<PAGE>
Securities and Exchange Commission
Washington, DC 20549
----------------------------------
FORM 10-Q
Quarterly Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
Commission File Number 0-10077
EVERGREEN RESOURCES, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO 84-0834147
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation of Organization) Number)
1000 WRITER SQUARE
1512 LARIMER STREET
DENVER, COLORADO 80202
(Address of Principal Executive (Zip Code)
Offices)
(303) 534-0400
(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.
X Yes No
----- -----
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest date.
CLASS OUTSTANDING AT NOVEMBER 11, 1996
Common Stock, No Par Value 9,102,000
<PAGE>
EVERGREEN RESOURCES, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets as of September 30, 1996
and March 31, 1996. . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Six and Three
Months Ended September 30, 1996 and September 30, 1995. . . . . 4-5
Consolidated Statements of Cash Flows for the Six Months
Ended September 30, 1996 and September 30, 1995 . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . . . . . 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 8-13
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 13
2
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
ASSETS Sept. 30, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
CURRENT:
Cash and cash equivalents $ 1,131,629 $ 3,702,511
Accounts receivable:
Oil and gas sales 653,542 237,178
Joint interest billings and other 839,556 897,142
Other current assets 589,926 132,446
------------ ------------
TOTAL CURRENT ASSETS 3,214,653 4,969,277
------------ ------------
PROPERTY AND EQUIPMENT:
Proved oil and gas properties, based on full-cost accounting 47,002,527 36,378,828
Unevaluated properties not subject to amortization 8,718,401 7,792,739
Gas gathering equipment 10,158,051 4,415,439
Support equipment 696,443 595,656
------------ ------------
66,575,422 49,182,662
Less accumulated depreciation, depletion and amortization (12,124,859) (11,558,516)
------------ ------------
NET PROPERTY AND EQUIPMENT 54,450,563 37,624,146
------------ ------------
DESIGNATED CASH 1,310,634 770,076
OTHER ASSETS 1,439,282 808,218
------------ ------------
$ 60,415,132 $ 44,171,717
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,425,834 1,204,378
Accrued expenses and other 573,775 162,127
Amounts payable to oil and gas property owners 651,922 1,123,465
------------ ------------
TOTAL CURRENT LIABILITIES 2,651,531 2,489,970
LONG-TERM LIABILITIES
Obligations under capital leases 1,335,143 191,956
Notes payable 6,089,000 --
Other long term liabilities 2,030,878 1,630,878
PRODUCTION TAXES PAYABLE 1,310,634 770,076
------------ ------------
TOTAL LIABILITIES 13,417,186 5,082,880
------------ ------------
REDEEMABLE PREFERRED STOCK 7,500,000 7,500,000
------------ ------------
COMMON STOCKHOLDERS' EQUITY:
Common stock, shares issued and outstanding,
7,102,000 and 5,899,736 71,021 58,998
Additional paid-in capital 49,624,037 41,822,026
Accumulated deficit (9,807,674) (9,873,715)
Foreign currency translation adjustment (389,438) (418,472)
TOTAL STOCKHOLDERS' EQUITY 39,497,946 31,588,837
------------ ------------
$ 60,415,132 $ 44,171,717
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended September 30
------------------------------
1996 1995
---- ----
REVENUE:
Oil and gas production $1,655,413 $ 524,511
Oil and gas services 365,862 370,453
Interest and dividend income 82,946 66,869
---------- ----------
Other income 35,816 535,426
TOTAL REVENUES 2,140,037 1,497,259
---------- ----------
COSTS AND EXPENSES:
Cost of production and operations 364,616 387,551
Gas gathering costs 74,997 118,611
Cost of oil and gas services 401,967 375,926
Depreciation, depletion and amortization 498,679 322,202
General and administrative expenses 316,649 398,449
Interest expense 108,455 18,958
Other expense 8,633 (7,979)
---------- ----------
TOTAL COSTS AND EXPENSES 1,773,996 1,613,718
---------- ----------
NET INCOME (LOSS) 366,041 (116,459)
PREFERRED STOCK DIVIDENDS 300,000 204,620
---------- ----------
NET INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCK $ 66,041 $(321,079)
---------- ----------
---------- ----------
NET INCOME (LOSS) PER SHARE OF COMMON STOCK $ 0.01 $ (0.06)
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,307,267 5,674,141
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
4
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30,
1996 1995
REVENUE: ---- ----
Oil and gas production $1,129,069 $ 240,772
Oil and gas services 174,953 184,563
Interest income 31,347 43,679
Other income 25,788 520,216
---------- ----------
TOTAL REVENUES 1,361,157 989,230
---------- ----------
COSTS AND EXPENSES:
Cost of production and operations 232,663 156,870
Gas gathering costs 31,099 60,350
Cost of oil and gas services 217,126 163,285
Depreciation, depletion and amortization 296,839 155,052
General and administrative expenses 167,379 196,189
Interest expense 99,070 9,744
Other expense 10,970 (270)
---------- ----------
TOTAL COSTS AND EXPENSES 1,055,146 741,220
---------- ----------
NET INCOME 306,011 248,010
PREFERRED STOCK DIVIDENDS 150,000 129,620
---------- ----------
NET INCOME ATTRIBUTABLE
TO COMMON STOCK $ 156,011 $ 118,390
---------- ----------
---------- ----------
NET INCOME PER SHARE OF COMMON STOCK $ 0.02 $ 0.02
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,710,369 5,674,141
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
5
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Six Months Ended September 30
-----------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 366,040 $ (116,459)
Adjustments to reconcile net income (loss) to
cash provided (used) by operating activities:
Depreciation, depletion and amortization 498,679 322,202
Gain on sale of subsidiary and other -- (525,287)
Other 50,568 --
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 204,337 (40,520)
Decrease (increase) in current assets (312,620) (141,342)
Increase (decrease) in accounts payable (41,952) (219,215)
Increase (decrease) in accrued expenses (46,973) 144,379
----------- ----------
Net cash provided (used) by operating activities 718,079 (576,242)
----------- ----------
Cash flows from investing activities:
Investment in property and equipment (4,855,357) (1,512,864)
Proceeds from sale of subsidiary -- 580,000
Proceeds from sale of oil and gas assets 403,046 122,180
Designated cash (540,558) (70,599)
Change in production taxes payable 540,558 70,599
Change in other assets (489,769) (42,130)
----------- ----------
Net cash used by investing activities (4,942,080) (852,814)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from notes payable 2,493,000 --
Proceeds from sale of preferred stock -- 3,750,000
Debt issue costs (9,661) (52,880)
Principal payments on capital lease obligations (52,455) (23,319)
Payment of preferred stock dividends (300,000) (204,620)
Increase in cash held from operating oil
and gas properties (471,543) (30,421)
----------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,659,341 3,438,760
----------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (6,222) 20,770
----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,570,882) 2,030,474
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD 3,702,511 2,038,157
----------- ----------
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD $ 1,131,629 $4,068,631
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
EVERGREEN RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1996
1. In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Company's
financial position as of September 30, 1996 and the results of its operations
and changes in financial position for the three months and six months then
ended. All such adjustments are of a normal recurring nature.
2. Certain information at March 31, 1996 has been condensed from the
audited financial statements included in the Company's most recent filing
on Form 10-K.
3. The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Evergreen Operating Corporation
("EOC"), Evergreen Resources (UK) Limited ("ERUK"), Primero Gas Marketing
Co. (Primero), and Powerbridge, Inc. ("PBI"). All significant intercompany
balances and transactions have been eliminated.
4. The Company follows the full-cost method of accounting for oil and gas
properties. Under this method, all productive and nonproductive costs
incurred in connection with the exploration for and development of oil and
gas reserves are capitalized. Such capitalized costs include lease
acquisition, geological and geophysical work, delay rentals, drilling,
completing and equipping oil and gas wells and other related costs. Normal
dispositions of oil and gas properties are accounted for as adjustments of
capitalized costs, with no gain or loss recognized.
5. Depreciation and depletion of proved oil and gas properties is computed
on the units-of-production method based upon estimates of proved reserves
with oil and gas being converted to a common unit of measure based on the
relative energy content. Unproved oil and gas properties, including any
related capitalized interest expense, are not amortized, but are assessed
for impairment either individually or on an aggregated basis.
6. Designated cash represents the cash withheld for payment of production
taxes from third party revenue interest owners for subsequent distribution
to county taxation authorities.
7. The functional currency for the Company's foreign operations is the
applicable local currency. The translation of the applicable foreign
currency into U.S. dollars is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue
and expense accounts using a weighted average exchange rate during the
period. The gains or losses resulting from such translation are included
in stockholders' equity.
7
<PAGE>
EVERGREEN RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
UNDERWRITING
On October 28, 1996, the Company completed a public offering of its common
shares, whereby it sold 2,000,000 shares at $5.75 per share. Total proceeds,
net of underwriters' commissions, were approximately $10.3 million.
PBI ACQUISITION
Effective August 1, 1996, Evergreen acquired 100% of the outstanding common
stock of Powerbridge, Inc. and the limited partnership interests of Energy
Investor Funds I and II (collectively "PBI").
Evergreen acquired approximately 37 BCF of proved natural gas reserves,
approximately 24 BCF of which are developed, together with 25% working
interest in 120,000 gross acres and 50% interest in an associated gas
gathering and marketing system. All of these assets are located on
Evergreen's present acreage position in the Raton Basin. Evergreen issued
1,162,266 restricted shares of Evergreen Common Stock and assumed $3.6
million of long term bank debt owed to Hibernia National Bank.
The acquisition of these assets increased Evergreen's interest to 100% in all
leases, reserves, production, and associated gathering facilities on the
Company's 120,000 gross acres in the Raton Basin.
At March 31, 1996, Evergreen reported 80 BCF of proved reserves, based on an
independent engineering study which has been updated. As of August 1, 1996,
Evergreen's proved reserves increased to 128 BCF, through the above reported
acquisition and other development activity in the Raton Basin. Approximately
59% of these proved reserves are developed. Present value of future net
revenues before income taxes discounted at 10% increased from $30 million at
March 31, 1996, to $51 million as of August 1, 1996.
RATON BASIN
Since December 1991, Evergreen has acquired oil and gas leases covering over
120,000 gross acres in the Raton Basin, Las Animas County in Southeastern
Colorado. This acreage position will support over 500 wells on 160 acre
spacing. Independent engineering estimates indicate reserve potential of
approximately 1.5 -2.0 billion cubic feet of gas per well.
Since early 1994 Evergreen has drilled fifty-four coalbed methane gas wells
in the Vermejo coals at depths of 700 to 1,800 feet. Forty-one of these wells
are producing; twelve are being completed and will be placed into production
during December 1996 and January 1997. One well will be placed into
production in mid-97 when gathering facilities are available.
Gas sales began in January 1995 and have improved, as new wells have been
drilled, to a present level of 11.5 million cubic feet per day gross, or
approximately 10 million cubic feet per day net to Evergreen.
In March 1995, the Bureau of Land Management designated approximately 67,000
acres of Evergreen's Raton Basin oil and gas leases as a Federal Unit called
the Spanish Peaks Unit.
8
<PAGE>
Evergreen has been named Unit Operator. Formation of the Unit allows
Evergreen to base development decisions within the Unit on technical,
geologic and geophysical data rather than the fulfillment of term lease
obligations. Evergreen's remaining Unit commitment is to drill and evaluate
one new unit obligation well by December 31, 1997.
Evergreen plans continual development of the Raton Basin acreage. Existing
gathering and compression systems are now being upgraded.
CIG AGREEMENT
On September 5, 1996, Evergreen (through its marketing joint venture with
Primero Gas Marketing Company) entered into an agreement with Colorado
Interstate Gas Company ("CIG") providing for CIG's construction of a gas
blending facility in Trinidad, Colorado, 10 miles from Evergreen's wells and
a firm transportation agreement for a ten year term. Evergreen's gas
production is relatively pure methane and to meet CIG pipeline
specifications, CIG desires to have small quantities of nitrogen blended with
the methane. CIG will construct a nitrogen blending facility capable of
blending at least 30 million cubic feet of gas per day, to be in service on
or about January 1, 1997. Evergreen has entered into a firm transportation
agreement at CIG's current tariff rates to transport gas to Dumas, Texas.
Evergreen will be obligated to transport at least 10,000 MMBtu per day
(approximately 10.4 million cubic feet of gas), and will be allowed to
transport an additional 15,000 MMBtu per day at a fixed charge. This
transportation agreement will provide Evergreen access to Midwest markets and
the Company believes that it will receive higher gas prices as a result.
FALKLAND ISLANDS
Evergreen has a net 2% working interest in a consortium which has recently
been awarded an exploration license for Tranche A in the First Offshore
Falkland Islands Licensing Round.
Amerada Hess (Falklands Islands) Limited is Operator of the consortium, which
includes Fina Exploration Atlantic BV, Murphy South Atlantic Oil Company,
Teikoku Oil Co. Ltd., and Argos Evergreen Limited.
Argos Evergreen Limited, a 5% working interest holder in the consortium, is a
joint venture company formed in the Falkland Islands and owned 60% by Argos
Resources Limited and 40% by Evergreen Resources (UK) Limited, the UK
subsidiary of Evergreen Resources Inc.
Argos Resources Limited is a subsidiary of Argos Limited, a Falkland Islands
company which owns and operates a fleet of deep sea fishing vessels in the
Falkland Islands area.
The license covers 626 square miles and lies approximately 150 miles to the
north of the islands in water depths ranging up to 1,575 feet. This area
incorporates part of a major unexplored sedimentary basin which has not yet
been tested by drilling. It therefore represents a rare opportunity to be
involved during the early phase of exploration in an unexplored basin.
SAN JUAN BASIN
Effective June 1, 1996, Evergreen sold its working interests in six producing
wells in the San Juan Basin, Rio Arriba County, New Mexico. The wells
qualify for the Section 29 tax credit. The working interests were sold to a
limited partnership owned and controlled by Banque Paribas.
Evergreen received $53,000 cash and a volumetric production payment under
which Evergreen will receive 99% of the cash flow from the wells until
approximately 1.1 billion
9
<PAGE>
cubic feet of gas have been produced and sold net to the well interests. At
present production levels, the production payment will end in 4 - 5 years.
In addition to the production payment, Evergreen will receive additional
monthly payments based on production from the wells through 2002.
Evergreen has the option to repurchase the interests at any time between
December 31, 2002, and January 1, 2008, and will automatically revert to 75%
ownership in the interests if and when approximately 1.8 BCF net have been
produced from the wells.
Evergreen owns varying interests in sixteen additional wells in the San Juan
Basin, the majority of which are shut-in at present because of low production
volumes.
UNITED KINGDOM
In 1991 and 1992 the Company's wholly owned subsidiary, Evergreen Resources
(U.K.) Ltd.("ERUK"), was awarded seven onshore U.K. hydrocarbon Exploration
Licenses for the development of coalbed methane gas and conventional
hydrocarbons (the "Licenses"). The Licenses provide ERUK with the largest
onshore acreage position in the U.K., and cover substantially all of six
distinct onshore U.K. basins. Over 400,000 acres are considered prospective
specifically for coalbed methane.
Under a new onshore Licensing regime implemented by the UK Department of
Trade and Industry (DTI), Evergreen will convert its existing onshore
Exploration Licenses to new onshore Licenses, called Petroleum Exploration
and Development Licenses. These new Licenses will provide up to a 30 year
term with periodic relinquishment, approximately every 5 years, of up to 50%
of the acreage subject to future development plans. Work commitments on the
existing Licenses have been fulfilled through 1997 as a result of Evergreen's
prior UK activity. There are no royalties or burdens encumbering the
Licenses.
Evergreen is continuing to hold discussions with various funding sources,
including potential industry partners, for the purpose of resuming evaluation
and development of the Licenses.
LIQUIDITY AND CAPITAL RESOURCES
Evergreen currently has a $15.0 million revolving line of credit with
Hibernia National Bank of New Orleans with interest at the Bank's prime rate.
Advances pursuant to this line of credit are limited to the borrowing base,
which is presently $15.0 million. There are no restrictions associated with
advances under the line. An annual fee of one half of one percent is paid
quarterly for any unused portion of the credit line. The borrowing base is
redetermined semi-annually by the bank based upon reserve evaluations of the
Company's oil and gas properties. The Company used a portion of the proceeds
of the underwriting to retire $2.5 million outstanding under the line of
credit and the $3.6 million assumed in the PBI acquisition. As of November
11, 1996, there are no borrowings on the line.
The Company anticipates drilling 30 to 40 wells and expanding and upgrading
gas gathering facilities during fiscal 1997. Capital requirements for the
remainder of fiscal 1997 are estimated to be approximately $7 million. The
Company believes that cash flow from operations, the availability of funds
under its line of credit, and funds from the underwriting will be sufficient
to fulfill the 1997 development objectives.
Leases expiring in fiscal 1997 are not material and do not require
significant drilling expenditures.
10
<PAGE>
Cash flows provided by operating activities were $718,000 for the six months
ended September 30, 1996 as compared to cash used by operating activities of
$576,000 in the prior year. The significant increase in the cash flows
provided by operating activities is due primarily to improved operating
results as a result of higher gas production, higher gas prices, the PBI
acquisition and the monetization of the San Juan Basin section 29 tax credits.
Cash flows used by investing activities were $4,942,000 during the six months
ended September 30, 1996 versus $853,000 during the same period in 1995. The
increase was primarily due to the continued development of the Raton Basin
including increased capital expenditures resulting from the PBI acquisition.
Cash flows provided by financing activities were $1,659,000 during the six
months ended September 30, 1996 as compared to $3,439,000 in the prior
period. The decrease was due primarily to the Company using $2,500,000 of
its line of credit for drilling activities in 1996 compared to receiving
proceeds from the sale of preferred stock of $3,750,000 in 1995.
The Company's production from its San Juan basin properties has not met the
minimum volume requirements under its transportation agreements with El Paso
Field Services ("El Paso"). As of September 30, 1996, the cumulative
obligation of the Company to El Paso resulting from this shortfall was
$2,031,000. At current rates of production, this liability would increase to
over $3 million by the end of the contract term in July 1998. The Company is
currently in discussions with El Paso concerning alternative resolutions to
the shortfall, including the purchase by the Company of a portion of El
Paso's pipeline system. However, there is no assurance that an alternative
agreement will be reached.
The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets" and SFAS No. 123, "Accounting for the Stock
Based Compensation". SFAS No. 121 provides standards for accounting for the
impairment of various long-lived assets. The Company uses the full cost
method which requires an impairment to be recorded when total capitalized
costs exceed the present value, discounted at 10%, of estimated future net
cash flows from proved oil and gas reserves. Therefore, the adoption of SFAS
No. 121 is not expected to have a material effect on the financial position
or results of operations of the Company.
SFAS No. 123 encourages the accounting for stock-based employee compensation
programs to be reported within the financial statements on a fair value based
method. If the fair value based method is not adopted, then the statement
requires pro-forma disclosure of net income and earnings per share as if the
fair value based method had been adopted. The Company has not yet determined
how SFAS No. 123 will be adopted nor its impact on the financial statements.
Both statements are effective for fiscal years beginning after December 15,
1995.
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1996
The Company reported net income of $66,000 or $0.01 per common share for the
six months ended September 30, 1996, compared to a net loss of $321,100 or
$0.06 per common share for the same period in 1995.
For the three months ended September 30, 1996, the Company reported net
income of $156,000 or $0.02 per common share compared to net income of
$118,400 or $0.02 per common share for the same period in 1995, which
included a $525,000 gain on an asset sale.
Natural gas revenues were $1,652,700 during the six months ended September
30, 1996, compared to $456,000 for the same period in the prior year.
11
<PAGE>
During the three months ended September 30, 1996, natural gas revenues were
$1,129,600 versus $210,500 in the prior year.
The Company has no significant oil reserves, production or revenues.
The significant year-to-year increase in natural gas revenue during the six
months ended September 30, 1996, is attributable to substantially higher
Raton Basin production volumes sharply higher natural gas prices and the
monetization of the San Juan Basin tax credit.
The higher gas production volumes and gas revenues in the quarter ended
September 30, 1996, are due to ten new Raton Basin wells being placed into
production, higher gas prices, and the PBI acquisition.
During the quarter ended September 30, 1996, Raton Basin gas production
represented over 88% of the Company's total gas production, compared to 49%
for the same period in the prior year. At September 30, 1996, there were 31
producing Raton Basin wells compared to 16 producing wells at September 30,
1995.
Production costs and taxes (lifting costs) for the six months ended September
30, 1996, were $364,600 compared to $388,000 for the same period in 1995. On
an equivalent Mcf basis (Mcfe), lifting costs declined from $0.88 per Mcf in
the six months ended September 30, 1995 to $0.33 per Mcf in the current year.
Six Months Ended Three Months Ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
Gas Production (Mcf) 1,118,700 414,500 724,400 206,800
Gas Revenues $1,652,700 $456,000 $1,129,600 $210,500
Avg. Price per Mcf $1.48 $1.10 $1.56 $1.02
Production Cost per Mcfe $0.33 $0.88 $0.32 $0.71
Oil and gas service revenues and cost of oil and gas services are
attributable to the Company's wholly owned subsidiary Evergreen Operating
Corporation (EOC), which is primarily responsible for drilling, evaluation
and production activities associated with various properties and for
negotiating the sales of oil and gas production from the properties. As of
November 8, 1996, EOC was serving as Operator for approximately 160 producing
wells owned by the Company and also by other unaffiliated third parties.
During the six months ended September 30, 1996, oil and gas service revenues
were $365,800, versus $370,500 for the six months ended September 30, 1995, a
2% decrease. Costs of oil and gas services during the six months ended
September 30, 1996 were $402,000 vs. $376,000 for the prior year, a 7%
increase.
Depreciation, depletion and amortization expense for the six months ended
September 30, 1996 was $498,700 compared to $322,200 in the prior year. The
increase is due to the increase in gas production in the Raton Basin.
General and administrative expenses were $317,000 during the six months ended
September 30, 1996 as compared to $398,000 during 1995. The $81,000 decrease
is due to overhead reductions.
Interest income for the six months ended September 30, 1996 was $83,000
compared to $66,900 in 1995.
12
<PAGE>
Interest expense for the six months ended September 30, 1996 was $108,000
versus $18,000 during the same period in 1995. The $90,000 increase is due
to the debt assumed by the Company as a result of the PBI acquisition, the
interest on the line of credit borrowings, and the interest on the capital
lease obligations.
The Company reported $35,800 of other income during the six months ended
September 30, 1996, compared to $535,400, the result of an asset sale, in
the prior year.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not engaged in any material pending legal proceedings to which
the Company or its subsidiaries is a party or to which any of its property is
subject.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's Annual Meeting on August 15, 1996, Shareholders elected John
J. Ryan, III, to a new three year term as a Director.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
On August 21, 1996, a report on Form 8-K was filed, and on September 6, 1996
a report on Form 8K/A was filed. Each of these reports were filed pursuant
to the PBI acquisition.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
EVERGREEN RESOURCES, INC.
(Registrant)
DATE: November 11, 1996 By: /s/ James S. Williams
------------------------
James S. Williams
Chairman of the Board
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,131,629
<SECURITIES> 0
<RECEIVABLES> 1,493,098
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,214,653
<PP&E> 66,575,422
<DEPRECIATION> (12,124,859)
<TOTAL-ASSETS> 60,415,132
<CURRENT-LIABILITIES> 2,651,531
<BONDS> 0
7,500,000
0
<COMMON> 71,021
<OTHER-SE> 39,426,925
<TOTAL-LIABILITY-AND-EQUITY> 60,415,132
<SALES> 2,021,275
<TOTAL-REVENUES> 2,140,037
<CGS> 841,580
<TOTAL-COSTS> 1,656,908
<OTHER-EXPENSES> 8,633
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108,455
<INCOME-PRETAX> 366,041
<INCOME-TAX> 0
<INCOME-CONTINUING> 66,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,041
<EPS-PRIMARY> 0.01 <F1>
<EPS-DILUTED> 0
<FN>
<F1>PER COMMON SHARE AFTER CASH DIVIDENDS PAID ON PREFERRED STOCK.
</FN>
</TABLE>
