<PAGE> 1
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 JUNE 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 (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 June 30, 1994 129,034,218
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
-------------------- --------------------
1994 1993 1994 1993
---- ---- ---- ----
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C>
Revenues................................... $ 300,842 $ 312,196 $ 621,165 $ 628,662
Costs and Expenses......................... 254,736 242,919 505,880 493,002
------------- ------------- ------------- -------------
Operating Income........................... 46,106 69,277 115,285 135,660
Interest Expense........................... 21,711 17,584 39,767 37,385
Other Income (Expense) - Net............... 2,212 128,029 (68) 128,074
------------- ------------- ------------- -------------
Income from Continuing Operations
Before Income Taxes................... 26,607 179,722 75,450 226,349
Income Tax Expense (Benefit)............... (6,405) 46,134 (5,282) 47,533
------------- ------------- ------------- -------------
Income from Continuing Operations.......... 33,012 133,588 80,732 178,816
Income from Discontinued Operations -
Net of Income Taxes.................... - 228 - 861
------------- ------------- ------------- -------------
Net Income................................. $ 33,012 $ 133,816 $ 80,732 $ 179,677
============= ============= ============= =============
Earnings per Common Share:
Continuing Operations.................... $ .25 $ 1.02 $ .62 $ 1.37
Discontinued Operations.................. - .01 - .01
------------- ------------- ------------- -------------
Total.................................... $ .25 $ 1.03 $ .62 $ 1.38
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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<PAGE> 3
BURLINGTON RESOURCES INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
-------- ------------
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments................................. $ 17,537 $ 19,784
Accounts Receivable............................................. 189,797 218,361
Inventories..................................................... 33,039 23,954
Other Current Assets............................................ 18,338 14,572
---------------- ----------------
258,711 276,671
---------------- ----------------
Oil & Gas Properties (Successful Efforts Method).................. 5,629,737 5,027,312
Other Properties.................................................. 543,858 540,342
---------------- ----------------
6,173,595 5,567,654
Accumulated Depreciation, Depletion and Amortization............ 1,764,136 1,631,941
---------------- ----------------
Properties - Net.............................................. 4,409,459 3,935,713
---------------- ----------------
Other Assets...................................................... 187,549 235,336
---------------- ----------------
Total Assets................................................ $ 4,855,719 $ 4,447,720
================ ================
LIABILITIES
Current Liabilities:
Accounts Payable................................................ $ 245,866 $ 202,565
Taxes Payable................................................... 77,098 58,372
Other Current Liabilities....................................... 19,614 38,680
---------------- ----------------
342,578 299,617
---------------- ----------------
Long-term Debt.................................................... 1,139,139 819,071
---------------- ----------------
Deferred Income Taxes............................................. 542,495 566,758
---------------- ----------------
Other Liabilities and Deferred Credits............................ 205,851 154,216
---------------- ----------------
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................................................... 2,936,812 2,936,934
Retained Earnings................................................. 512,728 467,667
---------------- ----------------
3,451,040 3,406,101
Cost of Treasury Stock
(1994, 20,965,782 Shares; 1993, 20,316,521 Shares).............. 825,384 798,043
---------------- ----------------
Common Stockholders' Equity....................................... 2,625,656 2,608,058
---------------- ----------------
Total Liabilities and Common Stockholders' Equity........... $ 4,855,719 $ 4,447,720
================ ================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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<PAGE> 4
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
------------------------
1994 1993
---- ----
(In Thousands)
<S> <C> <C>
Cash Flows From Continuing Operating Activities:
Income from Continuing Operations.................................... $ 80,732 $ 178,816
Adjustments to Reconcile Income to Net Cash Provided By
Continuing Operating Activities:
Depreciation, Depletion and Amortization........................... 155,611 143,347
Deferred Income Taxes.............................................. (24,272) (28,016)
Exploration Costs.................................................. 17,720 12,200
Working Capital Changes:
Accounts Receivable.............................................. 28,564 10,765
Inventories...................................................... (9,085) (3,954)
Other Current Assets............................................. (3,766) 67,465
Accounts Payable................................................. 43,301 (35,507)
Taxes Payable.................................................... 18,726 50,395
Other Current Liabilities........................................ (19,066) (18,270)
Gain on Sales and Other............................................ (48,636) (162,692)
---------------- ----------------
Net Cash Provided By Continuing Operating Activities......... 239,829 214,549
---------------- ----------------
Cash Flows From Continuing Investing Activities:
Additions to Properties.............................................. (539,238) (200,886)
Proceeds from Sales and Other........................................ 28,455 217,794
---------------- ----------------
Net Cash Provided By (Used In) Continuing Investing
Activities................................................... (510,783) 16,908
---------------- ----------------
Cash Flows From Continuing Financing Activities:
Proceeds from Long-term Financing.................................... 318,537 -
Reduction in Long-term Debt.......................................... - (254,605)
Dividends Paid....................................................... (35,756) (33,948)
Treasury Stock Transactions - Net.................................... (26,535) 40,725
Other................................................................ (2,037) 58,676
---------------- ----------------
Net Cash Provided By (Used In) Continuing Financing
Activities................................................. 254,209 (189,152)
---------------- ----------------
Increase (Decrease) in Cash and Short-term Investments
from Continuing Operations........................................... (16,745) 42,305
Cash Provided By (Used In) Discontinued Operations..................... 14,498 (7,017)
Cash and Short-term Investments:
Beginning of Year.................................................... 19,784 31,729
---------------- ----------------
End of Period........................................................ $ 17,537 $ 67,017
================ ================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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<PAGE> 5
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 six
months of 1994 and 1993, respectively.
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<PAGE> 6
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 June 30, 1994, and December 31, 1993, was 30 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 June 30, 1994, there were no borrowings
outstanding under the previous credit facility although borrowing capacity is
reduced by outstanding commercial paper. At June 30, 1994, the Company had
outstanding commercial paper borrowings of $90 million at an average interest
rate of 4.54 percent.
During the first six months of 1994, the Company purchased approximately
677,000 shares of its common stock for $28 million. Since December 1988, the
Company has repurchased 24.7 million shares under three 10 million share
repurchase authorizations.
Net cash provided by continuing operating activities for the first six months
of 1994 was $240 million compared to $215 million for the first six months of
1993. The increase is primarily due to lower interest payments and other
working capital changes partially offset by decreased operating income.
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.
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<PAGE> 7
Capital Expenditures
Capital expenditures during the first six months of 1994 totaled $539 million
compared to $201 million for the first six months of 1993. On April 26, 1994,
the Company acquired Maxus Energy Corporation's ("Maxus") 87.1 percent interest
in Diamond Shamrock Offshore Partners Limited Partnership (the "Partnership"),
including the general partners' interests in the Partnership. In July 1994,
the Company acquired the remaining 12.9 percent of the Partnership by merging
the Partnership into a wholly owned subsidiary of the Company. In a separate
transaction, the Company purchased an additional offshore property and one
onshore property from Maxus. The aggregate net purchase price, including the
12.9 percent of the Partnership acquired by merger, was $375 million.
The proved and probable reserves acquired from Maxus are approximately 375 BCFE
of natural gas. The acquired properties currently produce approximately 95
MMCF per day of natural gas and 4 thousand barrels of oil per day from 49
structures of which approximately 50 percent are currently operated by the
Company.
Capital expenditures for 1994, including $375 million for the Maxus acquisition
and the remaining Partnership interests, are projected to be approximately $920
million and will consist primarily of reserve acquisitions, spending for
exploration and development of oil and gas properties and processing plant and
pipeline expenditures. Capital expenditures will be funded from internal cash
flow supplemented, as needed, by external financing.
Dividends
On July 6, 1994, the Board of Directors declared a common stock quarterly
dividend of $0.1375 per share, payable October 3, 1994.
-7-
<PAGE> 8
Results of Continuing Operations - Second Quarter 1994 Compared to Second
Quarter 1993
Income from Continuing Operations for the second quarter of 1994 was $33
million or $.25 per share compared to $134 million or $1.02 per share in 1993.
The 1993 results included $.50 per share from a gain on sale of the Burlington
Resources Coal Seam Gas Royalty Trust (the "Trust") units and $.09 per share
from a gain on the exchange of Company debt for Anadarko Petroleum Corporation
("Anadarko") common stock. Operating income for the second quarter of 1994 was
$46 million compared to $69 million in 1993.
Revenues were $301 million for the second quarter of 1994 compared to $312
million in 1993. Natural gas sales volumes improved 11 percent to 1,032 MMCF
per day which increased revenues $16 million. Oil sales volumes improved 7
percent to 44.8 MBbls per day which increased revenues $5 million. 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 $5 million primarily due to higher volumes.
The revenue increases were more than offset by an 11 percent decline in 1994
average natural gas sales prices to $1.58 per MCF and a 12 percent decline in
1994 average oil sales prices to $16.06 per barrel which decreased revenues $18
million and $9 million, respectively. In addition, NGL revenues decreased $10
million due to lower sales prices and volumes.
Costs and expenses were $255 million for the second quarter of 1994 compared to
$243 million in 1993. The increase was primarily due to a 10 percent
improvement in 1994 production levels which increased production and processing
related expenses $18 million and a $3 million increase in exploration costs
which were partially offset by an $11 million decrease in NGL product
purchases.
Interest expense was $22 million for the second quarter of 1994 compared to $18
million in 1993. The increase was primarily due to the additional debt issued
in May 1994.
Other Income - Net was $2 million for the second quarter of 1994 compared to
$128 million in 1993. The second quarter of 1993 included 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 24 percent for the second quarter
of 1994 compared to an expense of 26 percent for the second quarter of 1993 and
17 percent for the full year 1993. The second quarter 1993 tax rate is
significantly higher primarily due to the application of statutory tax rates to
the gains on the sale of the Trust units and from the exchange of Company debt
for Anadarko common stock. Without the additional tax expense associated with
these gains, the second quarter 1993 effective tax rate was a benefit of 5
percent. The higher beneficial tax rate in 1994 is due to increased
nonconventional fuel tax credits generated from increased coal seam gas
production.
-8-
<PAGE> 9
Results of Continuing Operations - Six Months 1994 Compared to Six Months 1993
Income from Continuing Operations for the first six months of 1994 was $81
million or $.62 per share compared to $179 million or $1.37 per share in 1993.
Operating income for the first six months of 1994 was $115 million compared to
$136 million in 1993.
Revenues were $621 million for the first six months of 1994 compared to $629
million in 1993. Natural gas sales volumes improved 10 percent to 1,015 MMCF
per day which increased revenues $27 million. Oil sales volumes improved 4
percent to 43.6 MBbls per day which increased revenues $5 million. Gas and oil
sales volumes increased primarily due to continued development of the Company's
oil and gas properties and producing property acquisitions. Intrastate natural
gas sales increased $6 million primarily due to higher sales volumes.
Processing and transportation revenues increased $10 million primarily due to
higher volumes. The revenue increases were more than offset by an 18 percent
decline in 1994 average oil sales prices to $15.01 per barrel which decreased
revenues $25 million and a $32 million decrease in NGL revenues primarily due
to lower sales prices and volumes.
Costs and expenses were $506 million for the first six months of 1994 compared
to $493 million in 1993. The increase was primarily due to an 8 percent
improvement in 1994 production levels which increased production related
expenses $32 million. Intrastate natural gas purchases and exploration costs
increased $8 million and $6 million, respectively. These increases were
partially offset by a $33 million decrease in NGL product purchases.
Interest expense was $40 million for the first six months of 1994 compared to
$37 million in 1993. The increase was primarily due to the additional debt
issued in May 1994 partially offset by the conversion of Company debt for
Anadarko common stock in April 1993.
-9-
<PAGE> 10
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.
Exhibits incorporated by reference are designated with an asterisk.
Exhibit Nature of Exhibit
------- -----------------
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.
B. Reports on Form 8-K
During the quarter covered by this report there were no reports
filed on Form 8-K.
Items 1, 2, 3, 4 and 5 of Part II are not applicable and have been omitted.
-10-
<PAGE> 11
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: August 1, 1994
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<PAGE> 1
BURLINGTON RESOURCES INC.
EARNINGS PER SHARE COMPUTATION
EXHIBIT 11.1
(UNAUDITED)
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
------------------------------------- ------------------------------------
1994 1993 1994 1993
---------------- ----------------- ---------------- -----------------
Earnings Shares Earnings Shares Earnings Shares Earnings Shares
-------- ------ -------- ------ -------- ------ -------- ------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Primary earnings per common share:
Net earnings available for common stock and
weighted average number of common
shares outstanding................................ $33,012 129,366 $133,816 129,765 $80,732 129,511 $179,677 129,395
Stock options assumed exercised - net.............. - 781 - 685 - 751 - 1,205
------- ------- -------- ------- ------- ------- -------- -------
Total net earnings and primary common shares....... $33,012 130,147 $133,816 130,450 $80,732 130,262 $179,677 130,600
======= ======= ======== ======= ======= ======= ======== =======
Primary earnings per common share.................. $ .25 $ 1.03 $ .62 $ 1.38
======= ======== ======= ========
Fully diluted earnings per common share:
Net earnings available for common stock and
weighted average number of common
shares outstanding................................ $33,012 129,366 $133,816 129,765 $80,732 129,511 $179,677 129,395
Stock options assumed exercised - net.............. - 781 - 877 - 751 - 1,322
------- ------- -------- ------- ------- ------- -------- -------
Total net earnings and fully diluted common shares. $33,012 130,147 $133,816 130,642 $80,732 130,262 $179,677 130,717
======= ======= ======== ======= ======= ======= ======== =======
Fully diluted earnings per common share............ $ .25 $ 1.02 $ .62 $ 1.37
======= ======== ======= ========
</TABLE>
<PAGE> 1
BURLINGTON RESOURCES INC.
RATIO OF EARNINGS TO FIXED CHARGES
EXHIBIT 12.1
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1994 1993
---- ----
(In Thousands, Except Ratio Amounts)
<S> <C> <C>
Earnings:
Income from Continuing Operations
Before Income Taxes............................. $ 75,450 $ 226,349
Add:
Interest and fixed charges...................... 39,767 37,385
Portion of rent under long-term operating
leases representative of an interest factor.. 2,249 2,425
--------------- -----------------
Total Earnings Available for Fixed Charges....... $ 117,466 $ 266,159
=============== =================
Fixed Charges:
Interest and fixed charges....................... $ 39,767 $ 37,385
Portion of rent under long-term operating
leases representative of an interest factor..... 2,249 2,425
Capitalized interest............................. 690 1,560
--------------- -----------------
Total Fixed Charges.............................. $ 42,706 $ 41,370
=============== =================
Ratio of Earnings to Fixed Charges................. 2.75 x 6.43 x
=============== =================
</TABLE>
