<PAGE> 1
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, 1994, 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 NUMBER 1-8241
____________
PRESIDIO OIL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 95-3049484
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
5613 DTC PARKWAY, SUITE 750
ENGLEWOOD, COLORADO 80111-3065
(Address of principal executive offices) (Zip Code)
(303) 773-0100
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 21, 1994:
CLASS A COMMON STOCK: 25,316,685
CLASS B COMMON STOCK: 3,217,985
1
<PAGE> 2
PRESIDIO OIL COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Unaudited Consolidated Financial Statements:
Unaudited Consolidated Balance Sheets -
March 31, 1994 and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Consolidated Statements of Operations -
For the Three Months Ended March 31, 1994 and 1993 . . . . . . . . . . . . . . . 5
Unaudited Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 1994 and 1993 . . . . . . . . . . . . . . . 6
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . . . 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
(in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,021 $ 13,559
Accounts receivable:
Oil and gas sales 5,799 6,388
Joint interest owners and other 8,359 8,182
Other 1,449 2,394
-------- --------
Total current assets 25,628 30,523
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties using full
cost accounting 490,004 504,512
Other 3,674 3,611
-------- --------
Total 493,678 508,123
Less accumulated depletion,
depreciation and amortization 273,947 269,349
-------- --------
Net property, plant and equipment 219,731 238,774
-------- --------
OTHER ASSETS:
Deferred charges 8,631 8,833
Other 2,125 2,290
-------- --------
Total other assets 10,756 11,123
-------- --------
$256,115 $280,420
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE> 4
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
---------- ------------
(in thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable:
Oil and gas sales $ 3,731 $ 4,739
Trade and other 7,513 13,137
Accrued interest 2,637 3,621
Other accrued liabilities 6,075 6,206
-------- --------
Total current liabi1ities 19,956 27,703
-------- --------
BANK DEBT 3,500 15,000
-------- --------
SENIOR SECURED NOTES 75,000 75,000
-------- --------
GAS INDEXED NOTES 100,000 100,000
-------- --------
CONVERTIBLE SUBORDINATED DEBENTURES 50,000 50,000
-------- --------
OTHER NONCURRENT LIABILITIES 9,667 9,152
-------- --------
STOCKHOLDERS' EQUITY:
Class A Common stock, $.10 par value per share;
25,317,000 and 25,312,000 shares outstanding
at March 31, 1994 and December 31, 1993,
respectively 2,532 2,532
Class B Common stock, $.10 par value per share;
3,218,000 and 3,223,000 shares outstanding
at March 31, 1994 and December 31, 1993,
respectively 322 322
Additional paid-in capital 133,377 133,503
Deferred compensation (7,037) (7,317)
Retained deficit (131,202) (125,475)
-------- --------
Total stockholders' equity (2,008) 3,565
-------- --------
$256,115 $280,420
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE> 5
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1994 1993
---------- ----------
(in thousands, except
per share amounts)
<S> <C> <C>
Oil and gas revenues $ 10,542 $ 12,329
Less - direct costs:
Lease operating 2,967 3,344
Production taxes 595 773
Depletion, depreciation and amortization 4,484 4,747
-------- --------
2,496 3,465
General and administrative expense (1,664) (1,548)
Interest expense (6,998) (5,885)
Other 439 193
-------- --------
Net loss $ (5,727) $ (3,775)
======== ========
Loss per share:
Class A Common Stock $ (.21) $ (.14)
======== ========
Class B Common Stock $ (.21) $ (.14)
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE> 6
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1994 1993
---------- ----------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,727) $ (3,775)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depletion, depreciation and amortization 4,598 4,875
Amortization of debt issuance costs
included in interest expense 305 524
Other 571 479
Changes in other assets and liabilities:
Decrease in accounts receivable 412 4,667
Decrease (increase) in other current assets 815 (24)
Payment of loan fees and costs (103) (552)
Decrease (increase) in other noncurrent assets 165 (106)
Decrease in accounts payable (6,632) (6,229)
Decrease in accrued interest and liabilities (1,115) (3,436)
Increase in other noncurrent liabilities 228 568
-------- --------
Net cash used in operating activities (6,483) (3,009)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (7,444) (4,015)
Proceeds from sale of oil and gas properties 21,889 -
-------- ---------
Net cash provided by (used in)
investing activities 14,445 (4,015)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term bank debt 8,090 17,400
Payments of long-term bank debt (19,590) (15,500)
-------- --------
Net cash provided by (used in)
financing activities (11,500) 1,900
--------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (3,538) (5,124)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 13,559 11,457
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 10,021 $ 6,333
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
6
<PAGE> 7
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
For the Three Months Ended March 31, 1994 and 1993
1. The accompanying financial statements are unaudited; however,
management believes all material adjustments (consisting of only
normal recurring adjustments) necessary for a fair presentation have
been made. These financial statements and notes should be read in
conjunction with the financial statements and related notes included
in Presidio Oil Company's (the "Company" or "Presidio") annual report
on Form 10-K for the year ended December 31, 1993.
The Company's Senior Subordinated Gas Indexed Notes, Senior Gas
Indexed Notes and Senior Secured Notes (collectively the "Notes") are
guaranteed by all significant subsidiaries of the Company (the
"Guarantors"). Separate financial statements of the Guarantors are
not included herein because the Guarantors have fully,
unconditionally, jointly and severally guaranteed the Company's
obligations with respect to the Notes and the Company (which is
primarily a holding company and whose operating income is generated by
its subsidiaries) has no separate operations of its own. The
operations, assets, liabilities and equity of the subsidiaries of the
Company that are not Guarantors are inconsequential.
2. The computation of loss per share excludes the weighted average number
of unallocated shares held by the Company's Employee Stock Ownership
Plan which totaled 1,592,000 shares and 1,527,000 shares at March 31,
1994 and 1993, respectively.
3. Included in the Consolidated Statements of Cash Flows is $7,652,000
and $6,803,000 of interest paid, net of amounts capitalized, during
the three months ended March 31, 1994 and 1993, respectively.
4. In January 1994 the Company realized $22 million as a result of
certain oil and gas property sales, including $7 million from its
ongoing program to sell miscellaneous small, non-operated oil and gas
properties, as well as $15 million from the sale of a 50% interest in
a partly-developed gas field in Louisiana. Approximately $5 million
of the net cash proceeds from these sales was utilized to prepay all
of the then outstanding indebtedness under the Company's $25 million
revolving credit facility and the remaining $17 million was added to
the Company's working capital and is to be utilized to fund a portion
of the Company's 1994 capital expenditure program.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the Company's successful drilling operations, the Company's gas
production increased 2% during the quarter ended March 31, 1994 as compared to
the quarter ended December 31, 1993. Such increase in production would have
been 9% had the Company not sold certain gas producing properties in January
1994. Moreover, the Company's gas production increased to an average of 48.7
million cubic feet of gas per day ("MMCFD") during March 1994 as compared to
production of 39.3 MMCFD during December 1993 (after adjustment for the
above-mentioned sale of gas production in January 1994), or an increase of 24%.
The Company's oil production declined 13% during the quarter ended March 31,
1994 as compared to the quarter ended December 31, 1993, as a result of the
sale of certain oil producing properties in January 1994.
The Company's revenues and associated cash flows for the quarter ended March
31, 1994 declined compared to the quarter ended December 31, 1993, as a result
of (i) the above-described oil production decline, (ii) a decline in the
Company's average realized oil price from $12.81 to $11.07 per barrel, and
(iii) a decline in the Company's average realized gas price from $1.79 per
thousand cubic feet ("MCF") to $1.71 per MCF, which more than offset the
above-described gas production increase. As of April 25, 1994, the Company's
average realized gas price remained relatively unchanged from the average price
received during the first quarter of 1994; however, the Company's average
realized oil price as of such date had increased to $13.18 per barrel from the
$11.07 average price received in the 1994 first quarter.
The Company estimates that, in respect of 1994, (i) if the Company's average
realized oil price increased by $1.00 per barrel, its net income and cash flow
for the year would increase by approximately $1.3 million; and (ii) if the
Company's average realized gas price increased by $.10 per MCF, its net income
and cash flow for the year would increase by approximately $1.9 million.
The Company's capital expenditures for its oil and gas operations totaled
approximately $7.4 million during the quarter ended March 31, 1994, of which
$5.1 million was used in development drilling and other operations, $1.3
million was used in exploratory drilling and $1.0 million was used in various
other activities, including acquisitions of producing properties and
undeveloped acreage. During the remainder of 1994, the Company currently
anticipates that it will make not less than $23 million of capital
expenditures, of which $21 million will be used in development operations and
in the acquisition of producing properties. Moreover, during the 1995 - 1996
period, the Company currently plans to spend a minimum of $25-30 million per
annum on capital expenditures, with a substantial portion of such expenditures
being devoted to the development of the Company's proved undeveloped
hydrocarbon reserves, which totaled 3.1 million barrels of oil and 138.4
billion cubic feet of gas as of December 31, 1993. Except for the Company's
commitment to spend $5 million per year during the three-year period ending
October 1, 1996 contained in its revolving credit facility, the timing of most
of the Company's capital expenditures is discretionary, and thus the Company
has a significant degree of flexibility to adjust the level of expenditures as
circumstances warrant.
The Company funded its capital expenditures during the quarter ended March 31,
1994 with a portion of the $22 million of proceeds realized from the sale of
certain oil and gas properties in January 1994, and currently plans to utilize
working capital and borrowings under its revolving credit facility to fund the
remaining portion of its 1994 capital expenditures. In 1995 and thereafter,
the Company plans to principally rely upon the increasing levels of cash flow
from its oil and gas operations to fund its ongoing capital expenditures, as
well as to meet its long-term debt service obligations and any indebtedness
outstanding under its revolving credit facility, as the Company benefits from
the increased levels of oil and gas production and related revenues and cash
flows that are anticipated to result from its 1994-1996 capital expenditures.
There can be no assurance, however, that such capital expenditures will be
successful and result in a sufficient level of revenues and cash flow to both
fund the Company's ongoing capital expenditures and enable it to meet its debt
service and other obligations; and, accordingly, in such circumstances, the
Company's discretionary capital spending would have to be correspondingly
reduced or it would have to make further asset sales, in order to continue with
its capital expenditures and meet its debt service and other obligations. In
addition, oil and gas price declines would adversely impact the value of the
Company's cash flow.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS
The Company had a net loss for the quarter ended March 31, 1994 of $5,727,000,
compared to a loss of $3,775,000 for the first quarter of 1993. Contributing
to the 1994 first quarter loss was a 20% decrease in oil production compared to
the 1993 period, most of which resulted from the above-mentioned sale of oil
production in January 1994. Gas production for the 1994 first quarter
increased 11% as compared to the 1993 period, notwithstanding the
above-mentioned sale of gas production in January 1994, and resulted from the
Company's successful drilling operations. Also contributing to the loss during
the 1994 period was a 30% decrease in the Company's average realized oil price
in the first quarter of 1994 as compared to the 1993 period, which more than
offset a 3% increase in the Company's average realized gas price in the 1994
period.
The following table reflects the average prices received by the Company for oil
and gas and the amount of its oil and gas production for the quarters ended
March 31, 1994 and 1993:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1994 1993
---------- ----------
<S> <C> <C>
Average Price:
Oil and condensate (per barrel) $11.07 $15.86
Gas (per thousand cubic feet) $ 1.71 $ 1.66
Production:
Oil and condensate (barrels) 308,000 387,000
Gas (thousand cubic feet) 4,156,000 3,728,000
</TABLE>
The reduced amount of depletion, depreciation and amortization during the 1994
first quarter as compared to the 1993 period is due to a decrease in the
Company's depletion rate as a result of an increase in the Company's reserves
during 1993 at a finding cost substantially below its depletion rate. Lease
operating expenses decreased on a unit of production basis for the 1994 first
quarter as compared to the 1993 period, primarily due to the sale in January
1994 of certain relatively high operating cost properties, and also due to
operating efficiencies realized by the Company.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
The following table shows the costs associated with the Company's oil and gas
revenues per equivalent barrel of oil for the quarters ended March 31, 1994 and
1993:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1994 1993
---------- ----------
(per equivalent barrel)
<S> <C> <C>
Production Costs $3.56 $4.08
Depletion, Depreciation and
Amortization $4.48 $4.71
</TABLE>
The Company's interest expense increased for the quarter ended March 31, 1994
as compared to the 1993 first quarter as a result of (i) the Company's issuance
of $75 million of its 11.5% Senior Secured Notes Due 2000 in 1993 and the
utilization of the net proceeds thereof to repay an equivalent amount of bank
debt with a 7.1% borrowing rate during the 1993 period and (ii) an increase in
the interest rate on the Company's Gas Indexed Notes to 14% as compared to
13.25% in the 1993 period.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Executive Compensation Plans
----------------------------
10.1 * First Amendment to Employee Stock Ownership Plan of
Presidio Oil Company to be effective January 1, 1989.
10.2 * Second Amendment to Employee Stock Ownership Plan of
Presidio Oil Company to be effective January 1, 1989.
* Filed herewith
(b) Reports on Form 8-K
On March 11, 1994, a Form 8-K was filed dated March 9, 1994,
which reports under Item 5 "Other Events" the interest rate on
the Company's Senior Subordinated Gas Indexed Notes Due 1999
and Senior Gas Indexed Notes Due 2002 to be 14.125% for the
period May 16, 1994 to August 15, 1994.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
PRESIDIO OIL COMPANY
--------------------
Registrant
DATE: April 27, 1994 /s/ Christopher S. Hardesty
---------------------- -----------------------------
Christopher S. Hardesty
Chief Financial Office
and Treasurer
(Principal Financial Officer)
DATE: April 27, 1994 /s/ Charles E. Brammeier
---------------------- -----------------------------
Charles E. Brammeier
Controller
(Principal Accounting
Officer)
12
<PAGE> 13
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
10.1 First Amendment to Employee Stock Ownership Plan of Presidio
Oil Company to be effective January 1, 1989.
10.2 Second Amendment to Employee Stock Ownership Plan of Presidio
Oil Company to be effective January 1, 1989.
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDMENT TO
EMPLOYEE STOCK OWNERSHIP PLAN OF
PRESIDIO OIL COMPANY
(Amendment and Third Restatement
Effective January 1, 1989)
WITNESSETH:
WHEREAS, Presidio Oil Company (the "Company") established the
Employee Stock Ownership Plan of Presidio Oil Company (the "Plan") pursuant to
an instrument effective July 1, 1981, for the purpose of providing retirement
benefits to the employees of the Company;
WHEREAS, in order to comply with the provisions of the Tax
Reform Act of 1986 ("TRA '86"), the Omnibus Budget Reconciliation Acts of 1986
and 1987 ("OBRA '86" and "OBRA '87", respectively), the Technical and
Miscellaneous Revenue Act of 1988 ("TAMRA") and final regulations promulgated
under the Employee Retirement Income Security Act of 1974 ("ERISA") and the
Internal Revenue Code of 1986, as amended, the Plan was restated in its
entirety effective January 1, 1989; and
WHEREAS, the Internal Revenue Service has requested certain
amendments to the Plan during its' review of the Company's determination letter
request filing.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, it is agreed by the Company, subject to the
approval of the United States Treasury Department, that the Plan is hereby
amended effective January 1, 1989, except where otherwise indicated herein, to
provide as follows:
1. Section 2.10 of the Plan is restated to read as follows:
"2.10 "COMPENSATION" shall mean Compensation as defined
in Section 4.3 for purposes of applying the limitations of that
Section but excluding all of the following items (even if
included in gross income) (i) reimbursements or other expense
allowances, (ii) fringe benefits, (iii) moving expenses, (iv)
deferred compensation and (v) welfare benefits but including
any elective contributions that are made by the Company on
behalf of Employees that are not includible in gross income
under Code Sections 125, 402(a)(8) and 402(h).
Compensation in excess of $200,000 shall be disregarded.
Such amount shall be adjusted at the same time and in such
manner as permitted under Code Section 415(d). In applying
this limitation, the family group of
-1-
<PAGE> 2
a Highly Compensated Participant who is subject to the Family
Member aggregation rules of Code Section 414(q)(6) because such
Participant is either a "five percent owner" of the Company or
one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated
as a single Participant, except that for this purpose Family
Members shall include only the affected Participant's spouse
and any lineal descendants who have not attained age nineteen
(19) before the close of the year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is
exceeded, then the limitation shall be prorated among the
affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the
application of this limitation.
For Plan Years beginning prior to January 1, 1989, the
$200,000 limit (without regard to Family Member aggregation)
shall apply only to Top Heavy Plan Years and shall not be
adjusted.
Effective for Plan Years beginning on or after January 1,
1994, the annual Compensation of each Employee under the Plan
shall not exceed $150,000 as adjusted for increases in the cost
of living in accordance with Code Section 401(a)(17)(B)."
2. Section 2.30 is hereby amended by adding the following sentence:
"Stock shall satisfy the requirements of Qualifying
Employer Security."
3. Section 3.1 is hereby amended by adding the following sentence
at the end of the third paragraph:
"For purposes of eligibility to participate in the Plan,
a temporary employee is an Employee who is paid on an hourly
basis and who, upon hire, is advised that he is employed for a
specific project of limited duration and that upon completion
of such project, employment will cease."
4. Section 3.3 is hereby amended by adding the following second
paragraph:
"An Employee may elect not to participate in the Plan for
any Plan Year by filing with the Committee a written notice of
non-participation. A new election shall be required for each
such Plan Year. Such election may be made retroactively, but
not for any period during which a benefit shall have accrued to
the Participant. Upon the expiration of his period of
non-participation the Employee shall immediately participate in
the Plan. A Participant who shall have elected not to
participate in the Plan for a Plan Year shall not thereafter,
by revocation of election or otherwise, be entitled to be or
become an active Participate for such Plan Year. The operation
of this non-participation provision may be suspended in whole
or in part by decision of the Committee if it shall determine,
upon advice of counsel, that
-2-
<PAGE> 3
voluntary non-participation may endanger the tax qualified
status of the Plan."
5. Section 4.2 is hereby restated effective January 1, 1987 to read
as follows:
"4.2 PARTICIPANT CONTRIBUTIONS. Participants are not
permitted to contribute to the Plan."
6. Section 4.5 is hereby restated to read as follows:
"4.5 SPECIAL ESOP ALLOCATION LIMITATION. Effective
for Plan Years beginning after July 12, 1989, if no more than
one-third (1/3) of the Company contributions to the ESOP for a
year which are deductible under paragraph (9) of Section 404(a)
of the Code are allocated to Highly Compensated Employees the
Annual Addition limitations imposed by this Article shall not
apply to:
(a) Forfeitures of Company Stock (within the
meaning of Section 409 of the Code) under the ESOP if
such securities were acquired with the proceeds of an
Exempt Loan (as described in Section 404(a)(9)(A) of the
Code), or
(b) Company contributions to the ESOP which are
deductible under Section 404(a)(9)(B) of the Code and
charged against the Participant's Account."
7. Section 11.4 is amended by restating the second sentence thereof
to read as follows:
"If the Company does not have a "registration-type class
of securities", each Participant shall be entitled to vote the
shares of Stock, including fractional shares, allocated to his
Account with respect to any corporate matter which involves the
voting of such shares with respect to the consolidation,
recapitalization, reclassification, liquidation, dissolution,
sale of substantially all of a trade or business, or such
similar transaction as the Secretary of the Treasury may
prescribe in regulations."
8. Section 11.10 is amended by restating paragraph (a) to read as
follows:
"(a) As soon as practicable after the
commencement of an exchange offer or tender offer (the
"Offer") for shares of Stock, the Committee shall use its
best efforts to cause each Participant to be advised in
writing of the terms of the Offer and to be provided the
forms by which the Participant may instruct the Trustee,
or revoke such instruction, to the extent permitted by
the terms of the Offer, to exchange or tender, as the
case may be, all or a portion of the Stock
-3-
<PAGE> 4
allocated to his Account. The Trustee shall follow the
direction of each Participant. All shares of Stock that
have been allocated to Participants' accounts for which
instructions have not been received shall not be
exchanged or tendered, as the case may be. Shares of
Stock that have not been allocated to Participants'
accounts shall be exchanged or tendered, as the case may
be, by the Trustee but only as directed by the
Committee."
9. Section 12.11 is restated to read as follows:
"12.11 NON-TERMINABLE PROVISIONS. Notwithstanding the
fact that the Plan may cease to be an Employee Stock Ownership
Plan, Stock acquired with proceeds of an Exempt Loan shall
continue to be subject to the provisions of this Article and
Sections 11.7 and 11.8."
10. Section 13.4 is restated to read as follows:
"13.4 EFFECT OF DISAFFILIATION OR WITHDRAWAL. If at
the time of disaffiliation or withdrawal the disaffiliating or
withdrawing corporation shall by resolution of its board of
directors determine to adopt a substantially identical plan,
the Trustee shall transfer to the trustee of the new plan all
of the assets held for the benefit of employees of the
disaffiliating or withdrawing corporation. Such payment shall
operate as a complete discharge of the Trustee, and of all
corporations except the disaffiliating or withdrawing
corporation, of all obligations under this Plan to employees of
the disaffiliating or withdrawing corporation and to their
beneficiaries. A new plan shall not be deemedsubstantially
identical to this Plan if it provides slower vesting than this
Plan, and nothing in this subsection shall authorize the
divesting of any vested portion of any Employee's Account.
This Section shall be subject to the provisions of Article X."
11. Section 16.2 is hereby amended by adding the following at the
end thereof:
"A Participant may receive the Eligible Rollover
Distribution at any time after the Committee clearly informs
the Participant that he has the right to a period of at least
30 days after receiving the notice to consider the decision of
whether or not to elect a distribution, and the Participant,
after receiving the notice, affirmatively elects a
distribution."
ATTEST: PRESIDIO OIL COMPANY
By:/s/Bruce R. DeBoer By:/s/ Robert L. Smith
------------------ -------------------
Bruce R. DeBoer Robert L. Smith
Secretary President
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<PAGE> 1
EXHIBIT 10.2
SECOND AMENDMENT TO
EMPLOYEE STOCK OWNERSHIP PLAN OF
PRESIDIO OIL COMPANY
(Amendment and Third Restatement
Effective January 1, 1989)
WITNESSETH:
WHEREAS, Presidio Oil Company (the "Company") established the
Employee Stock Ownership Plan of Presidio Oil Company effective July 1, 1981,
which was subsequently restated in its entirety effective January 1, 1989, and
amended by that First Amendment to Employee Stock Ownership Plan of Presidio
Oil Company (as amended, the "Plan"); and
WHEREAS, the Company seeks to further amend the Plan in
accordance with Section 10.4 thereof to remove references to voluntary
contributions.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the Plan is hereby amended as follows:
1. Section 2.1 is restated to read as follows:
"2.1 "Account" shall mean a Participant's Company
Contribution Account.
2. Section 5.1 is amended by deleting the third sentence thereof
in its entirety.
3. Section 5.4 shall be deleted in its entirety.
4. Section 5.5 shall be renumbered as Section 5.4 and the
reference in the second line thereof to the words "and 5.4" shall be deleted.
5. Section 6.5 shall be amended by restating the first sentence
thereof as follows:
"No distribution from a Participant's Company
Contributions Account shall be made to a Participant before his
normal retirement age without his consent, except upon the
death of the Participant."
6. Section 6.6 shall be amended by deleting the two references to
"or Accounts" in the first sentence thereof.
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<PAGE> 2
7. Section 7.1 is amended by deleting the second sentence in the
first paragraph thereof in its entirety.
8. Section 7.2(a) is amended by restating the first sentence
thereof as follows:
"Upon termination of a Participant's employment for reasons
other than death, disability or retirement, the entire vested balance of his
Company Contributions Account shall be paid to him in a lump sum."
9. Section 7.2(b) is amended by changing any reference therein in
respect of "Accounts" to "Account".
10. Section 14.5 is amended by changing the reference to "5.5" in
the second line thereof to "5.4".
IN WITNESS WHEREOF, this Second Amendment to Employee Stock
Ownership Plan of Presidio Oil Company has been executed to be effective as of
January 1, 1989.
ATTEST: PRESIDIO OIL COMPANY
By:/s/ Bruce R. DeBoer By:/s/ Robert L. Smith
------------------- -------------------
Bruce R. DeBoer Robert L. Smith
Secretary President
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