<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarterly Period Ended September 30, 1996
-------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
Commission File No. 0-9976
ARCH PETROLEUM INC.
(Exact name of registrant as specified in its charter)
Delaware 83-0248900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Taylor Street, Suite II, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 332-9209
- --------------------------------------------------------------------------------
(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
requirements for the past 90 days.
Yes X No____
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 31, 1996
Common Stock, $.01 Par Value 17,171,604
---------------------------- ----------
<PAGE>
ARCH PETROLEUM INC.
INDEX
<TABLE>
<CAPTION>
Page
Part I. FINANCIAL INFORMATION Number
<S> <C>
Item 1.
CONSOLIDATED BALANCE SHEETS (Unaudited) -
September 30, 1996 and December 31, 1995............................ 3
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) -
Three months and nine months ended September 30, 1996 and 1995...... 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) -
Nine months ended September 30, 1996 and 1995....................... 6
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)......................................................... 7
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................. 8
Part II. OTHER INFORMATION
Item 1.
Legal Proceedings.............................................. N/A
Item 2.
Changes in Securities.......................................... N/A
Item 3.
Defaults upon Senior Securities................................ N/A
Item 4.
Submission of Matters to a Vote of Security Holders............ N/A
Item 5.
Other Information.............................................. N/A
Item 6.
Exhibits and Reports on Form 8-K
a. Exhibits.................................................. None
b. Reports on Form 8-K....................................... None
SIGNATURES............................................................... 11
</TABLE>
2
<PAGE>
ARCH PETROLEUM INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,856,000 $ 2,574,000
Accounts receivable - trade 9,171,000 6,986,000
Accounts receivable - related parties 23,000 -
Prepaid expenses and other 737,000 542,000
------------- ------------
Total current assets 11,787,000 10,102,000
Property and Equipment, at cost:
Oil and gas properties accounted for by the
successful efforts method 80,876,000 66,375,000
Natural gas pipelines 11,766,000 11,448,000
Furniture, fixtures and other equipment 1,061,000 957,000
------------- ------------
93,703,000 78,780,000
Less accumulated depletion, depreciation
and amortization 17,912,000 12,968,000
------------- ------------
Net property and equipment 75,791,000 65,812,000
Accounts receivable - related parties 1,410,000 939,000
Notes receivable - related parties 1,730,000 1,645,000
Other 1,132,000 1,174,000
------------- ------------
$ 91,850,000 $ 79,672,000
============= ============
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
3
<PAGE>
ARCH PETROLEUM INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- -------------
<S> <C> <C>
Current Liabilities:
Accounts payable $ 10,355,000 $ 9,552,000
Accounts payable - related parties 587,000 75,000
Current maturities of long-term debt 1,118,000 1,111,000
Preferred stock dividends payable 711,000 311,000
-------------- -------------
Total current liabilities 12,771,000 11,049,000
Long-term debt, less current maturities 27,673,000 17,821,000
Deferred revenue 13,181,000 16,037,000
Convertible subordinated notes 5,000,000 5,000,000
Deferred federal income taxes 2,597,000 1,711,000
Note payable - minority interest holder 694,000 -
Other liabilities 346,000 -
Minority interest in consolidated subsidiaries 1,019,000 459,000
Exchangeable convertible preferred stock,
$.01 par value, 727,273 shares
authorized, issued and outstanding 20,000,000 20,000,000
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, 727,273 issued as exchangeable
convertible preferred stock - -
Common stock, $.01 par value, 50,000,000 shares authorized,
17,171,604 and 17,141,404 shares issued and outstanding,
respectively 172,000 172,000
Additional paid-in capital 6,012,000 5,944,000
Employee notes for stock purchases (1,010,000) (965,000)
Treasury stock, 100,000 shares (206,000) (206,000)
Cumulative translation adjustment 86,000 -
Retained earnings 3,515,000 2,650,000
-------------- -------------
8,569,000 7,595,000
-------------- -------------
$ 91,850,000 $ 79,672,000
============== =============
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
4
<PAGE>
ARCH PETROLEUM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 5,964,000 $ 4,475,000 $ 16,806,000 $ 12,344,000
Pipeline sales 16,941,000 13,892,000 47,607,000 36,537,000
Gain on sale of properties - - 1,037,000 -
Interest and other 166,000 374,000 642,000 719,000
------------ ------------ ------------ ------------
23,071,000 18,741,000 66,092,000 49,600,000
COSTS AND EXPENSES:
Lease operations 1,906,000 1,982,000 5,951,000 5,483,000
Natural gas purchases and
pipeline operations 16,160,000 13,166,000 45,183,000 34,829,000
Exploration 312,000 507,000 490,000 830,000
Depletion, depreciation and
amortization 1,829,000 1,744,000 5,094,000 3,940,000
General and administrative 1,166,000 1,084,000 3,830,000 3,103,000
Interest 717,000 495,000 2,077,000 1,356,000
Foreign currency transaction gain (19,000) - (47,000) -
Minority interest in income
of consolidated subsidiaries 149,000 257,000 560,000 317,000
------------ ------------ ------------ ------------
22,220,000 19,235,000 63,138,000 49,858,000
------------ ------------ ------------ ------------
Net income (loss) before income taxes
and dividends 851,000 (494,000) 2,954,000 (258,000)
Deferred federal income tax expense
(benefit) 256,000 (167,000) 886,000 (88,000)
------------ ------------ ------------ ------------
Net income (loss) before dividends 595,000 (327,000) 2,068,000 (170,000)
Dividends on preferred stock 400,000 400,000 1,200,000 1,200,000
------------ ------------ ------------ ------------
Net income (loss) $ 195,000 $ (727,000) $ 868,000 $ (1,370,000)
============ ============ ============ ============
Net income (loss) per common share $ 0.01 $ (0.04) $ 0.05 $ (0.08)
============ ============ ============ ============
Weighted average common and
common equivalent shares
outstanding 17,196,000 17,233,000 17,232,000 17,198,000
============ ============ ============ ============
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
5
<PAGE>
ARCH PETROLEUM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------
1996 1995
-------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,068,000 $ (170,000)
Adjustments to reconcile to net cash from operations:
Depletion, depreciation and amortization 5,094,000 3,940,000
Deferred revenue (1,772,000) (2,679,000)
Deferred income taxes 886,000 (88,000)
Interest on notes receivable and other (144,000) (148,000)
Minority interest in net income of consolidated subsidiaries 560,000 317,000
Gain on sale of properties (1,037,000) -
Foreign currency transaction gain (47,000) -
------------ -----------
5,608,000 1,172,000
Change in accounts receivable (1,237,000) (1,917,000)
Change in other current assets (175,000) 197,000
Change in accounts receivable - related parties (471,000) (311,000)
Change in accounts payable and other current liabilities 318,000 770,000
Production payment remedy adjustment (1,084,000) (781,000)
------------ -----------
Net operating cash flows 2,959,000 (870,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,881,000) (4,717,000)
Proceeds from sale of properties 1,585,000 -
Notes receivable and other assets (45,000) -
Investment in subsidiary (7,645,000) -
------------ -----------
Net investing cash flows (12,986,000) (4,717,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowing 23,004,000 8,600,000
Payments of bank debt (13,589,000) (2,834,000)
Payment of preferred stock dividends (800,000) (800,000)
Proceeds from note payable - minority interest holder 694,000 -
Purchase of treasury shares - (205,000)
Issue common shares - 135,000
------------ -----------
Net financing cash flows 9,309,000 4,896,000
Change in cash and cash equivalents (718,000) (691,000)
Cash and cash equivalents at beginning of period 2,574,000 1,553,000
------------ -----------
Cash and cash equivalents at end of period $ 1,856,000 $ 862,000
------------ -----------
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
6
<PAGE>
ARCH PETROLEUM INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In the opinion of Arch Petroleum Inc. (the "Company"), the accompanying
consolidated financial statements, which have not been audited by independent
public accountants, contain all adjustments necessary to present fairly the
Company's consolidated financial position, the results of its operations and its
cash flows for the periods reported. The consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany balances and transactions are eliminated. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. Certain prior amounts have been reclassified to conform with 1996
presentation. It is suggested that these consolidated financial statements be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K as of December 31,
1995. The results of operations for the three months and nine months ended
September 30, 1996 and 1995 are not necessarily indicative of the results to be
expected for a full year.
Effective January 31, 1996, the Company acquired 100% of the outstanding
common stock of Trax Petroleums Limited (Trax), a Canadian oil and gas
exploration and development company headquartered in Calgary, Alberta, Canada.
The results of Trax have been consolidated with the Company beginning February
1, 1996. The following unaudited pro forma information has been prepared as if
the acquisition had occurred at the beginning of each period presented, and is
provided for comparative purposes only. The pro forma information presented is
not necessarily indicative of the combined financial results as they may be in
the future or as they might have been for the period had the acquisition been
consummated at the beginning of such period.
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------
(In thousands except per share data) 1996 1995
---------- ----------
<S> <C> <C>
Revenues $ 66,409 $ 51,425
Net income (loss) before dividends 2,150 (2,464)
Net income (loss) per common share $ 0.06 $ (0.21)
</TABLE>
The Company has two bank credit facilities: the Third Restated Revolving
Credit Loan Agreement among the Company and Bank One, Texas, N.A., the Agent
bank, and other banks (the Domestic Revolver) and the Credit Agreement among
Trax and Bank of Montreal, the Canadian Agent bank, and other financial
institutions (the Canadian Revolver and, together with the Domestic Revolver,
the Revolvers). The two credit facilities are separate bank revolvers. The
lenders in the Domestic Revolver (the U.S. lenders) and the lenders in the
Canadian Revolver (the Canadian lenders and, together with the U.S. lenders, the
Lenders) have entered into an associated Intercreditor Agreement.
The Revolvers borrowing base is the amount that the Lenders commit to loan
to the Company based on the designated loan value established by the Lenders at
their sole discretion and assigned to certain of the Companys oil and gas
properties which serve as collateral for any loan which may be outstanding under
the Revolvers. The Domestic Revolver facility is $50.0 million and the borrowing
base is currently $30.0 million. The Canadian Revolvers initial commitment is
U.S. $11.0 million. The Revolvers borrowing base is reviewed semiannually by the
Lenders at their discretion. A commitment fee of one half of one percent of the
unused borrowing base accrues and is payable quarterly. The Revolvers mature on
May 1, 1998. Borrowings under the Revolvers will, at the Company's option, bear
interest either at the Lenders Base Rate or a rate based on the London Interbank
Offered Rate (LIBOR). The average actual interest rate was 7.99% at September
30, 1996.
Effective April 30, 1996, the Company sold its working and royalty
interests in certain oil and gas properties located in West Texas for net
proceeds of $1,585,000. The properties represented less than 3% of the Company's
total reserves (equivalent barrel basis) as of January 1, 1996. The Company
recognized a pre-tax gain of $1,037,000 on the sale of the properties.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
With the exception of historical information, the matters discussed herein
are forward-looking statements that involve risks and uncertainties including,
but not limited to, oil and gas price fluctuations, economic conditions,
interest rate fluctuations, the regulatory and political environments and other
risks indicated in filings with the Securities and Exchange Commission.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At September 30, 1996, the Companys total assets increased to $91.9 million
from $79.7 million at December 31, 1995. The assets of Trax (acquired January
31, 1996) accounted for $10.2 million of the increase. In addition, oil and gas
properties (excluding Trax) increased $4.7 million primarily as a result of
successful development drilling and recompletion of existing wells in New
Mexico.
In 1996 the Companys principal sources of funds were $9.4 million from its
Revolvers, $3.0 million from operations and $1.6 million from sale of
properties. These funds were primarily consumed by funding $7.6 million for the
acquisition of Trax and funding $6.9 million of development in existing
properties, primarily in New Mexico and the drilling of prospects in Alberta,
Canada. Discretionary cash flows (net income adjusted for non-cash charges)
increased to $5.6 million in 1996, compared to $1.2 million in 1995, reflecting
increased oil and gas sales and improved margins on pipeline sales.
Discretionary cash flows are available for capital expenditures, debt service
and dividend payments.
The Companys Revolvers are in place for use by the Company at its
discretion including drilling, development and acquisition of oil and gas
properties. The Company has borrowed $17.5 million and $8.5 million against the
Domestic and Canadian Revolvers at September 30, 1996, respectively. The
Revolvers borrowing base is the amount that the Lenders commit to loan to the
Company based on the designated loan value established by the Lenders at their
sole discretion and assigned to certain of the Companys oil and gas properties
which serve as collateral for any loan which may be outstanding under the
Revolvers. The Domestic Revolver facility is $50.0 million and the borrowing
base is currently $30.0 million. The Canadian Revolvers initial commitment is
U.S. $11.0 million. The Revolvers borrowing base is reviewed semiannually by the
Lenders at their discretion. A commitment fee of one half of one percent of the
unused borrowing base accrues and is payable quarterly. The Revolvers mature on
May 1, 1998. Borrowings under the Revolvers will, at the Companys option, bear
interest either at the Lenders Base Rate or a rate based on the London Interbank
Offered Rate (LIBOR). The average actual interest rate was 7.99% at September
30, 1996.
The Onyx Term Loan Agreement (the Onyx Note), which Onyx entered into with
the Bank of Scotland on March 30, 1994, as amended, is a separate facility and
provided Onyx with $5.0 million. The Onyx Note bears interest at national prime
rate plus one-half of one percent (8.75% at September 30, 1996). Interest on the
unpaid principal amount of the note is payable quarterly and commenced on June
30, 1994. The unpaid principal ($2.8 million at September 30, 1996), is payable
in eighteen quarterly installments ending on March 31, 1999. Current maturities
of the Onyx Note total $1.1 million at September 30, 1996. The Onyx Note is
collaterlized by certain of Onyx's pipelines, gathering facilities and related
transportation contracts. In addition, the Onyx Note is guaranteed by the
Company.
Both the Revolvers and Onyx Note contain normal and standard covenants
generally found in lending agreements. Among other things, these covenants
prohibit the declaration and payment of cash dividends on the Companys common
stock. In addition, the covenants stipulate the maintenance of financial
criteria including: a minimum level of net worth, a certain current ratio, a
certain debt to net worth ratio and a defined net income in excess of scheduled
interest and principal payments. The Company and Onyx are currently not in
default with the loan agreements. Neither the Company nor Onyx has any other
unused lines of credit.
The Company has sufficient cash and unused borrowing base in the Revolvers
to fund its anticipated drilling, development and acquisition programs for 1996
as well as its debt service and preferred stock dividend requirements.
Additionally, the Company expects to meet its current operating cash
requirements from cash flows provided by current operations. Management believes
that the Company can continue to generate, or obtain through other alternatives,
resources sufficient to meet cash requirements for future acquisition
opportunities. The Company operates in an industry that is subject to volatile
prices for its products. Cash flow from operations may be affected to a
significant degree by fluctuations in prices that are brought on by factors
beyond the Company's control.
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO
------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1995
------------------------------------
The Company recorded net income before dividends of $2,068,000 in 1996 as
compared to a net loss of $170,000 before dividends in 1995. Net income
increased $2,238,000. Net income was increased by the gain on sale of certain
oil and gas properties, as well as increased oil and gas sales and improved
margins on pipeline sales. Net income was reduced by an increase in almost all
costs and expenses.
Pipeline sales increased $11,070,000 in 1996 as compared to 1995, but were
offset by an increase in natural gas purchases of $10,228,000. The increase in
sales and purchases is due primarily to the increase in the cost of gas which
averaged $1.99 in 1996 as compared to $1.46 in 1995. During 1996 natural gas was
sold at an average price of $2.23 as compared to $1.53 in 1995. Gross margin
increased to 6.3% in 1996 as compared to 5.9% in 1995.
Revenues from oil and gas sales increased $4,462,000 in 1996 as compared to
1995. Oil and gas revenues attributable to Trax were $1,588,000 during 1996.
Increased production from the New Mexico properties as a result of the
development and exploitation program and higher average oil and gas prices also
contributed to the increase in sales. Oil production increased to 432,000
barrels in 1996 as compared to 281,000 barrels in 1995, resulting in a
$2,615,000 increase in sales. The increase in oil production is due to the
Companys successful drilling and development program in New Mexico as well as
the Trax production (88,000 barrels). The average price received for oil was
$20.03 in 1996 as compared to $17.34 in 1995, resulting in a $1,159,000 increase
in sales. Gas production in 1996 decreased to 5,072,000 Mcf as compared to
5,678,000 Mcf in 1995, resulting in a $790,000 decrease in sales. The decrease
in gas production is attributable primarily to the reduced allowable production
from the Keystone Ellenburger field. The average price received for gas
increased to $1.61 in 1996 as compared to $1.30 in 1995, resulting in a
$1,542,000 increase in sales. The average price received for gas excluding
certain production payment volumes was $2.13 in 1996.
Lease operating expenses (LOE) related to oil and gas properties increased
$468,000, primarily as a result of the addition of the Trax operations. Trax LOE
was $309,000 during 1996. The new wells successfully completed in New Mexico
also added to LOE. Lifting costs per equivalent barrel (including Trax
operations) increased in 1996 to $4.76 from $4.47 in 1995. Exploration expense
decreased $340,000 in 1996 as compared to 1995. During 1995 the Company incurred
significant costs related to its 3-D seismic program. Depletion, depreciation
and amortization (DD&A) increased $1,154,000 in 1996 as a result of increased
production, primarily from the New Mexico operations, as well as the added Trax
operations. Trax DD&A was $776,000 in 1996.
General and administrative expenses increased $727,000 in 1996 as compared
to 1995, as a result of increased personnel costs and the addition of Trax. Trax
general and administrative expense was $423,000 in 1996. Interest expense
increased $721,000 as a result of the increased outstanding bank debt during
1996.
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO
-------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 1995
-------------------------------------
The Company recorded net income before dividends of $595,000 in 1996 as
compared to a net loss of $327,000 before dividends in 1995. Net income
increased $922,000. Net income was increased by higher oil and gas sales and
improved margins on pipeline sales. Net income was reduced primarily by
increased natural gas purchases.
Pipeline sales increased $3,049,000 in 1996 as compared to 1995, but were
offset by an increase in natural gas purchases of $2,954,000. The increase in
sales and purchases is due primarily to the increase in the cost of gas which
averaged $2.21 in 1996 as compared to $1.42 in 1995. During 1996 natural gas was
sold at an average price of $2.29 as compared to $1.51 in 1995. Gross margin
decreased slightly to 5.9% in 1996 as compared to 6.5% in 1995.
Revenues from oil and gas sales increased $1,489,000 in 1996 as compared to
1995. Oil and gas revenues attributable to Trax were $705,000 during 1996. Oil
production increased to 150,000 barrels in 1996 as compared to 104,000 barrels
in 1995, resulting in a $740,000 increase in sales. The increase in oil
production is due to the Companys successful drilling and development program in
New Mexico as well as the Trax production (31,000 barrels). The average price
received for oil was $21.67 in 1996 as compared to $15.89 in 1995, resulting in
a $868,000 increase in sales. Gas production in 1996 decreased to 1,653,000 Mcf
as compared to 2,258,000 Mcf in
9
<PAGE>
1995, resulting in a $758,000 decrease in sales. The decrease in gas production
is attributable primarily to the reduced allowable production from the Keystone
Ellenburger field. The average price received for gas increased to $1.64 in 1996
as compared to $1.25 in 1995, resulting in a $642,000 increase in sales. The
average price received for gas excluding certain production payment volumes was
$2.15 in 1996.
Lease operating expenses (LOE) related to oil and gas properties (including
Trax LOE of $159,000) decreased $76,000 during 1996. The decrease in LOE was due
primarily to the sale of properties effective April 30, 1996. Lifting costs per
equivalent barrel (including Trax operations) increased in 1996 to $4.61 from
$4.13 in 1995, primarily as a result of the decreased gas production from
Keystone. Exploration expense decreased $195,000 in 1996 as compared to 1995.
During 1995 the Company incurred significant costs related to its 3-D seismic
program. Interest expense increased $222,000 as a result of the increased
outstanding bank debt during 1996.
10
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARCH PETROLEUM INC.
-------------------
(Registrant)
Date: November 13, 1996 /s/ Fred Cantu
----------------- ----------------------
Fred Cantu
Treasurer and
Chief Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,856,000
<SECURITIES> 0
<RECEIVABLES> 9,194,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,787,000
<PP&E> 93,703,000
<DEPRECIATION> 17,912,000
<TOTAL-ASSETS> 91,850,000
<CURRENT-LIABILITIES> 12,771,000
<BONDS> 0
20,000,000
0
<COMMON> 172,000
<OTHER-SE> 8,397,000
<TOTAL-LIABILITY-AND-EQUITY> 91,850,000
<SALES> 64,413,000
<TOTAL-REVENUES> 66,092,000
<CGS> 51,134,000
<TOTAL-COSTS> 51,134,000
<OTHER-EXPENSES> 5,584,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,077,000
<INCOME-PRETAX> 2,954,000
<INCOME-TAX> 886,000
<INCOME-CONTINUING> 2,068,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,068,000
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0
</TABLE>
