EQUIVALENTS, beginning of period .............. 2,522,000 5,644,000
------------ ------------
CASH AND CASH EQUIVALENTS, end of period .................... $ 25,623,000 $ 5,233,000
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</TABLE>
