<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 SEPTEMBER 30, 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 November 11, 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 -
September 30, 1994 and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Consolidated Statements of Operations -
For the Three Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 5
Unaudited Consolidated Statements of Operations -
For the Nine Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 6
Unaudited Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 7
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
(in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 13,369 $ 13,559
Accounts receivable:
Oil and gas sales 4,959 6,388
Joint interest owners and other 4,923 8,182
Other 1,476 2,394
-------- --------
Total current assets 24,727 30,523
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties using full
cost accounting 506,655 504,512
Other 4,048 3,611
-------- --------
Total 510,703 508,123
Less accumulated depletion,
depreciation and amortization 282,872 269,349
-------- --------
Net property, plant and equipment 227,831 238,774
-------- --------
OTHER ASSETS:
Deferred charges 8,146 8,833
Other 2,160 2,290
-------- --------
Total other assets 10,306 11,123
-------- --------
$262,864 $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>
September 30, December 31,
1994 1993
------------- ------------
(in thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable:
Oil and gas sales $ 3,427 $ 4,739
Trade and other 8,886 13,137
Accrued interest 2,779 3,621
Other accrued liabilities 5,627 6,206
-------- --------
Total current liabilities 20,719 27,703
-------- --------
BANK DEBT 22,500 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 9,448 9,152
-------- --------
STOCKHOLDERS' EQUITY:
Class A Common stock, $.10 par value per share;
25,317,000 and 25,312,000 shares outstanding
at September 30, 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 September 30, 1994 and December 31, 1993,
respectively 322 322
Additional paid-in capital 129,087 133,503
Deferred compensation (2,534) (7,317)
Retained deficit (144,210) (125,475)
-------- --------
Total stockholders' equity (14,803) 3,565
-------- --------
$262,864 $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 September 30,
-------------------------------------
1994 1993
---------- ----------
(in thousands, except
per share amounts)
<S> <C> <C>
Oil and gas revenues $ 9,742 $ 10,963
Less - direct costs:
Lease operating 3,172 3,472
Production taxes 582 696
Depletion, depreciation and amortization 4,177 4,562
-------- --------
1,811 2,233
General and administrative expense (1,630) (1,341)
Interest expense (6,984) (6,302)
Debt repayment expense - (1,971)
Other - 326
-------- --------
Net loss from continuing operations (6,803) (7,055)
Discontinued operations:
Gain on sale - 11,550
-------- --------
Net income (loss) $ (6,803) $ 4,495
======== ========
Loss per share from continuing operations:
Class A Common Stock $ (.25) $ (.26)
======== ========
Class B Common Stock $ (.25) $ (.26)
======== ========
Income (loss) per share:
Class A Common Stock $ (.25) $ .17
======== ========
Class B Common Stock $ (.25) $ .17
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE> 6
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------------
1994 1993
---------- ----------
(in thousands, except
per share amounts)
<S> <C> <C>
Oil and gas revenues $ 30,429 $ 35,644
Less - direct costs:
Lease operating 9,304 10,105
Production taxes 1,777 2,226
Depletion, depreciation and amortization 13,187 13,799
-------- --------
6,161 9,514
General and administrative expense (4,943) (4,174)
Interest expense (20,936) (18,249)
Debt repayment expense - (1,971)
Other 983 486
--------- --------
Net loss from continuing operations (18,735) (14,394)
Discontinued operations:
Gain on sale - 11,550
-------- --------
Net loss $(18,735) $ (2,844)
======== ========
Loss per share from continuing operations:
Class A Common Stock $ (.69) $ (.53)
======== ========
Class B Common Stock $ (.69) $ (.53)
======== ========
Loss per share:
Class A Common Stock $ (.69) $ (.11)
======== ========
Class B Common Stock $ (.69) $ (.11)
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
6
<PAGE> 7
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------
1994 1993
---------- ----------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(18,735) $ (2,844)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depletion, depreciation and amortization 13,532 14,174
Gain on sale of discontinued operations - (11,550)
Amortization of debt issuance costs
included in interest expense 925 3,392
Other 1,484 1,750
Changes in other assets and liabilities:
Decrease in accounts receivable 4,688 3,659
Decrease (increase) in other current assets 329 (1,181)
Payment of loan fees and costs (238) (3,489)
Decrease (increase) in other noncurrent assets 130 (92)
Decrease in accounts payable (5,563) (4,324)
Decrease in accrued interest and liabilities (1,421) (6,572)
Increase (decrease) in other noncurrent liabilities (202) 996
--------- --------
Net cash used in operating activities (5,071) (6,081)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (24,272) (13,054)
Proceeds from sale of oil and gas properties 21,692 1,250
Proceeds from sale of discontinued operations - 11,550
-------- --------
Net cash used in investing activities (2,580) (254)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term bank debt 42,490 49,650
Payments of long-term bank debt (34,990) (99,650)
Issuance of Senior Secured Notes - 56,250
Other noncurrent financing (39) 32
--------- --------
Net cash provided by financing activities 7,461 6,282
--------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (190) (53)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 13,559 11,457
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 13,369 $ 11,404
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
7
<PAGE> 8
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
For the Three Months and Nine Months Ended September 30, 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 Company's Senior Gas Indexed Notes (i) rank pari passu with other
senior debt of the Company (including bank indebtedness and the Senior
Secured Notes), (ii) mature in 2002 and have no sinking fund
requirements, (iii) have a 15% maximum interest rate above which the
13.25% base interest rate may not be increased as a result of a gas
indexing feature, and (iv) are redeemable, at the option of the
Company, at the prices (expressed as a percentage of principal amount)
and during the indicated years beginning August 15: 1996 - 106%;
1997 - 103%; and 1998 - 100%. At September 30, 1994 the interest rate
on the Gas Indexed Notes, as adjusted for the gas indexing feature
referred to above, was 13.9%.
3. The Company's Senior Secured Notes (i) rank pari passu with other
senior debt of the Company (including bank indebtedness and the Senior
Gas Indexed Notes), (ii) mature in 2000 and have no sinking fund
requirements, (iii) bear interest at the rate of 11.5%, (iv) are
secured by a mortgage (the "Secured Note Mortgage") on certain of the
Company's oil and gas properties, with the amount and type of such
properties being subject to adjustment, based upon the value of the
properties and certain other factors, (v) provide that the incurrence
by the Company of indebtedness, in excess of the Company's $25
million Revolving Credit Facility discussed below (or equivalent
amount of indebtedness) is limited to $12 million plus 67% of the
value of the Company's oil and gas reserves in excess of $251.6
million, with such value being the discounted future net cash flow
before income taxes (the "SEC Value") computed in accordance with the
Securities and Exchange Commission regulations, and (vi) are
redeemable, at the option of the Company, at the prices (expressed as
a percentage of principal amount) and during the indicated years
beginning September 15: 1996 - 103%; 1997 - 102%; 1998 - 101%; and
1999 - 100%. In accordance with the provisions of (iv) above, the SEC
Value of the properties secured by the Secured Note Mortgage must be
$93.8 million or more as of December 31, 1994 (with $78.8 million
thereof being attributable to proved developed producing properties),
with the Company being required, in the event of any shortfall in such
SEC Value, to either pledge an appropriate amount of additional
properties under the Secured Note Mortgage or offer to purchase (at
par) an amount of Senior Secured Notes equal to the shortfall.
8
<PAGE> 9
Notes to Unaudited Consolidated Financial Statements
(Continued)
4. 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 1,473,000 shares and 1,528,000 shares for the
quarter and nine months ended September 30, 1994, respectively, and
1,418,000 shares and 1,472,000 shares for the quarter and nine months
ended September 30, 1993, respectively.
5. Included in the Consolidated Statements of Cash Flows is $20,814,000
and $18,821,000 of interest paid, net of amounts capitalized, during
the nine months ended September 30, 1994 and 1993, respectively.
6. At September 30, 1994, the Company had $22,500,000 outstanding under a
$25 million revolving credit facility ("Revolving Credit Facility").
The Revolving Credit Facility (i) is secured by mortgages on certain
of the Company's oil and gas properties (the "Mortgaged Properties");
(ii) provides for an interest rate of either prime plus 1% or LIBOR
plus 2 1/2%; (iii) requires that the commitment be reduced by 100% of
the proceeds realized from the sale of Mortgaged Properties; (iv)
requires that 75% of the proceeds (in excess of $5 million) from the
sale of assets other than Mortgaged Properties be used to develop the
Company's hydrocarbon reserves; (v) provides that the incurrence by
the Company of indebtedness in excess of the Revolving Credit Facility
commitment be limited to $5 million; (vi) requires regular quarterly
commitment reductions of approximately $1.56 million beginning on
October 1, 1995 through July 1, 1999; (vii) requires capital
expenditures of not less than $5 million per annum during the
three-year period ending October 1, 1996 in respect of the development
of the Mortgaged Properties; and (viii) provides that, on a quarterly
basis, the Company maintain at least a 1:1 ratio of its operating cash
flow plus the proceeds of asset sales during the preceding four
quarters (the "Period"), to interest paid by the Company during the
Period plus the amount of any required commitment reductions during
the four quarters following the Period.
7. 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 non-strategic 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 Revolving Credit
Facility and the remaining $17 million was added to the Company's
working capital and was utilized to fund a portion of the Company's
1994 capital expenditure program.
As discussed under "Liquidity and Capital Resources", the Company
plans to sell a total of $18.2 million of miscellaneous non-strategic
oil and gas properties, with $11 million of such sales being
anticipated to be completed in December 1994 and with the remainder
being anticipated to be completed in January 1995. The net cash
proceeds of such sales will be utilized to prepay any indebtedness
outstanding under the Revolving Credit Facility.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's gas production totaled 4.2 billion cubic feet ("BCF") for the
quarter ended September 30, 1994, as compared to 4.4 BCF for the quarter ended
June 30, 1994. The .2 BCF decline in production was largely due to delays in
connecting a number of the Company's wells to pipeline and, to a lesser extent,
to lower producing rates in several wells that went onstream in early 1994. As
of September 30, 1994 7 wells, which are capable of producing .3 BCF of gas per
quarter, were shut-in awaiting pipeline connection. All of such wells, as well
as an additional 9 wells currently anticipated to produce approximately .5 BCF
of gas per quarter, are anticipated to be on production by yearend 1994.
The Company's oil production totaled 270,000 barrels for the quarter ended
September 30, 1994, as compared to 285,000 barrels in the June 30, 1994
quarter, with this decrease reflecting lower production rates in several mature
fields. The Company's increased level of expenditures during the fourth
quarter of 1994, as discussed in detail below, will fund a number of oil field
development projects, including the start-up of a horizontal drilling program
in the Company's largest oil field which, if successful, is anticipated to
result in a stabilization of the Company's oil production by yearend 1994.
The Company's revenues and associated cash flows for the quarter ended
September 30, 1994 were adversely affected by the above described oil and gas
production decreases, as well as by a severe decline in gas prices (as compared
to a year earlier), which more than offset an increase in oil pricing. The
Company's average realized gas price for the quarter ended September 30, 1994
was $1.35 per thousand cubic feet ("MCF"), as compared to the $1.37 per MCF
received in the 1994 second quarter. The depressed level of 1994 third quarter
gas pricing, which has continued through November when the Company's realized
gas price was $1.35 per MCF, is considerably lower than the $1.63 per MCF price
received by the Company in the 1993 third quarter, and reflects an abnormally
low level of gas pricing relative to the usual strengthening of gas pricing in
the cooler autumn months. The Company's average realized oil price for the
quarter ended September 30, 1994 increased to $15.34 per barrel, as compared to
the $14.63 per barrel received in the 1994 second quarter. However, oil prices
have since declined somewhat, such that the Company's average realized oil
price was approximately $13.98 per barrel on November 10, 1994.
The above-described declines in oil and gas pricing, as well as the decline in
production volumes, have adversely affected the Company's financial condition
and increased its operating cash flow deficit. At November 14, 1994 the
Company's bank debt outstanding under its Revolving Credit Facility was
approximately $15 million and its working capital deficit was approximately $10
million.
The Company's capital expenditures totaled approximately $24.3 million during
the nine months ended September 30, 1994, of which $16.2 million was used in
development drilling and other operations, $3.4 million was used in exploratory
drilling and $4.7 million was used in various other activities, including the
acquisition of producing properties and undeveloped acreage. As a result of
such expenditures, the Company believes that it has more than replaced its
projected hydrocarbon production for 1994, as well as the reserves associated
with its January 1994 asset sales which included 26.3 BCF of gas and 1.4 million
barrels of oil.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
The Company funded its capital expenditures during the nine months ended
September 30, 1994 with a portion of the $22 million of proceeds realized from
the January 1994 asset sales referred to above (see Note 7 of the Notes to the
Company's Unaudited Financial Statements), and with borrowings under its
Revolving Credit Facility. The Company recently agreed to sell $7.7 million of
miscellaneous non-strategic oil and gas properties, and is currently
negotiating to sell a further $10.5 million of such properties. It is
anticipated that $11 million of such property sales will be completed in early
December 1994 and that the remaining $7.2 million of such sales will be
completed by mid-January 1995. Accordingly, the Company plans to fund a
substantial portion of the Company's remaining 1994 capital expenditures of
approximately $11 million with a portion of the proceeds of the $11 million of
property sales anticipated to close in early December 1994, and plans to fund
the remainder of its 1994 capital expenditures with borrowings under the
Revolving Credit Facility. In this respect, it should be noted that certain
modifications to the covenants contained in the Revolving Credit Facility may
be required in order for the Company to fully utilize the proceeds of the
planned December 1994 asset sale in respect of the remaining 1994 capital
budget without a reduction in the Revolving Credit Facility of approximately $4
million (see Note 6 of the Notes to the Company's Unaudited Financial
Statements for a description of the financial covenants contained in the
Revolving Credit Facility).
During 1995 the level of the Company's capital expenditures will be contingent
upon the Company's ability to fund such expenditures from the cash flow
provided by the increased levels of hydrocarbon production projected for such
year as a result of the development of a portion of the Company's proved
undeveloped hydrocarbon reserves with the Company's 1994 capital budget of
$35.3 million (net of the revenues and cash flow attributable to the producing
properties sold as a portion of the property sales discussed above), the
utilization of a portion of the proceeds of the property sales referred to
above, and the utilization of the proceeds from the sale of a production
payment. In respect, therefore, of funding the Company's 1995 capital
expenditures, the Company anticipates using a portion of the $7.2 million of
proceeds anticipated to be received from the mid-January 1995 asset sale, and a
portion of the proceeds of the sale of a production payment in late 1994
involving the oil and gas producing properties mortgaged under the Revolving
Credit Facility, with it being anticipated that the proceeds of the sale of
such production payment would be approximately $30-35 million and thus be more
than sufficient to prepay all of the bank debt outstanding under the Revolving
Credit Facility. Assuming, however, that such production payment was not sold,
the Company estimates that it could have as much as $12 million of bank debt
outstanding under the Revolving Credit Facility and a working capital deficit
of approximately $6 million after completing the $18.2 million of asset sales
anticipated to be completed by January 1995 (including the $11 million
anticipated to be closed in December 1994).
There can be no assurance, however, as to the levels of hydrocarbon production
and related cash flow that will result from the Company's past capital
expenditure programs, or that the Company's planned property sales will be
completed, or that the Company will sell a production payment in late 1994, all
as above-discussed, so that the Company would have a sufficient level of
revenues and cash flow to both fund a substantial level of capital expenditures
in 1995 and also enable it to meet its debt service and other obligations.
Accordingly, in such circumstances, the Company's discretionary capital
spending would have to be correspondingly reduced or eliminated, or it would
have to make further asset sales consistent with the provisions of the
Revolving Credit Facility and the Secured Note Mortgage (and/or substantially
reduce its general and administrative expense), in order to meet its ongoing
debt service and other obligations. In addition, it should be recognized that
if the SEC Value of the properties securing the Senior Secured Notes should be
less than $93.8 million as of December 31, 1994 (or if at least $78.8
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
million of such value is not attributable to proved developed producing
properties), the Company would be required to either pledge an appropriate
amount of additional properties under the Secured Note Mortgage or offer to
purchase (at par) an amount of Senior Secured Notes equal to the amount of any
such shortfall. There can be no assurance, however, that the Company will have
sufficient funds to purchase any such shortfall amount of Senior Secured Notes
or a sufficient amount of properties to pledge under the Secured Note Mortgage
in respect of such shortfall (see Note 3 of the Notes to the Unaudited
Financial Statements).
RESULTS OF OPERATIONS
The Company had a net loss from continuing operations of $6,803,000 and
$18,735,000 for the quarter and nine months ended September 30, 1994,
respectively, compared to a net loss from continuing operations of $7,055,000
and $14,394,000 for the quarter and nine months ended September 30, 1993. The
net income (loss) for the 1993 periods includes a $11.5 million gain on the
sale of discontinued operations.
The Company's revenues and operating cash flows have decreased during the 1994
periods as compared to the 1993 periods due to lower gas prices, lower oil
production and, for the nine-month periods, a decrease in oil prices, as
partially offset by increases in gas production, and, for the three-month
periods, an increase in oil prices.
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 three months and
nine months ended September 30, 1994 and 1993:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average Price:
Oil and condensate (per barrel) $15.34 $13.39 $13.58 $15.12
Gas (per thousand cubic feet) $1.35 $1.63 $1.48 $1.71
Production:
Oil and condensate (barrels) 270,000 342,000 863,000 1,082,000
Gas (thousand cubic feet) 4,160,000 3,908,000 12,668,000 11,264,000
Equivalent barrel (1) 963,000 993,000 2,974,000 2,959,000
</TABLE>
(1) Oil and gas are converted to a common unit of measure on the basis of
six MCF of gas to one barrel of oil.
Depletion, depreciation and amortization decreased on a unit of production
basis for the 1994 periods as compared to the 1993 periods due to a decrease in
the Company's depletion rate as a result of an increase in the Company's
reserves during 1993 and 1994 at a finding cost substantially below its
depletion rate. Lease operating expenses decreased on a unit of production
basis for the 1994 periods as compared to the 1993 periods, 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.
12
<PAGE> 13
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 three months and nine months
ended September 30, 1994 and 1993:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1994 1993 1994 1993
-------- -------- -------- --------
(per equivalent barrel)
<S> <C> <C> <C> <C>
Production Costs $3.90 $4.20 $3.73 $4.17
Depletion, Depreciation and
Amortization $4.34 $4.59 $4.43 $4.66
</TABLE>
The increase in general and administrative expenses for the 1994 periods as
compared to the 1993 periods is due to a general increase in the Company's
expenses.
The Company's interest expense increased for the quarter and nine months ended
September 30, 1994 as compared to the comparable periods in 1993 as a result of
(i) the Company's issuance of $75 million of its 11.5% Senior Secured Notes Due
2000 ("Senior Secured Notes") in the second half of 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 periods and (ii) an increase in the interest
rate on the Company's Gas Indexed Notes to 14% and 14.1% for the quarter and
nine months ended September 30, 1994, respectively, as compared to 13.6% and
13.4% for comparable periods in 1993.
The Company incurred debt repayment expense of $2.0 million during the quarter
ended September 30, 1993 in connection with the repayment of bank debt in
connection with the Company's issuance of its Senior Secured Notes.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
On September 13, 1994, a Form 8-K was filed dated September 13,
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 13.675% for
the period November 15, 1994 to February 14, 1995.
14
<PAGE> 15
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: November 14, 1994 /s/ Christopher S. Hardesty
------------------- -----------------------------------
Christopher S. Hardesty
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
DATE: November 14, 1994 /s/ Charles E. Brammeier
------------------- -----------------------------------
Charles E. Brammeier
Controller
(Principal Accounting Officer)
15
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 13,369
<SECURITIES> 0
<RECEIVABLES> 9,882
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,727
<PP&E> 510,703
<DEPRECIATION> (282,872)
<TOTAL-ASSETS> 262,864
<CURRENT-LIABILITIES> 20,719
<BONDS> 247,500
<COMMON> 2,854
0
0
<OTHER-SE> (17,657)
<TOTAL-LIABILITY-AND-EQUITY> 262,864
<SALES> 30,429
<TOTAL-REVENUES> 30,429
<CGS> 0
<TOTAL-COSTS> 24,268
<OTHER-EXPENSES> 3,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,936
<INCOME-PRETAX> (18,735)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,735)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,735)
<EPS-PRIMARY> (.69)
<EPS-DILUTED> (.69)
</TABLE>
