<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[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 1-10578
-------
VINTAGE PETROLEUM, INC.
------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 73-1182669
- - -------------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4200 One Williams Center Tulsa, Oklahoma 74172
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 592-0101
-----------------------------------
(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
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1996
----- -----------------------------
Common Stock, $.005 Par Value 24,017,462
-1-
<PAGE>
PART I
FINANCIAL INFORMATION
-2-
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands, except shares
and per share amounts)
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- --------------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 3,697 $ 2,545
Accounts receivable -
Oil and gas sales 43,685 40,256
Joint operations 4,143 4,616
Prepaids and other current assets 10,131 11,665
------------- --------------
Total current assets 61,656 59,082
------------- --------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, full cost method 792,630 762,582
Oil and gas gathering systems 12,768 12,765
Other 8,106 7,733
------------- --------------
813,504 783,080
Less accumulated depreciation, depletion and
amortization 222,349 205,334
------------- --------------
591,155 577,746
------------- --------------
OTHER ASSETS, net 10,200 10,711
------------- --------------
TOTAL ASSETS $ 663,011 $ 647,539
============= ==============
</TABLE>
See notes to unaudited consolidated financial statements.
-3-
<PAGE>
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Revenue payable $ 20,704 $ 16,855
Accounts payable - trade 12,776 15,514
Other payables and accrued liabilities 15,849 18,697
Current portion of long-term debt 11,245 7,930
------------- --------------
Total current liabilities 60,574 58,996
------------- --------------
LONG-TERM DEBT, less current portion above 321,541 315,846
------------- --------------
DEFERRED INCOME TAXES 40,818 37,753
------------- --------------
OTHER LONG-TERM LIABILITIES 3,578 3,922
------------- --------------
MINORITY INTEREST IN SUBSIDIARY 3,907 7,062
------------- --------------
STOCKHOLDERS' EQUITY per accompanying statement:
Preferred stock, $.01 par, 5,000,000 shares
authorized, zero shares issued and outstanding - -
Common stock, $.005 par, 40,000,000 shares
authorized, 24,017,462 and 23,661,162 shares
issued and outstanding 120 118
Capital in excess of par value 151,782 149,725
Retained earnings 80,691 74,117
------------- --------------
232,593 223,960
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 663,011 $ 647,539
============= ==============
</TABLE>
See notes to unaudited consolidated financial statements.
-4-
<PAGE>
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
------------- --------------
<S> <C> <C>
REVENUES:
Oil and gas sales $ 58,641 $ 32,810
Oil and gas gathering 5,015 2,679
Gas marketing 7,220 5,024
Other income 464 529
------------- --------------
71,340 41,042
------------- --------------
COSTS AND EXPENSES:
Lease operating, including production taxes 22,072 14,495
Oil and gas gathering 4,181 2,032
Gas marketing 6,695 4,662
General and administrative 3,811 2,522
Depreciation, depletion, and amortization 17,015 11,045
Interest 7,319 3,651
------------- --------------
61,093 38,407
------------- --------------
Income before provision for income taxes
and minority interest 10,247 2,635
PROVISION FOR INCOME TAXES:
Current - 257
Deferred 3,065 770
MINORITY INTEREST IN INCOME OF SUBSIDIARY (8) -
------------- --------------
NET INCOME $ 7,174 $ 1,608
============= ==============
NET INCOME PER SHARE $ .30 $ .08
============= ==============
Weighted average common shares and common
equivalent shares outstanding 24,303 21,141
============= ==============
</TABLE>
See notes to unaudited consolidated financial statements.
-5-
<PAGE>
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1996
-----------------------------------------
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Capital
Common Stock In Excess
-------------- of Par Retained
Shares Amount Value Earnings Total
------ ------ --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 23,661 $ 118 $149,725 $ 74,117 $ 223,960
Net income - - - 7,174 7,174
Exercise of warrants 306 2 1,530 - 1,532
Exercise of stock options and
resulting tax effects 51 - 527 - 527
Cash dividends declared
($.025 per share) - - - (600) (600)
------ ------ --------- ---------- -----------
Balance at March 31, 1996 24,018 $ 120 $ 151,782 $ 80,691 $ 232,593
====== ====== ========= ========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
-6-
<PAGE>
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,174 $ 1,608
Adjustments to reconcile net income to
cash provided by operating activities -
Depreciation, depletion and amortization 17,015 11,045
Minority interest in income of subsidiary 8 -
Provision for deferred income taxes 3,065 770
------------ -----------
27,262 13,423
(Increase) decrease in receivables (2,956) 2,455
(Decrease) increase in payables and accrued liabilities (3,541) 2,239
Other 1,534 1,206
------------ -----------
Cash provided by operating activities 22,299 19,323
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment -
Oil and gas properties (30,048) (16,836)
Other property and equipment (376) (247)
Purchase of additional interest in subsidiary (3,297) -
Other 52 4,214
------------ -----------
Cash used by investing activities (33,669) (12,869)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 1,532 2
Advances on revolving credit facility and other borrowings 19,907 2,143
Payments on revolving credit facility and other borrowings (9,102) (7,629)
Dividends paid (591) (403)
Other 776 -
------------ -----------
Cash provided (used) by financing activities 12,522 (5,887)
------------ -----------
Net increase in cash and cash equivalents 1,152 567
Cash and cash equivalents, beginning of period 2,545 431
------------ -----------
Cash and cash equivalents, end of period $ 3,697 $ 998
============ ===========
</TABLE>
See notes to unaudited consolidated financial statements.
-7-
<PAGE>
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
March 31, 1996 and 1995
1. GENERAL
The accompanying financial statements are unaudited. The consolidated
financial statements include the accounts of the Company and its wholly- and
majority-owned subsidiaries. Management believes that 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 1995 audited financial statements and
related notes. Certain reclassifications have been made to the prior year
financial statements to conform to the 1996 presentations. These
reclassifications had no effect on previously reported net income or cash
flow.
2. SIGNIFICANT ACCOUNTING POLICIES
Statements of Cash Flows
During the three months ended March 31, 1996 and 1995, cash payments for
interest totaled $3,639,086 and $2,968,697, respectively. During the three
months ended March 31, 1996 and 1995, there were no cash payments made for
U.S. Federal and state income taxes or for foreign income taxes. The Company
had no foreign operations prior to July 1995.
Depreciation, Depletion, and Amortization
Amortization per equivalent barrel of the Company's U.S. oil and gas
properties for the three months ended March 31, 1996 and 1995, was $3.88 and
$3.92, respectively. Amortization per equivalent barrel of the Company's
Argentina oil and gas properties for the three months ended March 31, 1996,
was $4.27. The Company had no Argentina operations prior to July 1995.
Income Taxes
Deferred income taxes are provided on transactions which are recognized in
different periods for financial and tax reporting purposes. Such temporary
differences arise primarily from the deduction of certain oil and gas
exploration and development costs which are capitalized for financial
reporting purposes and differences in the methods of depreciation. The
Company follows the provisions of Statement of Financial Accounting
Standards No. 109 when calculating the deferred income tax provision for
financial purposes.
Earnings of the Company's foreign subsidiaries, Cadipsa S.A. and Vintage Oil
Argentina, Inc., are subject to Argentina income taxes. Due to significant
Argentina net operating loss carryforwards for both companies, the Company
does not expect to pay any foreign income taxes related to these
subsidiaries in the near future. No U.S. deferred tax liability will be
recognized related to the unremitted earnings of these foreign subsidiaries,
as it is the Company's intention, generally, to reinvest such earnings
permanently.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
---------------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Results of Operations
The Company's results of operations have been significantly affected by its
success in acquiring oil and gas properties and its ability to maintain or
increase production through its exploitation activities. Fluctuations in oil and
gas prices have also significantly affected the Company's results. The following
table reflects the Company's oil and gas production and its average oil and gas
prices for the periods presented:
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Production:
Oil (MBbls) -
U.S................................ 1,852 1,532
Argentina (1)...................... 898 -
Total.............................. 2,750 1,532
Gas, all U.S. (MMcf)................. 8,405 6,932
Total MBOE........................... 4,151 2,687
Average prices:
Oil (per Bbl) -
U.S................................ $ 16.64 $ 15.16
Argentina (1)...................... 15.87 -
Total.............................. 16.39 15.16
Gas, all U.S. (per Mcf).............. $ 1.62 $ 1.46
- - ---------------
(1) Argentina operations commenced July 5, 1995.
</TABLE>
Average oil and gas prices received by the Company fluctuate generally with
changes in the West Texas Intermediate ("WTI") posted prices for oil and spot
market prices for gas. Spot market prices for gas may vary significantly by
region. During the first quarter of 1996, gas deliverable to markets in the
northeast received substantial premiums over other regions. A substantial
portion of the Company's gas production during the first quarter of 1996 was in
markets other than the northeast.
The Company experienced an eight percent increase in its average oil price in
the first quarter of 1996 compared to the same period in 1995. The Company
realized an average oil price which was approximately 91 percent of WTI posted
prices for the first quarter of 1996 compared to 90 percent of WTI posted prices
for the year earlier quarter.
-9-
<PAGE>
The Company's average gas price for the first quarter of 1996 was 11 percent
above the same period in 1995, due primarily to the increases in the average
spot market prices for gas. 1996's first quarter average gas price was
negatively impacted by 18 cents per Mcf as the result of certain gas hedges that
were in place for 40,000 Mcf of gas per day for the period January through March
1996.
The Company has previously engaged in oil and gas hedging activities and
intends to continue to consider various hedging arrangements to realize
commodity prices which it considers favorable. In order to minimize the impact
of oil price fluctuations, the Company has entered into hedges (swap agreements)
totaling approximately 5.5 million barrels of its 1996 oil production. The
hedges cover production for the periods of April through December 1996. The
following table reflects the barrels hedged and the corresponding weighted
average NYMEX reference prices by quarter:
<TABLE>
<CAPTION>
NYMEX
Barrels Reference Price
Quarter Ending (in thousands) Per Barrel
-------------------- -------------- ---------------
<S> <C> <C>
June 30, 1996 1,477 $19.52
September 30, 1996 2,024 $18.50
December 31, 1996 2,024 $18.12
</TABLE>
The Company's average realized oil price for calendar 1995 of $15.16 per barrel
was approximately 82 percent of the average NYMEX reference price. During the
first quarter of 1996, the Company's average realized oil price was
approximately 84 percent of the average NYMEX referenced price.
Relatively modest changes in either oil or gas prices significantly impact
the Company's results of operations and cash flow. However, the impact of
changes in the market prices for oil and gas on the Company's average realized
prices may be reduced from time to time based on the level of the Company's
hedging activities. Based on 1996 first quarter production, a change in the
average prices realized by the Company of either $1.00 per Bbl for oil or $.33
per Mcf for gas would result in a change in net income and cash flow before
income taxes on a quarterly basis of approximately $1.6 million and $2.7
---------------
million, respectively.
Period to Period Comparisons
Period ended March 31, 1996, Compared to Period ended March 31, 1995
Net income was $7.2 million for the quarter ended March 31, 1996, up 350
percent from $1.6 million for the same period in 1995. Increases in the
Company's oil and gas production of 54 percent on an equivalent barrel basis, an
increase of 11 percent in natural gas prices, and an increase of eight percent
in oil prices are primarily responsible for the increase in net income. The
production increases primarily relate to certain oil and gas properties acquired
subsequent to March 31, 1995. In addition, certain oil and gas properties were
shut-in for a portion of the first three months of 1995 due to storm damage
caused by heavy rains in California and the resulting mudslides, reducing the
Company's overall production in the first three months of 1995 by approximately
51,000 barrels of oil and 210,000 Mcf of gas.
-10-
<PAGE>
Subsequent to March 31, 1995, the Company made various significant
acquisitions including the purchase of certain U.S. oil and gas properties from
Texaco Exploration and Production, Inc. ("Texaco") in May 1995, the acquisition
of a controlling interest in Cadipsa S.A. ("Cadipsa") in July 1995, the
acquisition of Vintage Oil Argentina, Inc. (formerly BG Argentina, S.A.) in
September 1995 and the acquisition of certain Argentine oil and gas properties
from Astra Compania Argentina de Petroleo S.A. and Shell Compania Argentina de
Petroleo S.A. (collectively the "Astra/Shell Properties") in November 1995 and
December 1995, respectively.
The Company's consolidated revenues and expenses for the first quarter of
1996 include the consolidation of 100 percent of Cadipsa under the purchase
method of accounting. The minority interest in income of subsidiary reflects the
portion of Cadipsa's income attributable to the minority ownership during the
first quarter of 1996.
Oil and gas sales increased $25.8 million (79 percent), to $58.6 million for
the first quarter of 1996 from $32.8 million for the first quarter of 1995. An
80 percent increase in oil production and an eight percent increase in average
oil prices combined to account for $21.8 million of the increase. A 21 percent
increase in gas production and an 11 percent increase in average gas prices
contributed to an additional $4.0 million increase.
Oil and gas gathering net margins (revenue less expenses) increased $185,000
(28 percent), to $835,000 for the first quarter of 1996 from $650,000 for the
first quarter of 1995, due primarily to additional oil volumes transported on
the Shawnee gathering system and increased gas prices.
Gas marketing net margins (revenue less expenses) increased $165,000 (46
percent), to $525,000 for the first quarter of 1996 from $360,000 for the first
quarter of 1995, due primarily to a 43 percent increase in average natural gas
prices received which more than offset a seven percent decrease in volumes
marketed.
Lease operating expenses, including production taxes, increased $7.6 million
(52 percent), to $22.1 million for the first quarter of 1996 from $14.5 million
for the first quarter of 1995. The increase in lease operating expenses is due
primarily to the acquisitions of Cadipsa, Vintage Oil Argentina, Inc. and the
Astra/Shell Properties in the second half of 1995 and certain domestic oil and
gas properties acquired from Texaco in May 1995. Lease operating expenses per
equivalent barrel produced decreased one percent to $5.32 in the first quarter
of 1996 from $5.39 for the same period in 1995.
General and administrative expenses increased $1.3 million (51 percent), to
$3.8 million for the first quarter of 1996 from $2.5 million for the first
quarter of 1995, due primarily to the acquisitions of Cadipsa and Vintage Oil
Argentina, Inc.
-11-
<PAGE>
Depreciation, depletion and amortization increased $6.0 million (54
percent), to $17.0 million for the first quarter of 1996 from $11.0 million for
the first quarter of 1995, due primarily to the 54 percent increase in
production on an equivalent barrel basis. Amortization per equivalent barrel of
the Company's U.S. oil and gas properties declined to $3.88 in the first quarter
of 1996 from $3.92 in 1995. Amortization per equivalent barrel of the Company's
Argentina oil and gas properties for the first quarter of 1996 was $4.27. The
Company had no Argentina operations prior to July 1995.
Interest expense increased $3.6 million (97 percent), to $7.3 million for
the first quarter of 1996 from $3.7 million for the first quarter of 1995, due
primarily to a 72 percent increase in the Company's total average outstanding
debt related primarily to the 1995 acquisitions.
Capital Expenditures
During the first three months of 1996, the Company's U.S. capital
expenditures totaled $23.8 million, including $14.0 million for the acquisition
of producing oil and gas properties from Conoco. Funds for the acquisition were
provided by an advance under the Company's revolving credit facility.
The Company's capital expenditures in Argentina during the three months
ended March 31, 1996, were $9.9 million. These capital expenditures include $3.3
million for the purchase of an additional 12.9 percent of the outstanding common
stock of Cadipsa, increasing the Company's total ownership of Cadipsa to 84.5
percent at March 31, 1996. The Company is pursuing additional purchases of
shares of Cadipsa.
The timing of most of the Company's capital expenditures is discretionary
with no material long-term capital expenditure commitments. Consequently, the
Company has a significant degree of flexibility to adjust the level of such
expenditures as circumstances warrant. The Company primarily uses internally
generated cash flow to fund capital expenditures other than significant
acquisitions and anticipates that its cash flow will be sufficient to fund its
planned 1996 non-acquisition capital expenditures of approximately $43 million
in the U.S. and approximately $45 million in South America. The Company does not
have a specific acquisition budget since the timing and size of acquisitions are
difficult to forecast. The Company is actively pursuing additional acquisitions
of oil and gas properties. In addition to internally generated cash flow and
advances under the Company's revolving credit facility, the Company may seek
additional sources of capital to fund any future significant acquisitions (see
"-Liquidity").
Liquidity
Internally generated cash flow and the borrowing capacity under the
Company's revolving credit facility are its major sources of liquidity. In
addition, the Company may use other sources of capital, including the issuance
of additional debt securities or equity securities, to fund any major
acquisitions it might secure in the future and to maintain its financial
flexibility. The Company funds its capital expenditures (excluding acquisitions)
and debt service requirements primarily through internally generated cash flows
from operations. Any excess cash flow is used to reduce outstanding advances
under the Company's revolving credit facility and other indebtedness.
-12-
<PAGE>
In the past, the Company has accessed the public equity markets to finance
significant acquisitions and provide liquidity for its future activities. In
August 1990, the Company sold 3.4 million shares of its common stock for net
proceeds of approximately $32.8 million which were used to fund an acquisition
of oil and gas properties and reduce indebtedness under the Company's revolving
credit facility. In January 1993, the Company sold 3.9 million shares of its
common stock for net proceeds of approximately $44.8 million which were used to
reduce indebtedness under the Company's revolving credit facility.
On December 20, 1995, the Company completed a public offering of 2,793,700
shares of common stock of which 2,500,000 shares were sold by the Company and
293,700 shares were sold by a stockholder. Net proceeds to the Company, after
underwriting commission and other expenses, were approximately $49.5 million and
were used to fund a substantial portion of the purchase of the Astra/Shell
Properties.
Also on December 20, 1995, the Company issued $150 million of its 9% Senior
Subordinated Notes Due 2005 (the "Notes"). The net proceeds to the Company from
the sale of the Notes of approximately $145.1 million were used principally to
reduce a portion of the outstanding balance under the Company's revolving credit
facility. The Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after December 15, 2000. Upon a change in control of the
Company, holders of the Notes may require the Company to purchase all or a
portion of the Notes at a purchase price equal to 101 percent of the principal
amount thereof, plus accrued and unpaid interest. The Notes will mature on
December 15, 2005, with interest payable semiannually on June 15 and December 15
of each year.
Under its Credit Agreement dated November 3, 1993, as amended, certain banks
have provided to the Company an unsecured revolving credit facility. The
revolving credit facility establishes a borrowing base (currently $230 million)
determined by the banks' evaluation of the Company's U.S. oil and gas reserves.
The Company has elected to set the banks' commitment under the revolving credit
facility at $180 million in order to reduce fees charged by the banks.
Outstanding advances under the revolving credit facility bear interest
payable quarterly at a floating rate based on Bank of Montreal's alternate base
rate (as defined) or, at the Company's option, at a fixed rate for up to six
months based on the eurodollar market rate ("LIBOR"). The Company's interest
rate increments above the alternate base rate and LIBOR vary based on the level
of outstanding senior debt and the borrowing base at the time. As of April 30,
1996, the Company had elected a fixed rate based on LIBOR for a substantial
portion of its outstanding advances which resulted in an average interest rate
of approximately 6.3 percent per annum. In addition, the Company must pay a
commitment fee of 0.375 percent per annum on the unused portion of the banks'
commitment.
On a semiannual basis, the Company's borrowing base is redetermined by the
banks based upon their review of the Company's U.S. oil and gas reserves. If the
sum of outstanding senior debt (which includes the $36.7 million bank term loan
and the 5.92% Senior Note of the Company in the principal amount of $9.9
million) exceeds the borrowing base, as redetermined, the Company must repay
such excess. Any principal advances outstanding at October 31, 1997, will be
payable in 16 equal consecutive quarterly installments commencing January 31,
1998, with maturity at October 31, 2001.
-13-
<PAGE>
The unused portion of the revolving credit facility was approximately $99
million at April 30, 1996. The unused portion of the revolving credit facility
and the Company's internally generated cash flow provide liquidity which may be
used to finance future capital expenditures, including acquisitions. As
additional U.S. acquisitions are made and properties are added to the borrowing
base, the banks' determination of the borrowing base and their commitment may be
increased.
Income Taxes
The total provision for U.S. income taxes is based on the Federal corporate
statutory income tax rate plus an estimated average rate for state income taxes.
The Company had no current provision for U.S. income taxes in the first quarter
of 1996 and a current provision of $0.3 million in the same period of 1995. The
Company has a $3.5 million U.S. alternative minimum tax credit carryforward
which does not expire and is available to offset U.S. regular income taxes in
future years, but only to the extent that U.S. regular income taxes exceed the
U.S. alternative minimum tax in such years.
Earnings of the Company's foreign subsidiaries, Cadipsa and Vintage Oil
Argentina, Inc., are subject to Argentina income taxes. Due to significant
Argentina net operating loss carryforwards for both companies, the Company does
not expect to pay any foreign income taxes related to these subsidiaries in the
near future. No U.S. deferred tax liability will be recognized related to the
unremitted earnings of these foreign subsidiaries, as it is the Company's
intention, generally, to reinvest such earnings permanently. As a result of the
Company's Argentina earnings, its effective tax rate for the first quarter of
1996 was 30 percent as compared to 39 percent for the same period of 1995. The
Company had no Argentina operations prior to July 1995.
Foreign Operations
Substantially all of the Company's foreign operations are located in
Argentina. The Company believes Argentina offers a politically stable
environment and does not anticipate any significant change in the near future.
The current democratic form of government has been in place since 1983 and,
since 1989, has pursued a steady process of privatization, deregulation and
economic stabilization and reforms involving the reduction of inflation and
public spending. Argentina's 12-month trailing inflation rate measured by the
Argentine Consumer Price Index declined from 200.7 percent as of June 1991 to
2.7 percent as of August 1995.
The Company believes that its Argentine operations present minimal currency
risk. All of the Company's Argentine revenues are U.S. dollar based, while a
large portion of its costs are Argentine peso denominated. The Argentina Central
Bank is obligated by law to sell dollars at a rate of one Argentine peso to one
U.S. dollar and has sought to prevent appreciation of the peso by buying dollars
at rates of not less than 0.998 peso to one U.S. dollar. As a result, the
Company believes that should any devaluation of the Argentine peso occur, its
revenues would be unaffected and its operating costs would not be significantly
increased. At the present time, there are no foreign exchange controls
preventing or restricting the conversion of pesos into dollars.
-14-
<PAGE>
PART II
OTHER INFORMATION
-15-
<PAGE>
Item 1. Legal Proceedings
-----------------
not applicable
Item 2. Changes in Securities
---------------------
not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
not applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
not applicable
Item 5. Other Information
-----------------
not applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
27. Financial Data Schedules
b) Reports on Form 8-K
Form 8-K was filed January 16, 1996, to report under Item 2 the
closing of the acquisitions of the Astra/Shell Properties.
************************************************************************
-16-
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VINTAGE PETROLEUM, INC.
-----------------------
(Registrant)
DATE: May 10, 1996 \s\ Michael F. Meimerstorf
--------------- --------------------------------------
Michael F. Meimerstorf
Vice President and Controller
(Principal Accounting Officer)
-17-
<PAGE>
Exhibit Index
The following documents are included as exhibits to this Form 10-Q.
Exhibit
Number Description
- - ------ ------------------------------
27. Financial Data Schedule
-18-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,697
<SECURITIES> 0
<RECEIVABLES> 47,828
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,131
<PP&E> 813,504
<DEPRECIATION> 222,349
<TOTAL-ASSETS> 663,011
<CURRENT-LIABILITIES> 60,574
<BONDS> 321,541
0
0
<COMMON> 120
<OTHER-SE> 232,473
<TOTAL-LIABILITY-AND-EQUITY> 663,011
<SALES> 70,876
<TOTAL-REVENUES> 71,340
<CGS> 32,948
<TOTAL-COSTS> 32,948
<OTHER-EXPENSES> 20,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,319
<INCOME-PRETAX> 10,247
<INCOME-TAX> 3,065
<INCOME-CONTINUING> 7,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,174
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
