UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-13289
PRIDE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 76-0069030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5847 SAN FELIPE, SUITE 3300
HOUSTON, TEXAS 77057
(Address of principal executive offices) (Zip Code)
(713) 789-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.
Common Stock, no par value Outstanding as of November 13, 1998
50,383,041
<PAGE>
PRIDE INTERNATIONAL, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
-------
Item 1. Financial Statements
Consolidated Balance Sheet as of September 30, 1998 and
December 31, 1997............................................... 4
Consolidated Statement of Operations for the three months
ended September 30, 1998 and 1997............................... 5
Consolidated Statement of Operations for the nine months
ended September 30, 1998 and 1997............................... 6
Consolidated Statement of Cash Flows for the nine months
ended September 30, 1998 and 1997............................... 7
Notes to Unaudited Consolidated Financial Statements.............. 8
Report of Independent Accountants................................. 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................. 26
Signatures........................................................... 27
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
3
<PAGE>
PRIDE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ..................................................... $ 101,653 $ 74,395
Trade receivables, net ........................................................ 201,350 194,973
Parts and supplies ............................................................ 31,880 26,899
Deferred income taxes ......................................................... 1,508 2,252
Prepaid expenses and other current assets ..................................... 44,458 35,691
----------- -----------
Total current assets .................................................... 380,849 334,210
----------- -----------
PROPERTY AND EQUIPMENT, at cost .................................................. 1,663,084 1,273,327
ACCUMULATED DEPRECIATION ......................................................... (151,996) (101,680)
----------- -----------
Net property and equipment .............................................. 1,511,088 1,171,647
----------- -----------
OTHER ASSETS
Investments in and advances to affiliates ..................................... 42,643 9,092
Goodwill and other intangibles, net ........................................... 3,472 3,623
Other assets, net ............................................................. 35,444 22,929
----------- -----------
Total other assets ...................................................... 81,559 35,644
----------- -----------
$ 1,973,496 $ 1,541,501
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .............................................................. $ 102,477 $ 94,736
Accrued expenses .............................................................. 81,655 64,994
Short-term borrowings ......................................................... 13,141 21,055
Current portion of long-term debt ............................................. 30,059 39,356
Current portion of long-term lease obligations ................................ 10,646 10,336
----------- -----------
Total current liabilities ............................................... 237,978 230,477
----------- -----------
OTHER LONG-TERM LIABILITIES ...................................................... 60,790 28,911
LONG-TERM DEBT, net of current portion ........................................... 498,390 435,100
LONG-TERM LEASE OBLIGATIONS, net of current portion .............................. 32,308 36,275
6 1/4% CONVERTIBLE SUBORDINATED DEBENTURES ....................................... 52,500 52,500
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES .................................. 234,552 --
DEFERRED INCOME TAXES ............................................................ 81,514 72,313
MINORITY INTEREST ................................................................ 22,948 768
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value; 100,000,000 shares authorized;
50,156,400 and 50,097,120 shares issued and 50,102,180
and 50,042,900 shares outstanding, respectively ............................ 1 1
Paid-in capital ............................................................... 523,547 522,946
Treasury stock, at cost ....................................................... (191) (191)
Retained earnings ............................................................. 229,159 162,401
----------- -----------
Total shareholders' equity .............................................. 752,516 685,157
----------- -----------
$ 1,973,496 $ 1,541,501
=========== ===========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE>
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1998 1997
--------- ---------
REVENUES ..................................... $ 209,964 $ 182,908
OPERATING COSTS .............................. 130,959 118,040
--------- ---------
Gross margin .............................. 79,005 64,868
DEPRECIATION AND AMORTIZATION ................ 19,667 16,084
SELLING, GENERAL AND ADMINISTRATIVE .......... 20,756 18,837
--------- ---------
EARNINGS FROM OPERATIONS ..................... 38,582 29,947
--------- ---------
OTHER INCOME (EXPENSE)
Other expense, net ........................ (722) (700)
Interest income ........................... 1,785 975
Interest expense .......................... (11,413) (10,460)
--------- ---------
Total other income (expense), net ... (10,350) (10,185)
--------- ---------
EARNINGS BEFORE INCOME TAXES ................. 28,232 19,762
INCOME TAX PROVISION ......................... 7,424 5,730
--------- ---------
NET EARNINGS ................................. $ 20,808 $ 14,032
========= =========
NET EARNINGS PER SHARE
Basic ..................................... $ .42 $ .30
Diluted ................................... $ .37 $ .28
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ..................................... 50,101 46,809
Diluted ................................... 63,008 52,621
The accompanying notes are an integral part
of the consolidated financial statements.
5
<PAGE>
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1998 1997
--------- ---------
REVENUES ..................................... $ 642,836 $ 488,821
OPERATING COSTS .............................. 404,894 322,999
--------- ---------
Gross margin .............................. 237,942 165,822
DEPRECIATION AND AMORTIZATION ................ 57,566 41,581
SELLING, GENERAL AND ADMINISTRATIVE .......... 61,508 52,197
--------- ---------
EARNINGS FROM OPERATIONS ..................... 118,868 72,044
--------- ---------
OTHER INCOME (EXPENSE)
Other income (expense), net ............... (1,281) 77,965
Interest income ........................... 4,849 2,898
Interest expense .......................... (34,241) (23,809)
--------- ---------
Total other income (expense), net ... (30,673) 57,054
--------- ---------
EARNINGS BEFORE INCOME TAXES ................. 88,195 129,098
INCOME TAX PROVISION ......................... 21,437 44,519
--------- ---------
NET EARNINGS ................................. $ 66,758 $ 84,579
========= =========
NET EARNINGS PER SHARE
Basic ..................................... $ 1.33 $ 2.06
Diluted ................................... $ 1.19 $ 1.82
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ..................................... 50,082 41,143
Diluted ................................... 59,890 47,384
The accompanying notes are an integral part
of the consolidated financial statements.
6
<PAGE>
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings ............................................... $ 66,758 $ 84,579
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities -
Depreciation and amortization ........................... 53,014 41,581
Discount amortization on zero coupon
convertible subordinated debentures .................. 4,552 --
Gain on sale of assets .................................. (878) (84,775)
Effect of changes in foreign currency exchange rates .... (1,685) 432
Deferred tax provision (benefit) ........................ 9,945 (8,802)
Minority interest in earnings of consolidated
subsidiaries .......................................... 67 (851)
Changes in assets and liabilities, net of
effects of acquisitions -
Trade receivables .................................... (6,377) (18,664)
Parts and supplies ................................... (4,981) (2,941)
Prepaid expenses and other current assets ............ (8,767) (2,168)
Other assets ......................................... (9,001) (7,862)
Accounts payable ..................................... (10,459) (11,779)
Accrued expenses ..................................... 16,661 10,255
--------- ---------
Net cash provided by (used in) operating activities 108,849 (995)
--------- ---------
INVESTING ACTIVITIES
Purchase of net assets of acquired entities, including
acquisition costs, less cash acquired ................... (17,000) (371,802)
Purchases of property and equipment ........................ (349,110) (116,967)
Proceeds from sales of property and equipment .............. 3,784 141,520
Investments in affiliates .................................. (39,380) (756)
--------- ---------
Net cash used in investing activities ............. (401,706) (348,005)
--------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of common stock ..................... -- 70,235
Proceeds from exercise of stock options .................... 601 5,328
Proceeds from minority interest owners ..................... 22,113 --
Proceeds from issuance of zero coupon
convertible subordinated debentures,
net of underwriting discounts and
offering costs .......................................... 223,100 --
Proceeds from debt borrowings .............................. 181,321 426,929
Reduction of debt .......................................... (107,020) (93,161)
--------- ---------
Net cash provided by financing activities ......... 320,115 409,331
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ..................... 27,258 60,331
CASH AND CASH EQUIVALENTS, beginning of period ................ 74,395 10,770
--------- ---------
CASH AND CASH EQUIVALENTS, end of period ...................... $ 101,653 $ 71,101
========= =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
7
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
of Pride International, Inc. (the "Company") included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997. Certain
reclassifications have been made to prior year amounts to conform with the
current year presentation.
The unaudited consolidated financial information included herein reflects all
adjustments, consisting only of normal recurring adjustments, which are
necessary, in the opinion of management, for a fair presentation of the
Company's financial position, results of operations and cash flows for the
interim periods presented. The results of operations for the interim periods
presented herein are not necessarily indicative of the results to be expected
for a year.
2. DEBT AND CONVERTIBLE SUBORDINATED DEBENTURES
SHORT-TERM BORROWINGS
The Company has agreements with several banks for short-term lines of credit
denominated in U.S. dollars, French francs and Argentine pesos. The facilities
are renewable annually and bear interest at variable rates based on LIBOR for
the U.S. dollar and Argentine peso denominated facilities, and PIBOR for the
French franc denominated facilities. The interest rates on such borrowings as of
September 30, 1998 ranged from 4.2% to 7.6%.
LONG-TERM DEBT
Long-term debt as of September 30, 1998 and December 31, 1997 consisted of
the following:
SEPTEMBER 30, DECEMBER 31,
1998 1997
-------- --------
(IN THOUSANDS)
Senior notes ............................... $325,000 $325,000
Collateralized term loans .................. 66,340 79,009
Limited-recourse
collateralized term loans .................. 32,174 35,210
Credit Facility ............................ 30,000 --
Other notes payable
Note payable to sellers .................. 2,000 11,000
Eximbank notes payable ................... 5,143 6,533
Notes payable ............................ 24,219 13,667
Loan obligations to customers ............ 3,573 4,037
Other debt ................................. 40,000 --
-------- --------
528,449 474,456
Less: Current portion of
long-term debt ........................... 30,059 39,356
-------- --------
Long-term debt, net of
current portion ..................... $498,390 $435,100
======== ========
8
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
SENIOR NOTES
In May 1997, the Company issued $325,000,000 of 9.375% Senior Notes due May
1, 2007 (the "Senior Notes"). Interest on the Senior Notes is payable
semi-annually on May 1 and November 1 of each year, commencing November 1, 1997.
The Senior Notes are not redeemable prior to May 1, 2002, after which they will
be redeemable, in whole or in part, at the option of the Company at redemption
prices starting at 104.688% and declining to 100% by May 1, 2005. In the event
the Company consummates a public equity offering on or prior to May 1, 2000, the
Company at its option may use all or a portion of the proceeds from such public
equity offering to redeem up to $108,333,000 principal amount of the Senior
Notes at a redemption price equal to 109.375% of the aggregate principal amount
thereof, together with accrued and unpaid interest to the date of redemption.
The indenture governing the Senior Notes contains provisions which limit the
ability of the Company and its subsidiaries to incur additional indebtedness,
create liens, enter into mergers and consolidations, pay cash dividends on its
capital stock, make acquisitions, sell assets or change its business.
COLLATERALIZED TERM LOANS
In April 1996, the Company completed two separate financing arrangements with
lending institutions pursuant to which it borrowed an aggregate amount of $40
million and an additional $6.5 million in November 1996. The collateralized term
loans bore interest initially at a floating rate of prime plus 0.5% and are
repayable in monthly installments of principal and interest over a period of
five to six years. In December 1996, the Company elected to convert the interest
payable to a fixed rate basis. As a result, the collateralized term loans
currently bear interest at fixed rates ranging from 7.95% to 8.50% per annum.
The loans are collateralized by certain of the Company's domestic offshore rig
fleet and ancillary equipment. The loan agreements include restrictive financial
covenants with respect to cash flow coverage and tangible net worth.
In connection with the March 1997 acquisition of Forasol-Foramer N.V.
("Forasol"), the Company assumed certain borrowing arrangements with various
banks, including a $20 million bank loan, payable in semi-annual installments
each August and February through 2002. The loan bears interest at a stated rate
of six-month LIBOR plus a margin ranging from 1.25% to 2.50%. In conjunction
with this loan, Forasol simultaneously entered into an interest rate swap
agreement with a notional amount of $20 million, which fixed the rate of
interest on this loan at 7.55% over the term of the debt agreement. A
semisubmersible rig is pledged as security for this loan. The Company also
assumed a $30 million bank loan, secured by another semisubmersible rig, payable
in semi-annual installments beginning May 1997 through 2003, which bears
interest at a rate of LIBOR plus a margin ranging from 1.00% to 2.00%.
LIMITED-RECOURSE COLLATERALIZED TERM LOANS
During 1994, the Company entered into long-term financing arrangements with
two Japanese trading companies in connection with the construction and operation
of two drilling barge rigs. The term loans bear interest at 9.60% and are
collateralized by the drilling barge rigs and related charter contracts. The
loans are being repaid from the proceeds of the related charter contracts in
equal monthly installments of principal and interest through July 2004. In
addition, a portion of contract proceeds is being held in trust to assure that
timely payment of future debt service obligations is made. As of September 30,
1998, approximately $2.4 million of such contract proceeds, which amount is
included in cash and cash equivalents on the accompanying unaudited consolidated
balance sheet, are being held in trust as security for the lenders, and are not
presently available for use by the Company.
9
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
CREDIT FACILITY
In March 1997, the Company entered into a senior secured revolving credit
facility with a group of banks (as amended and restated, the "Credit Facility")
under which up to $100 million (including $25 million for letters of credit) was
initially available. Availability under the Credit Facility is limited to a
borrowing base based on the fair market value of collateral. The Credit Facility
is collateralized by the accounts receivable, inventory and other assets of the
Company and its domestic subsidiaries, two-thirds of the stock of the Company's
foreign subsidiaries, the stock of the Company's domestic subsidiaries and
certain other assets. The Credit Facility terminates in December 2000.
Borrowings under the Credit Facility bear interest at a variable rate based on
either the prime rate or LIBOR.
The Credit Facility limits the ability of the Company and its subsidiaries to
incur additional indebtedness, create liens, enter into mergers and
consolidations, pay cash dividends on its capital stock, make acquisitions, sell
assets or change its business without prior consent of the lenders. Under the
Credit Facility, the Company must maintain certain financial ratios, including
(i) funded debt to pro forma EBITDA, (ii) funded debt to capitalization, (iii)
adjusted EBITDA to debt service and (iv) minimum tangible net worth. As of
September 30, 1998, advances totaling $30 million were outstanding under the
Credit Facility. In September 1998, the Credit Facility was amended to allow the
funding of the equipment loan for the Pride Africa. In connection with such
amendment, availability under the Credit Facility was reduced to $50 million. In
addition, in order to maintain the availability of the Credit Facility, the
Company will be required to obtain waivers from the lenders or further amend the
Credit Facility prior to the funding of the equipment loan for the PRIDE ANGOLA.
If the Company is unable to obtain such a waiver or amendment on terms it
considers acceptable, the Company will seek alternate financing arrangements to
replace the Credit Facility.
OTHER NOTES PAYABLE
Other notes payable consists of an acquisition note payable to sellers,
Eximbank loans for the purchase and import of goods manufactured in the United
States into other countries, notes payable in connection with financed insurance
premiums and miscellaneous loan obligations to customers.
In addition, other notes payable includes domestic bank financing of $15
million for the acquisition of two offshore drilling rigs. The borrowings bear
interest at 7.54% per annum. The loans are repayable in monthly installments
over 7 years.
OTHER DEBT
Other debt includes certain foreign short-term borrowings relating to the
acquisition of certain equipment to be installed on the PRIDE AFRICA and PRIDE
ANGOLA, two ultra-deepwater drillships under construction referred to in Note 5.
The Company intends to refinance these short-term borrowings to long-term and
has obtained commitments from a group of banks to provide up to $310 million in
loans to finance these construction projects. Accordingly, the Company has
reclassified short-term borrowings of $40 million to long-term debt. The loans
will be secured by such equipment and will bear interest at a rate of LIBOR plus
1.25% per annum. The Company has agreed to sell such equipment to two joint
ventures formed to construct, own and operate the drillships on or before the
date of acceptance by the operator of the drillships which is anticipated to be
mid-1999. The Company expects to repay such loans from such sales proceeds.
CONVERTIBLE SUBORDINATED DEBENTURES
In January 1996, the Company completed a public sale of $80,500,000 principal
amount of 6 1/4% convertible subordinated debentures. The debentures, which are
due February 15, 2006, are convertible into common stock of the
10
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
Company at a price of $12.25 per share. The debentures are redeemable at the
option of the Company, in whole or in part, at any time on or after March 1,
1999, at an initial redemption price of 103.125% of the principal amount and
declining to 100.0% of the principal amount by February 15, 2002. Interest is
payable semi-annually on February 15 and August 15 of each year commencing
August 15, 1996. During the first quarter of 1997, an aggregate of $28,000,000
principal amount of the debentures was converted into 2,285,712 shares of common
stock.
In April 1998, the Company completed a public sale of zero coupon convertible
subordinated debentures. The net proceeds to the Company in connection with the
sale, after deducting underwriting discounts and offering expenses, amounted to
approximately $223,100,000. The issue price of $391.06 for each debenture
represents a yield to maturity of 4.75% per annum (computed on a semiannual bond
equivalent basis) calculated from the issue date. The debentures, which mature
on April 24, 2018, are convertible into common stock of the Company at a
conversion rate of 13.794 shares of common stock per $1,000 principal amount at
maturity. At the maturity date, the aggregate amount payable would be
$588,145,000. The Company will become obligated to purchase the debentures, at
the option of the holders, in whole or in part, on April 24, 2003, 2008 and 2013
at a price per debenture of $494.52, $625.35 and $790.79, respectively, settled
either in cash, common stock or a combination thereof. On or subsequent to April
24, 2003, the debentures are redeemable at the option of the Company, in whole
or in part, for cash at a price equal to the issue price plus accrued original
issue discount to the date of redemption.
3. INCOME TAXES
The Company's consolidated effective income tax rate for the nine months
ended September 30, 1998 was approximately 24%, as compared to approximately 34%
for the corresponding period in 1997. The decrease in the effective tax rate for
the first nine months of 1998 resulted primarily from the effects of the
inclusion of the related operating results of Forasol for the full nine month
period, which was acquired in March 1997 and has a majority of its operations in
lower tax jurisdictions. Such decrease was partially offset by an increase in
the effective tax rate due to the inclusion of the related operating results of
13 mat-supported jackup drilling rigs acquired in May 1997. In addition, the
1997 first quarter included a pretax gain of $83.6 million on the sale of the
Company's U.S. land operations that were taxed at 36% and certain non-deductible
amounts, primarily $3.7 million of after-tax costs related to the induced
conversion of $28.0 million of the Company's 6 1/4% convertible subordinated
debentures.
4. NET EARNINGS PER SHARE
Other income (expense), earnings before income taxes and net earnings for the
nine months ended September 30, 1997 include a pretax gain on the divestiture of
the Company's U.S. land-based well servicing business of $83.6 million. The gain
was partially offset by nonrecurring charges totaling $4.2 million, net of
income taxes, relating principally to the induced conversion of $28.0 million
principal amount of the Company's 6 1/4% convertible subordinated debentures.
Excluding such nonrecurring items, net earnings for the nine months ended
September 30, 1997 were $35.3 million, or $.78 per share on a diluted basis.
Basic net earnings per share has been computed based on the weighted average
number of shares of common stock outstanding during the applicable period.
Diluted net earnings per share has been computed based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
the period, as if the convertible subordinated debentures were converted into
common stock on the date of sale, after giving retroactive effect to the
elimination of interest expense, net of income tax effect, applicable to the
convertible subordinated debentures.
11
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
The following table presents information necessary to calculate basic and
diluted net earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1998 1997 1998 1997
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net earnings ........................................... $ 20,808 $ 14,032 $ 66,758 $ 84,579
Interest expense on convertible
subordinated debentures .............................. 3,672 878 7,287 2,835
Income tax effect ...................................... (1,322) (316) (2,623) (1,020)
Adjusted net earnings .............................. $ 23,158 $ 14,594 $ 71,422 $ 86,394
======== ======== ======== ========
Weighted average number of common
shares outstanding ................................... 50,101 46,809 50,082 41,143
Convertible subordinated
debentures ....................................... 12,395 4,286 8,979 4,946
Stock options and warrants ......................... 512 1,526 829 1,295
-------- -------- -------- --------
Adjusted weighted average
shares outstanding ............................... 63,008 52,621 59,890 47,384
Basic net earnings per share ................... $ .42 $ .30 $ 1.33 $ 2.06
======== ======== ======== ========
Diluted net earnings per share ................. $ .37 $ .28 $ 1.19 $ 1.82
======== ======== ======== ========
</TABLE>
As described in Note 2, the Company will become obligated to purchase its
zero coupon convertible subordinated debentures, at the option of the holders,
in whole or in part, on April 24, 2003, 2008 and 2013. The Company has the
option to purchase the debentures for cash, common stock or a combination
thereof. The Company anticipates that if redemption of the debentures using
common stock would result in dilution to common stockholders of greater than
13.794 shares per $1,000 principal amount at maturity (the stated conversion
rate), the Company would redeem the debentures for cash.
For the three months and nine months ended September 30, 1998, 2,180,801 and
1,310,000 shares, respectively, shares of common stock from the options and
warrants were antidilutive and therefore not included in the computation of net
earnings per share.
5. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is routinely involved in litigation incidental to its business,
which often involves claims for significant monetary amounts, some of which
would not be covered by insurance. In the opinion of management, none of the
Company's existing litigation will have a material adverse effect on the
Company's financial position, results of operations or cash flows.
DRILLSHIP JOINT VENTURES
During 1997, the Company entered into a joint venture to construct, own and
operate the PRIDE AFRICA, an ultra-deepwater drillship currently under
construction in South Korea. The drillship is contracted to work offshore Angola
for an initial term of five years. It is anticipated that the drillship will
commence operations in mid-1999. The joint venture has entered into a financing
arrangement with a group of banks providing that approximately $200 million of
the drillship's estimated construction cost of $235 million will be financed by
loans that are, upon delivery of the drillship, without recourse to the joint
venture participants. The Company estimates that its equity investment in the
project will be approximately $19 million, which represents a 51% ownership
interest.
12
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
The Company also has obtained a commitment from a group of banks to provide
up to $110.0 million in loans to finance the acquisition of certain equipment to
be installed on the PRIDE AFRICA. The loans will be secured by such equipment
and will bear interest at a rate of LIBOR plus 1.25% per annum. The Company has
agreed to sell such equipment to the joint venture formed to construct, own and
operate the rig on or before the date Elf Angola accepts delivery of the rig
under the charter, which is anticipated to be mid-1999, and expects to repay
such loan from such sales proceeds. The joint venture intends to draw on its
financing arrangement described above to finance its payment to the Company.
In addition, the Company has entered into a separate joint venture similar to
the PRIDE AFRICA joint venture to construct, own and operate a second ultra-deep
water drillship to operate offshore Angola under a three-year contract with two
one-year options. The drillship, the PRIDE ANGOLA, is also being built in South
Korea at a cost of approximately $235 million. It is anticipated this drillship
will begin operation in late-1999. The joint venture has entered into
non-recourse financing similar to the PRIDE AFRICA financing for approximately
$200 million, subject to final documentation. The Company's equity investment in
the project is expected to be approximately $19 million, which will represent a
51% ownership interest.
AMETHYST JOINT VENTURES
During 1997, a special purpose company, in which the Company has a 30%
indirect investment, was formed to construct, own and operate six Amethyst-class
dynamically positioned semisubmersible drilling rigs. Upon their completion, the
rigs will be contracted to Petroleo Brasilerio S.A. pursuant to chartering
agreements with initial terms of five to eight years. The total estimated cost
to construct, equip and mobilize the six rigs is approximately $1.1 billion.
Delivery of the rigs is expected over a period from late 1999 through mid 2000.
The Company has made aggregate equity contributions of approximately $40 million
for the project as of September 30, 1998. The special purpose company has been
seeking financing for up to 90% of the construction costs of the rigs on terms
that would not require substantial recourse to the Company or the other project
sponsor. To date, however, the special purpose company has been unable to obtain
commitments for the financing, and there can be no assurance that financing will
be obtained on these or other acceptable terms. Should the financing not be
obtained, the Company may not recover some or all of its investment in the
special purpose company.
In November 1998, the special purpose company terminated the construction
contracts with respect to two of the Amethyst rigs after the shipyard at which
the rigs were to be constructed filed for protection from its creditors.
Payments to the builder under the terminated contracts total approximately $16
million, of which the Company paid approximately $5 million. Some or all of
these payments may not be recoverable by the special purpose company or the
Company. The special purpose company is currently evaluating alternatives for
constructing these two rigs elsewhere, including the possibility of exercising
option slots at the two shipyards where the other four Amethyst rigs are being
constructed.
6. SUBSEQUENT EVENT
In October 1998, the Company purchased, for $85 million, a dynamically
positioned, self-propelled semisubmersible drilling rig, named AMETHYST I. The
rig is currently working offshore Brazil under a charter and service contract
that expires in 2001. The purchase price of the rig consisted of $63.7 million
in cash, with the balance financed by a $21.3 million note convertible into
common stock at a conversion price of $28.50 per share for the first year and
decreasing $1.00 per share annually thereafter until maturity. The convertible
note also bears interest at 6% per annum for the first year and escalates 1% per
annum annually thereafter until maturity. Interest is payable semi-annually on
December 1 and June 1 of each year commencing December 1, 1998. The note matures
on September 1, 2001, and no principal payments are required until maturity.
13
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Pride
International, Inc.:
We have reviewed the accompanying consolidated balance sheet of Pride
International, Inc. as of September 30, 1998, and the related consolidated
statements of operations for the three-month and nine-month periods ended
September 30, 1998 and 1997 and the related consolidated statement of cash flows
for the nine-month periods ended September 30, 1998 and 1997. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1997, and the
related consolidated statements of operations, changes in shareholders' equity,
and cash flows for the year then ended (not presented herein); and in our report
dated March 16, 1998, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of December 31, 1997 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
PricewaterhouseCoopers LLP
Houston, Texas
November 12, 1998
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
unaudited consolidated financial statements of Pride International, Inc. (the
"Company") as of September 30, 1998 and for the three-month and nine-month
periods ended September 30, 1998 and 1997 included elsewhere herein, and with
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
The following information contains forward-looking statements. For a discussion
of certain limitations inherent in such statements, see " - Outlook and
Forward-Looking Statements."
GENERAL
The Company's operations and future results have been and will be
significantly affected by a series of strategic transactions that have
transformed the Company from the second largest provider of land-based workover
and related well services in the United States into a diversified drilling
contractor operating both offshore and onshore in international markets and
offshore in the U.S. Gulf of Mexico. With the sale of its domestic land-based
well servicing operations in February 1997, the Company has ceased to provide
rig services onshore in the United States.
Since 1993, the Company has entered into a number of transactions that have
significantly expanded its international and domestic offshore operations,
including the following:
o During 1993, the Company made market-entry acquisitions in Argentina and
Venezuela. The Company further expanded these operations by subsequently
deploying more than 40 rigs from its former U.S. land-based fleet to
Argentina and Venezuela, and by acquiring four rigs from an Argentine
competitor. The Company also made market-entry acquisitions in the Gulf of
Mexico in 1994 and Colombia in 1995.
o In January 1995, the Company commenced operating two drilling barge rigs
on Lake Maracaibo, Venezuela. The barge rigs were constructed during 1994
pursuant to ten-year operating contracts entered into with Petroleos de
Venezuela, S.A., the Venezuelan national oil company.
o In April 1996, the Company acquired Quitral-Co S.A.I.C. ("Quitral-Co")
from Perez Companc S.A. and other shareholders. The 23 land-based drilling
and 57 land-based workover rigs in Argentina and seven land-based drilling
and 23 land-based workover rigs in Venezuela operated by Quitral-Co were
combined with the Company's existing land-based operations in those
countries. In November 1996, the Company added three land-based drilling
rigs and support assets to its operations in Argentina through the
acquisition of the assets of another contractor.
o In October 1996, the Company expanded its Colombian operations to 20 rigs
through the acquisition of Ingeser de Colombia, S.A., which operated seven
land-based drilling rigs and six land-based workover rigs in Colombia.
o In February 1997, the Company completed the divestiture of its domestic
land-based well servicing operations, which included 407 workover rigs in
Texas, California, New Mexico and Louisiana.
o In March 1997, the Company completed the acquisition of the operating
subsidiaries of Forasol-Foramer N.V. (collectively, "Forasol"), adding two
semisubmersible rigs, three jackup rigs, seven tender-assisted rigs, four
barge rigs and 29 land-based rigs operating in various locations in South
America, Africa, the Middle East and Southeast Asia.
o In April 1997, the Company purchased a tender-assisted rig, which has been
upgraded and deployed to Southeast Asia. In October 1997, the Company
purchased an independent-leg, cantilevered jackup rig capable of operating
in water depths of up to 300 feet, which is currently under contract in
Southeast Asia.
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<PAGE>
o In May 1997, the Company purchased 13 mat-supported jackup drilling rigs,
11 of which are currently operating in the Gulf of Mexico, one of which is
currently operating in West Africa and one of which is operating in
Malaysia.
o In July 1998, the Company acquired 60% of a Bolivian company, Compania
Boliviana de Perforacion S.A. M. ("CBP"), pursuant to a joint initiative
with the Bolivian national oil company, Yacimientos Petroliferos Fiscales
Bolivianos ("YPFB"). CBP was capitalized through the contribution of 13
land drilling and workover rigs, oilfield trucks and other related
drilling assets by YPFB and $17 million of cash by the Company.
o In October 1998, the Company purchased, for approximately $85 million, a
dynamically positioned, self-propelled semisubmersible drilling rig. The
rig is currently working offshore Brazil under a charter and service
contract that expires in 2001.
International drilling and well servicing activity is affected by
fluctuations in oil prices, but historically to a lesser extent than domestic
activity. International rig services contracts are typically for terms of one
year or more, while domestic contracts are typically for one well or multiple
wells. Accordingly, international rig services activities generally are not as
sensitive to short-term changes in oil prices as domestic operations.
The continuing weakness in worldwide oil prices, which began trending
downward in the fourth quarter of 1997, is depressing offshore drilling
activity, particularly in the U.S. Gulf of Mexico and international land
activity. This continuation of low oil prices has caused some customers to
reduce their 1998 drilling budgets, primarily in water depths where jackup
drilling rigs are used. This decreased drilling activity has in turn increased
competition among drilling contractors for the available work, and has forced
dayrates for some jackup rigs down by as much as 50% compared to levels seen
earlier in the year. If oil prices remain at current levels, the Company
anticipates further decreases in dayrates and possibly lower utilization on some
of its rigs, particularly its platform rigs and jackup rigs in the U.S. Gulf of
Mexico and its international land-based rig fleet. The Company expects this
slowdown in offshore and land drilling activity and anticipated decreases in
dayrates to continue to negatively affect the Company's results of operations
for the remainder of 1998, and the results of operations for the third quarter
of 1998 will not be indicative of the results for the reminder of 1998.
Management believes, however, that a rebound in the price of oil would result in
increased demand for the Company's services and corresponding increases in
dayrates and utilization. See "--Outlook and Forward-Looking Statements."
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<PAGE>
RESULTS OF OPERATIONS
The following table sets forth selected consolidated financial information of
the Company by operating segment for the periods indicated:
THREE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------
1998 1997
------------------- -------------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Revenues
International land ...... $103,303 49.2% $ 99,382 54.3%
International offshore .. 67,167 32.0 41,864 22.9
United States offshore .. 39,494 18.8 41,662 22.8
-------- ----- -------- -----
Total revenues ....... 209,964 100.0 182,908 100.0
-------- ----- -------- -----
Operating Costs
International land ...... 72,132 55.1 70,731 59.9
International offshore .. 38,110 29.1 26,038 22.1
United States offshore .. 20,717 15.8 21,271 18.0
-------- ----- -------- -----
Total operating costs 130,959 100.0 118,040 100.0
-------- ----- -------- -----
Gross Margin
International land ...... 31,171 39.4 28,651 44.2
International offshore .. 29,057 36.8 15,826 24.4
United States offshore .. 18,777 23.8 20,391 31.4
-------- ----- -------- -----
Total gross margin ... $ 79,005 100.0% $ 64,868 100.0%
======== ===== ======== =====
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------
1998 1997
------------------- -------------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Revenues
International land ...... $313,909 48.8% $282,579 57.8%
International offshore .. 196,502 30.6 102,732 21.0
United States offshore .. 132,425 20.6 87,025 17.8
United States land ...... -- -- 16,485 3.4
-------- ----- -------- -----
Total revenues ....... 642,836 100.0 488,821 100.0
-------- ----- -------- -----
Operating Costs
International land ...... 226,043 55.8 203,143 62.9
International offshore .. 107,219 26.5 59,734 18.4
United States offshore .. 71,632 17.7 47,346 14.7
United States land ...... -- -- 12,776 4.0
-------- ----- -------- -----
Total operating costs 404,894 100.0 322,999 100.0
-------- ----- -------- -----
Gross Margin
International land ...... 87,866 36.9 79,436 47.9
International offshore .. 89,283 37.5 42,998 26.0
United States offshore .. 60,793 25.6 39,679 23.9
United States land ...... -- -- 3,709 2.2
-------- ----- -------- -----
Total gross margin ... $237,942 100.0% $165,822 100.0%
======== ===== ======== =====
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<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997.
REVENUES. Revenues for the three months ended September 30, 1998 increased
$27.1 million, or 14.8%, as compared to the corresponding period in 1997.
Revenues from international offshore operations increased $25.3 million, due
primarily to the deployment of three additional offshore rigs and two additional
tender-assisted rigs. Revenues from domestic offshore operations decreased $2.2
million, due primarily to generally weak market conditions and downtime due to
lower dayrates on some rigs and severe weather conditions in the Gulf of Mexico.
Revenues from international land-based operations increased $3.9 million due to
the deployment of two additional land rigs to Argentina and the acquisition of
several land rigs in Bolivia, partially offset by lower utilization in Argentina
and Venezuela.
OPERATING COSTS. Operating costs for the three months ended September 30,
1998 increased $12.9 million, or 10.9%, as compared to the corresponding period
in 1997. Of this increase, $12.1 million was a result of the Company's
international offshore operations, due to the deployment of additional rigs, as
discussed above. Operating costs from international land operations increased
$1.4 million, due primarily to the addition of rigs in Argentina and Bolivia.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the three
months ended September 30, 1998 increased $3.6 million, or 22.3%, as compared to
the corresponding period in 1997, primarily due to the expansion of the
Company's international land-based operations and refurbishment of certain of
its international offshore rigs.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the three months ended September 30, 1998 increased $1.9 million,
or 10.2%, as compared to the corresponding period in 1997, primarily due to the
expansion of the Company's domestic and international offshore operations. As a
percentage of revenues, selling, general and administrative expenses were 9.9%
for the third quarter of 1998, as compared to 10.3% for the third quarter of
1997.
OTHER INCOME (EXPENSE). Interest income increased to $1.8 million for the
three months ended September 30, 1998, from $.9 million for the corresponding
period in 1997, due to increased cash made available from increased operations
and the public sale of zero coupon convertible subordinated debentures in April
1998. Interest expense for the three months ended September 30, 1998 increased
by $1.0 million over the corresponding period in 1997, primarily as a result of
$2.7 million in discount amortization on the Company's zero coupon convertible
subordinated debentures. During the three months ended September 30, 1998, the
Company capitalized $4.7 million of interest expense in connection with
construction projects, as compared to $2.5 million for the three months ended
September 30, 1997.
INCOME TAX PROVISION. The Company's consolidated effective income tax rate
for the three months ended September 30, 1998 was approximately 26.3%, as
compared to approximately 29.0% for the corresponding period in 1997, due to the
mobilization to and operation of rigs in lower tax jurisdictions.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1997.
REVENUES. Revenues for the nine months ended September 30, 1998 increased
$154.0 million, or 31.5%, as compared to the corresponding period in 1997.
Revenues from international land operations increased $31.3 million, due to the
inclusion of Forasol's revenues and revenues from its 13 mat-suppported jackup
rigs for the full nine months of 1998 and the acquisition of CBP in Bolivia in
July 1998. Revenues from international offshore operations increased $93.8
million, due also to the inclusion of Forasol's revenues for the full nine
months of 1998, and due to the deployment of five additional offshore rigs
partially offset by declining utilization of land based rigs. In addition,
revenues from domestic offshore operations increased $45.4 million, due to the
inclusion of revenues from the 13 mat-supported jackup rigs acquired in May
1997, for the full nine months of 1998. These increases were partially offset by
a decrease in revenues of $16.5 million, due to the sale of the Company's U.S.
land-based well servicing operations in February 1997, and generally weak market
conditions in the Gulf of Mexico.
18
<PAGE>
OPERATING COSTS. Operating costs for the nine months ended September 30, 1998
increased $81.9 million, or 25.4%, as compared to the corresponding period in
1997. Of this increase, $70.4 million was a result of expansion of the Company's
international operations, as discussed above. In addition, operating costs from
domestic offshore operations increased $24.3 million, due primarily to the
acquisition of 13 mat-supported jackup rigs. Operating costs decreased by $12.8
million, due to the sale of the Company's U.S. land-based well servicing
operations, as discussed above.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the nine
months ended September 30, 1998 increased $16.0 million, or 38.4%, as compared
to the corresponding period in 1997, primarily as a result of the acquisitions
of Forasol, 13 mat-supported jackup rigs and the completion and deployment of
several newly-constructed or refurbished jackup rigs. This increase was
partially offset by the sale of the Company's U.S. domestic land-based well
servicing operations in February 1997.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the nine months ended September 30, 1998 increased $9.3 million, or
17.8%, as compared to the corresponding period in 1997, primarily due to the
inclusion of such expenses for the Forasol acquisition and the acquisition of 13
mat-supported jackup rigs. As a percentage of revenues, selling, general and
administrative expenses were 9.6% for the first nine months of 1998, as compared
to 10.7% for the first nine months of 1997.
OTHER INCOME (EXPENSE). Other income (expense) for the nine months ended
September 30, 1997 included a gain of $83.6 million from the sale of the
Company's U.S. land-based well servicing operations in February 1997. The gain
was partially offset by a charge of $3.7 million related to the induced
conversion of $28.0 million principal amount of the Company's 6 1/4% convertible
subordinated debentures.
Interest income increased by $2.0 million for the nine months ended September
30, 1998, from $2.9 million for the corresponding period in 1997, due to
increased cash made available from increased operations and the public sale of
zero coupon convertible subordinated debentures in April 1998. Interest expense
for the nine months ended September 30, 1998 increased by $10.4 million over the
corresponding period in 1997, as a result of increased borrowings and discount
amortization on the Company's zero coupon convertible subordinated debentures.
During the nine months ended September 30, 1998, the Company capitalized $10.5
million of interest expense in connection with construction projects, compared
to $5.7 million in 1997.
INCOME TAX PROVISION. The Company's consolidated effective income tax rate
for the nine months ended September 30, 1998 was approximately 24%, as compared
to approximately 34.5% for the corresponding period in 1997. The decrease in the
effective tax rate for the first nine months of 1998 resulted primarily from the
effects of the inclusion of the related operating results of Forasol, which has
a majority of its operations in lower tax jurisdictions, for the full nine month
period as well as expansion of the Company's other international operations. In
addition, the 1997 first quarter included a pretax gain of $83.6 million on the
sale of the Company's U.S. land-based well servicing operations that were taxed
at 36% and certain non-deductible amounts, primarily $3.7 million of after-tax
costs related to the induced conversion of $28.0 million of the Company's 6 1/4%
convertible subordinated debentures.
LIQUIDITY AND CAPITAL RESOURCES
The Company had net working capital of $142.9 million and $103.7 million as
of September 30, 1998 and December 31, 1997, respectively. The Company's current
ratio was 1.6 as of September 30, 1998 and 1.5 as of December 31, 1997. The
increase in the current ratio was attributable primarily to the increase in cash
and cash equivalents from the sale of zero coupon convertible subordinated
debentures in April 1998 offset by an increase in accounts payable and accrued
expenses as a result of increased capital expenditures and investments in joint
ventures.
19
<PAGE>
The Company's cash flow from operations and capital expenditures were as
follows:
NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
------ ------
(IN MILLIONS)
Cash flow provided by (used in) operations ... $108.8 $ (1.0)
====== ======
Capital Expenditures
Sustaining ................................. $ 81.9 $ 42.8
New Construction ........................... 205.1 39.8
Acquisitions ............................... 17.0 371.8
Enhancements ............................... 75.8 67.4
Other ...................................... 4.5 0.2
------ ------
Total ........................................ $384.3 $522.0
====== ======
Net cash provided by operations increased by $109.8 million for the nine
months ended September 30, 1998 over the corresponding period in 1997. The
increase is primarily due to increased earnings from operations due to the
inclusion of Forasol's revenue for the full nine months in 1998, and the net of
changes in the components of working capital.
Net cash used in investing activities increased by $53.7 million for the nine
months ended September 30, 1998 over the corresponding period in 1997. The
increase is primarily related to the proceeds from the sale of the Company's
U.S. land-based operations received in 1997.
Net cash provided by financing activities decreased $89.2 million for the
nine months ended September 30, 1998, over the same period in 1997. The decrease
is primarily due to decreased debt borrowings and issuance of common stock.
Management anticipates that capital expenditures for the full year 1998 will
be approximately $550 million, represented by $94 million to sustain operations,
$76 million for enhancements, $273 million for new construction projects, $102
million for the purchase of drilling related assets and $5 million for the
upgrade of the Company's computers and software systems. The Company may spend
additional funds to acquire rigs or vessels in 1998, depending on market
conditions and opportunities. Currently, the Company has two mat-supported
jackup rigs under construction, is a party to the joint ventures having two
drillships and 6 semisubmesible drilling rigs under construction, and has
recently completed construction of four land rigs that were deployed to South
America.
In March 1997, the Company entered into a senior secured revolving credit
facility with a group of banks (as amended and restated, the "Credit Facility")
under which up to $100 million (including $25 million for letters of credit) was
initially available. Availability under the Credit Facility is limited to a
borrowing base based on the fair market value of collateral. The Credit Facility
is collateralized by the accounts receivable, inventory and other assets of the
Company and its domestic subsidiaries, two-thirds of the stock of the Company's
foreign subsidiaries, the stock of the Company's domestic subsidiaries and
certain other assets. The Credit Facility terminates in December 2000.
Borrowings under the Credit Facility bear interest at a variable rate based on
either the prime rate or LIBOR.
The Credit Facility limits the ability of the Company and its subsidiaries to
incur additional indebtedness, create liens, enter into mergers and
consolidations, pay cash dividends on its capital stock, make acquisitions, sell
assets or change its business without prior consent of the lenders. Under the
Credit Facility, the Company must maintain certain financial ratios, including
(i) funded debt to pro forma EBITDA, (ii) funded debt to capitalization, (iii)
adjusted EBITDA to debt service and (iv) minimum tangible net worth. As of
September 30, 1998, advances totaling $30 million were outstanding under the
Credit Facility at 8% interest. In September 1998, the Credit Facility was
amended to allow the funding of the equipment loan for the Pride Africa. In
connection with such amendment, availability under the Credit Facility was
reduced to $50 million. In addition, in order to maintain the availability of
the Credit Facility, the Company will
20
<PAGE>
be required to obtain waivers from the lenders or further amend the Credit
Facility prior to the funding of the equipment loan for the PRIDE ANGOLA. If the
Company is unable to obtain such a waiver or amendment on terms it considers
acceptable, the Company will seek alternate financing arrangements to replace
the Credit Facility.
During 1997, the Company entered into a joint venture to construct, own and
operate the PRIDE AFRICA, an ultra-deepwater drillship currently under
construction in South Korea. The drillship is contracted to work offshore Angola
for an initial term of five years. It is anticipated that the drillship will
commence operations in mid-1999. The joint venture has entered into a financing
arrangement with a group of banks providing that approximately $200 million of
the drillship's estimated construction cost of $235 million will be financed by
loans that, upon delivery of the drillship, are without recourse to the joint
venture participants. The Company estimates that its equity investment in the
project will be approximately $19 million, which represents a 51% ownership
interest.
The Company also has obtained a commitment from a group of banks to provide
up to $110.0 million in loans to finance the acquisition of certain equipment to
be installed on the PRIDE AFRICA. As of September 30, 1998 there were no
outstanding loans under this commitment. As of November 12, 1998, $35 million
was outstanding under this commitment. The loans will be secured by such
equipment and will bear interest at a rate of LIBOR plus 1.25% per annum. The
Company has agreed to sell such equipment to the joint venture formed to
construct, own and operate the rig on or before the date Elf Angola accepts
delivery of the rig under the charter, which is anticipated to be mid-1999, and
expects to repay the loan from the sales proceeds. The joint venture intends to
draw on its financing arrangement described above to finance its payment to the
Company.
In addition, the Company has entered into a separate joint venture similar to
the PRIDE AFRICA joint venture to construct, own and operate a second ultra-deep
water drillship to operate offshore Angola under a three-year contract with two
one-year options. The drillship, the PRIDE ANGOLA, is also being built in South
Korea at a cost of approximately $235 million. It is anticipated this drillship
will begin operation in late-1999. The joint venture has entered into a
non-recourse financing similar to the PRIDE AFRICA financing for approximately
$200 million, subject to find documentation. The Company's equity investment in
the project is expected to be approximately $19 million, which will represent a
51% ownership interest.
The Company intends to finance the acquisition of certain equipment for the
PRIDE ANGOLA through a commitment from a group of banks for approximately $110
million. The Company expects to finalize this commitment during the fourth
quarter of 1998. As of November 12, 1998, the Company had purchased
approximately $5 million of this equipment using its working capital. Additional
commitments for the fourth quarter of 1998 are expected to be approximately $10
million.
During 1997, a special purpose company, in which the Company has a 30%
indirect investment, was formed to construct, own and operate six Amethyst-class
dynamically positioned semisubmersible drilling rigs. Upon their completion, the
rigs will be contracted to Petroleo Brasilerio S.A. pursuant to chartering
agreements with initial terms of five to eight years. The total estimated cost
to construct, equip and mobilize the six rigs is approximately $1.1 billion.
Delivery of the rigs is expected over a period from late 1999 through mid 2000.
The Company has made aggregate equity contributions of approximately $40 million
for the project as of September 30, 1998. The special purpose company has been
seeking financing for up to 90% of the construction costs of the rigs on terms
that would not require substantial recourse to the Company or the other project
sponsor. To date, however, the special purpose company has been unable to obtain
commitments for the financing, and there can be no assurance that financing will
be obtained on these or other acceptable terms. Should the financing not be
obtained, the Company may not recover some or all of its investment in the
special purpose company.
In November 1998, the special purpose company terminated the construction
contracts with respect to two of the Amethyst rigs after the shipyard at which
the rigs were to be constructed filed for protection from its creditors.
Payments to the builder under the terminated contracts total approximately $16
million, of which the Company paid approximately $5 million. Some or all of
these payments may not be recoverable by the special purpose company or the
Company. The special purpose company is currently evaluating alternatives for
constructing these two rigs elsewhere, including the possibility of exercising
option slots at the two shipyard where the other four Amethyst rigs are being
constructed.
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<PAGE>
In October 1998, the Company purchased, for $85 million, a dynamically
positioned, self-propelled semisubmersible drilling rig, named AMETHYST I. The
rig is currently working offshore Brazil under a charter and service contract
that expires in 2001. The purchase price of the rig consists of $63.7 million
in cash, with the balance financed by a $21.3 million note convertible into
common stock at a conversion price of $28.50 per share for the first year and
decreasing $1.00 per share annually thereafter until maturity. The convertible
note also bears interest at 6% per annum for the first year and escalates 1% per
annum annually thereafter until maturity. Interest is payable semi-annually on
December 1 and June 1 of each year commencing December 1, 1998. The note matures
on September 1, 2001, and no principal payments are required until maturity.
In April 1998, the Company completed a public sale of zero coupon convertible
subordinated debentures. The net proceeds to the Company in connection with the
sale, after deducting underwriting discounts and offering expenses, amounted to
approximately $223.1 million. Of such net proceeds approximately $63.2 million
was used to fund the cash portion of the purchase price of a semisubmersible
rig, approximately $40.0 million was used to fund the Company's investments in
the Amethyst joint ventures and approximately $38.0 million was used to fund the
Company's equity investments in the PRIDE AFRICA and the PRIDE ANGOLA.
Approximately $45.0 million was used to repay the balance outstanding under the
Company's Credit Facility. The Company used the excess proceeds from the
offering for general corporate purposes. The debentures, which mature on April
24, 2018, are convertible into common stock of the Company at a conversion rate
of 13.794 shares of common stock per $1,000 principal amount at maturity. At
maturity, the amortized aggregate amount payable under the debentures including
accrued original issue discount would be approximately $588.1 million.
The sale of the zero coupon convertible subordinated debentures was pursuant
to a "shelf" registration statement under the Securities Act of 1933 pursuant to
which the Company may issue up to $500 million initial offering price of
securities consisting of any combination of debt securities, common stock and
preferred stock of the Company. Management believes that the cash generated from
the Company's operations, together with borrowings under the Credit Facility,
will be adequate to fund the rig acquisition and equity investments discussed
above and the Company's normal ongoing capital expenditures, working capital and
debt service requirements.
The Company is active in reviewing possible expansion and acquisition
opportunities relating to all of its business segments. While the Company has no
definitive agreements to acquire additional equipment other than those discussed
above, suitable opportunities may arise in the future. The timing, size or
success of any acquisition effort and the associated potential capital
commitments are unpredictable. From time to time, the Company has one or more
bids outstanding for contracts that could require significant capital
expenditures and mobilization costs. The Company expects to fund acquisitions
and project opportunities primarily through a combination of working capital,
cash flow from operations and full or limited recourse debt or equity financing.
OUTLOOK AND FORWARD-LOOKING STATEMENTS
With oil prices remaining at depressed levels, management anticipates that
the Company will experience further decreases in day rates and utilization in
the near-term. As day rates and utilization continue to decrease, the Company's
future financial results are expected to be lower than 1998 results. Due to the
short-term nature of many of the Company's contracts, primarily in the Gulf of
Mexico and South America land operations, and the unpredictable nature of oil
and natural gas prices, which affect the demand for drilling activity, the
extent of such adverse change cannot be accurately predicted. However, the
Company currently anticipates that its financial results for the next several
quarters will be significantly lower than the results for each of the three
quarters of 1998. The duration of this market downturn depends on many factors
that also cannot be accurately predicted. Management anticipates that the
offshore drilling markets will be unsettled for at least the balance of 1998 and
the first quarter of 1999, but remains positive on the long-term outlook for the
industry and for the Company.
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The declines experienced in the offshore drilling markets have had the
greatest impact on the demand for the Company's platform rigs in the Gulf of
Mexico. The Company currently has one jackup rig and 15 platform rigs idle in
the Gulf of Mexico where the Company's contracts have traditionally been and
continue to be short-term contracts. Due to the short-term nature of these
contracts, the Company expects that its Gulf of Mexico rigs will experience
increased downtime.
The construction of the Company's two drillships (PRIDE AFRICA AND PRIDE
ANGOLA) and two jackup rigs (PRIDE KANSAS AND PRIDE TEXAS) is proceeding as
scheduled. The drillships, which are being constructed to work under long-term
contracts, are expected to be delivered in mid and late 1999, respectively, and
the two jackup rigs are scheduled for delivery in the fourth quarter of 1998.
Following delivery, the PRIDE KANSAS is contracted to work in the Gulf of
Mexico. The PRIDE TEXAS is currently being marketed. The Company continues to
evaluate its opportunities with regard to new construction projects.
This Quarterly Report on Form 10-Q includes certain statements that may be
deemed to be "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements, other than statements of
historical facts, included in this Quarterly Report on Form 10-Q that address
activities, events or developments that the Company expects, projects, believes
or anticipates will or may occur in the future, including such matters as future
capital expenditures and investments in the construction, acquisition and
refurbishment of rigs (including the amount and nature thereof and the timing of
completion thereof), expansion and other development trends of the contract
drilling industry, business strategies, expansion and growth of operations and
other such matters are forward-looking statements. These statements are based on
certain assumptions and analyses made by management of the Company in light of
its experience and its perception of historical trends, current conditions,
expected future developments and other factors it believes are appropriate in
the circumstances. Such statements are subject to a number of assumptions, risks
and uncertainties, general economic and business conditions, prices of oil and
gas, foreign exchange controls and currency fluctuations, the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company, changes in laws or regulations, the ability to obtain shipyard
contracts and other factors, many of which are beyond the control of the
Company. Any such statements are not guarantees of future performance, and
actual results or developments may differ materially from those projected in the
forward-looking statements.
ACCOUNTING MATTERS
The Company will adopt Statement of Financial Accounting Standards ("FAS")
No. 131 "Disclosures about Segments of an Enterprise and Related Information",
FAS No. 132 "Employers' Disclosures about Pensions and Other Postretirement
Benefits", and FAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" for the year ended December 31, 1998. The Company does not
anticipate that the adoption of these disclosure standards will have a material
impact on its consolidated financial statements. FAS No. 130 "Reporting
Comprehensive Income" was adopted during the quarter ended March 31, 1998 and
had no impact on the Company's financial position, results of operations or cash
flows.
YEAR 2000 ISSUE
BACKGROUND. The "Year 2000" problem refers to the inability for certain
computer systems and other equipment with embedded chips or processors
(collectively "Business Systems") to correctly interpret the century from a date
in which the year is represented by only two digits. Business Systems, which are
not Year 2000 compliant, would not be able to correctly process certain data, or
in extreme situations, could cause the entire system to be disabled.
OVERALL GOALS AND OBJECTIVES. The Company's goal is to have all of its
significant Business Systems functioning properly with respect to the Year 2000
problem and to develop contingency plans in the event of disruptions caused by
the Year 2000 problem before December 31, 1999. In order to meet these goals,
the Company has taken a strategic business decision to implement a common set of
purchased Business Systems which cover it's global operations and are Year 2000
compliant. The Company has also established a global task force of key employees
and professional consultants to work with the key staff at each location to
ensure the goal is met. It is expected that the majority of the Company's
existing significant Business Systems will either be upgraded or replaced during
this process. The task force will also develop the contingency plans as
required. These overall goals and objectives are referred to as the "Year 2000
Project Plan."
YEAR 2000 PROJECT PLAN. The phases of the Year 2000 Project Plan include: (1)
identifying, inventory and assigning priorities to existing significant Business
Systems, (i.e. Business Systems critical to continuing operations are given the
highest priority) (2) determining and implementing the new year 2000 compliant
Business Systems that will be used throughout the Company, (3) assessing all
remaining Year 2000 risks, (4) resolving and correcting remaining Year 2000
problems with upgrades, or replacements, (5) testing the Year 2000 upgrades, or
replacements, (5) conducting Year 2000 surveys of significant customers,
suppliers, and business partners (collectively "Key Business Partners"), and (6)
developing and testing Year 2000 contingency plans. Currently, each phase is in
various stages of completion; however, the Company estimates that it is
approximately 50% complete with the Year 2000 Project Plan.
BUSINESS SYSTEMS: OPERATIONAL. Part of the Year 2000 Project Plan includes
performing an inventory of each drilling rig's critical Business Systems. This
inventory is in the process of being fully developed and evaluated, and a
compilation of written documentation regarding compliance is underway. The
Company believes that some of its rigs are Year 2000 compliant, but a full
assessment is currently being performed. At this time, the Company is not able
to reasonably assess a likely worst case Year 2000 scenario related to its
drilling rigs, but expects to do so in the near future.
KEY BUSINESS PARTNERS. The Company has initiated communication with its Key
Business Partners to seek Year 2000 readiness assurances and determine the
extent to which their failure to correct their own Year 2000 problems could
affect the Company. The Company's Key Business Partners include suppliers whose
critical function is to provide drilling rig capital equipment essential to the
operation of a rig. As part of normal business operations, the Company generally
does not maintain an inventory of drilling rig capital equipment replacement
parts. In the event replacement parts are required for a rig and the Company is
unsuccessful in purchasing the equipment from its suppliers, the rig could
experience idle time resulting in loss of revenue.
Key Business Partners also include customers who provide the Company's source
of revenue and cash flow. Any disruption in this revenue stream could impact the
Company's cash flow, results of operations and financial position. Other Key
Business Partners include strategic suppliers whose critical function is to
provide Business Systems which are Year 2000 compliant and consultants who can
advise and assist the company in the implementation of the systems. Any Year
2000 problems with these Business Systems could impact the Company adversely in
terms of lost time or even loss of revenues.
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The Company cannot guarantee that Year 2000 problems, if any, in other Key
Business Partners' systems on which it relies will be timely resolved, nor can
it inspect the companies' Year 2000 efforts or independently verify their
representations to the Company. In addition, the Company cannot foretell the
effect on its business operations from the failure of systems owned by others,
from the delivery of inaccurate information from other companies, or from the
inability of their systems to interface with the Company's systems. Accordingly,
the Company cannot guarantee that other companies' failure to resolve their Year
2000 problems would not have a material adverse effect on the Company; however,
the Company is in the process of assessing these risks.
COSTS. As of November 11, 1998, the Company has incurred approximately $ 7
million in costs related to the Year 2000 issue, primarily for new hardware, new
software licenses and outside consultants. The Company estimates its future
costs to be $ 2.5 million by December 31, 1998 and an additional $5 million in
1999. Costs related to the Year 2000 issue are funded from the Company's
operating cash flows.
RISKS. The Company's expectations regarding the Year 2000 are subject to
uncertainties which could affect the Company's results of operations or
financial condition. Success depends on many factors, some of which are outside
the Company's control. Despite reasonable efforts, the Company cannot assure
that it will not experience any disruptions or otherwise be adversely affected
by Year 2000 problems. While the Company presently does not expect any
catastrophic failures of any of its Business Systems, it cannot provide any
assurances that it is not in a position to give nor should anyone rely on
statements to the contrary.
CONTINGENCY PLANS. The Company is developing contingency plans for Business
Systems and certain processes that are high and moderately critical to the
business operations. The contingency plans will encompass alternative courses of
action, with limited reliance on computer software and hardware, in the event
that Business Systems or processes are not Year 2000 compliant.
THIS DISCLOSURE IS MADE FOR THE SOLE PURPOSE OF FACILITATING RESPONSES,
COMMUNICATING OR DISCLOSING INFORMATION AIMED AT CORRECTING, HELPING TO CORRECT
AND/OR AVOIDING YEAR 2000 FAILURES. THESE STATEMENTS ARE MADE WITH THE INTENTION
TO COMPLY FULLY WITH THE YEAR 2000 READINESS AND INFORMATION DISCLOSURE ACT AS
SIGNED INTO LAW OCTOBER 19, 1998. ALL STATEMENTS MADE HEREIN SHALL BE CONSTRUED
WITHIN THE CONFINES OF THAT ACT.
25
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NO.
3.1 -- Restated Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, File No. 0-16961).
3.2 -- Amendment to Restated Articles of Incorporation (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, File No. 0-16961).
3.3 -- Amendment to Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.3 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, File No.
0-16961).
3.4 -- Amendment to Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement on Form S-8 dated September 8, 1997,
Registration No. 333-35089).
3.5 -- Amendment to Amended and Restated Articles of Incorporation.
3.6 -- Bylaws of the Company, as amended.
4.1 -- Rights Agreement dated as of September 9, 1998 between the Company
and American Stock Transfer & Trust Company, as Rights Agent
(incorporated by reference to Exhibit 1 to the Company's Current
Report on Form 8-K dated September 10, 1998 (File No. 1-13289)).
4.2 -- First Amendment to Credit Agreement, dated as of April 24, 1998, by
and among the Company, certain of its subsidiaries, First National
Bank of Commerce, as arranger and syndication agent, Wells Fargo Bank
(Texas), National Association, as administrative and documenation
agent, and the lenders named therein.
4.3 -- Second Amendment to Credit Agreement, dated as of September 17, 1998,
by and among the Company, certain of its subsidiaries, First National
Bank of Commerce, as arranger and syndication agent, Wells Fargo Bank
(Texas), National Association, as administrative and documenation
agent, and the lenders named therein.
15 -- Awareness Letter of PricewaterhouseCoopers LLP.
27 -- Financial data schedule.
(b) Reports on Form 8-K
In a Current Report on Form 8-K dated September 10, 1998, the Company (i)
reported pursuant to Item 5 of Form 8-K the declaration by the Board of
Directors of a dividend of one right to purchase preferred stock ("Right") for
each outstanding share of the Company's Common Stock to shareholders of record
at the close of business on September 30, 1998; (ii) set forth pursuant to Item
5 of Form 8-K a summary description of the Rights and (iii) filed pursuant to
Item 7 of Form 8-K (a) the Rights Agreement dated as of September 9, 1998
between the Company and American Stock Transfer & Trust Company, as Rights
Agent, and (b) a press release issued by the Company dated September 10, 1998
with respect thereto.
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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.
PRIDE INTERNATIONAL, INC.
By: EARL W. MCNIEL
(EARL W. MCNIEL)
Vice President and Chief
Financial Officer
By: M. TERRY MAY
(M. TERRY MAY)
Chief Accounting Officer
Date: November 16, 1998
27
EXHIBIT 3.5
ARTICLES OF AMENDMENT ss.
TO ss. STATE OF TEXAS
RESTATED ARTICLES OF ss.
INCORPORATION ss. COUNTY OF HARRIS
OF ss.
PRIDE INTERNATIONAL, INC. ss. CITY OF HOUSTON
BE IT KNOWN, That on this 14th day of September, 1998,
BEFORE ME, Yolanda E. Steagall, a Notary Public, duly commissioned
and qualified in and for the County of Harris, State of Texas, and in the
presence of the witnesses hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
Earl W. McNiel and Robert W. Randall, appearing herein and acting
for Pride International, Inc. (of which Corporation they are, respectively, Vice
President and Secretary), a corporation organized and existing under the laws of
the State of Louisiana, domiciled in the Parish of Orleans, State of Louisiana,
organized by Articles of Incorporation effective May 3, 1988, which Articles, as
amended, were restated pursuant to Restated Articles of Incorporation effective
August 31, 1988, who declared that pursuant to Section 24B(6) and 33A of the
Louisiana Business Corporation Law, Article III.B of the Restated Articles of
Incorporation of the Corporation, and resolutions of the Board of Directors of
the Corporation adopted at a special meeting of the Board of Directors of the
Corporation held on September 9, 1998, they now appear for the purpose of
executing this act of amendment and putting into authentic form the amendment so
adopted by the Board of Directors of said Corporation.
AND THE SAID APPEARERS further declare that by vote of the Board of
Directors of said Corporation, it was resolved that Article III of the Restated
Articles of Incorporation of Pride International, Inc. be further amended to add
as a new paragraph C of Article III the following:
C. Of the aforesaid 5,000,000 shares of Preferred Stock,
1,000,000 shares shall constitute a separate series of preferred shares
designated "Series A Junior Participating Preferred Stock." The preferences,
limitations and relative rights of the Series A Junior Participating Preferred
Stock are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. DIVIDENDS AND DISTRIBUTIONS.
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(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock, in
preference to the holders of shares of any class or series of stock of the
Corporation ranking junior to the Series A Junior Participating Preferred Stock,
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on March 31, June 30, September 30 and December 31 in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1 or (b) the Adjustment Number (as defined below) times the aggregate
per share amount of all cash dividends, and the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, no par value, of the Corporation (the
"Common Stock") since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. The "Adjustment Number" shall initially be 100. In the event
the Corporation shall at any time after September 9, 1998 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock
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entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share- by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Junior Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
2. VOTING RIGHTS. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to a number of votes equal to the Adjustment
Number on all matters submitted to a vote of the shareholders of the
Corporation.
(B) Except as otherwise provided herein, in the Restated Articles of
Incorporation or by law, the holders of shares of Series A Junior Participating
Preferred Stock, the holders of shares of any other class or series entitled to
vote with the Common Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of shareholders of the
Corporation.
(C)(i)If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") that shall extend until such time
when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, (1) the number of
Directors shall be increased by two, effective as of the time of election of
such Directors as herein provided, and (2) the holders of Preferred Stock
(including holders of the Series A Junior Participating Preferred Stock) upon
which these or like voting rights have been conferred and are exercisable (the
"Voting Preferred Stock") with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect such two Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 2(C) or at
any annual meeting of shareholders, and thereafter at annual meetings of
shareholders, provided that such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Voting Preferred Stock of such voting right.
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(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than ten percent of the total number of shares
of Voting Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the President, a
Vice President or the Secretary of the Corporation. Notice of such meeting and
of any annual meeting at which holders of Voting Preferred Stock are entitled to
vote pursuant to this paragraph (C)(iii) shall be given to each holder of record
of Voting Preferred Stock by mailing a copy of such notice to him at his last
address as the same appears on the books of the Corporation. Such meeting shall
be called for a time not earlier than 20 days and not later than 60 days after
such order or request or, in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar notice
by any shareholder or shareholders owning in the aggregate not less than ten
percent of the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the shareholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a class, (x)
the Directors so elected by the holders of Voting Preferred Stock shall continue
in office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class or classes of stock which
elected the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class or
classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the number of Directors shall
be such number as may be provided for in the Restated Articles of Incorporation
or By-Laws irrespective of any increase made pursuant to the provisions of
paragraph (C) of this Section 2 (such number being subject, however, to change
thereafter in any manner provided by law or in the Restated Articles of
Incorporation or By-Laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
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3. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 1 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, except dividends paid ratably on
the Series A Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred Stock,
or any shares of stock ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Junior Participating Preferred
Stock, or to all such holders and the holders of any such shares ranking
on a parity therewith, upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 3, purchase or otherwise acquire such shares at such time and in
such manner.
4. REACQUIRED SHARES. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.
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5. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) the Adjustment Number.
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall, subject to the prior rights of all other series of Preferred Stock,
if any, ranking prior thereto, receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Series A Junior Participating Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any, that
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
5, but the sale, lease or conveyance of all or substantially all the
Corporation's assets shall be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 5.
6. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination, share exchange or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case each
share of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
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7. REDEMPTION. (A) The Corporation, at its option, may redeem shares
of the Series A Junior Participating Preferred Stock in whole at any time and in
part from time to time, at a redemption price equal to the Adjustment Number
times the current per share market price (as such term is hereinafter defined)
of the Common Stock on the date of the mailing of the notice of redemption,
together with unpaid accumulated dividends to the date of such redemption. The
"current per share market price" on any date shall be deemed to be the average
of the closing price per share of such Common Stock for the ten consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; PROVIDED, however, that in the event that the current per share market
price of the Common Stock is determined during a period following the
announcement of (A) a dividend or distribution on the Common Stock other than a
regular quarterly cash dividend or (B) any subdivision, combination or
reclassification of such Common Stock and the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, shall not have occurred prior to the commencement of such ten
Trading Day period, then, and in each such case, the current per share market
price shall be properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sales price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange, or, if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange but sales price information is reported for such security,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other self-regulatory organization or
registered securities information processor (as such terms are used under the
Securities Exchange Act of 1934, as amended) that then reports information
concerning the Common Stock, or, if sales price information is not so reported,
the average of the high bid and low asked prices in the over-the-counter market
on such day, as reported by NASDAQ or such other entity, or, if on any such date
the Common Stock is not quoted by any such entity, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Stock selected by the Board of Directors of the Corporation. If on
any such date no such market maker is making a market in the Common Stock, the
fair value of the Common Stock on such date as determined in good faith by the
Board of Directors of the Corporation shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the Common Stock is listed or admitted to trading is open for the transaction of
business, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange but is quoted by NASDAQ, a day on which NASDAQ
reports trades, or, if the Common Stock is not so quoted, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the State of New
York are not authorized or obligated by law or executive order to close.
(B) In the event that fewer than all the outstanding shares of the
Series A Junior Participating Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be determined by lot or
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pro rata as may be determined by the Board of Directors or by any other method
that may be determined by the Board of Directors in its sole discretion to be
equitable.
(C) Notice of any such redemption shall be given by mailing to the
holders of the shares of Series A Junior Participating Preferred Stock to be
redeemed a notice of such redemption, first class postage prepaid, not later
than the fifteenth day and not earlier than the sixtieth day before the date
fixed for redemption, at their last address as the same shall appear upon the
books of the Corporation. Each such notice shall state: (i) the redemption date;
(ii) the number of shares to be redeemed and, if fewer than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on the close of business on such redemption date. Any notice that is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the shareholder received such notice, and failure duly to
give such notice by mail, or any defect in such notice, to any holder of Series
A Junior Participating Preferred Stock shall not affect the validity of the
proceedings for the redemption of any other shares of Series A Junior
Participating Preferred Stock that are to be redeemed. On or after the date
fixed for redemption as stated in such notice, each holder of the shares called
for redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the redemption price. If fewer than all the
shares represented by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(D) The shares of Series A Junior Participating Preferred Stock
shall not be subject to the operation of any purchase, retirement or sinking
fund.
8. RANKING. The Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise, and shall rank senior to the Common Stock
as to such matters.
9. AMENDMENT. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Restated Articles of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
10. FRACTIONAL SHARES. Series A Junior Participating Preferred Stock
may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
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APPEARERS further stated that all of the shares of the Corporation
have no par value; that the Corporation is authorized to issue 105,000,000
shares, of which 100,000,000 are common shares and 5,000,000 are preferred
shares; that of the preferred shares, no shares have been designated as shares
of any series; and that the Board of Directors of the Corporation has the
authority to amend the Articles to fix the preferences, limitations, and
relative rights of the shares of Preferred Stock, and to establish, and fix
variations in the preferences, limitations and relative rights as between
different series of Preferred Stock, all as more fully set out in Article III of
the Restated Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said
amendment in authentic form, I do by these presents receive said amendment in
the form of this public act to the end that said amendment may be promulgated
and recorded and thus be read into the Restated Articles of Incorporation of
Pride International, Inc., as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Harris County, State
of Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
PRIDE INTERNATIONAL, INC.
By: /s/ EARL W. MCNIEL
Earl W. McNiel
Vice President
By: /s/ ROBERT W. RANDALL
Robert W. Randall
Secretary
WITNESSES:
/s/ JENNIFER PIERCE
/s/ FRIDA A. MARTINEZ
/s/ YOLANDA E. STEAGALL
NOTARY PUBLIC
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EXHIBIT 3.6
AMENDED AS OF FEBRUARY 26, 1998
BY-LAWS
OF
PRIDE INTERNATIONAL, INC.
SECTION 1.
OFFICES
1.1 PRINCIPAL OFFICE. The principal office of the Corporation shall be
located at 5847 San Felipe, Suite 3300, Houston, Texas 77057.
1.2 ADDITIONAL OFFICES. The Corporation may have such offices at such
other places as the Board of Directors may from time to time determine or the
business of the Corporation may require.
SECTION 2.
SHAREHOLDERS' MEETINGS
2.1 PLACE OF MEETINGS. Unless otherwise required by law or these
By-laws, all meetings of the shareholders shall be held at the principal office
of the Corporation or at such other place, within or without the State of
Louisiana, as may be designated by the Board of Directors.
2.2 ANNUAL MEETINGS; NOTICE THEREOF. An annual meeting of the
shareholders shall be held on the date in April and at the time specified by the
Board of Directors in each year. Notice of the annual meeting must state the
purpose thereof and the business to be conducted thereat shall be limited to
such purpose or purposes.
2.3 ELECTION OF DIRECTORS. Directors shall be elected at the annual
meeting in 1993 and at the annual meetings in every fifth calendar year
thereafter. Any shareholder may nominate a person to serve as director only by
complying with the proceedings set forth in the Restated Articles of the
Corporation.
2.4 SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes, may be called by the Chairman of the Board, the President
or the Board of Directors. At any time upon the written request of any
shareholder or group of shareholders holding in the aggregate at least eighty
percent (80%) of the Total Voting Power, as that term is defined in Article V of
the Restated Articles of Incorporation (the "Total Voting Power"), the Secretary
shall call a special meeting of shareholders to be held at the registered office
of the Corporation at such time as the Secretary may fix, not less than fifteen
nor more than sixty days after the receipt of said request, and if the Secretary
shall neglect or refuse to fix such time or to give notice of the meeting, the
shareholder or shareholders making the request may do so. Such request must
state the specific purpose or purposes
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of the proposed special meeting, and the business to be conducted thereat shall
be limited to such purpose or purposes.
2.5 NOTICE OF MEETINGS. Except as otherwise provided by law, the
authorized person or persons calling a shareholders' meeting shall cause written
notice of the time, place and purpose of the meeting to be given to all
shareholders entitled to vote at such meeting at least ten days and not more
than sixty days prior to the day fixed for the meeting.
2.6 LIST OF SHAREHOLDERS. At every meeting of shareholders, a list of
shareholders entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of transfers of
shares, showing the number and class of shares held by each such shareholder on
the record date for the meeting, shall be produced on the request of any
shareholder.
2.7 QUORUM. At all meetings of shareholders, the holders of a majority
of the Total Voting Power shall constitute a quorum, except that at any meeting
the notice of which sets forth any matter that, by law or specified percentage
in excess of a majority of the Total Voting Power of the Corporation, the
holders of that specified percentage shall constitute a quorum.
2.8 VOTING. When a quorum is present at any meeting, the vote of the
holders of a majority of the Voting Power (as defined in Article V of the
Restated Articles of Incorporation) present in person or represented by proxy
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of law or the Restated Articles of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question. Directors
shall be elected by plurality vote.
2.9 PROXIES. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such shareholder and bearing
a date not more than eleven months prior to the meeting, unless the instrument
provides for a longer period, but in no case will an outstanding proxy be valid
for longer than three years from the date of its execution and in no case may a
proxy be voted at a meeting called pursuant to La. R.S. 12:138 unless it is
executed and dated by the shareholder within 30 days of the date of such
meeting. The person appointed as proxy need not be a shareholder of the
Corporation.
2.10 ADJOURNMENTS. Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a new record
date is fixed for the adjourned meeting, but any meeting at which directors are
to be elected shall be adjourned only from day to day until such directors shall
have been elected.
2.11 WITHDRAWAL. If a quorum is present or represented at a duly
organized meeting, such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum as fixed in Section 2.7 of these By-laws, or the refusal of any
shareholders present to vote.
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2.12 LACK OF QUORUM. If a meeting cannot be organized because a quorum
has not attended, those present may adjourn the meeting to such time and place
as they may determine, subject, however, to the provisions of Section 2.10
hereof. In the case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less than a quorum as
fixed in Section 2.7 hereof, shall nevertheless constitute a quorum for the
purpose of electing directors.
2.13 PRESIDING OFFICER. The Chairman of the Board, or in his absence,
the President, shall preside at all shareholders' meetings.
SECTION 3.
DIRECTORS
3.1 NUMBER. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by a Board of Directors
of seven (7) natural persons, provided that, if after proxy materials for any
meeting of shareholders at which directors are to be elected are mailed to
shareholders any person or persons named therein to be nominated at the
direction of the Board of Directors becomes unable or unwilling to serve, the
foregoing number of authorized directors shall be automatically reduced by a
number equal to the number of such persons unless the Board of Directors, by a
majority vote of the entire Board, selects an additional nominee or nominees.
The Board of Directors may, by a two-thirds vote, amend this Section 3.1 to
increase or decrease the number of directors, provided that no amendment to this
Section to decrease the number of directors shall shorten the term of any
incumbent director. The members of the Board of Directors shall be elected for
terms of five years and shall hold office until their successors are elected and
qualified. No director need be a shareholder.
3.2 POWERS. The Board may exercise all such powers of the Corporation
and do all such lawful acts and things which are not by law, the Restated
Articles of Incorporation or these By-laws directed or required to be done by
the shareholders.
3.3 VACANCIES. Except as otherwise provided in the Restated Articles of
Incorporation or these By-laws (a) the office of a director shall become vacant
if he dies, resigns or is removed from office and (b) the Board of Directors may
declare vacant the office of a director if he (i) is interdicted or adjudicated
an incompetent, (ii) is adjudicated a bankrupt, (iii) in the sole opinion of the
Board of Directors becomes incapacitated by illness or other infirmity so that
he is unable to perform his duties for a period of six months or longer, or (iv)
ceases at any time to have the qualifications required by law, the Restated
Articles of Incorporation or these By-laws.
3.4 FILLING VACANCIES. In the event of a vacancy (including any vacancy
resulting from an increase in the authorized number of directors, or from
failure of the shareholders to elect the full number of authorized directors)
the remaining directors, even though not constituting a quorum, may, by a vote
of at least two-thirds of such remaining directors, fill any vacancy on the
Board for an
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unexpired term, provided that the shareholders shall have the right, at any
special meeting called for the purpose prior to such action by the Board, to
fill the vacancy.
SECTION 4.
COMPENSATION OF DIRECTORS
Directors as such, shall receive such compensation for their services
as may be fixed by resolution of the Board of Directors and shall receive their
actual expenses of attendance, if any, for each regular or special meeting of
the Board; provided that nothing herein contained shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 5.
MEETINGS OF THE BOARD
5.1 PLACE OF MEETINGS. The meetings of the Board of Directors may be
held at such place within or without the State of Louisiana as a majority of the
directors may from time to time appoint.
5.2 INITIAL MEETINGS. The first meeting of each newly elected Board
shall be held immediately following the shareholders' meeting at which the Board
is elected and at the same place as such meeting, and no notice of such first
meeting shall be necessary to the newly elected directors in order legally to
constitute the meeting.
5.3 REGULAR MEETINGS; NOTICE. Regular meetings of the Board may be held
on such dates as the Board may fix from time to time. Notice of regular meetings
of the Board of Directors shall be required, but no special form of notice or
time of notice shall be necessary.
5.4 SPECIAL MEETINGS; NOTICE. Special meetings of the Board may be
called by the President on two days notice given to each director, either
personally or by telephone, mail or by telegram. Special meetings shall be
called by the President or Secretary in like manner and on like notice on the
written request of one-third of the directors and if the President and Secretary
fail or refuse, or are unable to call a meeting within 24 hours to call a
meeting when requested, then the directors making the request may call the
meeting on two days' written notice given to each director. The notice of a
special meeting of directors need not state its purpose or purposes, but if the
notice states a purpose or purposes, and does not state as a further purpose to
consider such other business as may properly come before the meeting, the
business to be conducted at the special meeting shall be limited to the purpose
or purposes stated in the notice.
5.5 WAIVER OF NOTICE. Directors present at any regular or special
meeting shall be deemed to have received due, or to have waived, notice thereof,
provided that a director who participates in a meeting by telephone (as
permitted by Section 5.9 hereof) shall not be deemed to
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have received or waived due notice if, at the beginning of the meeting, he
objects to the transaction because the meeting is not lawfully called.
5.6 QUORUM. A majority of the Board shall be necessary to constitute a
quorum for the transaction of business, and except as otherwise provided by law
or the Restated Articles of Incorporation or these By-laws, the acts of a
majority of the directors present at a meeting at which a quorum is present
shall be the acts of the Board. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present.
5.7 WITHDRAWAL. If a quorum is present when the meeting is convened,
the directors present may continue to do business, taking action by vote of a
majority of a quorum as fixed in Section 5.6 hereof, until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum
as fixed in Section 5.6 hereof or the refusal of any director present to vote.
5.8 ACTION BY CONSENT. Any action which may be taken at a meeting of
the Board or any committee thereof, may be taken by a consent in writing signed
by all of the directors or by all members of the committee, as the case may be,
and filed with the records of proceedings of the Board or committee.
5.9 MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS. Members of the
Board may participate at and be present at any meeting of the Board or any
committee thereof by means of conference telephone or similar communications
equipment if all persons participating in such meeting can hear and communicate
with each other.
SECTION 6.
COMMITTEES OF THE BOARD
6.1 DESIGNATION. The Board may designate one or more committees, each
committee to consist of two or more of the directors of the Corporation (and one
or more directors may be named as alternate members to replace any absent or
disqualified regular members), which, to the extent provided by resolution of
the Board or the By-laws, shall have and may exercise the powers of the Board in
the management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to documents. Such
committee or committees shall have such name or names as may be stated in the
By-laws, or as may be determined, from time to time, by the Board. Any vacancy
occurring in any such committee shall be filled by the Board, but the President
may designate another director to serve on the committee pending action by the
Board. Each such member of a committee shall hold office during the term of the
Board constituting it, unless otherwise ordered by the Board.
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SECTION 7.
REMOVAL OF BOARD MEMBER
Any director or the entire Board of Directors may be removed at any
time, but only for cause, by the affirmative vote of not less than eighty
percent (80%) of the Total Voting Power, provided that the removal may only be
effected at a meeting of shareholders called for that purpose. The shareholders
at such meeting may proceed to elect a successor or successors for the unexpired
term of the director or directors removed. Except as provided in the Articles of
Incorporation and in this Section 7, directors shall not be subject to removal.
SECTION 8.
NOTICES
8.1 FORM OF DELIVERY. Whenever under the provisions of law, the
Restated Articles of Incorporation or these By-laws notice is required to be
given to any shareholder or director, it shall not be construed to mean personal
notice unless otherwise specifically provided in the Restated Articles of
Incorporation or these By-laws, but said notice may be given by mail, addressed
to such shareholder or director at his address as it appears on the records of
the Corporation, with postage thereon prepaid. Such notices shall be deemed to
have been given at the time they are deposited in the United States mail. Notice
to a director pursuant to Section 5.4 hereof may also be given personally or by
telephone or telegram sent to his address as it appears on the records of the
Corporation.
8.2 WAIVER. Whenever any notice is required to be given by law, the
Restated Articles of Incorporation or these By-laws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto. In addition, notice
shall be deemed to have been given to, or waived by, any shareholder or director
who attends a meeting of shareholders or directors in person, or is represented
at such meeting by proxy, without protesting at the commencement of the meeting
the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 9.
OFFICERS
9.1 DESIGNATIONS. The officers of the Corporation shall be chosen by
the directors and shall be a Chief Executive Officer, a President, a Secretary
and a Treasurer. The directors may elect one or more Vice Presidents. Any two
offices may be held by one person, provided that no person holding more than one
office may sign, in more than one capacity, any certificate or other instrument
required by law to be signed by two officers.
9.2 ADDITIONAL DESIGNATIONS. The Board of Directors may appoint such
other officers as it shall deem necessary, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
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9.3 TERM OF OFFICE. The officers of the Corporation shall hold office
at the pleasure of the Board of Directors.
9.4 THE PRESIDENT. The President shall have general and active
management of the business of the Corporation. If a Chairman of the Board of
Directors has not been elected or is incapacitated, the President, if a
director, shall preside at all meetings of the Board.
9.5 THE VICE-PRESIDENTS. The Vice-Presidents (if any) in the order
specified by the Board or, if not so specified, in the order of their seniority
shall, in the absence or disability of the President, perform the duties and
exercise the powers of the President, and shall perform such other duties as the
President or the Board of Directors shall prescribe.
9.6 THE SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He shall give,
or cause to be given, notice of all meetings of the shareholders and special
meetings of the Board, and shall perform such other duties as may be prescribed
by the Board or President, under whose supervision he shall be. He shall keep in
safe custody the seal of the Corporation, if any, and affix the same to any
instrument requiring it.
9.7 THE TREASURER. The Treasurer shall have the custody of the
corporate funds and shall keep or cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall keep a proper accounting of all receipts and disbursements
and shall disburse the funds of the Corporation only for proper corporate
purposes or as may be ordered by the Board and shall render to the President and
the Board at the regular meetings of the Board, or whenever they may require it,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation.
SECTION 10.
STOCK
10.1 CERTIFICATES. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the Chief Executive Officer or a
President or a Vice President and the Secretary or an Assistant Secretary
evidencing the holder's name, the number and class (and series, if any) of
shares owned by him, containing such information as required by law and bearing
the seal of the Corporation. If any stock certificate is manually signed by a
transfer agent or registrar other than the Corporation itself or an employee of
the Corporation, the signature of any such officer may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
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10.2 MISSING CERTIFICATES. The President or any Vice President may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
officers of the Corporation shall, unless dispensed with by the President, as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative to
advertise or give the Corporation a bond in such sum as is appropriate as
indemnity any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
10.3 TRANSFERS. Upon surrender to the Corporation or the transfer agent
of the Corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
SECTION 11.
DETERMINATION OF SHAREHOLDERS
11.1 RECORD DATE. For the purpose of determining shareholders entitled
to notice of and to vote at a meeting, or to receive a dividend, or to receive
or exercise subscription or other rights, or to participate in a
reclassification of stock, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors may fix in advance a record
date for determination of shareholders for such purpose, such date to be not
more than sixty days and, if fixed for the purpose of determining shareholders
entitled to notice of and to vote at a meeting, not less than ten days, prior to
the date on which the action requiring the determination of shareholders is to
be taken.
11.2 REGISTERED SHAREHOLDERS. Except as otherwise provided by law, the
Corporation, and its directors, officers and agents, may recognize and treat a
person registered on its records as the owner of shares, as the owner in fact
thereof for all purposes, and as the person exclusively entitled to have and to
exercise all rights and privileges incident to the ownership of such shares, and
rights under this Section shall not be affected by any actual or constructive
notice which the Corporation, or any of its directors, officers or agents, may
have to the contrary.
SECTION 12.
MISCELLANEOUS
12.1 DIVIDENDS. Except as otherwise provided by law or the Restated
Articles of Incorporation, dividends upon the stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting. Dividends
may be paid in cash, in property, or in shares of stock.
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12.2 CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate. Signatures of
the authorized signatories may be by facsimile.
12.3 FISCAL YEAR. The fiscal Corporation will be a calendar year.
12.4 SEAL. The Board of Directors may adopt a corporate seal, which
seal shall have inscribed thereon the name of the Corporation. Said seal may be
used by causing lt or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. Failure to affix the seal shall not, however, affect
the validity of any instrument.
12.5 GENDER. All pronouns and variations thereof used in these By-laws
shall be deemed to refer to the masculine, feminine or neuter gender, singular
or plural, as the identity of the person, persons, entity or entities referred
to require.
SECTION 13.
INDEMNIFICATION
13.1 DEFINITIONS. As used in this Section:
(a) The term "Expenses" shall mean any expenses or costs
(including, without limitation, attorneys' fees, judgments,
punitive or exemplary damages, fines and amounts paid in
settlement). If any of the foregoing amounts paid on behalf of
Indemnitee are not deductible by Indemnitee for federal or
state income tax purposes, the Corporation will reimburse
Indemnitee for his tax liability with respect thereto by
paying to Indemnitee an amount which, after taking into
account taxes on such amount, equals Indemnitee's incremental
tax liability.
(b) The term "Claim" shall mean any threatened, pending or
completed claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether made
judicially or extra-judicially, or any separate issue or
matter therein, as the context requires.
(c) The term "Determining Body" shall mean (i) those members
of the Board of Directors who are not named as parties to the
Claim for which indemnification is being sought ("Impartial
Directors"), if there are at least three Impartial Directors,
or (ii) a committee of at least three directors appointed by
the Board of Directors (regardless whether the members of the
Board of Directors voting on such appointment are Impartial
Directors) and composed of Impartial Directors or (iii) if
there are fewer than three Impartial Directors or if the Board
of Directors or a committee appointed thereby so directs
(regardless of whether the members thereof are Impartial
Directors), independent legal counsel, which may be the
regular outside counsel of the Corporation.
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<PAGE>
(d) The term "Indemnitee" shall mean each director and officer
and each former director and officer of the Corporation, of
any subsidiary of the Corporation or of Pride Oil Well Service
Company, a Texas corporation (the "Predecessor Corporation")
and any subsidiary of the Predecessor Corporation.
(e) The "Standard of Conduct" shall mean conduct by an
Indemnitee with respect to which a Claim is asserted which
conduct he reasonably believed to be in, or not opposed to,
the best interest of the Corporation, and, in the case of a
Claim which is a criminal action or proceeding, conduct that
the Indemnitee had no reasonable cause to believe was
unlawful. The termination of any Claim by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption
that Indemnitee did not meet the Standard of Conduct.
13.2 INDEMNITY.
(a) To the extent any Expenses incurred by Indemnitee are in
excess of the amounts reimbursed or indemnified pursuant to
policies of liability insurance maintained by the Corporation
or its subsidiaries, the Corporation shall indemnify and hold
harmless Indemnitee against any such Expenses actually and
reasonably incurred in connection with any Claim against
Indemnitee (whether as a subject of or party to, or a proposed
or threatened subject of or party to, the Claim) or in which
Indemnitee is involved solely as a witness or person required
to give evidence, by reason of his position
(i) as a director or officer of the Corporation,
(ii) as a (A) director or officer of the Predecessor
Corporation or (B) director or officer of any
subsidiary of the Corporation or the Predecessor
Corporation which was a subsidiary of the Corporation
or the Predecessor Corporation when the conduct or
alleged conduct of Indemnitee giving rise to the
Claim occurred or when Indemnitee held the position
by reason of which Indemnitee is required to appear
as a witness or give evidence, or (C) fiduciary with
respect to any employee benefit plan of the
Corporation or
(iii) as a director, officer, employee or agent of
another corporation, partnership, joint venture,
trust or other for profit or not for profit entity or
enterprise, if such position is was held at the
request of the Corporation,
whether relating to service in such position before or after
the effective date of this Section 13, if (A) the Indemnitee
is successful in his defense of the Claim on the merits or
otherwise or (B) the Indemnitee has been found by the
Determining Body (acting in good faith) to have met the
Standard of Conduct; provided that (1) the amount of Expenses
for which the Corporation shall indemnify Indemnitee may be
reduced by the Determining Body to such amount as it deems
proper if it determines in good faith that the Claim involved
the receipt of a personal benefit by Indemnitee
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and (2) no indemnification shall be made in respect of any
Claim as to which Indemnitee shall have been adjudged by a
court of competent jurisdiction, after exhaustion of all
appeals therefrom, to be liable for willful or intentional
misconduct in the performance of his duty to the Corporation
or to have obtained an improper personal benefit, unless, and
only to the extent that, a court shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such Expenses
as the court shall deem proper; and provided further that, if
the Claim involves Indemnitee by reason of his position with
an entity or enterprise described in clause (ii) or (iii) of
this Section 13.2(a) and if Indemnitee may be entitled to
indemnification with respect to such Claim from such entity or
enterprise, Indemnitee shall be entitled to indemnification
hereunder only (X) if he has applied to such entity or
enterprise for indemnification with respect to the Claim and
(Y) to the extent that indemnification to which he would be
entitled hereunder but for this proviso exceeds the
indemnification paid by such other entity or enterprise.
(b) Promptly upon becoming aware of the existence of any
Claim, Indemnitee shall notify the President of the existence
of the Claim, who shall promptly advise the members of the
Board of Directors thereof and that establishing the
Determining Body will be a matter presented at the next
regularly scheduled meeting or at a special meeting of the
Board of Directors. After the Determining Body has been
established, the President shall inform Indemnitee thereof and
Indemnitee shall immediately notify the Determining Body of
all facts relevant to the Claim known to such Indemnitee.
Within 60 days of the receipt of such notice and information,
together with such additional information as the Determining
Body may request of Indemnitee, the Determining Body shall
report to Indemnitee its determination whether Indemnitee has
met the Standard of Conduct. The Determining Body may extend
the period of time for determining whether the Standard of
Conduct has been met, but in no event shall such period of
time be extended beyond an additional sixty days.
(c) If, after determining that the Standard of Conduct has
been met, the Determining Body obtains facts of which it was
not aware at the time it made such determination, the
Determining Body on its own motion, after notifying the
Indemnitee and providing him an opportunity to be heard, may,
on the basis of such facts, revoke such determination,
provided that, in the absence of actual fraud by Indemnitee,
no such revocation may be made later than thirty days after
final disposition of the Claim.
(d) Indemnitee shall promptly inform the Determining Body upon
his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the
Determining Body has obtained such facts by other means.
(e) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
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<PAGE>
(i) if Indemnitee has, in the good faith judgment of
the Determining Body, met the Standard of Conduct,
the Corporation may, in its sole discretion, assume
all responsibility for the defense of the Claim, and,
in any event, the Corporation and Indemnitee each
shall keep the other informed as to the progress of
the defense of the Claim, including prompt disclosure
of any proposals for settlement; provided that if the
Corporation is a party to the Claim and Indemnitee
reasonably determines that there is a conflict
between the positions of the Corporation and
Indemnitee with respect to the Claim, then Indemnitee
shall be entitled to conduct his defense with counsel
of his choice; and provided further that Indemnitee
shall in any event be entitled at his expense to
employ counsel chosen by him to participate in the
defense of the Claim; and
(ii) the Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim.
If the Corporation proposes a settlement of the Claim
and such settlement is acceptable to the person
asserting the Claim, or the Corporation believes a
settlement proposed by the person asserting the Claim
should be accepted, it shall inform Indemnitee of the
terms of such proposed settlement and shall fix a
reasonable date by which Indemnitee shall respond. If
Indemnitee agrees to such terms, he shall execute
such documents as shall be necessary to make final
the settlement. If Indemnitee does not agree with
such terms, Indemnitee may proceed with the defense
of the Claim in any manner he chooses, provided that
if Indemnitee is not successful on the merits or
otherwise, the Corporation's obligation to indemnify
such Indemnitee as to any Expenses incurred following
his disagreement shall be limited to the lesser of
(A) the total Expenses incurred by Indemnitee
following his decision not to agree to such proposed
settlement or (B) the amount that the Corporation
would have paid pursuant to the terms of the proposed
settlement. If, however, the proposed settlement
would impose upon Indemnitee any requirement to act
or refrain from acting that would materially
interfere with the conduct of Indemnitee's affairs,
Indemnitee shall be permitted to refuse such
settlement and proceed with the defense of the Claim,
if he so desires, at the Corporation's expense in
accordance with the terms and conditions of this
Section of the By-laws without regard to the
limitations imposed by the immediately preceding
sentence. In any event, the Corporation shall not be
obligated to indemnify Indemnitee for an amount paid
in a settlement that the Corporation has not
approved.
(f) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to
conduct the defense of the Claim and to make all decisions
with respect thereto, with counsel of his choice; provided
that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the
Corporation has not approved.
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<PAGE>
(g) After notification to the Corporation of the existence of
a Claim, Indemnitee may from time to time request of the
President or, if the President is a party to the Claim as to
which indemnification is being sought, any officer who is not
a party to the Claim and who is designated by the President
(the "Disbursing Officer"), which designation shall be made
promptly after receipt of the initial request, that the
Corporation advance to Indemnitee the Expenses (other than
fines, penalties, judgments or amounts paid in settlement)
that he incurs in pursuing a defense of the Claim prior to the
time that the Determining Body determines whether the Standard
of Conduct has been met. The Disbursing Officer shall pay to
Indemnitee the amount requested (regardless of Indemnitee's
apparent ability to repay the funds) upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount
if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation under the circumstances,
provided that if the Disbursing Officer does not believe such
amount to be reasonable, he shall advance the amount deemed by
him to be reasonable and Indemnitee may apply directly to the
Determining Body for the remainder of the amount requested.
(h) After a determination that the Standard of Conduct has
been met, for so long as and to the extent that the
Corporation is required to indemnify Indemnitee under this
Section of the By-laws, the provisions of subsection (g) shall
continue to apply with respect to Expenses incurred after such
time except that (i) no undertaking shall be required of
Indemnitee and (ii) the Disbursing Officer shall pay to
Indemnitee the amount of any fines, penalties or judgments
against him which have become final for which the Corporation
is obligated to indemnify him or any amount of indemnification
ordered to be paid to him by a court.
(i) Any determination by the Corporation with respect to
settlement of a Claim shall be made by the Determining Body.
(j) The Corporation and Indemnitee shall keep confidential to
the extent permitted by law and their fiduciary obligations
all facts and determinations provided pursuant to or arising
out of the operation of this Section of the By-laws and the
Corporation and Indemnitee shall instruct its or his agents
and employees to do likewise.
13.3 ENFORCEMENT.
(a) The rights provided by this Section of the By-laws shall
be enforceable by Indemnitee in any court of competent
jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights
under this Section of the By-laws, Indemnitee shall be
entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any and all Expenses
actually and reasonably incurred by him in connection with
such proceeding, but only if he prevails therein. If it shall
be determined that Indemnitee is entitled to receive part but
not all of the
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<PAGE>
relief sought, then Indemnitee shall be entitled to be
reimbursed for all Expenses incurred by him in connection with
such proceeding if the indemnification amount to which he is
determined to be entitled exceeds 50% of the amount of his
claim. Otherwise, the Expenses incurred by Indemnitee in
connection with such judicial adjudication shall be
appropriately prorated.
(c) In any judicial proceeding described in this Section 13.3,
the Corporation shall bear the burden of proving that
Indemnitee is not entitled to Expenses sought with respect to
any Claim.
13.4 SAVING CLAUSE. If any provision of this Section of the By-laws is
determined by a court having jurisdiction over the matter to require the
Corporation to do or refrain from doing any act that is in violation of
applicable law, the court shall be empowered to modify or reform such provision
so that, as modified or reformed, such provision provides the maximum
indemnification permitted by law and such provision, as so modified or reformed,
and the balance of this Section shall be applied in accordance with their terms.
Without limiting the generality of the foregoing, if any portion of this Section
of the By-laws shall be invalidated on any ground, the Corporation shall
nevertheless indemnify an Indemnitee to the full extent permitted by any
applicable portion of this Section of the By-laws that shall not have been
invalidated and to the full extent permitted by law with respect to that portion
that has been invalidated.
13.5 NON-EXCLUSIVITY.
(a) The indemnification and payment of Expenses provided by or
granted pursuant to this Section of the By-laws shall not be
deemed exclusive of any other rights to which Indemnitee is or
may become entitled under any statute, article of
incorporation, bylaw, authorization of shareholders or
directors, agreement or otherwise.
(b) It is the intent of the Corporation by this Section of the
By-laws to indemnify and hold harmless Indemnitee to the
fullest extent permitted by law, so that if applicable law
would permit the Corporation to provide broader
indemnification rights than are currently permitted, the
Corporation shall indemnify and hold harmless Indemnitee to
the fullest extent permitted by applicable law notwithstanding
that the other terms of this Section of the By-laws would
provide for lesser indemnification.
13.6 SUCCESSORS AND ASSIGNS. This Section of the By-laws shall be
binding upon the Corporation, its successors and assigns and shall inure to the
benefit of Indemnitee's heirs and personal representatives.
13.7 INDEMNIFICATION OF OTHER PERSONS. The Corporation may indemnity
any person not a director or officer of the Corporation to the extent authorized
by the Board of Directors or a committee of the Board expressly authorized by
the Board of Directors.
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SECTION 14.
AMENDMENTS
14.1 ADOPTION OF BY-LAWS; AMENDMENTS THEREOF. By-laws of the
Corporation may be adopted only by (i) a majority of the entire Board of
Directors at any time when there is no Acquiring Entity (as defined in the
Restated Articles of Incorporation) or (ii) both a majority of the entire Board
of Directors and a majority of the Continuing Directors (as defined in the
Restated Articles of Incorporation) at any time when there is an Acquiring
Entity. By-laws may be amended or repealed only by (i) a majority of the entire
Board of Directors at any time when there is no Acquiring Entity, (ii) both a
majority of the entire Board and a majority of the Continuing Directors at any
time when there is an Acquiring Entity, or (iii) the affirmative vote of the
holders of at least eighty percent (80%) of the Total Voting Power at any
regular or special meeting of shareholders, the notice of which expressly states
that the proposed amendment or repeal is to be considered at the meeting.
14.2 READOPTION BY BOARD OF DIRECTORS. Any provision of these By-laws
amended or repealed by the shareholders may be re-amended or re-adopted in the
manner provided in Section 14.1.
14.3 NEW BY-LAWS; AMENDMENTS. Any purported amendment to these By-laws
which would add hereto a matter not covered herein prior to such purported
amendment shall be deemed to constitute the adoption of a Bylaw provision and
not an amendment to the By-laws.
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EXHIBIT 4.2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
April 24, 1998, is by and among PETROLEUM SUPPLY COMPANY, PRIDE INTERNATIONAL
HOLDINGS, INC., RANGER WELL SERVICE, INC., PRIDE OFFSHORE, INC., and RANGER
CORPORATION (each individually, a "BORROWER," and, collectively, the
"BORROWERS"), PRIDE INTERNATIONAL, INC., (the "PARENT GUARANTOR"), each of the
Lenders (as defined in the below-mentioned Credit Agreement) signatory hereto,
FIRST NATIONAL BANK OF COMMERCE, as arranger and syndication agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"SYNDICATION AGENT"), and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as
administrative and documentation agent for the Lenders and as issuer of Letters
of Credit (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
R E C I T A L S:
WHEREAS, the Borrowers, the Parent Guarantor, the Agents, and the Lenders
signatory hereto entered into a Credit Agreement, dated as of December 22, 1997
(the "CREDIT AGREEMENT"), pursuant to which the Lenders made available to the
Borrowers a revolving credit facility of up to $100,000,000; and
WHEREAS, the Borrowers have requested that the Lenders and the Agents
agree to amend the Credit Agreement to permit (i) issuance of the Zero Coupon
Debentures (defined below); (ii) issuance of the Amethyst I Convertible Note
(defined below); and (iii) up to $100,000,000 of investments in Foreign
Affiliates; and
WHEREAS, the Lenders and the Agents are willing to amend the Credit
Agreement as hereinafter provided; and
WHEREAS, the Borrowers, the Parent Guarantor, the Lenders and the Agents
now desire to amend the Credit Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meaning as in the
Credit Agreement, as amended hereby.
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 1
<PAGE>
ARTICLE II
AMENDMENTS
Section 2.1 ADDITIONAL DEFINITIONS. Section 1.1 is amended by adding the
following definitions in alphabetical order:
"AMETHYST 1 UNSECURED CONVERTIBLE NOTE" means the Parent Guarantor's
$21,250,000 unsecured convertible promissory note issued in partial
payment of the purchase price for the Semi-submersible Rig "Amethyst 1,"
the principal terms and conditions of which are described in a 31 March
1998 agreement between the Parent Guarantor and DWC Amethyst N.V. (a copy
of which letter has been delivered to the Agent and the Lenders).
"ZERO COUPON DEBENTURES" means the Parent Guarantor's Zero Coupon
Convertible Subordinated Debentures due 2018 issued by the Parent
Guarantor pursuant to the terms of the Zero Coupon Indenture upon the
terms and conditions set forth therein, the gross cash proceeds of which
are $230,000,000.
"ZERO COUPON INDENTURE" means that certain indenture dated as of
April 1, 1998 between the Parent Guarantor and Marine Midland Bank,
trustee, as amended by First Supplemental Indenture dated on or about the
date hereof relating to the Zero Coupon Debentures and, as the same may
hereafter be amended, modified, or supplemented from time to time.
Section 2.2 AMENDMENT TO DEFINITION. The definition of "Funded Debt" is
amended by adding the following in clause (a) thereof immediately after the word
"Debenture": ", the Zero Coupon Debentures."
Section 2.3 AMENDMENT TO SECTION 10.1. Section 10.1 is amended (i) by
deleting the word "and" at the end of clause (g) and the period at the end of
clause (h) and (ii) by adding a semi colon after clause (h) and the following:
"(i) Debt incurred in connection with the Zero Coupon Debentures and
the Zero Coupon Indenture; and
"(j) Debt incurred in connection with the Amethyst 1 Unsecured
Convertible Note."
Section 2.4 AMENDMENT TO SECTION 10.5. Section 10.5 is amended by changing
the reference in clause (h) from "$60,000,000" to $100,000,000."
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 2
<PAGE>
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 NECESSARY DOCUMENTATION. This Amendment shall be effective
when the Administrative Agent shall have received this Amendment executed by the
Borrowers, the Agent, the Parent Guarantor and the Required Lenders.
Section 3.2 REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in the Credit Agreement shall be true and correct in all
material respects on and as of the date hereof with the same force and effect as
if such representations and warranties had been made on and as of such date.
ARTICLE IV
MISCELLANEOUS
Section 4.1 RATIFICATIONS, REPRESENTATIONS AND WARRANTIES. Except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Credit Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The representations and warranties
contained herein and in all other Loan Documents, as amended hereby, shall be
true and correct in all material respects as of, and as if made on, the date
hereof. The Borrower, the Banks and the Agents agree that the Credit Agreement
as amended hereby shall continue to be legal, valid, binding and enforceable in
accordance with its terms, except as the enforceability thereof may be affected
by general principles of equity or creditors' rights.
Section 4.2 REFERENCE TO THE CREDIT AGREEMENT. Each of the Loan Documents,
including the Credit Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Credit Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Credit Agreement
shall mean a reference to the Credit Agreement as amended hereby.
Section 4.3 SEVERABILITY. Any provisions of this Amendment held by court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provisions so held to be invalid or unenforceable.
Section 4.4 APPLICABLE LAW. This Amendment and all other Loan Documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Texas and the applicable laws of the United States of
America.
Section 4.5 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of the Lenders, the Agents, the Parent Guarantor and
the Borrowers and their respective successors and assigns.
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 3
<PAGE>
Section 4.6 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument. Facsimile signatures shall be effective for all purposes.
Section 4.7 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 4.8 NO ORAL AGREEMENTS. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 4.9 DESIGNATED SENIOR INDEBTEDNESS. The Obligations are expressly
designated by the Borrowers and the Parent Guarantor as "Designated Senior
Indebtedness" for purposes of the Indenture and the Zero Coupon Indenture.
[Balance of this page intentionally left blank.]
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
BORROWERS:
PETROLEUM SUPPLY COMPANY
By: ______________________________
Name:
Title:
PRIDE INTERNATIONAL HOLDINGS, INC.
By: ______________________________
Name:
Title:
RANGER WELL SERVICE, INC.
By: ______________________________
Name:
Title:
PRIDE OFFSHORE, INC.
By: ______________________________
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 5
<PAGE>
RANGER CORPORATION
By: ______________________________
Name:
Title:
GUARANTOR:
PRIDE INTERNATIONAL, INC.
By: ______________________________
Earl W. McNiel
Vice President
AGENTS AND LENDERS:
FIRST NATIONAL BANK OF COMMERCE,
as Syndication Agent and as a Lender
By: ______________________________
Name:
Title:
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, as Administrative
Agent and a Lender
By: ______________________________
Frank W. Schageman
Vice President
HIBERNIA NATIONAL BANK
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 6
<PAGE>
By: ______________________________
Name:
Title:
THE FUJI BANK, LIMITED -HOUSTON
AGENCY
By: ______________________________
Name:
Title:
per pro BROWN BROTHERS HARRIMAN & CO.
By: ______________________________
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - PAGE 7
EXHIBIT 4.3
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
September 17, 1998, is by and among PETROLEUM SUPPLY COMPANY, PRIDE
INTERNATIONAL HOLDINGS, INC., RANGER WELL SERVICE, INC., PRIDE OFFSHORE, INC.,
and RANGER CORPORATION (each individually, a "BORROWER," and, collectively, the
"BORROWERS"), PRIDE INTERNATIONAL, INC., (the "PARENT GUARANTOR"), each of the
Lenders (as defined in the below-mentioned Credit Agreement) signatory hereto,
FIRST NATIONAL BANK OF COMMERCE, as arranger and syndication agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"SYNDICATION AGENT"), and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as
administrative and documentation agent for the Lenders and as issuer of Letters
of Credit (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
R E C I T A L S:
WHEREAS, the Borrowers, the Parent Guarantor, the Agents, and the Lenders
signatory hereto entered into a Credit Agreement, dated as of December 22, 1997
(as amended as of April 24, 1998, the "CREDIT AGREEMENT"), pursuant to which the
Lenders made available to the Borrowers a revolving credit facility of up to
$100,000,000; and
WHEREAS, the Borrowers have requested that the Lenders and the Agents
agree to amend the Credit Agreement to permit (i) incurrence of certain Limited
Recourse Debt in connection with the construction, equipping and mobilization of
the PRIDE AFRICA ultra-deepwater drillship and (ii) incurrence of certain Debt
for owner-furnished equipment for the PRIDE AFRICA; and
WHEREAS, the Lenders and the Agents are willing to amend the Credit
Agreement as hereinafter provided; and
WHEREAS, the Borrowers, the Parent Guarantor, the Lenders and the Agents
now desire to amend the Credit Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 1
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meaning as in the
Credit Agreement, as amended hereby.
ARTICLE II
AMENDMENTS
Section 2.1 ADDITIONAL DEFINITIONS. Section 1.1 is amended as follows:
(a) by adding the following definitions in alphabetical order:
"PRIDE AFRICA LOAN" means the Debt, when coupled with outstanding
the PRIDE AFRICA OFE Loan not to exceed $198,000,000 of principal,
incurred or to be incurred by Martin Maritime Ltd., a special purpose
Subsidiary of the Parent Guarantor, pursuant to the PRIDE AFRICA Loan
Documents, the purpose of which PRIDE AFRICA Loan is to construct, equip
and mobilize the ultra-deepwater drillship PRIDE AFRICA.
"PRIDE AFRICA LOAN DOCUMENTS" means the Loan Agreement dated 10th
July, 1998 between Martin Maritime, Ltd., Compagnie Financiere de CIC et
de l'Union Europeene, as Arranger, Facility Agent and Security Trustee and
the banks and financial institutions that are "Lenders" thereunder and
related documents, a copy of which Loan Agreement and related documents
have been delivered to the Administrative Agent and its counsel.
"PRIDE AFRICA OFE LOAN" means Debt incurred or to be incurred by the
Parent Guarantor, not to exceed $110,000,000 of principal, pursuant to the
PRIDE AFRICA OFE Loan Documents, the purpose of which PRIDE AFRICA OFE
Loan is to finance the purchase of "Owner Furnish Equipment" (as defined
in the PRIDE AFRICA OFE Loan Documents).
"PRIDE AFRICA OFE LOAN DOCUMENTS" means the Loan Agreement dated
10th July, 1998 between the Parent Guarantor, Compagnie Financiere de CIC
et de l'Union Europeene, as Arranger, Facility Agent and Security Trustee
and the banks and financial institutions that are "Lenders" thereunder and
related documents, a copy of which Loan Agreement and related documents
have been delivered to the Administrative Agent and its counsel.
"PRIDE AFRICA INTERCOMPANY CAPITAL CONTRIBUTION" means $21,034,000
of principal Debt evidenced by (i) a promissory note issued by Sonamer
Limited to Pride Foramer, S.A. in connection with the sale price of the
ANADYR Hull Section to such issuer, and (ii) a promissory note issued by
Martin Maritime, Ltd. to Sonamer Limited in connection with the
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 2
<PAGE>
sale price of the ANADYR Hull Section to such issuer, each of which notes
is subject to a Deed of Subordination in favor of the Facility Agent under
the PRIDE AFRICA Loan Documents.
(b) by changing the definition of clause (a) of "Funded Debt" as
follows:
(i) deleting the word "and" in the penultimate line thereof
and inserting a comma in lieu thereof; and
(ii) adding the following words immediately before the word
"PLUS" in the last line thereof: "and the PRIDE AFRICA OFE Loan."
Section 2.2 AMENDMENT TO SECTION 2.9. Section 2.9 is amended by deleting
the reference to "$75,000,000" and inserting in lieu thereof a reference to
"$50,000,000."
Section 2.3 AMENDMENT TO ARTICLE IX. Article IX is amended by adding
thereto a new Section reading as follows:
"Section 9.11. YEAR 2000 MATTERS. Each Borrower shall perform all
acts reasonably necessary to ensure that (i) each Borrower and any
business in which such Borrower holds a substantial interest, and (ii) all
customers, suppliers and vendors that are material to such Borrower's
business, become Year 2000 Compliant in a timely manner. Such acts shall
include, without limitation, performing a comprehensive review and
assessment of all of a Borrower's systems and adopting a detailed plan,
with itemized budget, for the remediation, monitoring and testing of such
systems. As used in this Section, "Year 2000 Compliant" shall mean, in
regard to any entity, that all software, hardware, firmware, equipment,
goods or systems utilized by or material to the business operations or
financial condition of such entity will properly perform date sensitive
functions before, during and after the year 2000. Each Borrower shall,
immediately upon request, provide to the Administrative Agent such
certifications or other evidence of such Borrower's compliance with the
terms of this paragraph as may from time to time require."
Section 2.4 AMENDMENTS TO SECTION 10.1. Section 10.1 is amended by:
(a) adding the following at the end of clause (d): "PLUS the
PRIDE AFRICA Intercompany Capital Contribution;
(b) adding the following at the end of clause (f): "PLUS the PRIDE
AFRICA OFE Loan; and
(c) adding the following at the end of clause (g): "PLUS the
PRIDE AFRICA Loan.
Section 2.5 AMENDMENT TO ARTICLE X. Article X is amended by adding a new
Section numbered 10.12, reading as follows:
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 3
<PAGE>
"10.12 REGARDING THE PRIDE AFRICA OFE LOAN. Neither the Parent
Guarantor nor any Borrower will, and none of them will permit any
Subsidiary to, prepay the PRIDE AFRICA OFE Loan; PROVIDED, however, that
nothing contained in this covenant shall prohibit repayment of the PRIDE
AFRICA OFE Loan with proceeds of the PRIDE AFRICA Loan. None of the Parent
Guarantor, any Borrower, nor any Subsidiary (other than the Parent
Guarantor in request of the PRIDE AFRICA OFE Loan and the special purpose
Subsidiaries formed to be the obligor under the PRIDE AFRICA Loan) shall
Guarantee or otherwise become liable for the PRIDE AFRICA OFE Loan or the
PRIDE AFRICA Loan or grant any Lien on any other of their respective
properties or assets as collateral for the repayment thereof."
Section 2.6 AMENDMENT TO SECTION 12.1. Section 12.1 is amended by:
(a) adding the following after the word "Obligations" found in the
first parenthetical in clause (j): ", the PRIDE AFRICA Intercompany
Capital Contribution"; and
(b) adding thereto a new clause, reading as follows "(o) The PRIDE
AFRICA OFE Loan is not paid in full from proceeds of the PRIDE AFRICA Loan
on or before April 17, 2000."
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 NECESSARY DOCUMENTATION. This Amendment shall be effective
when the Administrative Agent shall have received this Amendment executed by the
Borrowers, the Agent, the Parent Guarantor and the Required Lenders. The Parent
Guarantor shall have paid to the Administrative Agent an Amendment fee equal to
$5,000 times the number of Lenders. The Administrative Agent, upon receipt of
the amendment fees, shall promptly distribute them to the Lenders.
Section 3.2 REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in the Credit Agreement shall be true and correct in all
material respects on and as of the date hereof with the same force and effect as
if such representations and warranties had been made on and as of such date.
ARTICLE IV
MISCELLANEOUS
Section 4.1 RATIFICATIONS, REPRESENTATIONS AND WARRANTIES. Except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Credit Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The representations and warranties
contained herein and in all other Loan Documents, as amended
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 4
<PAGE>
hereby, shall be true and correct in all material respects as of, and as if made
on, the date hereof. The Borrower, the Banks and the Agents agree that the
Credit Agreement as amended hereby shall continue to be legal, valid, binding
and enforceable in accordance with its terms, except as the enforceability
thereof may be affected by general principles of equity or creditors' rights.
Section 4.2 SPECIAL REPRESENTATION. Each of the Parent Guarantor and each
Borrower represents and warrants to the Agents and the Lenders that the recourse
of the holders of the PRIDE AFRICA Loan and the PRIDE AFRICA Intercompany
Capital Contribution are effectively limited to the special purpose Subsidiaries
that are the obligors thereunder and to the security of the assets of such
special purpose obligors referred to in the PRIDE AFRICA Loan Documents.
Section 4.3 VOLUNTARY REDUCTION OF COMMITMENTS. The Borrowers irrevocably
reduce the Commitments by $50,000,000 effective on the date hereof. The
Borrowers request that the Administrative Agent and the Banks waive the prior
notice required by Section 2.9 of the Agreement and they confirm that from and
after the date hereof the Commitments aggregate $50,000,000. The Administrative
Agent and at least the Required Lenders waive the requirements of prior notice
required under Section 2.9 of the Agreement.
Section 4.4 REFERENCE TO THE CREDIT AGREEMENT. Each of the Loan Documents,
including the Credit Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Credit Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Credit Agreement
shall mean a reference to the Credit Agreement as amended hereby.
Section 4.5 SEVERABILITY. Any provisions of this Amendment held by court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provisions so held to be invalid or unenforceable.
Section 4.6 APPLICABLE LAW. This Amendment and all other Loan Documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Texas and the applicable laws of the United States of
America.
Section 4.7 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of the Lenders, the Agents, the Parent Guarantor and
the Borrowers and their respective successors and assigns.
Section 4.8 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument. Facsimile signatures shall be effective for all purposes.
Section 4.9 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 5
<PAGE>
Section 4.10 NO ORAL AGREEMENTS. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 4.11 DETERMINATION OF CERTAIN DEBT AS LIMITED RECOURSE DEBT. The
Administrative Agent hereby designates the PRIDE AFRICA Loan as Limited Recourse
Debt for purposes of the Credit Agreement.
[Balance of this page intentionally left blank.]
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
BORROWERS:
PETROLEUM SUPPLY COMPANY
By: /s/ ROBERT W. RANDALL
Name: Robert W. Randall
Title: Secretary
PRIDE INTERNATIONAL HOLDINGS, INC.
By: /s/ PAUL A. BRAGG
Name: Paul A. Bragg
Title: President
RANGER WELL SERVICE, INC.
By: /s/ ROBERT W. RANDALL
Name: Robert W. Randall
Title: Secretary
PRIDE OFFSHORE, INC.
By: /s/ ROBERT W. RANDALL
Name: Robert W. Randall
Title: Secretary
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 7
<PAGE>
RANGER CORPORATION
By: /s/ ROBERT W. RANDALL
Name: Robert W. Randall
Title: Secretary
PARENT GUARANTOR:
PRIDE INTERNATIONAL, INC.
By: /s/ EARL W. MCNIEL
Earl W. McNiel
Vice President
AGENTS AND LENDERS:
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, as Administrative
Agent and a Lender
By: /s/ FRANK W. SCHAGEMAN
Frank W. Schageman
Vice President
FIRST NATIONAL BANK OF COMMERCE,
as Syndication Agent and as a Lender
By: /s/ NEMESIO J. VISO
Name: Nemesio J. Viso
Title: Vice President, First National Bank of
Commerce
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 8
<PAGE>
HIBERNIA NATIONAL BANK
By: ______________________________
Name:
Title:
THE FUJI BANK, LIMITED -HOUSTON
AGENCY
By: /s/ TOSHIAKI YAKURA
Name: Toshiaki Yakura
Title: Senior Vice President
per pro BROWN BROTHERS HARRIMAN & CO.
By: /s/ RICHARD J. RAGOZA
Name: Richard J. Ragoza
Title: Senior Credit Officer
SECOND AMENDMENT TO CREDIT AGREEMENT - PAGE 9
EXHIBIT 15
AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Pride International, Inc.
Quarterly Report on Form 10-Q
We are aware that our report dated November 12, 1998 on our review of interim
consolidated financial information of Pride International, Inc. for the periods
ended September 30, 1998 and 1997 and included in this Form 10-Q is incorporated
by reference in the Company's registration statements on Form S-8 and Form S-3
filed with the Securities and Exchange Commission: Form S-8 (file no. 33-26854)
filed on February 6, 1989; Form S-8 (file no. 33-44823) filed on December 30,
1991; Form S-8 (file no. 333-06823) and Form S-8 (file no. 333-06825) filed on
June 26, 1996; Form S-3 (file no. 333-21385) filed on April 4, 1997; Form S-8
(file no. 333-27661) filed on May 22, 1997; Form S-8 (file no. 333-35089) and
Form S-8 (file no. 333-35093) filed on September 8, 1997, and Form S-3 (file no.
333-44925) filed on March 23, 1998. Pursuant to Rule 436(c) under the Securities
Act of 1933, this report should not be considered a part of the registration
statements prepared or certified by us within the meanings of Sections 7 and 11
of that Act.
PricewaterhouseCoopers LLP
Houston, Texas
November 16, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE PRIDE INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER
30, 1998 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE-MONTH PERIOD
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 101,653
<SECURITIES> 0
<RECEIVABLES> 201,350
<ALLOWANCES> (2,953)
<INVENTORY> 31,880
<CURRENT-ASSETS> 380,849
<PP&E> 1,511,088
<DEPRECIATION> (151,996)
<TOTAL-ASSETS> 1,973,496
<CURRENT-LIABILITIES> 237,978
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 752,516
<TOTAL-LIABILITY-AND-EQUITY> 1,973,496
<SALES> 642,836
<TOTAL-REVENUES> 642,836
<CGS> 404,894
<TOTAL-COSTS> 523,968
<OTHER-EXPENSES> (3,568)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,241
<INCOME-PRETAX> 88,195
<INCOME-TAX> 21,437
<INCOME-CONTINUING> 66,758
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,758
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.19
</TABLE>
