<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 24, 1999
--------------------------------
VINTAGE PETROLEUM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10578 73-1182669
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
4200 One Williams Center, Tulsa, Oklahoma 74172
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 592-0101
-----------------------------
Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
------------
A copy of the Registrant's press release dated February 24, 1999, is
attached as an exhibit hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
99 Press release dated February 24, 1999, issued by the
Registrant.
SIGNATURES
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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 hereunto duly authorized.
VINTAGE PETROLEUM, INC.
Date: February 25, 1999 By: /s/ Michael F. Meimerstorf
---------------------------------------------
Michael F. Meimerstorf
Vice President and Controller
-2-
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Exhibit Index
Exhibit
Number Description
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99 Press release dated February 24, 1999, issued by the Registrant.
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EXHIBIT 99
[Letterhead of Vintage Petroleum, Inc. appears here]
For Immediate Release For Further Information Contact:
Wednesday, February 24, 1999 Robert E. Phaneuf
Vice President - Corporate Development
(918) 592-0101
VINTAGE PETROLEUM REPORTS 1998 RESULTS;
SETS RECORDS IN ANNUAL PRODUCTION AND RESERVES
Tulsa, Oklahoma - Vintage Petroleum, Inc. today announced a loss for the
year ended December 31, 1998 of $87.7 million, or $1.69 per share, inclusive of
certain after-tax, non-cash charges totaling $51.4 million related primarily to
an impairment of oil and gas properties, which occurred in the fourth quarter.
This compares to the prior year's restated earnings of $55.0 million, or $1.05
per share which included $5.4 million of certain after-tax, non-cash
impairments. Excluding these certain non-cash charges, VPI had a loss of $36.3
million or 70 cents per share in 1998 compared to earnings of $60.3 million or
$1.16 per share in 1997. The losses for 1998 resulted from dramatically lower
oil and gas prices.
Production for the year reached an all-time high, advancing eight percent
to 24.3 million equivalent barrels (BOE) from 22.6 million BOE in 1997. Spurred
by the exploitation program in Argentina and acquisitions, oil production rose
six percent to 16.4 million barrels. Domestic exploration and acquisitions,
drove gas production up 11 percent to 47.2 billion cubic feet (Bcf).
Despite the eight percent rise in total production, a dramatically lower
average price of oil and a decline in the average price of natural gas combined
to reduce oil and gas revenues
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by 25 percent to $266.7 million compared to $355.1 million in the prior year.
The company's realized price of oil averaged $10.87 per barrel, 36 percent below
last year's average realized price of $17.02 per barrel. Similarly, the realized
price of gas averaged $1.86 per thousand cubic feet (Mcf), a drop of 14 percent
from the 1997 realized average of $2.16 per Mcf. Driven primarily by oil and gas
sales, total revenues declined 21 percent for the year to $328.9 million.
Overall, lease operating costs increased primarily in association with the
eight percent rise in production. Lease operating costs and general and
administrative costs were held to a slight one percent increase on a per BOE
basis. Exploration expense of $24.1 million for 1998 includes $16.3 million of
seismic and other geological and geophysical costs and $7.8 million of dry hole
and other costs. Interest rose $6.9 million to $43.7 million in response to
higher outstanding borrowings utilized to fund acquisitions and the excess of
capital spending over cash flow.
Cash flow (before changes in working capital) for the year was $76.8
million. This compares to restated cash flow of $174.6 million in 1997.
Vintage incurred a non-cash impairment charge in the fourth quarter of 1998
equal to $43.3 million after tax, ($70.9 million, pretax). The charge relates
to certain of the company's U. S. oil and gas properties and resulted from the
effect of significantly lower oil and gas price expectations. VPI also incurred
certain other non-cash charges as a result of lower oil and gas prices amounting
to $8.1 million during the quarter.
Fourth Quarter Results
Fourth quarter daily production averaged 66,685 BOE compared to the year-
ago
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quarter of 66,315 BOE. As was the case for the 1998 year as a whole,
dramatically lower oil and gas prices more than offset the production gain. A 44
percent drop in the average realized price of oil and a 28 percent decrease in
the average realized price of gas compared to respective year-ago levels
resulted in a 38 percent decline in oil and gas sales for the quarter to $59.6
million. Lease operating expenses rose in-line with production.
The net loss for the quarter just ended was $66.7 million, or $1.27 a
share, inclusive of the $51.4 million of after-tax, non-cash charges. This
compares to fourth quarter 1997 restated earnings of $12.7 million or 24 cents
per share, which included $5.4 million of certain after-tax, non-cash
impairments. Absent these items, the loss for the fourth quarter was $15.3
million or 29 cents a share compared to restated earnings of $18.0 million or 34
cents a share in the 1997 fourth quarter. As a result of the issuance of 1.3
million shares in connection with an acquisition in November 1998, shares
outstanding averaged 52.6 million shares.
Cash flow (before changes in working capital) in the fourth quarter of 1998
was $11.9 million compared to restated cash flow of $46.8 million in the year
earlier quarter.
1999 Focus - Near Term Cash Flow Enhancement While Preserving Long - Term Growth
Vintage Revises 1999 Capital Budget to be Consistent with Cash Flow Expectations
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Vintage has revised its preliminary capital spending plan of $115 million
for 1999 to $56 million, exclusive of acquisitions. "The capital budget is
designed to be consistent with our cash flow assuming that the below-normal oil
price environment continues throughout the year. Our target is to reduce and
control costs and fund the maintenance of 1998 volume
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capacity while preserving our longer-term growth potential," said S. Craig
George, CEO. "In addition, due to the current historically low oil and gas price
environment, we are temporarily suspending our regular quarterly cash dividend.
The reinstatement of quarterly dividends will be evaluated as conditions
warrant," Mr. George concluded.
Approximately $16.5 million of the 1999 budget is earmarked for production
maintenance while $32.5 million will be directed primarily toward medium risk
exploration projects, particularly in Bolivia, aimed at building a base for
future reserve and production growth. Approximately $7.0 million of seismic,
geologic and geophysical expenditures in Yemen and the United States are planned
for the year, in support of future growth. The drilling of exploration projects
in Yemen and Ecuador Block 19 are being deferred until next year.
Production
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With the budgeted expenditures, production capacity is targeted to remain
even with the 1998 production of 24.3 million BOE. However, VPI has elected to
shut-in approximately 3,000 barrels per day pending higher oil prices. If these
volumes remain shut-in for the year, it would reduce targeted 1999's production
by 1.1 million BOE or five percent from the year-ago level.
Costs
- -----
As a result of activities to cut field level costs combined with the
benefits of shutting-in marginal production, Vintage plans to cut $20 million in
operating costs, targeting total lease operating expense for the year of $103
million compared to the 1998 level of $122.7 million. General and administrative
expenses are anticipated to rise slightly as cost
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reductions are offset by the full year cost of operations in Ecuador and Yemen.
"In addition to the measures we've outlined, we continue to pursue
acquisition targets consistent with our growth goals, but financed in ways that
will not adversely affect our financial position," added S. Craig George.
Issuance of $150 Million of Senior Subordinated Notes
In January 1999, Vintage sold $150 million of 9.75% Senior Subordinated
Notes due 2009 in a Rule 144A transaction. All of the net proceeds of
approximately $146.3 million were used to repay a portion of the company's bank
borrowings. The offering benefited the company by extending the maturity of a
portion of its long-term debt and increased the unused availability under the
company's bank credit facility to approximately $185 million, pending the next
borrowing base redetermination scheduled for April 1999.
Record High Year-End 1998 Reserves; Production Replacement of 383 Percent Before
Price Impact
The company's recently announced estimated proved reserves of oil and gas
at year-end 1998, before adjusting for the negative effect of dramatically lower
oil and gas prices since year-end 1997, were 347.9 million BOE, up 24 percent or
68.1 million BOE from the 1997 year-end level of 279.8 million BOE. Based on oil
and gas pricing at the lower year-end 1998 levels, the company's reported proved
reserves were 298.9 million BOE, still seven percent above those of year-end
1997. The negative effect of lower oil and gas prices amounted to a downward
revision to reserves of approximately 49 million BOE.
Proved reserve additions from all sources totaled 93 million BOE before the
downward revision due to lower oil and gas prices, replacing 383 percent of
1998's record
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production of 24.3 million BOE at a cost of $3.08 per BOE. Even after taking
into account the significant reduction of reserves due to lower oil and gas
prices, total reserve additions were 44.1 million BOE, replacing 181 percent of
1998 production at a per BOE cost of $6.50. During the year, the company spent
$105.0 million to acquire 35.9 million BOE of reserves at an average cost of
$2.93 per BOE. This compares favorably to the industry's average cost of
acquisitions in 1998 of $7.38 per BOE as computed by John S. Herold, Inc.
Vintage Increases Its Proved Bolivian Reserves by 100 Percent in 1998
Also in an earlier release, Vintage estimated that in 1998 its total proved
Bolivian reserves more than doubled, rising to 459 billion cubic feet
equivalents. Identified reserve potential from defined reservoirs increased
dramatically. Identified reserves are important to the process of positioning
the company to sell gas to the Brazilian market. New capacity in the Bolivia-to-
Brazil pipeline will be allocated through a bidding process based on proved and
probable reserves available to be dedicated for sale. Based on the higher
reserve level and higher productive capacity at year-end 1998, the company
expects that its reserve-weighted volume available to bid for pipeline capacity
in upcoming competitive rounds is likely to be improved.
"We're pleased to demonstrate ongoing reserve and production growth despite
the adverse current commodity price environment. We will continue to be
creative in our strategy to grow our asset base while striving to protect our
financial flexibility. We feel this is the best way to position our
shareholders for the day when commodity prices return to more normal levels,"
commented S. Craig George, CEO.
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Forward Looking Statements
This release includes certain statements that may be deemed to be "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements in this release, other than statements of
historical facts, that address estimates of proved oil and gas reserves, future
production and costs, exploration drilling, exploitation activities and events
or developments that the company expects are forward-looking statements.
Although Vintage believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors that could
cause actual results to differ materially from those in forward-looking
statements include oil and gas prices, exploitation and exploration successes,
continued availability of capital and financing, and general economic, market or
business conditions.
Vintage Petroleum, Inc. is an independent energy company engaged in the
acquisition, exploitation, exploration and development of oil and gas properties
and the marketing of natural gas and crude oil. Company headquarters are in
Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange
under the symbol VPI.
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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
------------------------ -----------------------
1998 1997 1998 1997
----------- ----------- --------- ------------
(Restated) (Restated)
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales............................ $ 59,606 $ 96,849 $ 266,661 $355,113
Oil and gas gathering........................ 930 4,549 7,741 18,063
Gas marketing................................ 14,444 14,340 54,108 45,981
Other income (expense)....................... (256) (2,612) 425 (2,567)
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74,724 113,126 328,935 416,590
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COSTS AND EXPENSES:
Lease operating, including production taxes.. 31,033 30,499 122,726 114,346
Exploration costs............................ 5,117 4,346 24,056 12,667
Impairment of oil and gas properties......... 70,913 8,785 70,913 8,785
Oil and gas gathering........................ 407 3,578 6,258 14,932
Gas marketing................................ 13,859 13,399 51,560 43,398
General and administrative................... 8,074 7,624 31,996 27,361
Depreciation, depletion and amortization..... 28,692 25,487 108,975 96,307
Interest..................................... 12,885 9,307 43,680 36,762
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170,980 103,025 460,164 354,558
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Income (loss) before income taxes
and minority interest................. (96,256) 10,101 (131,229) 62,032
PROVISION (BENEFIT) FOR
INCOME TAXES:
Current...................................... (3,481) 1,942 (4,068) 5,235
Deferred..................................... (26,125) (4,507) (39,496) 1,640
MINORITY INTEREST IN
INCOME OF SUBSIDIARY......................... - - - (203)
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NET INCOME (LOSS)............................... $(66,650) $ 12,666 $ (87,665) $ 54,954
======== ======== ========= ========
EARNINGS (LOSS) PER SHARE:
Basic........................................ $(1.27) $.25 $(1.69) $1.07
======== ======== ========= ========
Diluted...................................... $(1.27) $.24 $(1.69) $1.05
======== ======== ========= ========
Weighted average common shares outstanding:
Basic........................................ 52,600 51,559 51,900 51,178
======== ======== ========= ========
Diluted...................................... 52,600 52,719 51,900 52,026
======== ======== ========= ========
</TABLE>
-Table follows-
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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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(In thousands, except shares
and per share amounts)
(Unaudited)
A S S E T S
<TABLE>
<CAPTION>
December 31,
----------------------------
1998 1997
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(Restated)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................... $ 5,245 $ 5,797
Accounts receivable -
Oil and gas sales........................................ 54,680 60,878
Joint operations......................................... 5,905 6,358
Deferred income taxes........................................ - 4,206
Prepaids and other current assets............................ 18,312 12,443
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Total current assets.................................. 84,142 89,682
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PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties....................................... 1,368,914 1,158,749
Oil and gas gathering systems................................ 14,774 12,943
Other........................................................ 16,276 8,420
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1,399,964 1,180,112
Less accumulated depreciation, depletion and amortization.... 501,722 373,225
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898,242 806,887
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OTHER ASSETS, net............................................... 31,791 18,825
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$1,014,175 $ 915,394
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L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Revenue payable.............................................. $ 17,382 $ 27,085
Accounts payable - trade..................................... 24,812 21,088
Other payables and accrued liabilities....................... 24,731 31,504
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Total current liabilities............................. 66,925 79,677
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LONG-TERM DEBT.................................................. 672,507 451,096
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DEFERRED INCOME TAXES........................................... - 43,135
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OTHER LONG-TERM LIABILITIES..................................... 785 3,908
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STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized,
zero shares issued and outstanding....................... - -
Common stock, $.005 par, 80,000,000 shares authorized,
53,107,066 and 51,558,886 shares issued and outstanding.. 266 258
Capital in excess of par value............................... 230,736 202,008
Retained earnings............................................ 42,956 135,312
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273,958 337,578
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$1,014,175 $ 915,394
========== ==========
</TABLE>
-Table follows-
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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
----------------------------------------
SUMMARY OPERATING DATA
----------------------
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------- -----------------
1998 1997 1998 1997
-------- -------- -------- --------
Production:
Oil (MBbls) -
U.S. 2,403 2,602 9,912 9,692
Argentina 1,685 1,473 6,322 5,630
Bolivia 23 37 122 135
Ecuador 78 - 78 -
Total 4,189 4,112 16,434 15,457
Gas (MMcf) -
U.S. 10,646 10,421 42,176 36,623
Bolivia 1,026 1,514 5,062 6,068
Total 11,672 11,935 47,238 42,691
Total MBOE 6,135 6,101 24,307 22,573
Average prices:
Oil (per Bbl) -
U.S. $ 9.83 $ 16.58 $ 11.20 $ 17.23
Argentina 8.29 15.44 10.41 16.67
Bolivia 10.57 17.39 11.31 16.52
Ecuador 5.77 - 5.77 -
Total 9.14 16.18 10.87 17.02
Gas (per Mcf) -
U.S. $ 1.94 $ 2.76 $ 1.99 $ 2.33
Bolivia .64 1.03 .78 1.10
Total 1.83 2.54 1.86 2.16
