SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 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 1-959
THE LOUISIANA LAND AND EXPLORATION COMPANY
Exact name of registrant as specified in its charter
MARYLAND 72-0244700
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
909 POYDRAS STREET, NEW ORLEANS, LA. 70112
Address of principal executive offices Zip Code
Registrant's telephone number, including area code 504-566-6500
NO CHANGE
Former name, former address and former fiscal year, if
changed since last report
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class May 1, 1995
CAPITAL STOCK, $.15 PAR VALUE 33,414,202 SHARES
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THE LOUISIANA LAND AND EXPLORATION COMPANY
INDEX
Page
Number
_________________________________________________________________
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
(The March 31, 1995 and 1994 consolidated financial
statements included in this filing on Form 10-Q have been
reviewed by KPMG Peat Marwick LLP, independent auditors, in
accordance with established professional standards and
procedures for such a review. The report of KPMG Peat
Marwick LLP commenting upon their review is included
herein.)
Consolidated Balance Sheets - March 31, 1995 and
December 31, 1994............................. 3
Consolidated Statements of Earnings - three months
ended March 31, 1995 and 1994................. 4
Consolidated Statements of Cash Flows - three months
ended March 31, 1995 and 1994................. 5
Notes to Consolidated Financial Statements........ 6-7
Independent Auditors' Report...................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 9-10
Petroleum Segment Information......................... 11
Operating Data........................................ 12-13
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security
Holders.................................. 14
Item 6. Exhibits and Reports on Form 8-K............ 14
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<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
THE LOUISIANA LAND AND EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION)
(Millions of dollars)
March 31, December 31,
ASSETS 1995 1994
_____________________________________________________________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents (March 31,
1995-$3.5; December 31, 1994-$8.6) $ 12.3 12.5
Accounts and notes receivable, principally trade 97.4 126.4
Income taxes receivable 1.1 1.9
Inventories 24.4 31.8
Prepaid expenses 6.9 8.9
Deferred income taxes 2.6 2.6
_____________________________________________________________________________________
TOTAL CURRENT ASSETS 144.7 184.1
_____________________________________________________________________________________
Investments in affiliates 25.4 23.4
Property, plant and equipment 3,078.8 3,049.9
Less accumulated depletion, depreciation and amortization (1,844.8) (1,809.5)
_____________________________________________________________________________________
NET PROPERTY, PLANT AND EQUIPMENT 1,234.0 1,240.4
_____________________________________________________________________________________
Other assets 34.5 30.2
_____________________________________________________________________________________
$ 1,438.6 1,478.1
_____________________________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
_____________________________________________________________________________________
CURRENT LIABILITIES:
Accounts payable and accrued expenses 142.4 187.7
Income taxes payable 2.4 2.8
_____________________________________________________________________________________
TOTAL CURRENT LIABILITIES 144.8 190.5
_____________________________________________________________________________________
Deferred income taxes 40.0 40.0
Long-term debt 742.3 739.5
Other liabilities 156.0 155.7
_____________________________________________________________________________________
STOCKHOLDERS' EQUITY:
Capital stock 5.7 5.7
Additional paid-in capital 87.6 87.3
Retained earnings 425.7 424.2
_____________________________________________________________________________________
519.0 517.2
Loans to ESOP (4.4) (5.2)
Cost of capital stock in treasury (159.1) (159.6)
_____________________________________________________________________________________
TOTAL STOCKHOLDERS' EQUITY 355.5 352.4
_____________________________________________________________________________________
$ 1,438.6 1,478.1
_____________________________________________________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(Millions, except per share data)
<CAPTION>
Three months ended
March 31,
1995 1994
_____________________________________________________________________________________
<S> <C> <C>
REVENUES:
Oil and gas $109.1 103.8
Refined products 82.2 96.7
Gain on sale of oil and gas properties - 4.7
Other 1.8 1.5
_____________________________________________________________________________________
193.1 206.7
_____________________________________________________________________________________
COSTS AND EXPENSES:
Lease operating and facility expenses 29.5 31.8
Refinery cost of sales and operating expenses 79.6 94.5
Dry holes and exploratory charges 15.2 9.3
Depletion, depreciation and amortization 36.9 49.3
Taxes, other than on earnings 6.4 6.7
General, administrative and other expenses 10.7 10.1
Interest and debt expenses 9.4 6.1
Reversal of litigation accrual - (10.0)
_____________________________________________________________________________________
187.7 197.8
_____________________________________________________________________________________
Earnings before income taxes 5.4 8.9
Income tax expense 1.9 2.7
_____________________________________________________________________________________
NET EARNINGS $ 3.5 6.2
_____________________________________________________________________________________
EARNINGS PER SHARE $ 0.11 0.19
_____________________________________________________________________________________
AVERAGE SHARES 33.5 33.3
_____________________________________________________________________________________
CASH DIVIDENDS PER SHARE $ 0.06 0.25
_____________________________________________________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Millions of dollars)
<CAPTION>
Three months ended
March 31,
1995 1994
_____________________________________________________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3.5 6.2
Adjustments to reconcile to cash flows
from operations:
Gain on sale of oil and gas properties - (4.7)
Depletion, depreciation and amortization 36.9 49.3
Deferred income taxes - (3.5)
Dry holes and impairment charges 8.5 4.8
Other (1.6) (2.3)
_____________________________________________________________________________________
47.3 49.8
Changes in operating assets and liabilities:
Net decrease in receivables 28.2 17.2
Net decrease in inventories 7.4 1.1
Net (increase) decrease in prepaid items 2.0 (4.3)
Net decrease in payables (36.2) (21.5)
Other (3.0) (2.4)
_____________________________________________________________________________________
NET CASH FLOWS FROM OPERATING ACTIVITIES 45.7 39.9
_____________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (52.3) (51.4)
Proceeds from asset sales 2.7 10.0
Other (2.1) (14.5)
_____________________________________________________________________________________
Net cash flows from investing activities (51.7) (55.9)
_____________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 12.3 126.0
Repayments of long-term debt (9.5) (134.3)
Advances against cash surrender value 9.0 34.4
Dividends (2.0) (8.3)
Repayment of loans to ESOP .8 .7
Other (4.8) (4.9)
_____________________________________________________________________________________
NET CASH FLOWS FROM FINANCING ACTIVITIES 5.8 13.6
_____________________________________________________________________________________
DECREASE IN CASH AND CASH EQUIVALENTS $ (.2) (2.4)
_____________________________________________________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
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THE LOUISIANA LAND AND EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position as of March 31, 1995, and the results of operations and cash
flows for the three-month periods ended March 31, 1995 and 1994.
Certain amounts have been reclassified to conform with the current
period's presentation.
2. For the three months ended March 31, 1995 and 1994, interest costs
incurred were $13.6 million and $11.9 million, respectively, of which
$4.2 million and $5.8 million, respectively, were capitalized as part
of the cost of property, plant and equipment.
3. Earnings per share are calculated on the weighted average number of
shares outstanding during each period for capital stock and, when
dilutive, capital stock equivalents, which assumes exercise of stock
options.
4. In accordance with Regulation S-X, Rule 3-09, the audited consolidated
financial statements of the Company's 50%-owned affiliate, MaraLou
Netherlands Partnership (MaraLou) and its wholly-owned consolidated
subsidiary, CLAM Petroleum Company (CLAM), were filed with the
Company's Annual Report on Form 10-K for the year ended December 31,
1994.
Accordingly, the following unaudited summarized consolidated income
statement information for MaraLou and its consolidated subsidiary,
CLAM, for the three-month periods ended March 31, 1995 and 1994 are
presented in accordance with Regulation S-X, Rule 10-01(b).
<TABLE>
<CAPTION>
(Unaudited)
Three months ended
March 31,
1995 1994
_________________________________________________________________________________
<S> <C> <C>
Gross revenues $ 25.0 16.8
_________________________________________________________________________________
Operating profit 12.5 11.6
_________________________________________________________________________________
Net earnings (loss) 5.4 3.9
_________________________________________________________________________________
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. As explained in Note 15 of "Notes to Consolidated Financial Statements"
in the Company's 1994 Annual Report to Shareholders, the Company has
been notified by the U.S. Environmental Protection Agency that it is
one of many Potentially Responsible Parties (PRP) at three National
Priorities List sites. Based on its evaluation of the total cleanup
costs, its estimate of its potential exposure, and the viability of the
other PRP's, the Company believes that any costs ultimately required to
be borne by it at these sites will not have a material adverse effect
on the results of operations, cash flow or financial position of the
Company.
The Company is subject to other legal proceedings, claims and
liabilities which arise in the ordinary course of its business. In the
opinion of Management, the amount of ultimate liability with respect to
these actions will not have a material adverse effect on results of
operations, cash flow or financial position of the Company.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Louisiana Land and Exploration Company:
We have reviewed the consolidated balance sheet of The Louisiana Land and
Exploration Company and subsidiaries as of March 31, 1995, and the related
consolidated statements of earnings and cash flows for the three-month
periods ended March 31, 1995 and 1994. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Louisiana Land and
Exploration Company and subsidiaries as of December 31, 1994, and the
related consolidated statements of earnings (loss), stockholders' equity,
and cash flows for the year then ended (not presented herein); and in our
report dated February 3, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
May 12, 1995
<PAGE>
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
REVIEW OF OPERATIONS
Pretax earnings totaled $5.4 million in the first quarter of 1995,
compared to $8.9 million in the first quarter of 1994 which included
nearly $15 million of nonrecurring gains. Excluding the impact of the 1994
nonrecurring gains, operating results improved significantly in the first
quarter of 1995 due to higher production volumes, improved crude oil
prices, lower operating costs and expenses and improved refinery operating
profit. Pretax earnings for the 1994 quarter included a $10 million pretax
gain related to the reversal of a litigation accrual and a $4.7 million
pretax gain on the sale of oil and gas properties.
OIL AND GAS OPERATIONS
Revenues from the Company's oil and gas operations were up $5 million
from the first quarter of 1994. Liquids revenues were up $22 million due
to the effect of higher worldwide crude oil prices ($14 million) and
increased crude oil volumes ($5 million). Natural gas revenues, however,
were down $15 million as a result of lower domestic deliveries ($2 million)
and prices ($18 million). The decline in domestic natural gas revenues was
partially offset by higher North Sea natural gas production ($4 million)
and prices ($2 million).
Crude oil volumes were 3500 barrels per day (BPD) higher than first
quarter 1994 volumes. North Sea operations were up 7400 BPD primarily due
to new wells coming onstream at Brae Field and T-Block. Domestic and other
foreign operations were down 2600 BPD and 1300 BPD, respectively, primarily
due to natural declines at mature properties.
Natural gas deliveries were up 26 million cubic feet per day from the
prior year first quarter primarily due to the late-1994 initiation of gas
sales through the SAGE Pipeline System in the North Sea. Also contributing
to the increase in natural gas deliveries were new domestic and North Sea
wells onstream and the return to production of domestic wells which were
shut-in for repairs and maintenance during the prior year. The domestic
increases were offset by the effects of natural declines at mature
producing properties, the voluntary curtailment of natural gas deliveries
due to low prices, and the sale of certain oil and gas properties since the
1994 quarter.<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Costs and expenses were reduced during the first quarter of 1995. Lease
operating and facility expenses (LOE) were down due to reductions in
operating expenses, workover costs, repair charges and facilities expenses.
Depletion, depreciation and amortization (DD&A) declined over $12 million
as a result of the 1994 write-down of petroleum assets ($13 million) and
natural production declines on mature producing properties ($8 million).
These reductions in DD&A were partially offset by the DD&A associated with
new wells onstream ($9 million). Dry holes and exploratory charges
increased due to the write-off of unsuccessful exploratory wells and higher
seismic costs incurred. Interest and debt expenses increased due to higher
revolving debt and interest rates and lower interest capitalized on
qualifying projects.
REFINING OPERATIONS
Refining operations resulted in a $1.4 million pretax operating profit
for the first quarter of 1995, which was up from the $1.1 million reported
in the comparable 1994 quarter. The favorable impact of higher product
prices ($6 million) and lower crude oil feedstock costs ($13 million) more
than offset the effect of lower revenues due to a decline in sales volumes
($18 million).
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 1995, the Company generated approximately $46
million in cash from operations. However, cash and equivalents were
essentially unchanged from the December 31, 1994 level primarily as the
result of expenditures for capital projects ($52 million) and dividends
paid ($2 million). The Company's cash position was supplemented with net
increases in long-term debt ($3 million), the proceeds from assets sales
($3 million) and advances against cash surrender values of life insurance
policies ($9 million).
The Company expects to fund its 1995 expenditures, including capital
and exploration expenditures of approximately $214 million, primarily from
operating cash flows and the proceeds from sales of nonstrategic assets.
The Company does not expect to realize any significant losses from these
sales. However, the Company expects to supplement its working capital,
from time-to-time, through its commercial paper program and its existing
revolving credit facility.
NOTE: The accompanying consolidated financial statements and notes
thereto included in Item 1. of this Form 10-Q and the petroleum
segment information and operating data following this Item 2. are
an integral part of this discussion and analysis and should be
read in conjunction herewith.
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<TABLE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
PETROLEUM SEGMENT INFORMATION
(Millions of dollars)
<CAPTION>
Three months ended
March 31,
1995 1994
_____________________________________________________________________________________
<S> <C> <C>
Sales to unaffiliated customers:
Domestic $152.6 187.3
North Sea 34.9 12.9
Other foreign 3.8 5.0
_____________________________________________________________________________________
191.3 205.2
Interest and other income 1.8 1.5
_____________________________________________________________________________________
Total revenues $193.1 206.7
_____________________________________________________________________________________
Earnings (loss) before income taxes:
Operating profit (loss):
Domestic 18.7 19.9
North Sea 10.4 (1.2)
Other foreign (3.7) (3.2)
_____________________________________________________________________________________
25.4 15.5
Other income (expense), net (20.0) (6.6)
_____________________________________________________________________________________
Earnings before income taxes $ 5.4 8.9
_____________________________________________________________________________________
Capital expenditures:
Exploration:
Domestic 11.7 10.8
North Sea - .4
Other foreign 3.9 4.5
_____________________________________________________________________________________
15.6 15.7
_____________________________________________________________________________________
Development:
Domestic 12.3 17.7
North Sea 2.7 3.7
Other foreign 3.8 2.0
_____________________________________________________________________________________
18.8 23.4
_____________________________________________________________________________________
34.4 39.1
Refining and marketing 1.1 2.8
_____________________________________________________________________________________
35.5 41.9
Capitalized interest 4.2 5.8
Other 1.5 .7
_____________________________________________________________________________________
$ 41.2 48.4
_____________________________________________________________________________________
</TABLE>
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<TABLE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
OPERATING DATA
<CAPTION>
Three months ended
March 31,
1995 1994
_____________________________________________________________________________________
<S> <C> <C>
OIL AND GAS OPERATIONS1
CRUDE AND CONDENSATE2
Production (thousands of barrels per day):
Domestic 21.6 24.2
North Sea 17.8 10.4
Other foreign 3.1 4.4
_____________________________________________________________________________________
42.5 39.0
_____________________________________________________________________________________
Average price received (per barrel):
Domestic $17.88 13.90
North Sea 17.27 13.49
Other foreign 12.94 10.97
Consolidated 17.27 13.46
_____________________________________________________________________________________
PLANT PRODUCTS
Production (thousands of barrels per day):
Domestic 3.4 2.3
North Sea 1.0 .3
_____________________________________________________________________________________
4.4 2.6
_____________________________________________________________________________________
Average price received (per barrel):
Domestic $11.26 8.87
North Sea 15.89 11.02
Consolidated 12.34 9.10
_____________________________________________________________________________________
NATURAL GAS
Production (millions of cubic feet per day):
Domestic 232.8 243.4
North Sea 27.4 .2
Other foreign 2.4 3.3
CLAM Petroleum Company 53.6 43.2
_____________________________________________________________________________________
316.2 290.1
_____________________________________________________________________________________
Average price received (per MCF):
Domestic $ 1.51 2.38
North Sea 2.38 1.69
Other foreign .72 2.02
CLAM Petroleum Company 2.49 2.11
Consolidated 1.75 2.33
_____________________________________________________________________________________
1 Includes the Company's 50% equity interest in its unconsolidated affiliate, CLAM
Petroleum Company.
2 Before the elimination of intercompany transfers.
</TABLE>
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<TABLE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
OPERATING DATA (CONTINUED)
<CAPTION>
Three months ended
March 31,
(Millions of dollars) 1995 1994
____________________________________________________________________________________
<S> <C> <C>
REFINING OPERATIONS
Refining Operating Profit (Loss):
Revenues:
Refined products* $ 90.5 102.5
Other - .5
____________________________________________________________________________________
90.5 103.0
____________________________________________________________________________________
Cost and expenses:
Cost of sales* 78.0 91.1
Operating expenses 9.9 9.2
Depreciation .4 .8
Taxes, other than income .8 .8
____________________________________________________________________________________
89.1 101.9
____________________________________________________________________________________
$ 1.4 1.1
____________________________________________________________________________________
*Before the elimination of intercompany
transfers to the Company's refinery $ 8.3 5.8
____________________________________________________________________________________
Sales (thousands of barrels per day) 49.5 59.8
____________________________________________________________________________________
Average price received (per barrel) $20.31 19.04
____________________________________________________________________________________
____________________________________________________________________________________
GROSS WELLS DRILLED
Working Interest
Exploratory:
Oil - 1
Gas 7 5
Dry 1 4
____________________________________________________________________________________
8 10
____________________________________________________________________________________
Development:
Oil 2 1
Gas 2 1
Dry - -
____________________________________________________________________________________
4 2
____________________________________________________________________________________
Total working interest 12 12
Royalty Interest 5 6
____________________________________________________________________________________
Total wells 17 18
____________________________________________________________________________________
NET WELLS DRILLED
Exploratory:
Oil - .5
Gas 3.3 3.0
Dry .7 2.1
____________________________________________________________________________________
4.0 5.6
____________________________________________________________________________________
Development:
Oil .4 .3
Gas .5 .2
Dry - -
____________________________________________________________________________________
.9 .5
____________________________________________________________________________________
Total net wells 4.9 6.1
____________________________________________________________________________________
</TABLE>
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Stockholders held on May 11, 1995, The
Louisiana Land and Exploration Company 1995 Stock Option Plan for Non-
Employee Directors was approved by a stockholder vote of: For -
27,152,443; Against - 1,995,462.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
A Current Report on Form 8-K was filed on January 30, 1995
containing the press release relating to the unaudited financial
results for the Registrant's fiscal quarter ended December 31,
1994.
SIGNATURE
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.
THE LOUISIANA LAND AND EXPLORATION COMPANY
(REGISTRANT)
By: /s/ Jerry D. Carlisle
___________________________________________
JERRY D. CARLISLE
VICE PRESIDENT AND CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
Dated: May 12, 1995
