SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 1-10447
CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-3072771
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
15375 Memorial Drive, Houston, Texas 77079
(Address of principal executive offices including Zip Code)
(713) 589-4600
(Registrant's telephone number)
No Change
(Former name, former address and fiscal year, if changed since last report)
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of October 31, 1995, there were 22,779,723 shares of Class A Common
Stock, Par Value $.10 Per Share, outstanding.
<PAGE>
CABOT OIL & GAS CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Statement of Operations for the Three and Nine
Months Ended September 30, 1995 and 1994 3
Condensed Consolidated Balance Sheet at September 30, 1995 and
December 31, 1994 4
Condensed Consolidated Statement of Cash Flows for the Three and Nine
Months Ended September 30, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Independent Accountants' Report on Review of
Interim Financial Information 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 21
Signature 22
</TABLE>
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<PAGE>
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ----------------------
1995 1994 1995 1994
------- ------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Natural Gas......................................... $ 40,576 $ 50,320 $141,036 $166,560
Crude Oil and Condensate............................ 2,116 3,790 8,388 7,691
Other (Note 13)..................................... 5,290 1,648 8,033 3,800
------- ------- -------- --------
47,982 55,758 157,457 178,051
COSTS AND EXPENSES
Costs of Natural Gas............................... 18,359 21,515 65,627 72,978
Direct Operations.................................. 6,785 8,729 20,692 24,884
Exploration........................................ 2,025 2,198 5,016 5,310
Depreciation, Depletion and Amortization........... 11,352 15,088 38,182 37,922
Impairment of Unproved Properties.................. 1,128 933 3,177 2,623
Impairment of Long-Lived Assets (Note 9)........... 113,795 - 113,795 -
General and Administrative......................... 3,274 4,456 12,727 12,824
Taxes Other Than Income............................ 2,983 3,294 8,775 8,887
Cost Reduction Program............................. - - 6,820 -
--------- --------- -------- ---------
159,701 56,213 274,811 165,428
Gain (Loss) On Sale Of Assets...................... 10 32 (399) 48
-------- -------- -------- ---------
INCOME (LOSS) FROM OPERATIONS...................... (111,709) (423) (117,753) 12,671
Interest Expense................................... 5,523 4,632 17,118 11,308
------- ------- ------- --------
Income (Loss) Before Income Taxes.................. (117,232) (5,055) (134,871) 1,363
Income Tax Expense (Benefit)....................... (45,313) (2,024) (52,234) 543
-------- --------- --------- -------
NET INCOME (LOSS) ................................. (71,919) (3,031) (82,637) 820
Dividend Requirement On Preferred Stock............ 1,391 1,410 4,162 3,057
------- ------- -------- -------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS............................. $ (73,310) $ (4,441) $ (86,799) $ (2,237)
======== ======= ========= ========
EARNINGS (LOSS) PER COMMON SHARE................... $ (3.22) $ (0.20) $ (3.81) $ (0.10)
======= ======== ======== ========
Average Common Shares Outstanding.................. 22,778 22,726 22,773 21,775
======= ======= ======= =======
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
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<PAGE>
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents.................................................. $ 1,961 $ 3,773
Accounts Receivable........................................................ 27,205 38,166
Inventories................................................................ 7,059 8,384
Other...................................................................... 1,714 1,696
--------- ---------
Total Current Assets..................................................... 37,939 52,019
Properties and Equipment (Successful Efforts Method).......................... 472,273 634,934
Other Assets.................................................................. 1,442 1,399
--------- ---------
$ 511,654 $ 688,352
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-Term Debt............................................................ $ 29 $ -
Accounts Payable........................................................... 27,405 39,990
Accrued Liabilities........................................................ 16,520 13,750
-------- --------
Total Current Liabilities................................................ 43,954 53,740
Long-Term Debt................................................................ 240,307 268,363
Deferred Income Taxes......................................................... 65,486 117,807
Other Liabilities............................................................. 7,955 5,360
Commitments and Contingencies (Note 6)
Stockholders' Equity
Preferred Stock:
Authorized--5,000,000 Shares of $.10 Par Value
Issued and Outstanding - $3.125 Cumulative Convertible
Preferred; $50 Stated Value; 692,439 Shares in 1995 and 1994 - 6%
Convertible Redeemable Preferred; $50
Stated Value; 1,134,000 Shares in 1995 and 1994........................ 183 183
Common Stock:
Authorized--40,000,000 Shares of $.10 Par Value
Issued and Outstanding--22,779,266 Shares and
22,757,007 Shares as of September 30, 1995 and
December 31, 1994, Respectively........................................ 2,278 2,275
Additional Paid-in Capital................................................. 241,873 241,471
Accumulated Deficit........................................................ (90,382) (847)
-------- --------
Total Stockholders' Equity............................................... 153,952 243,082
------- -------
$ 511,654 $ 688,352
======== ========
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
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<PAGE>
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)....................................... $ (71,919) $ (3,031) $ (82,637) $820
Adjustments to Reconcile Net Income (Loss) to
Cash Provided by Operating Activities:
Depletion, Depreciation and Amortization............ 11,352 15,088 38,182 37,922
Impairments of Unproved Properties.................. 1,128 933 3,177 2,623
Impairments of Long-Lived Assets (Note 9)........... 113,795 - 113,795 -
Deferred Income Taxes............................... (45,935) (1,418) (52,321) 615
Loss (Gain) on Sale of Assets....................... (10) (32) 399 (48)
Exploration Expense................................. 2,025 2,198 5,016 5,310
Other, Net.......................................... (473) (282) 2,530 (1,054)
Changes in Assets and Liabilities:
Accounts Receivable................................. 4,203 1,195 10,961 10,653
Inventories......................................... (1,797) (2,418) 1,325 (2,828)
Other Current Assets ............................... (540) 327 (18) 401
Other Assets........................................ (9) (307) (43) (287)
Accounts Payable & Accrued Liabilities.............. (5,515) (6,359) (10,250) 2,049
Other Liabilities................................... 82 217 652 (461)
-------- -------- -------- --------
Net Cash Provided By Operating.......................... 6,387 6,111 30,768 55,715
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures ................................... (2,907) (25,179) (10,933) (60,113)
Cost of Major Acquisition (Note 12)..................... 8,402 (9,403) 8,402 (78,291)
Proceeds from Sale of Assets (Notes 11 & 14)............ 2,019 146 9,716 322
Exploration Expense..................................... (2,025) (2,198) (5,016) (5,310)
-------- -------- ------- --------
Net Cash Provided (Used) By Investing .................. 5,489 (36,634) 2,169 (143,392)
-------- -------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of Common Stock.................................... 78 226 339 323
Increase in Debt........................................ - 33,535 7,000 109,574
Decrease in Debt........................................ (10,000) - (35,027) (16,000)
Dividends Paid.......................................... (2,303) (2,017) (7,061) (4,800)
--------- --------- -------- --------
Net Cash Provided (Used) By Financing................... (12,224) 31,744 (34,749) 89,097
-------- -------- -------- --------
Net Increase (Decrease) In Cash
and Cash Equivalents.................................... (349) 1,221 (1,812) 1,420
Cash and Cash Equivalents, Beginning of Period............ 2,310 3,096 3,773 2,897
------- -------- -------- --------
Cash and Cash Equivalents, End of Period.................. $ 1,961 $ 4,317 $ 1,961 $ 4,317
======= ======== ======== ========
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
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<PAGE>
CABOT OIL & GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. FINANCIAL STATEMENT PRESENTATION
During interim periods, the Company follows the accounting policies set
forth in its Annual Report to Stockholders and its Report on Form 10-K filed
with the Securities and Exchange Commission. Users of financial information
produced for interim periods are encouraged to refer to the footnotes contained
in the Annual Report to Stockholders when reviewing interim financial results.
In the opinion of management, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments (except as described in the Notes to the Condensed Consolidated
Financial Statements), necessary for a fair presentation.
2. PROPERTIES AND EQUIPMENT
Properties and equipment are comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Unproved oil and gas properties........................................ $ 16,330 $ 20,847
Proved oil and gas properties.......................................... 789,047 796,390
Gathering and pipeline systems......................................... 147,424 146,131
Land, building and improvements........................................ 5,513 5,533
Other.................................................................. 14,749 13,875
-------- --------
973,063 982,776
Accumulated depreciation, depletion and amortization.................. (500,790) (347,842)
-------- --------
$ 472,273 $ 634,934
======== ========
</TABLE>
3. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest and income taxes are comprised as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1995 1994 1995 1994
------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C>
Interest expense..................... $ 2,629 $ 2,410 $ 14,069 $ 8,674
Income taxes......................... $ 7 $ 6 $ 37 $ 18
</TABLE>
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<PAGE>
CABOT OIL & GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
4. ADDITIONAL BALANCE SHEET INFORMATION
Certain balance sheet amounts are comprised of the following:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1995 1994
--------- ---------
(in thousands)
<S> <C> <C>
Accounts Receivable
Trade accounts.................................................... $ 25,962 $ 36,246
Other accounts.................................................... 2,598 3,245
------- -------
28,560 39,491
Allowance for doubtful accounts................................... (1,355) (1,325)
------- -------
$ 27,205 $ 38,166
======= =======
Inventories
Natural gas in storage............................................ $ 5,560 $ 5,777
Tubular goods and well equipment.................................. 1,746 2,120
Exchange balances................................................. (247) 487
------ -------
$ 7,059 $ 8,384
====== ======
Accounts Payable
Trade accounts.................................................... $ 6,207 $ 10,818
Natural gas purchases............................................. 7,603 7,938
Royalty and other owners.......................................... 7,456 12,691
Capital costs..................................................... 1,197 4,097
Dividends payable................................................. 1,237 1,404
Taxes Other Than Income........................................... 484 690
Other accounts.................................................... 3,221 2,352
------- -------
$ 27,405 $ 39,990
======= =======
Accrued Liabilities
Employee benefits................................................. $ 2,425 $ 3,182
Taxes other than income........................................... 8,553 7,886
Interest payable.................................................. 4,792 1,742
Other accrued..................................................... 750 940
------- --------
$ 16,520 $ 13,750
======= =======
Other Liabilities
Postretirement benefits other than pension........................ $ 2,842 $ 898
Accrued pension cost.............................................. 3,061 2,299
Other............................................................. 2,052 2,163
------- -------
$ 7,955 $ 5,360
======= =======
</TABLE>
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<PAGE>
CABOT OIL & GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
5. LONG-TERM DEBT
At September 30, 1995, the Company had borrowed $160 million against an
available credit line of $235 million. The available credit line is subject to
revision based on the projected present value (as determined by a petroleum
engineer's report incorporating certain assumptions provided by the lender) of
estimated future net cash flows from proved oil and gas reserves and other
assets.
The Company amended certain provisions of the revolving credit facility in
the second quarter of 1995, refer to Note 5 of the Notes to the Condensed
Consolidated Financial Statements included in the Company's Form 10-Q for the
quarter ended June 30, 1995 for further discussion.
6. CONTINGENCIES
There have been no new material developments with regard to the Barby
lawsuit as described in the Company's 1994 Annual Report on Form 10-K other than
as set forth below. On March 16, 1995, Barby appealed the decision of the trial
court to the Oklahoma Supreme Court. Barby requested that the Oklahoma Supreme
Court retain the case. Subsequently, the Oklahoma Supreme Court decided not to
retain the case and assigned the appeal to the Oklahoma Court of Appeals.
In September 1995, Barby filed a separate action in state court in
Oklahoma, purporting to represent all similarly situated royalty owners in
Oklahoma, alleging improper calculation of royalties and seeking actual and
punitive damages. The Company has denied the material allegations of the
complaint. No formal discovery has yet been conducted.
7. ACCOUNTING CHANGE
Effective January 1, 1995, the Company changed from the
property-by-property basis to the field basis of applying the unit-of-production
method to calculate depreciation and depletion on producing oil and gas
properties. The net effect of the change in method resulted in a $2,899 thousand
decrease in DD&A expense and a $1,762 thousand increase in net earnings in the
nine months of 1995, including the impact of the pre-1995 amount of $303
thousand. The pro forma impact on the results of operations in the nine months
of 1994, had the change in method been implemented at the beginning of 1994,
would have been a decrease in DD&A expense of approximately $1,587 thousand and
a $965 thousand increase in earnings. The Company projects the effect of the
change in method for the full year of 1995 will reduce DD&A expense by
approximately $3.5 to $4.0 million. For further discussion, refer to Note 7 of
the Notes to the Condensed Consolidated Financial Statements included in the
Company's Form 10-Q for the quarter ended June 30, 1995.
8. COST REDUCTION PROGRAM
In the first quarter of 1995, the Company recorded a $6.8 million charge
($4.1 million after tax) in termination benefits for a 20% reduction of the
total workforce. For further discussion, refer to Note 8 of the Notes to the
Condensed Consolidated Financial Statements included in the Company's Form 10-Q
for the quarter ended June 30, 1995.
- 8 -
<PAGE>
CABOT OIL & GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
9. ACCOUNTING FOR LONG-LIVED ASSETS
Effective September 30, 1995, the Company adopted Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS 121
requires that an impairment loss be recognized when the carrying amount of an
asset exceeds the sum of the undiscounted estimated future cash flow of the
asset. Under SFAS 121, the Company reviewed the impairment of oil and gas
properties and related assets on an economic unit basis. For each economic unit
determined to be impaired, an impairment loss equal to the difference between
the carrying value and the fair value of the economic unit was recognized. Fair
value, on a economic unit basis, was estimated to be the present value of
expected future net cash flows over the economic lives of the reserves. As a
result of the adoption of SFAS 121, the Company recognized a non-cash charge
during the third quarter of $113.8 million ($69.1 million after tax).
10. NET REVENUE MARGINS ON NATURAL GAS SALES
Natural gas revenue margins were comprised of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1995 1994 1995 1994
-------- -------- -------- --------
(in thousands, except where noted)
<S> <C> <C> <C> <C>
Production and Royalty Gas
Sales volume (MMcf).................. 15,990 19,483 56,516 53,661
Natural gas revenue.................. $ 26,405 $ 36,712 $ 98,941 $ 118,826
Cost of natural gas.................. 4,622 8,677 25,396 27,992
------ ------ ------- -------
Net revenue margin................... $ 21,783 $ 28,035 $ 73,545 $ 90,834
====== ====== ======= =======
Brokered Gas (*)
Sales volume (MMcf).................. 9,977 7,014 27,109 21,022
Natural gas revenue.................. $ 14,171 $ 13,608 $ 42,095 $ 47,734
Cost of natural gas.................. 13,737 12,838 40,231 44,986
------ ------ ------- -------
Net revenue margin................... $ 434 $ 770 $ 1,864 $ 2,748
======= ======= ======== =======
Total Company
Sales volume (MMcf).................. 25,967 26,497 83,625 74,683
Natural gas revenue.................. $ 40,576 $ 50,320 $ 141,036 $ 166,560
Cost of natural gas.................. 18,359 21,515 65,627 72,978
------ ------ ------- -------
Net revenue margin................... $ 22,217 $ 28,805 $ 75,409 $ 93,582
====== ====== ======= =======
</TABLE>
(*) Includes back-to-back and third-party purchase brokerage activities.
- 9 -
<PAGE>
CABOT OIL & GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
11. SALE OF NON-CORE OIL AND GAS PROPERTIES
To reduce debt, the Company sold various non-core oil and gas properties in
the Western Region, obtaining proceeds of $7.9 million through the third quarter
of 1995.
12. VALUATION ADJUSTMENT
The Company received an $8.4 million net cash settlement in connection with
a valuation adjustment on the 1994 Washington Energy Resources Company
acquisition ("WERCO Valuation Adjustment"). The WERCO Valuation Adjustment was
recorded as a reduction to the net book value of certain oil and gas properties
purchased in the WERCO acquisition.
13. OTHER REVENUE
The Company recorded $4.6 million ($4.1 million net of severance taxes) in
other revenue in connection with the sale of certain Columbia Gas Transmission
Corporation ("Columbia") bankruptcy claims. The claims related to the remaining
value of gas sales in contracts terminated by Columbia as part of its bankruptcy
filing in 1991.
14. MONETIZATION OF SECTION 29 TAX CREDITS
During the third quarter, the Company completed a transaction to monetize
the value of Section 29 tax credits from most of its qualifying Appalachian
properties. The transaction provided cash of $1.8 million at closing, which was
recorded as a reduction to the net book value of natural gas properties, and
will generate additional revenues through 2002 estimated at $14 million ($2.0
million in the first twelve months) related to the value of future Section 29
tax credits attributable to these properties. Employing a volumetric production
payment structure, the production, revenues, expenses and proved reserves
related to these properties will continue to be reported by the Company until
the production payment is satisfied.
- 10 -
<PAGE>
Independent Certified Public Accountants' Report on Review of Interim Financial
Information
To the Board of Directors and Stockholders
Cabot Oil & Gas Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
Cabot Oil & Gas Corporation as of September 30, 1995, and the related condensed
consolidated statements of operations and cash flows for the three and nine
month periods ended September 30, 1995 and 1994. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the condensed consolidated balance sheet as of December 31, 1994, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the year then ended (not presented herein); and, in our report
dated March 3, 1995, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1994, is
fairly stated in all material respects, in relation to the consolidated
financial statements from which it has been derived.
COOPERS & LYBRAND L.L.P.
Houston, Texas
November 10, 1995
- 11 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following review of operations for the third quarters and nine months
of 1995 and 1994 should be read in conjunction with the Condensed Consolidated
Financial Statements of the Company and the notes thereto included elsewhere in
this Form 10-Q and with the Consolidated Financial Statements and the Notes
included in the Company's Form 10-K for the year ended December 31, 1994.
Overview
The Company's growth strategy through the exploitation of current
development drilling opportunities, selective acquisitions and expanded
marketing activities is sensitive to energy commodity prices, particularly the
price of natural gas. The average natural gas price realized by the Company in
the third quarter of 1995 was approximately 18% lower than the third quarter of
1994, replacing the second quarter of 1995 as the lowest quarterly price since
the Company became publicly traded in 1990. These lower gas prices have
significantly reduced earnings and cash flows, partially offset by the benefit
of lower unit costs.
Effective September 30, 1995, the Company adopted Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". As a result of
this adoption, the Company recorded a non-cash charge of $113.8 million ($69.1
million after tax) in the third quarter. See Note 9 of the Notes to the
Condensed Consolidated Financial Statements for further discussion of SFAS 121.
While the adoption of SFAS 121 has no impact on cash flow or oil and gas
reserves, the Company's depreciation, depletion and amortization rate per unit
of production is expected to decrease in future periods by $0.13 to $0.15 per
Mcfe.
During the third quarter, the Company completed a transaction to monetize
the value of Section 29 tax credits from most of its qualifying Appalachian
properties. The transaction provided cash of $1.8 million at closing, which was
recorded as a reduction to the net book value of natural gas properties, and
will generate additional revenues through 2002 estimated at $14 million ($2.0
million in the first twelve months) related to the value of future Section 29
tax credits attributable to these properties. Employing a volumetric production
payment structure, the production, revenues, expenses and proved reserves
related to these properties will continue to be reported by the Company until
the production payment is satisfied. A smaller but similar transaction
monetizing Section 29 tax credits from the Company's Rocky Mountain properties
is expected to be completed in the fourth quarter.
The Company recorded $4.6 million ($4.1 million net of severance taxes)
in other revenue during the third quarter in connection with the sale of claims
related to certain gas sales contracts with Columbia Gas Transmission
Corporation ("Columbia"). The claims related to the remaining value of gas sales
contracts terminated by Columbia as part of its 1991 bankruptcy filing.
In response to market conditions, the Company continues to focus on
reducing debt while conducting a smaller drilling program than in prior years,
comprised of the highest return opportunities and obligatory development to
maintain lease positions. A large portion of the $10 million debt reduction in
the third quarter was funded by an $8.4 million net cash settlement received in
connection with a valuation adjustment on the 1994 Washington Energy Resources
Company acquisition ("WERCO Valuation Adjustment"). Future reductions in debt
will also be achieved by applying benefits of the cost reduction program and
anticipated proceeds from certain future transactions. This focus has resulted
in a net debt reduction of $28 million since the beginning of 1995.
- 12 -
<PAGE>
Also, as gas prices decline to a level approaching the Company's combined
finding and variable lifting costs, production and sales at those prices become
undesirable. Accordingly, the Company curtailed approximately 12 MMcf of
production per day in August and September, all from the Rocky Mountains area of
the Western Region. These actions did not have a significant impact on the
Company's cash flows. Rocky Mountain market prices improved to a level allowing
the Company to return the curtailed wells to production in October.
The Company's capital and exploration expenditures plan ("program
spending") for 1995 is $28.1 million, down $52.6 million from the 1994 capital
and exploration expenditures, excluding the WERCO acquisition. Program spending
for 1995 was revised downward from the second quarter estimate of $43.5 million
primarily due to rescheduling of certain drilling and acquisition plans to 1996.
During the nine months of 1995, the Company drilled 23 net wells and realized a
drilling success rate of 77%, compared to 158 net wells with a drilling success
rate of 96% for the nine months of 1994.
Natural gas sales were 26.0 Bcf for the third quarter of 1995, including
10 Bcf from the marketing of brokered natural gas, compared to 26.5 Bcf in the
third quarter of 1994, including 7.0 Bcf from the marketing of brokered natural
gas. Gas volumes and net revenue margins associated with the Company's marketing
activities (see Note 10 of the Notes to the Condensed Consolidated Financial
Statements) are presented in two categories, (1) production and royalty gas
marketed through the Company's gathering and pipeline facilities and (2)
brokered gas marketed in back-to-back or brokered arrangements ("brokered"). The
contribution to net revenue margin provided by brokered sales was approximately
5 cents per Mcf in the third quarter of 1995, compared with approximately 7
cents per Mcf in the third quarter of 1994, when higher natural gas prices
typically supported higher margins. The reduction in net revenue margin also
reflects an increase in lower margin brokered sales in the Western Region.
The Company continued to reduce its operating costs in the third quarter
of 1995. Controllable operating costs and expenses, consisting of direct
operations, exploration and general and administrative expenses, were $0.85 per
Mcfe produced as compared with $0.88 per Mcfe produced in the third quarter of
1994 and $0.93 per Mcfe for the year of 1994. This improvement reflects the
Company's continued focus on cost control along with the impact of the cost
reduction program implemented in the first quarter of 1995 (see Note 8 of the
Notes to the Condensed Consolidated Financial Statements included elsewhere in
this Form 10-Q).
The Company continues to assess market conditions and commodity prices
and will modify its business plans as warranted.
Financial Condition
Capital Resources and Liquidity
The Company's capital resources consist primarily of cash flows from its
oil and gas properties and asset-based borrowing supported by its oil and gas
reserves. The Company's level of earnings and cash flows depend on many factors,
including the price of oil and natural gas and its ability to market production
on a cost-effective basis. Demand for oil and gas has historically been subject
to seasonal influences characterized by peak demand and higher prices in the
winter heating season. During latter 1994 and 1995 to date, however, natural gas
prices have dropped significantly while demand has remained reasonably high.
While the Company increased year-to-date sales volumes, the drop in gas prices
has significantly reduced cash flows during this period.
- 13 -
<PAGE>
Primary sources of cash for the Company were from funds generated from
operations and bank borrowings. Primary uses of cash were funds used in
exploration and development expenditures, acquisitions, repayment of debt and
dividends.
The Company had a net cash outflow of $1.8 million in the nine months of
1995. Net cash inflows from operating activities, asset sales and the WERCO
Valuation Adjustment totalled $48.9 million in the period, substantially funding
capital and exploration expenditures of $15.9 million, net debt reductions of
$28.0 million and dividend payments of $7.1 million.
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1995 1994
------ ------
(in millions)
<S> <C> <C>
Cash Flows Provided by Operating Activities................................. $ 30.8 $ 55.7
====== ======
</TABLE>
Cash flows from operating activities in the 1995 nine months were lower by
$24.9 million compared to the corresponding nine months of 1994 primarily due to
lower natural gas prices, higher interest expense due to increased bank debt and
non-recurring charges related to the cost reduction program and other related
severance costs, partially offset by proceeds from the sale of the Columbia
bankruptcy claim.
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1995 1994
------ ------
(in millions)
<S> <C> <C>
Cash Flows Provided (Used) by Investing Activities.......................... $ 2.2 $ (143.4)
===== ======
</TABLE>
Cash flows used by investing activities in the nine months of 1995 and 1994
were substantially attributable to capital and exploration expenditures of $15.9
million (offset by $9.7 million in proceeds from the sale of certain non-core
oil and gas properties and $8.4 million from the WERCO Valuation Adjustment) and
$143.7 million (including $78.3 million for the WERCO acquisition),
respectively.
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1995 1994
------ ------
(in millions)
<S> <C> <C>
Cash Flows Provided (Used) by Financing Activities.......................... $ (34.7) $ 89.1
===== =====
</TABLE>
Cash flows provided (used) by financing activities were primarily debt
reductions in 1995 and debt increases in 1994 under the revolving credit
facility. The debt reductions in 1995 were funded in part by cash flows from
operations and from the aforementioned sale proceeds from non-core properties
and the WERCO Valuation Adjustment. The $93.6 million net increase under the
revolving credit facility in 1994 was primarily attributable to the financing
associated with the WERCO acquisition ($73.1 million) and the $6.2 million
purchase of additional drilling locations in connection with another proved
property acquisition.
Under the Company's revolving credit facility, the available credit line,
currently $235 million, is subject to revision based on the projected present
value of estimated future net cash flows from proved oil and gas reserves and
other assets.
The Company's 1995 interest expense is projected to be approximately $23
million. No principal payments are due in 1995.
- 14 -
<PAGE>
Capitalization information on the Company is as follows:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1995 1994
------ ------
(in millions)
<S> <C> <C>
Long-Term Debt.............................................................. $ 240.3 $ 268.3
Stockholders' Equity
Common Stock........................................................... 62.7 151.8
Preferred Stock........................................................ 91.3 91.3
------ ------
Total ............................................................. 154.0 243.1
------ ------
Total Capitalization........................................................ $ 394.3 $ 511.4
===== =====
Debt to Capitalization...................................................... 60.9% 52.5%
</TABLE>
Since December 31, 1994, the debt-to-capitalization percentage increased
from 52.5% to 60.9% largely due to the $113.8 million non-cash charge recorded
in connection with the adoption of SFAS 121 in the third quarter of 1995.
Capital and Exploration Expenditures
The following table presents major components of capital and exploration
expenditures:
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1995 1994
------ ------
(in millions)
<S> <C> <C>
Capital Expenditures
Drilling and Facilities.......................................... $ 8.8 $ 42.2
Leasehold Acquisitions........................................... 0.5 3.4
Pipeline and Gathering .......................................... 1.1 6.4
Other............................................................ 0.1 1.3
----- -------
10.5 53.3
----- ------
Proved Property Acquisitions (*)................................. 0.4 214.5
Exploration Expenses................................................... 5.0 5.3
------ ------
Total............................................................ $ 15.9 $ 273.1
====== ======
</TABLE>
- ------------
(*) Excludes the $8.4 million WERCO Valuation Adjustment in 1995 and
includes $207.6 million attributable to the WERCO acquisition in 1994 of which
$97.5 million was non-cash consideration of the Company's preferred and common
stock and $31.9 million was a non-cash component relating to deferred taxes for
the difference in book and tax bases.
Total capital spending is down most notably in the area of proved property
acquisitions due to the $208.0 million WERCO acquisition in 1994. The remaining
decrease is due primarily to a reduced capital spending program for 1995.
The Company generally funds most of its capital and exploration activities,
excluding oil and gas property acquisitions, with cash generated from operations
and budgets such capital expenditures based upon projected cash flows, exclusive
of acquisitions.
The Company has planned $28.1 million of capital and exploration
expenditures for 1995 which includes $23.7 million for drilling and facilities
and exploration expenses. Compared to the 1994 capital and exploration
expenditures, excluding the WERCO acquisition, the Company has reduced 1995
planned
- 15 -
<PAGE>
expenditures by 65% in response to continued low natural gas prices. The Company
plans to drill 50 to 60 wells, net to its interest, in 1995 compared with 169
net wells drilled in 1994.
During the nine months of 1995, the Company paid dividends of $2.7 million
on the Common Stock and $4.4 million in aggregate on the $3.125 convertible
preferred stock and 6% convertible redeemable preferred stock. A regular
dividend of $0.04 per share of Common Stock was declared for the quarter ending
September 30, 1995. The dividend will be paid November 30, 1995 to shareholders
of record as of November 16, 1995.
Other Issues and Contingencies
There have been no new material developments with regard to the Barby
lawsuit as described in the Company's 1994 Annual Report on Form 10-K other than
as set forth below. On March 16, 1995, Barby appealed the decision of the trial
court to the Oklahoma Supreme Court. Barby requested that the Oklahoma Supreme
Court retain the case. Subsequently, the Oklahoma Supreme Court decided not to
retain the case and assigned the appeal to the Oklahoma Court of Appeals.
In September 1995, Barby filed a separate action in state court in
Oklahoma, purporting to represent all similarly situated royalty owners in
Oklahoma, alleging improper calculation of royalties and seeking actual and
punitive damages. The Company has denied the material allegations of the
complaint. No formal discovery has yet been conducted.
Conclusion
The Company's financial results depend upon many factors, particularly the
price of natural gas, and its ability to market gas on economically attractive
terms. The continued deterioration of gas prices in 1995 significantly impacted
the Company's operating results, reducing earnings and cash flows in the third
quarter. Given the volatility of natural gas prices in recent years, management
cannot predict with certainty what pricing levels will be for the remainder of
1995. Should the present pricing levels continue through the end of the year,
management would expect to report a net loss for the fourth quarter of 1995.
Because future cash flows are subject to such variables, there can be no
assurance that the Company's operations will provide cash sufficient to fully
fund its capital expenditures.
While present conditions make such actions difficult, the Company remains
committed to its plan to pursue potential acquisitions as part of its long-term
corporate strategy. Such acquisitions may require capital resources beyond those
provided from operations. The Company's ability to fund such acquisitions, if
necessary, with external financing is dependent, among other things, upon
available borrowing capacity under its committed bank line and the Company's
access to and the general conditions of debt and equity capital markets.
The Company believes that debt reduction aided by asset rationalization,
production increases from the exploitation of its highest return exploration and
development opportunities, and continuing efforts to improve efficiency and
reduce operating cost will return the Company to profitability. Furthermore, the
Company believes its capital resources, supplemented, if necessary, with
external financing, are adequate to meet its capital requirements, including
acquisitions.
- 16 -
<PAGE>
Results of Operations
For the purpose of reviewing the Company's results of operations, "Net
Income (Loss)" is defined as net income (loss) applicable to common
stockholders.
Selected Financial and Operating Data
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1995 1994 1995 1994
------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C>
Revenues................................................ $ 48.0 $ 55.8 $ 157.5 $ 178.1
Costs and Expenses (1).................................. 159.7 56.2 274.8 165.4
Operating Income (Loss) (1)............................. (111.7) (0.4) (117.8) 12.7
Interest Expense........................................ 5.5 4.6 17.1 11.3
Net Income (Loss) (1)................................... (73.3) (4.4) (86.8) (2.2)
Earnings (Loss) Per Share (1)........................... $ (3.22) $ (0.20) $ (3.81) $ (0.10)
Natural Gas Production (Bcf)
Appalachia......................................... 6.6 7.6 21.0 22.1
West............................................... 6.7 8.3 22.5 20.9
---- ----- ----- ----
Total Company...................................... 13.3 15.9 43.5 43.0
==== ==== ==== ====
Natural Gas Sales (Bcf)
Appalachia......................................... 11.8 12.5 38.8 43.0
West............................................... 14.2 14.0 44.8 31.7
---- ----- ---- ----
Total Company...................................... 26.0 26.5 83.6 74.7
==== ===== ==== ====
Natural Gas Prices ($/Mcf)
Appalachia......................................... $1.97 $2.14 $2.10 $2.56
West............................................... $1.22 $1.67 $1.33 $1.80
Total Company...................................... $1.56 $1.90 $1.69 $2.23
Crude/Condensate
Volume (MBbl)...................................... 119 212 470 464
Price $/Bbl........................................ $17.83 $17.92 $17.86 $16.56
</TABLE>
- ----------
(1) Included in the three and nine month periods ended September 30, 1995,
is the impact of the $113.8 million ($69.1 million after tax or $3.03 per share)
non-cash charge recorded in connection with the adoption of SFAS 121 in the
third quarter.
- 17 -
<PAGE>
Third Quarters of 1995 and 1994 Compared
Net Loss and Revenues. The Company reported a net loss in the third quarter 1995
of $73.3 million, or $3.22 per share, including $6.6 million, or $0.29 per
share, from recurring operations and $66.7 million, or $2.93 per share, due to a
$113.8 million charge ($69.1 million after tax) related to the adoption of SFAS
121, partially offset by other revenue of $4.1 million ($2.5 million after tax)
in connection with the sale of a Columbia bankruptcy claim. During the
corresponding quarter of 1994, the Company reported a loss of $4.4 million, or
$0.20 per share. Operating income and operating revenues from recurring
operations decreased $1.6 million and $12.4 million, respectively. Natural gas
made up 94%, or $40.6 million, of operating revenue from recurring operations.
The decrease in operating revenues was driven primarily by an 18% decrease in
the average natural gas price. Net loss and operating income (loss) from
recurring operations were similarly impacted by the decline in the average
natural gas price, as well as higher interest expense associated with the WERCO
acquisition.
Natural gas sales volumes were down 0.8 Bcf to 11.8 Bcf in the Appalachian
Region. Production volume in the Appalachian Region was down 1.0 Bcf, or 13%
primarily due to decreased production resulting from higher pipeline
curtailments and normal production declines that were not offset by new
production due to the reduced drilling activity in 1995. Natural gas sales
volumes were virtually unchanged at 14.2 Bcf in the Western Region. Production
volume in the Western Region was down 1.6 Bcf, or 19%, resulting from 0.7 Bcf of
shutin production in response to lower gas prices, the sale of non-core oil and
gas properties and normal production declines not offset by new production due
to the reduced drilling activity in 1995.
The average Appalachian natural gas sales price decreased $0.17 per Mcf, or
8%, to $1.97, decreasing operating revenues by approximately $2.0 million. In
the Western Region, the average natural gas sales price decreased $0.45 per Mcf,
or 27%, to $1.22, decreasing operating revenues by approximately $6.5 million.
The total Company natural gas price decreased $0.34 per Mcf, or 18%, to $1.56.
Crude oil and condensate sales were down 93 MBbl to 119 MBbl due to the
sale of various non-core oil and gas properties earlier in the year.
Costs and Expenses Total costs and expenses, excluding the $113.8 million
impairment of long-lived assets (discussed above), decreased $10.3 million, or
18%, due primarily to the following:
o The costs of natural gas decreased $3.2 million to $18.4 million. The decrease
was primarily due to a $0.40 per Mcf decrease in the average price of gas
purchased for resale, partially offset by a 1.7 Bcf increase in gas purchased
for resale (including gas exchanges and storage).
o Direct operations expense decreased $1.9 million, or 22%, due in large part to
reductions in (1) lease maintenance work and workovers, (2) field and regional
office expenses due primarily to the cost reduction program and (3) compressor
rental and overhaul expenses.
o General and administrative expense decreased $1.2 million, or 27%, due to $0.5
million in cost savings from the cost reduction program in the first quarter and
a $0.7 million downward revision in the provision for employee benefits costs
for 1995.
o Depreciation, depletion, amortization and impairment ("DD&A") expense,
excluding the $113.8 million impairment of long-lived assets in connection with
SFAS 121, decreased $3.5 million, or 22%, due primarily to shutin production as
discussed above and in part to the field level method of computing DD&A expense
on producing oil and gas properties, adopted effective January 1, 1995. Due to
the adoption of
- 18 -
<PAGE>
SFAS 121, the Company's DD&A rate is expected to decrease in future periods by
$0.13 to $0.15 per Mcfe.
Interest expense was up $0.9 million, or 19%, due to the increase in debt
primarily attributable to the WERCO acquisition in 1994.
Income tax benefit was up $43.3 million due to the comparable increase in
the loss before income tax. The Company's effective tax rate was virtually
unchanged.
Nine Months of 1995 and 1994 Compared
Net Income (Loss) and Revenues. The Company reported a net loss in the nine
months of 1995 of $86.8 million, or $3.81 per share, including $15.4 million, or
$0.68 per share, from recurring operations and $71.4 million, or $3.13 per
share, primarily due to a $113.8 million charge ($69.1 million after tax)
related to the adoption of SFAS 121 and $7.7 million ($4.9 million after tax)
for the cost reduction program and other severance costs, offset in part by
other revenue of $4.1 million ($2.5 million after tax) in connection with the
sale of a Columbia bankruptcy claim. During the corresponding nine months of
1994, the Company reported a net loss of $2.2 million, or $0.10 per share.
Operating income and operating revenues from recurring operations decreased
$13.0 million and $25.2 million, respectively. Natural gas made up 92%, or
$141.0 million, of operating revenue from recurring operations. The decrease in
operating revenues from recurring operations was driven primarily by a 24%
decrease in the average natural gas price, partially offset by a 12% increase in
natural gas sales volumes due to higher gas purchased for resale (up 21%) as
discussed below. Net income (loss) and operating income (loss) from recurring
operations were similarly impacted by the decline in the average natural gas
price, as well as higher interest expenses associated with the WERCO
acquisition.
Natural gas sales volumes were down 4.2 Bcf to 38.8 Bcf in the Appalachian
Region primarily due to a 4.5 Bcf decrease in gas purchased for resale.
Production volume in the Appalachian Region was down 1.1 Bcf, or 5%, to 21.0 Bcf
due in part to higher pipeline curtailments and normal production declines not
fully replaced by new production due to reduced drilling activity in 1995.
Natural gas sales volumes were up 13.1 Bcf to 44.8 Bcf in the Western Region due
primarily to higher production volume (up 1.7 Bcf) and gas purchased for resale
(up 11.8 Bcf), all of which are primarily due to the WERCO acquisition.
The average Appalachian natural gas sales price decreased $0.46 per Mcf, or
18%, to $2.10, decreasing operating revenues by approximately $17.7 million. In
the Western Region, the average natural gas sales price decreased $0.46 per Mcf,
or 26%, to $1.33, decreasing operating revenues by approximately $20.6 million.
Because the proportion of lower priced Western Region sales volume relative to
total Company sales volume was up significantly, the weighted average natural
gas price for the total Company decreased $0.54 per Mcf, or 24%, to $1.69.
Crude oil and condensate sales were virtually unchanged at 470 MBbl.
Costs and Expenses Total costs and expenses from recurring operations decreased
$12.2 million, or 7%, due primarily to the following:
o The costs of natural gas decreased $7.4 million to $65.6 million. The decrease
was primarily due to a $0.58 per Mcf decrease in the average price of gas
purchased for resale, partially offset by an 8.5 Bcf increase in gas purchased
for resale (including gas exchanges and storage).
o Direct operations expense decreased $4.2 million, or 17%, due in large part to
reductions in (1) lease maintenance work and workovers, (2) field and regional
office expenses due primarily to the cost reduction program, and (3) compressor
rental and overhaul expenses.
- 19 -
<PAGE>
o General and administrative expense from recurring operations decreased $1.0
million, or 8%, due largely to costs savings realized from the cost reduction
program.
o Depreciation, depletion, amortization and impairment expense, excluding the
$113.8 million impairment of long-lived assets in connection with SFAS 121,
increased $0.8 million due primarily to the WERCO acquisition partially offset
by the field level method of computing DD&A expense on producing oil and gas
properties, adopted effective January 1, 1995. Due to the adoption of SFAS 121,
the Company's DD&A rate is expected to decrease in future periods by $0.13 to
$0.15 per Mcfe.
The cost reduction program, recorded in the first quarter, consisted
primarily of a 20% staff reduction, achieved through early retirement and
involuntary termination programs. The pre-tax charges related to this action
totalled $6.8 million, comprised of $3.8 million in salary and other severance
related expense ($3.6 million paid during the nine months) and a $3.0 million
non-cash charge for the impact of the staff reduction to the pension and
postretirement benefits plans.
Interest expense was up $5.8 million, or 51%, due to the increase in debt
primarily attributable to the WERCO acquisition in 1994.
Income tax expense was down $52.8 million due to the comparable decrease in
earnings before income tax. The Company's effective tax rate was virtually
unchanged.
- 20 -
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
15.1 -- Awareness letter of independent accountants.
27 -- Article 5. Financial Data Schedule for third quarter
1995 Form 10-Q
(b) Reports on Form 8-K
None
- 21 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABOT OIL & GAS CORPORATION
(Registrant)
By: /s/ Ray R. Seegmiller
-------------------------------------
November 14, 1995 Ray R. Seegmiller, Vice President and
Chief Financial Officer
(Chief Financial Officer and Officer Duly
Authorized to Sign on Behalf of the Registrant)
- 22 -
<PAGE>
EXHIBIT 15.1
Coopers & Lybrand L.L.P. Awareness Letter
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549
Re: Cabot Oil & Gas Corporation
Registration Statements on Form S-8
We are aware that our report dated November 10, 1995 on our review of the
interim consolidated financial information of Cabot Oil & Gas Corporation for
the three and nine month periods ended September 30, 1995 and 1994 and included
in this Form 10-Q is incorporated by reference in the Company's registration
statements on Form S-8 filed with the Securities and Exchange Commission on June
23, 1990, November 1, 1993 and May 20, 1994. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meanings of
Section 7 and 11 of the Act.
COOPERS & LYBRAND L.L.P.
Houston, Texas
November 14, 1995
- 23 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,961
<SECURITIES> 0
<RECEIVABLES> 28,560
<ALLOWANCES> (1,355)
<INVENTORY> 7,059
<CURRENT-ASSETS> 37,939
<PP&E> 973,063
<DEPRECIATION> (500,790)
<TOTAL-ASSETS> 511,654
<CURRENT-LIABILITIES> 43,954
<BONDS> 240,307
<COMMON> 153,046
0
91,289
<OTHER-SE> (90,383)
<TOTAL-LIABILITY-AND-EQUITY> 511,654
<SALES> 150,688
<TOTAL-REVENUES> 157,457
<CGS> 274,811
<TOTAL-COSTS> 274,811
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,118
<INCOME-PRETAX> (134,871)
<INCOME-TAX> (52,234)
<INCOME-CONTINUING> (86,799)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86,799)
<EPS-PRIMARY> (3.81)
<EPS-DILUTED> 0
</TABLE>
