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 MARCH 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-11871
AMERICAN EXPLORATION COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 74-2086890
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1331 LAMAR, SUITE 900
HOUSTON, TEXAS 77010
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 756-6000
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 [ ]
On May 2, 1995, there were outstanding 118,144,275 shares of the
registrant's Common Stock, par value $0.05 per share.
<PAGE>
AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 1995
(Unaudited)
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1995
and December 31, 1994...................................... 1
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 1995 and 1994....................... 2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1995 and 1994....................... 3
Notes to Condensed Consolidated Financial Statements......... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................ 10
Item 6. Exhibits and Reports on Form 8-K............................. 10
SIGNATURES.............................................................. 11
<PAGE>
AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts)
March 31, December 31,
1995 1994
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and temporary cash investments................ $ 13,098 $ 9,973
Accounts receivable................................ 11,493 10,652
Receivable from partnerships....................... 584 4,488
Inventory.......................................... 230 293
Other current assets............................... 970 721
--------- ---------
Total current assets........................... 26,375 26,127
--------- ---------
Property, plant and equipment:
Oil and gas properties, based on successful
efforts accounting............................... 328,814 318,453
Other property and equipment....................... 13,061 12,530
--------- ---------
341,875 330,983
Less: Accumulated depreciation, depletion and
amortization.............................. 143,097 135,578
--------- ---------
Property, plant and equipment, net............. 198,778 195,405
--------- ---------
Other assets......................................... 3,073 2,362
--------- ---------
Total assets................................. $ 228,226 $ 223,894
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................. $ 159 $ 154
Accounts payable................................... 15,487 14,391
Accrued liabilities................................ 14,341 15,629
Obligation to net profits investors................ 55 55
--------- ---------
Total current liabilities...................... 30,042 30,229
--------- ---------
Long-term debt....................................... 99,088 69,712
--------- ---------
Note payable to related party........................ -- 31,128
--------- ---------
Other liabilities.................................... 5,108 4,779
--------- ---------
Deferred income taxes................................ 336 336
--------- ---------
Stockholders' equity:
Convertible preferred stock, $1.00 par value, 4,000
shares issued and outstanding (1995 and 1994).... 4 4
Common stock, par value $.05 per share; issued:
118,236,143 shares (1995) and 114,775,000 shares
(1994); outstanding: 118,144,275 shares (1995)
and 114,683,132 shares (1994).................... 5,912 5,739
Additional paid-in capital......................... 271,805 267,652
Accumulated deficit................................ (183,164) (184,676)
Treasury stock, at cost; 91,868 shares (1995
and 1994)........................................ (342) (342)
Unearned compensation.............................. (439) (525)
Notes receivable from officers..................... (124) (142)
--------- ---------
Total stockholders' equity..................... 93,652 87,710
--------- ---------
Total liabilities and stockholders' equity.. $ 228,226 $ 223,894
========== =========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
1
<PAGE>
AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
(Unaudited)
For the Three Months
Ended March 31,
----------------------
1995 1994
--------- --------
REVENUES:
Oil and gas sales................................. $ 17,832 $ 9,366
Gas settlement income, net........................ 879 --
Gain on sales of oil and gas properties........... 147 22
Other revenues (costs), net....................... (21) 45
--------- --------
Total revenues................................. 18,837 9,433
--------- --------
COSTS AND EXPENSES:
Production and operating.......................... 6,762 3,718
Depreciation, depletion and amortization.......... 7,732 6,209
General and administrative........................ 1,485 2,079
Taxes other than income........................... 1,430 1,181
Exploration....................................... 120 811
Impairment........................................ -- 6,764
--------- --------
Total costs and expenses....................... 17,529 20,762
--------- --------
INCOME (LOSS) FROM OPERATIONS....................... 1,308 (11,329)
--------- --------
OTHER INCOME (EXPENSE):
Interest expense.................................. (1,971) (1,324)
Other income (expense), net....................... 121 (145)
--------- --------
Total other expense............................ (1,850) (1,469)
--------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM..... (542) (12,798)
Income tax benefit (provision)...................... 47 (11)
--------- --------
LOSS BEFORE EXTRAORDINARY ITEM...................... (495) (12,809)
Extraordinary gain on extinguishment of debt........ 2,456 --
--------- --------
NET INCOME (LOSS)................................... 1,961 (12,809)
Preferred stock dividends........................... (450) (450)
--------- --------
NET INCOME (LOSS) TO COMMON STOCK................... $ 1,511 $(13,259)
========= ========
NET INCOME (LOSS) PER COMMON SHARE:
Primary and fully diluted:
Loss before extraordinary item.................. $ (.01) $ (.19)
Extraordinary item.............................. .02 --
--------- --------
NET INCOME (LOSS) PER COMMON SHARE............ $ .01 $ (.19)
--------- ========
NUMBER OF COMMON AND EQUIVALENT SHARES:
Primary and fully diluted......................... 118,067 70,514
========= ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
2
<PAGE>
AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Three Months
Ended March 31,
----------------------
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................. $ 1,961 $(12,809)
Adjustments to arrive at net cash provided by
(used in) operating activities:
Depreciation, depletion and amortization ........... 7,732 6,209
Gain on sales of oil and gas properties ............ (147) (22)
Exploration expense ................................ 109 410
Impairment expense ................................. -- 6,764
Extraordinary gain ................................. (2,456) --
Other, net ......................................... 136 304
Changes in operating working capital:
Accounts receivable ................................ (293) 256
Other current assets ............................... (65) (1,031)
Accounts payable and accrued liabilities ........... 1,105 (6,418)
Other operating .................................... (275) (53)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES ....................................... 7,807 (6,390)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of oil and gas properties .............. (1,939) (1,272)
Development and exploration expenditures ........... (9,000) (5,283)
Sales of oil and gas properties .................... 112 771
Other investing .................................... 2,738 (256)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES .............. (8,089) (6,040)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank debt borrowings ............................... 36,000 11,000
Bridge debt repayments ............................. (31,128) --
Repayments of other debt, net ...................... (1,034) (856)
Preferred stock dividends .......................... (450) (450)
Debt and equity issuance costs and other ........... 19 (472)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES .......... 3,407 9,222
-------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS ................................... 3,125 (3,208)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING
OF PERIOD .......................................... 9,973 12,236
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF PERIOD .......................................... $ 13,098 $ 9,028
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by American Exploration Company ("American" or the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. The financial statements reflect adjustments of a normal recurring
nature which are, in the opinion of management, necessary to present fairly such
information. Although the Company believes that the disclosures are adequate to
make the information presented not misleading, certain information and footnote
disclosures, including significant accounting policies, normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994. Certain amounts in the prior year's consolidated financial
statements have been reclassified to conform with current classifications.
(2) ADOPTION OF NEW ACCOUNTING STANDARD
Effective March 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets." Under the provisions of the new statement, if the book value of an
individual proved field is greater than its undiscounted future net cash flow
from proved reserves, then an impairment is recognized for the difference
between the net book value and fair value. As the Company reflected the effects
of the new statement at December 31, 1994, the adoption of SFAS No. 121 had no
effect on the current financial statements.
(3) APPL CONSOLIDATION
During 1994 and January 1995, the Company purchased limited partners'
interests in the APPL Partnerships and net profits interests and debt interests
in the APPL Debt Programs (the "APPL Consolidation"). In January 1995, the
Company repurchased the remaining two investors' interests in several APPL
Partnerships and the APPL Debt Programs for a combination of $1.3 million in
cash and the issuance of approximately 3.4 million shares of the Company's
common stock, thereby eliminating the remaining $6.6 million of nonrecourse debt
outstanding at year-end 1994. The elimination of the APPL debt in 1995 resulted
in an extraordinary gain of approximately $2.5 million. No income tax expense
has been recognized on the extraordinary gain.
In addition, New York Life Insurance Company ("New York Life") has agreed
to transfer certain of its interests not acquired in the APPL Consolidation to
ANCON Partnership Ltd. ("ANCON"). The transfer of New York Life's APPL Program
interests to ANCON is expected to occur in the second quarter of 1995, with the
Company acquiring for cash a 20% interest in such properties at that time.
4
The following pro forma summary of consolidated results of operations for
the three months ended March 31, 1995 and 1994 gives effect to the APPL
Consolidation as if it had occurred as of January 1, 1994.
(In thousands except per share amounts) For the Three Months
Ended March 31,
--------------------------
1995 1994
--------- ---------
Pro forma revenues ............................... $ 18,837 $ 18,996
Pro forma loss before extraordinary item ......... (495) (11,267)
Pro forma net loss to common stock ............... (945) (2,319)
Pro forma net loss per common share:
Primary and fully diluted:
Loss before extraordinary item ............... $ (.01) $ (.10)
Net loss ..................................... (.01) (.02)
Weighted average shares outstanding:
Primary and fully diluted ...................... 118,067 116,645
The pro forma amounts do not purport to be indicative of the results of
operations of American that may be reported in the future or that would have
been reported had this transaction occurred as of January 1, 1994.
(4) DEBT
BANK DEBT
In February 1995, the Company used excess borrowing capacity under the bank
credit facility to refinance the $31.1 million balance outstanding under the
bridge facility which had been provided by New York Life to finance the APPL
Consolidation. Primarily due to the refinancing, bank debt increased $36.0
million to $64.0 million at March 31, 1995. The borrowing base or amount
available under the bank credit facility is currently in the process of being
redetermined by the banks. Management expects, based on discussions with its
lenders, that the borrowing base will be at least $65.0 million.
(5) CONTINGENCIES
LEGAL PROCEEDINGS
LOUISIANA STATEWIDE CONTRACT. In December 1992, a U.S. District Court ruled
that Louisiana Intrastate Gas Corporation ("LIG") had underpaid a subsidiary of
the Company under a statewide gas purchase contract ("Statewide Contract") for
the 1989 contract year. Pursuant to the ruling by the U.S. District Court, it
was also determined through arbitration that the Company's subsidiary was
underpaid for the period January 1990 to October 1992. The Statewide Contract
covered certain properties acquired by the Company's subsidiary in 1988 with
ownership in these properties assigned to several of the Company's investment
programs. In December 1992, the Company's subsidiary agreed to terminate the
Statewide Contract effective October 1, 1992 in exchange for a cash payment from
LIG and a three-year replacement contract providing for market-based pricing.
Upon appeal to the Fifth Circuit Court of Appeals, the Court of Appeals held in
December 1994, in a per curiam opinion, that there was no reversible error and
affirmed the trial court's ruling. Neither party appealed this ruling and in
January 1995, the Company received approximately $1.0 million, net to its
interest, after payment of applicable royalties. The proceeds from this
settlement are reflected in gas settlement income on the accompanying statements
of operations.
5
(6) CASH FLOW INFORMATION
Net cash provided by operating activities includes cash payments for
interest totaling $814,000 and $757,000, net of capitalized interest of $359,000
and $378,000, for the first three months of 1995 and 1994, respectively. The
Company received income tax refunds totaling $46,800 for the first three months
of 1995 and paid income taxes of $12,800 for the same period in 1994.
Noncash investing and financing activities related to the APPL
Consolidation consisted of the issuance of approximately 3.4 million shares of
common stock for the acquisition of oil and gas properties, including working
capital, of $1.2 million and the elimination of $4.7 million in debt resulting
in an extraordinary gain of $1.6 million.
(7) SUBSEQUENT EVENT
DERIVATIVES
In April 1995, the Company entered into Commodity Price Swap Agreements to
hedge against a downturn in oil and gas prices. For the period from May 1995
through April 1996, American has two fixed price swap transactions covering a
total of 15,000 MMBtu of gas per day hedged at a weighted average fixed price of
$1.79 per MMBtu. The market price is defined as the price quoted in the first
publication of INSIDE F.E.R.C.'S GAS MARKET REPORT for the month of production
for Henry Hub or Houston Ship Channel deliveries. The Company also entered into
two additional oil hedges. For the period from May 1995 through December 1995,
the Company hedged 2,000 barrels of oil per day, and for the period from July
1995 through December 1995, the Company hedged an additional 1,500 barrels per
day at a fixed price of $18.70 and $18.55 per barrel of NYMEX WTI Light Sweet
Crude Oil, respectively. With regard to the Commodity Price Swap Agreements, if
the market price is above the fixed price, the Company will pay the difference
between the fixed price and the market price; and if the market price is below
the fixed price, the Company will receive 100% of the difference.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain operating information of the Company
for the periods presented.
For the Three Months
Ended March 31,
--------------------
1995 1994
------- -------
AVERAGE SALE PRICE:
Gas ($/Mcf) .......................................... $ 1.67 $ 2.18
Oil ($/Bbl) .......................................... 16.52 13.10
BOE ($/Bbl) .......................................... 11.76 13.06
PRODUCTION DATA:
Gas (MMcf) ........................................... 6,662 2,661
Oil (MBbls) .......................................... 406 273
MBOE ................................................. 1,516 717
ADDITIONAL $/BOE DISCLOSURES:
Production and operating costs ....................... $ 4.46 $ 5.19
Production and severance taxes(1)..................... 0.60 0.76
Depreciation, depletion and amortization ............. 5.10 8.66
(1) Excludes Franchise and Ad Valorem taxes
REVENUES
Oil and gas sales totaled $17.8 million for the first quarter of 1995
compared to $9.4 million for the first quarter of 1994. This increase was due to
higher domestic oil and gas production and oil prices offset in part by lower
gas prices.
On a net basis, oil production and gas production increased 49% and 150%,
respectively, resulting in an increase in sales of $10.4 million. The increase
in production was primarily due to the acquisition of investors' interests in
the APPL Programs, which occurred primarily during the third and fourth quarters
of 1994, and the results of drilling activities in the Sawyer, Brazos 440 and
West McAllen fields.
American realized an average gas price of $1.67 for the current quarter,
down 23% from the first quarter of 1994, thus decreasing sales by $4.4 million
offset by a $1.0 million gain from hedges. The average oil price for the quarter
increased to $16.52 per barrel from $13.10 per barrel for the same period last
year, increasing sales by $1.4 million.
The Company recorded net gas settlement income of $879,000 for the first
quarter of 1995. The 1995 income included amounts collected as the result of a
final judgement in certain litigation with Louisiana Intrastate Gas Corporation.
EXPENSES
Production and operating costs increased to $6.8 million for the first
quarter of 1995 compared to $3.7 million for the first quarter of 1994. This
increase was primarily due to the acquisition of interests pursuant to the APPL
Consolidation. On a per unit of production basis, American's operating cost per
BOE decreased to $4.46 for the 1995 quarter compared to $5.19 for the same
quarter last year.
Depreciation, depletion and amortization ("DD&A") totaled $7.7 million for
the current quarter compared to $6.2 million for the same period in 1994.
Although total DD&A expense increased due to higher production volumes during
the current quarter, DD&A per BOE decreased 41% to $5.10 for the 1995 quarter
compared to $8.66 for the same period last year. The decline in the DD&A rate
reflects the effects of the acquisition of interests pursuant to the APPL
Consolidation and the reduction in cost basis on certain properties as a result
of an impairment charge taken in the fourth quarter of 1994.
7
General and administrative expense ("G&A") totaled $1.5 million for the
first quarter of 1995 compared to $2.1 million for the 1994 quarter. The
decrease reflects a reduction in personnel and other administrative expenses
partially offset by the loss of management fees related to the APPL Programs.
Taxes other than income totaled $1.4 million for the first quarter of 1995
compared to $1.2 million for the 1994 quarter. The increase was primarily due to
higher oil and gas revenues.
Exploration expense was $120,000 for the quarter, down 85% from the same
period in 1994. The decrease in exploration expense reflects reduced domestic
exploratory drilling activity and the elimination of international exploration
commitments which represented the majority of first quarter 1994 expenditures.
During the first quarter of 1994, American recorded impairment expense of
$6.8 million, which included a $6.4 million noncash charge for the write-off of
the Company's remaining leasehold costs related to Tunisia. This write-off was a
result of the Company's decision to sell its remaining interest in Tunisia in
exchange for the purchaser assuming American's remaining international
commitment associated with this concession. The remaining impairment expense
taken in 1994 was primarily due to the write-off of leasehold costs associated
with several domestic prospects at which the Company did not plan to conduct any
further exploration.
Interest expense totaled approximately $2.0 million for the 1995 quarter
compared to $1.3 million for the same period in 1994. This increase reflects
higher levels of debt outstanding primarily as a result of the APPL
Consolidation. During the first quarter of 1995 and 1994, the Company paid
quarterly dividends of $450,000 on its convertible preferred stock.
EXTRAORDINARY ITEM
The $2.5 million extraordinary gain recorded in 1995 resulted from the
elimination of nonrecourse debt in conjunction with the repurchases of notes
issued by and net profits interests in the APPL Debt Programs. These repurchases
were part of the APPL Consolidation. This gain represents the difference between
the outstanding note balances and the actual purchase price of the notes.
NET INCOME (LOSS) TO COMMON STOCK
American recorded net income to common stock for the first quarter of 1995
of $1.5 million, or $0.01 per share, compared to a net loss to common stock of
$13.3 million, or $0.19 per share, for the same quarter last year. The income
for 1995 was primarily due to increased income from operations as a result of
the APPL Consolidation, gas settlement income and the recording of the
extraordinary gain resulting from the elimination of nonrecourse debt
associated with the APPL Consolidation.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by operating activities totaled $7.8 million during the
first quarter of 1995 compared to a utilization of $6.4 million of cash flows
from operating activities during the first quarter of 1994. The improvement in
operating cash flow reflects the impact of the APPL Consolidation as oil and gas
production has more than doubled in the first three months of 1995 as compared
to the same period a year ago. Cash flows for the first quarter of 1994
reflected changes in working capital of $6.4 million due to the timing of
payments relating to accounts payable and accrued liabilities.
During the first quarter of 1995, capital expenditures for the acquisition
and development of oil and gas properties totaled $10.9 million, compared to
$6.6 million in the 1994 period.
Bank debt increased $36.0 million in the first quarter of 1995 as the
Company used its bank credit facility to refinance the $31.1 million balance
outstanding under the bridge debt facility, which had provided financing for the
APPL Consolidation. At March 31, 1995, bank debt totaled $64.0 million. The
borrowing base, or amount available, under the bank credit facility is currently
in the process of being redetermined by the banks. Management expects, based on
current discussions with its lenders, that the borrowing base will be at least
$65.0 million.
In January 1995, the Company repurchased the remaining two investors'
interests in several APPL Partnerships and the APPL Debt Programs for a
combination of $1.3 million in cash and the issuance of approximately 3.4
million shares
8
of the Company's common stock, thereby eliminating the remaining $6.6 million of
nonrecourse debt outstanding at year-end 1994.
The Company has increased its 1995 capital expenditure budget from $20
million to approximately $35 million. The increase in the Company's budget is
primarily due to higher cash flows related to the Company's ability to stabilize
its oil and gas prices through hedging activities.
The Company intends to fund its planned capital expenditures, commitments
and working capital requirements through cash flows from operations and
borrowings under its bank credit facility. However, if there are changes in oil
and gas prices, which correspondingly affect cash flows and bank borrowings,
American has the discretion and ability to adjust its capital budget. Other
potential sources of capital for the Company include property sales and
financings through the placement of notes or the sale of equity. Management
believes that the Company will have sufficient capital resources and liquidity
to fund its capital expenditures and meet its financial obligations as they come
due.
9
PART II
ITEM 1. LEGAL PROCEEDINGS
Information regarding legal proceedings of the company is set forth in Note
5 to the Condensed Consolidated Financial Statements in Item 1. of Part I, which
information is incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
12 Statements Re Computations of Ratios
27 Financial Data Schedule
(b) The Registrant filed no reports on Form 8-K during the first quarter
of 1995.
10
<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.
AMERICAN EXPLORATION COMPANY
Date: May 5, 1995 By: /s/ MARK ANDREWS
----------------
Mark Andrews
Chairman of the Board
and Chief Executive Officer
Date: May 5, 1995 By: /s/ JOHN M. HOGAN
-----------------
John M. Hogan
Senior Vice President
and Chief Financial Officer
(Also Principal Accounting Officer)
11
<PAGE>
Exhibit 12
AMERICAN EXPLORATION COMPANY
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(In thousands, except for ratio amounts)
<TABLE>
<CAPTION>
For the Three Year Ended December 31,
Months Ended ----------------------------------------------------------------
3/31/95 1994 1993 1992 1991 1990
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
(+) Pretax income from continuing
operations ................................ $ (542) $(60,690) $(18,681) $(68,791) $(24,006) $ 4,298
(+) Interest expense ............................ 1,971 6,638 6,847 9,485 13,609 10,322
(+) Amort. of debt expense ...................... 188 2,779 739 1,292 -- --
(+) Rent representative of int. factor .......... 244 1,284 1,533 1,726 1,697 1,245
-------- -------- -------- -------- -------- --------
1,861 (49,989) (9,562) (56,288) (8,700) 15,865
-------- -------- -------- -------- -------- --------
FIXED CHARGES:
(+) Int. expensed or capitalized (1) ............ 2,330 8,134 9,193 12,786 17,081 10,322
(+) Amort. of debt expense ...................... 188 2,779 739 1,292 -- --
(+) Rent representative of int. factor .......... 244 1,284 1,533 1,726 1,697 1,245
-------- -------- -------- -------- -------- --------
2,762 12,197 11,465 15,804 18,778 11,567
-------- -------- -------- -------- -------- --------
PREF. STOCK DIV. REQUIREMENTS (2) ............... 450 1,800 75 -- 65 244
-------- -------- -------- -------- -------- --------
COVERAGE EXCESS (DEFICIENCY) .................... $ (1,351) $(63,986) $(21,102) $(72,092) $(27,543) $ 4,054
======== ======== ======== ======== ======== ========
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS ............................... .58 (3.57) (0.83) (3.56) (0.46) 1.34
======== ======== ======== ======== ======== ========
</TABLE>
(1) Amortization of deferred financing costs is included in interest expense.
(2) There was no preferred stock outstanding during 1992.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the Company's
consolidated financial statements for the 3 months ended March 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 13,098
<SECURITIES> 0
<RECEIVABLES> 12,077
<ALLOWANCES> 0
<INVENTORY> 230
<CURRENT-ASSETS> 26,375
<PP&E> 341,875
<DEPRECIATION> 143,097
<TOTAL-ASSETS> 228,226
<CURRENT-LIABILITIES> 30,042
<BONDS> 99,088
<COMMON> 5,912
0
4
<OTHER-SE> 87,736
<TOTAL-LIABILITY-AND-EQUITY> 228,226
<SALES> 17,832
<TOTAL-REVENUES> 18,837
<CGS> 0
<TOTAL-COSTS> 17,529
<OTHER-EXPENSES> 121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,971
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