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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly Report Under Section 13 or 15(d)
[X] of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1996 or
Transition Report Pursuant to Section 13 or 15(d)
[ ] of the Securities Act of 1934 for the
Transition Period from __________ to ___________
COMMISSION FILE NO. 1-10762
________________________________________
BENTON OIL AND GAS COMPANY
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 77-0196707
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1145 EUGENIA PLACE, SUITE 200
CARPINTERIA, CALIFORNIA 93013
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (805) 566-5600
___________________________________________
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 _____
___________________________________________
At May 10, 1996, 26,699,571 shares of the
Registrant's Common Stock were outstanding.
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2
BENTON OIL AND GAS COMPANY AND SUBSIDIARIES
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PART I. FINANCIAL INFORMATION
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Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at March 31, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART II. OTHER INFORMATION
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BENTON OIL AND GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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March 31, December 31,
1996 1995
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(unaudited)
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ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $7,803,966 $ 6,179,998
Restricted cash (Note 4) 21,314,000 20,314,000
Accounts receivable:
Accrued oil and gas revenue 29,854,256 22,069,217
Joint interest and other 4,572,824 2,869,962
Prepaid expenses and other 653,255 214,622
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TOTAL CURRENT ASSETS 64,198,301 51,647,799
OTHER ASSETS 2,763,150 3,434,760
PROPERTY AND EQUIPMENT (Notes 3, 5 and 8):
Oil and gas properties (full cost method - costs of
$18,830,911 and $17,925,371 excluded from
amortization in 1996 and 1995, respectively) 192,853,214 177,110,550
Furniture and fixtures 2,792,878 2,539,233
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195,646,092 179,649,783
Accumulated depletion and depreciation (27,714,584) (19,982,244)
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167,931,508 159,667,539
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$234,892,959 $214,750,098
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable:
Revenue distribution $5,782,376 $ 2,692,751
Trade and other 18,903,497 19,777,018
Accrued interest payable, payroll and related taxes 2,421,223 1,687,648
Income taxes payable 4,919,607 1,039,166
Short term borrowings (Note 4) 21,307,604 21,905,480
Current portion of long term debt (Note 3) 8,137,779 7,433,339
-------------- --------------
TOTAL CURRENT LIABILITIES 61,472,086 54,535,402
LONG TERM DEBT (Note 3) 46,050,082 49,486,306
MINORITY INTEREST (Note 8) 9,374,400 7,047,791
COMMITMENTS AND CONTINGENCIES (Notes 3, 5, 7 and 9)
STOCKHOLDERS' EQUITY (Notes 3 and 8):
Preferred stock, par value $0.01 a share;
authorized 5,000,000 shares; outstanding, none
Common stock, par value $0.01 a share;
authorized 40,000,000 shares; issued and
outstanding 26,092,559 and 25,508,605 shares at
March 31, 1996 and December 31, 1995, respectively 260,926 255,086
Additional paid-in capital 105,745,506 97,745,794
Retained earnings 11,989,959 5,679,719
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TOTAL STOCKHOLDERS' EQUITY 117,996,391 103,680,599
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$234,892,959 $214,750,098
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See notes to consolidated financial statements.
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4
BENTON OIL AND GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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THREE MONTHS ENDED MARCH 31,
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1996 1995
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REVENUES
Oil and gas sales $31,284,923 $12,080,479
Gain on exchange rates 1,127,715 131,717
Investment earnings and other 526,109 448,970
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32,938,747 12,661,166
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EXPENSES
Lease operating costs and production taxes 4,072,520 2,246,002
Depletion, depreciation and amortization 7,732,801 3,145,067
General and administrative 3,647,460 1,668,772
Interest 2,259,995 1,618,126
Partnership exchange expenses (Note 2) 2,139,655
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19,852,431 8,677,967
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INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 13,086,316 3,983,199
INCOME TAX EXPENSE 4,449,467 1,079,416
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INCOME BEFORE MINORITY INTEREST 8,636,849 2,903,783
MINORITY INTEREST (Note 8) 2,326,609 862,675
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NET INCOME FROM OPERATIONS $ 6,310,240 $ 2,041,108
============ ============
NET INCOME PER COMMON SHARE:
Primary $ 0.23 $ 0.08
============ ============
Fully Diluted $ 0.22 $ 0.08
============ ============
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See notes to consolidated financial statements.
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5
BENTON OIL AND GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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THREE MONTHS ENDED MARCH 31,
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 6,310,240 $ 2,041,108
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation and amortization 7,732,801 3,145,067
Net earnings from limited partnerships (3,511)
Amortization of financing costs 281,061 28,578
Loss on disposition of assets 10,632
Partnership exchange expenses 2,139,655
Minority interest in undistributed earnings of subsidiary 2,326,609 862,675
Increase in accounts receivable (9,609,456) (583,664)
Increase in prepaid expense and other (438,633) (576,793)
Increase in accounts payable 2,419,608 67,530
Increase (decrease) in accrued interest payable, payroll and related taxes 733,575 (390,996)
Increase in income taxes payable 3,880,440 788,068
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TOTAL ADJUSTMENTS 9,465,660 3,347,586
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NET CASH PROVIDED BY OPERATING ACTIVITIES 15,775,900 5,388,694
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 1,317,582 14,713,894
Additions of property and equipment (15,530,353) (11,130,286)
Increase in restricted cash (1,000,000)
Distributions from limited partnerships 264,114
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (14,948,657) 3,583,608
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants 1,070,820 188,890
Proceeds from other short term borrowings 1,552,106
Proceeds from issuance of notes payable 1,691,754 2,040,000
Payments on other short term borrowings and notes payable (3,562,175) (4,025,520)
Decrease (increase) in other assets 44,220 (159,465)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 796,725 (1,956,095)
------------ -------------
NET INCREASE IN CASH 1,623,968 7,016,207
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,179,998 14,192,568
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,803,966 $ 21,208,775
============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest expense $ 1,726,938 $ 1,832,229
============ =============
Cash paid during the period for income taxes $ 424,706 $ 176,825
============ =============
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SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the three months ended March 31, 1995, the Company financed the purchase
of oil and gas equipment in the amount of $2,337,860 and leased office
equipment in the amount of $54,473.
During the three months ended March 31, 1996, $3,226,000 principal amount of
the Company's 8% convertible notes and $58,000 principal amount of the
Company's 8% convertible debentures were retired upon conversion into 275,082
and 5,865 shares of the Company's common stock, respectively.
During the three months ended March 31, 1996, the Company financed the purchase
of oil and gas equipment and services in the amount of $272,655. Also during
the three months ended March 31, 1996, the Company acquired the partners'
interests in each of the three limited partnerships sponsored by the Company in
exchange for an aggregate of 168,362 shares of the Company's common stock and
warrants to purchase 587,783 shares of common stock at $11.00 per share, with a
total value of $3,996,601.
See notes to consolidated financial statements.
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7
BENTON OIL AND GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Benton Oil and Gas Company (the "Company") engages in the exploration,
development, production and management of oil and gas properties.
The Company and its former subsidiary, Benton Oil and Gas Company of Louisiana,
participated as the managing general partner of three oil and gas limited
partnerships formed during 1989 through 1991. Under the provisions of the
limited partnership agreements, the Company received compensation as stipulated
therein, and functioned as an agent for the partnerships to arrange for the
management, drilling, and operation of properties, and assumed customary
contingent liabilities for partnership obligations. In January 1996, the
Company issued an aggregate of 168,362 shares of common stock and warrants to
purchase 587,783 shares of common stock at $11 per share in exchange for all
outstanding limited partnership interests and liquidated the partnerships. (See
Note 2.)
The consolidated financial statements include the accounts of the Company and
its subsidiaries. The Company's investment in the Russia joint venture
("GEOILBENT") is proportionately consolidated based on the Company's ownership
interest. Beginning in 1995, GEOILBENT (owned 34% by the Company) has been
included in the consolidated financial statements based on a fiscal period
ending September 30. This change was made to provide adequate time for the
accumulation and review of financial information from the joint venture for
both quarterly and annual reporting purposes. This change did not have a
material effect on the consolidated financial statements. All material
intercompany profits, transactions and balances have been eliminated.
INTERIM REPORTING
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
March 31, 1996, and the results of operations for the three month periods ended
March 31, 1996 and 1995. The unaudited financial statements are presented in
accordance with the requirements of Form 10-Q and do not include all
disclosures normally required by generally accepted accounting principles.
References should be made to the Company's consolidated financial statements
and notes thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1995 for additional disclosures, including a summary of
the Company's accounting policies.
The results of operations for the three month period ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
EARNINGS PER SHARE
Earnings per common share are computed by dividing net income by the weighted
average number of common and common equivalent shares outstanding. Common
equivalent shares are shares which may be issuable upon exercise of outstanding
stock options and warrants. Total weighted average common stock equivalent
shares used to calculate primary earnings per common share for the three months
ended March 31, 1996 and 1995 were 27,674,188 and 26,037,055, respectively.
Total weighted average common stock equivalent shares used to calculate fully
diluted earnings per share for the three months ended March 31, 1996 and 1995
were 28,747,580 and 27,403,209, respectively.
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8
PROPERTY AND EQUIPMENT
The Company follows the full cost method of accounting for oil and gas
properties. Accordingly, all costs associated with the acquisition,
exploration, and development of oil and gas reserves are capitalized as
incurred, including exploration overhead of $452,937 and $526,161 for the three
months ended March 31, 1996 and 1995, respectively. Only overhead which is
directly identified with acquisition, exploration or development activities is
capitalized. All costs related to production, general corporate overhead and
similar activities are expensed as incurred. The costs of oil and gas
properties are accumulated in cost centers on a country by country basis,
subject to a cost center ceiling (as defined by the Securities and Exchange
Commission).
All capitalized costs of oil and gas properties (excluding unevaluated property
acquisition and exploration costs) and the estimated future costs of developing
proved reserves, are depleted over the estimated useful lives of the properties
by application of the unit-of-production method using only proved oil and gas
reserves. Excluded costs attributable to the Venezuelan, Russian and other
cost centers at March 31, 1996 were $14,536,008, $3,366,031, and $928,872,
respectively. Excluded costs attributable to the Venezuelan, Russian and other
cost centers at December 31, 1995 were $14,001,386, $3,214,849 and $709,136,
respectively. Depletion expense attributable to the Venezuelan, Russian and
other cost centers for the three months ended March 31, 1996 was $5,475,593,
$786,140 and $1,380,070 ($2.09, $3.52 and $6.47 per equivalent barrel),
respectively. Depletion expense attributable to the Venezuelan, Russian and
United States cost centers for the three months ended March 31, 1995 was
$2,109,428, $328,136 and $628,270 ($1.99, $2.76 and $6.97 per equivalent
barrel), respectively. Depreciation of furniture and fixtures is computed
using the straight-line method, with depreciation rates based upon the
estimated useful life applied to the cost of each class of property.
Depreciation expense was $90,537 and $57,477 for the three months ended March
31, 1996 and 1995, respectively.
RECLASSIFICATIONS
Certain items in 1995 have been reclassified to conform to the 1996 financial
statement presentation.
NOTE 2 - PROPERTY SALES AND PARTNERSHIP EXCHANGE OFFER
In March 1995, the Company sold its 32.5% working interest in certain depths
(above approximately 10,575 feet) in the West Cote Blanche Bay Field for
approximately $14.9 million. In April 1996, the Company sold its remaining
interests in the West Cote Blanche Bay, Rabbit Island and Belle Isle Fields
located in the Gulf Coast of Louisiana for approximately $35.4 million,
resulting in a gain of approximately $7.5 million after adjustments for
revenues and expenses subsequent to the effective date of December 31, 1995 and
satisfaction of a net profits interest associated with the properties. The
gain on the sale of properties will be recorded in the second quarter of 1996.
In conjunction with this sale and to obtain the required consents for such
sale, the Company agreed to repay $35 million in senior unsecured notes and a
$5 million revolving credit facility which was secured by these properties.
Debt prepayment premiums and related costs totalling approximately $10.4
million will be recognized as an extraordinary loss in the second quarter of
1996. (See Note 3.)
In January 1996, the Company completed an exchange offer under which it issued
an aggregate of 168,362 shares of common stock and warrants to purchase
587,783 shares of common stock at $11 per share in exchange for all outstanding
limited partnership interests in the three remaining limited partnerships
sponsored by the Company. The shares of common stock were valued at $1.9
million (based upon the current market price at the time of the offer), which
was allocated to oil and gas properties. Substantially all of the oil and gas
properties were immediately sold at their approximate book value. The
warrants, issued as an inducement to the participants to accept the Exchange
Offer, were valued at $3.64 each, for a total of $2.1 million, which was
charged to expense in the first quarter of 1996.
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NOTE 3 - LONG TERM DEBT
Long term debt consists of the following:
<CAPTION>
MARCH 31 DECEMBER 31,
1996 1995
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Senior unsecured notes with interest at 13.0%.
See description below. $35,000,000 $35,000,000
Revolving secured credit facility. Interest
payments due quarterly beginning
March 31, 1995. Principal payments due
quarterly beginning March 31, 1997.
See description below. 5,000,000 5,000,000
Convertible subordinated debentures with
interest at 8.0%. 4,252,000 4,310,000
Convertible subordinated notes with interest
at 8.0%. See description below. 3,269,000
Promissory note due on July 1, 1996 with
interest at 13.0% from January 1, 1996.
Unsecured 1,000,000 1,000,000
Vendor financing with interest ranging from 10.5 - 13.5%.
Principal and interest payments are due in varying
installments through April 1997. Unsecured. 5,840,562 6,234,357
Bank financing with interest at LIBOR plus
7.5% to 8.0%. Secured by certain GEOILBENT
oil export proceeds. See description below. 1,861,754 850,000
Bank financing with interest at 8.875%. Principal
and interest due in monthly installments of $9,156
with the unpaid balance due January 5, 1998. Secured
by residential real estate. 1,136,011 1,137,500
Other--various equipment purchases and
leases with principal and interest
payments due monthly from $180 to $3,381.
Interest rates vary from 10.0% to 16.91%.
Notes and leases mature from March 1996 to
March 2000. 97,534 118,788
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54,187,861 56,919,645
Less current portion 8,137,779 7,433,339
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$46,050,082 $49,486,306
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In September 1994 and June 1995, the Company issued $15 million and $20 million
in 13% senior unsecured notes due 2002 and 2007, respectively. Additionally,
in connection with the issuance of the notes, the Company issued warrants
entitling the holder to purchase 250,000 shares of common stock at $9.00 per
share and 125,000 shares at $17.09 per share, subject to adjustment in certain
circumstances, that are exercisable on or before September 30, 2002 and June
30, 2007, respectively. In April and May 1996, in conjunction with the sale of
the Company's Gulf Coast properties and the issuance of $125 million in 11.625%
senior unsecured notes due 2003, the Company repaid the outstanding 13% notes,
accrued interest, and corresponding prepayment premiums of approximately $10.4
million. (See Notes 2 and 9.)
In December 1994, the Company entered into a revolving credit facility, secured
in part by mortgages on the Company's U.S. properties and in part by a
guarantee provided by the financial institution which arranged the credit
facility. The initial available principal under the facility was set at $10
million. Additionally, in exchange for the credit enhancement, the Company
issued to the arranging financial institution and lending commercial bank
warrants entitling the holders to purchase 50,000 shares of common stock at
$12.00 per share, subject to adjustment in certain circumstances, that are
exercisable on or before December 2004, and the Company granted to the
arranging institution a 5% net profits interest in the Company's properties
whose development is financed by the facility. At March 31, 1996 and 1995,
the interest rates under this facility were 10.2% and 8.9%, respectively. In
conjunction with the sale of the Company's Gulf Coast properties in April 1996,
the Company repaid the outstanding balance of $5.0 million to the lending
institution. (See Note 2.)
In October 1991, the Company issued $4,662,000 aggregate principal amount of
privately placed 8% convertible subordinated notes due October 1, 2001,
convertible at the option of the note holders at 85.259 shares per $1,000
principal amount. In December 1995, the holders of the notes were notified of
the Company's intention to prepay the notes on February 12, 1996 at 103% of the
principal amount plus accrued interest. As a result, substantially all
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of the holders elected to convert their notes for shares of common stock.
During the first quarter of 1996, the Company issued an aggregate of 275,081
shares of common stock upon the conversion of notes with a principal amount of
$3,226,000 and prepaid the remaining note principal of $43,000 plus premium and
accrued interest.
In August 1994, GEOILBENT entered into an agreement with International Moscow
Bank for a $4 million loan with the following terms: 14 monthly payments,
interest at LIBOR plus 7.5%, with interest only payments for the first four
months and monthly principal and interest payments thereafter. In March 1995,
this credit facility was expanded to $6 million with interest only payments for
three months and monthly principal and interest payments thereafter. In
connection with this agreement, the Company provided to International Moscow
Bank a guarantee of payment under which the Company has agreed to pay such loan
in full if GEOILBENT fails to make the scheduled payments. In December 1995,
GEOILBENT entered into a new loan agreement with International Moscow Bank for
$5.0 million, the repayment of which was not guaranteed by the Company, payable
over 17 months with interest at LIBOR plus 8.0%. At March 31, 1996 and
December 31, 1995, the Company's proportionate share of the outstanding
balances was $1.9 million and $0.9 million, respectively.
NOTE 4 - SHORT TERM BORROWINGS
In 1994, Benton-Vinccler entered into a $25 million credit facility with
Morgan Guaranty Trust Company of New York ("Morgan Guaranty") to repay
commercial paper and for working capital requirements. The credit facility is
collateralized in full by time deposits from the Company, bears interest at
LIBOR plus 3/4% (5.3% and 6.1% at March 31, 1996 and 1995, respectively) and
is renewed on a monthly basis. The loan arrangement contains no restrictive
covenants and no financial ratio covenants. The outstanding balance under the
credit facility at March 31, 1996 and December 31, 1995 was $19.25 million.
Beginning in the fourth quarter of 1994, Benton-Vinccler acquired approximately
$4.1 million of drilling and production equipment from trading companies and
suppliers under terms which include repayment within a 12-month period in
monthly and quarterly installments at interest rates from 6.7% to 10.75%. At
March 31, 1996 and December 31, 1995, approximately $0.7 million related to
these loans was outstanding.
In June 1994, GEOILBENT entered into a payment advance agreement with NAFTA
Moscow, the export agency which markets GEOILBENT's oil production to
purchasers in Europe. The payment advance of $2.5 million against future oil
shipments, which bore an effective discount rate of 12%, was repaid through
withholdings from oil sales on a monthly basis through December 1994. In March
and August 1995, GEOILBENT received $3.0 million and $2.0 million,
respectively, in production payment advances pursuant to similar agreements
with NAFTA Moscow containing similar terms. During the period ended March 31,
1996, GEOILBENT repaid most of the original NAFTA Moscow advances. Funding for
these repayments was provided largely by entering into other similar short term
borrowings and oil payment advance arrangements with Russian commercial banks
and with another oil purchaser. GEOILBENT also entered into an agreement with
Morgan Guaranty for a short term credit facility under which the Company
provides cash collateral for the loans to GEOILBENT. GEOILBENT's obligations
under the new agreements with the Russian commercial banks and oil purchaser
are not guaranteed by the Company. At March 31, 1996, the Company's
proportionate share of the outstanding liabilities of GEOILBENT was $1.4
million, $0.6 million of which was cash collateralized by the Company.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
In the normal course of its business, the Company may periodically become
subject to actions threatened or brought by its investors or partners in
connection with the operation or development of its properties or the sale of
securities. Prior to 1992, the Company was engaged in the formation and
operation of oil and gas limited partnership interests. In 1992, the Company
ceased raising funds through such sales. In connection with its continuing
role as managing general partner of certain limited partnerships, the Company
may become subject to actions brought by limited partners of these
partnerships. Certain of such limited partners have brought an action against
the Company in connection with the Company's operation of the limited
partnerships as managing general partner. The plaintiffs seek actual and
punitive damages for alleged actions and omissions by the Company in operating
the partnerships and alleged misrepresentations made by the Company in selling
the limited partnership interests. In May 1995, the Company agreed to a
binding arbitration proceeding with respect to such claims. In April 1996, the
plaintiffs delivered a letter to the arbitrator instructing the arbitrator to
place such action in abeyance. The Company intends
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11
to vigorously defend this action and does not believe the claims raised are
meritorious. However, new developments could alter this conclusion at any
time. The Company will be forced to expend time and financial resources to
defend or resolve any such matters. The Company is also subject to ordinary
litigation that is incidental to its business. None of the above matters are
expected to have a material adverse effect on the Company.
NOTE 6 - TAXES ON INCOME
As of December 31, 1995, for federal income tax purposes the Company had
operating loss carryforwards of approximately $41.0 million, expiring in the
years 2003 through 2010. If the carryforwards are ultimately realized,
approximately $3.0 million will be credited to additional paid-in capital for
tax benefits associated with deductions for income tax purposes related to
stock options. The provisions for income taxes for 1996 and 1995 consist
primarily of foreign taxes currently payable.
NOTE 7 - RUSSIAN EXPORT TARIFF
GEOILBENT received a waiver from the export tariff for 1995. Russia has
recently announced that, in July 1996, such oil export tariffs will be
terminated in conjunction with a loan agreement with the International Monetary
Fund. It is anticipated that the tariff on oil exporters may be replaced by an
excise or other duty levied on all oil producers, but it is currently unclear
how such other tax rates and regimes will be set and administered. The Russian
regulatory environment continues to be volatile and the Company is unable to
predict the impact of such changes in tariffs, taxes and duties.
NOTE 8 - VENEZUELA OPERATIONS
On July 31, 1992, the Company and its partner, Venezolana de Inversiones y
Construcciones Clerico, C.A. ("Vinccler"), signed an operating service
agreement to reactivate and further develop three Venezuelan oil fields with
Lagoven, S.A., an affiliate of the national oil company, Petroleos de
Venezuela, S.A. The operating service agreement covers the Uracoa, Bombal and
Tucupita fields that comprise the South Monagas Unit. Under the terms of the
operating service agreement, Benton-Vinccler, a corporation owned 80% by the
Company and 20% by Vinccler, is a contractor for Lagoven and is responsible for
overall operations of the South Monagas unit, including all necessary
investments to reactivate and develop the fields comprising the unit.
Benton-Vinccler receives an operating fee in U.S. dollars deposited into a U.S.
commercial bank account for each barrel of crude oil produced (subject to
periodic adjustments to reflect changes in a special energy index of the U.S.
Consumer Price Index) and is reimbursed according to a prescribed formula in
U.S. dollars for its capital costs, provided that such operating fee and cost
recovery fee cannot exceed the maximum dollar amount per barrel set forth in
the agreement (which amount is periodically adjusted to reflect changes in the
average of certain world crude oil prices). The Venezuelan government
maintains full ownership of all hydrocarbons in the fields.
NOTE 9 - SUBSEQUENT EVENTS
In May, 1996, the Company issued $125 million in 11.625% senior unsecured notes
due May 1, 2003. Interest on the notes is due May 1 and November 1 of each
year, beginning November 1, 1996. The indenture agreement provides for
limitations on liens, additional indebtedness, certain capital expenditures,
dividends, sales of assets and mergers. Pursuant to the terms of the senior
unsecured notes, the Company has agreed to file a registration statement to
exchange such notes. In the event that the Company does not file such a
registration statement and/or consummate an exchange offer within the time
periods prescribed, then additional interest (in addition to the interest
otherwise due on the notes) will accrue at an annual rate of 0.50% until such
exchange offer is consummated. A portion of the proceeds from this offering
was used to repay certain long term indebtedness and the remainder will be used
for repayment of certain short term obligations and for capital expenditure and
working capital purposes. (See Note 2.)
<PAGE> 12
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
PRINCIPLES OF CONSOLIDATION AND ACCOUNTING METHODS
The Company has included the results of operations of Benton-Vinccler in its
consolidated statement of operations and has reflected the 20% ownership
interest of Vinccler as a minority interest. Beginning in 1995, GEOILBENT has
been included in the consolidated financial statements based on a fiscal period
ending September 30. Results of operations reported in the first quarter of
1996 for Russia reflect the three months ended December 31, 1995. The
Company's investment in GEOILBENT is proportionately consolidated based on the
Company's ownership interest, and for oil and gas reserve information, the
Company reports its 34% share of the reserves attributable to GEOILBENT.
The Company follows the full-cost method of accounting for its investments in
oil and gas properties. The Company capitalizes all acquisition, exploration,
and development costs incurred. The Company accounts for its oil and gas
properties using cost centers on a country by country basis. Proceeds from
sales of oil and gas properties are credited to the full-cost pools.
Capitalized costs of oil and gas properties are amortized within the cost
centers on an overall unit-of-production method using proved oil and gas
reserves as determined by independent petroleum engineers. Costs amortized
include all capitalized costs (less accumulated amortization), the estimated
future expenditures (based on current costs) to be incurred in developing
proved reserves, and estimated dismantlement, restoration and abandonment
costs. See Note 1 of Notes to Consolidated Financial Statements.
The following discussion of the Company's results of operations for the three
months ended March 31, 1996 and 1995 and financial condition at March 31, 1996
and December 31, 1995 should be read in conjunction with the Company's
Consolidated Financial Statements and related notes thereto included in PART I,
Item 1, "Financial Statements."
RESULTS OF OPERATIONS
The following table presents the Company's consolidated income statement items
as a percentage of total revenues:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
----- -----
<S> <C> <C>
Oil and Gas Sales 95.0% 95.4%
Net Gain on Exchange Rates 3.4 1.0
Investment Earnings and Other 1.6 3.6
----- -----
Total Revenues 100.0 100.0
----- -----
Lease Operating Costs and Production Taxes 12.4 17.7
Depletion, Depreciation and Amortization 23.5 24.8
General and Administrative 11.0 13.2
Interest 6.9 12.8
Partnership Exchange Expenses 6.5 --
----- -----
Total Expenses 60.3 68.5
----- -----
Income Before Income Taxes and Minority Interest 39.7 31.5
Income Tax Expense 13.5 8.6
Minority Interest 7.0 6.8
----- -----
Net Income 19.2% 16.1%
===== =====
</TABLE>
<PAGE> 13
13
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
The Company had revenues of $32.9 million for the three months ended March 31,
1996. Expenses incurred during the period consisted of lease operating costs
and production taxes of $4.1 million, depletion, depreciation and amortization
expense of $7.7 million, general and administrative expense of $3.7 million,
interest expense of $2.3 million, partnership exchange expense of $2.1 million,
income tax expense of $4.4 million and a minority interest of $2.3 million.
Net income for the period was $6.3 million or $0.22 per share.
By comparison, the Company had revenues of $12.7 million for the three months
ended March 31, 1995. Expenses incurred during the period consisted of lease
operating costs and production taxes of $2.2 million, depletion, depreciation
and amortization expense of $3.1 million, general and administrative expense
of $1.7 million, interest expense of $1.6 million, income tax expense of $1.1
million and a minority interest of $0.9 million. Net income for the period was
$2.0 million or $0.08 per share.
Revenues increased $20.2 million, or 159%, during the three months ended March
31, 1996 compared to the corresponding period of 1995 primarily due to
increased oil sales in Venezuela. Sales quantities for the three months ended
March 31, 1996 from Venezuela and Russia were 2,623,444 and 223,397 Bbl,
respectively, compared to 1,062,093 and 118,864 Bbl, respectively, for the
three months ended March 31, 1995. Prices for crude oil averaged $9.63 per Bbl
(pursuant to terms of an operating service agreement) from Venezuela and $10.32
per Bbl from Russia for the three months ended March 31, 1996 compared to $9.02
per Bbl from Venezuela and $13.12 per Bbl from Russia for the corresponding
period of 1995. Domestic sales quantities for the three months ended March 31,
1996 were 5,163 Bbl of crude oil and condensate and 1,249,128 Mcf of natural
gas compared to 32,317 Bbl of crude oil and condensate and 346,548 Mcf of
natural gas for the three months ended March 31, 1995. Domestic prices for
crude oil and natural gas averaged $19.94 per Bbl and $3.26 per Mcf during the
three months ended March 31, 1996 compared to $17.10 per Bbl and $1.62 per Mcf
during the corresponding period of 1995. Revenues for the three months ended
March 31, 1996 were reduced by a loss of $0.4 million related to a commodity
hedge agreement compared to a loss of $0.2 million during the corresponding
period of 1995. Revenues for the three months ended March 31, 1996 were
increased by a foreign exchange gain of $1.1 million compared to a gain of $0.1
million during the corresponding period of 1995.
Lease operating costs and production taxes increased $1.9 million, or 86%,
during the three months ended March 31, 1996 compared to the three months ended
March 31, 1995 primarily due to the growth of the Company's Venezuelan
operations, but decreased as a percentage of total revenues. Depletion,
depreciation and amortization increased $4.6 million, or 148%, during the three
months ended March 31, 1996 compared to the corresponding period of 1995
primarily due to the increased oil production in Venezuela, but decreased as a
percentage of total revenues. Depletion expense per barrel of oil equivalent
produced from Venezuela, Russia and the United States during the three months
ended March 31, 1996 was $2.09, $3.52 and $6.47, respectively, compared to
$1.99, $2.76 and $6.97, respectively, during the corresponding period of the
previous year. General and administrative expenses increased $2.0 million, or
118%, during the three months ended March 31, 1996 compared to the
corresponding period of 1995 was primarily due to the implementation of certain
consulting and related arrangements among Benton-Vinccler, the Company and
Vinccler, Venezuelan municipal taxes (which are a function of growing oil
revenues) and the Company's increased corporate activity associated with the
growth of the Company's business; but decreased slightly as a percentage of
total revenues. Interest expense increased $0.7 million, or 44%, during the
three months ended March 31, 1996 compared to the three months ended March 31,
1995 primarily due to increased borrowing to fund operations in Venezuela and
Russia, but decreased substantially as a percentage of total revenues. The
Company incurred partnership exchange expenses of $2.1 million during the three
months ended March 31, 1996 as a result of the completion of an exchange offer
resulting in the liquidation of three limited partnerships. Income tax expense
increased $3.3 million, or 300%, during the three months ended March 31, 1996
compared to the corresponding period of 1995 due primarily to increases in
profitability in Venezuela, the United States and Russia. The net income
attributable to the minority interest increased $1.4 million, or 156%, for the
three months ended March 31, 1996 compared to the three months ended March 31,
1995 as a result of the increased profitability of Benton-Vinccler's operations
in Venezuela.
<PAGE> 14
14
INTERNATIONAL OPERATIONS
The Company's costs of operations in Venezuela and Russia beginning in 1993
have included certain fixed or minimum office, administrative, legal and
personnel related costs and certain start up costs, including short term
facilities rentals, organizational costs, contract services and consultants.
Such costs are expected to grow over time as operations increase. In the last
two years such costs have become less significant on a unit of production
basis, but such costs can be expected to fluctuate in the future based upon a
number of factors. In Venezuela, for the year ended December 31, 1993, the
operating costs and general and administrative expenses were $7.26 and $2.25
per Bbl, respectively. For the three months ended March 31, 1996 the operating
costs and general and administrative expenses for Venezuela decreased to $0.88
and $1.29 per Bbl, respectively. The Company's Venezuelan operations have
grown considerably since inception, and are expected to continue to grow, and
its operating costs and general and administrative expenses are expected to
increase both in the aggregate and on a per unit basis. In Russia, for the
year ended December 31, 1993, the operating costs and general and
administrative expenses were $16.22 and $12.96 per Bbl, respectively,
decreasing to $6.72 and $1.70 per Bbl, respectively, for the three months ended
March 31, 1996. The Company's Russian operations have grown less significantly
than the Venezuelan operations. Capital expenditures through 1993 in both
Venezuela and Russia focused on start-up infrastructure items such as roads,
pipelines, and facilities rather than drilling. Beginning in 1994, a higher
proportion of capital expenditures have been and will continue to be spent on
drilling and production activities.
In January 1996, a consortium consisting of the Company (30%) and two bidding
partners (35% each) were awarded the right to explore and develop the Delta
Centro Block in Venezuela. The contract requires a minimum exploration work
program consisting of completing a 1,300 kilometer seismic survey and drilling
three wells to depths ranging from 12,000 to 18,000 feet, within the next five
years. PDVSA estimates that such work will cost $60 million. The Company and
its partners will have to provide performance guarantees or letters of credit
for their pro rata shares of the minimum work program. The venture will be
operated by one of the Company's partners, The Louisiana Land and Exploration
Company. The venture intends to conduct a 3-D seismic survey beginning in 1996
at a total cost to the Company of $6-7 million. The first well is tentatively
scheduled for 1997 at a cost of $1.5-2.0 million to the Company. Future
seismic and drilling programs will be based on the results of 1996-97 activity.
If commercial production results from exploration activities at Delta Centro,
then an affiliate of PDVSA will participate in the venture at an interest
ranging from 1 to 35% at its discretion. Any oil and gas produced at Delta
Centro will be sold at market prices and will be subject to the oil and gas
taxation regime in Venezuela and to the terms of a profit sharing agreement
with PDVSA. Under current oil and gas tax law, a royalty of 16.7% will be paid
to the state, and an income tax rate of 66.7% will be applied to the venture's
pre-tax profits. Under the terms of the profit sharing agreement, the venture
will share 41% of pre-tax income with PDVSA for the period of time during which
the first $1 billion of revenues is produced; thereafter, the profit sharing
may increase to up to 50% according to a formula based on return on assets.
As a private contractor, Benton-Vinccler is subject to a statutory income tax
rate of 34%. However, Benton-Vinccler reported lower effective tax rates due
to significant non-cash tax deductible expenses resulting from devaluations in
Venezuela when Benton-Vinccler had net monetary liabilities in U.S. dollars.
The Company cannot predict the timing or impact of future devaluations in
Venezuela. Any Company operations related to Delta Centro will be subject to
oil and gas industry taxation, which currently provides for royalties of 16.67%
and income taxes of 66.67%.
GEOILBENT is subject to a statutory income tax rate of 35%. GEOILBENT has also
been subject to various other tax burdens, including an oil export tariff. The
export tariff was 30 ECU's per ton through 1995, although GEOILBENT obtained an
exemption from such tariff for 1995. The tariff was reduced to 20 ECU's per
ton in January 1996, and Russia has recently announced that effective July
1996, oil export tariffs will be terminated. The Company anticipates that the
tariff on oil exporters may be replaced by an excise, pipeline or other tax
levied on all oil producers, but it is currently unclear how such other tax
rates and regimes will be set and administered.
EFFECTS OF CHANGING PRICES, FOREIGN EXCHANGE RATES AND INFLATION
The Company's results of operations and cash flow are affected by changing oil
and gas prices. However, the Company's Venezuelan revenues are based on a fee
adjusted quarterly by the percentage change of a basket of crude oil prices
instead of by absolute dollar changes, which dampens both any upward and
downward effects of changing prices on the Company's Venezuelan revenues and
cash flows. If the price of oil and gas increases, there
<PAGE> 15
15
could be an increase in the cost to the Company for drilling and related
services because of increased demand, as well as an increase in revenues.
Fluctuations in oil and gas prices may affect the Company's total planned
development activities and capital expenditure program.
Effective May 1, 1994, the Company entered into a commodity hedge agreement
with Morgan Guaranty designed to reduce a portion of the Company's risk from
oil price movements. Pursuant to the hedge agreement, with respect to the
period from May 1, 1994 through the end of 1996, the Company will receive from
Morgan Guaranty $16.82 per Bbl and the Company will pay to Morgan Guaranty the
average price per Bbl of West Texas Intermediate Light Sweet Crude Oil ("WTI")
determined in the manner set forth in the hedge agreement. Such payments will
be made with respect to production of 1,000 Bbl of oil per day for 1994, 1,250
Bbl of oil per day for 1995, and 1,500 Bbl of oil per day for 1996. During the
quarter ended March 31, 1996, the average price per Bbl of WTI was $19.57 and
the Company's net exposure for the quarter was $0.4 million. The Company's oil
production is not materially affected by seasonality. The returns under the
hedge agreement are affected by world-wide crude oil prices, which are subject
to wide fluctuation in response to a variety of factors that are beyond the
control of the Company.
There are presently no restrictions on conversion of currency in either
Venezuela or Russia. However, from June 1994 through April 1996, Venezuela
implemented exchange controls which significantly limit the ability to convert
local currency into U.S. dollars. Because payments made to Benton-Vinccler are
made in U.S. dollars into its United States bank account, and Benton-Vinccler
is not subject to regulations requiring the conversion or repatriation of those
dollars back into the country, the exchange controls have not had a material
adverse effect on Benton-Vinccler or the Company.
Within the United States, inflation has had a minimal effect on the Company,
but is potentially an important factor in results of operations in Venezuela
and Russia. With respect to Benton-Vinccler and GEOILBENT, substantially all
of the sources of funds, including the proceeds from oil sales, the Company's
contributions and credit financings, are denominated in U.S. dollars, while
local transactions in Russia and Venezuela are conducted in local currency.
Following the announcement of a Venezuelan preliminary loan accord with the IMF
and the lifting of certain exchange and price controls, inflation could be
expected to have an adverse effect on Benton-Vinccler.
During the quarter ended March 31, 1996, the Company realized net foreign
exchange gains, primarily as a result of the decline in the value of the
Venezuelan bolivar during periods when Benton-Vinccler had substantial net
monetary liabilities denominated in bolivares. However, there are many factors
affecting foreign exchange rates and resulting exchange gains and losses, many
of which are beyond the influence of the Company. The Company has recognized
significant exchange gains and losses in the past, resulting from fluctuations
in the relationship of the Venezuelan and Russian currencies to the U.S.
dollar. It is not possible to predict the extent to which the Company may be
affected by future changes in exchange rates and exchange controls.
CAPITAL RESOURCES AND LIQUIDITY
The oil and gas industry is a highly capital intensive business. The Company
requires capital principally to fund the following costs: (i) drilling and
completion costs of wells and the cost of production and transportation
facilities; (ii) geological, geophysical and seismic costs; and (iii)
acquisition of interests in oil and gas properties. The amount of available
capital will affect the scope of the Company's operations and the rate of its
growth.
The net funds raised and/or used in each of the operating, investing and
financing activities for the three months ended March 31, 1996 and 1995 are
summarized in the following table and discussed in further detail below:
<TABLE>
<CAPTION>
THREE MONTHS YEARS ENDED MARCH 31,
---------------------------------------
1996 1995
------------- --------------
<S> <C> <C>
Net cash provided by operating activities $ 15,775,900 $ 5,388,694
Net cash provided by (used in)
investing activities (14,948,657) 3,583,608
Net cash provided by (used in)
financing activities 796,725 (1,956,095)
------------- --------------
Net increase in cash $ 1,623,968 $ 7,016,207
============= ==============
</TABLE>
<PAGE> 16
16
At March 31, 1996, the Company had current assets of $64.2 million (including
$19.3 million and $2.0 million of cash restricted as collateral for loans to
Benton-Vinccler and GEOILBENT, respectively), and current liabilities of $61.5
million (including loans of $19.3 million and $0.6 million collateralized by
restricted cash), resulting in working capital of $2.7 million and a current
ratio of 1.04:1. This compares to the Company's working capital deficit of
$2.9 million at March 31, 1995. The increase of $5.6 million was due primarily
to working capital generated from operations in excess of capital expenditures.
CASH FLOW FROM OPERATING ACTIVITIES. During the three months ended March 31,
1996 and 1995, respectively, net cash provided by operating activities was
approximately $15.8 million and $5.4 million, respectively. Cash flow from
operating activities increased by $10.4 million during the three months ended
March 31, 1996 over the corresponding period of the prior year due primarily to
increased oil and gas production in Venezuela.
CASH FLOW FROM INVESTING ACTIVITIES. During the three months ended March 31,
1996 and 1995, the Company had drilling and production related capital
expenditures of approximately $17.4 million and $13.5 million, respectively.
Of the 1996 expenditures, $12 million was attributable to the development of
the South Monagas Unit in Venezuela, $1.8 million related to the development of
the North Gubkinskoye Field in Russia, $1.7 million related to drilling
activity in the West Cote Blanche Bay, Rabbit Island and Belle Isle Fields in
Louisiana, and $1.9 million was attributable to other projects. The Company
also sold certain oil and gas properties for net proceeds of approximately $1.3
million and $14.7 million in the three months ended March 31, 1996 and 1995,
respectively.
In April 1996, the Company sold all of its interests in the West Cote Blanche
Bay, Rabbit Island and Belle Isle Fields for a purchase price of $35.4 million.
Proceeds of the sale will be used for repayment of certain indebtedness and
capital expenditures as described below.
CASH FLOW FROM FINANCING ACTIVITIES. In May 1996, the Company issued $125
million in 11.625% senior unsecured notes due May 1, 2003. A portion of the
proceeds were used to repay certain long term indebtedness and the remainder
will be used for repayment of certain short term obligations and for capital
expenditure and working capital purposes.
The Company expects 1996 capital expenditures to be approximately $100 million,
including $12 million in expenditures for Russia (net to the Company's
interest), which is dependent on proposed EBRD or other financing, which may or
may not be obtained. Funding for the 1996 and subsequent capital expenditure
programs is expected to come from the Company's recent issuance of senior
unsecured notes and sale of property interests, its cash flow from operations,
future sales of property interests, or issuance of debt or equity securities.
<PAGE> 17
17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Computation of per share earnings.
(b) Reports on Form 8-K.
On January 8, 1996, the Company filed a report on Form 8-K,
under Item 5. "Other Events" regarding a press release related
to the settlement of certain litigation, such release
disseminated on January 8, 1996.
On January 12, 1996, the Company filed a report on Form 8-K,
under Item 5. "Other Events" regarding a press release related
to the execution of a non-binding letter of intent related to
the sale of the Company's wholly-owned subsidiary, such
release disseminated on January 11, 1996.
On March 27, 1996, the Company filed a report on Form 8-K,
under Item 5. "Other Events" regarding the Company press
release of 1995 and fourth quarter 1995 earnings, such release
disseminated on March 20, 1996; and regarding the agreement
reached to sell the Company's wholly owned subsidiary, Benton
Oil and Gas Company of Louisiana, and related exhibits.
<PAGE> 18
18
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
<TABLE>
<S> <C> <C>
BENTON OIL AND GAS COMPANY
Dated: May 13, 1996 By: /S/A. E. Benton
------------------------------
A. E. Benton,
Chairman and Chief Executive Officer
Dated: May 13, 1996 By: /S/Michael B. Wray
-----------------------------
Michael B. Wray
President and Chief Financial Officer
</TABLE>
<PAGE> 1
<TABLE>
19
EXHIBIT 11.1
BENTON OIL AND GAS COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months Ended March 31,
--------------------------------
1996 1995
----------- -----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
--------------------------
Net income (loss) attributable to common stock $ 6,310,240 $ 2,041,108
=========== ===========
Weighted average number of common shares outstanding 25,873,794 24,914,617
=========== ===========
Primary earnings (loss) per share $ 0.24 $ 0.08
=========== ===========
ADDITIONAL PRIMARY COMPUTATION
------------------------------
Net income (loss) attributable to common stock $ 6,310,240 $ 2,041,108
=========== ===========
Shares:
Weighted average number of common shares outstanding 25,873,794 24,914,617
Add shares assuming exercise of options reduced by the number
of shares which could have been purchased with the
proceeds from exercise of such options 1,800,394 1,122,438
------------ ------------
Primary weighted average number of common shares outstanding
as adjusted 27,674,188 26,037,055
=========== ===========
Primary earnings (loss) per share (a) $ 0.23 $ 0.08
=========== ===========
ASSUMING FULL DILUTION
----------------------
Net income (loss) attributable to common stock $ 6,310,240 $2,041,108
=========== ===========
Shares:
Weighted average number of common shares outstanding 25,873,794 24,914,617
Add shares assuming exercise of options reduced by the number
of shares which could have been purchased with the
proceeds from exercise of such options 2,354,112 1,440,878
------------ ------------
Weighted average number of common shares outstanding as
adjusted 28,227,906 26,355,495
=========== ===========
Earnings (loss) per common share assuming full dilution (a) $ 0.22 $ 0.08
=========== ===========
ADDITIONAL FULLY DILUTED COMPUTATION
------------------------------------
Additional adjustment to net income (loss) as adjusted per fully
diluted computation above:
Net income (loss) attributable to common stock $ 6,310,240 $ 2,041,108
Add after tax interest expense attributable to convertible notes (70,880) 93,240
Add after tax interest expense attributable to convertible
debentures 84,267 128,560
---------- -----------
Net income (loss) as adjusted $ 6,323,627 $ 2,262,908
=========== ===========
Additional adjustment to weighted average number of shares
outstanding:
Weighted average number of common shares outstanding 25,873,794 24,914,617
Add shares assuming conversion of convertible debentures 433,930 650,237
Add shares assuming conversion of convertible notes 85,744 397,477
Add shares assuming exercise of options reduced by the number
of shares which could have been purchased with the
proceeds from exercise of such options 2,354,112 1,440,878
----------- -----------
Weighted average number of common shares outstanding as
adjusted 28,747,580 27,403,209
=========== ===========
Earnings (loss) per common share assuming full dilution (b) $ 0.22 $ 0.08
=========== ===========
<FN
(a) This calculation is submitted in accordance with Regulations S-K Item 601(b)(11) although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 for 1995 because it results in dilution of less than 3% for the three months ended March 31,
1995.
(b) This calculation is submitted in accordance with Regulation S-K Item 601 (b)(11) although it is contrary to paragraph
40 of APB Opinion No. 15 because it produces an anti-dilutive result for the three months ended March 31, 1995.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR
THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 7,803,966
<SECURITIES> 0
<RECEIVABLES> 34,427,080
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 64,198,301
<PP&E> 195,646,092
<DEPRECIATION> (27,714,584)
<TOTAL-ASSETS> 234,892,959
<CURRENT-LIABILITIES> 61,472,086
<BONDS> 46,050,082
<COMMON> 260,926
0
0
<OTHER-SE> 117,735,465
<TOTAL-LIABILITY-AND-EQUITY> 234,892,959
<SALES> 31,284,923
<TOTAL-REVENUES> 32,938,747
<CGS> 11,805,321
<TOTAL-COSTS> 11,805,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,259,995
<INCOME-PRETAX> 13,086,316
<INCOME-TAX> 4,449,467
<INCOME-CONTINUING> 6,310,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,310,240
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.22
</TABLE>
