FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
--------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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_________________________________________________________
For Quarter Ended June 30, 1995 Commission file number 1-10509
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SNYDER OIL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 75-2306158
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Main Street, Fort Worth, Texas 76102
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (817)338-4043
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(Former name, former address and former 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 (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 [ ].
30,187,441 Common Shares were outstanding as of August 10, 1995
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements included herein have been prepared
in conformity with generally accepted accounting principles. The
statements are unaudited, but reflect all adjustments which, in the
opinion of management, are necessary to fairly present the Company's
financial position and the results of operations.
<PAGE> 2<PAGE>
<TABLE>
SNYDER OIL CORPORATION
CONSOLIDATED BALANCE SHEETS (Notes 1 and 2)
(In thousands)
<CAPTION>
December 31, June 30,
1994 1995
-------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and equivalents $ 21,733 $ 20,211
Accounts receivable 37,055 39,371
Inventory and other 13,651 13,990
---------- ----------
72,439 73,572
---------- ---------
Investments (Note 4) 43,301 44,805
---------- ---------
Oil and gas properties, successful efforts method (Note 5) 680,215 727,746
Accumulated depletion, depreciation and amortization (207,976) (241,550)
--------- ---------
472,239 486,196
--------- ---------
Gas processing and transportation facilities (Note 5) 106,622 96,223
Accumulated depreciation (21,342) (28,429)
--------- ---------
85,280 67,794
--------- ---------
$673,259 $672,367
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 44,874 $ 46,867
Accrued liabilities 25,112 19,969
Current portion of long term debt (Note 3) 1,745 813
-------- ---------
71,731 67,649
-------- ---------
Senior debt, net (Notes 3) 216,034 229,418
Convertible subordinated notes (Note 3) 83,650 83,854
Capital lease, net (Note 3) 18,823 18,968
Deferred taxes and other (Note 7 and 9) 3,211 7,769
Minority interest 5,724 4,712
Commitments and contingencies (Note 10)
Stockholders' equity (Note 6)
Preferred stock, $.01 par, 10,000,000 shares authorized,
6% Convertible preferred stock, 1,035,000 shares
issued and outstanding 10 10
Common stock, $.01 par, 75,000,000 shares authorized,
30,209,197 and 30,320,726 issued 302 303
Capital in excess of par value 255,961 256,633
Retained earnings 20,959 8,479
Common stock held in treasury, 122,018 and 133,605 shares at cost (2,288) (2,450)
Foreign currency translation adjustment 1,222 (1,222)
Unrealized loss on investments (Note 4) (2,080) (1,756)
--------- ---------
274,086 259,997
--------- ---------
$673,259 $672,367
========= ==========
<FN>
The accompanying notes are an intergral part of these statements
</TABLE>
<PAGE> 3
<PAGE>
<TABLE>
SNYDER OIL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Notes 1 and 2)
(In thousands except per share data)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------- -----------------------------
1994 1995 1994 1995
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues (Note 8)
Oil and gas sales $ 33,860 $ 38,806 $ 66,507 $ 76,407
Gas processing, transportation and marketing 28,075 11,412 54,998 24,978
Other 2,643 7,250 6,529 9,100
-------- --------- -------- ---------
64,578 57,468 128,034 110,485
-------- --------- -------- ---------
Expenses
Direct operating 12,073 15,612 24,016 29,717
Cost of gas and transportation 24,352 8,444 47,617 18,473
Exploration 1,546 937 2,444 2,058
General and administrative 2,086 3,236 3,877 6,669
Interest and other 2,669 7,906 4,234 14,310
Litigation settlement (Note 10) - - - 4,400
Depletion, depreciation and amortization 18,164 20,675 37,555 40,661
-------- --------- -------- ---------
Income (loss) before taxes and minority interes 3,688 658 8,291 (5,803)
-------- --------- -------- ---------
Provision for income taxes (Note 7)
Current 25 - 50 25
Deferred - - - (591)
-------- --------- -------- ---------
25 - 50 (566)
-------- --------- -------- ---------
Minority interest (Note 2) - (133) - (219)
-------- --------- -------- ---------
Net income (loss) $ 3,663 $ 525 $ 8,241 $ (5,456)
======== ========= ======== =========
Net income (loss) per common share (Note 6) $ .04 $ (.03) $ .12 $ (.28)
======== ========= ======== =========
Weighted average shares outstanding (Note 6) 23,381 30,155 23,344 30,109
======== ========= ======== =========
<FN>
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE> 4
<PAGE>
<TABLE>
SNYDER OIL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (Notes 1, 2 and 6)
(In thousands)
<CAPTION>
Preferred Stock Common Stock Capital in
----------------------- ------------------- Excess of Retained
Shares Amount Shares Amount Par Value Earnings
-------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 2,221 $ 22 23,260 $ 233 $ 249,713 $ 25,308
Common stock grants and
exercise of options - - 414 4 2,851 -
Conversion of preferred
to common (1,186) (12) 6,535 65 (53) -
Issuance of warrants - - - - 3,450 -
Dividends - - - - - (16,721)
Net income - - - - - 12,372
-------- -------- -------- -------- ---------- ---------
Balance, December 31, 1994 1,035 10 30,209 302 255,961 20,959
Common stock grants and
exercise of options - - 112 1 672 -
Dividends - - - - - (7,024)
Net loss - - - - - (5,456)
-------- -------- -------- -------- ---------- ---------
Balance, June 30, 1995
(Unaudited) 1,035 $ 10 30,321 $ 303 $ 256,633 $ 8,479
======== ======== ======== ======== ========== =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 5
<PAGE>
<TABLE>
SNYDER OIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Notes 1 and 2)
(In thousands)
<CAPTION>
Six Months Ended June 30,
----------------------------------
1994 1995
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(Unaudited)
<S> <C> <C>
Operating activities
Net income(loss) $ 8,241 $ (5,456)
Adjustments to reconcile net income to net cash
provided by operations
Gain on sales of properties (1,641) (1,830)
Exploration expense 2,444 1,993
Depletion, depreciation and amortization 37,555 40,661
Deferred taxes - (591)
Gain on sale of investments (2,017) (4,959)
Equity in (earnings) losses (669) 1,338
Amortization of deferred credits (1,632) (1,058)
Changes in operating assets and liabilities
Decrease (increase) in
Accounts receivable 10,276 (2,974)
Inventory and other (4,465) (339)
Increase (decrease) in
Accounts payable (1,899) 2,051
Accrued liabilities (402) 4,197
Other liabilities (150) (1,268)
Other 121 98
---------- ----------
Net cash provided by operations 45,762 31,863
---------- ----------
Investing activities
Acquisition, development and exploration (104,395) (66,433)
Proceeds from investments 4,456 2,467
Outlays for investments (7,313) -
Proceeds from sale of properties 1,818 21,679
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Net cash used by investing (105,434) (42,287)
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Financing activities
Issuance of common 696 413
Increase in indebtedness 69,938 13,733
Debt issuance costs (2,855) -
Dividends (8,277) (7,024)
Deferred credits 2,694 1,780
---------- ----------
Net cash realized by financing 62,196 8,902
---------- ----------
Decrease in cash 2,524 (1,522)
Cash and equivalents, beginning of period 10,913 21,733
---------- ----------
Cash and equivalents, end of period $ 13,437 $ 20,211
========== ==========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 6
<PAGE>
SNYDER OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND NATURE OF BUSINESS
Snyder Oil Corporation (the "Company") is primarily engaged in
the acquisition, production, development and exploration of domestic
oil and gas properties. The Company is also involved in gas
processing, transportation, gathering and marketing. The Company is
engaged to a modest but growing extent in international acquisition,
development and exploration and maintains a number of special purpose
subsidiaries which are engaged in ancillary activities including gas
transmission and water disposal. The Company, a Delaware
corporation, is the successor to a company formed in 1978.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of
Snyder Oil Corporation and its subsidiaries (collectively, the
"Company"). Affiliates in which the Company owns more than 50% are
fully consolidated, with the related minority interest being deducted
from subsidiary earnings and stockholders' equity. Affiliates in
which the Company owns less than 50% are accounted for under the
equity method.
In 1994, the Company changed from the full cost to the
successful efforts method of accounting for its oil and gas
properties, in order to more accurately reflect its results as it
continues to expand its development and exploration efforts.
Accordingly, the three months ended June 30, 1994 and the six months
ended June 30, 1994 consolidated statements of operations have been
restated to conform to successful efforts. The cumulative effect was
to reduce January 1, 1992, retained earnings by $9.5 million. For
the 1992 and 1993 years previously reported, the effect of the
accounting change restatement, was to reduce net income by $6.0
million ($.27 per share) and $6.1 million ($.26 per share),
respectively. Under successful efforts, oil and gas leasehold costs
are capitalized when incurred. Unproved properties are assessed
periodically on a property-by-property basis and impairments in value
are charged to expense. Exploratory expenses, including geological
and geophysical expenses and delay rentals, are charged to expense as
incurred. Exploratory drilling costs, including stratigraphic test
wells, are initially capitalized, but charged to expense if and when
the well is determined to be unsuccessful. Costs of productive
wells, developmental dry holes and productive leases are capitalized
and amortized on a unit-of-production basis over the life of the
remaining proved or proved developed reserves, as applicable. Gas is
converted to equivalent barrels at the rate of 6 Mcf to 1 barrel.
Amortization of capitalized costs is generally provided on a
property-by-property basis.
Generally, the Company provides an impairment reserve for
significant proved and unproved oil and gas property groups to the
extent that net capitalized costs exceed the undiscounted future
value. During the six months ended June 30, 1994, the Company
provided impairment reserves of $3.5 million.
The Company's investment in its Australian affiliate is
accounted for using the equity method, whereby the cash basis
investment is increased for equity in earnings and decreased for
dividends, if any were received. The affiliate's functional currency
is the Australian dollar. The foreign currency translation
adjustments reported in the balance sheet are the result of the
translation of the Australian dollar balance sheet into United States
dollars at the balance sheet dates and changes in the exchange rate
subsequent to purchase.
<PAGE> 7
<PAGE>
To a limited extent, the Company enters into commodities
contracts to hedge the price risk of a portion of its production. In
1994, the Company entered into certain gas sales arrangements in
order to lock in the price differential between the Rocky Mountain
and the NYMEX Henry Hub prices to reduce exposure to the Rocky
Mountain spot prices. The contracts included 31,000 MMBtu per day
(20,000 MMBtu for a period of ten years and 11,000 MMBtu through July
1995). At December 31, 1994 and June 30, 1995, the net present value
at 10% of the contracts was estimated to be $4.9 million and $4.7
million, respectively, with no recorded carrying value.
All liquid investments with a maturity of three months or less
are considered to be cash equivalents. General and administrative
expenses are reduced by reimbursements for well operations, drilling,
management of partnerships and services provided to unconsolidated
affiliates. Reimbursements amounted to $12.1 million and $17.1
million, respectively, for the six months ended June 30, 1994 and
1995.
In the opinion of management, those adjustments to the
financial statements (all of which are of a normal and recurring
nature) necessary to present fairly the financial position and
results of operations have been made. These interim financial
statements should be read in conjunction with the 1994 annual report
on Form 10-K.
(3) INDEBTEDNESS
The following indebtedness was outstanding on the respective
dates:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
-------------- ------------
(In thousands)
<S> <C> <C>
Revolving credit facility $ 216,001 $ 229,401
Other 50 34
------------ ------------
216,051 229,435
Less current portion (17) (17)
------------ ------------
Senior debt, net $ 216,034 $ 229,418
============ ============
Convertible subordinated notes, net $ 83,650 $ 83,854
=========== ============
Capital lease 20,551 19,764
Less current portion (1,728) (796)
------------ ------------
Capital lease, net $ 18,823 $ 18,968
============ ============
</TABLE>
The Company maintains a $500 million revolving credit
facility. The facility is divided into a $400 million long-term
portion and a $100 million short-term portion. The borrowing base
available under the facility at June 30, 1995 was $270 million. In
August 1995, the borrowing base will be reduced to $260 million. The
majority of the borrowings under the facility currently bear interest
at LIBOR plus 1% with the remainder at prime, with an option to
select CD plus 1%. The margin on LIBOR or CD will decrease to .75%
if the Company's consolidated senior debt becomes less than 80% of
its tangible net worth. During the six months ended June 30, 1995,
the average interest rate under the revolver was 7.0%. The Company
pays certain fees based on the unused portion of the borrowing base.
Covenants require maintenance of minimum working capital, limit the
incurrence of debt and restrict dividends, stock repurchases, certain
investments, other indebtedness and unrelated business activities.
Such restricted payments are limited by a formula that includes
underwriting proceeds, cash flow and other items. Based on such
limitations, more than $100 million was available for the payment of
dividends and other restricted payments as of June 30, 1995.
In May 1994, the Company issued $86.3 million of 7%
convertible subordinated notes due May 15, 2001. The net proceeds
were $83.4 million. The notes are convertible into common stock at
$23.16 per share, and are redeemable at the option of the Company on
or after May 15, 1997, initially at 103.51% of principal, and at
prices declining to 100% at May 15, 2000, plus accrued interest. At
June 30, 1995, the fair market value of the notes, based on their
closing price on the New York Stock Exchange, was $76.3 million.
<PAGE> 8
<PAGE>
In November 1994, the Company entered into an agreement with
a bank whereby the bank purchased the recently constructed West
Wattenberg Gas Plant from the Company for $21 million and leased it
back. The lease has a term of seven years and includes an option to
repurchase the plant at the end of the lease for $4.2 million. As a
capital lease, the asset and related debt are recorded on the balance
sheet of the Company. In June 1995, the Company sold the West
Wattenberg Gas Plant and certain related assets and relinquished
plant operations to the purchaser. In conjunction with the sale, the
lease will remain in effect until November 1995. At that time, the
lease will be paid with additional borrowings under the revolving
credit facility. As a result of the sale, the Company recorded a
gain of $565,000, net of accrued penalties associated with the lease
early termination.
Scheduled maturities of indebtedness for the next five years
are $813,000 for the remainder of 1995, $17,000 in 1996, zero in
1997, $248.4 million in 1998 and zero in 1999. The long-term portion
of the revolving credit facility is scheduled to expire in 1998;
however, it is management's policy to renew the facility and extend
the maturity on a regular basis.
Cash payments for interest were $2.8 million and $11.7
million, respectively, for the six months ended June 30, 1994 and
1995.
(4) INVESTMENTS
The Company has investments in foreign and domestic energy
companies and long term notes receivable, which at December 31, 1994
and June 30, 1995, had a book cost of $46.5 million and $47.7
million, respectively. The corresponding fair market values were
$48.2 million and $45.3 million at December 31, 1994 and June 30,
1995, respectively. In 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
Per the pronouncement, investments carried on the cost basis must be
adjusted to their market value with a corresponding increase or
decrease to stockholders' equity. The pronouncement does not apply
to investments accounted for by the equity method.
In 1993, the Company acquired 42.8% of the outstanding shares
of Command Petroleum Limited ("Command"), an Australian exploration
and production company, for $18.2 million. The investment is
accounted for by the equity method. The Sydney based company is
listed on the Australian Stock Exchange, and holds interests in
various international exploration and production permits and
licenses. In January 1994, Command completed an offering of 43
million of its common shares, and in February 1994 paid $1.1 million
in cash and issued 2.5 million of its common shares in return for an
incremental interest in a publicly traded Netherlands exploration and
production company which was subsequently sold in the second quarter
of 1995. Additionally in 1994, 51.9 million of stock options were
exercised and 4.7 million partly paid shares were issued. As a
result of these transactions, the Company's ownership in Command was
reduced to 29.0% and a $3.1 million gain was recognized. In 1995,
the Company acquired an additional 4.7 million shares of Command
common stock in exchange for the Company's interest in the Fejaj
Permit area in Tunisia and will receive an additional 4.7 million
shares if a commercial discovery is made as the result of the initial
4,000 meter drilling commitment. As a result of this transaction,
the Company's ownership in Command was increased to 30.0% and a
$602,000 gain was recognized. The Company had retained the
obligation to pay up to $750,000 of the costs incurred by Command in
drilling the first well on the concession. Subsequent to quarter
end, however, Command successfully located farmout partners to drill
this first well which has relieved the Company from any future
commitment related to drilling such well. The market value of the
Company's investment in Command based on Command's closing price at
June 30, 1995 was $24.0 million, compared to a cost basis of $23.5
million.
In early 1993, the Company formed the Permtex joint venture to
develop proven oil fields in the Volga-Urals Basin of Russia. To
finance its portion of planned development expenditures, the Company
sold a portion of its investment in the project to three industry
participants in 1994. As a result, its equity basis investment was
reduced from 50% to 20.6% and a $3.5 million net gain was recorded.
In 1995, the three industry participants paid the final installments
of their contributions to the venture and as a result, the Company
recognized an additional gain of $1.1 million. The Russian
investment had a cost and fair value at June 30, 1995 of $4.5
million.
<PAGE> 9
<PAGE>
In late 1994, the Company formed a consortium to explore the
Tamtsag Basin of eastern Mongolia. In late 1994 and 1995, the
Company sold a portion of its investment to three industry
participants, one of which committed to fund the drilling of two
wells (the first well having been drilled in the second quarter and
found to be noncommercial, with the second well scheduled to be
drilled in the second half of 1995), one of which purchased its
interest for cash and a third participant who assigned its
exploration rights in the basin to the venture. Accordingly, the
Company's equity basis investment was reduced from 100% to 49% and
had a cost and fair value at June 30, 1995 of $1.8 million.
The Company has investments in securities of publicly traded
domestic energy companies, not accounted for by the equity method,
with a total cost at December 31, 1994 and June 30, 1995 of $15.4
million and $15.0 million, respectively. The market value of these
securities at December 31, 1994 and June 30, 1995 approximated $12.2
million and $12.1 million, respectively. Accordingly, at December
31, 1994 and June 30, 1995, investments were decreased by $3.2
million and $2.9 million, stockholders' equity was decreased by $2.1
million and $1.8 million, and deferred taxes payable were decreased
by $1.1 million and $1.1 million, respectively, as required by SFAS
No. 115.
The Company holds $2.9 million in long term notes receivable
due from privately held corporations. All notes are secured by
certain assets, including stock and oil and gas properties. At
December 31, 1994 and June 30, 1995, the fair value of the notes
receivable, based on existing market conditions and the anticipated
future net cash flow related to the notes, approximated their book
value.
(5) OIL AND GAS PROPERTIES AND GAS FACILITIES
The cost of oil and gas properties at December 31, 1994 and
June 30, 1995 includes $23.7 million and $26.4 million, respectively,
of unevaluated leasehold. Such properties are held for exploration,
development or resale and are excluded from amortization. The
following table sets forth costs incurred related to oil and gas
properties and gas processing and transportation facilities:
<TABLE>
<CAPTION>
Six
Year Ended Months Ended
December 31, June 30,
1994 1995
------------ ------------
<S> <C> <C>
Acquisition $ 70,255 $ 6,386
Development 156,912 42,896
Gas processing, transportation and other 46,607 4,378
Exploration 5,514 2,177
----------- -----------
$ 279,288 $ 55,837
=========== ===========
</TABLE>
Development expenditures for the six months ended June 30,
1995 were concentrated primarily in the DJ Basin of Colorado, the
Green River Basin of southern Wyoming, the Giddings Field of
southeast Texas, the Uinta Basin of northeast Utah and the Piceance
Basin of western Colorado. A total of 64 wells were placed on
production in DJ Basin in the first half of 1995 with seven in
progress at quarter end. In the Green River Basin of southern
Wyoming, 9 wells were placed on sales during the six months ended
June 30, 1995 with three in progress at quarter end. In the
horizontal drilling program in the Giddings Field of southeast Texas,
15 wells were placed on sales in the six months ended June 30, 1995,
with two in progress at quarter end. The Uinta Basin development
program in northeast Utah is still in its early stages with 10 wells
placed on sales and three wells abandoned in the first half of 1995.
In the Piceance Basin of western Colorado, 4 wells were placed on
sales with one in progress at quarter end.
During the six months ended June 30, 1995, the Company
expended $6.4 million for domestic acquisitions, of which $4.3
million was for acreage purchases in or around the Company's
operating hubs and $2.1 million for producing properties.
Acquisitions are accounted for utilizing the purchase method. The
pro forma effect of the acquisitions was not material to the
Company's results of operations.
<PAGE> 10
<PAGE>
In June 1995, the Company sold its recently constructed gas
processing plant on the west end of the Wattenberg area of the DJ
Basin along with certain related assets for a sales price of $18.5
million. A net gain of $565,000 was recognized as a result of this
sale. The proforma effect of the disposition was not material to the
Company's results of operations. Subsequent to quarter end, the
Company announced that it had signed a letter of intent covering the
sale of substantially all of its remaining Wattenberg gas gathering
and processing facilities for $63.5 million.
(6) STOCKHOLDERS' EQUITY
A total of 75 million common shares, $.01 par value, are
authorized of which 30.3 million were issued at June 30, 1995. In
1994, the Company issued 6,949,000 shares, with 414,000 shares issued
primarily for the exercise of stock options by employees (for which
122,000 shares were received as consideration in lieu of cash and are
held in treasury) and 6,535,000 shares issued on conversion of all
remaining shares of the 8% preferred. During the six months ended
June 30, 1995, the Company issued 112,000 shares primarily for the
exercise of stock options by employees (for which 12,000 shares were
received as consideration in lieu of cash and are held in treasury).
In 1994, the Company paid first and second quarter dividends at the
rate of $.06 per share and increased the rate to $.065 per share in
the third and fourth quarters. Dividends of $.065 per share were
paid for the first and second quarters of 1995.
A total of 10 million preferred shares, $.01 par value, are
authorized. In 1991, 1.2 million shares of 8% convertible
exchangeable preferred stock were sold through an underwriting. The
net proceeds were $57.4 million. In 1993, 14,000 of the preferred
shares were converted into 77,000 common shares. Effective December
31, 1994, the remaining 8% convertible preferred shares were
converted into 6,535,000 common shares.
In 1993, 4.1 million depositary shares (each representing a
one quarter interest in one share of $100 liquidation value stock) of
6% preferred stock were sold through an underwriting. The net
proceeds were $99.3 million. The stock is convertible into common
stock at $21.00 per share and is exchangeable at the option of the
Company for 6% convertible subordinated debentures on any dividend
payment date. The 6% convertible preferred stock is redeemable at
the option of the Company on or after March 31, 1996. The
liquidation preference is $25.00 per depositary share, plus accrued
and unpaid dividends. The Company paid $10.8 million and $3.1
million, respectively, in preferred dividends during 1994 and the six
months ended June 30, 1995.
The Company maintains a stock option plan for employees
providing for the issuance of options at prices not less than fair
market value. Options to acquire up to three million shares of
common stock may be outstanding at any given time. The specific
terms of grant and exercise are determinable by a committee of
independent members of the Board of Directors. The majority of
currently outstanding options vest over a three-year period (30%,
60%, 100%) and expire five to seven years from date of grant.
In 1990, the shareholders adopted a stock grant and option
plan (the "Directors' Plan") for non-employee Directors of the
Company. The Directors' Plan provides for each non-employee director
to receive 500 common shares quarterly in payment of their annual
retainer. It also provides for 2,500 options to be granted annually
to each non-employee Director. The options vest over a three-year
period (30%, 60%, 100%) and expire five years from date of grant.
At June 30, 1995, a total of 1.8 million options were
outstanding at exercise prices of $6.00 to $20.13 per share. At June
30, 1995, a total of 779,000 of such options were vested having
exercise prices of $6.00 to $20.13 per share. During 1994, 414,000
options were exercised at prices of $4.53 to $13.00 per share, and
2,000 were forfeited. During the six months ended June 30, 1995,
112,000 options were exercised at prices of $4.53 to $13.00 per
share, and 139,000 were forfeited.
Earnings per share are computed by dividing net income, less
dividends on preferred stock, by average common shares outstanding.
Net income (loss) available to common for the six months ended June
30, 1994 and 1995, was $2.8 million and ($8.6) million, respectively.
Differences between primary and fully diluted earnings per share were
insignificant for all periods presented.
<PAGE> 11
<PAGE>
(7) FEDERAL INCOME TAXES
At June 30, 1995, the Company had no liability for foreign
taxes. A reconciliation of the United States federal statutory rate
to the Company's effective income tax rate as they apply to the
provision for 1994 and the benefit for 1995 follows:
<TABLE>
<caption
Six Months Ended June 30,
-------------------------
1994 1995
-------- --------
<S> <C> <C>
Federal statutory rate 35% (35%)
Utilization of net deferred tax (asset) liability (34%) 26%
------ ------
Effective income tax rate 1% (9%)
====== ======
</TABLE>
The effective tax rate for the six months ended June 30, 1995
was a benefit of nine percent. This benefit would have been greater
but was limited to the extent of the net deferred tax liability at
December 31, 1994 of $591,000.
For tax purposes, the Company had net operating loss
carryforwards of $162.6 million at December 31, 1994. These
carryforwards expire between 1997 and 2009. At December 31, 1994,
the Company had alternative minimum tax credit carryforwards of $1.4
million and depletion carryforwards of $1.5 million, both of which
are available indefinitely. Current income taxes shown in the
financial statements reflect estimates of alternative minimum taxes.
(8) MAJOR CUSTOMERS
For the six months ended June 30, 1994 and 1995, Amoco
Production Company accounted for approximately 12% and 10%,
respectively, of revenues. Management believes that the loss of any
individual purchaser would not have a material adverse impact on the
financial position or results of operations of the Company.
(9) DEFERRED CREDITS
In 1992, an institutional investor agreed to contribute $7
million to a partnership formed to monetize Section 29 tax credits to
be realized from the Company's properties, mainly in the DJ Basin.
The initial $3 million was contributed in 1992, an additional $3
million contributed during 1993 and $1 million received in March
1994. In June 1994, the arrangement was extended and an additional
$1.8 million was received. In early 1995, a second investor was
added and the limited partners committed to contribute an additional
$5.0 million of which $2.0 million was received in January 1995. As
a result, this transaction is anticipated to increase cash flow and
net income through 1996. A revenue increase of more than $.40 per
Mcf is realized on production generated from qualified Section 29
properties in this partnership. The Company recognized $1.6 million
and $1.1 million of this revenue during the six months ended June 30,
1994 and 1995, respectively.
(10) COMMITMENTS AND CONTINGENCIES
The Company rents office space and gas compressors at various
locations under non-cancelable operating leases. Minimum future
payments under such leases approximate $1.2 million for the remainder
of 1995, $2.5 million for 1996 and 1997, $2.4 million for 1998, and
$2.0 million for 1999.
In 1993, the Company received a $5.1 million net settlement on
a gas contract dispute. Of the proceeds, $3.5 million was reflected
as other income in 1993, with and additional $610,000 reported as
other income in second quarter 1994. The remainder was reflected as
a reserve for possible contingencies at June 30, 1994 and later in
the year reported as income.
<PAGE> 12
<PAGE>
In April 1995, the Company settled a lawsuit in Harris County,
Texas filed by certain landowners relating to certain alleged
problems at a Company well site. The Company recorded a charge of
$4.4 million during the first quarter to reflect the cost of the
settlement. A primary insurer honored its commitments in full and
participated in the settlement. The Company's excess carriers have
declined, to date, to honor indemnification for the loss. Based on
the advice of counsel, the Company plans to vigorously pursue the
non-participating carriers for the great majority of the cost of
settlement. However, given the time period which may be involved in
resolving the matter, the full amount of the settlement was provided
for in the financial statements in the first quarter of 1995.
In June 1995, the Company recorded a receivable for $1.5
million as a net settlement of a dispute involving a gas processing
agreement. The settlement proceeds were received in July 1995.
The financial statements reflect favorable legal proceedings
only upon receipt of cash, final judicial determination or execution
of a settlement agreement. In April 1993, the Company was granted a
$2.7 million judgment in litigation involving the allocation of
proceeds from a pipeline dispute. On appeal, the appellate court
upheld the verdict but reduced the judgment to approximately $1.4
million. The judgment may be further appealed.
The Company is a party to various other lawsuits incidental to
its business, none of which are anticipated to have a material
adverse impact on its financial position or results of operations.
<PAGE> 13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Effective December 31, 1994, the Company changed its method of
accounting for oil and gas properties from the full cost method to
the successful efforts method. The change was applied retroactively
and prior periods presented have been restated. The following
discussions of operating results are based on those restated amounts.
Total revenues for the three month and six month periods ended
June 30, 1995 declined to $57.5 million and $110.5 million,
respectively. The amounts represented decreases of 11% and 14% as
compared to the respective prior year periods. The revenue decrease
was primarily the result of the Company's decision to suspend third
party gas marketing until the markets recover. However, oil and gas
sales rose 15% for both periods to $38.8 million for the three months
ended June 30, 1995 and $76.4 million for the six months ended June
30, 1995. The increase was due to a 28% increase in equivalent oil
and gas production for both periods. The benefit of these increases
did not fully impact revenues as the average price received per
equivalent barrel dropped 10% for both periods to $10.95 and $10.81
for the three month and six month periods ended June 30, 1995. Net
income for the second quarter was $575,000 as compared to net income
of $3.7 million for the same period in 1994. The decrease was due
primarily to the price decline, which reduced current quarter
revenues by $4.4 million, increased general and administrative costs
and increased interest expense, partially offset by the continued
growth in production. Net loss per common share for the six months
ended June 30, 1995 was $.28 compared to net income of $.12 in 1994.
Average daily production in the second quarter of 1995 climbed
to 12,829 barrels and 157 MMcf (38,944 barrels of oil equivalent),
increases of 4% and 44%, respectively. The production increases
resulted primarily from the Company's continued development program
in 1994 and, to a lesser extent, 1995. During the first six months
of 1995, an additional 133 wells were placed on production with 13
wells in various stages of drilling and completion at June 30, 1995.
The gross margin from production operations was $23.2 million, a 6%
increase over the prior year quarter. Average oil prices rebounded
somewhat to $17.52 per barrel compared to $15.55 received in the
second quarter of 1995. However, that increase was more than offset
by a continued drastic reduction in gas prices. The average gas
price during the quarter was only $1.29 per Mcf, a 22% decrease from
the $1.65 received in second quarter 1994. Second quarter operating
expenses per equivalent barrel (including production taxes) remained
relatively stable at $4.41 compared to $4.35 for the second quarter
of 1994.
The gross margin from gas processing, transportation and
marketing activities decreased by 20% to $3.0 million from $3.7
million in the same quarter of 1994. The decrease is primarily
attributable to the Company's decision to suspend third party gas
marketing until markets recover and increased operating expenses
associated with additional processing capacity without a
proportionate increase in processing revenues. In June 1995, the
Company sold its recently constructed gas processing plant on the
west end of the Wattenberg area of the DJ Basin along with certain
related assets. As a result of the sale, the Company recorded a net
gain of $565,000. The assets included in the sale are part of the
Wattenberg gas gathering and processing facilities which had
previously been disclosed as being offered for sale. Subsequent to
quarter end, the Company announced that it had signed a letter of
intent covering the sale of substantially all of its remaining
Wattenberg gas gathering and processing facilities for $63.5 million.
During the second quarter, transportation throughput for the Wyoming
Systems increased to an average of 53.1 MMcf per day, up from 37.1
MMcf in second quarter 1994. The growth was a direct result of
development drilling in the area.
Other income was $7.3 million in the second quarter of 1995
compared to $2.6 million in 1994. The $7.3 million consists
primarily of $2.3 million from the Company's international
subsidiaries, $1.5 million as a result of a settlement of a dispute
involving a gas processing agreement, $1.5 million in gains on sales
of securities and $1.1 million in gains on property sales.
<PAGE> 14
<PAGE>
G&A expenses, net of reimbursements, for second quarter 1995
represented 5.8% of revenues compared to 3.2% for the same period in
1994. The increase is attributable to the decrease in gas
processing, transportation and marketing revenue which generally has
a smaller percentage of G&A, as well as expense rising due to an
increase in staffing related to development projects taken on
subsequent to the second quarter of 1994.
Interest and other expense was $7.9 million compared to $2.7
million in the three month period ended June 30, 1994. The majority
of the increase is the result of a rise in outstanding debt levels,
due to the increase in capital expenditure projects, at higher
average interest rates.
Depletion, depreciation and amortization expense for the
second quarter increased 14% from the same period in 1994. The
increase, excluding impairments recognized in the second quarter of
1994 of $1.4 million (versus none in 1995), was 19%. This increase
is primarily due to the 28% increase in production as compared to the
same period in 1994. The increase due to increased production was
offset by a lower depletion, depreciation and amortization rate of
$4.82 compared to $5.48 in 1994. The difference in rates is due
primarily to the mix of production shifting towards lower depletion,
depreciation and amortization rate properties.
Development, Acquisition and Exploration
During the six months ended June 30, 1995, the Company
incurred $55.8 million in capital expenditures; including $42.9
million for oil and gas development, $6.4 million for acquisitions of
proved reserves and acreage, $3.1 million for gas facility expansion,
$2.2 million for exploration and $1.2 million for field and office
equipment.
Of the total development expenditures, $10.8 million was
concentrated in the DJ Basin of Colorado. A total of 64 wells were
placed on production there in the first half of 1995 with no dry
holes drilled and seven in progress at quarter end. With the
continued declines in gas prices in 1995, the Company has reduced its
DJ Basin drilling plans for the remainder of 1995 to approximately 37
wells.
The Company expended $32.1 million for other development and
recompletion projects during the six months ended June 30, 1995. In
the Green River Basin of southern Wyoming, 9 wells were placed on
sales with three in progress at quarter end. In the horizontal
drilling program in the Giddings Field of southeast Texas, 15 wells
were placed on sales, with two in progress at quarter end. The Uinta
Basin development program in northeast Utah is still in its early
stages with 10 wells placed on sales and three wells abandoned in the
first half of 1995, with none in progress at quarter end. In the
Piceance Basin of western Colorado, 4 wells were placed on sales,
with one in progress at quarter end.
During the six months ended June 30, 1995, the Company
expended $6.4 million for domestic acquisitions, of which $4.3
million was for acreage purchases in or around the Company's
operating hubs and $2.1 million for producing properties. Although
a number of potential producing property acquisitions are under
review, no individually significant purchases were consummated during
the first half of 1995.
The Company's gas gathering and processing facility operations
incurred $3.1 million of capital expenditures in the first half of
1995. The work was concentrated primarily in the Wattenberg area of
DJ Basin, the Piceance Basin in western Colorado, the Washakie Basin
in southern Wyoming and the Giddings Field in south Texas. In June
1995, the Company sold its recently constructed gas processing plant
on the west end of the Wattenberg area of the DJ Basin along with
certain related assets for a sales price of $18.5 million. A net
gain of $565,000 was recognized as a result of this sale.
Subsequent to quarter end, the Company announced that it had signed
a letter of intent covering the sale of substantially all of its
remaining Wattenberg gas gathering and processing facilities for
$63.5 million.
Exploration costs for the six months ended June 30, 1995 were
$2.2 million, primarily for geological and other studies on the newly
acquired undeveloped acreage. Expenditures of $123,000 were incurred
on international projects. In Russia, commercial production began in
mid 1994 with pipeline construction in the southernmost field in the
contract area now completed. Three industry partners committed
<PAGE> 15
<PAGE>
$11.25 million to the joint venture to fully fund the western
participants' anticipated equity requirements, of which $8.5 million
was received in 1994 and the remainder received in the second quarter
of 1995. In June 1994, a commitment letter was executed with the
Overseas Private Investment Corporation ("OPIC") whereby OPIC will
commit $40 million to the Russian Permtex project. It is expected
that the final OPIC agreement and associated debt financing will be
put in place during the second half of 1995. The Company is also
exploring alternatives to the OPIC financing, including sales of
additional equity interests in the venture. In Mongolia and Tunisia,
seismic acquisition and processing continues. In 1995, agreements
were reached whereby 100% of the Tunisia project was sold to Command
for stock and 51% of the Mongolia properties were sold for a
combination of cash and property rights at gains of $602,000 and
$456,000, respectively. Subsequent to June 30, 1995, a farmout
agreement was reached by Command in Tunisia whereby the Company can
recognize an additional $750,000 gain in the third quarter 1995. The
Company will receive additional proceeds if commercial reserves are
discovered on the planned exploratory well.
Financial Condition and Capital Resources
At June 30, 1995, the Company had total assets of $672.4
million. Total capitalization was $600.0 million, of which 43% was
represented by stockholder's equity, 38% by senior debt, 14% by
subordinated debt and the remainder by deferred taxes and other.
During the six months ended June 30, 1995, net cash provided by
operations was $31.9 million, a decrease of 30% compared to the same
period in 1994. As of June 30, 1995, commitments for capital
expenditures totalled $5.0 million. The Company anticipates that
1995 expenditures for development drilling and gas facilities will
approximate $80 million to $100 million. The level of these and
other future expenditures is largely discretionary, and the amount of
funds devoted to any particular activity may increase or decrease
significantly, depending on available opportunities and market
conditions. The Company plans to finance its ongoing development,
acquisition and exploration expenditures using internally generated
cash flow, asset sales proceeds and existing credit facilities. In
addition, joint ventures or future public and private offerings of
debt or equity securities may be utilized.
The Company maintains a $500 million revolving credit
facility. The facility is divided into a $100 million short-term
portion and a $400 million long-term portion that expires on December
31, 1998. Management's policy is to renew the facility on a regular
basis. Credit availability is adjusted semiannually to reflect
changes in reserves and asset values. The borrowing base available
under the facility at June 30, 1995 was $270 million. In August
1995, the borrowing base will be reduced to $260 million. The
majority of the borrowings under the facility currently bear interest
at LIBOR plus 1% with the remainder at prime. The Company also has
the option to select CD plus 1%. The margin on LIBOR or CD loans
will decrease to .75% if the Company's consolidated senior debt
becomes less than 80% of its tangible net worth. Financial covenants
limit debt, require maintenance of minimum working capital and
restrict certain payments, including stock repurchases, dividends and
contributions or advances to unrestricted subsidiaries. Such
restricted payments are limited by a formula that includes
underwriting proceeds, cash flow and other items. Based on such
limitations, more than $100 million was available for the payment of
dividends and other restricted payments as of June 30, 1995.
In early 1994, the Company executed an agreement with Union
Pacific Resources Corporation ("UPRC") whereby the Company gained the
right to drill wells on UPRC's previously uncommitted acreage in the
Wattenberg area. The transaction significantly increased the
Company's inventory of undeveloped Wattenberg acreage. UPRC retained
a royalty and the right to participate as a 50% working interest
owner in each well, and received warrants to purchase two million
shares of Company stock. On February 8, 1995, the exercise prices
were reset to $21.60 per share and their expiration extended one
year. One million of the warrants expire in February 1998 and the
other million expire in February 1999. For financial reporting
purposes, the warrants were valued at $3.5 million, which was
recorded as an increase to oil and gas properties and capital in
excess of par value. In early 1995, the Company paid UPRC $400,000
for an extension of the time period to drill the commitment wells and
released a portion of the outlying acreage committed to the venture.
<PAGE> 16<PAGE>
In 1992, an institutional investor agreed to contribute $7
million to a partnership formed to monetize Section 29 tax credits to
be realized from the Company's properties, mainly in the DJ Basin.
The initial $3 million was contributed in 1992, an additional $3
million contributed during 1993 and $1 million received in March
1994. In June 1994, the arrangement was extended and an additional
$1.8 million was received. In early 1995, a second investor was
added and the limited partners committed to contribute an additional
$5.0 million. As a result, this transaction is anticipated to
increase cash flow and net income through 1996. A revenue increase
of more than $.40 per Mcf is realized on production generated from
qualified Section 29 properties in this partnership. The Company
recognized $1.6 million and $1.1 million, respectively, of this
revenue during the six months ended June 30, 1994 and 1995.
The Company maintains a program to divest marginal properties
and assets which do not fit its long range plans. During the six
months ended June 30, 1994 and 1995, the Company received $1.8
million and $21.7 million, respectively, in proceeds from sales of
properties. In early 1995, the Company announced that it was
considering the sale of its Wattenberg gas facilities and certain
non-strategic assets to increase its financial flexibility. Included
in the 1995 proceeds are $18.5 million of proceeds related to the
June 1995 sale of the recently constructed gas processing plant on
the west end of the Wattenberg area along with certain related
assets, all of which are part of the Wattenberg gas facilities.
Subsequent to quarter end, the Company announced that it had signed
a letter of intent covering the sale of substantially all of its
remaining Wattenberg gas gathering and processing facilities for
$63.5 million.
The Company believes that its capital resources are adequate
to meet the requirements of its business. However, future cash flows
are subject to a number of variables including the level of
production and oil and gas prices, and there can be no assurance that
operations and other capital resources will provide cash in
sufficient amounts to maintain planned levels of capital expenditures
or that increased capital expenditures will not be undertaken.
Inflation and Changes in Prices
While certain of its costs are affected by the general level
of inflation, factors unique to the petroleum industry result in
independent price fluctuations. Over the past five years,
significant fluctuations have occurred in oil and gas prices.
Although it is particularly difficult to estimate future prices of
oil and gas, price fluctuations have had, and will continue to have,
a material effect on the Company.
The following table indicates the average oil and gas prices
received over the last five years and highlights the price
fluctuations by quarter for 1994 and 1995. Average gas prices prior
to 1994 exclude Mississippi gas production sold under a high price
contract. In 1993, the Company renegotiated the gas contract and
received a substantial payment. Average price computations exclude
contract settlements and other nonrecurring items to provide
comparability. Average prices per equivalent barrel indicate the
composite impact of changes in oil and gas prices. Natural gas
production is converted to oil equivalents at the rate of 6 Mcf per
barrel.
<PAGE> 17<PAGE>
<TABLE>
<CAPTION>
Average Prices
------------------------------------
Crude Oil Per
and Natural Equivalent
Liquids Gas Barrel
--------- --------- ------------
(Per Bbl) (Per Mcf)
<S> <C> <C> <C>
ANNUAL
------
1990 $ 23.65 $ 1.69 $ 15.61
1991 20.62 1.68 14.36
1992 18.87 1.74 13.76
1993 15.41 1.94 13.41
1994 14.80 1.67 11.82
QUARTERLY
---------
1994
--------
First $ 12.02 $ 1.98 $ 11.93
Second 15.55 1.65 12.20
Third 16.21 1.53 11.83
Fourth 15.30 1.56 11.39
1995
--------
First $ 16.40 $ 1.31 $ 10.66
Second 17.52 1.29 10.95
</TABLE>
In June 1995, the Company received an average of $16.99 per
barrel and $1.42 per Mcf for its production.
<PAGE> 18<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
10.11.1 First Amendment dated as of May 1, 1995 to Fifth
Restated Credit Agreement.
10.11.2 Second Amendment dated as of June 30, 1995 to
Fifth Restated Credit Agreement.
10.12.1 Second Amendment dated June 30, 1995 to Facility
Agreement.
12 Computation of Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.
27 Financial Data Schedule
(b) Reports on Form 8-K -
No reports on Form 8-K were filed by Registrant during the
quarter ended June 30, 1995.
<PAGE> 19
<PAGE>
SIGNATURES
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.
SNYDER OIL CORPORATION
By (James H. Shonsey)
----------------------------------
James H. Shonsey, Vice President
August 10, 1995
<PAGE> 20
<PAGE>
EXHIBIT 10.11.1
As of May 1, 1995
Snyder Oil Corporation
777 Main Street, Suite 2500
Fort Worth, Texas 76102
Re: Fifth Restated Credit Agreement dated as of June 30,
1994, by and among Snyder Oil Corporation, NationsBank
of Texas, N.A. as Agent and NationsBank of Texas, N.A.,
Bank One, Texas, N.A., Wells Fargo Bank, N.A. and Texas
Commerce Bank National Association as Banks (the
"Credit Agreement"); Unless otherwise defined herein,
all terms used herein with their initial letter
capitalized shall have the meaning set forth in the
Credit Agreement.
Gentlemen:
Borrower has requested that the Banks extend the Facility B
Termination Date to April 29, 1996. Borrower has also requested that
the Banks consent to Borrower's computation and reporting of
compliance with the covenants contained in Article X of the Credit
Agreement based on a "successful efforts" method of accounting rather
than the "full cost" method of accounting historically used by
Borrower. This letter sets forth the agreements of the Banks with
respect to Borrower's requests. This letter also sets forth certain
agreements of the Borrower and the Banks with respect to the amount
of the Total Borrowing Base and the amounts of the Facility A
Borrowing Base and the Facility B Borrowing Base for the period from
May 1, 1995 until the next Determination Date. Finally, this letter
contains an amendment to certain provisions of the Credit Agreement
related to the method of establishing the Borrowing Base.
1. Extension of Facility B Termination Date. In accordance
with Section 2.9(b) of the Credit Agreement, the Facility B
Termination Date is hereby extended from October 30, 1995 to April
29, 1996. At Borrower's request, the Banks hereby defer compliance
with the condition contained in Section 2.9(b) of the Credit
Agreement that, in connection with the extension of the Facility B
Termination Date, corresponding amendments be executed to each
Mortgage required by Section 5.1 of the Credit Agreement. In that
regard, Borrower acknowledges and agrees that (a) the Banks have not
permanently waived the mortgage amendment requirements of Section
2.9(b), but have only agreed to defer compliance with such
requirements, and (b) within fifteen (15) days following request by
Required Banks, Borrower shall execute (and cause DJ Partners and the
appropriate Restricted Subsidiaries [as applicable] to execute) such
amendments.
2. Method of Accounting. Borrower has advised the Banks that
it has changed its method of accounting from a "full cost" method of
accounting to a "successful efforts" method of accounting. The Banks
hereby consent to Borrower's computation and reporting of compliance
with the covenants contained in Article X of the Credit Agreement
based on the "successful efforts" method of accounting, and the Banks
hereby waive the contrary provisions of Section 1.2 of the Credit
Agreement.
3. Borrowing Base. In accordance with Section 4.1 and 4.4 of
the Credit Agreement, effective May 1, 1995 and continuing until the
earlier of August 1, 1995 or the next Determination Date, the Total
Borrowing Base shall be $270,000,000, allocated as follows:
$170,000,000 to the Facility A Borrowing Base; and $100,000,000 to
the Facility B Borrowing Base. Unless the Total Borrowing Base is
redetermined pursuant to a Special Determination or Determination (a)
prior to August 1, 1995, on August 1, 1995 the Total Borrowing Base
shall reduce to $260,000,000, allocated as follows: $160,000,000 to
the Facility A Borrowing Base and $100,000,000 to the Facility B
Borrowing Base, and (b) on or prior to November 1, 1995, on November
1, 1995 the Total Borrowing Base shall reduce to $250,000,000
allocated as follows: $150,000,000 to the Facility A Borrowing Base
and $100,000,000 to the Facility B Borrowing Base.
4. Amendment to Section 4.2 of Credit Agreement. Section 4.2
of the Credit Agreement shall be and hereby is amended by deleting
the sixth (6th) sentence of such Section in its entirety and
inserting the following in place thereof:
In the event the Banks are unable to agree on the Total
Borrowing Base to be effective on the next succeeding
Determination Date within such ten (10) day period, the Total
Borrowing Base which becomes effective on the next Determination
Date shall be determined in the following manner: (a) the Agent
shall determine the weighted average of the Total Borrowing Base
requested by each Bank; (b) to the extent that (i) the weighted
average of the Total Borrowing Base requested by all Banks as
determined pursuant to clause (a) preceding would result in an
increase in the Total Borrowing Base then in effect, the Agent
shall determine the weighted average of the Total Borrowing Base
requested by all Banks other than the Bank which requested the
greatest increase in the Total Borrowing Base (such Bank is
hereafter referred to as the "Apex Bank"), and (w) to the extent
that the Apex Bank has requested a Total Borrowing Base which is
greater than one-hundred ten percent (110%) of the weighted
average of the Total Borrowing Base requested by all Banks other
than the Apex Bank, the Total Borrowing Base to be effective on
the next Determination Date shall be the weighted average of the
Total Borrowing Base requested by all Banks other than the Apex
Bank; and (x) to the extent that the Apex Bank has requested a
Total Borrowing Base which is not greater than one-hundred ten
percent (110%) of the weighted average of the Total Borrowing
Base requested by all Banks other than the Apex Bank, the Total
Borrowing Base to be effective on the next Determination Date
shall be the weighted average of the Total Borrowing Base
requested by all Banks as determined pursuant to clause (a)
preceding, and (ii) the weighted average of the Total Borrowing
Base requested by all Banks as determined pursuant to clause (a)
preceding would result in a decrease in the Total Borrowing Base
then in effect, the Agent shall determine the weighted average
of the Total Borrowing Base requested by all Banks other than
the Bank which requested the greatest decrease in the Total
Borrowing Base (such Bank is hereafter referred to as the "Nadir
Bank"), and (y) to the extent that the Nadir Bank has requested
a Total Borrowing Base which is less than ninety percent (90%)
of the weighted average of the Total Borrowing Base requested by
all Banks other than the Nadir Bank, the Total Borrowing Base to
be effective on the next Determination Date shall be the
weighted average of the Total Borrowing Base requested by all
Banks other than the Nadir Bank, and (z) to the extent that the
Nadir Bank has requested a Total Borrowing Base which is not
less than ninety percent (90%) of the weighted average of the
Total Borrowing Base requested by all Banks other than the Nadir
Bank, the Total Borrowing Base to be effective on the next
Determination Date shall be the weighted average of the Total
Borrowing Base requested by all Banks as determined pursuant to
clause (a) preceding. For purposes of clauses (a), (b)(i)(x)
and (b)(ii)(z) preceding, "weighted average" shall be determined
by reference to that percentage of the Total Commitment
represented by each Bank's Commitment. For purposes of clause
(b)(i)(w) preceding, "weighted average" shall be determined by
reference to that percentage of the sum of the Commitments of
all Banks other than the Apex Bank represented by each Bank's
(other than the Apex Bank's) Commitment. For purposes of clause
(b)(ii)(y) preceding, "weighted average" shall be determined by
reference to that percentage of the sum of the Commitments of
all Banks other than the Nadir Bank represented by each Bank's
(other than the Nadir Bank's) commitment.
The extension granted by the Banks in paragraph 1 above, the
waiver by the Banks contained in paragraph 2 above and the approval
of the Banks contained in paragraph 3 above are based on, and subject
to, the following representations, warranties and agreements of
Borrower:
A. Borrower hereby represents and warrants to Agent and each
Bank that each representation and warranty of Borrower and the
Restricted Subsidiaries contained in the Loan Papers are true
and correct in all material respects as of the date hereof
(except to the extent that such representations and warranties
are expressly made as of a particular date, in which event such
representations and warranties were true and correct as of such
date).
B. Borrower hereby represents and warrants to Agent and each
Bank that neither a Default nor an Event of Default has occurred
which is continuing.
C. Borrower acknowledges that nothing contained herein shall
obligate any Bank to grant any subsequent extension of the
Facility B Termination Date or to grant any subsequent waiver of
Section 1.2 of the Credit Agreement.
Borrower's acknowledgement of and agreement to the
representations, warranties, and agreements set forth in this
letter shall be evidenced by Borrower's execution of a
counterpart of this letter in the space indicated below and
Borrower's delivery of such counterpart to Agent. This letter
and the extension and agreements of the Banks herein contained
shall be effective as of May 1, 1995, when counterparts of this
letter have been executed by Borrower and all Banks and
delivered to Agent. It is not necessary that all signatures
appear on the same counterpart. Facsimiles shall be effective
as originals. If counterparts of this letter are executed by
all Banks, but no counterpart of this letter is executed by
Borrower by 5:00 p.m., Dallas, Texas time, May 20, 1995, all
obligations of the Banks hereunder shall immediately terminate
and shall be of no force or effect.
Very truly yours,
NationsBank of Texas, N.A.
By: /s/ E. Murphy Markham, IV
Its: Senior Vice President
Bank One, Texas, N.A.
By: /s/ Brad Bartek
Its: Vice President
Wells Fargo Bank, N.A.
By: /s/ Charles D. Kirkham
Its: Vice President
Texas Commerce Bank National Association
By: /s/ Timothy E. Perry
Its: Senior Vice President
Acknowledged and Agreed as of the
1st day of May, 1995
Snyder Oil Corporation
By: /s/ Peter E. Lorenzen
Its: Vice President
EXHIBIT 10.11.2
SECOND AMENDMENT TO FIFTH RESTATED CREDIT AGREEMENT
This Second Amendment to Fifth Restated Credit Agreement (this
"Second Amendment") is entered into as of the 30th day of June, 1995,
by and among Snyder Oil Corporation ("Borrower"), NationsBank of
Texas, N.A., as Agent ("Agent"), and NationsBank of Texas, N.A., Bank
One, Texas, N.A., Wells Fargo Bank, N.A. and Texas Commerce Bank
National Association as Banks (the "Banks").
W I T N E S E T H:
WHEREAS, Borrower, Agent and the Banks are parties to that
certain Fifth Restated Credit Agreement dated as of June 30, 1994, as
amended by that certain letter agreement by and among Borrower and
the Banks dated as of May 1, 1995 (as amended, the "Credit
Agreement") (unless otherwise defined herein, all terms used herein
with their initial letter capitalized shall have the meaning given
such terms in the Credit Agreement); and
WHEREAS, pursuant to the Credit Agreement the Banks have made
certain Loans to Borrower and the Agent has issued certain Letters of
Credit on behalf of Borrower; and
WHEREAS, Borrower has requested that certain provisions of the
Credit Agreement, including, without limitation, Sections 9.5 and
10.4 and related definitions be amended in certain respects; and
WHEREAS, subject to the terms and conditions herein contained,
the Banks have agreed to Borrower's requests.
NOW THEREFORE, for and in consideration of the mutual covenants
and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Borrower, Agent and each Bank hereby
agree as follows:
Section 1. Amendments. Subject to the satisfaction of each
condition precedent set forth in Section 2 hereof and in reliance on
the representations, warranties, covenants and agreements contained
in this Second Amendment, the Credit Agreement shall be amended
effective June 30, 1995 (the "Effective Date") in the manner provided
in this Section 1.
1.1. Amendment to Definitions. The definitions of "Adjusted
Consolidated Cash Flow," "Consolidated Total Covered Debt" and "Loan
Papers" contained in Section 1.1 of the Credit Agreement shall be
amended to read in full as follows:
"Adjusted Consolidated Cash Flow" means, with respect to
Borrower for any time period, Consolidated Cash Flow of Borrower
for such time period, adjusted, however, to (a) reflect all
revenues and expenses (including lease operating expense,
severance taxes, additional overhead and other expenses)
attributable to material oil and gas properties purchased by
Borrower or any of its Subsidiaries after the first day of such
period as if such properties had been owned by Borrower or such
Subsidiary on the first day of such period, (b) exclude all (i)
expenses in an amount not exceeding $4,341,000 incurred by
Borrower in its fiscal quarters ending June 30, 1995 and March
31, 1996 in connection with the settlement of certain litigation
pending against Borrower in the District Court of Harris County,
Texas styled Jerry Wayne Roberson, et al. v. Snyder Oil
Corporation, et al., and (ii) recoveries made of such expenses
by Borrower or any of its Subsidiaries under insurance policies.
As used in this definition, "material oil and gas properties"
means oil and gas properties purchased for a purchase price of
not less than $25,000,000.
"Consolidated Total Covered Debt" means with respect to Borrower
at any time, (a) the consolidated Debt of Borrower and its
Consolidated Subsidiaries at such time, plus (b) Consolidated
Current Liabilities of Borrower and its Consolidated
Subsidiaries in excess of Consolidated Current Assets of
Borrower and its Consolidated Subsidiaries at such time, minus
(c) Debt of Borrower at such time under the NBL Lease.
"Loan Papers" means this Agreement, the Letter Agreement, the
Second Amendment, the Notes, the Mortgages, the Restricted
Subsidiary Guarantees and all other certificates, documents or
instruments delivered in connection with this Agreement, as the
foregoing may be amended from time to time.
1.2. Additional Definitions. Section 1.1 of the Credit
Agreement shall be amended to add the following definitions to such
Section:
"Letter Agreement" means that certain letter agreement dated as
of May 1, 1995 by and between Borrower and the Banks, pursuant
to which, among other things, Section 4.2 was amended in certain
respects.
"NBL Lease" means, collectively, (a) that certain Master
Equipment Lease Agreement dated November 3, 1994 by and between
NationsBanc Leasing Corporation and Borrower, and (b) that
certain Equipment Lease Schedule No. 1 dated November 3, 1994,
by and between NationsBanc Leasing Corporation and Borrower, as
amended by that certain First Amendment to Equipment Lease
Schedule No. 1 dated December 30, 1994, pursuant to which
Borrower leases certain equipment comprising a part of the West
Plant more particularly described therein.
"Second Amendment" means that certain Second Amendment to Fifth
Restated Credit Agreement dated as of June 30, 1995, by and
among Borrower, Agent and the Banks.
"West Plant" means that certain 80 MMSCFD Gas Processing Plant,
associated inlet system, and high pressure gas pipeline commonly
known as the "West Plant", and located in the SE/4 of Section 8,
Township 3 North, Range 66 West, Weld County, Colorado.
"West Plant Documents" means (a) that certain Purchase and Sale
Agreement dated June 30, 1995 by and between Borrower and Amoco
Production Company, (b) that certain Asset Sale and Purchase
Contract dated June 30, 1995, by and between Borrower and KN Gas
Gathering, Inc., and (c) that certain Consent and Agreement
dated June 30, 1995, by and among Borrower, NationsBanc Leasing
Corporation, Amoco Production Company and KN Gas Gathering, Inc.
1.3. Sale of the West Plant. Section 9.5 of the Credit
Agreement shall be amended to read in full as follows:
SECTION 9.5. Asset Dispositions. Except as herein provided,
neither Borrower, any Restricted Subsidiary nor DJ Partners,
L.P. shall sell, lease, abandon or otherwise transfer any of its
assets to any other Person other than pursuant to an Exempt
Transfer. Borrower, the Restricted Subsidiaries and DJ
Partners, L.P. shall be permitted to sell or otherwise dispose
of any asset other than (a) oil and gas properties, (b) Related
Assets, (c) debt and equity securities issued by any Restricted
Subsidiary, and (d) Other Borrowing Base Property. Borrower,
the Restricted Subsidiaries and DJ Partners, L.P. may sell oil
and gas assets, Related Assets and Other Borrowing Base
Property; provided, that (x) during the period between the
Periodic Determination occurring as of May 1, 1995 and the
Periodic Determination occurring on or around November 1, 1995,
Borrower, the Restricted Subsidiaries and DJ Partners, L.P. may
only sell (i) Borrower's interest in the West Plant pursuant to
the West Plant Documents as in effect on June 30, 1995, (ii) oil
and gas properties, Related Assets (in addition to the West
Plant) and Other Borrowing Base Properties with an aggregate
value of $5,000,000, and (iii) oil and gas properties, Related
Assets and other Borrowing Base Properties in addition to assets
sold pursuant to clauses (i) and (ii) preceding provided, that
(A) prior to selling any such additional assets, Borrower shall
give Banks fifteen (15) days written notice prior to the
effective date of any such sale, (B) Banks shall be permitted to
make a Special Determination (in addition to Banks' right to
make a Special Determination pursuant to Section 4.3 hereof) of
the Borrowing Base in connection with any such sale, and (C)
simultaneously with the completion of such sale, Borrower shall
be required to reduce the outstanding principal balance of the
Loans by an amount sufficient to eliminate any Borrowing Base
Deficiency resulting from such Special Determination, and (y)
the aggregate value of all oil and gas properties, Related
Assets and Other Borrowing Base Property sold by Borrower, the
Restricted Subsidiaries and DJ Partners, L.P. in transactions
which are not Exempt Transfers during any period between
Periodic Determinations commencing with the period between the
Periodic Determinations scheduled to occur on or around November
1, 1995 and May 1, 1996 shall not exceed the sum of (i) the
greater of (A) $10,000,000, or (B) five percent (5%) of the
Recognized Value of all oil and gas properties and Related
Assets held by Borrower and the Restricted Subsidiaries as
reflected on the most recent Reserve Report and Related Asset
Report delivered to the Banks prior to the commencement of such
period, plus (z) the Recognized Value of all proved, developed,
producing oil and gas reserves acquired by Borrower and
Restricted Subsidiaries during such period. The Recognized Value
of all proved, developed, producing reserves acquired by
Borrower during any period between Periodic Determinations shall
be determined by Borrower; provided that such value shall be
subject to verification and adjustment by Required Banks if the
value asserted by Borrower exceeds $5,000,000. For purposes of
determining compliance with this Section 9.5, the value of oil
and gas properties, Related Assets and Other Borrowing Base
Property sold for cash shall be the sales price of the
properties sold. The value of oil and gas properties sold for
consideration other than cash shall be the amount which should
be reflected on Borrower's books in accordance with GAAP as
"proceeds from the sale of properties". Farmouts of undeveloped
properties will not be considered sales or dispositions for
purposes of this Section 9.5 until the farmee earns a right to
an assignment of the underlying property.
1.4. Adjusted Consolidated Cash Flow Coverage of Borrower.
Section 10.4 of the Credit Agreement shall be amended to read in full
as follows:
SECTION 10.4. Adjusted Consolidated Cash Flow Coverage of
Borrower. If as of March 31, 1995, June 30, 1995 or September
30, 1995, Borrower's Adjusted Consolidated Cash Flow for (a) the
fiscal quarter then ending, is less than four percent (4%) of
Borrower's Consolidated Total Covered Debt as of such date
exclusive of such portion of Consolidated Total Covered Debt
with respect to which Exempt Subsidiaries are the only obligors,
or (b) any period of four (4) fiscal quarters then ending is
less than nineteen percent (19%) of Borrower's Consolidated
Total Covered Debt as of such date exclusive of such portion of
Consolidated Total Covered Debt with respect to which Exempt
Subsidiaries are the only obligors, then, in either event,
Borrower will, prior to the expiration of the applicable Special
Cash Flow Cure Period, reduce the principal balance of the Loans
to an amount which would cause Borrower's Adjusted Consolidated
Cash Flow for such quarter and period of four fiscal quarters to
exceed the percentages set forth herein of Borrower's
Consolidated Total Covered Debt as so reduced. If, as of the
end of any fiscal quarter ending on or after December 31, 1995,
the aggregate Adjusted Consolidated Cash Flow of Borrower for
(y) the fiscal quarter then ended is less than five percent (5%)
of Borrower's Consolidated Total Covered Debt as of the end of
such fiscal quarter exclusive of such portion of Consolidated
Total Covered Debt with respect to which Exempt Subsidiaries are
the only obligors, or (z) the four (4) fiscal quarters then
ended is less than twenty five percent (25%) of Borrower's
Consolidated Total Covered Debt as of the end of such fiscal
quarter exclusive of such portion of Consolidated Total Covered
Debt with respect to which Exempt Subsidiaries are the only
obligors, then, in either event, Borrower will, prior to the
expiration of the applicable Special Cash Flow Cure Period,
reduce the principal balance of the outstanding Loans to an
amount which would cause Borrower's Adjusted Consolidated Cash
Flow for such quarter and period of four fiscal quarters to
exceed the percentages set forth herein of Borrower's
Consolidated Total Covered Debt as so reduced.
SECTION 2. Conditions Precedent to Effectiveness of Amendments.
The amendments to the Credit Agreement contained in Section 1 of
this Second Amendment shall be effective only upon the satisfaction
of each of the conditions set forth in this Section 2. If each
condition set forth in this Section 2 has not been satisfied by the
Effective Date, this Second Amendment and all obligations of the
Banks and Agent contained herein shall, at the option of Majority
Banks, terminate.
2.1 Corporate Existence and Authority. Borrower shall have
delivered to Agent such resolutions, certificates and other documents
as Agent shall request relative to the authorization, execution and
delivery by Borrower of this Second Amendment and the West Plant
Documents.
2.2 Certificate Regarding Representations and Warranties.
Borrower shall have delivered to Agent a certificate of its vice
president of finance, chief financial officer or chief accounting
officer certifying that each representation and warranty contained in
(a) the Credit Agreement, (b) this Second Amendment, (c) each of the
other Loan Papers, and (d) the West Plant Documents is true and
correct and will be true and correct after giving effect to the
amendments contained in Section 1 hereof.
2.3 West Plant Documents. Borrower shall have delivered to
Agent a copy of each West Plant Document, together with a certificate
from an authorized officer of Borrower certifying that such copies
are accurate and complete and represent the final understanding and
agreement of the parties with respect to the subject matter thereof.
SECTION 3. Representations and Warranties of Borrower. To
induce the Banks and Agent to enter into this Second Amendment,
Borrower hereby represents and warrants to Agent as follows:
(a) Each representation and warranty of Borrower contained in
the Credit Agreement and the other Loan Papers is true and correct on
the date hereof and will be true and correct after giving effect to
the amendments set forth in Section 1 hereof.
(b) The execution, delivery and performance by Borrower of this
Second Amendment are within the Borrower's corporate powers, have
been duly authorized by necessary action, require no action by or in
respect of, or filing with, any governmental body, agency or official
and do not violate or constitute a default under any provision of
applicable law or any Material Agreement binding upon Borrower or the
Subsidiaries of Borrower or result in the creation or imposition of
any Lien upon any of the assets of Borrower or the Subsidiaries of
Borrower except Permitted Encumbrances.
(c) This Second Amendment constitutes the valid and binding
obligation of Borrower enforceable in accordance with its terms,
except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditor's rights
generally, and (ii) the availability of equitable remedies may be
limited by equitable principles of general application.
(d) Borrower has provided the Agent with a true and correct copy
of all of the West Plant Documents including all amendments and
modifications thereto. No rights or obligations of any party to any
of such West Plant Documents have been waived, and no party to any of
such West Plant Documents is in default of its obligations
thereunder. Each of such West Plant Documents is a valid, binding
and enforceable obligation of the parties thereto in accordance with
its terms and is in full force and affect.
SECTION 4. Miscellaneous.
4.1 No Defenses. Borrower hereby represents and warrants to
the Banks that there are no defenses to payment, counterclaims or
rights of set-off with respect to the Loans existing on the date
hereof.
4.2 Reaffirmation of Loan Papers; Extension of Liens. Any and
all of the terms and provisions of the Credit Agreement and the Loan
Papers shall, except as amended and modified hereby, remain in full
force and effect. Borrower hereby extends the Liens securing the
Obligations until the Obligations have been paid in full, and agrees
that the amendments and modifications herein contained shall in no
manner affect or impair the Obligations or the Liens securing payment
ad performance thereof.
4.3 Parties in Interest. All of the terms and provisions of
this Second Amendment shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
4.4 Legal Expenses. Borrower hereby agrees to pay on demand
all reasonable fees and expenses of counsel to Agent incurred by
Agent, in connection with the preparation, negotiation and execution
of this Second Amendment and all related documents.
4.5 Counterparts. This Second Amendment may be executed in
counterparts, and all parties need not execute the same counterpart.
However, no party shall be bound by this Second Amendment until all
parties have executed a counterpart. Facsimiles shall be effective
as originals.
4.6 Complete Agreement. THIS SECOND AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
4.7 Headings. The headings, captions and arrangements used in
this Second Amendment are, unless specified otherwise, for
convenience only and shall not be deemed to limit, amplify or modify
the terms of this Second Amendment, nor affect the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective authorized officers
on the date and year first above written.
BORROWER:
SNYDER OIL CORPORATION,
a Delaware corporation
By: /s/ James H. Shonsey
---------------------------
James H. Shonsey
Vice President, Finance
AGENT:
NATIONSBANK OF TEXAS, N.A.
By: /s/ E. Murphy Markham IV
---------------------------
Its: Senior Vice President
BANKS:
NATIONSBANK OF TEXAS, N.A.
By: /s/ Emurphy Markham IV
--------------------------
Its: Senior Vice President
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ Timothy E. Perry
--------------------------
Its: Senior Vice President
BANK ONE, TEXAS, N.A.
By: /s/ Brad Bartek
--------------------------
Its: Vice President
WELLS FARGO BANK, N.A.
By: /s/ Charles D. Kirkhman
--------------------------
Its: Vice President
EXHIBIT 10.12.1
SECOND AMENDMENT TO FACILITY AGREEMENT
This Second Amendment to Facility Agreement (this "Second
Amendment") is entered into as of the 30th day of June, 1995, by and
between Snyder Oil Corporation, a Delaware corporation ("Lessee") and
NationsBanc Leasing Corporation, a North Carolina corporation
("Lessor").
W I T N E S E T H:
WHEREAS, Lessee and Lessor are parties to that certain Facility
Agreement dated as of November 3, 1994, as amended by that certain
First Amendment to Facility Agreement by and between Lessee and
Lessor dated as of December 30, 1994 (as amended, the "Facility
Agreement") (unless otherwise defined herein, all terms used herein
with their initial letter capitalized shall have the meaning given
such terms in the Facility Agreement); and
WHEREAS, pursuant to the Facility Agreement, the Lessee has made
certain covenants, agreements, representations and warranties with
respect to an equipment leasing transaction between Lessor and
Lessee; and
WHEREAS, Lessee has requested that certain provisions of the
Facility Agreement, including, without limitation, Section 6.4
thereof and certain related definitions be amended in certain
respects; and
WHEREAS, subject to the terms and conditions herein contained,
Lessor has agreed to Lessee's requests.
NOW THEREFORE, for and in consideration of the mutual covenants
and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Lessee and Lessor hereby agree as
follows:
Section 1. Amendments. Subject to the satisfaction of each
condition precedent set forth in Section 2 hereof and in reliance on
the representations, warranties, covenants and agreements contained
in this Second Amendment, the Facility Agreement shall be amended
effective June 30, 1995 (the "Effective Date") in the manner provided
in this Section 1.
1.1. Amendment to Definitions. The definitions of "Adjusted
Consolidated Cash Flow," "Consolidated Total Covered Debt," "Senior
Credit Agreement," and "Transaction Papers" contained in Section 1.1
of the Facility Agreement shall be amended to read in full as
follows:
"Adjusted Consolidated Cash Flow" means, with respect to Lessee
for any time period, Consolidated Cash Flow of Lessee for such
time period, adjusted, however, to (a) reflect all revenues and
expenses (including lease operating expense, severance taxes,
additional overhead and other expenses) attributable to material
oil and gas properties purchased by Lessee or any of its
Subsidiaries after the first day of such period as if such
properties had been owned by Lessee or such Subsidiary on the
first day of such period, and (b) exclude all (i) expenses in an
amount not exceeding $4,341,000 incurred by Lessee in its fiscal
quarters ending June 30, 1995 and March 31, 1996 in connection
with the settlement of certain litigation pending against
Borrower in the District Court of Harris County, Texas styled
Jerry Wayne Roberson, et al. v. Snyder Oil Corporation, et al.,
and (ii) recoveries made of such expenses by Lessee or any of
its Subsidiaries under insurance policies. As used in this
definition, "material oil and gas properties" means oil and gas
properties purchased for a purchase price of not less than
$25,000,000.
"Consolidated Total Covered Debt" means with respect to Lessee
at any time, (a) the consolidated Debt of Lessee and its
Consolidated Subsidiaries at such time, plus (b) Consolidated
Current Liabilities of Lessee and its Consolidated Subsidiaries
in excess of Consolidated Current Assets of Lessee and its
Consolidated Subsidiaries at such time, minus (c) Debt of Lessee
at such time under the Master Lease.
"Senior Credit Agreement" means the Fifth Restated Credit
Agreement dated as of June 30, 1994, by and among Lessee,
NationsBank of Texas, N.A. and the Banks from time to time
parties thereto as the same was amended by (i) that certain
letter agreement dated as of May 1, 1995 by and among Lessee and
the Banks, and (ii) that certain Second Amendment to Fifth
Restated Credit Agreement dated as of June 30, 1995, by and
among Lessee, NationsBank of Texas, N.A. and the Banks, as the
same may hereafter be amended, modified, renewed, extended,
restated, increased or replaced from time to time, including,
without limitation, any replacement thereof entered into with
banks or other financial institutions which are not parties to
the Senior Credit Agreement as in effect on the date hereof.
"Transaction Papers" means this Agreement, the Master Lease, the
Site Lease, the Environmental Indemnity Agreement, the First
Amendment, the Second Amendment and all other documents,
instruments, agreements or certificates now or at any time
hereafter delivered in connection with this Agreement, the
Master Lease, the Site Lease, the Environmental Indemnity
Agreement, the First Amendment and the Second Amendment, as the
same may hereinafter be amended, modified or reinstated from
time to time.
1.2. Additional Definitions. Section 1.1 of the Facility
Agreement shall be amended to add the following definitions to such
Section:
"First Amendment" means that certain First Amendment to Facility
Agreement dated as of December 30, 1994, by and between Lessee
and Lessor.
"Second Amendment" means that certain Second Amendment to
Facility Agreement dated as of June 30, 1995, by and between
Lessee and Lessor.
1.3. Adjusted Consolidated Cash Flow Coverage of Lessee.
Section 6.4 of the Facility Agreement shall be amended to read in
full as follows:
SECTION 6.4. Adjusted Consolidated Cash Flow Coverage of
Lessee. If, as of March 31, 1995, June 30, 1995 or September
30, 1995, Lessee's Adjusted Consolidated Cash Flow for (a) the
fiscal quarter then ending, is less than four percent (4%) of
Lessee's Consolidated Total Covered Debt as of such date, or (b)
any period of four (4) fiscal quarters then ending is less than
nineteen percent (19%) of Lessee's Consolidated Total Covered
Debt as of such date, then, in either event, Lessee will, prior
to the expiration of the applicable Special Cash Flow Cure
Period, reduce the principal balance on its outstanding Debt to
an amount which would cause Lessee's Adjusted Consolidated Cash
Flow for such quarter and period of four (4) fiscal quarters to
exceed the percentages set forth herein of Lessee's Consolidated
Total Covered Debt as so reduced. If, as of the end of any
fiscal quarter ending on or after December 31, 1995, the
aggregate Adjusted Consolidated Cash Flow of Lessee for (y) the
fiscal quarter then ended is less than five percent (5%) of
Lessee's Consolidated Total Covered Debt as of the end of such
fiscal quarter, or (z) the four (4) fiscal quarters then ended
is less than twenty five percent (25%) of Lessee's Consolidated
Total Covered Debt as of the end of such fiscal quarter, then,
in either event, Lessee will, prior to the expiration of the
applicable Special Cash Flow Cure Period, reduce the principal
balance on its outstanding Debt to an amount which would cause
Lessee's Adjusted Consolidated Cash Flow for such quarter and
period of four (4) fiscal quarters to exceed the percentages set
forth herein of Lessee's Consolidated Total Covered Debt as so
reduced.
SECTION 2. Conditions Precedent to Effectiveness of Amendments.
The amendments to the Facility Agreement contained in Section 1 of
this Second Amendment shall be effective only upon the satisfaction
of each of the conditions set forth in this Section 2. If each
condition set forth in this Section 2 has not been satisfied by the
Effective Date, this Second Amendment and all obligations of Lessee
contained herein shall, at the option of Lessor, terminate.
2.1 Corporate Existence and Authority. Lessee shall have
delivered to Lessor such resolutions, certificates and other
documents as Lessor shall request relative to the authorization,
execution and delivery by Lessee of this Second Amendment.
2.2 Certificate Regarding Representations and Warranties.
Lessee shall have delivered to Lessor a certificate of its vice
president of finance, chief financial officer or chief accounting
officer certifying that each representation and warranty contained in
(a) the Facility Agreement, (b) this Second Amendment, and (c) each
of the other Transaction Papers, is true and correct and will be true
and correct after giving effect to the amendments contained in
Section 1 hereof.
SECTION 3. Representations and Warranties of Lessee. To induce
Lessor to enter into this Second Amendment, Lessee hereby represents
and warrants to Lessor as follows:
(a) Each representation and warranty of Lessee contained in the
Facility Agreement and the other Transaction Papers is true and
correct on the date hereof and will be true and correct after giving
effect to the amendments set forth in Section 1 hereof.
(b) The execution, delivery and performance by Lessee of this
Second Amendment are within Lessee's corporate powers, have been duly
authorized by necessary action, require no action by or in respect
of, or filing with, any governmental body, agency or official and do
not violate or constitute a default under any provision of applicable
law or result in the creation or imposition of any Lien upon any of
the assets of Lessee or the Subsidiaries of Lessee except Permitted
Encumbrances.
(c) This Second Amendment constitutes the valid and binding
obligation of Lessee enforceable in accordance with its terms, except
as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, and
(ii) the availability of equitable remedies may be limited by
equitable principles of general application.
SECTION 4. Miscellaneous.
4.1 Reaffirmation of Transaction Papers. Any and all of the
terms and provisions of the Facility Agreement and the Transaction
Papers shall, except as amended and modified hereby, remain in full
force and effect.
4.2 Parties in Interest. All of the terms and provisions of
this Second Amendment shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
4.3 Legal Expenses. Lessee hereby agrees to pay on demand all
reasonable fees and expenses of counsel to Lessor incurred by Lessor,
in connection with the preparation, negotiation and execution of this
Second Amendment and all related documents.
4.4 Counterparts. This Second Amendment may be executed in
counterparts, and all parties need not execute the same counterpart.
However, no party shall be bound by this Second Amendment until all
parties have executed a counterpart. Facsimiles shall be effective
as originals.
4.5 Complete Agreement. THIS SECOND AMENDMENT, THE FACILITY
AGREEMENT AND THE OTHER TRANSACTION PAPERS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
4.7 Headings. The headings, captions and arrangements used in
this Second Amendment are, unless specified otherwise, for
convenience only and shall not be deemed to limit, amplify or modify
the terms of this Second Amendment, nor affect the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective authorized officers
on the date and year first above written.
LESSEE:
SNYDER OIL CORPORATION,
a Delaware corporation
By: /s/ James H. Shonsey
---------------------------
James H. Shonsey
Vice President, Finance
LESSOR:
NATIONSBANC LEASING
CORPORATION, a North Carolina corporation
By: /s/ Regis S. Sakalik
---------------------------
Its: Assistant Vice President
<TABLE>
EXHIBIT 12
SNYDER OIL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
<CAPTION>
Six
Years ended December 31, Months Ended
---------------------------------------------------- June 30,
1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before taxes,
minority interest and
extraordinary item $ 4,154 $ 3,893 $15,027 $22,538 $13,510 ($ 5,803)
Interest expense 6,273 8,452 4,997 5,315 10,337 11,809
------- ------- ------- ------- ------- ---------
Earnings before fixed charges 10,427 12,345 20,024 27,853 23,847 6,006
======= ======= ======= ======= ======= =========
Fixed Charges:
Interest expense 6,273 8,452 4,997 5,315 10,337 11,809
------- ------- ------- ------- ------- ---------
Total fixed charges $ 6,273 $ 8,452 $ 4,997 $ 5,315 $10,337 $11,809
======= ======= ======= ======= ======= =========
Ratio of earnings (loss) 1.66 1.46 4.01 5.24 2.31 .51
to fixed charges ======= ======= ======= ======= ======= =========
</TABLE>
<PAGE> 1
<PAGE>
<TABLE>
SNYDER OIL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(Unaudited)
<CAPTION>
Six
Years ended December 31, Months Ended
---------------------------------------------------- June 30,
1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before taxes,
minority interest and
extraordinary item $ 4,154 $ 3,893 $15,027 $22,538 $13,510 ($ 5,803)
Interest expense 6,273 8,452 4,997 5,315 10,337 11,809
------- ------- ------- ------- ------- ---------
Earnings before fixed charges 10,427 12,345 20,024 27,853 23,847 6,006
======= ======= ======= ======= ======= =========
Fixed Charges:
Interest expense 6,273 8,452 4,997 5,315 10,337 11,809
Preferred stock dividends 0 453 4,800 9,100 10,806 3,108
------- ------- ------- ------- ------- --------
Total fixed charges $ 6,273 $ 8,905 $ 9,797 $14,415 $21,143 $14,917
======= ======= ======= ======= ======= =========
Ratio of earnings (loss)
to combined fixed charges
and preferred dividends 1.66 1.39 2.04 1.93 1.13 .40
======= ======= ======= ======= ======= ========
</TABLE>
<PAGE> 2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 20,211
<SECURITIES> 0
<RECEIVABLES> 39,371
<ALLOWANCES> 0
<INVENTORY> 11,578
<CURRENT-ASSETS> 73,572
<PP&E> 823,969
<DEPRECIATION> 269,979
<TOTAL-ASSETS> 672,367
<CURRENT-LIABILITIES> 67,649
<BONDS> 332,240
<COMMON> 303
0
10
<OTHER-SE> 259,864
<TOTAL-LIABILITY-AND-EQUITY> 672,367
<SALES> 101,385
<TOTAL-REVENUES> 110,485
<CGS> 82,355
<TOTAL-COSTS> 95,520
<OTHER-EXPENSES> 6,458
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,310
<INCOME-PRETAX> (5,803)
<INCOME-TAX> (566)
<INCOME-CONTINUING> (5,456)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,456)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
