<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
Commission file number 1-12088
------------------
UNITED MERIDIAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2160316
- --------------------------------------------- -----------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1201 Louisiana, Suite 1400, Houston, TX 77002-5603
- --------------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
(713) 654-9110
---------------------------------
(Registrant's telephone number)
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 .
----- -----
The number of shares outstanding of the registrant's common stock, all
of which comprise a single class with a $0.01 par value, as of August 2, 1996,
the latest practicable date, was 28,832,220.
<PAGE>
UNITED MERIDIAN CORPORATION
Form 10-Q
June 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Statement of Income for the Three Months
and Six Months Ended June 30, 1996 and 1995............ 1
Consolidated Balance Sheet at June 30, 1996 and
December 31, 1995...................................... 2
Consolidated Statement of Changes in Stockholders' Equity
Equity for the Year Ended December 31, 1995 and for the
Six Months Ended June 30, 1996......................... 4
Consolidated Statement of Cash Flows for the Six Months
Ended June 30, 1996 and 1995........................... 5
Notes to Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition..................... 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 16
Item 2. Changes in Securities...................................... 16
Item 3. Defaults Upon Senior Securities............................ 16
Item 4. Submission of Matters to a Vote of Security Holders........ 16
Item 5. Other Information.......................................... 16
Item 6. Exhibits and Reports on Form 8-K........................... 16
SIGNATURE............................................................. 17
EXHIBITS -
Index to Exhibits................................................... 18
</TABLE>
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the three For the six
months ended months ended
June 30, June 30,
---------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Revenues:
Gas sales............................ $30,305 $16,411 $ 60,986 $34,122
Oil sales............................ 18,865 11,723 35,284 21,128
Gain on sale of assets............... 12,487 82 18,012 12,569
Other................................ 458 122 680 955
------- ------- -------- -------
62,115 28,338 114,962 68,774
------- ------- -------- -------
Costs and expenses:
Production costs..................... 12,283 9,834 25,766 19,481
General and administrative........... 3,120 2,683 6,519 5,437
Exploration, including dry holes and
impairments........................ 10,250 3,553 14,711 7,623
Depreciation, depletion and
amortization....................... 22,062 12,868 41,821 25,828
------- ------- -------- -------
47,715 28,938 88,817 58,369
------- ------- -------- -------
Income (loss) from operations........... 14,400 (600) 26,145 10,405
Other income and expenses:
Interest and debt expense............ (5,841) (4,356) (11,380) (8,729)
Other................................ (36) 184 78 305
------- ------- -------- -------
Net income (loss) before income taxes... 8,523 (4,772) 14,843 1,981
Income tax benefit (provision).......... (3,288) 5,235 (5,892) 2,089
------- ------- -------- -------
Net income.............................. 5,235 463 8,951 4,070
Preferred stock dividends............... (765) - (1,531) -
------- ------- -------- -------
Net income available to common
stockholders........................... $ 4,470 $ 463 $ 7,420 $ 4,070
======= ======= ======== =======
Net income per common share............. $ 0.15 $ 0.02 $ 0.24 $ 0.14
======= ======= ======== =======
Weighted average number of common
shares outstanding, including common
stock equivalents (Exhibit 11.1)....... 30,652 29,079 30,474 29,035
======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents............................ $ 4,138 $ 13,586
Accounts receivable
Oil and gas sales.................................. 21,083 18,188
Joint interest and other........................... 22,157 22,522
Deferred income taxes................................ 8,826 3,875
Inventory............................................ 8,695 15,313
Prepaid expenses and other........................... 3,188 2,529
--------- ---------
Total current assets............................. 68,087 76,013
--------- ---------
Property and equipment, at cost:
Oil and gas (successful efforts method)
Proved properties.................................. 768,353 759,695
Unproved properties................................ 11,565 12,369
Other property and equipment......................... 6,860 6,231
--------- ---------
786,778 778,295
Accumulated depreciation, depletion and amortization. (327,397) (309,622)
--------- ---------
459,381 468,673
--------- ---------
Other assets:
Gas imbalances receivable............................ 5,818 5,852
Deferred income taxes................................ 14,295 17,140
Debt issue cost...................................... 9,375 9,905
Other................................................ 828 867
--------- ---------
30,316 33,764
--------- ---------
TOTAL ASSETS..................................... $ 557,784 $ 578,450
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable........................................ $ 37,534 $ 58,137
Advances from joint owners.............................. 8,977 8,238
Interest payable........................................ 5,310 4,494
Accrued liabilities..................................... 8,761 6,202
Notes payable........................................... - 10,639
Current maturities of long-term debt.................... 4,350 3,100
--------- ---------
64,932 90,810
--------- ---------
Long-term debt:
Revolving loan.......................................... 44,758 61,049
Cote d'Ivoire project loan.............................. 32,500 33,750
10-3/8% senior subordinated notes....................... 150,000 150,000
--------- ---------
227,258 244,799
--------- ---------
Deferred credits and other liabilities:
Deferred income taxes................................... 23,167 18,499
Gas imbalances payable.................................. 6,460 6,377
Other................................................... 6,151 5,653
--------- ---------
35,778 30,529
--------- ---------
Commitments and contingencies
Stockholders' equity:
Series F preferred stock................................ 12 12
Common stock............................................ 287 281
Additional paid-in capital.............................. 346,526 336,469
Foreign currency translation adjustment................. (4,036) (4,057)
Retained earnings (deficit)............................. (112,973) (120,393)
--------- ---------
229,816 212,312
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $ 557,784 $ 578,450
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
For the year ended December 31, 1995 and six months ended June 30, 1996
<TABLE>
<CAPTION>
SERIES F
PREFERRED STOCK COMMON STOCK ADD'L FOREIGN RETAINED
------------------ ------------------- PAID-IN CURRENCY EARNINGS
SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENT (DEFICIT) TOTAL
-------- ------- ---------- -------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994........ - $ - 27,721,881 $277 $296,168 $(3,999) $(121,008) $171,438
Foreign currency translation
adjustment.................... (58) (58)
Preferred stock issuance
- June 30.................... 833,333 8 24,992 25,000
- July 24.................... 333,334 4 9,902 9,906
Exercise of common stock
options....................... 428,343 4 5,407 5,411
Preferred stock dividends...... (1,484) (1,484)
Net income..................... 2,099 2,099
--------- --- ----------- ---- -------- ------- ---------- --------
Balance, December 31, 1995........ 1,166,667 12 28,150,224 281 336,469 (4,057) (120,393) 212,312
Foreign currency translation
adjustment.................... 21 21
Exercise of common stock
options....................... 318,358 3 6,472 6,475
Exercise of warrants........... 233,556 3 3,585 3,588
Preferred stock dividends...... (1,531) (1,531)
Net income..................... 8,951 8,951
--------- --- ----------- ---- -------- ------- ---------- --------
Balance, June 30, 1996............ 1,166,667 $12 28,702,138 $287 $346,526 $(4,036) $(112,973) $229,816
========= === =========== ==== ======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the six months
ended June 30,
--------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................ $ 8,951 $ 4,070
Adjustments to reconcile net income to cash from operating
activities:
Exploration, including dry holes and impairments........................ 14,711 7,623
Depreciation, depletion and amortization................................ 41,821 25,828
Amortization of debt issue cost......................................... 792 319
Deferred income tax provision (benefit)................................. 5,595 (2,476)
Gain on sale of assets.................................................. (18,012) (12,569)
--------- ---------
53,858 22,795
Changes in assets and liabilities:
Increase in receivables................................................. (2,530) (3,744)
Decrease in payables and accrued liabilities............................ (19,185) (517)
Increase in net gas imbalances.......................................... 117 183
Other................................................................... 2,700 1,869
--------- ---------
Net cash provided by operating activities............................. 34,960 20,586
--------- ---------
Cash flows from investing activities:
Exploration............................................................... (24,148) (14,120)
Development............................................................... (37,444) (36,519)
Acquisition of properties................................................. - (3,680)
Additions to other property and equipment................................. (615) (549)
Net proceeds from sale of assets.......................................... 29,715 48,410
--------- ---------
Net cash used in investing activities................................. (32,492) (6,458)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt............................................... (105,238) (237,784)
Additions to total debt................................................... 88,947 187,645
Debt issue cost........................................................... (251) -
Proceeds from exercise of common stock options
and warrants............................................................ 6,157 1,029
Preferred stock dividends................................................. (1,531) -
Net proceeds from issuance of preferred stock............................. - 24,970
--------- ---------
Net cash used in financing activities................................. (11,916) (24,140)
--------- ---------
Net decrease in cash and cash equivalents.................................. (9,448) (10,012)
Cash and cash equivalents at beginning of period........................... 13,586 11,825
--------- ---------
Cash and cash equivalents at end of period................................. $ 4,138 $ 1,813
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
UNITED MERIDIAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Financial Statements
The accompanying consolidated financial statements of United Meridian
Corporation (UMC or the Company) included herein have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Although certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted, UMC believes that the disclosures are adequate to
make the information presented not misleading. The financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto for the year ended December 31, 1995.
The financial statements reflect all normal recurring adjustments that, in the
opinion of management, are necessary for a fair presentation.
2. Acquisitions and Dispositions
As part of its on-going operations, the Company continually sells producing and
undeveloped reserves and related assets. Certain transactions are discussed
below.
In February 1995, UMC sold all of its interests in oil and gas properties in
West Virginia, effective January 1, 1995. Net proceeds from the sale were $41.2
million and a gain of $7.0 million was recognized. Total proved reserves at
December 31, 1994, attributable to the sold properties were 61,715 MMcfe of
natural gas equivalents.
In March 1995, UMC sold all of its interest in the Main Pass 108 offshore
Louisiana field effective February 1, 1995. Net proceeds from the sale were
$6.9 million with a recognized gain of $4.7 million. Total proved reserves at
December 31, 1994, associated with the Company's interest in Main Pass 108 were
2,106 MMcfe of natural gas equivalents.
In October 1995, the Company agreed to assign a portion of its interest in
Block B in Equatorial Guinea to Mobil for total consideration of $36.8 million,
$18.8 million of which was received in 1995 with the remainder to be received in
1996. During the first six months of 1996, the Company recognized a gain of
$11.4 million on proceeds of $13.0 million.
In June 1996, UMC Resources Canada, Inc. (Resources), the Company's wholly-
owned Canadian subsidiary, sold all of its interests in the Rocanville area in
the province of Saskatchewan, effective May 1, 1996. Net proceeds from the sale
were $6.9 million and a gain of $4.8 million was recognized. Total proved
reserves attributable to the interests sold were 4,366 MMcfe of natural gas
equivalents at December 31, 1995.
3. Financial Instruments
The Company has, from time to time, entered into crude oil and natural gas
price swaps and interest rate swaps, or other similar hedging transactions, to
reduce its exposure to price reductions on a portion of its production that is
subject to market sensitive pricing and to reduce its exposure to increases in
interest rates.
The Company hedged a portion of its gas production via swap agreements in the
first six months of 1996, resulting in a $2.2 million downward adjustment to
natural gas revenues. Details of current contracts in place are described
below.
-6-
<PAGE>
In April 1996, the Company entered into four natural gas collar contracts for a
total of 14 BCF of natural gas for the period June through December,
representing approximately 40% of estimated North American volumes. The collars
consist of a guaranteed floor price of $2.20 per MMbtu and a cap of $2.70 per
MMbtu. In addition, the Company also has an outstanding natural gas hedging
contract expiring in December 1996 and having a notional volume of 50,000 MMbtu
per month at $2.21 per MMbtu.
As of January 1, 1996, UMC has a fixed interest rate swap contract that
provides for fixed interest rates on $45.0 million of the Company's debt through
1998. The agreement includes annual fixed interest rates ranging from 5.55% in
1996 to 6.40% in 1998. Additionally, the Company has a two-year LIBOR interest
rate cap contract, which began January 1, 1995, at an interest rate cap of 8.30%
for 1996. The effect of these swaps has had minimal impact on Interest and Debt
Expense during the six months ended June 30, 1996.
4. Exercise of Common Stock Warrants
On June 11, 1993, the Company issued warrants to purchase 250,004 shares of the
Company's common stock in connection with the KPX acquisition at an exercise
price of $15.36 per share. During the quarter ended June 30, 1996, proceeds of
$3.6 million for the exercise of warrants were received and 233,556 shares of
common stock were issued.
5. Subsequent Event
On July 26, 1996, the Company converted $35 million of Series F convertible
preferred stock to 1.845 million shares of common stock in accordance with the
automatic conversion terms of the original private offering. The conversion
eliminates the 8.75% dividend on the preferred stock. Had the conversion of the
Series F preferred stock occurred at January 1, 1996, the reported earnings per
share would have been $0.28 and $0.16 for the six months and three months ended
June 30, 1996, respectively.
6. Supplemental Guarantor Information
In connection with the sale by UMC of the 10-3/8% Senior Subordinated Notes
(Notes) in October 1995, UMC Petroleum Corporation (Petroleum), wholly-owned and
the Company's only direct subsidiary, has unconditionally guaranteed the full
and prompt performance of the Company's obligations under the Notes and related
indenture, including the payment of principal, premium (if any) and interest.
Other than intercompany arrangements and transactions, the consolidated
financial statements of Petroleum are equivalent in all material respects to
those of the Company and therefore the separate consolidated financial
statements of Petroleum are not material to investors and have not been included
herein. However, in an effort to provide meaningful financial data relating to
the guarantor (i.e., Petroleum on an unconsolidated basis) of the Notes, the
following condensed consolidating financial information has been provided
following the policies set forth below:
(1) Investments in subsidiaries are accounted for by the Company on the cost
basis. Earnings of subsidiaries are therefore not reflected in the related
investment accounts.
(2) Certain reclassifications were made to conform all of the financial
information to the financial presentation on a consolidated basis. The
principal eliminating entries eliminate investments in subsidiaries and
intercompany balances.
-7-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the six months ended June 30, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
----------------------------------------------------
Guarantor Non-Guarantor Consolidated
UMC Subsidiary Subsidiaries UMC
--------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1996
- ----
Revenues..................................... $ - $ 78,477 $36,485 $114,962
------- -------- ------- --------
Costs and expenses:
Production costs............................ - 19,929 5,837 25,766
General and administrative.................. 107 5,187 1,225 6,519
Exploration, including dry holes and
impairments............................... - 8,811 5,900 14,711
Depreciation, depletion and amortization.... - 35,537 6,284 41,821
------- -------- ------- --------
Income (loss) from operations................ (107) 9,013 17,239 26,145
Interest income (expense), net.............. 8,849 (15,814) (4,415) (11,380)
Other credits, net.......................... - (22) 100 78
------- -------- ------- --------
Net income (loss) before income taxes........ 8,742 (6,823) 12,924 14,843
Income tax benefit (provision)............... (2,371) 1,272 (4,793) (5,892)
------- -------- ------- --------
Net income (loss)............................ $ 6,371 $ (5,551) $ 8,131 $ 8,951
======= ======== ======= ========
1995
- ----
Revenues..................................... $ - $ 58,362 $10,412 $ 68,774
------- -------- ------- --------
Costs and expenses:
Production costs............................ - 15,786 3,695 19,481
General and administrative.................. 374 3,794 1,269 5,437
Exploration, including dry holes and
impairments............................... - 5,470 2,153 7,623
Depreciation, depletion and amortization.... - 21,306 4,522 25,828
------- -------- ------- --------
Income (loss) from operations................ (374) 12,006 (1,227) 10,405
Interest income (expense), net.............. 7,614 (15,423) (920) (8,729)
Other credits, net.......................... - 57 248 305
------- -------- ------- --------
Net income (loss) before income taxes........ 7,240 (3,360) (1,899) 1,981
Income tax benefit (provision)............... (2,534) 1,282 3,341 2,089
------- -------- ------- --------
Net income (loss)............................ $ 4,706 $ (2,078) $ 1,442 $ 4,070
======= ======== ======= ========
</TABLE>
-8-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended June 30, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
----------------------------------------------------
Guarantor Non-Guarantor Consolidated
UMC Subsidiary Subsidiaries UMC
--------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1996
- ----
Revenues..................................... $ - $39,628 $22,487 $62,115
------- ------- ------- -------
Costs and expenses:
Production costs............................ - 9,543 2,740 12,283
General and administrative.................. 70 2,544 506 3,120
Exploration, including dry holes and
impairments............................... - 6,792 3,458 10,250
Depreciation, depletion and amortization.... - 18,839 3,223 22,062
------- ------- ------- -------
Income (loss) from operations................ (70) 1,910 12,560 14,400
Interest income (expense), net.............. 4,444 (7,861) (2,424) (5,841)
Other credits, net.......................... - (103) 67 (36)
------- ------- ------- -------
Net income (loss) before income taxes........ 4,374 (6,054) 10,203 8,523
Income tax benefit (provision)............... (862) 1,289 (3,715) (3,288)
------- ------- ------- -------
Net income (loss)............................ $ 3,512 $(4,765) $ 6,488 $ 5,235
======= ======= ======= =======
1995
- ----
Revenues..................................... $ - $22,353 $ 5,985 $28,338
------- ------- ------- -------
Costs and expenses:
Production costs............................ - 7,613 2,221 9,834
General and administrative.................. 176 1,853 654 2,683
Exploration, including dry holes and
impairments............................... - 2,807 746 3,553
Depreciation, depletion and amortization.... - 10,627 2,241 12,868
------- ------- ------- -------
Income (loss) from operations................ (176) (547) 123 (600)
Interest income (expense), net.............. 3,871 (7,751) (476) (4,356)
Other credits, net.......................... - 28 156 184
------- ------- ------- -------
Net income (loss) before income taxes........ 3,695 (8,270) (197) (4,772)
Income tax benefit (provision)............... (1,293) 3,308 3,220 5,235
------- ------- ------- -------
Net income (loss)............................ $ 2,402 $(4,962) $ 3,023 $ 463
======= ======= ======= =======
</TABLE>
-9-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
At June 30, 1996 and December 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
----------------------------------------------------
Guarantor Non-Guarantor Eliminating Consolidated
UMC Subsidiary Subsidiaries Entries UMC
--------- --------------- ---------------- ------- ---------------
<S> <C> <C> <C> <C> <C>
JUNE 30, 1996
- -------------
ASSETS
Current assets.......................... $ 7 $ 44,752 $ 23,328 $ - $ 68,087
Intercompany investments................ 469,546 (246,999) (84,211) (138,336) -
Property and equipment, net............. - 285,134 174,247 - 459,381
Other assets............................ 5,706 29,525 (4,915) - 30,316
-------- --------- -------- --------- --------
Total assets......................... $475,259 $ 112,412 $108,449 $(138,336) $557,784
======== ========= ======== ========= ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities..................... $ 4,091 $ 42,160 $ 18,681 $ - $ 64,932
Long-term debt.......................... 150,000 31,725 45,533 - 227,258
Deferred credits and other
liabilities............................ - 13,451 22,327 - 35,778
Stockholders' equity.................... 321,168 25,076 21,908 (138,336) 229,816
-------- --------- -------- -------- ---------
Total liabilities & stockholders'
equity............................... $475,259 $ 112,412 $108,449 $(138,336) $557,784
======== ========= ======== ========= ========
DECEMBER 31, 1995
- -----------------
ASSETS
Current assets.......................... $ 31 $ 44,599 $ 31,383 $ - $ 76,013
Intercompany investments................ 453,574 (239,072) (76,165) (138,337) -
Property and equipment, net............. - 305,930 162,743 - 468,673
Other assets............................ 6,103 28,970 (1,309) - 33,764
-------- -------- -------- --------- --------
Total assets......................... $459,708 $140,427 $116,652 $(138,337) $578,450
======== ======== ======== ========= ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities..................... $ 3,443 $ 57,920 $ 29,447 $ - $ 90,810
Long-term debt.......................... 150,000 39,225 55,574 - 244,799
Deferred credits and other
liabilities............................ - 12,655 17,874 - 30,529
Stockholders' equity.................... 306,265 30,627 13,757 (138,337) 212,312
-------- -------- -------- --------- --------
Total liabilities & stockholders'
equity................................ $459,708 $140,427 $116,652 $(138,337) $578,450
========= ======== ======== ========= ========
</TABLE>
-10-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
-----------------------------------------------------
Guarantor Non-Guarantor Consolidated
1996 UMC Subsidiary Subsidiaries UMC
- ---- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ 6,371 $ (5,551) $ 8,131 $ 8,951
Adjustments to reconcile net income
(loss) to cash from operating activities........ 2,633 42,526 (252) 44,907
Changes in assets and liabilities................ 648 (14,598) (4,948) (18,898)
------- -------- -------- --------
Net cash provided by operating activities...... 9,652 22,377 2,931 34,960
Cash flows used in investing activities........... - (31,425) (1,067) (32,492)
Cash flows provided by (used in) financing
activities....................................... (9,676) (2,945) 705 (11,916)
------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents...................................... (24) (11,993) 2,569 (9,448)
Cash and cash equivalents at beginning of period.. 31 6,631 6,924 13,586
------- -------- -------- --------
Cash and cash equivalents at end of period........ $ 7 $ (5,362) $ 9,493 $ 4,138
======= ======== ======== ========
1995
- ----
Cash flows from operating activities:
Net income (loss)................................ $ 4,706 $ (2,078) $ 1,442 $ 4,070
Adjustments to reconcile net income
(loss) to cash from operating activities........ 2,649 12,449 3,627 18,725
Changes in assets and liabilities................ (57) 5,269 (7,421) (2,209)
------- -------- -------- --------
Net cash provided by (used in) operating
activities.................................... 7,298 15,640 (2,352) 20,586
Cash flows provided by (used in) investing
activities....................................... - 22,001 (28,459) (6,458)
Cash flows provided by (used in) financing
activities....................................... (7,295) (40,520) 23,675 (24,140)
------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents...................................... 3 (2,879) (7,136) (10,012)
Cash and cash equivalents at beginning of period.. 12 3,728 8,085 11,825
------- -------- -------- --------
Cash and cash equivalents at end of period........ $ 15 $ 849 $ 949 $ 1,813
======= ======== ======== ========
</TABLE>
-11-
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
RESULTS OF OPERATIONS
The following table sets forth certain operating information of the Company for
the periods shown:
<TABLE>
<CAPTION>
- --------
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------- ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Production:
Natural gas (MMcf)
U.S................................. 12,558 9,572 24,850 19,696
Canada.............................. 1,323 1,426 2,516 2,871
Cote d'Ivoire....................... 730 - 1,243 -
------ ------ ------ ------
Total............................... 14,611 10,998 28,609 22,567
Oil (Mbbls)
U.S................................. 566 452 1,122 866
Canada.............................. 150 166 295 334
Cote d'Ivoire....................... 241 69 444 69
------ ------ ------ ------
Total............................... 957 687 1,861 1,269
Average wellhead sales price: /(1)/
Natural gas ($ per Mcf)
U.S................................. $ 2.19 $ 1.55 $ 2.23 $ 1.57
Canada.............................. $ 1.16 $ 1.15 $ 1.37 $ 1.15
Cote d'Ivoire....................... $ 1.74 $ - $ 1.73 $ -
Total Company....................... $ 2.07 $ 1.49 $ 2.13 $ 1.51
Oil ($ per bbl)
U.S................................. $20.56 $16.83 $19.32 $16.40
Canada.............................. $18.94 $18.49 $17.85 $17.59
Cote d'Ivoire....................... $18.21 $15.04 $18.79 $15.04
Total Company....................... $19.71 $17.06 $18.96 $16.65
Additional data ($ per Mcfe):
Production and operating costs /(2)/... $ 0.52 $ 0.54 $ 0.53 $ 0.54
Ad valorem and production taxes........ $ 0.08 $ 0.11 $ 0.12 $ 0.11
General and administrative expense..... $ 0.15 $ 0.18 $ 0.16 $ 0.18
Oil and natural gas depletion,
depreciation and amortization......... $ 1.07 $ 0.84 $ 1.04 $ 0.84
</TABLE>
- --------------------------------------------
/(1)/ Net of impact of hedging activities.
/(2)/ Costs incurred to operate and maintain wells and related equipment,
excluding ad valorem and production taxes.
-12-
<PAGE>
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1995.
Total revenues for the six months ended June 30, 1996 were $115.0 million,
or 67.2% greater than the six months ended June 30, 1995 amount of $68.8
million. The increase in total revenue was primarily attributable to significant
improvements in oil and natural gas prices for the period, increased production
volumes of oil and natural gas and gain on sale of assets of $18.0 million, an
increase of 42.9% from the comparable period.
The average sales price for natural gas increased $0.62 per Mcf or 41.1% in
the first six months of 1996 from the first six months of 1995. Natural gas
production for the six months ended June 30, 1996, was 28,609 MMcf, an increase
of 26.8% over 1995 volumes due primarily to new production from the Gulf of
Mexico and gas production in Cote d'Ivoire which commenced late in 1995. The
average sales price for oil increased $2.31 per bbl or 13.9% in the first six
months of 1996 compared to the first six months of 1995. Oil production
increased 46.7% or 592 Mbbls in the first six months of 1996 due primarily to
increased oil production in Cote d'Ivoire and condensate production in the Gulf
of Mexico.
Production costs, including ad valorem and production taxes, for the first
six months of 1996 of $25.8 million increased 32.3% from $19.5 million for the
first six months of 1995, with the increase primarily attributable to production
in Cote d'Ivoire. However, production costs per Mcfe remained flat at $0.65 in
the first six months of 1996 and 1995.
General and administrative expenses for the six months ended June 30, 1996,
were $6.5 million compared to $5.4 million for the six months ended June 30,
1995, primarily due to an overall increase in the Company's operations. However,
in the first six months of 1996, general and administrative expenses per Mcfe of
production were $0.16 compared to $0.18 for the comparable period of 1995 or a
decrease of 11.1%.
Exploration, dry hole and lease impairment expenses for the first six
months of 1996 were $14.7 million compared to $7.6 million for the first six
months of 1995. This increase of $7.1 million was primarily due to increased
geological and geophysical costs, reflecting a higher level of international and
North American exploration activity in 1996 and increased dry hole costs.
Depreciation, depletion and amortization (DD&A) expense for the first six
months of 1996 of $41.8 million increased 62.0% from $25.8 million for the six
months ended June 30, 1995, due primarily to overall increased production
levels. Certain downward mid-year revisions of proved oil and gas reserves were
recognized by the Company at June 30, 1996, increasing DD&A expense for the
period by $1.3 million. Furthermore, a greater proportion of the Company's oil
and gas volumes were produced from the Gulf of Mexico region which historically
has higher amortization rates.
Interest expense for the first six months of 1996 was $11.4 million
compared to $8.7 million for the first six months of 1995. This $2.7 million
increase is primarily due to a higher average interest rate in 1996, due to the
issuance of senior subordinated notes in the fourth quarter of 1995, offset by
lower debt levels for the first half of 1996 versus the comparable period of
1995.
An income tax provision of $5.9 million (of which $0.3 million is a current
provision and $5.6 million is a deferred provision) was recognized as of June
30, 1996, compared to a benefit of $2.1 million for the comparable period of
1995. Included in the 1995 tax provision was the release of $0.7 million in
deferred income taxes and generation of a $0.6 million current tax receivable
relating to the completion of an on-going audit of the Company's Canadian
operations. Consistent with the Statement of Financial Accounting Standards No.
109, the income tax provision or benefit is derived from changes in deferred
income taxes on the balance sheet.
The Company reported net income of $9.0 million, or $0.24 per share, for
the first six months of 1996 compared to net income of $4.1 million, or $0.14
per share, for the comparable period in 1995.
-13-
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THE THREE MONTHS ENDED JUNE 30,
1995.
Material changes in the results of operations between the three months
ended June 30, 1996 and 1995, primarily reflect the significant increases in oil
and natural gas production volumes and prices received and gain on sale of
assets, all of which have been discussed previously. Increases in exploration
expenses during the second quarter of 1996 as compared to the comparable period
in 1995 reflect the significant international seismic program underway and
certain dry hole costs recorded during the quarter.
CAPITAL RESOURCES AND LIQUIDITY
The primary sources of cash for the Company during the six months ended
June 30, 1996, included funds generated from operations which reflected
significant increases in production volumes and prices received, proceeds from
asset sales and exercise of stock options and warrants. In the comparable period
of 1995, the primary sources of cash included funds generated from operations
and proceeds from sales of certain oil and gas properties. Primary cash uses
included capital expenditures (including exploration expenses) which totaled
$62.2 million for the first six months of 1996.
Discretionary cash flow, a measure of performance for exploration and
production companies, is derived by adjusting net income to eliminate the
effects of exploration expenses, including dry hole costs and impairments,
depreciation, depletion and amortization, deferred income tax and gain (loss) on
sale of assets. The effects of working capital changes are not taken into
account. This measure reflects an amount that is available for capital
expenditures, debt repayment or dividend payments. The Company generated
discretionary cash flow of approximately $53.9 million for the first six months
of 1996 and $22.8 million for the first six months of 1995. The Company
anticipates higher levels of discretionary cash flow in the remainder of 1996 as
compared to 1995 due to increased forecasted production levels, full-year
production in Cote d'Ivoire, commencement of production in Equatorial Guinea and
the improvement of oil and natural gas prices since December 31, 1995.
As part of its on-going operations, the Company continually sells producing
and undeveloped reserves and related assets. During the first six months of
1996, the Company realized net proceeds of $29.7 million, as compared to $48.4
million during the comparable period of 1995.
During the first six months of 1996, the Company realized proceeds of $6.2
million on the exercise of common stock options and warrants, which were due to
expire during the second quarter of 1996.
On July 26, 1996, the Company converted $35 million of Series F convertible
preferred stock to 1.845 million shares of common stock in accordance with the
automatic conversion terms of the original private offering. This conversion
eliminates the 8.75% dividend on the preferred stock.
The Balance Sheet reflects a total debt to book capitalization ratio of 50%
and 54% at June 30, 1996 and December 31, 1995, respectively. The ratio at June
30, 1995 was 48%. Long-term debt outstanding at June 30, 1996 consisted of (1)
$150.0 million senior subordinated notes, (2) $32.5 million project loan and (3)
$44.8 million outstanding on the Company's revolving loan, resulting in
liquidity (including cash) exceeding $130 million, as compared to $124 million
at December 31, 1995.
The Company's interest coverage ratio (calculated as the ratio of income
from operations plus depreciation, depletion and amortization, impairment of
proved oil and gas properties and exploration expense to interest less non-cash
amortization of debt issue costs) was 7.11 to 1 for the six months ended June
30, 1996, compared with 5.21 to 1 during the comparable period of 1995.
-14-
<PAGE>
OPERATING DATA
For 1996, the Company has adopted a total capital expenditure budget of
$174 million (exploration, development, and acquisitions) which will be funded
from discretionary cash flow, non-core area property sales and available debt
liquidity under the Credit Facility. This capital program may change if the
prices of oil and natural gas are significantly more or less than the Company's
expectations or based upon the results of the Company's exploration program.
FOREIGN CURRENCY TRANSACTIONS
The Company conducts a portion of its business in Canadian dollars.
Therefore, a portion of the Company's business is subject to fluctuations in
currency exchange rates. In preparing the Company's financial statements, the
results of operations of the Canadian subsidiary are generally translated at the
average exchange rate for the year-to-date, and the subsidiary's assets and
liabilities are translated at the rate of exchange in effect on the balance
sheet date.
The majority of revenues and expenditures for the Company's West African
operations are settled and all books and records are maintained in the U.S.
dollar.
CHANGES IN PRICES AND INFLATION
The Company's revenues and the value of its oil and natural gas properties
have been, and will continue to be, effected by changes in oil and natural gas
prices. The Company's ability to maintain its current borrowing capacity and to
obtain additional capital on attractive terms is also substantially dependent on
oil and natural gas prices. Oil and natural gas prices are subject to
significant seasonal and other fluctuations that are beyond the Company's
ability to control or predict. Although certain Company costs and expenses are
effected by the level of inflation, inflation did not have a significant effect
on the Company's results of operations for the first six months of 1996 or 1995.
-15-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a named defendant in lawsuits and is a party in governmental
proceedings from time to time arising in the ordinary course of business. While
the outcome of such lawsuits or other proceedings against the Company cannot be
predicted with certainty, management does not expect these matters to have a
material adverse effect on the financial condition or results of operations of
the Company.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Stockholders voting at the Annual Meeting on May 22, 1996, and by proxy,
elected four Directors (three incumbent, one new) to serve on the Company's
Board of Directors until the 1999 annual meeting. The vote tabulation for the
individual Directors was:
<TABLE>
<CAPTION>
Director Shares For Shares Withheld
- ---------------------------- ---------- ---------------
<S> <C> <C>
J. Dennis Bonney 25,743,164 93,440
John B. Brock 25,745,864 90,740
Steven A. Denning 25,743,364 93,240
David K. Newbigging 25,742,364 94,240
</TABLE>
Voting stockholders approved an amendment to the Company's 1994 Employee
Nonqualified Stock Option Plan to increase the number of shares available for
issuance thereunder from 2,350,000 to 2,850,000. The amendment was approved by
23,306,453 (90.3%) votes for and 2,497,301 (9.7%) against with 32,850
abstentions.
Voting stockholders approved an amendment to the Company's 1994 Outside
Directors' Nonqualified Stock Option Plan to increase the number of shares
available for issuance thereunder from 150,000 to 250,000. The amendment was
approved by 22,770,212 (88.2%) votes for and 3,032,692 (11.8%) against with
33,700 abstentions.
Voting stockholders also approved the appointment of Arthur Andersen LLP as
the Company's independent public accountants. The vote was 25,821,478 for and
9,726 against. There were 5,400 abstentions.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Index to Exhibits incorporated by reference.
(b) Report on Form 8-K:
None.
-16-
<PAGE>
SIGNATURE
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.
UNITED MERIDIAN CORPORATION
August 8, 1996 /s/ Jonathan M. Clarkson
-------------------------
Jonathan M. Clarkson
Executive Vice President and
Chief Financial Officer
/s/ Christopher E. Cragg
-------------------------
Christopher E. Cragg
Vice President, Controller and
Chief Accounting Officer
-17-
<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------------------------------------------------- -------------
3.1 Certificate of Incorporation of the Company,
as amended, incorporated by reference to Exhibit
3.1 to UMC's 1995 Form 10-K filed with the
Securities and Exchange Commission on March 7, 1996.
3.2 By-laws of the Company, as amended, incorporated by
reference to Exhibit 3.2 to UMC's 1995 Form 10-K
filed with the Securities and Exchange Commission
on March 7, 1996.
4.1 Amended and Restated Credit Agreement dated as of
July 18, 1994, among Petroleum, UMC and Norfolk
Holdings Inc. as the Guarantors, The Chase Manhattan
Bank, N.A., Morgan Guaranty Trust Company of New York
and the lenders signatory thereto, incorporated by
reference to Exhibit (b)(1) of Schedule 14D-1 and
Schedule 13D of UMC, (No. 5-44990) filed with the
Securities and Exchange Commission on August 11, 1994.
4.2 First Joint Amendment to Amended and Restated Credit
Agreement and to Amended and Restated Credit
Agreement (Canada) effective as of September 2, 1994,
incorporated by reference to Exhibit 4.2 to Amendment
No. 1 to UMC's Form S-4 (No. 33-83458) filed with the
Securities and Exchange Commission on October 7, 1994.
4.3 Guaranty Agreement dated as of July 18, 1994, by UMC
in favor of The Chase Manhattan Bank, N.A., Morgan
Guaranty Trust Company of New York and the lenders
listed therein, incorporated by reference to Exhibit
4.4 to UMC's Form S-4 (No. 33-83458) filed with the
Securities and Exchange Commission on August 31, 1994.
4.4 Guaranty Agreement dated as of July 18, 1994, by
Norfolk Holdings Inc. as the Guarantor, in favor of
The Chase Manhattan Bank, N.A., Morgan Guaranty Trust
Company of New York and the lenders listed therein,
incorporated by reference to Exhibit 4.5 to UMC's
Form S-4 (No. 33-83458) filed with the Securities
and Exchange Commission on August 31, 1994.
4.5 Amended and Restated Credit Agreement dated as of
July 18, 1994 among UMC Resources Canada Ltd., The
Chase Manhattan Bank of Canada and the lenders
signatory thereto, incorporated by reference to
Exhibit 4.6 to UMC's Form S-4 (No. 33-83458) filed
with the Securities and Exchange Commission on
August 31, 1994.
-18-
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------------------------------------------------------- -------------
4.6 Guaranty Agreement dated as of July 18, 1994, by UMC as
the Guarantor, in favor of The Chase Manhattan Bank of
Canada and the lenders listed therein, incorporated by
reference to Exhibit 4.7 to UMC's Form S-4 (No. 33-83458)
filed with the Securities and Exchange Commission on
August 31, 1994.
4.7 Guaranty Agreement dated as of July 18, 1994 by Petroleum
in favor of The Chase Manhattan Bank of Canada and the
lenders listed therein, incorporated by reference to
Exhibit 4.8 to UMC's Form S-4 (No. 33-83458) filed with
the Securities and Exchange Commission on August 31, 1994.
4.8 Employment Agreement dated as of August 9, 1994, among
Donald D. Wolf, UMC and Petroleum, incorporated by
reference to Exhibit (c)(4) to UMC's Schedule 14D-1
(No. 5-44990) filed with the Securities and Exchange
Commission on August 11, 1994.
4.9 Amendment No. 1 to Registration Rights Agreement dated as
of August 9, 1994 among GARI, UMC, General Atlantic
Corporation, John Hancock Mutual Life Insurance Company
and Fidelity Oil Holdings, Inc., incorporated by
reference to Exhibit (c)(8) to UMC's Schedule 14D-1
(No. 5-44990) filed with the Securities and Exchange
Commission on August 11, 1994.
4.10 Second Joint Amendment to Amended and Restated Credit
Agreement and to Amended and Restated Credit Agreement
(Canada) effective as of November 15, 1994, incorporated
by reference to Exhibit 4.11 to UMC's 1994 Form 10-K filed
with the Securities and Exchange Commission on
March 10, 1995.
4.11 Third Joint Amendment to Amended and Restated Credit
Agreement and to Amended and Restated Credit Agreement
(Canada) effective as of December 31, 1994, incorporated
by reference to Exhibit 4.12 to UMC's 1994 Form 10-K filed
with the Securities and Exchange Commission on
March 10, 1995.
4.12 Credit Agreement dated as of December 31, 1994 among UMC,
The Chase Manhattan Bank, N.A., Morgan Guaranty Trust
Company of New York and Lenders Signatory thereto
incorporated by reference to Exhibit 4.13 to UMC's 1994
Form 10-K filed with the Securities and Exchange Commission
on March 10, 1995.
4.13 Specimen of certificate representing Series A Voting Common
Stock, $.01 par value, of the Company, incorporated herein
by reference to Exhibit 4.13 to the Company's Form 10-Q
for the period ended June 30, 1994 filed with the Securities
and Exchange Commission on August 10, 1994.
-19-
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ----------------------------------------------------- ------------
4.14 Stock Purchase Agreement of Series F Convertible
Preferred Stock (par value $0.01 per share) between UMC
and John Hancock Mutual Life Insurance Company, The
Travelers Insurance Company, The Travelers Life and
Annuity Company, The Phoenix Insurance Company and The
Travelers Indemnity Company dated June 30, 1994,
incorporated by reference to Exhibit 4.16 to UMC's Form
10-Q for the quarterly period ended June 30, 1995, filed
with the Securities and Exchange Commission on
August 10, 1995.
4.15 Stock Purchase Agreement of Series F Convertible Preferred
Stock (par value $0.01 per share) between UMC and John
Hancock Mutual Life Insurance Company dated July 24, 1995,
incorporated by reference to Exhibit 4.17 to UMC's
Form 10-Q for the quarterly period ended June 30, 1995,
filed with the Securities and Exchange Commission on
August 10, 1995.
4.16 First Amendment to Credit Agreement among UMC, The Chase
Manhattan Bank, N.A., Morgan Guaranty Trust Company of New
York and Lenders Signatory thereto dated as of June 30, 1995,
incorporated by reference to Exhibit 4.18 to UMC's Form 10-Q
for the quarterly period ended June 30, 1995, filed with the
Securities and Exchange Commission on August 10, 1995.
4.17 Loan Agreement between UMIC Cote d'Ivoire Corporation and
International Finance Corporation dated as of July 14, 1995,
incorporated by reference to Exhibit 4.19 to UMC's Form 10-Q
for the quarterly period ended June 30, 1995, filed with the
Securities and Exchange Commission on August 10, 1995.
4.18 Share Retention, Guarantee and Clawback Agreement among UMC,
UMC Petroleum Corporation, UMIC Cote d'Ivoire Corporation
and International Finance Corporation dated as of
July 14, 1995, incorporated by reference to Exhibit 4.20
to UMC's Form 10-Q for the quarterly period ended
June 30, 1995, filed with the Securities and Exchange
Commission on August 10, 1995.
4.19 Fourth Joint Amendment to Amended and Restated Credit
Agreement and to Amended Restated Credit Agreement (Canada)
effective as of October 30, 1995, incorporated by reference
to Exhibit 4.21 to UMC's Form 10-Q for the quarterly
period ended September 30, 1995, filed with the Securities
and Exchange Commission on November 13, 1995.
4.20 Indenture between the Company, Petroleum and Bank of Montreal
Trust Company, dated October 30, 1995, incorporated by
reference to Exhibit 4.20 to UMC's 1995 Form 10-K filed with
the Securities and Exchange Commission on March 7, 1996.
-20-
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- --------------------------------------------------------- ------------
4.21 Rights Agreement by and between United Meridian Corporation
and Chemical Mellon Shareholder Services, L.L.C., as Rights
Agent, dated as of February 13, 1996, incorporated by
reference as Exhibit 1 to Form 8-K, filed with the Securities
and Exchange Commission on February 14, 1996.
10.1 UMC Key Employee Cash Compensation Program, as amended,
incorporated herein by reference to Exhibit 10.1 to the
Company's Form S-1 (No. 33-63532) filed with the Securities
and Exchange Commission on May 28, 1993.
10.2 The UMC Petroleum Savings Plan as amended and restated
incorporated herein by reference to Exhibit 4.10 to the
Company's Form S-8 (No. 33-73574) filed with the Securities
and Exchange Commission on December 29, 1993.
10.3 First Amendment to the UMC Petroleum Savings Plan, as Amended
and Restated as of January 1, 1993, dated April 18, 1994,
incorporated by reference to Exhibit 10.3 to UMC's 1994
Form 10-K filed with the Securities and Exchange Commission
on March 10, 1995.
10.4 UMC 1987 Nonqualified Stock Option Plan, as amended,
incorporated herein by reference to Exhibit 10.3 to the
Company's Form S-1 (No. 33-63532) filed with the Securities
and Exchange Commission on May 28, 1993.
10.5 Third Amendment to UMC 1987 Nonqualified Stock Option Plan
dated November 16, 1993 incorporated herein by reference to
Exhibit 10.4 to the Company's 1993 Form 10-K filed with the
Securities and Exchange Commission on March 7, 1994.
10.6 Fourth Amendment to UMC 1987 Nonqualified Stock Option Plan
dated April 6, 1994, incorporated by reference to Exhibit 10.6
to UMC's 1994 Form 10-K filed with the Securities and Exchange
Commission on March 10, 1995.
10.7 UMC 1994 Nonqualified Employee Stock Option Plan incorporated
herein by reference to Exhibit 4.14 to the Company's Form S-8
(No. 33-79160) filed with the Securities and Exchange Commission
on May 19, 1994.
10.8 First Amendment to the UMC 1994 Employee Nonqualified Stock
Option Plan dated November 16, 1994, incorporated herein by
reference to Exhibit 4.11.1 to the Company's Form S-8
(No. 33-86480) filed with the Securities and Exchange
Commission on November 18, 1994.
-21-
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------------------------------------------------------- -----------
10.9 UMC 1994 Outside Directors' Nonqualified Stock Option
Plan incorporated herein by reference to Exhibit 4.15 to
the Company's Form S-8 (No. 33-79160) filed with the
Securities and Exchange Commission on May 19, 1994.
10.10 UMC Petroleum Corporation Supplemental Benefit Plan
effective January 1, 1994, approved by the Board of
Directors on March 29, 1994, incorporated by reference
to Exhibit 10.10 to UMC's 1994 Form 10-K filed with the
Securities and Exchange Commission on March 10, 1995.
10.11 Form of Indemnification Agreement, with Schedule of
Signatories, incorporated herein by reference to Exhibit
10.4 to the Company's Form S-1 (No. 33-63532) filed with
the Securities and Exchange Commission on May 28, 1993.
10.12 Petroleum Production Sharing Contract on Block CI-11
dated June 27, 1992 among the Republic of Cote d'Ivoire,
UMIC Cote d'Ivoire Corporation and Societe Nationale
d'Operations Petrolieres de la Cote d'Ivoire (including
English translation), incorporated herein by reference
to Exhibit 10.5 to Amendment No. 3 to the Company's
Form S-1 (No. 33-63532) filed with the Securities and
Exchange Commission on July 20, 1993.
10.13 Production Sharing Contract dated August 18, 1992 between
the Republic of Equatorial Guinea and United Meridian
International Corporation (Area A - Offshore NE Bioco),
incorporated herein by reference to Exhibit 10.6 to
Amendment No. 1 to the Company's Form S-1 (No. 33-63532)
filed with the Securities and Exchange Commission on
June 18, 1993.
10.14 Production Sharing Contract dated June 29, 1992 between
the Republic of Equatorial Guinea and United Meridian
International Corporation (Area B - Offshore NW Bioco),
incorporated herein by reference to Exhibit 10.7 to
Amendment No. 1 to the Company's Form S-1 (No. 33-63532)
filed with the Securities and Exchange Commission on
June 18, 1993.
10.15 Production Sharing Contract dated June 29, 1994 between
the Republic of Equatorial Guinea and United Meridian
International Corporation (Area C - Offshore Bioco)
incorporated by reference to Exhibit 10.15 to UMC's 1994
Form 10-K filed with the Securities and Exchange Commission
on March 10, 1995.
-22-
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------------------------------------------------------ ------------
10.16 Production Sharing Contract on Block CI-01 dated
December 5, 1994 among The Republic of Cote d'Ivoire
UMIC Cote d'Ivoire Corporation and Societe Nationale
d'Operations Petrolieres de la Cote d'Ivoire (English
translation) incorporated by reference to Exhibit 10.16
to UMC's 1994 Form 10-K filed with the Securities and
Exchange Commission on March 10, 1995.
10.17 Production Sharing Contract on Block CI-02 dated
December 5, 1994 among The Republic of Cote d'Ivoire UMIC
Cote d'Ivoire Corporation and Societe Nationale
d'Operations Petrolieres de la Cote d'Ivoire (English
translation) incorporated by reference to Exhibit 10.17
to UMC's 1994 Form 10-K filed with the Securities and
Exchange Commission on March 10, 1995.
10.18 Production Sharing Contract on Block CI-12 dated
April 27, 1995 among The Republic of Cote d'Ivoire, UMIC
Cote d'Ivoire Corporation and others (English translation),
incorporated by reference to Exhibit 10.18 to UMC's 1995
Form 10-K filed with the Securities and Exchange Commission
on March 7, 1996.
10.19 Contract for Sale and Purchase of Natural Gas for Block
CI-11 among Caisse Autonome D'Amortissement, UMIC
Cote d'Ivoire Corporation and others dated September 30,
1994 (French and English translation) incorporated by
reference to Exhibit 10.7 to the Company's Form 10-Q for
the period ended September 30, 1994 filed with the
Securities and Exchange Commission on November 14, 1994.
10.20 Production Sharing Contract dated April 5, 1995 between
The Republic of Equatorial Guinea and UMIC Equatorial Guinea
Corporation (Area D - Offshore Bioco) incorporated by
reference to Exhibit 10.20 to the Company's Form 10-Q for
the period ended June 30, 1995 filed with the Securities and
Exchange Commission on August 10, 1995.
10.21 Contract for Purchase and Sale of Lion Crude Oil between
UMIC Cote d'Ivoire Corporation, International Finance
Corporation, G.N.R. (Cote d'Ivoire) Ltd. and Pluspetrol S.A.
and Total International Limited, dated December 1, 1995,
incorporated by reference to Exhibit 10.22 to UMC's 1995
Form 10-K filed with the Securities and Exchange Commission
on March 7, 1996.
10.22* Amendment to United Meridian Corporation 1994 Non-Qualified
Stock Option Agreement for Former Employees of General Atlantic
Resources, Inc. dated as of April 16, 1996 among UMC and
Donald D. Wolf.
10.23* Amendment to Employment Agreement dated as of April 16, 1996
among Petroleum and Donald D. Wolf.
-23-
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ---------------------------------------------------- -------------
11.1* Calculation of Net Income per Common Share.
27.1* Financial Data Schedule.
- -------------------
* Filed herewith.
-24-
<PAGE>
Exhibit 10.22
AMENDMENT TO UNITED MERIDIAN CORPORATION
1994 NONQUALIFIED STOCK OPTION AGREEMENT FOR
FORMER EMPLOYEES OF GENERAL ATLANTIC RESOURCES, INC.
This Amendment to United Meridian Corporation 1994 Nonqualified Stock
Option Agreement for Former Employees of General Atlantic Resources, Inc. (this
"Amendment") is made and entered into this 16th day of April, 1996 by and
between UNITED MERIDIAN CORPORATION, a Delaware corporation (the "Company"), and
DONALD D. WOLF ("Optionee").
RECITALS
A. The Company and Optionee heretofore entered into a United Meridian
Corporation 1994 Nonqualified Stock Option Agreement for Former Employees of
General Atlantic Resources, Inc. dated as of November 15, 1994 (the "Agreement")
pursuant to which certain options which had been granted to Optionee by General
Atlantic Resources, Inc. were converted into options to acquire shares of Series
A Voting Common Stock, par value $0.01 per share, of the Company ("UMC Common
Stock").
B. Optionee has given notice to the Company that he desires to terminate
his employment arrangement effective as of April 30, 1996, and this Amendment
modifies the Agreement to reflect the agreement of the parties in respect of
such termination.
C. Terms which are defined in the Agreement and used herein shall have the
same meanings as so defined.
AGREEMENTS
1. Notwithstanding anything to the contrary contained in the Agreement,
the options granted therein shall continue to vest from the effective date of
Optionee's resignation to and including July 15, 1996, but not thereafter. The
effect of the preceding sentence will be to allow the option granted to Optionee
to vest in respect of 8,580 shares of UMC Common Stock included in the grant of
July 1993. Exhibit A attached hereto sets forth the number of shares of UMC
Common Stock which may be purchased as of July 15, 1996 upon the
<PAGE>
exercise of the option granted by the Agreement, the per share exercise price
for such shares and the dates on which such option shall expire with respect to
such shares.
2. Section 4(d) of the Agreement is amended to read as follows:
(d) In the event Optionee terminates his relationship with the Company
and its affiliates voluntarily on or before August 15, 1996, Optionee may
exercise this option at any time during the remaining term of the option.
If Optionee dies subsequent to such voluntary termination, this option may
be exercised, to the extent Optionee was entitled to exercise this option
immediately prior to Optionee's death, within twelve months of Optionee's
death (if otherwise within the option period), but not thereafter.
Notwithstanding the foregoing, the provisions of this Section 4(d) shall be
subject to Sections 1 and 6, which may earlier terminate the option.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first set forth above.
UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
--------------------
John B. Brock, Chairman and
Chief Executive Officer
/s/ Donald D. Wolf
---------------------
Donald D. Wolf
-2-
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Shares which may Date after which such
be Purchased as of Shares May no Longer
July 15, 1996 upon be Purchased Upon
Exercise of this Option Exercise Price per Share Exercise of the Option
- -----------------------------------------------------------------------------
<S> <C> <C>
141,288 $ 3.95 12/31/99
107,163 2.75 2/14/00
100,205 5.75 6/30/01
25,740 11.82 7/14/04
13,200 13.64 3/06/05
</TABLE>
<PAGE>
Exhibit 10.23
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made and
entered into this 16th day of April, 1996 by and among UNITED MERIDIAN
CORPORATION, a Delaware corporation (the "Parent"), UMC PETROLEUM CORPORATION, a
Delaware corporation (the "Corporation"), and DONALD D. WOLF (the "Officer").
The Parent and the Corporation are referred to herein as "UMC".
RECITALS
A. UMC and the Officer entered into an Employment Agreement dated August
9, 1994 (the "Agreement") pursuant to which the Officer was to be employed as an
officer of the Corporation.
B. The Officer has given notice to UMC that he desires to terminate such
employment, effective as of April 30, 1996 (the "Effective Date"), and this
Amendment modifies the Agreement to reflect the agreement of the parties in
respect of such termination.
C. Terms which are defined in the Agreement and used herein shall have the
same meanings as so defined.
AGREEMENTS
1. The Corporation accepts the resignation of the Officer as an employee
as of the Effective Date. Further, as of the Effective Date the Officer hereby
resigns his position as President and Chief Operating Officer of the Parent and
all positions which he holds as an officer or director of the Corporation and
its subsidiary companies; provided, however, that such resignations shall not
affect Officer's position as a director of the Parent. UMC accepts such further
resignations. The termination of the Officer's employment by the Corporation is
agreed to be a voluntary termination subject to the provisions of Section 2.6 of
the Agreement.
<PAGE>
2. The last sentence of Section 2.6 of the Agreement is amended to read as
follows:
Upon a voluntary termination hereunder, all options to purchase stock
in the Parent heretofore granted to the Officer pursuant to the United
Meridian Corporation 1994 Nonqualified Stock Option Agreement for
Former Employees of General Atlantic Resources, Inc. dated as of
November 15, 1994 between the Parent and the Officer, as modified by an
amendment thereto dated April 16, 1996 (the "Stock Option Agreement"),
which are vested as of the Effective Date, or subsequently become
vested pursuant to its terms, may be exercised in accordance with the
provisions of Section 4(d) of the Stock Option Agreement.
3. Notwithstanding any provisions of Section 4.1 of the Agreement to the
contrary, the severance compensation payable to the Officer pursuant to Section
4.1(a) of the Agreement is agreed to be $735,000 (which amount is equal to three
(3) times the Officer's Base Salary of $245,000); and such amount shall be
payable in semi-monthly installments of $10,208.33, commencing May 15, 1996 and
extending through December 31, 1996, with the unpaid amount thereof being due
and payable not later than January 15, 1997. Section 4.1 of the Agreement is
amended to be consistent with the foregoing sentence.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
---------------------
John B. Brock, Chairman and
Chief Executive Officer
UMC PETROLEUM CORPORATION
By: /s/ John B. Brock
---------------------
John B. Brock, Chairman and
Chief Executive Officer
/s/ Donald D. Wolf
----------------------
Donald D. Wolf
-2-
<PAGE>
EXHIBIT 11.1
CALCULATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
-------------------- ------------------
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net income............................................ $ 5,235 $ 463 $ 8,951 $ 4,070
Dividends paid on preferred stock..................... 765 - 1,531 -
------- ------- ------- -------
Amount available to common shareholders............... $ 4,470 $ 463 $ 7,420 $ 4,070
======= ======= ======= =======
Weighted average number of common
shares outstanding.................................. 30,652 29,079 30,474 29,035
======= ======= ======= =======
Net income per common share........................... $ 0.15 $ 0.02 $ 0.24 $ 0.14
======= ======= ======= =======
</TABLE>
CALCULATION OF WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
-------------------- ------------------
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Shares outstanding from beginning of
period.............................................. 28,253 27,789 28,150 27,722
451 and 554 stock options and warrants
exercised in the three months and
six months ended June 30, 1996,
respectively........................................ 261 - 186 -
123 and 190 stock options exercised in
the three months and six months
ended June 30, 1995, respectively................... - 46 - 86
Common stock equivalents of stock
options /1/......................................... 2,138 1,244 2,138 1,227
------- ------- ------- -------
30,652 29,079 30,474 29,035
======= ======= ======= =======
</TABLE>
/1/ The calculation of common stock equivalents of stock options and warrants
is based on the "Treasury Method" as detailed in Accounting Principles Board
Opinion No. 15.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,138
<SECURITIES> 0
<RECEIVABLES> 44,430
<ALLOWANCES> 1,190
<INVENTORY> 8,695
<CURRENT-ASSETS> 68,087
<PP&E> 786,778
<DEPRECIATION> 327,397
<TOTAL-ASSETS> 557,784
<CURRENT-LIABILITIES> 64,932
<BONDS> 227,258
0
12
<COMMON> 287
<OTHER-SE> 229,517
<TOTAL-LIABILITY-AND-EQUITY> 557,784
<SALES> 96,270
<TOTAL-REVENUES> 114,962
<CGS> 0
<TOTAL-COSTS> 25,766
<OTHER-EXPENSES> 56,532
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,380
<INCOME-PRETAX> 14,843
<INCOME-TAX> 5,892
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,951
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
