<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
[ ] 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: 0-9808
PLAINS RESOURCES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2898764
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 SMITH STREET
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(Zip Code)
(713) 654-1414
(Registrant's telephone number, including area code)
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
------ ------
15,252,332 shares of common stock $.10 par value, issued and outstanding at
August 7, 1995.
Page 1 of 16
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PLAINS RESOURCES INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets:
June 30, 1995 and December 31, 1994........................ 3
Condensed Consolidated Statements of Operations:
For the three and six months ended June 30, 1995 and 1994.. 4
Condensed Consolidated Statements of Cash Flows:
For the six months ended June 30, 1995 and 1994............ 5
Notes to Condensed Consolidated Financial Statements......... 6
MANAGEMENT'S DISCUSSION AND ANALYSIS............................ 7
PART II. OTHER INFORMATION..................................... 14
</TABLE>
Page 2 of 16
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PLAINS RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- -------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,355 $ 1,291
Cash in compensating balance account 1,253 1,500
Accounts receivable and other 40,421 33,370
Inventory 4,505 5,525
--------- ------------
Total current assets 50,534 41,686
--------- ------------
PROPERTY AND EQUIPMENT
Oil and natural gas properties - full cost method:
Subject to amortization 272,233 265,123
Not subject to amortization 37,878 35,779
Crude oil terminal and storage facility 30,710 30,576
Other property and equipment 8,105 7,780
--------- ------------
348,926 339,258
Less allowance for depreciation, depletion and amortization (129,232) (121,656)
--------- ------------
219,694 217,602
--------- ------------
OTHER ASSETS 8,450 7,616
--------- ------------
$ 278,678 $ 266,904
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current liabilities $ 41,122 $ 36,282
Interest payable 3,898 3,617
Royalties payable and drilling advances 6,296 4,702
Notes payable and other current obligations 1,549 1,550
--------- ------------
Total current liabilities 52,865 46,151
BANK DEBT 50,000 45,100
SUBORDINATED DEBT 100,000 100,000
OTHER LONG-TERM LIABILITIES 6,996 8,254
--------- ------------
209,861 199,505
--------- ------------
SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK,
STATED AT LIQUIDATION PREFERENCE -- 20,937
--------- ------------
NON-REDEEMABLE PREFERRED STOCK, COMMON STOCK
AND OTHER STOCKHOLDERS' EQUITY
Preferred stock, stated at liquidation preference 481 481
Common stock, $.10 par value, 50,000,000 shares authorized;
issued and outstanding 15,249,482 shares at June 30, 1995
and 11,593,457 shares at December 31, 1994 1,525 1,159
Additional paid-in capital 110,893 89,274
Accumulated deficit (44,082) (44,452)
--------- ------------
68,817 46,462
--------- ------------
$ 278,678 $ 266,904
========= ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 16
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PLAINS RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ------------------------
1995 1994 1995 1994
--------- -------- --------- ------------
<S> <C> <C> <C> <C>
REVENUE
Oil and natural gas sales $15,789 $15,039 $ 30,478 $ 27,433
Marketing, transportation and
storage 79,392 52,117 158,278 90,265
Interest and other income 75 42 147 84
------- ------- --------- ------------
95,256 67,198 188,903 117,782
------- ------- --------- ------------
EXPENSES
Production expenses 7,148 6,766 13,907 13,114
Purchases, transportation and
storage 77,796 50,485 155,184 86,980
General and administrative 1,876 1,781 3,774 3,647
Depreciation, depletion and
amortization 4,127 4,115 8,125 8,024
Interest expense 3,395 3,301 6,680 6,445
------- ------- --------- ------------
94,342 66,448 187,670 118,210
------- ------- --------- ------------
NET INCOME (LOSS) $ 914 $ 750 $ 1,233 $ (428)
======= ======= ========= ============
Net income (loss) per common and common
equivalent share $.06 $.06 $.08 $(.04)
======= ======= ========= ============
Weighted average number of common and common
equivalent shares 16,002 11,572 15,737 11,567
======= ======= ========= ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 16
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PLAINS RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1995 1994
--------- ------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 6,718 $ 13,622
--------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of oil and natural gas properties 1,765 267
Payment for acquisition, exploration and development costs (8,343) (25,564)
Payment for additions to other property and assets (695) (1,810)
--------- ------------
Net cash used in investing activities (7,273) (27,107)
--------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 23,750 42,600
Proceeds from short-term debt - 10,354
Principal payments of long-term debt (18,850) (20,700)
Principal payments of short-term debt - (19,991)
Payments of other long-term liabilities (1,505) (113)
Other 224 433
--------- ------------
Net cash provided by financing activities 3,619 12,583
--------- ------------
Net increase (decrease) in cash and cash equivalents 3,064 (902)
Cash and cash equivalents, beginning of period 1,291 3,783
--------- ------------
Cash and cash equivalents, end of period $ 4,355 $ 2,881
========= ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 5 of 16
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
NOTE 1--ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to interim financial reporting as
prescribed by the Securities and Exchange Commission. For further information,
refer to the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed
with the Securities and Exchange Commission.
All material adjustments consisting only of normal recurring adjustments which,
in the opinion of management, were necessary for a fair statement of the results
for the interim periods, have been reflected. Certain reclassifications have
been made to the prior year statements to conform with the current year
presentation. The Company evaluates the capitalized costs of its oil and
natural gas properties on an ongoing basis and has utilized the most recently
available information to estimate its reserves at June 30, 1995, in order to
determine the realizability of such capitalized costs. Future events, including
drilling activities, product prices and operating costs, may affect future
estimates of such reserves.
NOTE 2--REVOLVING CREDIT FACILITY
In June 1995, the Company's revolving credit facility (the "Credit Facility")
and borrowing base thereunder was increased to $65 million from $55 million.
The Credit Facility, as amended, consists of a $65 million revolving credit
loan, which matures on June 30, 1996, with a final maturity of April 1, 1998.
On June 30, 1995, the Company had $50 million outstanding under the Credit
Facility.
NOTE 3--CONVERSION OF SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK
In July 1994, the Company sold in a private placement 200,000 shares of Series C
Cumulative Convertible Preferred Stock ("Series C Preferred Stock") for net
proceeds of approximately $20 million. On May 25, 1995, all outstanding shares
of the Series C Preferred Stock, including accrued dividends, were converted
into approximately 3.6 million shares of the Company's common stock (the "Common
Stock").
NOTE 4--EARNINGS PER SHARE
Earnings per share is based on the weighted average number of common and common
equivalent shares of Common Stock outstanding. Common equivalent shares include
employee stock options and warrants. Accrued dividends on the Series C
Preferred Stock were satisfied through its conversion into Common Stock on May
25, 1995 (see Note 3), and accordingly, net income available to common
shareholders has not been reduced by such dividends. For purposes of the
earnings per share calculation, Common Stock issued upon the conversion of the
Series C Preferred Stock is included in the weighted average number of shares
outstanding effective January 1, 1995.
Page 6 of 16
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MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Three month periods ended June 30, 1995 and 1994
For the quarter ended June 30, 1995, the Company reported net income of
$914,000, or $.06 per share, on total revenue of $95.3 million. This compares
with net income of $750,000, or $.06 per share, on total revenue of $67.2
million for the second quarter of 1994. The Company reported an increase in the
weighted average number of common and common equivalent shares outstanding
between the two periods as a result of the 1995 second quarter conversion of the
Company's Series C Cumulative Convertible Preferred Stock (the "Series C
Preferred Stock"), originally issued in July 1994. Approximately 16.0 million
shares were assumed to be outstanding during the second quarter of 1995 as
compared to 11.6 million shares outstanding during the second quarter of 1994.
Cash flow from operations (net income plus noncash expenses) increased to $5.0
million for the second quarter of 1995 as compared to $4.9 million for the 1994
period. Earnings before interest, taxes, depreciation, depletion and
amortization ("EBITDA") increased to $8.4 million versus $8.2 million reported
in last year's second quarter.
The following table sets forth certain operating information of the Company for
the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
(in thousands, except per unit
data) (unaudited)
AVERAGE DAILY VOLUMES
Barrels of oil:
LA Basin 7.7 7.6
S. Florida 3.5 2.7
Other 0.3 0.4
------ ------
Total 11.5 10.7
====== ======
Mcf of natural gas:
LA Basin 4.6 4.8
Other 3.6 5.6
------ ------
Total 8.2 10.4
====== ======
Barrels of oil equivalent ("BOE"):
LA Basin 8.5 8.4
S. Florida 3.5 2.7
Other 0.9 1.4
------ ------
Total 12.9 12.5
====== ======
AVERAGE SALES PRICE
Per barrel of oil $14.31 $14.10
Per MCF of natural gas $ 1.02 $ 1.35
Per BOE $13.44 $13.26
PRODUCTION EXPENSES PER BOE $ 6.09 $ 5.97
UPSTREAM GENERAL AND
ADMINISTRATIVE EXPENSES PER BOE $ 1.10 $ 1.10
</TABLE>
Oil and natural gas production for the second quarter of 1995 increased to 1.17
million BOE, up 4% over the 1.13 million BOE produced in last year's second
quarter. Oil production, the Company's principal product, increased 8% to
1,050,000 barrels from 977,000 barrels produced during the second quarter of
1994 as a result of the Company's continuing focus on the development and
exploitation of its principal properties and the acquisition of the remaining
50% working interest in its properties in the Sunniland
Page 7 of 16
<PAGE>
Trend of South Florida (the "Sunniland Trend Properties") effective May 1, 1994.
Natural gas production decreased from .9 billion cubic feet to .8 billion cubic
feet in the current year quarter primarily as a result of natural depletion in
the Company's Gulf Coast properties.
Oil and natural gas revenues increased approximately 5% to $15.8 million versus
$15.0 million for the second quarter of 1994 due to increased production volumes
and slightly higher average product prices. The Company's average wellhead
price, which represents a combination of fixed and floating price sales
arrangements and incorporates location and quality discounts from benchmark New
York Mercantile Exchange ("NYMEX") prices, increased 1% to $13.44 per BOE for
the quarter ended June 30, 1995. Such increase is attributable to an increase
in the spot crude oil price in the second quarter of 1995 which was offset by
lower average natural gas prices. The posted wellhead price for the benchmark
West Texas Intermediate ("WTI") crude oil averaged $17.62 per barrel during the
quarter as compared to the second quarter 1994 average of $16.40 per barrel.
The Company's average oil price was $14.31 per barrel for the quarter versus
$14.10 per barrel in the prior year quarter. The Company's average natural gas
price decreased 24% to $1.02 per thousand cubic feet ("Mcf") during the second
quarter of 1995 as compared to $1.35 per Mcf received in the 1994 quarter.
Crude oil prices weakened late in the second quarter and continued to
deteriorate throughout the first part of the third quarter. The Company
routinely maintains fixed price arrangements on a significant portion of its
crude oil production. During the second quarter, the Company entered into
agreements to replace certain arrangements that expired at the end of such
quarter. As a result, approximately 55% of the Company's current crude oil
production volumes are hedged at a NYMEX index price (before location and
quality discounts) of $18.40 per barrel through mid-1996. Financial swap
arrangements and futures transactions entered into by the Company to hedge
production are included in the product prices discussed in the preceding
paragraph. Such transactions (which do not include fixed price, physical
delivery arrangements) had the effect of decreasing the average price per BOE by
$.42 in the second quarter of 1995 and increasing the average price per BOE by
$0.23 in the second quarter of 1994.
Aggregate gross profit from the Company's downstream operations remained
constant at $1.6 million for the three months ended June 30, 1995 and 1994.
Gross revenues were $79.4 million and $52.1 million for the respective periods.
Excluding contango market inventory transactions, gross profit from base level
marketing, transportation, storage and terminalling activities increased
approximately 23% in the 1995 second quarter to $1.57 million as compared to
$1.28 million last year. Such increase in base level activities is primarily
attributable to improved market access made available by the Company's new crude
oil storage and terminalling facility in Cushing, Oklahoma (the "Cushing
Terminal"). Construction of the Cushing Terminal was completed in December
1993. Total crude oil volumes marketed and terminalled during the 1995 second
quarter were 43,000 barrels per day and 39,000 barrels per day, respectively, as
compared with average daily volumes of 26,000 barrels and 35,000 barrels in last
year's second quarter. For the second quarter of 1995, marketing and
transportation accounted for gross profit of $1.25 million with terminalling and
storage activities accounting for the balance.
Unit production expenses increased to $6.09 per BOE in the current period as
compared to $5.97 per BOE in last year's second quarter primarily due to
workover expenses in the Sunniland Trend Properties. Unit production expenses
will vary throughout each year due to seasonal demand charges for peak
electricity usage and periodic workover expenses associated with the Company's
production and exploitation activities. Annual unit production expenses were
$7.36, $6.65 and $6.15 per BOE in 1992, 1993 and 1994, respectively. The annual
unit expense reductions are primarily the result of the Company's ongoing focus
on cost reduction and cost control and to increased production volumes. Total
production expenses increased to $7.1 million from $6.8 million for the second
quarter of 1994 primarily as a result of increased production volumes and to the
Sunniland Trend workover expenses.
Page 8 of 16
<PAGE>
Excluding general and administrative ("G&A") expenses related to the Company's
downstream activities, unit upstream G&A expenses remained constant at $1.10 per
BOE for the three months ended June 30, 1995 and 1994. On an annual basis, unit
upstream G&A expenses were $2.48, $1.34 and $1.04 per BOE in 1992, 1993 and
1994, respectively. Total G&A expenses were $1.9 million for the three months
ended June 30, 1995, compared to $1.8 million for the 1994 period.
Depreciation, depletion and amortization ("DD&A") expense remained constant at
$4.1 million for the quarters ended June 30, 1995 and 1994. Increased DD&A
attributable to higher production volumes was partially offset by a lower DD&A
rate ($3.00 per BOE in the 1995 quarter versus $3.10 per BOE in the 1994
quarter). Interest expense for the quarter ended June 30, 1995, increased to
$3.4 million from $3.3 million reported for the comparative prior year quarter.
The increase is primarily due to a higher average interest rate.
Six month periods ended June 30, 1995 and 1994
For the six months ended June 30, 1995, the Company reported net income of $1.2
million, or $.08 per share, on total revenue of $188.9 million. This compares
to a net loss of $428,000, or $.04 per share, on total revenue of $117.8 million
for the first half of 1994. The Company reported an increase in the weighted
average number of common and common equivalent shares outstanding between the
two periods as a result of the 1995 second quarter conversion of the Series C
Preferred Stock, originally issued in July 1994. Approximately 15.7 million
shares were assumed to be outstanding during the first six months of 1995 as
compared to 11.6 million shares outstanding during the 1994 comparative period.
Cash flow from operations (net income plus noncash expenses) increased 24% to
$9.4 million for the six months ended June 30, 1995 versus $7.6 million for the
1994 period. EBITDA increased 14% to $16.0 million as compared to $14.0 million
reported in the first six months of 1994. Net cash provided by operating
activities, as reported in the consolidated statements of cash flows, decreased
to $6.7 million for the six months ended June 30, 1995 as compared to $13.6
million for the 1994 comparative period. Included in the 1994 amount is
approximately $11.8 million of proceeds from the sale of crude oil inventory,
primarily attributable to contango market inventory transactions.
Page 9 of 16
<PAGE>
The following table sets forth certain operating information of the Company for
the periods presented:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
(in thousands, except per unit
data) (unaudited)
AVERAGE DAILY VOLUMES
Barrels of oil:
LA Basin 7.5 7.3
S. Florida 3.5 2.1
Other 0.4 0.6
------ ------
Total 11.4 10.0
====== ======
Mcf of natural gas:
LA Basin 4.5 4.6
Other 3.8 5.7
------ ------
Total 8.3 10.3
====== ======
Barrels of oil equivalent:
LA Basin 8.3 8.1
S. Florida 3.5 2.1
Other 1.0 1.5
------ ------
Total 12.8 11.7
====== ======
AVERAGE SALES PRICE
Per barrel of oil $13.97 $13.74
Per MCF of natural gas $ 1.05 $ 1.41
Per BOE $13.14 $12.97
PRODUCTION EXPENSES PER BOE $ 5.99 $ 6.20
UPSTREAM GENERAL AND
ADMINISTRATIVE EXPENSES PER BOE $ 1.10 $ 1.20
</TABLE>
Oil and natural gas production for the first six months of 1995 increased to 2.3
million BOE, up 10% over the 2.1 million BOE produced in last year's first half.
Oil production, the Company's principal product, increased approximately 15% to
2.1 million barrels from 1.8 million barrels produced during the first half of
1994 as a result of the Company's continuing focus on the development and
exploitation of its principal properties and the acquisition of the remaining
50% working interest in the Sunniland Trend Properties effective May 1, 1994.
Production from the Company's LA Basin properties was negatively affected by
downtime associated with unusually heavy rainfall in the first quarter of 1995
(approximately 8,000 BOE, net to the Company's interest) and the Los Angeles
earthquake in the first quarter of 1994 (approximately 40,000 BOE, net to the
Company's interest). Natural gas production decreased from 1.9 billion cubic
feet to 1.5 billion cubic feet in the current year period primarily as a result
of natural depletion in the Company's Gulf Coast properties.
Oil and natural gas revenues increased approximately 11% to $30.5 million versus
$27.4 million for the first six months of 1994 due to increased production
volumes and slightly higher average product prices. The Company's average
wellhead price, which represents a combination of fixed and floating price sales
arrangements and incorporates location and quality discounts from benchmark
NYMEX prices, increased 1% to $13.14 per BOE for the six months ended June 30,
1995. Such increase is attributable to an increase in the spot crude oil price
in 1995 which was offset by lower average natural gas prices. The posted
wellhead price for the benchmark WTI crude oil averaged $17.22 per barrel during
the first half of 1995 as compared to the 1994 first half average of $14.79 per
barrel. The Company's average oil price was $13.97 per barrel for the first six
months of 1995 versus $13.74 per barrel in the prior year comparative period.
The Company's average natural gas price decreased 26% to $1.05 per Mcf during
the first half of 1995 as compared to $1.41 received in the 1994 period.
Page 10 of 16
<PAGE>
Crude oil prices weakened late in the second quarter and continued to
deteriorate throughout the first part of the third quarter. The Company
routinely maintains fixed price arrangements on a significant portion of its
crude oil production. During the second quarter, the Company entered into
agreements to replace certain arrangements that expired at the end of such
quarter. As a result, approximately 55% of the Company's current crude oil
production volumes are hedged at a NYMEX index price (before location and
quality discounts) of $18.40 per barrel through mid-1996. Financial swap
arrangements and futures transactions entered into by the Company to hedge
production are included in the product prices discussed in the preceding
paragraph. Such transactions (which do not include fixed price, physical
delivery arrangements) had the effect of decreasing the average price per BOE by
$.43 in the first half of 1995 and increasing the average price per BOE by $0.46
in the 1994 comparative period.
Aggregate gross profit from the Company's downstream operations was $3.1 million
for the six months ended June 30, 1995, versus $3.3 million in the prior year
period. Gross revenues were $158.3 million and $90.3 million for the respective
periods. Excluding contango market inventory transactions, gross profit from
base level marketing, transportation, storage and terminalling activities
increased approximately 30% in the first half of 1995 to $3.0 million as
compared to $2.3 million last year. Gross profit from contango related
activities was $60,000 in the 1995 period versus $951,000 in 1994. The increase
in base level activities is primarily attributable to improved market access
made available by the Cushing Terminal. Construction of the Cushing Terminal
was completed in December 1993. Total crude oil volumes marketed and
terminalled during the first half of 1995 were 45,000 barrels per day and 39,000
barrels per day, respectively, as compared with average daily volumes of 24,000
barrels and 31,000 barrels in last year's comparative period. For the six
months ended June 30, 1995, marketing and transportation accounted for gross
profit of $2.5 million with terminalling and storage activities accounting for
the balance.
Unit production expenses decreased approximately 3% to $5.99 per BOE in the
first half of 1995 as compared to $6.20 per BOE in last year's comparative
period. Unit production expenses will vary throughout each year due to seasonal
demand charges for peak electricity usage and periodic workover expenses
associated with the Company's production and exploitation activities. Annual
unit production expenses were $7.36, $6.65 and $6.15 per BOE in 1992, 1993 and
1994, respectively. The annual unit expense reductions are primarily the result
of the Company's ongoing focus on cost reduction and cost control and to
increased production volumes. Total production expenses increased to $13.9
million from $13.1 million for the first half of 1994 primarily as a result of
increased production volumes.
Excluding G&A expenses related to the Company's downstream activities, unit
upstream G&A expenses declined 8% to $1.10 per BOE for the six months ended June
30, 1995. On an annual basis, unit upstream general and administrative expenses
were $2.48, $1.34 and $1.04 per BOE in 1992, 1993 and 1994, respectively. Total
G&A expenses were $3.8 million for the six months ended June 30, 1995, compared
to $3.6 million for the 1994 period.
DD&A expense increased slightly to $8.1 million for the six months ended June
30, 1995. Increased DD&A attributable to higher production volumes was
partially offset by a lower DD&A rate ($3.00 per BOE in the 1995 period versus
$3.24 per BOE in the 1994 period). Interest expense for the six months ended
June 30, 1995, increased to $6.7 million from $6.4 million reported for the
comparative prior year period. The increase is primarily due to a higher
average interest rate.
Page 11 of 16
<PAGE>
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL CONDITION
In July 1994, the Company sold in a private placement 200,000 shares of the
Series C Preferred Stock for net proceeds of approximately $20 million. On May
25, 1995, all outstanding shares of the Series C Preferred Stock, including
accrued dividends, were converted into approximately 3.6 million shares of the
Company's common stock (the "Common Stock"). The conversion of the Series C
Preferred Stock eliminates a $2 million annual dividend obligation for future
years.
In June 1995, the Company's revolving credit facility (the "Credit Facility")
and borrowing base thereunder was increased to $65 million from $55 million.
The Credit Facility, as amended, consists of a $65 million revolving credit
loan, which matures on June 30, 1996, with a final maturity of April 1, 1998.
On June 30, 1995, the Company had $50 million outstanding under the Credit
Facility.
At June 30, 1995, the Company had a working capital deficit of approximately
$2.3 million compared to a deficit of $4.5 million at December 31, 1994. The
Company has historically operated with a working capital deficit due primarily
to ongoing capital expenditures that have been financed through cash flow and
the Credit Facility. The Company currently estimates that during 1995 it will
spend approximately $20 million on the development and exploitation of its LA
Basin and Sunniland Trend properties and approximately $4 million, net of
partner reimbursements, on exploration activities in South Louisiana and the
Sunniland Trend. A substantial portion of these planned capital expenditures
are discretionary and actual expenditures may vary based on crude oil and
natural gas prices, results from geological and geophysical studies and drilling
operations and the Company's efforts to solicit partners for certain of its
projects. Additionally, the Company intends to continue to pursue the
acquisition of underdeveloped producing properties.
Investing and Financing Activities
Net cash flows used in investing activities were $7.3 million and $27.1 million
for the six months ended June 30, 1995 and 1994, respectively. Investing
activities include payments for acquisition, exploration and development costs
of $8.3 million and $25.6 million for these same periods, respectively. Such
payments for the 1994 period include approximately $11.2 million related to the
cash portion of the acquisition of the Sunniland Trend Properties. Also
included in investing activities are proceeds from the sale of certain minor
nonoperated properties of $1.8 million and $.3 million for the six months ended
June 30, 1995, and 1994, respectively.
Net cash provided by financing activities amounted to $3.6 million and $12.6
million for the six months ended June 30, 1995 and 1994, respectively.
Proceeds, net of payments, from long-term debt for the six months ended June 30,
1995 and 1994, were $4.9 million and $21.9 million, respectively. Included in
both years are net proceeds from the Credit Facility as a result of acquisition,
exploration and development activities, while 1994 also includes an $11.5
million bridge loan incurred to finance the acquisition of the Sunniland Trend
Properties. Such loan was repaid in July 1994, with proceeds from the sale of
the Series C Preferred Stock. Short-term debt transactions during the 1994
period reflect borrowings and repayments associated with contango crude oil
inventory transactions.
Changing Oil and Natural Gas Prices
The Company believes that, with the completion of the Cushing Terminal and
acquisitions made in the last three years, it has the available capital
resources, including external sources of financing, to fund its capital
programs. However, the Company is heavily dependent on crude oil prices which
have
Page 12 of 16
<PAGE>
historically been volatile. During 1995, the posted price for WTI crude oil has
ranged from a high of $19.00 in April to a low of $15.00 in July. Although the
Company's long-term sales arrangements for its crude oil production
substantially mitigated the impact of crude oil price declines in 1993 and 1994,
future crude oil price declines would have a negative impact on the Company's
overall results, and therefore its liquidity. Further, low crude oil prices
could affect the Company's ability to raise capital on favorable terms. The
Company routinely maintains fixed price arrangements on a significant portion of
its crude oil production. During the second quarter, the Company entered into
agreements to replace certain arrangements that expired at the end of such
quarter. As a result, approximately 55% of the Company's current crude oil
production volumes are hedged at a NYMEX index price (before location and
quality discounts) of $18.40 per barrel through mid-1996.
Page 13 of 16
<PAGE>
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
On April 27, 1992, the Company and certain of its officers and directors and a
former director and officer were named as defendants in a lawsuit filed in the
United States District Court for the Southern District of Texas captioned
Judith Rubinstein and Howard Greenwald v. Collins, et al., C.A. No. H-92-1297.
The complaint brings a class action for alleged violations of Sections 10(b)
and 20(a) of the Exchange Act and for state law fraud and negligent
misrepresentation, arising out of certain alleged misrepresentations and
omissions in the Company's disclosures regarding its onshore natural gas
exploration activities. The plaintiffs, who purport to have purchased their
Common Stock in open market transactions (300 and 375 shares, respectively),
contend the class is entitled to approximately $30 million for compensatory
damages and punitive damages in an unspecified amount. The Company filed a
motion to dismiss in July 1992. On August 24, 1992, the Court entered an
Order of Dismissal and a Final Judgment dismissing the plaintiffs' complaint
for failure to state a claim under the federal securities laws and/or under
the common law of the State of Texas. On September 10, 1992, the plaintiffs
filed a Notice of Appeal of the District Court's judgment with the United
States Court of Appeals for the Fifth Circuit (No. 92-2736). On May 5, 1994,
the Fifth Circuit Court ruled, among other things, that the plaintiffs had
sufficiently pleaded claims under the federal securities laws and under Texas
common law and reversed the trial court's dismissal and remanded the case to
the trial court for further proceedings.
On July 27, 1993, a second case similar to the Rubinstein case described in
the preceding paragraph was filed in the United States District Court for the
Southern District of Texas captioned Gloria Moroson v. Collins, et al., C.A.
No. H-93-2305, naming the Company and certain of its officers and directors
and a former director and officer as defendants. The complaint brings a class
action for, among other things, alleged violations of Sections 10(b) and 20(a)
of the Exchange Act and for state law fraud and negligent misrepresentation,
arising out of certain alleged misrepresentations and omissions in the
Company's disclosures regarding its onshore natural gas exploration activities
and the value of the assets acquired through the purchase of Stocker
Resources, Inc. and Stocker Resources, L.P. (collectively "Stocker"). The
plaintiff, who purports to have purchased 50 shares of Common Stock in an open
market transaction, contends the class is entitled to approximately $60
million for compensatory damages and punitive damages in an unspecified
amount. These amounts are alleged to be in addition to the damages claimed in
the Rubinstein case. In June 1994, the trial court granted the Company's
motion to consolidate the Rubinstein and Moroson cases. Trial for these cases
is currently scheduled to commence in November 1995. Although the Company
believes these complaints to be without merit and intends to vigorously defend
these lawsuits, an adverse judgement could have a material adverse effect on
the Company.
Item 2 - None
Item 3 - None
Page 14 of 16
<PAGE>
Item 4 - Submission of Matters to a Vote of Security Holders
The 1995 Annual Meeting of Stockholders (the "Meeting") of the Company was
held on May 24, 1995. At the Meeting, holders of common stock, $.10 par
value, of the Company ("Common Stock"), elected eight members of the Company's
Board of Directors and holders of the Series C Cumulative Convertible
Preferred Stock, $1.00 par value, of the Company ("Series C Preferred Stock")
elected one member of the Company's Board of Directors.
Out of the 11,593,457 shares of Common Stock and 209,370 shares of Series C
Preferred Stock entitled to vote at the Meeting, there were 9,626,633 shares
of Common Stock and 173,777 shares of Series C Preferred Stock represented at
the Meeting either by proxies solicited in accordance with Schedule 14A or by
security holders voting in person.
No other matters were voted on at the Meeting. The tabulation of votes for
each director nominee is set forth below:
NOMINEES FOR ELECTION TO THE COMPANY'S BOARD OF DIRECTORS
<TABLE>
<CAPTION>
Holders of Common Stock Votes "For" Withheld
------------------------------------ -------------- --------
<S> <C> <C>
Greg L. Armstrong 9,619,493 7,140
Robert A. Bezuch 9,622,193 4,440
Tom H. Delimitros 9,622,118 4,515
William H. Hitchcock 9,621,493 5,140
Dan M. Krausse 9,618,240 8,393
D. Irving Obrow 9,616,640 9,993
Gerald F. Rome 9,618,990 7,643
J. Taft Symonds 9,619,593 7,040
Holders of Series C Preferred Stock
------------------------------------
Robert V. Sinnott 173,777 0
</TABLE>
Item 5 - None
Item 6 -
A. Exhibits
<TABLE>
<C> <S>
10(l) Third Amendment to Second Amended and Restated Credit Agreement
dated as of June 12, 1995, between Plains Resources Inc.,
Internationale Nederlanden (U.S.) Capital Corporation, The First
National Bank of Boston, Den norske Bank AS, First Interstate Bank
of Texas,N.A., and Texas Commerce Bank National Association.
11(a) Computation of per share earnings for the three months and six
months ended June 30, 1995 and 1994
27. Financial Data Schedule
</TABLE>
B. Report on Form 8-K
None
Page 15 of 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
PLAINS RESOURCES INC.
Date: August 8, 1995 By: /s/ Phillip D. Kramer
-------------- ------------------------------------------
Phillip D. Kramer, Vice President and Chief
Financial Officer (Principal Financial Officer)
Page 16 of 16
<PAGE>
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of the 12th day of June, 1995, by and among PLAINS
RESOURCES INC., a Delaware corporation (the "Company"), INTERNATIONALE
NEDERLANDEN (U.S.) CAPITAL CORPORATION, as Agent ("Agent"), and the Lenders
under the Original Agreement (as defined herein).
W I T N E S S E T H:
WHEREAS, the Company, Agent and Lenders entered into that certain Second
Amended and Restated Credit Agreement dated as of February 11, 1994, as amended
by that certain First Amendment to Second Amended and Restated Credit Agreement
dated as of September 15, 1994 and that certain Second Amendment to Second
Amended and Restated Credit Agreement dated as of January 25, 1995 (as amended,
including any schedules thereto, the "Original Agreement") for the purposes and
consideration therein expressed, pursuant to which Lenders became obligated to
make loans to the Company as therein provided; and
WHEREAS, the Company, Agent and Lenders desire to amend the Original
Agreement for the purposes described herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- Definitions and References
(S) 1.1. Terms Defined in the Original Agreement. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
(S) 1.2. Other Defined Terms. Unless the context otherwise requires, the
following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.
"Amendment" means this Third Amendment to Second Amended and Restated
Credit Agreement.
"Amendment Documents" means this Amendment, the Renewal Notes, and the
Mortgage Amendments.
"Credit Agreement" means the Original Agreement as amended hereby.
"Mortgage Amendments" has the meaning set forth in Section 3.1(iv)(A).
1
<PAGE>
"Original Mortgage" means that certain Deed of Trust, Mortgage,
Assignment, Security Agreement and Fixture Filing dated February 11, 1994
by Calumet Florida, Inc., Stocker Resources, L.P., the Company and Plains
Resources Utah Inc. in favor of Agent for the benefit of Lenders, as
amended by that certain First Amendment to Deed of Trust, Mortgage,
Assignment, Security Agreement and Fixture Filing dated November 1, 1994
and that certain Second Amendment to Deed of Trust, Mortgage, Assignment,
Security Agreement and Fixture Filing dated February 6, 1995.
"Original Notes" means the "Notes" referred to and defined as such in
the Original Agreement.
"Renewal Notes" has the meaning given it in Section 3.1(iii).
ARTICLE II. -- Amendments
(S) 2.1. Definitions. The definitions of "Commitment" and "Revolving
Credit Termination Date" set forth in Section 1.01 of the Original Agreement are
hereby amended in their entirety to read as follows:
"Commitment" shall mean the obligation of Lenders to make Loans
in an aggregate amount at any one time outstanding up to but not exceeding
$65,000,000, as the same may be reduced at any time or from time to time
pursuant to Sections 2.03(a), (b) or (c).
"Revolving Credit Termination Date" shall mean the earlier of (a)
June 30, 1996 and (b) the date on which the Commitment is reduced to zero
or terminated pursuant to Section 2.03 hereof.
(S) 2.2. Changes of Commitment. The first sentence of Section 2.03(a) of
the Original Agreement is hereby amended in its entirety to read as follows:
"2.03 Changes of Commitment. (a) The Commitment shall be reduced
on July 1, 1996 by $10,000,000; provided, that in the event the principal
amount of the Revolving Credit Loans as of July 1, 1996 is less than
$65,000,000, then the Commitment shall be reduced on such date by an amount
obtained by multiplying such amount by the original principal amount of the
Term Loans divided by $65,000,000."
(S) 2.3. Borrowing Base. The references to "April 1" contained in Section
2.08(b) of the Original Agreement are hereby amended to refer instead to "May
1".
2
<PAGE>
(S) 2.4. Repayment of Term Loans. Section 3.01(b) of the Original
Agreement is hereby amended in its entirety to read as follows:
"(b) The Company will repay the principal of the Term Loans in
eight installments payable on each Quarterly Date beginning July 1, 1996,
with the final installment being due and payable on or before April 1,
1998. Each such installment shall be the lesser of (i) the remaining
outstanding principal of the Term Loans on such Quarterly Date or (ii) the
following amounts:
<TABLE>
<CAPTION>
Quarterly Date Principal Due
-------------- -------------
<S> <C>
October 1, 1996 $10,000,000
January 1, 1997 $ 6,000,000
April 1, 1997 $ 6,000,000
July 1, 1997 $ 6,000,000
October 1, 1997 $ 6,000,000
January 1, 1998 $ 6,000,000
April 1, 1998 $15,000,000
</TABLE>
provided, that in the event the original principal amount of the Term Loans
as of the Revolving Credit Termination Date is less than $65,000,000, then
each amount set forth above shall be reduced by multiplying such amount by
the original principal amount of the Term Loans divided by $65,000,000. In
any event all unpaid principal and interest shall be due and payable in
full on the final maturity of April 1, 1998. As set forth in Section
2.07(c), all optional and mandatory prepayments made on the Term Loans
shall be applied to the scheduled installments in inverse order of their
maturity."
(S) 2.5. Taxes. The first sentence of Section 8.09 of the Original
Agreement is hereby amended in its entirety to read as follows:
"8.09 Taxes. Except as disclosed to Agent and Lenders as set
forth in Schedule 8.09, the United States Federal income tax returns of the
Company, its subsidiaries and the Partnerships have never been examined."
(S) 2.6. Investments in Stocker Resources, Inc. and Calumet Florida Inc.
Section 9.10(c) of the Original Agreement is hereby amended in part by deleting
the period at the end thereof and inserting the following clause at the end
thereof:
", and (3) so long as no Default shall have occurred and be continuing or
would exist after giving effect thereto, the Company may make Investments
without limitation in Stocker Resources, Inc. and Calumet Florida Inc."
3
<PAGE>
(S) 2.7. Ownership of PMCT. Lenders hereby consent to the transfer of
ownership of PMCT, currently a direct, wholly-owned Subsidiary of Plains
Marketing, to the Company, resulting in PMCT being a direct, wholly-owned
Subsidiary of the Company, and waive any Default or Event of Default arising
from such transfer.
(S) 2.8. Borrowing Base. Lenders hereby designate the Borrowing Base as
$65,000,000, effective for the period beginning on the date hereof, and
continuing until but not including the next date as of which the Borrowing Base
is redetermined.
ARTICLE III. -- Conditions of Effectiveness
(S) 3.1. Effective Date. This Amendment shall become effective as of the
date first above written when and only when (i) Agent shall have received, at
Agent's office, a counterpart of this Amendment executed and delivered by the
Company and Majority Lenders, (ii) the Company shall have paid to Agent for the
account of each Lender according to its Percentage Share a facility increase fee
in the aggregate amount of $62,500, (iii) the Company shall have issued and
delivered to each Lender a promissory note with appropriate insertions in the
form attached hereto as Exhibit A payable to the order of such Lender on or
before April 1, 1998 (collectively, the "Renewal Notes"), duly executed on
behalf of the Company, dated the date hereof, and expressly renewing, extending
and increasing, but not novating or extinguishing, such Lender's Original Note,
and (iv) Agent shall have additionally received all of the following documents,
each document (unless otherwise indicated) being dated the date of receipt
thereof by Agent, duly authorized, executed and delivered, and in form and
substance satisfactory to Agent:
(A) Mortgage Amendments. A Third Amendment to Deed of Trust,
Mortgage, Assignment, Security Agreement and Fixture Filing among Calumet
Florida, Inc., Stocker Resources, L.P., the Company and Agent, for the
benefit of Lenders, amending the Original Mortgage, and a First Amendment
to Mortgage, Assignment, Security Agreement and Fixture Filing between the
Company and Agent, for the benefit of Lenders, amending that certain
Mortgage, Assignment, Security Agreement and Fixture Filing dated March 20,
1995 by the Company in favor of Agent, for the benefit of Lenders
(collectively, the "Mortgage Amendments").
(B) Opinions of Counsel for the Company. A written opinion of (I)
Michael Patterson, Esq., counsel for the Company, dated as of the date of
this Amendment, addressed to Agent and Lenders, to the effect that the
Amendment Documents have been duly authorized, executed and delivered by
the Company and the Subsidiary Guarantors, and (II) Messrs. Fulbright &
Jaworski, counsel for the Company, dated as of the date of this Amendment,
addressed to Agent and Lenders, to the effect that the Credit Agreement and
the Notes constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency and similar laws and to general principles of equity) and that
the New York choice of law provisions contained therein are enforceable
under Texas law.
4
<PAGE>
(C) Officer's Certificate. A certificate of a duly authorized officer
of the Company to the effect that all of the representations and warranties
set forth in Article IV hereof are true and correct at and as of the date
thereof.
(D) Supporting Documents. (I) A certificate of the Secretary of the
Company dated the date of this Amendment certifying that attached thereto
is a true and complete copy of resolutions adopted by the Board of
Directors of the Company authorizing the execution, delivery and
performance of the Amendment Documents and certifying the names and true
signatures of the officers of the Company authorized to sign the Amendment
Documents and (II) such supporting documents as Agent may reasonably
request.
ARTICLE IV. -- Representations and Warranties
(S) 4.1. Representations and Warranties of the Company. In order to
induce Agent and Lenders to enter into this Amendment, the Company represents
and warrants to Agent and Lenders that:
(a) The representations and warranties contained in Section 8 of the
Original Agreement, are true and correct at and as of the time of the
effectiveness hereof.
(b) The Company and the Subsidiaries are duly authorized to execute
and deliver this Amendment and the other Amendment Documents and the
Company is and will continue to be duly authorized to borrow and perform
its obligations under the Credit Agreement. The Company and the
Subsidiaries have duly taken all corporate action necessary to authorize
the execution and delivery of this Amendment and the other Amendment
Documents and to authorize the performance of their respective obligations
thereunder.
(c) The execution and delivery by the Company and the Subsidiaries of
this Amendment and the other Amendment Documents, the performance by the
Company and the Subsidiaries of their respective obligations thereunder and
the consummation of the transactions contemplated thereby do not and will
not conflict with any provision of law, statute, rule or regulation or of
the certificate or articles of incorporation and bylaws of the Company or
any Subsidiary, or of any material agreement, judgment, license, order or
permit applicable to or binding upon the Company or any Subsidiary, or
result in the creation of any lien, charge or encumbrance upon any assets
or properties of the Company or any Subsidiary, except in favor of Agent
for the benefit of Lenders. Except for those which have been duly
obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by the Company or any Subsidiary of this Amendment
or any other Amendment Document or to consummate the transactions
contemplated thereby.
5
<PAGE>
(d) When this Amendment and the other Amendment Documents have been
duly executed and delivered, each of the Basic Documents, as amended by
this Amendment and the other Amendment Documents, will be a legal and
binding instrument and agreement of the Company and the Subsidiaries to the
extent it is a party thereto, enforceable in accordance with its terms,
(subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency and similar laws applicable to creditors' rights generally and
to general principles of equity).
ARTICLE V. -- Miscellaneous
(S) 5.1. Ratification of Agreements. The Original Agreement, as hereby
amended, is hereby ratified and confirmed in all respects. The Basic Documents,
as they may be amended or affected by this Amendment and/or the other Amendment
Documents, are hereby ratified and confirmed in all respects. Any reference to
the Credit Agreement in any Basic Document shall be deemed to refer to this
Amendment also. The execution, delivery and effectiveness of this Amendment and
the other Amendment Documents shall not, except as expressly provided herein or
therein, operate as a waiver of any right, power or remedy of Agent or any
Lender under the Credit Agreement or any other Basic Document nor constitute a
waiver of any provision of the Credit Agreement or any other Basic Document.
(S) 5.2. Ratification of Security Documents. The Company, Agent and
Lenders each acknowledge and agree that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and is
secured indebtedness under, and is secured by, each and every Security Document
to which the Company is a party. The Company hereby re-pledges, re-grants and
re-assigns a security interest in and lien on every asset of the Company
described as collateral in any Security Document.
(S) 5.3. Survival of Agreements. All representations, warranties,
covenants and agreements of the Company herein and in the other Amendment
Documents shall survive the execution and delivery of this Amendment and the
other Amendment Documents and the performance hereof and thereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations are paid in full. All statements and
agreements contained in any certificate or instrument delivered by the Company
or any Subsidiary hereunder, under the other Amendment Documents or under the
Credit Agreement to Agent or any Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, the Company
under this Amendment and under the Credit Agreement.
(S) 5.4. Basic Documents. This Amendment and each of the other Amendment
Documents is a Basic Document, and all provisions in the Credit Agreement
pertaining to Basic Documents apply hereto and thereto.
6
<PAGE>
(S) 5.5. GOVERNING LAW. THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL
RESPECTS, INCLUDING CONSTRUCTION, VALIDITY AND PERFORMANCE.
(S) 5.6. Counterparts. This Amendment and each of the other Amendment
Documents may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same Amendment or Amendment Document, as the
case may be.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
PLAINS RESOURCES INC.
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer
Vice President and Treasurer
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, individually as a
Lender and as Agent
By: /s/ CHRISTOPHER R. WAGNER
---------------------------------------
Christopher R. Wagner, Senior Associate
THE FIRST NATIONAL BANK OF BOSTON,
Lender
By: /s/ GEORGE W. PASSELA
---------------------------------------
George W. Passela, Managing Director
7
<PAGE>
DEN NORSKE BANK AS, Lender
By: /s/ NELVIN FARSTAD
---------------------------------------
Name: Nelvin Farstad
Title: Senior Vice President
By: /s/ FRAN MEYERS
---------------------------------------
Name: Fran Meyers
Title: Vice President
FIRST INTERSTATE BANK OF TEXAS, N.A.,
Lender
By: /s/ ANN M. RHOADS
---------------------------------------
Ann M. Rhoads, Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Lender
By: /s/ JAMES MCBRIDE
---------------------------------------
James McBride, Senior Vice President
8
<PAGE>
CONSENT AND AGREEMENT
Each of the undersigned Subsidiary Guarantors hereby consents to the
provisions of this Amendment and the transactions contemplated herein and hereby
(i) acknowledge and agree that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes and the Renewal Notes
are Obligations and is secured indebtedness under, and is secured by, each and
every Security Document to which it is a party, (ii) re-pledges, re-grants and
re-assigns a security interest in and lien on all of its assets described as
collateral in any Security Document and (iii) ratifies and confirms its Amended
and Restated Guaranty dated February 11, 1994 made by it for the benefit of
Agent and Lenders, expressly acknowledges and agrees that such Subsidiary
Guarantor guarantees all indebtedness, liabilities and obligations arising under
or in connection with the Notes and the Renewal Notes pursuant to the terms of
such Amended and Restated Guaranty, and agrees that its obligations and
covenants thereunder are unimpaired hereby and shall remain in full force and
effect.
CALUMET FLORIDA, INC.
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
PLAINS LIQUIDS TRANSPORT INC.,
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
PLAINS MARKETING & TRANSPORTATION
INC.,
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
PLAINS RESOURCES INTERNATIONAL INC.,
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
9
<PAGE>
PLAINS TERMINAL & TRANSFER
CORPORATION,
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
PRI PRODUCING INC.,
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
PLX CRUDE LINES INC.,
a Delaware corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
STOCKER RESOURCES, INC.,
a California corporation
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
STOCKER RESOURCES, L.P.,
a California limited partnership
By: Stocker Resources, Inc.,
its General Partner
By: /s/ PHILLIP D. KRAMER
---------------------------------------
Phillip D. Kramer, Vice President
10
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$13,000,000 June 12, 1995
New York, New York
FOR VALUE RECEIVED, PLAINS RESOURCES INC., a Delaware corporation (the
"COMPANY"), hereby promises to pay to
__________________________________________________, a
________________________________________ ("LENDER"), at the principal offices of
Agent at 135 East 57th Street, New York, NY 10022, the principal sum of THIRTEEN
MILLION DOLLARS ($13,000,000) (or such lesser amount as made by Lender to the
Company under the Credit Agreement), in lawful money of the United States of
America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The final maturity date of this Note is April 1, 1998.
The date, amount, Type, interest rate, and duration of Interest Period (if
applicable) of each Loan made by Lender to the Company, and each payment made on
account of the principal thereof, shall be recorded by Lender on its books and,
prior to any transfer of this Note, endorsed by Lender on the schedule attached
hereto or any continuation thereof.
This Note is one of the Notes referred to in the Second Amended and
Restated Credit Agreement dated February 11, 1994, as amended by a First
Amendment to Second Amended and Restated Credit Agreement dated September 15,
1994, a Second Amendment to Second Amended and Restated Credit Agreement dated
January 25, 1995 and a Third Amendment to Second Amended and Restated Credit
Agreement of even date herewith (as amended, modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT") between the Company,
Internationale Nederlanden (U.S.) Capital Corporation ("INCC"), individually and
as Agent, and the lenders named therein, and evidences Loans made by Lender
thereunder and is given in partial renewal, extension and increase of, and not
in extinguishment or novation of, those certain Promissory Notes dated September
15, 1994 made by the Company to Lender and others in the aggregate principal
face amount of $55,000,000, which renewed and extended, but did not extinguish
or novate, that certain Promissory Note dated February 11, 1994 made by the
Company to INCC in the principal face amount of $55,000,000, which renewed and
extended, but did not extinguish or novate, that certain Promissory Note dated
November 2, 1993 made by the Company to INCC in the principal face amount of
$55,000,000, which renewed and extended, but did not extinguish or novate, that
certain Promissory Note dated June 5, 1992 made by the Company to Internationale
Nederlanden Bank N.V. (the "BANK"), and now to Lender, as assignee of the Bank,
in the principal face amount of $55,000,000, which renewed and extended, but did
not extinguish or novate, that certain Promissory Note dated February 28, 1991
made by the
1
<PAGE>
Company to the Bank in the principal face amount of $40,000,000. Capitalized
terms used in this Note have the respective meanings assigned to them in the
Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Loans upon the
terms and conditions specified therein.
Except as permitted by Section 11.06(b) of the Credit Agreement, this Note
may not be assigned by Lender to any other Person.
This Note shall be governed by, and construed and enforced in accordance
with, the law of the State of New York.
PLAINS RESOURCES INC.
By:_______________________________
Phillip D. Kramer
Vice President and Treasurer
2
<PAGE>
SCHEDULE OF LOANS
This Note evidences Loans made, Continued or Converted under the within-
described Credit Agreement to the Company, on the dates, in the principal
amounts, of the Types, bearing interest at the rates, and having Interest
Periods (if applicable) of the durations set forth below, subject to the
payments, Continuations, Conversions and prepayments of principal set forth
below:
<TABLE>
<CAPTION>
Amount
Date Paid,
Made, Principal Duration Prepaid,
Continued Amount Type of Continued Unpaid
or of of Interest Interest or Principal Notation
Converted Loan Loan Rate Period Converted Amount Made By
----------- --------- ---- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 11a. - Computation of Per Share Earnings (unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- ---------------------------
1995 1994 1995 1994
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding 13,078,000 11,572,000 12,340,000 11,567,000
Incremental shares assumed to be
issued 2,924,000 0 3,397,000 0
----------- ----------- ----------- -----------
Total shares outstanding for
calculation 16,002,000 11,572,000 15,737,000 11,567,000
=========== =========== =========== ===========
Net income (loss) as reported $ 914,000 $ 750,000 $ 1,233,000 $ (428,000)
Deduct dividends on Cumulative
Convertible Preferred Stock (16,000) (16,000) (31,000) (31,000)
----------- ----------- ----------- -----------
Net income (loss) available to
common shareholders $ 898,000 $ 734,000 $ 1,202,000 $ (459,000)
=========== =========== =========== ===========
Net income (loss) per share $ 0.06 $ 0.06 $ 0.08 $ (0.04)
=========== =========== =========== ===========
</TABLE>
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PLAINS
RESOURCES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE
30, 1995, AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 5,608
<SECURITIES> 0
<RECEIVABLES> 40,421
<ALLOWANCES> 0
<INVENTORY> 4,505
<CURRENT-ASSETS> 50,534
<PP&E> 348,926
<DEPRECIATION> 129,232
<TOTAL-ASSETS> 278,678
<CURRENT-LIABILITIES> 52,865
<BONDS> 156,996
<COMMON> 1,525
0
481
<OTHER-SE> 66,811
<TOTAL-LIABILITY-AND-EQUITY> 278,678
<SALES> 188,756
<TOTAL-REVENUES> 188,903
<CGS> 169,091
<TOTAL-COSTS> 177,216
<OTHER-EXPENSES> 3,774
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,680
<INCOME-PRETAX> 1,233
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,233
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,233
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
