<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 September 30, 1997
------------------
Commission file number 1-12088
---------------
UNITED MERIDIAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2160316
- ---------------------------------- -------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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 October 31, 1997,
the latest practicable date, was 35,783,929.
-----------
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<PAGE>
UNITED MERIDIAN CORPORATION
FORM 10-Q
SEPTEMBER 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Statement of Income for the Three Months and Nine Months
Ended September 30, 1997 and 1996..................................... 1
Consolidated Balance Sheet at September 30, 1997 and
December 31, 1996..................................................... 2
Consolidated Statement of Changes in Stockholders'
Equity for the Year Ended December 31, 1996 and for the Nine
Months Ended September 30, 1997....................................... 4
Consolidated Statement of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996..................................... 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
SIGNATURES............................................................................. 16
EXHIBITS --
Index to Exhibits.................................................................... 17
</TABLE>
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
------------------------ ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Gas sales................................................ $23,262 $24,858 $ 76,507 $ 84,373
Oil sales................................................ 37,951 21,746 101,190 57,030
Gain on sale of assets................................... 649 7,385 2,897 25,397
Other.................................................... 508 79 2,326 759
------- ------- -------- --------
62,370 54,068 182,920 167,559
------- ------- -------- --------
Costs and expenses:
Production costs......................................... 13,529 10,924 39,234 35,219
General and administrative............................... 2,681 3,040 8,729 9,559
Exploration, including dry holes
and impairments....................................... 7,727 8,105 30,545 22,816
Depreciation, depletion and amortization................. 24,297 21,072 67,895 62,893
------- ------- -------- --------
48,234 43,141 146,403 130,487
------- ------- -------- --------
Income from operations...................................... 14,136 10,927 36,517 37,072
Other income, expenses and deductions:
Interest and debt expense................................ (5,631) (5,440) (15,069) (16,820)
Interest and other income................................ (105) (124) 1,322 (46)
------ ------- -------- --------
Income before income taxes.................................. 8,400 5,363 22,770 20,206
Income tax provision:
Current.................................................. (2,281) (373) (4,955) (670)
Deferred................................................. (2,816) (2,152) (6,493) (7,747)
------- ------- -------- --------
Net income.................................................. 3,303 2,838 11,322 11,789
Preferred stock dividends................................... -- -- -- (1,531)
------- ------- -------- --------
Net income available to common stockholders................. $ 3,303 $ 2,838 $ 11,322 $ 10,258
======= ======= ======== ========
Net income per common share (Exhibit 11.1).................. $ 0.09 $0.09 $0.31 $ 0.33
======= ======= ====== ========
Weighted average number of common
shares outstanding, including
common share equivalents (Exhibit 11.1).................. 36,789 32,025 36,632 30,695
======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-1-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................. $ 15,157 $ 54,942
Accounts receivable
Oil and gas sales........................ 29,435 36,238
Joint interest and other................. 62,832 45,447
Deferred income taxes...................... 7,081 2,839
Inventory.................................. 13,304 11,389
Prepaid expenses and other................. 5,003 5,306
---------- ---------
132,812 156,161
---------- ---------
Property and equipment, at cost:
Oil and gas (successful efforts method)
Proved properties........................ 1,052,251 851,818
Unproved properties...................... 28,866 14,667
Other property and equipment............... 11,274 8,295
---------- ---------
1,092,391 874,780
Accumulated depreciation, depletion and
amortization.............................. (395,292) (350,591)
---------- ---------
697,099 524,189
---------- ---------
Other assets:
Gas imbalances receivable.................. 6,232 5,702
Deferred income taxes...................... 17,594 23,035
Debt issue costs........................... 9,609 8,370
Other...................................... 1,084 836
---------- ---------
34,519 37,943
---------- ---------
TOTAL ASSETS......................... $ 864,430 $ 718,293
========== =========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-2-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $ 81,592 $ 80,593
Advances from joint owners.......................... 16,206 5,575
Interest payable.................................... 8,548 3,800
Accrued liabilities................................. 8,643 7,525
Current maturities of long-term debt................ 911 899
-------- ---------
115,900 98,392
-------- ---------
Long-term debt:
10-3/8% senior subordinated notes................... 150,000 150,000
Global credit facility.............................. 106,223 --
Other............................................... 6,238 6,832
-------- ---------
262,461 156,832
-------- ---------
Deferred credits and other liabilities:
Deferred income taxes............................... 21,811 20,797
Gas imbalances payable.............................. 4,668 3,994
Other............................................... 6,949 6,042
-------- --------
33,428 30,833
-------- --------
Commitments and contingencies
Stockholders' equity:
Common stock........................................ 358 352
Additional paid-in capital.......................... 550,077 540,661
Foreign currency translation adjustment............. (4,596) (4,257)
Retained earnings (deficit)......................... (93,198) (104,520)
-------- ---------
452,641 432,236
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $864,430 $ 718,293
======== =========
</TABLE>
The accompanying notes are an integral part
of these consolidated 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, 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997
<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, 1995...... 1,166,667 $ 12 28,150,224 $ 281 $ 336,469 $ (4,057) $(120,393) $ 212,312
Foreign currency translation
adjustment................. (200) (200)
Common stock offering........ 4,088,942 41 182,629 182,670
Exercise of common stock
options.................... 897,007 9 17,951 17,960
Exercise of warrants......... 235,749 2 3,619 3,621
Preferred stock dividends.... (1,531) (1,531)
Automatic conversion of
Series F preferred stock
to common stock............ (1,166,667) (12) 1,845,284 19 (7) -
Net income................... 17,404 17,404
---------- ------ ---------- ------ --------- ---------- --------- ---------
Balance, December 31, 1996...... - - 35,217,206 352 540,661 (4,257) (104,520) 432,236
Foreign currency translation
adjustment................. (339) (339)
Exercise of common stock
options.................... 545,573 6 9,416 9,422
Common shares issued
in exchange for shares
of General Atlantic
Resources, Inc............ 2,662 - -
Net income................... 11,322 11,322
---------- ------ ---------- ------ --------- ---------- --------- ---------
Balance, September 30, 1997
(Unaudited).................. - $ - 35,765,441 $358 $550,077 $(4,596) $ (93,198) $ 452,641
========== ====== ========== ==== ======== ======= ========= =========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-4-
<PAGE>
UNITED MERIDIAN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
-------------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................. $ 11,322 $ 11,789
Adjustments to reconcile net income to cash from
operating activities:
Exploration, including dry holes and impairments................. 30,545 22,816
Depreciation, depletion and amortization......................... 67,895 62,893
Amortization of debt issue cost.................................. 1,160 1,186
Deferred income tax provision.................................... 6,493 7,747
Gain on sale of assets........................................... (2,897) (25,397)
--------- ---------
114,518 81,034
Changes in assets and liabilities:
Increase in receivables............................................. (9,808) (14,775)
Increase (decrease) in payables and other current
liabilities...................................................... 13,655 (20,670)
Increase (decrease) in net gas imbalances........................... 144 (1,654)
Other............................................................... (3,354) (8,138)
--------- ---------
Net cash provided by operating activities........................ 115,155 35,797
--------- ---------
Cash flows from investing activities:
Exploration............................................................ (87,295) (44,087)
Development............................................................ (189,350) (47,423)
Additions to other property and equipment.............................. (2,210) (687)
Net proceeds from sale of assets....................................... 15,447 39,891
--------- ---------
Net cash used in investing activities........................... (263,408) (52,306)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt............................................ (20,319) (144,214)
Additions to total debt................................................ 125,960 151,432
Debt issue costs....................................................... (2,446) (251)
Proceeds from exercise of common stock options......................... 5,273 9,790
Preferred stock dividends.............................................. - (1,531)
--------- --------
Net cash provided by financing activities........................ 108,468 15,226
--------- --------
Net decrease in cash and cash equivalents................................ (39,785) (1,283)
Cash and cash equivalents at beginning of period......................... 54,942 13,586
--------- --------
Cash and cash equivalents at end of period............................... $ 15,157 $ 12,303
========= ========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-5-
<PAGE>
UNITED MERIDIAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 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, 1996.
The financial statements reflect all normal recurring adjustments that,
in the opinion of management, are necessary for a fair presentation.
NOTE 2 ACQUISITIONS AND DISPOSITIONS
As part of its on-going operations, the Company continually acquires
and sells producing and undeveloped reserves and related assets. Certain
transactions occurring in the periods presented are discussed below.
1997 TRANSACTIONS
- -----------------
Through September 1997, the Company has acquired additional interests
in various properties from several of its institutional partners. In
conjunction with one of these acquisitions, the Company sold a portion of the
acquired interests. The net cost of the additional interests acquired from the
Company's institutional partners was approximately $45,081,000. In addition,
the Company acquired interests in other North American properties for total
consideration of $15,307,000.
During the nine months ended September 30, 1997, the Company sold
various non-strategic North American properties for total proceeds of
$15,447,000, resulting in pre-tax gains of $2,897,000.
1996 TRANSACTIONS
- -----------------
In late 1995, the Company agreed to assign to Yukong Limited a portion
of its interests in Blocks CI-01 and CI-02 in Cote d'Ivoire and Blocks B, C and
D in Equatorial Guinea. Mobil Equatorial Guinea, Inc. (Mobil) subsequently
exercised its preferential right to purchase the interest in Block B in lieu of
the proposed assignment to Yukong Limited. Under the agreements, the Company
received $18,077,000 in cash in the first nine months of 1996, resulting in a
pre-tax gain of $15,774,000.
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 $6,722,000 and a gain of $4,679,000 was recognized.
In September 1996, the Company executed an agreement with Shell
Exploration Africa B.V. (Shell), a unit of the Royal Dutch/Shell group, to sell
a 55% contract interest in Block CI-105 in Cote d'Ivoire. The sale resulted in
the Company recognizing a gain of $3,260,000 on proceeds of $3,260,000. An
additional $940,000 was received relating to reimbursement of exploration
expense previously incurred by the Company.
During the first nine months of 1996, the Company sold various other
non-strategic North American properties for total proceeds of $11,832,000
resulting in pre-tax gains of $1,684,000.
-6-
<PAGE>
NOTE 3 FINANCIAL INSTRUMENTS
The Company hedged a portion of its oil production with collar
agreements in the first nine months of 1997, having no material impact on oil
revenues.
The Company had a natural gas collar contract in place through October
1997 for 1 BCF per month with a floor price of $2.10 and a cap price of $2.39
and a separate no-cost collar for 250,000 MCF per month for October 1997
production at a floor price of $2.00 and a cap price of $2.26. UMC's current
hedging agreements are settled on a monthly basis. All of UMC's current hedge
contracts specify the third-party index to be the New York Mercantile Exchange
(NYMEX) futures contract prices for the applicable commodity, matching the
appropriate basis risk. The Company incurred a loss of $178,000 on these
natural gas collar contracts through September 30, 1997. There was no deferred
hedge gain or loss at September 30, 1997.
The Company currently has a fixed interest rate swap contract that
provides for fixed interest rates ranging from 6.10% in 1997 to 6.40% in 1998.
The effect of this swap was an increase in interest and debt expense of $122,000
during the nine months ended September 30, 1997.
NOTE 4 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD
The Financial Accounting Standards Board (FASB) recently issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share",
superseding Accounting Principles Board (APB) No. 15. Although SFAS No. 128
cannot be adopted until December 15, 1997, pro forma disclosures are allowed to
minimize the impact of year-end adoption. Therefore, the following pro forma
information is presented:
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Primary EPS as reported under APB No. 15 $ 0.09 $ 0.09 $ 0.31 $ 0.33
Effect of SFAS No. 128 - - 0.01 0.02
-------- -------- -------- ---------
Basic EPS, as restated $ 0.09 $ 0.09 $ 0.32 $ 0.35
======== ======== ======== =========
Fully diluted EPS as reported under APB No. 15 $ 0.09 $ 0.09 $ 0.31 $ 0.33
Effect of SFAS No. 128 - - - -
-------- -------- -------- ---------
Diluted EPS, as restated $ 0.09 $ 0.09 $ 0.31 $ 0.33
======== ======== ======== =========
</TABLE>
As mandated by SFAS No. 128, basic earnings per common share is
computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year. Diluted earnings per common share is
determined on the assumption that outstanding stock options have been converted
using the average price for the quarter.
NOTE 5 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.
-7-
<PAGE>
(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.
Certain intercompany notes and the related accrued interest were transferred
from UMC to a newly formed non-guarantor subsidiary effective as of January 1,
1997.
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the nine months ended September 30, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
-------------------------------------------------
Guarantor Non-Guarantor Consolidated
UMC Subsidiary Subsidiaries UMC
---------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
1997
- ----
Revenues............................................ $ - $ 94,856 $ 88,064 $ 182,920
---------- --------------- ----------------- ----------------
Costs and expenses:
Production costs.................................. - 25,683 13,551 39,234
General and administrative........................ 120 7,432 1,177 8,729
Exploration, including dry holes and
impairments..................................... - 10,720 19,825 30,545
Depreciation, depletion and amortization.......... - 37,897 29,998 67,895
---------- --------------- ----------------- ----------------
Income (loss) from operations....................... (120) 13,124 23,513 36,517
Interest income (expense), net.................... (12,086) (29,035) 26,052 (15,069)
Other credits, net................................ - 1,115 207 1,322
---------- --------------- ----------------- ----------------
Income (loss) before income taxes................... (12,206) (14,796) 49,772 22,770
Income tax benefit (provision)...................... 4,915 (11,970) (4,393) (11,448)
---------- --------------- ----------------- ----------------
Net income (loss)................................... $ (7,291) $ (26,766) $ 45,379 $ 11,322
========== =============== ================= ================
1996
- ----
Revenues............................................ $ - $ 108,986 $ 58,573 $ 167,559
---------- --------------- ----------------- ----------------
Costs and expenses:
Production costs.................................. - 26,109 9,110 35,219
General and administrative........................ 150 7,784 1,625 9,559
Exploration, including dry holes and
impairments..................................... - 13,736 9,080 22,816
Depreciation, depletion and amortization.......... - 52,606 10,287 62,893
---------- --------------- ----------------- ----------------
Income (loss) from operations....................... (150) 8,751 28,471 37,072
Interest income (expense), net.................... 13,351 (23,399) (6,772) (16,820)
Other credits, net................................ - (202) 156 (46)
---------- --------------- ----------------- ----------------
Income (loss) before income taxes................... 13,201 (14,850) 21,855 20,206
Income tax benefit (provision)...................... (5,159) 4,181 (7,439) (8,417)
---------- --------------- ----------------- ----------------
Net income (loss)................................... $ 8,042 $ (10,669) $ 14,416 $ 11,789
========== =============== ================= ================
</TABLE>
-8-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended September 30, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
-------------------------------------------------
Guarantor Non-Guarantor Consolidated
UMC Subsidiary Subsidiaries UMC
---------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
1997
- ----
Revenues............................................ $ - $ 29,267 $ 33,103 $ 62,370
---------- --------------- ----------------- ----------------
Costs and expenses:
Production costs.................................. - 8,207 5,322 13,529
General and administrative........................ 30 2,346 305 2,681
Exploration, including dry holes and
impairments..................................... - 5,095 2,632 7,727
Depreciation, depletion and amortization.......... - 11,988 12,309 24,297
---------- --------------- ----------------- ----------------
Income (loss) from operations....................... (30) 1,631 12,535 14,136
Interest income (expense), net.................... (21,726) (17,032) 33,127 (5,631)
Other credits, net................................ - (206) 101 (105)
---------- --------------- ----------------- ----------------
Income (loss) before income taxes................... (21,756) (15,607) 45,763 8,400
Income tax benefit (provision)...................... 8,819 (11,208) (2,708) (5,097)
---------- --------------- ----------------- ----------------
Net income (loss)................................... $ (12,937) $ (26,815) $ 43,055 $ 3,303
========== =============== ================= ================
1996
- ----
Revenues............................................ $ - $ 31,980 $ 22,088 $ 54,068
---------- --------------- ----------------- ----------------
Costs and expenses:
Production costs.................................. - 7,651 3,273 10,924
General and administrative........................ 43 2,597 400 3,040
Exploration, including dry holes and
impairments..................................... - 4,925 3,180 8,105
Depreciation, depletion and amortization.......... - 17,069 4,003 21,072
---------- --------------- ----------------- ----------------
Income (loss) from operations....................... (43) (262) 11,232 10,927
Interest income (expense), net.................... 4,502 (7,585) (2,357) (5,440)
Other credits, net................................ - (180) 56 (124)
---------- --------------- ----------------- ----------------
Income (loss) before income taxes................... 4,459 (8,027) 8,931 5,363
Income tax benefit (provision)...................... (2,788) 2,909 (2,646) (2,525)
---------- --------------- ----------------- ----------------
Net income (loss)................................... $ 1,671 $ (5,118) $ 6,285 $ 2,838
========== =============== ================= ================
</TABLE>
-9-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
At September 30, 1997 and December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
-------------------------------------------------
Guarantor Non-Guarantor Eliminating Consolidated
UMC Subsidiary Subsidiaries Entries UMC
---------- --------------- ----------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
SEPTEMBER 30, 1997
- ------------------
ASSETS
Current assets.......................... $ 2 $ 62,639 $ 70,171 $ - $ 132,812
Intercompany investments................ 674,271 340,395 342,916 (1,357,582) -
Property and equipment, net............. - 339,060 358,039 - 697,099
Other assets............................ 5,723 30,872 (2,076) - 34,519
---------- --------------- ----------------- ------------ ----------------
Total assets.......................... $ 679,996 $ 772,966 $ 769,050 $ (1,357,582) $ 864,430
========== =============== ================= ============ ================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities..................... $ 7,217 $ 61,201 $ 47,482 $ - $ 115,900
Long-term debt.......................... 150,000 99,075 13,386 - 262,461
Deferred credits and other
liabilities........................... - 11,020 22,408 - 33,428
Stockholders' equity.................... 522,779 601,670 685,774 (1,357,582) 452,641
---------- --------------- ----------------- ------------ ----------------
Total liabilities & stockholders'
equity............................ $ 679,996 $ 772,966 $ 769,050 $ (1,357,582) 864,430
========== =============== ================= ============ ================
DECEMBER 31, 1996
- -----------------
ASSETS
Current assets.......................... $ 3 $ 93,023 $ 63,135 $ - 156,161
Intercompany investments................ 668,025 (346,861) (182,827) (138,337) -
Property and equipment, net............. - 282,236 241,953 - 524,189
Other assets............................ 5,947 36,714 (4,718) - 37,943
---------- --------------- ----------------- ------------ ----------------
Total assets......................... $ 673,975 $ 65,112 $ 117,543 $ (138,337) $ 718,293
========== =============== ================= ============ ================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities..................... $ 3,327 $ 42,577 $ 52,488 $ - $ 98,392
Long-term debt.......................... 150,000 (5,700) 12,532 - 156,832
Deferred credits and other
liabilities.......................... - 9,421 21,412 - 30,833
Stockholders' equity.................... 520,648 18,814 31,111 (138,337) 432,236
---------- --------------- ----------------- ------------ ----------------
Total liabilities & stockholders'
equity............................ $ 673,975 $ 65,112 $ 117,543 $ (138,337) $ 718,293
========== =============== ================= ============ ================
</TABLE>
-10-
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
Unconsolidated
----------------------------------------
Guarantor Non-Guarantor Consolidated
1997 UMC Subsidiary Subsidiaries UMC
- ---- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................... $(7,291) $(26,766) $ 45,379 $ 11,322
Adjustments to reconcile net income (loss)
to cash from operating activities..................... (4,501) 57,045 50,652 103,196
Changes in assets and liabilities...................... 3,890 2,115 (5,368) 637
------- -------- --------- ---------
Net cash provided by (used in) operating
activities......................................... (7,902) 32,394 90,663 115,155
Cash flows used in investing activities................... - (93,580) (169,828) (263,408)
Cash flows provided by financing
activities............................................. 7,901 19,188 81,379 108,468
------- -------- --------- ---------
Net increase (decrease) in cash and cash
equivalents............................................ (1) (41,998) 2,214 (39,785)
Cash and cash equivalents at beginning
of period.............................................. 3 41,759 13,180 54,942
------- -------- --------- ---------
Cash and cash equivalents at end of period................ $ 2 $ (239) $ 15,394 $ 15,157
======= ======== ========= =========
1996
- ----
Cash flows from operating activities:
Net income (loss)...................................... $ 8,042 $(10,669) $ 14,416 $ 11,789
Adjustments to reconcile net income
(loss) to cash from operating activities.............. 5,560 61,586 2,099 69,245
Changes in assets and liabilities...................... 3,792 (27,238) (21,791) (45,237)
------- -------- --------- ---------
Net cash provided by (used in) operating
activities......................................... 17,394 23,679 (5,276) 35,797
Cash flows used in investing activities................... - (43,678) (8,628) (52,306)
Cash flows provided by financing
activities............................................. (17,413) 12,373 20,266 15,226
------- -------- --------- ---------
Net increase (decrease) in cash and cash
equivalents............................................ (19) (7,626) 6,362 (1,283)
Cash and cash equivalents at beginning
of period.............................................. 31 6,631 6,924 13,586
------- -------- --------- ---------
Cash and cash equivalents at end of period................ $ 12 $ (995) $ 13,286 $ 12,303
======= ======== ========= =========
</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 NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------- -------------------
1997 1996 1997 1996
----------- --------- -------- --------
<S> <C> <C> <C> <C>
Production:
Oil (MBO)
U.S.......................................... 603 449 1,573 1,570
Canada....................................... 110 107 322 403
Cote d'Ivoire................................ 250 217 818 661
Equatorial Guinea............................ 1,191 229 2,870 229
------- ------- ------- -------
Total 2,154 1,002 5,583 2,863
Natural gas (MMCF)
U.S.......................................... 9,617 11,691 30,271 36,542
Canada....................................... 1,940 1,396 5,410 3,912
Cote d'Ivoire................................ 1,452 571 3,612 1,814
------- ------- ------- -------
Total...................................... 13,009 13,658 39,293 42,268
Average wellhead sales price, including hedging:
Oil ($ per bbl)
U.S.......................................... $ 17.16 $ 22.18 $ 18.18 $ 20.13
Canada....................................... $ 16.78 $ 20.76 $ 18.16 $ 18.62
Cote d'Ivoire................................ $ 18.41 $ 20.65 $ 18.55 $ 19.40
Equatorial Guinea............................ $ 17.78 $ 22.23 $ 17.97 $ 22.23
Average.................................... $ 17.63 $ 21.71 $ 18.13 $ 19.92
Natural gas ($ per MCF)
U.S.......................................... $ 1.93 $ 1.88 $ 2.07 $ 2.08
Canada....................................... $ 1.20 $ 1.30 $ 1.39 $ 1.34
Cote d'Ivoire................................ $ 1.76 $ 1.81 $ 1.80 $ 1.75
Average.................................... $ 1.80 $ 1.82 $ 1.95 $ 2.00
Additional data ($ per BOE):
Production and operating costs /(1)/............ $ 2.69 $ 3.19 $ 2.68 $ 3.02
General and administrative expense.............. $ 0.62 $ 0.93 $ 0.72 $ 0.96
Oil and natural gas depletion and depreciation.. $ 5.52 $ 6.35 $ 5.50 $ 6.26
</TABLE>
/(1)/ Costs incurred to operate and maintain wells and related equipment,
excluding ad valorem and production taxes of $0.44 and $0.14 per BOE for
the three months ended September 30, 1997 and 1996, respectively, and
$0.55 and $0.53 per BOE for the nine months ended September 30, 1997 and
1996, respectively.
-12-
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 30, 1996.
Oil and gas revenues for the nine months ended September 30, 1997 were
$177.7 million, or 25.7% greater than oil and gas revenues of $141.4 million for
the nine months ended September 30, 1996. The increase in oil and gas revenues
is primarily due to increased oil production volumes in West Africa, offset by
both lower U.S. gas volumes due primarily to property sales and lower product
prices. The average sales price after hedging for natural gas decreased to
$1.95 per Mcf, or 2.5%, in the first nine months as compared to the same period
of 1996. Natural gas production for the nine months ended September 30, 1997
was 39,293 MMCF, a decrease of 7.0% as compared to the first nine months of
1996, due primarily to the impact of property sales and natural production
declines. Oil production increased 95.0% to 5,583 MBO in the first nine months
of 1997 as compared to the same period in 1996 due primarily to increased oil
production in Equatorial Guinea. The average sales price after hedging for oil
decreased to $18.13, or 9.0%, in the nine months ended September 30, 1997 as
compared to the prior year period.
During the nine months ended September 30, 1997, the Company sold various
non-strategic North American properties for total cash proceeds of $15.4
million, resulting in pre-tax gains of $2.9 million. The 1996 pre-tax gains on
sales of assets included a gain of $15.8 million on cash proceeds of $18.1
million related to the sale to Mobil of a 10% interest in Equatorial Guinea
Block B, gain on sale of the Company's interests in the Rocanville area of
Saskatchewan of $4.7 million on proceeds of $6.7 million and the gain on the
sale of a 55% contract interest in Block CI-105 in Cote d'Ivoire of $3.3 million
on proceeds of $3.3 million.
Production costs, including ad valorem and production taxes, increased to
$39.2 million, or 11.4%, in the first nine months of 1997 as compared to $35.2
million in the comparable period of 1996, primarily due to production in
Equatorial Guinea for the full 1997 period. However, on a cost per barrel of
oil equivalent (BOE) basis, production costs in the first nine months of 1997
decreased $0.32 per BOE, or 9.0%, when compared to the first nine months of
1996.
General and administrative expenses for the nine months ended September
30, 1997 were $8.7 million compared to $9.6 million in the nine months ended
September 30, 1996. This decrease was primarily due to certain non-cash benefit
accrual adjustments in 1997 and increased management fees earned from
institutional partners. General and administrative expenses per BOE of
production decreased from $0.96 per BOE in the first nine months of 1996 to
$0.72 per BOE in the comparable period of 1997, the result of both lower net
costs and increased production.
Exploration, dry hole and lease impairment expenses for the first nine
months of 1997 totaled $30.5 million as compared to $22.8 million in the first
nine months of 1996. This increase of $7.7 million was primarily due to dry
hole costs experienced in Equatorial Guinea Block D and Cote d'Ivoire Block CI-
12. In addition, the Company had increased geological and geophysical costs in
the 1997 period as compared to the 1996 period reflecting a higher level of
exploration activity in Cote d'Ivoire, Equatorial Guinea and North America.
Depreciation, depletion and amortization (DD&A) expense for the nine
months ended September 30, 1997 of $67.9 million increased 8.0% from $62.9
million for the comparable 1996 period. This increase is primarily attributable
to increased production levels in Cote d'Ivoire and Equatorial Guinea. The rate
per BOE of oil and gas DD&A decreased 12.1% from $6.26 per BOE in the first nine
months of 1996 to $5.50 per BOE in the 1997 comparable period. This decrease is
primarily due to a change in the Company's production mix and reserve additions.
Interest and debt expense for the nine months ended September 30, 1997
was $15.1 million, including non-cash amortization of debt issue costs totaling
$1.2 million, compared to $16.8 million in the nine months ended September 30,
1996. The decrease in interest expense is primarily due to the reduced debt
levels in 1997 as a result of debt payments in late 1996 with the proceeds of
the November 1996 equity offering.
An income tax provision of $11.4 million (of which $4.9 million is a
current provision and $6.5 million is a deferred provision) was recognized for
the nine months ended September 30, 1997, compared to a provision of $8.4
million (of which $0.7 million was a current provision and $7.7 million was a
deferred provision) for the comparable 1996 period. Significantly impacting
current taxes in the first nine months of 1997 is a $3.5 million non-cash
provision representing current taxes incurred in Cote d'Ivoire which, under the
terms of the production sharing contract, will be paid by the Ivorian government
from their production proceeds. Consistent with Statement of Financial
Accounting Standards (SFAS) 109, Accounting for Income Taxes, the deferred
income tax provision or benefit was derived primarily from changes in deferred
income tax assets and liabilities recorded on the balance sheet. The deferred
tax provision for the nine months of 1997 includes a $1.1 million benefit
-13-
<PAGE>
reflecting final analysis and resolution of certain Canadian tax issues.
The Company reported net income of $11.3 million, or $0.31 per share, for
the first nine months of 1997 compared to a net income of $11.8 million, or
$0.33 per share, for the nine months of 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE THREE MONTHS ENDED
SEPTEMBER 30, 1996.
Material changes in the results of operations between the three months
ended September 30, 1997 and 1996, primarily reflect the significant increases
in oil production volumes offset by decreases in prices received, all of which
have been discussed previously. Production costs during the third quarter of
1997 as compared to the comparable period in 1996 reflect the impact of
Equatorial Guinea production for the full 1997 period.
CAPITAL RESOURCES AND LIQUIDITY
The Company has historically funded its operations, acquisitions,
exploration and development expenditures from cash flows from operating
activities, bank borrowings, sales of common and preferred stock, issuance of
senior subordinated notes, sales of non-strategic oil and natural gas
properties, sales of partial interests in exploration concessions and project
finance borrowings.
The primary sources of cash for the Company during the nine months ended
September 30, 1997, included proceeds from funds generated from operations,
proceeds from asset sales, exercise of stock options and borrowings under the
Global Credit Facility. In the comparable period of 1996, the primary sources
of cash included funds generated from operations, proceeds from asset sales and
exercise of stock options and warrants. Primary cash uses for the nine months
ended September 30, 1997 and 1996 included capital expenditures (including
exploration expenses) which totaled $278.9 million and $92.2 million,
respectively.
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, DD&A,
deferred income tax, gain (loss) on sale of assets and non-cash amortization of
debt issue costs. The effects of working capital changes are not considered.
This measure reflects an amount that is available for capital expenditures, debt
repayment or dividend payments. The company generated discretionary cash flow
for the nine months ended September 30, 1997 and 1996 of $114.5 million and
$81.0 million, respectively. The 41% increase in discretionary cash flow in the
1997 period as compared to the 1996 period is primarily due to increased BOE
production in Cote d'Ivoire, Equatorial Guinea and Canada and the impact of the
gain on sale of assets of $25.4 million in 1996 as compared to only $2.9 million
in 1997.
The Company has used the Global Credit Facility to partially finance its
capital expenditures. During March 1997, the Company expanded the Global Credit
Facility to $300.0 million with an initial borrowing base of $275.0 million. In
November 1997, the borrowing base was increased to $300 million. As of
September 30, 1997, the Company had outstanding loans thereunder of
approximately $106.2 and outstanding letters of credit of approximately $1.0
million. Resulting liquidity on a pro forma basis (including cash and the
November expansion of the borrowing base) at September 30, 1997 was
approximately $208.0 million. As of December 31, 1996, the borrowing base under
the Global Credit Facility was $200.0 million with no amounts outstanding
thereunder and outstanding letters of credit of approximately $0.6 million.
Resulting liquidity (including cash) exceeded $254.0 million.
As part of its on-going operations, the Company periodically sells
interests in proved reserves and enhanced exploration prospects. This practice
continued in the first nine months of 1997 and 1996, with net cash proceeds from
sales of assets of $15.4 million and $11.8 million, respectively. During the
nine months ended September 30, 1997 and 1996, the cash proceeds were generated
through the sale of various non-strategic North American properties. These
proceeds were used to redeploy capital to domestic and international
opportunities which management believes will generate higher rates of return.
The Company's capital expenditure level for 1997 is expected to be
approximately $360 million, consisting of approximately $120 million for
exploration and approximately $240 million for development and property
acquisitions. Primary areas of emphasis will be Western Africa, East Texas and
the Gulf of Mexico. Funding for capital expenditures is anticipated to come
from present cash on hand, discretionary cash flow and borrowings under the
Global Credit Facility. In addition, the Company will evaluate its level of
capital spending throughout the year based upon drilling results, commodity
prices, cash flows from operations and property acquisitions. Actual capital
spending may vary from the established capital expenditure
-14-
<PAGE>
budget.
Due to the aforementioned expanded Global Credit Facility and the equity
offering completed in November 1996, the Company continues to maintain a sound
financial structure. The Company's debt to total capitalization ratio has
increased to 37% at September 30, 1997, from 27% at December 31, 1996. Combined
with cash flows from operating activities, the Company has the financial
strength, leverage and liquidity that will allow it to fund the planned 1997
capital expenditure program, including the international exploration and
development opportunities in Cote d'Ivoire and Equatorial Guinea, and continue
to selectively pursue strategic corporate and property acquisitions.
The Company's interest coverage ratio (calculated as the ratio of income
from operations plus DD&A and exploration expense to interest expense plus
capitalized interest less non-cash amortization of debt issue costs) was 9.7 to
1 for the first nine months of 1997, compared with 7.0 to 1 for the first nine
months of 1996.
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, affected 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, market and other fluctuations that
are beyond the Company's ability to control or predict. Although certain
Company costs and expenses are affected by the level of inflation, inflation did
not have a significant effect on the Company's results of operations for the
first nine months of 1997 or 1996.
FORWARD - LOOKING STATEMENTS
Certain statements in this report, including statements of the Company's
and management's expectations, intentions, plans and beliefs, including those
contained in or implied by "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Notes to Consolidated Financial
Statements, are forward-looking statements, as defined in Section 21E of the
Securities Exchange Act of 1934, that are dependent on certain events, risks and
uncertainties that may be outside the Company's control. These forward-looking
statements include statements of management's plans and objectives for the
Company's future operations and statements of future economic performance;
information regarding drilling schedules, expected or planned production or
transportation capacity, future production levels from international and
domestic fields, the Company's capital budget and future capital requirements,
the Company's meeting its future capital needs, the Company's realization of its
deferred tax asset, the level of future expenditures for environmental costs and
the outcome of regulatory and litigation matters; and the assumptions described
in this report underlying such forward-looking statements. Actual results and
developments could differ materially from those expressed in or implied by such
statements due to a number of factors, including, without limitation, those
described in the context of such forward-looking statements, fluctuations in the
price of crude oil and natural gas, the success rate of exploration efforts,
timeliness of development activities, and the risk factors described from time
to time in the Company's other documents and reports filed with the Securities
and Exchange Commission.
-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 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.
A Form 8-A dated October 3, 1997 was filed with the Securities and
Exchange Commission to amend the previously authorized Preferred Stock Purchase
Rights.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: See Index to Exhibits on page 17.
(b) Report on Form 8-K:
A Form 8-K dated October 3, 1997 was filed announcing the revision of
the Stockholders Right Plan.
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.
UNITED MERIDIAN CORPORATION
November 12, 1997 /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
-16-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------------ ---------------------------------------------------------------
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 Form S-8 (No. 333-28017) filed with the
Securities and Exchange Commission on May 29, 1997.
4.1 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.
4.2 Specimen of certificate representing Series A Voting Common
Stock, $0.01 par value, of the Company, incorporated herein by
reference to Exhibit 4.13 to the Company's Form 10-Q for the
period ended September 30, 1994 filed with the Securities and
Exchange Commission on August 10, 1994.
4.3 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 September 30,
1994, incorporated by reference to Exhibit 4.16 to UMC's Form
10-Q for the quarterly period ended September 30, 1995, filed
with the Securities and Exchange Commission on August 10, 1995.
4.4 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 September 30, 1995, filed with the
Securities and Exchange Commission on August 10, 1995.
4.5 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 September 30, 1995,
incorporated by reference to Exhibit 4.18 to UMC's Form 10-Q
for the quarterly period ended September 30, 1995, filed with
the Securities and Exchange Commission on August 10, 1995.
4.6 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 September 30, 1995, filed with
the Securities and Exchange Commission on August 10, 1995.
4.7 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 September 30, 1995, filed with
the Securities and Exchange Commission on August 10, 1995.
4.8 Fourth Joint Amendment to Amended and Restated Credit Agreement
and to Amended and 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.
4.9 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.
-17-
<PAGE>
4.10 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.
4.11 Global Credit Agreement dated as of March 18, 1997, among
United Meridian Corporation, UMC Petroleum Corporation, The
Chase Manhattan Bank, N.A., as Administrative Agent, Morgan
Guaranty Trust Company of New York, as Syndication Agent,
NationsBank of Texas, N.A. and Societe Generale, as
Documentation Agents, Banque Paribas, Wells Fargo Bank, N.A.,
and Colorado National Bank, as Co-Agents and The Lenders Now or
Hereafter Signatory Hereto, incorporated by reference to
Exhibit 4.11 to UMC's Form 10-Q for the quarterly period ended
March 31, 1997, filed with the Securities and Exchange
Commission on May 9, 1997.
4.12 Credit Agreement dated as of March 18, 1997 among UMC Resources
Canada Ltd., as the Company, The Chase Manhattan Bank of
Canada, as Agent, and the Lenders Signatory Hereto,
incorporated by reference to Exhibit 4.12 to UMC's Form 10-Q
for the quarterly period ended March 31, 1997, filed with the
Securities and Exchange Commission on May 9, 1997.
4.13 Guaranty Agreement dated as of March 18, 1997, by UMC Petroleum
Corporation in favor of The Chase Manhattan Bank of Canada, as
Administrative Agent, and The Lenders Now or Hereafter
Signatory to the Credit Agreement, incorporated by reference to
Exhibit 4.13 to UMC's Form 10-Q for the quarterly period ended
March 31, 1997, filed with the Securities and Exchange
Commission on May 9, 1997.
4.14 Guaranty Agreement dated as of March 18, 1997, by United
Meridian Corporation in favor of The Chase Manhattan Bank, as
Administrative Agent, Morgan Guaranty Trust Company of New
York, as Syndication Agent, NationsBank of Texas, N.A. and
Societe Generale, as Documentation Agents, Banque Paribas,
Wells Fargo Bank, N.A., and Colorado National Bank as Co-
Agents, and The Lenders Now or Hereafter Signatory to the
Credit Agreement, incorporated by reference to Exhibit 4.14 to
UMC's Form 10-Q for the quarterly period ended March 31, 1997,
filed with the Securities and Exchange Commission on May 9,
1997.
4.15 Guaranty Agreement dated as of March 18, 1997 by United
Meridian Corporation in favor of The Chase Manhattan Bank of
Canada, as Administrative Agent, and The Lenders Now or
Hereafter Signatory to the Credit Agreement, incorporated by
reference to Exhibit 4.15 to UMC's Form 10-Q for the quarterly
period ended March 31, 1997, filed with the Securities and
Exchange Commission on May 9, 1997.
4.16 Guaranty Agreement dated as of March 18, 1997 by Norfolk
Holdings, Inc. as the Guarantor, in favor of The Chase
Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust
Company of New York as Syndication Agent, NationsBank of Texas,
N.A. and Societe Generale, as Documentation Agents, Banque
Paribas, Wells Fargo Bank, N.A., and Colorado National Bank, as
Co-Agents, and The Lenders Now or Hereafter Signatory to the
Credit Agreement, incorporated by reference to Exhibit 4.16 to
UMC's Form 10-Q for the quarterly period ended March 31, 1997,
filed with the Securities and Exchange Commission on May 9,
1997.
4.17 Guaranty Agreement dated as of March 18, 1997 by UMIC Cote
d'Ivoire Corporation, as the Guarantor, in favor of The Chase
Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust
Company of New York, as Syndication Agent, NationsBank of
Texas, N.A., and Societe Generale, as Documentation Agents,
Banque Paribas, Wells Fargo Bank, N.A., and Colorado National
Bank, as Co-Agents, and The Lenders Now or Hereafter Signatory
to the Credit Agreement, incorporated by reference to Exhibit
4.17 to UMC's Form 10-Q for the quarterly period ended March
31, 1997, filed with the Securities and Exchange Commission on
May 9, 1997.
4.18 Guaranty Agreement dated as of March 18, 1997 by UMC Equatorial
Guinea Corporation, as the Guarantor, in favor of The Chase
Manhattan Bank, as Administrative Agent, Morgan Guaranty Trust
Company of New York, as Syndication Agent, NationsBank of
Texas, N.A. and Societe Generale, as Documentation Agents,
Banque Paribas, Wells Fargo Bank, N.A., and Colorado National
Bank, as Co-Agents, and The Lenders Now or Hereafter Signatory
to the Credit Agreement, incorporated by reference to Exhibit
4.18 to UMC's Form 10-Q for the quarterly period ended March
31, 1997, filed with the Securities and Exchange Commission on
May 9, 1997.
4.19 Intercreditor Agreement dated as of March 18, 1997, among
United Meridian Corporation, UMC Petroleum Corporation, Norfolk
Holdings Inc., UMC Resources Canada Ltd., UMIC Cote d'Ivoire
Corporation, UMC
-18-
<PAGE>
Equatorial Guinea Corporation, The Chase Manhattan Bank, as
Administrative Agent and Collateral Agent, Morgan Guaranty
Trust Company of New York, as Syndication Agent, NationsBank of
Texas, N.A. and Societe Generale, as Documentation Agents,
Banque Paribas, Wells Fargo Bank, N.A., as Co-Agents, The Chase
Manhattan Bank of Canada, as Canadian Agent, and The Lenders
Now or Hereafter Signatory Hereto, incorporated by reference to
Exhibit 4.19 to UMC's Form 10-Q for the quarterly period ended
March 31, 1997, filed with the Securities and Exchange
Commission on May 9, 1997.
10.1 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.
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 Employee Nonqualified Stock Option Plan incorporated
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 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.
10.9 Second Amendment to the UMC 1994 Employee Nonqualified Stock
Option Plan dated May 22, 1996, incorporated by reference to
Exhibit 4.3.2 to the Company's Form S-8 (No. 333-05401) filed
with the Securities and Exchange Commission on June 6, 1996.
10.10 Third Amendment to the UMC 1994 Employee Nonqualified Stock
Option Plan dated November 13, 1996, incorporated by reference
to Exhibit 4.3.3 to the Company's Form S-8 (No. 333-28017)
filed with the Securities and Exchange Commission on May 29,
1997.
10.11 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.
10.12 First Amendment to the UMC 1994 Outside Directors' Nonqualified
Stock Option Plan dated May 22, 1996, incorporated by reference
to Exhibit 4.4.1 to the Company's Form S-8 (No. 333-05401)
filed with the Securities and Exchange Commission on June 6,
1996.
10.13 Form of the Second Amendment to the UMC 1994 Outside Directors=
Nonqualified Stock Option Plan dated November 13, 1996,
incorporated by reference to Exhibit 10.13 to UMC's 1996 Form
10-K filed with the Securities and Exchange Commission on March
7, 1997.
-19-
<PAGE>
10.14 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.
10.15 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.
10.16 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.
10.17 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.
10.18 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.
10.19 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.
10.20 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.
10.21 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.
10.22 Production Sharing of 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.
10.23 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.
10.24 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 September 30, 1995 filed with the Securities and Exchange
Commission on August 10, 1995.
10.25 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, 1995.
10.26 Amendment to United Meridian Corporation 1994 Non-Qualified
Stock Option Agreement for Former
-20-
<PAGE>
Employees of General Atlantic Resources, Inc. dated as of April
16, 1996 among UMC and Donald D. Wolf, incorporated by
reference to Exhibit 10.22 to the Company's Form 10-Q for the
period ended September 30, 1996 filed with the Securities and
Exchange Commission on August 8, 1996.
10.27 Amendment to Employment Agreement dated as of April 16, 1996
among Petroleum and Donald D. Wolf incorporated by reference to
Exhibit 10.23 to the Company's Form 10-Q for the period ended
September 30, 1996 filed with the Securities and Exchange
Commission on August 8, 1996.
10.28 Employment Agreement, dated October 9, 1996, between UMC, UMC
Petroleum Corporation and James L. Dunlap, incorporated by
reference to Exhibit 10.1 to UMC's Form S-3, Amendment No. 2
(No. 333-12823), filed with the Securities and Exchange
Commission on October 30, 1996.
10.29 Form of Indemnification Agreement with a schedule of director
signatories, incorporated by reference to Exhibit 10.2 to UMC's
Form S-3, Amendment No. 2 (No. 333-12823) filed with the
Securities and Exchange Commission on October 30, 1996.
10.30 Fourth Amendment to the UMC 1994 Employee Nonqualified Stock
Option Plan dated May 29, 1997, incorporated herein by
reference to Exhibit 4.3.4 to the Company's Form S-8 (No. 333-
28017) filed with the Securities and Exchange Commission on May
29, 1997.
10.31 Second Amendment to the UMC 1994 Outside Directors'
Nonqualified Stock Option Plan dated November 13, 1996,
incorporated herein by reference to Exhibit 4.4 to the
Company's Form S-8 (No. 333-28017) filed with the Securities
and Exchange Commission on May 29, 1997.
11.1* Calculation of Net Income per Common Share.
27.1* Financial Data Schedule, included solely in the Form 10-Q filed
electronically with the Securities and Exchange Commission.
----------------------
* Filed herewith.
-21-
<PAGE>
EXHIBIT 11.1
CALCULATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
September 30, September 30,
----------------- ----------------
1997 1996 1997 1996
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income......................... $ 3,303 $ 2,838 $11,322 $11,789
Dividends paid on preferred stock.. - - - (1,531)
------- ------- ------- -------
Amount available to common
shareholders.................... $ 3,303 $ 2,838 $11,322 $10,258
======= ======= ======= =======
Weighted average number of common
shares outstanding.............. 36,789 32,025 36,632 30,695
======= ======= ======= =======
Net income per common share........ $ 0.09 $ 0.09 $ 0.31 $ 0.33
======= ======= ======= =======
</TABLE>
CALCULATION OF WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
September 30, September 30,
----------------- --------------
1997 1996 1997 1996
--------- ------ ------ ------
<S> <C> <C> <C> <C>
Shares outstanding from beginning of
period.................................................. 35,607 28,704 35,217 28,150
158 and 547 stock options exercised in the three and
nine months ended September 30, 1997, respectively...... 53 - 306 -
504 and 1,058 stock options and warrants exercised in the
three and nine months ended September 30, 1996,
respectively............................................ - 210 - 380
Common shares issued in exchange for shares of General
Atlantic Resources, Inc................................. 3 - 1 -
1,845 common shares issued in conversion of
preferred stock, July 25, 1996.......................... - 1,344 - 451
Common stock equivalents of
stock options/(1)/...................................... 1,126 1,767 1,108 1,714
------ ------ ------ ------
36,789 32,025 36,632 30,695
====== ====== ====== ======
</TABLE>
/(1)/ The calculation of common stock equivalents of stock options 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 15,157
<SECURITIES> 0
<RECEIVABLES> 93,457
<ALLOWANCES> 1,190
<INVENTORY> 13,304
<CURRENT-ASSETS> 132,812
<PP&E> 1,092,391
<DEPRECIATION> 395,292
<TOTAL-ASSETS> 864,430
<CURRENT-LIABILITIES> 115,900
<BONDS> 150,000
0
0
<COMMON> 358
<OTHER-SE> 452,283
<TOTAL-LIABILITY-AND-EQUITY> 864,430
<SALES> 177,697
<TOTAL-REVENUES> 182,920
<CGS> 0
<TOTAL-COSTS> 39,234
<OTHER-EXPENSES> 98,440
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,069
<INCOME-PRETAX> 22,770
<INCOME-TAX> 11,448
<INCOME-CONTINUING> 11,322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,322
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
