<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995 Commission file number 1-8674
GLOBAL NATURAL RESOURCES INC.
(Exact name of Registrant as specified in its charter)
NEW JERSEY 93-0835865
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5300 MEMORIAL DRIVE 77007
SUITE 800 (Zip Code)
HOUSTON, TEXAS
(Address of principal
executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 880-5464
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 practicable date.
As of November 1, 1995, 29,543,946 shares of common stock were
outstanding.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets - September 30, 1995 and December 31, 1994 . . 1
Consolidated Statements of Operations for the Three Months and the Nine
Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . 10
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 10,415 $ 3,881
Short-term liquid investments . . . . . . . . . . . . . . . . . . . 11,424 33,279
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . 9,403 10,665
Current investments . . . . . . . . . . . . . . . . . . . . . . . . 524 832
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,585 4,436
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . 36,351 53,093
-------- --------
Properties and equipment, at cost:
Oil and gas properties (successful efforts method) . . . . . . . . . 149,403 119,602
Pipeline facilities . . . . . . . . . . . . . . . . . . . . . . . . 19,460 19,320
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,784 12,961
-------- --------
181,647 151,883
Less: accumulated depletion, depreciation and amortization . . . . (74,697) (58,534)
-------- --------
Net properties and equipment . . . . . . . . . . . . . . . . . 106,950 93,349
-------- --------
Notes receivable - Russian joint venture . . . . . . . . . . . . . . . 4,315 3,606
Indonesian venture advances, net . . . . . . . . . . . . . . . . . . . 2,311 2,453
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,367 1,999
-------- --------
$151,294 $154,500
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . $10,232 $13,256
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . 10,166 12,229
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 1,309
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . 21,298 26,794
-------- --------
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,700 1,275
Deferred credits and other . . . . . . . . . . . . . . . . . . . . . . 418 1,208
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . -- --
Redeemable bearer shares . . . . . . . . . . . . . . . . . . . . . . . 16,869 17,467
Shareholders' equity:
Common stock; authorized 100,000,000 shares at $1.00 par value;
issued and outstanding 33,433,537 in 1995 and 33,335,487
in 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,433 33,335
Capital in excess of par value . . . . . . . . . . . . . . . . . . . 138,955 138,355
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . (47,666) (44,167)
-------- --------
124,722 127,523
Less: treasury stock; 3,890,041 shares in 1995 and 3,900,697
in 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,713) (19,767)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . 105,009 107,756
-------- --------
$151,294 $154,500
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------------
1995 1994 1995 1994
--------- ----------- ------------- ---------------
Restated Restated
<S> <C> <C> <C> <C>
Revenues:
Oil and gas . . . . . . . . . . . . . . . . . . . . $ 13,824 $ 11,081 $ 41,605 $ 30,819
Pipeline . . . . . . . . . . . . . . . . . . . . . . 4,628 5,124 13,176 14,379
Other . . . . . . . . . . . . . . . . . . . . . . . 202 360 471 871
---------- ---------- ---------- ----------
18,654 16,565 55,252 46,069
---------- ---------- ---------- ----------
Expenses:
Production . . . . . . . . . . . . . . . . . . . . . 3,109 2,646 9,306 7,728
Exploration . . . . . . . . . . . . . . . . . . . . 2,567 4,771 9,587 12,852
Pipeline cost of sales . . . . . . . . . . . . . . . 4,341 4,667 12,118 13,581
Depletion, depreciation and amortization . . . . . . 5,485 2,794 17,069 6,442
Administrative . . . . . . . . . . . . . . . . . . . 2,206 2,395 6,970 6,632
---------- ---------- ---------- ----------
17,708 17,273 55,050 47,235
---------- ---------- ---------- ----------
Income (loss) from operations . . . . . . . . . 946 (708) 202 (1,166)
Other income (expense):
Interest income . . . . . . . . . . . . . . . . . . 461 582 1,473 1,747
Interest expense . . . . . . . . . . . . . . . . . . (37) (56) (114) (102)
Distribution from IPI . . . . . . . . . . . . . . . 1,520 -- 1,520 --
Other . . . . . . . . . . . . . . . . . . . . . . . (157) (498) (331) (399)
---------- ---------- ---------- ----------
1,787 28 2,548 1,246
---------- ---------- ---------- ----------
Income (loss) before income tax expense . . . . 2,733 (680) 2,750 80
Income tax expense . . . . . . . . . . . . . . . . . . . 1,575 1,735 6,249 4,806
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . $ 1,158 $ (2,415) $ (3,499) $ (4,726)
========== ========== ========== ==========
Net income (loss) per share based on weighted
average shares outstanding . . . . . . . . . . . . . $ .04 $ (.08) $ (.12) $ (.16)
========== ========== ========== ==========
Weighted average common shares outstanding . . . . . . . 29,527,397 29,426,779 29,481,367 29,736,810
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1995 1994
------------- ------------
Restated
<S> <C> <C>
Cash Flow from Operating Activities:
Net loss $ (3,499) $ (4,726)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depletion, depreciation and amortization . . . . . . . . . . . 17,069 6,442
Leasehold impairments and dry hole expense . . . . . . . . . . 6,118 9,182
Unrealized (gain) loss on short-term liquid investments . . . . (229) 431
(Gain) loss on asset sales . . . . . . . . . . . . . . . . . . 49 (63)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 47
Changes in:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . 1,262 4,226
Other current assets . . . . . . . . . . . . . . . . . . . . . 159 598
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (3,024) (3,281)
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . (2,063) (993)
Short-term liquid investments . . . . . . . . . . . . . . . . . 22,084 14,580
Deferred credits . . . . . . . . . . . . . . . . . . . . . . . (790) 141
--------- ---------
Net cash provided by operating activities . . . . . . . . . . . . . 37,629 26,584
--------- ---------
Cash Flows from Investing Activities:
Additions to oil and gas properties . . . . . . . . . . . . . . . . (36,436) (30,699)
Additions to pipeline facilities and other properties and equipment . (551) (1,131)
Proceeds from sales of assets . . . . . . . . . . . . . . . . . . . 436 6,736
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (577) (1,348)
--------- ---------
Net cash used in investment activities . . . . . . . . . . . . . . . (37,128) (26,442)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from common stock issuance . . . . . . . . . . . . . . . . 698 825
Redemptions of bearer shares . . . . . . . . . . . . . . . . . . . . (598) (708)
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . 7,700 1,275
Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . (1,275) --
Acquisitions of treasury stock . . . . . . . . . . . . . . . . . . . -- (5,289)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (492) --
--------- ---------
Net cash provided by (used in) financing activities . . . . . . . . . 6,033 (3,897)
--------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . 6,534 (3,755)
Cash and cash equivalents at beginning of period . . . . . . . . . . 3,881 16,356
--------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . $ 10,415 $ 12,601
========= =========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57 $ 24
========= =========
Income taxes:
U. S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ --
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,774 4,782
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,774 $ 4,782
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Supplemental disclosure of non-cash investing and financing activities:
In connection with the Company's Employees 401(k) Savings Plan, the
Company contributed 10,903 treasury shares during the period ended September
30, 1995 with a market value of approximately $94,000 to the plan. During the
period ended September 30, 1994, the Company contributed 11,572 treasury shares
with a market value of approximately $82,500 to the plan.
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
(1) Basis for Preparation of Financial Statements
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to
such rules and regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading. These
consolidated financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K/A-1 for the year ended December 31, 1994.
In Management's opinion, the accompanying unaudited consolidated financial
statements contain all necessary adjustments to present fairly the financial
position, the results of operations and cash flows for the periods reported.
All adjustments are of a normal recurring nature.
The 1994 financial information presented herein has been restated to
consolidate the Russian joint venture operations. Prior to the March 3, 1995
receipt of an exemption from paying export tax on crude oil sold outside of
Russia, the activities of the Russian joint venture were not significant to the
Company and the Company accounted for these activities using the equity method.
This change had no effect on net income (loss) or shareholders' equity for the
periods presented.
Certain reclassifications have been made to the 1994 financial statements
to conform to the presentation used in 1995.
The results of operations for the above periods are not necessarily
indicative of the results to be expected for the full year.
(2) Investments
The Company classifies its debt and marketable equity securities in one
of three categories: trading, available-for-sale, or held-to-maturity.
Trading securities are bought and held principally for the purpose of selling
them in the near term. Held-to-maturity securities are those securities in
which the Company has the ability and intent to hold the security until
maturity. Any other securities not included in trading or held-to-maturity
categories are classified as available-for-sale.
The Company has no held-to-maturity or available-for-sale securities.
Trading securities are recorded at fair value. Unrealized holding gains and
losses on trading securities are included in earnings. Dividend and interest
income are recognized when earned.
Marketable investment securities at December 31, 1994 and September 30,
1995 consist of certificates of deposit and U.S. government and corporate debt
securities (included in short-term liquid investments) and equity securities
(included in current investments). During the nine month period ended
September 30, 1995, the Company recorded $102,000 of unrealized losses
resulting from changes in the difference between cost and market value of
short-term liquid investments and equity securities. During the nine month
period ended September 30, 1994, the Company recorded $431,000 of unrealized
losses resulting from these same changes.
5
<PAGE> 8
(3) Long-term Debt
The company executed a Credit Agreement dated May 19, 1995 (the "Credit
Agreement") with NationsBank of Texas, N.A. ("Nations"). Pursuant to the
Credit Agreement, Nations has agreed to provide loans to the Company from time
to time, not to exceed in the aggregate $35 million (subject in all events to
certain periodic reductions and to the calculation of the Available Borrowing
Base, as defined in the Credit Agreement). The Company may borrow, repay and
re-borrow such amounts available under the Credit Agreement until March 31,
2000 (subject to certain early termination dates determined in accordance with
the Credit Agreement). In addition, Nations has agreed to extend credit to the
Company (or any subsidiary of the Company) by issuing, renewing, extending or
reissuing letters of credit not exceeding the lesser of (i) $20 million or (ii)
the Aggregate Commitments (as defined in the Credit Agreement) minus the
aggregate principle amount of all loans then outstanding under the Credit
Agreement. The loan facility is unsecured. As of September 30, 1995, the
Company, under this agreement, had no loans outstanding and had approximately
$18 million of letters of credit issued. These letters of credit are primarily
associated with the Redeemable Bearer Shares discussed in Note 4.
The Company executed a Financing Agreement dated July 14, 1995 (the
"Financing Agreement") with the International Finance Corporation ("IFC"). The
Financing Agreement is secured by the present and future assets of the
Borrower, GNR (Cote d' Ivoire) Ltd., a wholly owned subsidiary of the Company.
Until the completion date of the project, as defined, the loan is guaranteed by
the Company. After completion of the project, the amount guaranteed by the
Company, if any, is determined by the amount of the proved oil and gas reserves
related to the activities. Pursuant to the Financing Agreement, the IFC has
agreed to provide a $17.5 million secured line of credit specifically for the
financing of development activities for the Ivory Coast CI-11 project. As of
September 30, 1995, the Company, under this agreement, had approximately $7.7
million of loans outstanding.
(4) Redeemable Bearer Shares
In August 1993, the Company received $19.2 million, the cash held by the
Hambros Channel Islands Trust Corporation Limited ("Trust"), in the form of an
interest-free loan. The loan is repayable on demand only to the extent
necessary to redeem bearer share warrants presented for exchange until July
2008. Each bearer share warrant presented during this period will be redeemed
for $6.66. As of September 30, 1995, there were 2,587,806 outstanding bearer
share warrants. The loan is secured by a letter of credit from NationsBank.
The letter of credit is secured by the Credit Agreement (see Note 3). During
1995 and 1994 there were no drawings under the letter of credit. In July 2008,
the obligation of the Company to holders of bearer share warrants will cease,
the interest-free loan will terminate, and any remaining cash will revert to
the Company and will be accounted for as an increase to capital in excess of
par value.
(5) Earnings per Share
Earnings per share is computed based upon the weighted average common
shares outstanding determined on a monthly basis. Unexercised stock options do
not have a dilutive effect on the reported earnings per common share.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain data for 1994 has been restated to reflect the change in the
entities comprising the consolidated group, as discussed in Note 1 to the
Consolidated Financial Statements.
Introduction
The Company recorded a net loss of $3.5 million ($.12 per share) for the
first nine months of 1995, as compared to a net loss of $4.7 million ($.16 per
share) for the same period in 1994. The 1995 results include dry hole expenses
of $5.0 million while 1994 results include $7.4 million of similar expenses.
During the third quarter of 1995, the Company recorded a $1.5 million
liquidating distribution from Investment Properties International, Limited
("IPI"). No such distribution was recorded during the nine month period ended
September 30, 1994.
6
<PAGE> 9
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement is required by the FASB to be adopted for fiscal years beginning
after December 15, 1995. The Company is currently evaluating the effect this
accounting change will have on its financial condition; however, management
does not believe the impact will be material.
Results of Operations - Nine Months Ended September 30, 1995 and 1994.
Oil and Gas Revenues are summarized for the nine months ended September 30,
1995 and 1994 in the following table:
<TABLE>
<CAPTION>
Revenues Price Volumes
---------------------- -------------------- -------------------------
1995 1994 1995 1994 1995 1994
--------- ------- ------- ------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
United States
Oil . . . . . . . $ 3,129 $ 2,575 $17.27 $15.53 181 MBbls 166 MBbls
Gas . . . . . . . $15,265 $11,960 $ 1.45 $ 1.93 10.6 Bcf 6.2 Bcf
Russia
Oil . . . . . . . $11,375 $ 7,745 $14.92 $13.88 762 MBbls 558 MBbls
Ivory Coast
Oil . . . . . . . $ 2,256 n/a $15.22 n/a 148 MBbls n/a
Indonesia
Oil . . . . . . . $ 679 $ 559 n/a n/a n/a n/a
Gas . . . . . . . $ 8,901 $ 7,980 n/a n/a n/a n/a
</TABLE>
United States oil sales volume increased 15 MBbls (9%) principally due to
production from new offshore properties such as High Island Block 23-L and
South Timbalier Block 277 and increased production from the Company's Taylor
Lake field.
United States gas sales volume increased 4.4 Bcf for the nine months ended
September 30, 1995 as compared to the same period in 1994. This 71% increase
was primarily due to production from new offshore properties and increased
production from the Company's Taylor Lake field.
Russian oil sales volumes increased 204 MBbls during the first three
quarters of 1995 as compared to the same period of 1994. This 37% increase was
principally due to increased production from the Onbysk field.
Ivory Coast oil production began April 30, 1995.
Indonesian liquid natural gas (LNG) liftings for the nine months ended
September 30, 1995 totaled 314 as compared to 317 for the same period in 1994.
The Company has not been advised as to specific price or production changes
which would affect Indonesian oil and gas revenues.
Pipeline Operations contributed $13.2 million to consolidated revenues and
incurred $12.1 million in pipeline operating expenses, exclusive of
depreciation, for the nine months ended September 30, 1995 as compared to $14.4
million in revenues and $13.6 million in expenses for the same period in 1994.
The pipeline segment generated a net loss from operations before taxes of
approximately $0.4 million for the nine months ended September 30, 1995 as
compared to a net loss of $0.3 million for the same period in 1994.
Expenses increased to $55.1 million for the nine months ended September 30,
1995 as compared to $47.2 million for the same period in 1994. This $7.9
million (17%) increase is primarily due to increases in production and
7
<PAGE> 10
depletion expenses of $1.6 million, and $10.6 million respectively. These
increases were partially offset by a decrease in exploration expenses of $3.3
million. The increase in production expenses was the direct result of
increased domestic oil, domestic gas, Russian oil and Ivory Coast oil
production. The increase in production expenses that resulted from increased
production was partially offset by a $2.7 million decrease in Russian export tax
expense for the three quarters ended September 30, 1995 as compared to the same
period in 1994. The increased depletion expense was the result of substantially
increased oil and gas production and depletion expense of approximately $3.8
million associated with the Company's Mustang Island 783 field. The decrease in
exploration expenses was the result of decreased dry hole costs in 1995 as
compared to 1994. Dry hole costs during the first three quarters of 1995 were
$5.0 million compared to $7.4 million during the same period in 1994.
Other Income and Expense increased approximately $1.3 million for the nine
months ended September 30, 1995 compared to the same period in 1994. This
increase was primarily the result of the IPI distribution mentioned above.
Results of Operations - Three Months Ended September 30, 1995 and 1994.
Oil and Gas Revenues are summarized for the three months ended September 30,
1995 and 1994 in the following table:
<TABLE>
<CAPTION>
Revenues Price Volumes
----------------------- ---------------------- ------------------------
1995 1994 1995 1994 1995 1994
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
United States
Oil . . . . . . . $ 910 $1,031 $16.52 $16.87 55 MBbls 61 MBbls
Gas . . . . . . . $4,417 $4,014 $ 1.39 $ 1.76 3.2 Bcf 2.3 Bcf
Russia
Oil . . . . . . . $4,122 $2,962 $13.93 $14.70 296 MBbls 202 MBbls
Ivory Coast
Oil . . . . . . . $1,574 n/a $15.30 n/a 103 MBbls n/a
Indonesia
Oil . . . . . . . $ 228 $ 279 n/a n/a n/a n/a
Gas . . . . . . . $2,573 $2,795 n/a n/a n/a n/a
</TABLE>
United States oil sales volumes decreased 6 MBbls during the third quarter
of 1995 as compared to the same period in 1994. This 10% decrease was
principally due to normal production declines.
United States gas sales volumes increased .9 Bcf during the third quarter of
1995 as compared to the third quarter of 1994. This 39% increase was primarily
due to production from new offshore properties and to increased production from
the Company's Taylor Lake field.
Russian oil sales volumes increased 94 MBbls during the third quarter of
1995 as compared to the same period in 1994. This 47% increase was principally
due to increased production from the Onbysk field.
Ivory Coast oil production began April 30, 1995.
Indonesian LNG liftings for the three months ended September 30, 1995
totaled 96 as compared to 106 for the same period in 1994. The Company has not
been advised as to specific price or production changes which would affect
Indonesian oil and gas revenues.
Expenses increased to $17.7 million for the three months ended September 30,
1995 as compared to $17.3 million for the same period in 1994. This increase
was primarily due to a $2.7 million increase in depletion expenses which was
partially offset by a $2.2 million decrease in exploration expenses. The
increased depletion was primarily the result of substantially increased oil and
gas production and depletion expense of approximately $0.8 million associated
with the Company's Mustang Island 783 field. The decrease in exploration
expenses was the result of
8
<PAGE> 11
decreased dry hole costs of $2.5 million during the third quarter of 1994 as
compared to $1.2 million during the same period in 1995.
Other Income and Expenses increased approximately $1.8 million for the three
months ended September 30, 1995 compared to the same period in 1994. This
increase was primarily the result of the IPI distribution mentioned above.
Liquidity and Capital Resources
Cash and cash equivalents increased by $6.5 million during the first three
quarters of 1995. This increase was primarily due to the $6.4 million net
increase in long-term debt during the period.
Cash provided from operations for the nine months ended September 30, 1995
was $37.6 million compared to $26.6 million for the same period in 1994. This
41% increase was primarily due to a $7.5 million additional decrease in
short-term liquid investments in 1995 as compared to 1994. The Company expended
approximately $37.0 million for additions to properties and equipment in the
first nine months of 1995 compared to $31.8 million for the same period in
1994. Working capital for the first nine months of 1995 decreased by $11.2
million.
Traditionally, the Company has budgeted its exploration and development
expenditures for each year based on cash to be provided from operating
activities. In 1995, the Company is directing its internally generated cash
toward growing the Company's domestic asset base while directing a portion of
its balance sheet cash (cash and cash equivalents and short-term liquid
investments) toward international opportunities. The Russian, Egyptian and the
Ivory Coast activities are currently the primary focus of the Company's
international operations. The Company's 1995 budget includes capital
expenditures for Russia, Egypt and the Ivory Coast which are projected to be
approximately $22 million.
In order to insure that the Company continues to have the necessary
financial flexibility in the future, on May 19, 1995 the Company executed a $35
million unsecured line of credit (see Note 3). The proceeds from this line of
credit will be used for general corporate needs. In addition, the Company
executed on July 14, 1995 a $17.5 million secured line of credit specifically
for the financing of development activities for the Ivory Coast CI-11 project.
On July 24, 1995, the Company received $7.7 million as the initial funding from
the CI-11 line of credit with the balance to be drawn as future project
expenditures are incurred.
9
<PAGE> 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None.
Item 3. Defaults upon Senior Securities:
None.
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits
27 Financial Data Schedule
b) Reports on Form 8-K
None.
10
<PAGE> 13
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.
GLOBAL NATURAL RESOURCES INC.
-----------------------------
(Registrant)
Date: November 6, 1995 /s/ Eric Lynn Hill
-----------------------------
Eric Lynn Hill
Vice President-Finance and
Secretary
11
<PAGE> 14
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
GLOBAL NATURAL RESOURCES INC.
FINANCIAL DATA SCHEDULES
CONSOLIDATED TOTALS
For the Nine Month Period Ended September 30, 1995
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 10,415
<SECURITIES> 11,424
<RECEIVABLES> 9,403
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 36,351
<PP&E> 181,647
<DEPRECIATION> 74,697
<TOTAL-ASSETS> 151,294
<CURRENT-LIABILITIES> 21,298
<BONDS> 16,869
<COMMON> 33,433
0
0
<OTHER-SE> 71,576
<TOTAL-LIABILITY-AND-EQUITY> 151,294
<SALES> 54,781
<TOTAL-REVENUES> 55,252
<CGS> 12,118
<TOTAL-COSTS> 55,050
<OTHER-EXPENSES> 331
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 2,750
<INCOME-TAX> 6,249
<INCOME-CONTINUING> (3,499)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,499)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
