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 March 31, 1995
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 $.01 per share,
as of March 31, 1994 126,549,354
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER
1995 1994
(In Thousands, Except
per Share Amounts)
<S> <C> <C>
Revenues.........................................$ 214,569 $ 275,219
Costs and Expenses............................... 212,858 206,040
--------- ---------
Operating Income................................. 1,711 69,179
Interest Expense................................. 26,365 18,056
Other Income (Expense) - Net..................... 533 (2,280)
--------- ---------
Income (Loss) Before Income Taxes................ (24,121) 48,843
Income Tax Expense (Benefit)..................... (19,297) 1,123
--------- ---------
Net Income (Loss)................................$ (4,824) $ 47,720
========= =========
Earnings (Loss) per Common Share.................$ (.04) $ .37
========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
- 2 -
<PAGE>
BURLINGTON RESOURCES INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments.............................$ 44,503 $ 19,898
Accounts Receivable......................................... 161,133 193,825
Inventories................................................. 19,135 35,188
Other Current Assets........................................ 23,475 17,191
----------- -----------
248,246 266,102
----------- -----------
Oil & Gas Properties (Successful Efforts Method)............. 5,801,434 5,689,135
Other Properties............................................. 487,520 572,490
----------- -----------
6,288,954 6,261,625
Accumulated Depreciation, Depletion and Amortization........ 1,957,024 1,904,212
----------- -----------
Properties - Net............................................ 4,331,930 4,357,413
----------- -----------
Other Assets................................................. 168,160 185,095
----------- -----------
Total Assets..............................................$ 4,748,336 $ 4,808,610
=========== ===========
LIABILITIES
Current Liabilities:
Accounts Payable............................................$ 148,251 $ 193,819
Taxes Payable............................................... 37,592 47,080
Dividends Payable........................................... 17,395 17,434
Other Current Liabilities................................... 2,466 3,688
----------- -----------
205,704 262,021
----------- -----------
Long-term Debt............................................... 1,351,575 1,309,137
----------- -----------
Deferred Income Taxes........................................ 456,536 480,648
----------- -----------
Other Liabilities and Deferred Credits....................... 187,596 188,763
----------- -----------
Commitments and Contingent Liabilities
STOCKHOLDERS' EQUITY
Common Stock, Par Value, $.01 Per Share
(Authorized 325,000,000 Shares; Issued 150,000,000 Shares).. 1,500 1,500
Paid-in Capital.............................................. 2,936,034 2,936,374
Retained Earnings............................................ 529,183 551,385
----------- -----------
3,466,717 3,489,259
Cost of Treasury Stock
(1995, 23,450,646 Shares; 1994, 23,491,040 Shares)......... 919,792 921,218
----------- -----------
Common Stockholders' Equity.................................. 2,546,925 2,568,041
----------- -----------
Total Liabilities and Common Stockholders' Equity..........$ 4,748,336 $ 4,808,610
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
- 3 -
<PAGE>
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
1995 1994
(In Thousands)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss)..............................................$ (4,824) $ 47,720
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities:
Depreciation, Depletion and Amortization...................... 95,745 74,888
Deferred Income Taxes......................................... (24,097) (10,306)
Exploration Costs............................................. 6,724 7,518
Working Capital Changes:
Accounts Receivable.......................................... 32,692 (3,270)
Inventories.................................................. 16,053 (1,465)
Other Current Assets......................................... (6,284) (7,429)
Accounts Payable............................................. (45,568) 1,614
Taxes Payable................................................ (9,488) 14,688
Other Current Liabilities.................................... (1,261) (14,317)
Gain on Sales and Other........................................ 40,850 35,411
---------- ---------
Net Cash Provided By Operating Activities................... 100,542 145,052
---------- ---------
Cash Flows From Investing Activities:
Additions to Properties........................................ (141,098) (125,955)
Proceeds from Sales and Other.................................. 70,044 2,029
--------- ---------
Net Cash Used In Investing Activities....................... (71,054) (123,926)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from Long-term Financing.............................. 150,000 -
Reduction in Long-term Debt.. ................................. (106,811) (2,575)
Dividends Paid................................................. (17,417) (17,919)
Treasury Stock Transactions - Net. ............................ 1,426 1,696
Other.......................................................... (47,485) (11,891)
--------- ---------
Net Cash Used In Financing Activities....................... (20,287) (30,689)
--------- ---------
Increase (Decrease) in Cash and Short-term Investments.......... 9,201 (9,563)
Cash Provided By Discontinued Operations........................ 15,404 7,811
Cash and Short-term Investments:
Beginning of Year............................................. 19,898 19,784
--------- ---------
End of Period.................................................$ 44,503 $ 18,032
========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
- 4 -
<PAGE>
BURLINGTON RESOURCES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The 1994 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 during the year. The weighted average number
of common shares outstanding was 127 million and 131 million for the
first three months of 1995 and 1994, respectively.
2. RECLASSIFICATION
The Company's 1995 revenues include amounts from the sale of NGLs, less
the actual costs incurred to gather, treat, process and transport the
hydrocarbons to market. To conform to current presentation, the Company
reclassified approximately $45 million of costs and expenses to revenues
for the first three months of 1994. The reclassification had no effect
on operating income.
- 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 March 31, 1995, and December 31, 1994, was 35 percent and 34
percent, respectively. In March 1995, the Company issued $150 million of 8.20%
Debentures due March 15, 2025. The net proceeds were used for general
corporate purposes, including acquisition of oil and gas properties, repayment
of commercial paper, capital expenditures and repurchases of the Company's
common stock.
The Company's 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.
As of March 31, 1995, there were no borrowings outstanding under the credit
facilities although borrowing capacity is reduced by outstanding commercial
paper. At March 31, 1995, the Company had outstanding commercial paper
borrowings of $153 million at an average interest rate of 6.30 percent. The
Company also has the capacity to issue $350 million of debt securities under
shelf registration statements filed with the Securities and Exchange
Commission.
Net cash provided by operating activities for the first three months of 1995
was $101 million compared to $145 million for the first three months of 1994.
The decrease was primarily due to lower operating income.
The Company continued the divestiture of marginal and non-strategic properties
that began in June 1994. During the first quarter of 1995, the Company
divested 1,046 working interest wells for approximately $18 million. In
February 1995, the Company completed the sale of its intrastate natural gas
pipeline systems and its underground natural gas storage facility, including
gas-in-storage inventory, for approximately $80 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.
Capital Expenditures
Capital expenditures for the first three months of 1995 totaled $141 million
compared to $126 million for the same period in 1994. Capital expenditures are
currently projected to be approximately $580 million for all of 1995 and are
expected to be primarily for the development and exploration of oil and gas
properties and reserve acquisitions. Capital expenditures will be funded from
internal cash flow supplemented, as needed, by external financing.
- 6 -
<PAGE>
Dividends
On April 6, 1995, the Board of Directors declared a common stock quarterly
dividend of $0.1375 per share, payable July 3, 1995.
Results of Operations - First Quarter 1995 Compared to First Quarter 1994
The Company reported a net loss of $5 million or $.04 per share for the first
quarter of 1995 compared to net income of $48 million or $.37 per share in
1994. Operating income for the first quarter of 1995 was $2 million compared
to $69 million in 1994.
Revenues were $215 million for the first quarter of 1995 compared to $275
million in 1994. Natural gas sales volumes improved 15 percent to 1,145 MMCF
per day which increased revenues $26 million. Average oil sales prices
improved 18 percent to $16.43 per barrel and oil sales volumes improved 11
percent to 47.0 MBbls per day which increased revenues $11 million and $6
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. The revenue increases were more than offset by a 37
percent decline in 1995 average natural gas sales prices to $1.23 per MCF which
decreased revenues $76 million. Additionally, due to the sale of the
intrastate pipeline systems in February 1995, intrastate natural gas sales
declined $23 million.
Costs and expenses were $213 million for the first quarter of 1995 compared to
$206 million in 1994. The increase was primarily due to a 14 percent
improvement in 1995 production levels which increased production and processing
related expenses $23 million and a $5 million increase in administrative
expenses. These increases were partially offset by a $20 million decrease in
intrastate natural gas purchases primarily due to the sale of the intrastate
pipeline systems in February 1995.
Interest expense was $26 million for the first quarter of 1995 compared to $18
million in 1994. The increase was primarily due to additional debt issued in
May 1994 and higher outstanding commercial paper balances during the first
quarter of 1995.
The effective income tax rate was a benefit of 80 percent for the first quarter
of 1995 compared to an expense of 2 percent for the first quarter of 1994. The
1995 beneficial tax rate is due to a 1995 pre-tax loss plus the effect of non-
conventional fuel tax credits. The 1994 tax expense reflects the tax on lower
1994 pre-tax income relative to non-conventional fuel tax credits.
Other Matters
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to be Disposed Of, which is
effective for fiscal years beginning after December 15, 1995.
- 7 -
<PAGE>
Other Matters - Continued
SFAS No. 121 requires that long-lived assets to be held and used by an entity
be reviewed for impairment whenever events or changes indicate that the
carrying amount of the asset may not be recoverable. An impairment loss would
be recognized if the sum of expected future cash flows (undiscounted and
without interest charges) from the use of the asset is less than the carrying
amount of the asset. SFAS No. 121 also requires that long-lived assets to be
disposed of be reported at the lower of carrying amount or fair value less the
cost to sell. The Company is currently evaluating the impact, if any, SFAS
No. 121 will have on its financial position or results of operations.
- 8 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on March 16, 1995. The
following were nominated and elected to serve as Directors of
Burlington Resources Inc. for a term of one year or until their
successors shall have been duly elected and qualified:
Nominee For Withheld
J. V. Byrne 109,429,013 601,639
S. P. Gilbert 109,399,984 630,668
J. F. McDonald 109,464,979 565,673
T. H. O'Leary 109,357,765 672,887
D. M. Roberts 109,458,958 571,694
W. Scott, Jr. 109,424,871 605,781
W. E. Wall 109,414,795 615,857
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. 11
12.1 Ratio of Earnings to Fixed Charges. 12
27.1 Financial Data Schedule. **
* Exhibit incorporated by reference.
** Exhibit required only for filings made electronically using the Securities
and Exchange Commission's EDGAR System.
- 9 -
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K, Continued
B. Reports on Form 8-K
The Company filed a Form 8-K dated March 21, 1995, which included as
an exhibit the form of underwriting agreement in connection with its
offering of $150 million of 8.20% Debentures due 2025.
Items 1, 2, 3, and 5 of Part II are not applicable and have been omitted.
Pursuant to the requirements of Section 13 (or 15(d)) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BURLINGTON RESOURCES INC.
(Registrant)
By /s/ John E. Hagale
John E. Hagale
Senior Vice President and
Chief Financial Officer
By /s/ Hays R. Warden
Hays R. Warden
Vice President & Controller
Date: May 12, 1995
- 10 -
BURLINGTON RESOURCES INC.
EARNINGS PER SHARE COMPUTATION
EXHIBIT 11.1
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER
1995 1994
Earnings Shares Earnings Shares
(In Thousands, Except per
Share Amounts)
<S> <C> <C> <C> <C>
Primary earnings per common share:
Net earnings available for common stock and
weighted average number of common
shares outstanding.................................$ (4,824) 126,513 $ 47,720 129,707
Stock options assumed exercised - net................ - 462 - 812
-------- ------- -------- -------
Total net earnings and primary common shares.........$ (4,824) 126,975 $ 47,720 130,519
======== ======= ======== =======
Primary earnings per common share....................$ (0.04) $ 0.37
======== ========
Fully diluted earnings per common share:
Net earnings available for common stock and
weighted average number of common
shares outstanding.................................$ (4,824) 126,513 $ 47,720 129,707
Stock options assumed exercised - net................ - 462 - 812
-------- ------- -------- -------
Total net earnings and fully diluted common shares...$ (4,824) 126,975 $ 47,720 130,519
======== ======= ======== =======
Fully diluted earnings per common share...............$ (0.04) $ 0.37
======== =========
</TABLE>
- 10 -
BURLINGTON RESOURCES INC.
RATIO OF EARNINGS TO FIXED CHARGES
EXHIBIT 12.1
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
(In Thousands, Except Ratio Amounts)
<S> <C> <C>
Earnings:
Income (Loss) Before Income Taxes....................$ (24,121) $ 48,843
Add:
Interest and fixed charges.......................... 26,365 18,056
Portion of rent under long-term operating
leases representative of an interest factor....... 1,127 1,123
---------- -----------
Total Earnings Available for Fixed Charges..........$ 3,371 $ 68,022
========== ===========
Fixed Charges:
Interest and fixed charges..........................$ 26,365 $ 18,056
Portion of rent under long-term operating
leases representative of an interest factor....... 1,127 1,123
Capitalized interest................................ 480 345
---------- ----------
Total Fixed Charges.................................$ 27,972 $ 19,524
========== ===========
Ratio of Earnings to Fixed Charges.................... 0.12 x 3.48 x
========== ===========
</TABLE>
- 11 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995, AND
THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 44503
<SECURITIES> 0
<RECEIVABLES> 161133
<ALLOWANCES> 0
<INVENTORY> 19135
<CURRENT-ASSETS> 248246
<PP&E> 5801434
<DEPRECIATION> 1957024
<TOTAL-ASSETS> 4748336
<CURRENT-LIABILITIES> 205704
<BONDS> 1351575
<COMMON> 1500
0
0
<OTHER-SE> 2545425
<TOTAL-LIABILITY-AND-EQUITY> 4748336
<SALES> 214569
<TOTAL-REVENUES> 214569
<CGS> 0
<TOTAL-COSTS> 212858
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26365
<INCOME-PRETAX> (24121)
<INCOME-TAX> (19297)
<INCOME-CONTINUING> (4824)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4824)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
