<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, 1996, 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 May 2, 1996:
CLASS A COMMON STOCK: 25,318,085
CLASS B COMMON STOCK: 3,216,585
1
<PAGE> 2
PRESIDIO OIL COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Unaudited Consolidated Financial Statements:
Unaudited Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Consolidated Statements of Operations -
For the Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(Unaudited)
(in thousands)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 8,052 $ 7,060
Accounts receivable:
Oil and gas sales 4,908 4,572
Joint interest owners and other 1,838 2,255
Other 1,494 1,280
-------- --------
Total current assets 16,292 15,167
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties using full cost accounting 517,665 515,227
Other 4,389 4,371
-------- --------
Total 522,054 519,598
Less accumulated depletion, depreciation and amortization 305,968 302,733
-------- --------
Net property, plant and equipment 216,086 216,865
-------- --------
OTHER ASSETS:
Deferred charges 8,812 8,761
Other 1,224 1,153
-------- --------
Total other assets 10,036 9,914
-------- --------
$242,414 $241,946
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable:
Oil and gas sales $ 2,141 $ 2,139
Trade and other 4,280 5,137
Accrued interest 30,515 23,214
Other accrued liabilities 3,732 3,913
Current debt 246,413 246,413
-------- ---------
Total current liabilities 287,081 280,816
-------- --------
OTHER NONCURRENT LIABILITIES 11,417 11,125
-------- --------
STOCKHOLDERS' DEFICIT:
Class A Common stock, $.10 par value per share; 25,318,000 shares
outstanding at March 31, 1996 and December 31, 1995 2,532 2,532
Class B Common stock, $.10 par value per share; 3,217,000 shares
outstanding at March 31, 1996 and December 31, 1995 322 322
Additional paid-in capital 126,776 126,776
Retained deficit (185,714) (179,625)
-------- --------
Total stockholders' deficit (56,084) (49,995)
-------- --------
$242,414 $241,946
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE> 4
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------
1996 1995
-------- --------
(in thousands, except
per share amounts)
<S> <C> <C>
Oil and gas revenues $ 8,658 $ 8,844
Less - direct costs:
Lease operating 2,355 3,179
Production taxes 478 532
Depletion, depreciation and amortization 3,150 3,992
-------- --------
2,675 1,141
General and administrative expense (1,079) (1,477)
Interest expense (7,854) (7,157)
Other 169 (124)
-------- --------
Net loss $ (6,089) $ (7,617)
======== ========
Loss per share of Class A and Class B Common Stock $ (.21) $ (.28)
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE> 5
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------
1996 1995
-------- --------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,089) $ (7,617)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depletion, depreciation and amortization 3,235 4,119
Amortization of debt issuance costs
included in interest expense 313 313
Other 226 325
Changes in other assets and liabilities:
Decrease in accounts receivable 81 3,688
Decrease (increase) in other current assets (363) 248
Decrease (increase) in other noncurrent assets (435) 85
Decrease in accounts payable (855) (6,557)
Increase (decrease) in accrued interest
and other accrued liabilities 7,120 (1,858)
Increase in other noncurrent liabilities 215 1,244
-------- --------
Net cash provided by (used in)
operating activities 3,448 (6,010)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (2,456) (6,462)
Proceeds from sale of oil and gas properties - 13,002
-------- --------
Net cash provided by (used in)
investing activities (2,456) 6,540
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of bank debt - 8,700
Payments of bank debt - (8,287)
Payment of loan fees and costs - (145)
-------- --------
Net cash provided by financing activities - 268
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 992 798
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 7,060 6,423
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 8,052 $ 7,221
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE> 6
PRESIDIO OIL COMPANY AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
For the Three Months Ended March 31, 1996 and 1995
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, 1995.
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 accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. During 1994 and 1995,
the financial condition and operating cash flows of the Company were
materially and adversely affected by a significant decline in the price
that the Company received for its natural gas production. The
Company's revenues and operating cash flows thus declined significantly
during such periods, making it unlikely that the Company will be able
to continue as a going concern in its current financial structure.
Because of the Company's deteriorating financial condition, the Company
has failed to satisfy certain payment and other obligations under, and
Events of Default have occurred in respect of, the Company's public
debt and bank debt obligations.
The Company currently anticipates entering into an acquisition
agreement with Tom Brown, Inc. ("Tom Brown") during the second quarter
of 1996, as a result of which Tom Brown would acquire the Company for a
combination of cash and Tom Brown common stock. There can be no
assurance, however, that an agreement with Tom Brown will be completed;
or, if such an agreement is completed, that an informal consensual
agreement can be agreed upon with the Company's bank lenders, certain
significant holders of its public debt and its stockholders in respect
of the allocation of the proceeds resulting from the sale of the
Company to Tom Brown. In the event that such an acquisition agreement
is entered into with Tom Brown, but an informal consensual agreement
cannot be reached as to the allocation of the proceeds available for
distribution to the Company's debt and equity holders, then the Company
and Tom Brown plan to file a plan of reorganization under chapter 11 of
title 11 of the United States Bankruptcy Code (the "Bankruptcy Code"),
specifying an allocation of the proceeds of the sale of the Company
among the Company's debt and equity holders, and thereby implementing
the acquisition of the Company by Tom Brown. Should the Company and
Tom Brown fail to reach an agreement concerning such acquisition, then
it is likely that the Company would seek protection from its creditors
under chapter 11 of the Bankruptcy Code and seek other purchasers for
the Company or effect a restructuring thereunder.
See Item 2 for a further discussion of the Company's Financial
Condition, the Tom Brown Transaction and Events of Default.
6
<PAGE> 7
Notes to Unaudited Consolidated Financial Statements
(Continued)
3. 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 1,336,000 shares at March 31, 1995.
4. Included in the Consolidated Statements of Cash Flows is $240,000 and
$7,793,000 of interest paid, net of amounts capitalized, during the
three months ended March 31, 1996 and 1995, respectively.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
CURRENT FINANCIAL CONDITION AND RECENT DEVELOPMENTS
Current Financial Condition. During 1994 and 1995, the financial condition and
operating cash flows of the Company were materially and adversely affected by a
significant decline in the price that the Company received for its natural gas
production. The Company's revenues and operating cash flows thus declined
significantly during such periods, making it unlikely that the Company will be
able to continue as a going concern in its current financial structure.
Because of the Company's deteriorating financial condition, the Company has
failed to satisfy certain payments and other obligations under, and Events of
Default have occurred in respect of, the Company's public debt and bank debt
obligations. See "Liquidity and Ability to Service Debt; Related Defaults"
below.
Because of the Company's deteriorating financial condition, during the first
six months of 1995 the Company engaged in discussions with various third
parties and certain of its creditors in an effort to arrange a restructuring of
the Company's various debt obligations under which the Company would retain all
or most of its oil, gas and related assets. In June 1995, Tom Brown, Inc.
("Tom Brown") acquired approximately $56 million in principal amount of the
Company's Senior Gas Indexed Notes Due 2002 (the "Senior Gas Indexed Notes")
and reiterated a previously expressed interest in acquiring the Company or all
of its assets. In response to Tom Brown's expression of interest and after
consulting with certain of its significant creditors, the Company decided to
explore the possibility of selling the Company or all of its assets. In August
1995, the Company began soliciting bids from persons interested in acquiring
the Company or all of its assets. A data room was established which provided
potential buyers with information about the Company and its assets. Bids were
received from a number of companies that participated in the data room process.
The Company and its financial advisors evaluated those bids; and, on November
15, 1995, the Company selected Tom Brown as the bidder with which the Company
would pursue negotiations for a potential sale of the Company or all of its
assets. Tom Brown's November 15, 1995 bid contemplated the acquisition of the
Company for a purchase price of approximately $180 million (consisting of a
combination of cash and Tom Brown common stock).
Since late November of 1995, the Company has been in negotiations with Tom
Brown and certain of the Company's creditors regarding a proposed transaction
pursuant to which Tom Brown would acquire the Company (the "Tom Brown
Transaction"). Such negotiations are currently ongoing in an attempt to reach
an informal consensual agreement regarding the terms of the Tom Brown
Transaction, including the allocation of the proceeds thereof. Failure to
reach such an informal consensual agreement would have an adverse effect on the
amount of recovery, if any, that will be received by the holders of the
Company's public debt (in particular its Senior Gas Indexed Notes and 9%
Convertible Subordinated Debentures Due 2015 (the "Subordinated Debentures")),
as well as by the holders of the Company's common stock.
Since the consideration currently offered by Tom Brown for the Company would be
insufficient to liquidate the Company's bank debt and public debt obligations
at par, the Tom Brown Transaction contemplates that it would be implemented by
means of the Company and its subsidiaries filing a plan of reorganization
("Reorganization Plan") under chapter 11 of title 11 of the United States Code
(the "Bankruptcy Code"). Such a Reorganization Plan would implement the Tom
Brown Transaction and provide for the allocation and distribution of the
proceeds realized therefrom among the Company's debt and equity holders. The
Company, however, expects that no creditors of the Company other than holders
of the Public Debt (defined below) will be materially impaired in connection
with the Tom Brown Transaction. A bankruptcy filing and the publicity
attendant thereto may adversely affect the business of the Company and its
subsidiaries. While the Company believes that any such adverse effects would
be
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
mitigated if the bankruptcy filing was made in connection with a consensual Tom
Brown Transaction, a protracted bankruptcy case could have a material adverse
effect on the Company and its ability to implement the Tom Brown Transaction or
any other transaction or restructuring.
The Company expects to enter into an agreement with Tom Brown regarding the Tom
Brown Transaction during the second quarter of 1996. There can be no
assurance, however, that an acquisition agreement with Tom Brown will be
completed or, if such an agreement is entered into, that an informal consensual
agreement with the Company's bank lenders and certain of the significant
holders of the Public Debt can be agreed upon as to the amount or nature of the
proceeds that would be available for distribution to the Company's debt and
equity holders if the Tom Brown Transaction is consummated. In the event that
such an acquisition agreement is entered into with Tom Brown, but an informal
consensual agreement cannot be reached as to the allocation of the proceeds
available for distribution to the Company's debt and equity holders, then the
Company and Tom Brown plan to file a Reorganization Plan under chapter 11 of
title 11 of the Bankruptcy Code, specifying an allocation of the proceeds of
the sale of the Company among the Company's debt and equity holders and thereby
implementing the acquisition of the Company by Tom Brown. Should the Company
and Tom Brown fail to reach an agreement concerning such transaction, then it
is likely that the Company would seek protection from its creditors under
chapter 11 of the Bankruptcy Code and seek other purchasers or effect a
restructuring thereunder.
Liquidity and Ability to Service Debt; Related Defaults. As of May 2, 1996,
the Company had cash and cash equivalents of approximately $8 million. The
Company believes that such funds, together with the revenues anticipated to be
received from its ongoing activities, will be sufficient to fund its operations
for the time period necessary to implement the Tom Brown Transaction assuming
that the Company does not make any payments in respect of its Public Debt, or
in respect of its bank debt in excess of the current interest payments being
made thereon. Because of its current financial condition, the Company's
available cash flow is not adequate to meet its debt service requirements
relating to its bank debt and the Public Debt. Moreover, the Company's
available cash flow could be reduced below anticipated levels as a result of
risks and uncertainties associated with the Company's operations as well as
lower prices for oil and gas.
The Company has failed to satisfy its interest payment and certain other
obligations under the Senior Gas Indexed Notes, the Subordinated Debentures and
its 11.5% Senior Secured Notes Due 2000 (the "Senior Secured Notes"), resulting
in Events of Default thereunder. As a result of the Events of Default with
respect to the Senior Secured Notes, the outstanding $75 million of Senior
Secured Notes could be declared to be immediately due and payable, and the
trustee under the Senior Secured Note Indenture would be entitled to exercise
various remedies, including foreclosure of a mortgage on a substantial portion
of the Company's oil and gas properties. As a result of the Events of Default
with respect to the Senior Gas Indexed Notes and the Subordinated Debentures,
the outstanding $100 million of Senior Gas Indexed Notes and $50 million of
Subordinated Debentures could be declared immediately due and payable. The
Senior Gas Indexed Notes and the Subordinated Debentures are unsecured. Except
in connection with the Tom Brown Transaction or a similar sale or
restructuring, the Company does not anticipate making any future payments on
the Senior Secured Notes, the Senior Gas Indexed Notes or the Subordinated
Debentures (the "Public Debt").
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
In addition, Events of Default in respect of the Public Debt have resulted in
an Event of Default under the Company's bank credit agreement (the "Credit
Agreement"). The Company has also failed to make principal payments under the
Credit Agreement of $1.2 million due October 1, 1995 and $1.4 million due on
each of January 1 and April 1, 1996, resulting in further Events of Default.
In addition, on March 15, 1996, the Company caused Presidio West Virginia,
Inc., a Delaware corporation and wholly-owned subsidiary of the Company
("Presidio West Virginia"), to commence a bankruptcy case in Delaware resulting
in all of the obligations of the Company and its subsidiaries under the Credit
Agreement being accelerated and becoming immediately due and payable. The
acceleration also could lead to the foreclosure of a mortgage on substantially
all of the Company's oil and gas properties not pledged to secure the Senior
Secured Notes. Except in connection with the Tom Brown Transaction or a
similar sale or restructuring, the Company does not anticipate making any
payments on its bank debt other than interest thereon.
Additionally, any of the Events of Default described herein could provide the
opportunity for creditors of the Company to initiate involuntary bankruptcy
proceedings against the Company under the Bankruptcy Code.
Collateral Value Requirement for the Senior Secured Notes. The Senior Secured
Notes are secured by a lien on certain proved oil and gas reserves (the
"Pledged Assets") pursuant to a pledged assets agency agreement (the "Pledged
Assets Agency Agreement"). The Pledged Assets Agency Agreement requires that,
as of various dates, the Security Value (as defined below) of the Pledged
Assets and the Security Value of the Pledged Assets that are proved developed
producing reserves (the "Pledged Producing Assets") must be equal to or greater
than certain specified percentages of the then outstanding amount of Senior
Secured Notes. For the purposes of this discussion, "Security Value" means the
aggregate present value (computed at a discount rate equal to 10% per annum) of
the future net revenues of proved oil and gas reserves, calculated in
accordance with the rules of the Securities and Exchange Commission.
Because of the decline in gas prices during the second half of 1994, the
Security Values of both the Pledged Assets and the Pledged Producing Assets as
of December 31, 1994 were less than the required percentages (125% in respect
of the Pledged Assets and 105% in respect of the Pledged Producing Assets),
resulting in deficiencies (the "Deficiencies") in respect of the Pledged Assets
and Pledged Producing Assets of $4 million and $7.3 million, respectively. As
of December 31, 1995, the Deficiencies were $9.4 million in respect of the
Pledged Assets and $18.1 million in respect of the Pledged Producing Assets.
The Company has not complied with the requirements for curing the Deficiencies
by the dates set forth for such compliance in the Senior Secured Note
Indenture. As a result, an Event of Default under the Senior Secured Note
Indenture has occurred and the trustee under such Indenture and the holders of
Senior Secured Notes have the remedies described above in respect of an Event
of Default under the Senior Secured Note Indenture. See "Liquidity and Ability
to Service Debt; Related Defaults" above.
Ability to Replace Reserves Produced and Maintain Production Levels. The
ability of the Company to maintain its current level of oil and gas production
and to find and develop new proved reserves of oil and gas to replace the
reserves produced depends on the availability of funds for capital
expenditures. Due to the Company's current financial condition, the Company
has limited funds available for drilling operations during 1996. In addition,
the Company expects its ability to use such funds to be subject to restrictions
contained in any agreement it reaches with Tom Brown, and to be subject to the
approval of the bankruptcy court subsequent to the date when a filing is made
under the Bankruptcy Code. See "Capital Expenditures" below. As a result, the
Company's production and volumes of proved oil and gas
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
reserves are likely to continue to decline during 1996. Such a decline in
production would adversely affect the Company's short-term liquidity. A
decline in reserve volumes could cause increased Deficiencies under the
collateral requirement relating to the Senior Secured Notes and could adversely
affect the value of the collateral securing the Senior Secured Notes and the
Company's bank debt. See "Liquidity and Ability to Service Debt; Related
Defaults" and "Collateral Value Requirement for the Senior Secured Notes"
above.
LONG-TERM DEBT
At May 2, 1996, the total debt of the Company was $246.4 million. Of such
amount, $21.4 million was outstanding under the Credit Agreement and was
secured by mortgages on substantially all of the Company's oil and gas
properties (the "Mortgaged Properties") other than the Pledged Assets.
Borrowings under the Credit Agreement currently bear interest at a per annum
rate of either prime plus 3% or LIBOR plus 4.5%, reflecting a default rate of
interest resulting from the fact that all obligations of the Company and its
subsidiaries under the Credit Agreement have been accelerated and are
immediately due and payable, as described above. See "Liquidity and Ability to
Service Debt; Related Defaults".
The other long-term debt of the Company consists of $50 million of Subordinated
Debentures, $75 million of Senior Secured Notes, and $100 million of Senior Gas
Indexed Notes. The Senior Secured Notes bear interest at 11.5% per annum and
are secured by a mortgage on the Pledged Assets as described above. The Senior
Gas Indexed Notes are unsecured and currently bear interest at 13.25% per
annum. The Subordinated Debentures bear interest at 9% per annum, are
unsecured and are subordinated to the Company's bank debt, the Senior Secured
Notes and the Senior Gas Indexed Notes. As discussed above, the Company is
currently in default in respect of, and making no payments in respect of, the
Public Debt. See "Liquidity and Ability to Service Debt; Related Defaults."
CAPITAL EXPENDITURES
The Company's capital expenditures on its oil and gas operations totaled
approximately $2.5 million for the first quarter of 1996. Due to the current
uncertainty as to its financial condition, the Company plans to limit its
capital expenditures, subject to the availability of funds (as to which no
assurance can be given), during the remainder of 1996 to those that are
required to maintain its producing oil and gas properties as well as certain
other drilling operations and activities. The Company also expects any
agreement it reaches with Tom Brown to contain restrictions on the Company's
ability to make significant capital expenditures without Tom Brown's approval.
The unavailability of funds for capital projects could also materially and
adversely impact the value of the Company's interest in properties it owns
jointly and with others. Pursuant to the operating agreements governing these
joint ownership relationships, the Company could be forced to contribute funds
for capital projects in respect to these properties or suffer "non-consent"
penalties. Such penalties could materially and adversely affect the value of
the Company's ownership interest in any such properties.
11
<PAGE> 12
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, 1996 of $6,089,000,
compared to a loss of $7,617,000 for the first quarter of 1995. Contributing
to the 1996 first quarter loss was a 21% decrease in oil production compared to
the 1995 period, most of which resulted from lower production rates in several
significant fields. Gas production for the 1996 first quarter decreased 25% as
compared to the 1995 period due to the sale of certain producing properties.
However, the Company's revenues for the first quarter of 1996 were only
slightly lower than those a year earlier due to a significant increase in oil
and gas 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 quarters ended
March 31, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------
1996 1995
---------- -----------
<S> <C> <C>
Average Price:
Oil and condensate (per barrel) $ 16.91 $ 15.08
Gas (per thousand cubic feet) $ 1.71 $ 1.23
Production:
Oil and condensate (barrels) 191,000 242,000
Gas (thousand cubic feet) 3,177,000 4,240,000
</TABLE>
The reduced amount of expenses associated with lease operating, production
taxes and depletion, depreciation and amortization during the 1996 first
quarter as compared to the 1995 period is due to a decrease in oil and gas
production.
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, 1996 and
1995:
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------
1996 1995
---------- ----------
(per equivalent barrel)
<S> <C> <C>
Production Costs $3.93 $3.91
Depletion, Depreciation and
Amortization $4.37 $4.21
</TABLE>
The Company has significantly reduced its ongoing general and administrative
expenses during 1996 due to a reduction in personnel during 1995.
The Company's interest expense increased during 1996 as compared to 1995 due to
the interest accrued on the unpaid balance of interest due on the Public Debt.
12
<PAGE> 13
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 February 22, 1996, a Form 8-K was filed dated February 16,
1996, which reports under Item 5 "Other Events" that the
Company no longer satisfies all of the financial guidelines of
the AMEX for continued listing of its Class A and B Common
Stock and 9% Convertible Subordinated Debentures.
On April 4, 1996, a Form 8-K was filed dated April 2, 1996,
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 13.250% for the
period May 15, 1996 to August 14, 1996.
13
<PAGE> 14
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: May 10, 1996 /s/ Robert L. Smith
---------------- ---------------------------------
Robert L. Smith
President and
Chief Operating Officer
DATE: May 10, 1996 /s/ Charles E. Brammeier
---------------- ---------------------------------
Charles E. Brammeier
Controller
(Principal Accounting Officer)
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
27 Financial Data Schedule (Submitted to the SEC for its
information).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,052
<SECURITIES> 0
<RECEIVABLES> 6,746
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,292
<PP&E> 522,054
<DEPRECIATION> (305,968)
<TOTAL-ASSETS> 242,414
<CURRENT-LIABILITIES> 287,081
<BONDS> 0
<COMMON> 2,854
0
0
<OTHER-SE> (58,938)
<TOTAL-LIABILITY-AND-EQUITY> 242,414
<SALES> 8,658
<TOTAL-REVENUES> 8,658
<CGS> 0
<TOTAL-COSTS> 5,983
<OTHER-EXPENSES> 910
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,854
<INCOME-PRETAX> (6,089)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,089)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,089)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
