<PAGE>
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 MARCH 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
------ OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NO. 0-10727
TIDE WEST OIL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 84-0846048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6666 SOUTH SHERIDAN ROAD
SUITE 250
TULSA, OKLAHOMA 74133
(Address of principal executive offices)
(918) 488-8962
(Registrant's telephone number)
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
--- ---
As of May 12, 1995, 9,926,228 shares of the registrant's Common Stock, par value
$.01 per share, were outstanding.
<PAGE>
TIDE WEST OIL COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) - 3
December 31, 1994 and March 31, 1995
Consolidated Statements of Income 4
(Unaudited) -Three months ended March 31, 1994 and 1995
Consolidated Statements of Cash Flows 5
(Unaudited) - Three months ended March 31, 1994 and 1995
Notes to Consolidated Financial Statements 6-9
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial 10-15
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal proceedings 16
Item 2. Changes in securities 16
Item 3. Defaults upon senior securities 16
Item 4. Submission of matters to a vote of security-holders 16
Item 5. Other information 16
Item 6. Exhibits and reports on Form 8-K 16
Signatures 17
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Tide West Oil Company
Consolidated Balance Sheets
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, March 31,
(In thousands, except shares and per share amounts) 1994 1995
- - - - - - --------------------------------------------------- ------------ ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ --- $4,067
Short term investments, at cost --- 1,955
Accounts receivable:
Revenues 14,977 12,895
Other 2,960 2,483
Unrealized gain on commodity transactions --- 2,449
Other current assets 1,753 1,824
-------- --------
Total current assets 19,690 25,673
Property and Equipment:
Oil and gas properties (successful efforts method) 110,948 135,855
Other property and equipment 1,619 1,631
-------- --------
112,567 137,486
Accumulated depreciation, depletion and amortization (20,350) (26,125)
-------- --------
Property and equipment, net 92,217 111,361
Investments 12,064 1,025
Other Assets - Net 349 885
-------- --------
$124,320 $138,944
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Gas purchases $9,652 $9,419
Other 2,706 1,898
Revenues payable 3,604 3,841
Accrued liabilities 736 913
-------- -------
Total current liabilities 16,698 16,071
Long-term Debt 32,300 45,884
Deferred Tax Liability 4,863 5,063
Minority Interest --- (2)
Commitments and Contingencies --- ---
Stockholders' Equity:
Preferred stock, $.01 par value, 20,000,000 shares authorized, none outstanding --- ---
Common stock, $.01 par value, 20,000,000 shares authorized, 9,901,690 and
9,776,690 shares issued and outstanding at December 31, 1994 and March 31, 1995 99 99
Additional paid-in capital 60,685 60,685
Treasury stock --- (1,123)
Retained earnings 9,675 12,267
-------- --------
Total stockholders' equity 70,459 71,928
-------- --------
$124,320 $138,944
======== ========
</TABLE>
See notes to the unaudited consolidated financial statements.
3
<PAGE>
Tide West Oil Company
Consolidated Statements of Income
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ended ended
(In thousands, except per share amounts) March 31, 1994 March 31, 1995
- - - - - - ---------------------------------------- -------------- --------------
<S> <C> <C>
Revenues:
Oil and gas $7,661 $8,447
Trading and transportation 27,194 19,239
------ ------
Total revenues 34,855 27,686
Operating expenses:
Lease operating 1,185 1,914
Severance taxes 520 584
Trading and transportation 26,555 18,738
General and administrative:
Oil and gas 710 904
Trading and transportation 118 139
Compensation expense - stock options 45 45
Depreciation, depletion and amortization 2,444 3,607
------ ------
Total operating expenses 31,577 25,931
------ ------
Operating Income 3,278 1,755
------ ------
Other Income (Expense):
Interest income 20 56
Interest expense (347) (728)
Gain on sale of assets 24 2
Equity in earnings (loss) of unconsolidated affiliate (196) ----
Unrealized gain on commodities transactions ---- 2,902
Minority Interest ---- 8
Other income (expense) (7) (6)
------ ------
Total other income (expense) (506) 2,234
Income Before Income Taxes 2,772 3,989
Provision for Income Taxes 1,137 1,397
------ ------
Net Income $1,635 $2,592
====== ======
Weighted Average Common Shares Outstanding 9,902 9,830
Net Income Per Common Share $0.17 $0.26
</TABLE>
See notes to the unaudited consolidated financial statements.
4
<PAGE>
Tide West Oil Company
Consolidated Statements of Cash Flow
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ended ended
(In thousands) March 31, 1994 March 31, 1995
- - - - - - -------------- -------------- --------------
<S> <C> <C>
Operating Activities:
Net Income $ 1,635 $ 2,592
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization 2,444 3,607
Gain from sale of assets (24) (2)
Loss on acreage writeoff 10 --
Equity in loss of unconsolidated affiliate 196 --
Minority interest in net loss of consolidated interest -- 2
Changes in operating assets and liabilities:
Increase in short term investments, at cost -- (1,955)
(Increase) decrease in accounts receivable (4,876) 3,274
Decrease in income tax receivable -- 1,191
Increase in other current assets (448) (49)
Increase in unrealized gain on commodity transactions -- (2,449)
Increase in other assets (56) (453)
Increase in income taxes payable 852 --
Increase (decrease) in accounts and revenues payable
and accrued liabilities 4,743 (1,972)
Increase in deferred income taxes 279 200
-------- --------
Total adjustments 3,120 1,394
-------- --------
Net cash provided by operating activities 4,755 3,986
Investing Activities:
Capital expenditures (2,249) (12,989)
Proceeds from sale of assets 128 156
Payment on note receivable 34 89
Distributions from (investments in) partnership (1,057) --
-------- --------
Net cash used in investing activities (3,144) (12,744)
Financing Activities:
Borrowings of long-term debt 2,500 14,584
Principal payments on long-term debt (3,000) (1,000)
Issuance of note receivable (2) --
Payment on note receivable - officer 5 --
Purchase of common shares -- (1,123)
-------- --------
Net cash provided by (used in) financing activities (497) 12,461
-------- --------
Net Increase in Cash and Cash Equivalents 1,114 3,703
Cash and Cash Equivalents, Beginning of Period 72 364
-------- --------
Cash and Cash Equivalents, End of Period $ 1,186 $ 4,067
======== ========
</TABLE>
See notes to the unaudited consolidated financial statements.
5
<PAGE>
TIDE WEST OIL COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
Note 1. Basis of Presentation
---------------------
The consolidated financial statements included in this Report have
been prepared by Tide West Oil Company (the "Company") pursuant to
the rules and regulations of the Securities and Exchange Commission
for interim reporting and include all adjustments (consisting of only
normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation. These consolidated
financial statements have not been audited by an independent
accountant. The consolidated financial statements include the
accounts of the Company, its majority-owned subsidiaries and Horizon
Gas Partners, L.P. which was previously accounted for on the equity
method (see Note 2). All significant intercompany accounts and
transactions have been eliminated. The consolidated balance sheet at
December 31, 1994, included in this Report, has been derived from the
audited consolidated balance sheet.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations for interim reporting. These financial
statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994. The financial data
for the interim periods presented may not necessarily reflect the
results to be anticipated for the complete year.
Note 2. Summary of Significant Accounting Policies
------------------------------------------
Investments
-----------
Effective January 1, 1995, the Company began consolidating Horizon
Gas Partners, L.P. ("Horizon"). This partnership was accounted for
under the equity method during 1994 (its first full year of
operations). The Company's remaining unconsolidated investment at
March 31, 1995 consists of a 17.9 percent limited partnership
interest in an oil and gas partnership accounted for under the cost
method.
6
<PAGE>
TIDE WEST OIL COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
Note 2. Summary of Significant Accounting Policies (continued)
------------------------------------------------------
Income Taxes
------------
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes". Under SFAS No. 109, the Company accounts for income
taxes on an asset and liability method which requires the recognition
of deferred tax liabilities and assets for the tax effects of (a)
temporary differences between tax bases and financial reporting bases
of assets and liabilities, (b) operating loss carryforwards and (c)
tax credit carryforwards.
Supplemental Disclosures of Cash Flow Information
-------------------------------------------------
During the three months ended March 31, 1994 and 1995, cash payments
for interest totaled $267,000 and $761,000, respectively, of which
$46,000 was capitalized for the three months ended March 31, 1995. No
interest was capitalized during 1994. Cash payments for income taxes
totaled $6,000 for each of the three months ended March 31, 1994 and
1995.
Effective January 1, 1995, the Company began consolidating the
accounts and operations of Horizon in the consolidated financial
statements. The following table presents Horizon's balance sheet
accounts at January 1, 1995:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
Cash $ 364
Accounts receivable 1,997
Other current assets 21
Property and equipment 11,941
Accumulated depreciation, depletion and amortization 2,245
Other non current assets 172
Accounts and revenues payable and accrued liabilities 701
</TABLE>
Depreciation, Depletion, and Amortization
-----------------------------------------
Depreciation, depletion and amortization per equivalent barrel of
production from the Company's oil and gas properties for the three
months ended March 31, 1994 and 1995, was $4.07 and $4.25,
respectively. The increased rate was due to oil property acquisitions
in the first quarter of 1995 and the consolidation of Horizon.
7
<PAGE>
TIDE WEST OIL COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
Note 2. Summary of Significant Accounting Policies (continued)
------------------------------------------------------
Reclassification
----------------
Certain reclassifications were made to the 1994 financial statements
to conform to the presentation used in 1995.
Note 3. Earnings per Share
------------------
During the first quarter of 1995, the Company repurchased 125,000
shares of the Company's outstanding common stock on the open market
for an aggregate price of $1.1 million. The cost of these shares is
reflected as Treasury stock. Earnings per common share for the
periods presented have been computed using the weighted average
number of common shares outstanding. Outstanding stock options and
warrants are not included in the weighted average shares outstanding
for any period since their effect on the earnings per share
calculation is immaterial or not dilutive.
Note 4. Fair Value of Financial Instruments
-----------------------------------
Statement of Financial Accounting Standards No. 107 "Disclosures
About Fair Value of Financial Instruments," requires disclosure of
the fair value of certain financial instruments. The carrying value
of cash, accounts receivable, short-term borrowing, accounts payable
and accrued liabilities approximates fair value because of the short-
term maturity of these instruments. The carrying value of long-term
debt is also considered to approximate fair value based on its
current interest rate and terms. The estimated fair value amounts of
the Company's off-balance sheet financial instruments have been
determined by the Company, using appropriate market information and
valuation methodologies. Considerable judgement is required to
develop the estimates of fair value, thus, the estimates provided
herein are not necessarily indicative of the amounts that could be
realized in a current market exchange.
8
<PAGE>
TIDE WEST OIL COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
Note 4. Fair Value of Financial Instruments (continued)
-----------------------------------------------
<TABLE>
<CAPTION>
(In Thousands) March 31, 1995
-------------- ----------------
Carrying Fair
Amount Value
-------- ------
<S> <C> <C>
Off-Balance Sheet Financial Instruments -
Unrealized Gains:
Interest rate swap agreements $ ---- $ 200
Commodity contracts 2,902 2,902
</TABLE>
As of March 31, 1995 the Company had purchased 20 Bcf of natural gas
through various futures and swap contracts which do not qualify as
hedges. The unrealized gain of $2.9 million before tax, $1.9 million
after tax, is included in the accompanying consolidated financial
statements at March 31, 1995. The unrealized gain, recalculated at
May 10, 1995 would be $1.5 million before income tax and $1.0 million
after tax, based upon the NYMEX closing price on that date. The cash
effect of these transactions will be realized in the months when the
contracts actually expire or when the positions are closed out. The
Company has the potential to recognize significant gains or losses as
a result of these transactions.
Note 5. Subsequent Events
-----------------
On April 10, 1995, the Company acquired all of the outstanding common
stock of Killgore Investments, Inc. ("KI") in exchange for 149,538
shares of the Company's common stock. The acquisition will be
accounted for as a pooling of interests. The fair market value of the
assets acquired is approximately $2.2 million. The assets consisted
of producing natural gas properties in the Arkoma Basin of Oklahoma.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
General
- - - - - - -------
The factors that most significantly affect the Company's operating results are
(i) the sales prices of oil and natural gas; (ii) the amount of oil and gas
sold; (iii) the amount of operating expenses; and (iv) the interest rates on,
and amounts of, borrowing. Sales of oil and gas are significantly affected by
the Company's ability to complete producing property acquisitions and to
maintain or increase production from existing properties through development
drilling and production enhancement activities. The following table reflects
certain operating data for the periods presented.
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31,
------------------
1994 1995 (1)
------- --------
<S> <C> <C>
Sales Volumes:
Oil (MBbls) 96 125
Natural gas (MMcf) 3,031 4,342
Oil equivalent (MBOE) 601 848
Average Sales Prices:
Oil (per Bbl) $13.48 $15.90
Natural gas (per Mcf)(2) 2.04 1.40
Operating Expenses per BOE
of Net Sales:
Lease operating $1.97 $2.26
Severance tax .86 .69
General and administrative(3) 1.38 1.23
</TABLE>
- - - - - - -----------------
(1)Amounts for the three months ended March 31, 1995, include Horizon.
(2)Does not include the effect of the Company's hedging activities.
(3)Does not include compensation expense - stock options.
Prices received by the Company for sales of oil and natural gas fluctuate
significantly from period to period. Relatively modest changes in either oil or
gas prices can significantly impact the
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company's results of operations and cash flows. The prices for natural gas are
influenced by weather conditions and supply imbalances, particularly in the
domestic market, and by world wide oil price levels. The large drop in spot
market natural gas prices had a significant adverse effect on the value of the
Company's reserves at year end 1994. Likewise, declines in natural gas or oil
prices could adversely effect the semi-annual borrowing base determination under
the Company's current credit agreement.
During the period from October 1989 through March 31, 1995, the Company
completed 50 property acquisitions for a total expenditure of approximately
$122.4 million. As a result, the Company's equivalent reserves increased 34% in
1991, 210% in 1992, 63% in 1993 and 22% in 1994, while production and revenues
have also increased.
Through its wholly-owned subsidiary, Tide West Trading & Transport Company, the
Company actively markets its own natural gas production as well as that of third
parties. The Company believes that this activity gives it more control over the
marketing of its product and, thus affords the Company a higher sales price than
it would otherwise receive if its gas were marketed by a third party. These
revenues and the associated expenses are recognized under the heading "Trading
and transportation."
The results of the Company's operations vary due to seasonal fluctuations in the
sales prices and volumes of natural gas. Due to these seasonal fluctuations,
results of operations for individual quarterly periods may not be indicative of
the results which may be realized on an annual basis.
Three Months Ended March 31, 1995
Compared to Three Months Ended March 31, 1994
Oil and gas revenues increased $786,000, or 10%, during the three months ended
March 31, 1995 compared to the same period in 1994. This increase was due, in
part, to a 30% increase in crude oil sales volumes and a 43% increase in
natural gas sales volumes, while average sales prices received for crude oil
increased by $2.42 per Bbl, or 18%, and natural gas decreased by $0.64 per Mcf,
or 31%. The increase in production is primarily related to the production from
certain oil and gas properties acquired through various acquisitions which were
closed during the last half of 1994 and the first quarter of 1995, and the
consolidation of Horizon in the first quarter of 1995. The consolidation of
Horizon increased oil and gas revenues by $1.2 million, or 15%. Excluding the
consolidation of Horizon, oil and gas revenues decreased by $369,000, or 5%.
Average natural gas prices received by the Company declined due to a 34%
reduction in average spot market prices during the three months ended March 31,
1995 compared to 1994.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Trading & transportation gross revenues decreased by $8.0 million in the
first quarter of 1995 as compared to the first quarter of 1994 primarily as a
result of lower market prices for natural gas. The average sales price of gas
sold in the first quarter of 1995 was $1.41, considerably lower than the average
sales price of $2.14 in the first quarter of 1994. The average cost of gas sold
was proportionately lower as well, with both the first quarter of 1994 and 1995
yielding an average of 4 cents margin per MMBTU. The quantity of gas marketed
increased in the first quarter of 1995 to 16.4 Bcf, up from 14.6 Bcf in the
first quarter of 1994. In order to reduce price fluctuation risk, Tide West
Trading & Transport Company hedges its position throughout each trading month.
This hedging activity impacts the Trading and transportation revenue reported.
The first quarter of 1995 hedging activity yielded a loss of $116,000, however,
in the first quarter of 1994 a gain of $167,000 was reported. Net Trading &
transportation margins were lower in the first quarter of 1995, compared to the
same period in 1994. The primary reason for the reduction was the difference in
the hedging margins for these periods.
Lease operating expenses increased $729,000, or 62%, for the first three months
of 1995 compared to the first three months of 1994. The increase in lease
operating expense is due to the property acquisitions added in the last half of
1994 and in the first quarter of 1995 and the consolidation of Horizon in the
first quarter of 1995. The consolidation of Horizon increased lease operating
expenses by $574,000, or 49%. Excluding the consolidation of Horizon, lease
operating expenses increased $155,000, or 13%.
Severance taxes increased $64,000, or 12%, as a result of a 10% increase in oil
and gas revenues.
General and administrative expenses, excluding compensation expense - stock
options, increased $215,000 or 26%, for the first three months of 1995 compared
to the first three months of 1994, due primarily to the expansion of the
Company's developmental drilling and workover activities, the acquisition of oil
and gas properties during the last half of 1994 and the first quarter of 1995,
and the consolidation of Horizon in the first quarter of 1995. The
consolidation of Horizon increased general and administrative expenses $103,000,
or 12%. Excluding the consolidation of Horizon, general and administrative
expenses increased $112,000, or 14%.
Depreciation, depletion and amortization increased $1.2 million, or 48%, as a
result of the oil and gas properties acquired in the last half of 1994 and the
first quarter of 1995, and the consolidation of Horizon in the first quarter of
1995. The consolidation of Horizon increased depreciation, depletion and
amortization $536,000, or 22%. Excluding the consolidation of Horizon,
depreciation depletion and amortization increased $627,000, or 26%, due in part
to the acquisition of oil properties in the first quarter of 1995 which have a
high depletion rate per BOE.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest expense increased by $381,000, or 110%, as a result of the increase in
the average outstanding advances under the Company's revolving credit facility
and due to the increase in interest rates.
Interest income increased $36,000, or 180%, due to interest earned on a $1.5
million required margin account balance associated with the Company's futures
transactions in the first quarter of 1995 and the consolidation of Horizon.
Unrealized gain on commodity transactions were recorded in the amount $2.9
million before income taxes, $1.9 million after income taxes, in the first
quarter of 1995. These commodity transactions do not qualify as hedges. In the
first quarter of 1995, the Company purchased 20.0 Bcf of natural gas, at an
average NYMEX price of $1.70 per Mcf, for deliveries from June 1995 through
September 1996. The Company has the potential to recognize significant gains or
losses as a result of these contracts. The Company did not have any unrealized
gains or losses in the comparable period in 1994.
Equity in loss of unconsolidated affiliate was recorded in the first three
months of 1994 due to the Company's investment in Horizon. Effective January 1,
1995 the Company began consolidating Horizon in the Company's consolidated
statements (see Note 2).
Capital Resources and Liquidity
The Company intends to continue to expand its reserve base through acquisitions
of producing oil and gas properties. Sources of capital for such expansion
include internally generated cash flow and borrowing capacity under the
Company's revolving credit facility. At March 31, 1995, the Company had working
capital of $9.6 million, long-term debt of $45.9 million and stockholders'
equity was $71.9 million.
The Company's principal source of cash flow is the production and sale of its
crude oil and natural gas reserves, which are depleting assets. Cash flow from
oil and gas sales depends upon the quantity of production and the price obtained
for such production. An increase in prices permits the Company to finance its
operations to a greater extent with internally generated funds. A decline in
prices reduces the cash flow generated by operations, which in turn reduces the
funds available for servicing debt, acquiring additional properties and
exploring for and developing new reserves.
Net cash provided by operating activities was $4.8 million and $4.0 million for
the three months ended March 31, 1994 and 1995, respectively. The decrease in
1995 was primarily due to a $2.7
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
million decrease in the changes in assets and liabilities offset by a $2.1
million increase in income before depreciation, depletion and amortization.
Capital Expenditures
The Company's ability to finance its oil and gas acquisitions is determined by
its cash flow from operations and sources of debt financing. The Company
anticipates capital expenditures during the remainder of 1995 of approximately
$37.0 million. The timing of most capital expenditures is discretionary since
the Company has no material long-term commitments. Thus, the Company has
flexibility to adjust expenditure levels as conditions warrant. The Company
primarily uses internally generated cash flow to fund capital expenditures
associated with development and enhancement of existing properties. In the
event the Company's internally generated cash flow should be otherwise
insufficient to meet its debt service or other obligations, the Company may
reduce the level of discretionary capital expenditures in order to meet such
obligations. The level of the Company's capital expenditures will vary in
future periods, depending on energy market conditions, potential return on
investment and other related economic factors. The Company believes that cash
flow and available credit capacity will be sufficient to fund budgeted capital
expenditures and debt service during the remainder of 1995.
Net cash used in investing activities was $3.1 million and $12.7 million for the
three month periods ended March 31, 1994 and 1995, respectively. The increase
in net cash used in investing activities for 1995 was primarily due to the
acquisition of oil and gas properties in the first quarter of 1995.
Of the $13.0 million in capital expenditures for the first three months of 1995,
$1.4 million was spent on development drilling and workover programs and $11.6
million on producing property acquisitions.
Financing Arrangements
Under the Company's bank facility, certain banks have provided the Company with
a revolving credit facility, which is secured by substantially all of the
Company's oil and gas assets, and is renewable on July 1 of each year. In the
event of non-renewal, the outstanding advances are converted to a three year
term loan. On a semi-annual basis, the banks redetermine the Company's
borrowing base based upon their review of the Company's oil and gas reserves.
At March 31, 1995, the Company's borrowing base was $58.0 million. As of May
10, 1995, the Company received a commitment from such banks to increase the
borrowing base to $80.0 million under the Company's revolving credit facility.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Advances under the revolving credit facility bear interest, payable monthly, at
a floating rate based on the prime rate or, at the Company's option, at a fixed
rate for up to six months based on the Eurodollar market rate ("LIBOR"). The
Company's interest rate increments above prime or LIBOR vary based on the level
of outstanding advances and the borrowing base at the time. The average rate of
interest for the three months ended March 31, 1995 was 8.0%, due to the
combination of a fixed rate based upon LIBOR and the prime rate of interest. In
addition, the Company must pay a quarterly standby commitment fee of 0.25% to
0.375% on the unused balance of the revolving credit commitment.
On April 10, 1995, the Company entered into an interest rate hedge whereby the
Company has a total of $30 million notional amount hedged for five years
beginning in 1995 and continuing through 1999, such notional amount includes the
$15.0 million notional amount hedged at year end. The effective interest rates
on the Company's interest rate swaps are 7.9% for 1995, 8.9% for 1996 and 9% for
1997 through 1999. At March 31, 1995, the unused and available portion of the
revolving commitment under the Company's bank credit facility was $12.1 million.
The unused portion of the Company's revolving credit facility provides liquidity
to finance future acquisitions. As acquisitions are made and properties are
added to the Company's borrowing base, the banks' determination of the borrowing
base may be increased. The Company expects that cash flow from operations which
is not utilized for capital expenditures will be used to reduce indebtedness.
The Company's wholly-owned subsidiary, Tide West Trading & Transport Company,
has a $5.0 million letter of credit facility, all of which was available on
March 31, 1995.
Net cash (used in) provided by financing activities was ($497,000) and $12.5
million for the three month periods ended March 31, 1994 and 1995, respectively.
The cash provided by financing activities for the three months ended March 31,
1994 consisted primarily of a $500,000 reduction in long-term debt, compared
with a $13.6 million net increase in long-term debt for the comparable period in
1995. The increase in net cash provided by financing activities in the first
quarter of 1995 was primarily due to the acquisitions of oil and gas properties.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information regarding legal proceedings, see the Company's Form 10-
K for the fiscal year ended December 31, 1994.
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
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.0 Financial Data Schedule
(b) Reports on Form 8-K
None
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 thereunto duly authorized.
TIDE WEST OIL COMPANY
---------------------
Registrant
By: /S/ Peggy E. Gwartney
----------------------------
Peggy E. Gwartney
Chief Financial Officer
Duly Authorized Officer and
Principal Accounting Officer)
Date: May 12, 1995
17
<PAGE>
INDEX TO EXHIBITS
The following documents are included as exhibits to this Form 10-Q. Those
exhibits below incorporated by reference herein are indicated as such by the
information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.
<TABLE>
<CAPTION>
Sequentially
Numbered
Page
------------
<S> <C>
27.0 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,067
<SECURITIES> 0
<RECEIVABLES> 15,378
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,824
<PP&E> 137,486
<DEPRECIATION> 26,125
<TOTAL-ASSETS> 138,944
<CURRENT-LIABILITIES> 16,071
<BONDS> 0
<COMMON> 99
0
0
<OTHER-SE> 71,829
<TOTAL-LIABILITY-AND-EQUITY> 138,944
<SALES> 27,686
<TOTAL-REVENUES> 27,686
<CGS> 25,931
<TOTAL-COSTS> 25,931
<OTHER-EXPENSES> 6
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 728
<INCOME-PRETAX> 3,989
<INCOME-TAX> 1,397
<INCOME-CONTINUING> 2,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,592
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
