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, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9971
BURLINGTON RESOURCES INC.
(Exact name of registrant as specified in its charter)
Delaware 91-1413284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5051 Westheimer, Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 624-9500
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 practicable date.
Class Outstanding
Common Stock, par value $.01 per share
as of September 30, 1994 126,794,147
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
1994 1993 1994 1993
(In Thousands, Except
per Share Amounts)
<S> <C> <C> <C> <C>
Revenues...............................$ 314,037 $ 309,457 $ 935,202 $ 938,119
Costs and Expenses..................... 274,645 252,920 780,525 745,922
---------- ---------- ---------- ----------
Operating Income....................... 39,392 56,537 154,677 192,197
Interest Expense....................... 24,673 17,344 64,440 54,729
Other Income (Expense) - Net........... 2,038 (1,742) 1,970 126,332
---------- ---------- ---------- ----------
Income from Continuing Operations
Before Income Taxes.................. 16,757 37,451 92,207 263,800
Income Tax Expense (Benefit)........... (3,938) 13,141 (9,220) 60,674
---------- ---------- ---------- ----------
Income from Continuing Operations...... 20,695 24,310 101,427 203,126
Income from Discontinued Operations -
Net of Income Taxes................ - 277 - 1,138
---------- ---------- ---------- ----------
Net Income.............................$ 20,695 $ 24,587 $ 101,427 $ 204,264
========== ========== ========== ==========
Earnings per Common Share:
Continuing Operations................$ .16 $ .18 $ .78 $ 1.55
Discontinued Operations.............. - - - .01
---------- ---------- ---------- ----------
Total................................$ .16 $ .18 $ .78 $ 1.56
========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
- 2 -
<PAGE>
BURLINGTON RESOURCES INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments.............................$ 4,923 $ 19,784
Accounts Receivable......................................... 173,737 218,361
Inventories................................................. 34,690 23,954
Other Current Assets........................................ 25,402 14,572
----------- -----------
238,752 276,671
----------- -----------
Oil & Gas Properties (Successful Efforts Method).............. 5,725,345 5,027,312
Other Properties.............................................. 546,064 540,342
----------- -----------
6,271,409 5,567,654
Accumulated Depreciation, Depletion and Amortization........ 1,838,346 1,631,941
----------- -----------
Properties - Net........................................... 4,433,063 3,935,713
----------- -----------
Other Assets.................................................. 179,114 235,336
----------- -----------
Total Assets...............................................$ 4,850,929 $ 4,447,720
=========== ===========
LIABILITIES
Current Liabilities:
Accounts Payable............................................$ 174,522 $ 202,565
Taxes Payable............................................... 70,236 58,372
Other Current Liabilities................................... 32,291 38,680
----------- -----------
277,049 299,617
----------- -----------
Long-term Debt................................................ 1,302,152 819,071
----------- -----------
Deferred Income Taxes......................................... 539,670 566,758
----------- -----------
Other Liabilities and Deferred Credits........................ 189,201 154,216
----------- -----------
Commitments and Contingent Liabilities
STOCKHOLDERS' EQUITY
Common Stock, Par Value $.01 Per Share
(Authorized 325,000,000 Shares; Issued 150,000,000 Shares)... 1,500 1,500
Paid-in Capital............................................... 2,936,696 2,936,934
Retained Earnings............................................. 515,760 467,667
----------- -----------
3,453,956 3,406,101
Cost of Treasury Stock
(1994, 23,205,853 Shares; 1993, 20,316,521 Shares).......... 911,099 798,043
----------- -----------
Common Stockholders' Equity................................... 2,542,857 2,608,058
----------- -----------
Total Liabilities and Common Stockholders' Equity...........$ 4,850,929 $ 4,447,720
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
- 3 -
<PAGE>
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
1994 1993
(In Thousands)
<S> <C> <C>
Cash Flows From Continuing Operating Activities:
Income from Continuing Operations.................................$ 101,427 $ 203,126
Adjustments to Reconcile Income to Net Cash Provided By
Continuing Operating Activities:
Depreciation, Depletion and Amortization......................... 244,765 212,230
Deferred Income Taxes............................................ (27,099) (13,086)
Exploration Costs................................................ 26,857 18,251
Working Capital Changes:
Accounts Receivable............................................. 44,624 (14,025)
Inventories..................................................... (10,736) (14,262)
Other Current Assets............................................ (10,830) 65,626
Accounts Payable................................................ (28,043) (9,351)
Taxes Payable................................................... 11,864 38,348
Other Current Liabilities....................................... (6,389) (15,344)
Gain on Sales and Other........................................... 25,135 (121,908)
---------- ----------
Net Cash Provided By Continuing Operating Activities........... 371,575 349,605
---------- ----------
Cash Flows From Continuing Investing Activities:
Additions to Properties........................................... (751,250) (426,740)
Proceeds from Sales and Other..................................... 58,200 166,383
---------- ----------
Net Cash Used In Continuing Investing Activities............... (693,050) (260,357)
---------- ----------
Cash Flows From Continuing Financing Activities:
Proceeds from Long-term Financing................................. 481,580 -
Reduction in Long-term Debt.. .................................... - (160,897)
Dividends Paid.................................................... (53,508) (51,803)
Treasury Stock Transactions - Net. ............................... (113,056) 56,719
Other............................................................. (31,335) 51,333
---------- ----------
Net Cash Provided By (Used In) Continuing
Financing Activities......................................... 283,681 (104,648)
---------- ----------
Decrease in Cash and Short-term Investments from
Continuing Operations............................................ (37,794) (15,400)
Cash Provided By (Used In) Discontinued Operations................. 22,933 (6,709)
Cash and Short-term Investments:
Beginning of Year................................................ 19,784 31,729
---------- ---------
End of Period....................................................$ 4,923 $ 9,620
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
- 4 -
<PAGE>
BURLINGTON RESOURCES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The 1993 Annual Report on Form 10-K of Burlington Resources
Inc.(the"Company") includes certain definitions and a summary of
significant accounting policies and should be read in conjunction with
this Quarterly Report on Form 10-Q. The statements for the periods
presented herein are unaudited, condensed and do not contain all
information required by generally accepted accounting principles to be
included in a full set of financial statements. In the opinion of
management, all material adjustments necessary to present fairly the
results of operations have been included. All such adjustments are of a
normal, recurring nature. The results of operations for any interim
period are not necessarily indicative of the results of operations for the
entire year.
Earnings per common share is based on the weighted average number of
common shares outstanding on a year to date basis. The weighted average
number of common shares outstanding was 130 million and 131 million for the
first nine months of 1994 and 1993, respectively.
- 5 -
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition and Liquidity
The total long-term debt to capital (total long-term debt and stockholders'
equity) ratio at September 30, 1994, and December 31, 1993, was 34 percent and
24 percent, respectively. In May 1994, the Company issued $300 million of
7.15% Notes due May 1, 1999. The net proceeds were used for general corporate
purposes, including acquisition of oil and gas properties, repayment of
commercial paper and other capital expenditures. In July 1994, the Company
increased the capacity under its shelf registration statements from $200
million to $500 million.
In July 1994, the Company established new revolving credit facilities to
replace the previous $900 million facility that was due to expire in June
1996. The new credit facilities are comprised of a $600 million revolving
credit agreement that expires in July 1999 and a $300 million revolving credit
agreement that expires July 1995, but is renewable annually by mutual consent.
The new revolving credit facilities retain the same debt covenants as the
previous credit facility. As of September 30, 1994, there were no borrowings
outstanding under the credit facilities although borrowing capacity is reduced
by outstanding commercial paper. At September 30, 1994, the Company had
outstanding commercial paper borrowings of $253 million at an average interest
rate of 5.05 percent.
During the first nine months of 1994, the Company purchased approximately 2.8
million shares of its common stock for $112 million of which 2.2 million
shares were purchased in the third quarter. Since December 1988, the Company
has repurchased 26.9 million shares under three 10 million share repurchase
authorizations.
Net cash provided by continuing operating activities for the first nine months
of 1994 was $372 million compared to $350 million for the first nine months of
1993. The increase is primarily due to lower income tax payments and other
working capital changes partially offset by decreased operating income.
In an effort to maintain its high quality asset base, the Company continues to
divest marginal and non-strategic properties. In addition, the Company
conveyed working interests in certain coal seam natural gas wells in November
1994. The net proceeds, after tax, from all 1994 property transactions will
be approximately $115 million.
The Company is involved in certain environmental proceedings and other related
matters. Although it is possible that new information or future developments
could require the Company to reassess its potential exposure related to these
matters, the Company believes, based upon available information, the
resolution of these issues, individually and in the aggregate, will not have a
materially adverse effect on the consolidated financial position or results of
operations of the Company.
- 6 -
<PAGE>
Capital Expenditures
Capital expenditures for the first nine months of 1994 totaled $751 million
compared to $427 million for the same period in 1993 and are projected to be
approximately $890 million for all of 1994. The projected 1994 capital
expenditures will consist of approximately $490 million for producing property
and reserve acquisitions along with approximately $400 million for the
development of oil and gas properties and related facilities. The $490
million expected to be spent for acquisitions includes the $375 million
purchase of Maxus Energy Corporation's properties announced in the second
quarter of this year. Capital expenditures will be funded from internal cash
flow supplemented, as needed, by external financing.
Dividends
On October 6, 1994, the Board of Directors declared a common stock
quarterly dividend of $0.1375 per share, payable January 3, 1995.
- 7 -
<PAGE>
Results of Continuing Operations - Third Quarter 1994 Compared to Third
Quarter 1993
Income from Continuing Operations for the third quarter of 1994 was $21
million or $.16 per share compared to $24 million or $.18 per share in 1993.
The 1993 results include a non-recurring charge of $16 million or $.12 per
share due to an increase in the corporate tax rate as a result of the Budget
Reconciliation Act of 1993. Operating income for the third quarter of 1994
was $39 million compared to $57 million in 1993.
Revenues were $314 million for the third quarter of 1994 compared to $309
million in 1993. Natural gas sales volumes improved 21 percent to 1,077 MMCF
per day which increased revenues $29 million. Oil sales volumes improved 14
percent to 46.8 MBbls per day and average oil sales prices improved 8 percent
to $16.97 per barrel which increased revenues $8 million and $5 million,
respectively. Gas and oil sales volumes increased primarily due to continued
development of the Company's oil and gas properties and producing property
acquisitions. Processing and transportation revenues increased $4 million
primarily due to higher volumes. The revenue increases were partially offset
by a 16 percent decline in 1994 average natural gas sales prices to $1.42 per
MCF which decreased revenues $28 million and a $14 million decrease in
intrastate natural gas sales and NGL revenues due to lower sales prices and
volumes.
Costs and expenses were $275 million for the third quarter of 1994 compared to
$253 million in 1993. The increase was primarily due to a 19 percent
improvement in 1994 production levels which increased production and
processing related expenses $33 million and a $3 million increase in
exploration costs. These increases were partially offset by a $15 million
decrease in intrastate natural gas and NGL product purchases.
Interest expense was $25 million for the third quarter of 1994 compared to $17
million in 1993. The increase was primarily due to additional debt issued in
May 1994 and higher outstanding commercial paper balances during the third
quarter of 1994.
The effective income tax rate was a benefit of 24 percent for the third
quarter of 1994 compared to an expense of 35 percent for the third quarter of
1993. The 1994 beneficial tax rate is due to recognized nonconventional fuel
tax credits being greater than the Company's tax expense at statutory tax
rates. The third quarter 1994 tax rate is significantly lower than the same
quarter in 1993 primarily due to the additional income tax expense recognized
for the August 1993 enactment of an increase in the corporate income tax rate.
- 8 -
<PAGE>
Results of Continuing Operations - Nine Months 1994 Compared to Nine Months
1993
Income from Continuing Operations for the first nine months of 1994 was $101
million or $.78 per share compared to $203 million or $1.55 per share in 1993.
The 1993 results include a total of $.47 per share from gains on the sale of
the Burlington Resources Coal Seam Gas Royalty Trust (the "Trust") units and
the exchange of Company debt for Anadarko Petroleum Corporation ("Anadarko")
common stock, and a charge to reflect the increase in the corporate income tax
rate. Operating income for the first nine months of 1994 was $155 million
compared to $192 million in 1993.
Revenues were $935 million for the first nine months of 1994 compared to $938
million in 1993. Natural gas sales volumes improved 13 percent to 1,036 MMCF
per day and oil sales volumes improved 7 percent to 44.7 MBbls per day which
increased revenues $57 million and $14 million, respectively. Gas and oil
sales volumes increased primarily due to continued development of the
Company's oil and gas properties and producing property acquisitions.
Processing and transportation revenues increased $13 million primarily due to
higher volumes. The revenue increases were offset by a 6 percent decline in
1994 average natural gas sales prices to $1.59 per MCF and a 10 percent
decline in 1994 average oil sales prices to $15.70 per barrel which decreased
revenues $28 million and $21 million, respectively. In addition, NGL revenues
decreased $39 million due to lower sales prices and volumes.
Costs and expenses were $781 million for the first nine months of 1994
compared to $746 million in 1993. The increase was primarily due to a 12
percent improvement in 1994 production levels which increased production
related expenses $65 million and a $9 million increase in exploration costs.
These increases were partially offset by a $41 million decline in NGL product
purchases.
Interest expense was $64 million for the first nine months of 1994 compared to
$55 million in 1993. The increase was primarily due to additional debt issued
in May 1994 and higher outstanding commercial paper balances during 1994.
Other Income - Net was $2 million for the first nine months of 1994 compared
to $126 million in 1993. The 1993 amount includes a $108 million gain on the
sale of the Trust units and a $19 million gain from the exchange of Company
debt for Anadarko common stock.
The effective income tax rate was a benefit of 10 percent for the first nine
months of 1994 compared to an expense of 23 percent for the first nine months
of 1993 and 17 percent for the full year 1993. The effective tax rate for the
first nine months of 1994 is significantly lower than the same period in 1993
because 1994 did not include any of the special nonrecurring items that
increased income taxes in 1993. The special nonrecurring items included the
second quarter 1993 gains from the sale of the Trust units and from the
exchange of Company debt for Anadarko common stock and the additional income
tax expense recognized for the August 1993 enactment of an increase in the
corporate income tax rate. Without the additional tax expense associated with
these gains and the nonrecurring portion of the tax rate increase, the
effective tax rate for the first nine months of 1993 was a benefit of 4
percent. The 1994 beneficial tax rate is due to recognized nonconventional
fuel tax credits being greater than the Company's tax expense at statutory tax
rates.
- 9 -
<PAGE>
Nine Months 1994 Compared to Nine Months 1993 - Continued
The Company expects to have a substantially higher beneficial tax rate for the
year ending 1994 as compared to the first nine months of 1994. The higher
beneficial tax rate is primarily due to an increase in the Company's
nonconventional fuel tax credits recognized as a result of increased taxable
income from the disposition of certain coal seam properties discussed under
"Financial Condition and Liquidity." The anticipated higher beneficial tax
rate should result in higher net income and earnings per common share in the
fourth quarter of 1994.
- 10 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits
The following exhibits are filed as part of this report.
Exhibit Nature of Exhibit Page
4.1 The Company and its subsidiaries either *
have filed with the Securities and
Exchange Commission or upon request
will furnish a copy of any instrument
with respect to long-term debt of the
Company.
11.1 Earnings per share computation.
12.1 Ratio of Earnings to Fixed Charges.
27.1 Financial Data Schedule.
* - Exhibit incorporated by reference.
B. Reports on Form 8-K
The Company filed a Form 8-K dated October 10, 1994 which announced
the promotion of Bobby S. Shackouls to the office of President and
Chief Executive Officer of Meridian Oil Inc., a wholly owned
subsidiary of the Company. Mr. Shackouls replaces George E.
Howison, who is taking early retirement.
Items 1, 2, 3, 4 and 5 of Part II are not applicable and have been omitted.
- 11 -
<PAGE>
Pursuant to the requirements of Section 13 (or 15(d)) 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.
BURLINGTON RESOURCES INC.
(Registrant)
By /s/ John E. Hagale
John E. Hagale
Senior Vice President and
Chief Financial Officer
By /s/ Hays R. Warden
Hays R. Warden
Vice President & Controller
Date: November 14, 1994
- 12 -
BURLINGTON RESOURCES INC.
EARNINGS PER SHARE COMPUTATION
EXHIBIT 11.1
(UNAUDITED)
<TABLE>
<CAPTION>
THIRD QUARTER
1994 1993
Earnings Shares Earnings Shares
<S> <C> <C> <C> <C>
Primary earnings per common share:
Net earnings available for common stock
and weighted average number of common
shares outstanding..........................$ 20,695 127,939 $ 24,587 130,131
Stock options assumed exercised-net........... - 714 - 1,462
--------- ------- --------- -------
Total net earnings and primary common shares..$ 20,695 128,653 $ 24,587 131,593
========= ======= ========= =======
Primary earnings per common share.............$ .16 $ .18
========= =========
Fully diluted earnings per common share:
Net earnings available for common stock and
weighted average number of common
shares outstanding..........................$ 20,695 127,939 $ 24,587 130,131
Stock options assumed exercised - net......... - 714 - 1,611
--------- ------- --------- -------
Total net earnings and fully diluted
common shares...............................$ 20,695 128,653 $ 24,587 131,742
========= ======= ========= =======
Fully diluted earnings per common share.......$ .16 $ .18
========= =========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
1994 1993
Earnings Shares Earnings Shares
<S> <C> <C> <C> <C>
Primary earnings per common share:
Net earnings available for common stock
and weighted average number of common
shares outstanding..........................$ 101,427 128,930 $ 204,264 129,643
Stock options assumed exercised-net........... - 678 - 1,124
--------- ------- --------- -------
Total net earnings and primary common shares..$ 101,427 129,608 $ 204,264 130,767
========= ======= ========= =======
Primary earnings per common share.............$ .78 $ 1.56
========= =========
Fully diluted earnings per common share:
Net earnings available for common stock and
weighted average number of common
shares outstanding..........................$ 101,427 128,930 $ 204,264 129,643
Stock options assumed exercised - net......... - 678 - 1,260
--------- ------- --------- -------
Total net earnings and fully diluted
common shares...............................$ 101,427 129,608 $ 204,264 130,903
========= ======= ========= =======
Fully diluted earnings per common share.......$ .78 $ 1.56
========= =========
</TABLE>
BURLINGTON RESOURCES INC.
RATIO OF EARNINGS TO FIXED CHARGES
EXHIBIT 12.1
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1994 1993
(In Thousands,
Except Ratio Amounts)
<S> <C> <C>
Earnings:
Income from Continuing Operations
Before Income Taxes..............................$ 92,207 $ 263,800
Add:
Interest and fixed charges....................... 64,440 54,729
Portion of rent under long-term operating
leases representative of an interest factor.... 3,400 3,541
--------- ---------
Total Earnings Available for Fixed Charges.........$ 160,047 $ 322,070
========= =========
Fixed Charges:
Interest and fixed charges.........................$ 64,440 $ 54,729
Portion of rent under long-term operating
leases representative of an interest factor...... 3,400 3,541
Capitalized interest............................... 1,035 2,224
--------- ---------
Total Fixed Charges................................$ 68,875 $ 60,494
========= =========
Ratio of Earnings to Fixed Charges................... 2.32 x 5.32 x
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1994,
AND THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1994 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-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 4,923
<SECURITIES> 0
<RECEIVABLES> 173,737
<ALLOWANCES> 0
<INVENTORY> 34,690
<CURRENT-ASSETS> 238,752
<PP&E> 6,271,409
<DEPRECIATION> 1,838,346
<TOTAL-ASSETS> 4,850,929
<CURRENT-LIABILITIES> 277,049
<BONDS> 1,302,152
<COMMON> 1,500
0
0
<OTHER-SE> 2,541,357
<TOTAL-LIABILITY-AND-EQUITY> 4,850,929
<SALES> 935,202
<TOTAL-REVENUES> 935,202
<CGS> 0
<TOTAL-COSTS> 780,525
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,440
<INCOME-PRETAX> 92,207
<INCOME-TAX> (9,220)
<INCOME-CONTINUING> 101,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,427
<EPS-PRIMARY> .78
<EPS-DILUTED> .78
</TABLE>
