<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
----------------------
DATE OF EARLIEST EVENT REPORTED: JANUARY 27, 1999
SANTA FE ENERGY RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-7667 36-2722169
(STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
1616 SOUTH VOSS ROAD
HOUSTON, TEXAS 77057
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 507-5000
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<PAGE>
ITEM 5. OTHER EVENTS
On January 27, 1999, Santa Fe Energy Resources, Inc. (the "Company") issued
the press release filed as Exhibit 99.1 to this Current Report on Form 8-K
setting forth the Company's results of operations for the fourth quarter and
full year of 1998, and the contents of such Exhibit are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release, dated January 27, 1999, titled "Santa Fe Energy
Resources Reports 1998 Results and Significant Increase in Reserves."
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SANTA FE ENERGY RESOURCES, INC.
By: /s/ Mark A. Older
-------------------------------
Mark A. Older
Corporate Secretary
Date: January 28, 1999
-3-
<PAGE>
EXHIBIT INDEX
Exhibit
Number Decription
- ------ ----------
99.1 Press Release, dated January 27, 1999, titled "Santa Fe Energy
Resources Reports 1998 Results and Significant Increase in Reserves."
-4-
<PAGE>
[SANTA FE ENERGY RESOURCES, INC. LOGO]
SANTA FE ENERGY RESOURCES REPORTS
1998 RESULTS AND
SIGNIFICANT INCREASE IN RESERVES
Houston, Texas -- January 27, 1999
Santa Fe Energy Resources (NYSE:SFR) today reported a net loss of $98.7 million
or $0.96 per share for 1998 including a pre-tax charge of $87.8 million for
property impairments ($57.1 million on an after-tax basis) compared with pro
forma earnings to common of $23.2 million or $0.24 per share for the full year
1997 excluding the results of Monterey Resources which was spun-off to
shareholders in July, 1997. The impairment charge relates primarily to
properties located in the Gulf of Mexico and was required principally due to
lower commodity price expectations. The Company's 1998 discretionary cash flow
declined to $1.38 per share compared with $1.97 per share for last year despite
a 34 percent increase in oil production. The primary cause of the decline in
cash flow was a 35 percent decrease in crude oil prices coupled with a 15
percent decrease in natural gas prices.
Proved Reserves
Total reserves at year end were 215 million barrels of oil equivalent (BOE), a
26 percent increase from the 171 million BOE at the beginning of the year.
Despite a loss of approximately 11 million barrels due to low commodity prices,
during 1998 Santa Fe replaced 272 percent of the year's production at an average
cost of finding and development of $5.24 per BOE. Excluding acquisitions, 1998
reserve replacement was 176 percent of production at a cost of $5.26 per BOE.
For the three year period ended 1998, the Company replaced 248 percent of
production including acquisitions at a finding and development cost of $5.19 per
BOE. At year end, the reserve to production ratio was over 8 years, which is
important in this low commodity price cycle.
Fourth Quarter
For the three months ended December 31, 1998, the company reported a net loss of
$23.9 million or $0.24 per share excluding impairments of $87.8 million ($57.1
million after tax) compared with net income of $3.6 million or $0.04 per share
for the same three months in 1997. For the 1998 quarter, discretionary cash
flow was $31.6 million or $0.31 per share, a decrease from the $51.0 million or
$0.50 per share reported in the 1997 period.
-more-
<PAGE>
Including impairments the Company reported a 1998 fourth quarter net loss of
$81.0 million or $0.79 per share.
For the last three months of 1998, Santa Fe's oil production averaged 43,600
barrels per day, an increase of nearly 35 percent from 32,400 barrels per day
for the 1997 period, principally due to new field production in Indonesia and
Gabon. Natural gas production averaged 169.0 million cubic feet (MMcf) per day
during the 1998 fourth quarter, down slightly from 173.0 MMcf per day in the
same period last year, primarily due to declines in the Permian Basin as a
result of reduced capital expenditures in that area.
During the quarter ended December 31, 1998, realized oil prices averaged $10.32
per barrel, a precipitous drop of $6.87 from an average of $17.19 per barrel in
the last quarter of 1997. Realized natural gas prices during the 1998 period
averaged $1.85 per thousand cubic feet (Mcf), a 27 percent decrease from the
$2.54 per Mcf realized during the equivalent period last year.
In spite of a 17 percent increase in equivalent production, the nearly 40
percent decrease in crude oil prices and the 27 percent drop in natural gas
prices caused total revenues for the 1998 fourth quarter to decline 23 percent
to $68.5 million from $89.2 million in the 1997 period. During the last three
months of 1998 total costs and expenses were $194.1 million including the
property impairments, compared to the same period last year when costs and
expenses totalled $82.2 million. Operating costs per unit of production
increased to $4.72 from $4.38 per BOE in the same period last year, largely due
to storm related downtime and maintenance costs in the Gulf of Mexico and
increased international production under production sharing contracts.
Operating costs excluding production sharing contracts were $3.87 per BOE versus
$3.75 for the fourth quarter 1997. Depreciation, depletion and amortization
costs per equivalent barrel increased to $5.66 from $4.92 due principally to new
production from higher cost properties in the Gulf of Mexico. Exploration
expense in the fourth quarter 1998 increased to $27.9 million from $20.1 million
in 1997 mainly due to dry hole costs for the Crocodile X-1 and X-2 wells in Cote
d'Ivoire.
Capital expenditures for the fourth quarter were $94.1 million including two
acquisitions of proved properties. The acquisitions relate to development
properties in the deep water of the Gulf of Mexico acquired from Westport and
development properties offshore Brazil.
Annual Results
The contribution of Monterey Resources, which was spun off to Santa Fe's common
shareholders on July 25, 1997 has been eliminated from the 1997 results stated
below.
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<PAGE>
Including non-recurring and unusual items, Santa Fe reported a net loss of $98.7
million or $0.96 per share for 1998 compared with pro forma earnings to common
of $23.2 million or $0.24 per share for the full year 1997. The Company's 1998
discretionary cash flow was $1.38 per share, compared with pro forma results of
$1.97 per share for last year. The 1998 results include a pre-tax charge of
$87.8 million for property impairments while the major non-recurring item for
1997 was a non-cash charge of $8.4 million for the conversion of preferred
stock.
Santa Fe's 1998 oil production increased over 34 percent to an average 40,700
barrels per day from an average of 30,300 barrels per day in 1997 (excluding
Monterey). This increase was primarily due to commencement of production in two
major fields in Indonesia and one field in Gabon along with a full year's
production from the N. Geragai field in Indonesia. Natural gas production
averaged 178.0 MMcf per day in 1998, up from 174.7 MMcf per day in 1997. New
wells in Southeast New Mexico and the Gulf of Mexico offset normal production
declines while production increased in Argentina due to improved marketing
conditions.
Crude oil prices realized in 1998 declined 35 percent to $11.74, including a
$0.16 per barrel hedging benefit, compared with 1997 when the average realized
oil price was $18.02 per barrel, including a $.20 per barrel hedging benefit.
Natural gas prices realized in 1998 averaged $1.91 per Mcf, a 15 percent
decrease when compared with an average of $2.25 per Mcf in 1997. Natural gas
was not hedged in either year.
Revenues for 1998 declined 13 percent to $291.0 million, in spite of an increase
of approximately 18 percent in equivalent production, due to the lowest oil
prices seen in over twelve years and lower natural gas prices. Revenues for
1997 totalled $333.5 million.
Costs and expenses were $445.0 million, including the property impairment charge
up from $272.9 million in the 1997 period. Operating costs per unit of
production increased to $4.38 per BOE from $4.05 in 1997 primarily due to
increased international production under production sharing contracts and the
effects of storms in the Gulf of Mexico as discussed above. Depreciation,
depletion and amortization costs per equivalent barrel increased to $5.30 from
$4.86 due to new production from higher cost Gulf of Mexico properties.
Exploration expense increased by $22.9 million in 1998 primarily due to
increased seismic and drilling activity and dry hole expense both
internationally and in the Gulf of Mexico. Interest expense net of income and
capitalized interest increased $3.7 million in 1998 due to increased debt
levels. Capital expenditures totalled approximately $327.1 million, including
$110.3 million for acquisitions.
The Company's basic and diluted earnings per share are the same for all periods
presented.
-more-
<PAGE>
1999 OUTLOOK
Given the low commodity price environment, Santa Fe has cut its capital budget
for 1999 to approximately $170 million from over $300 million in 1998. Capital
will be allocated to domestic gas projects plus the funding necessary to ensure
the large international projects do not have serious time delays. With this
program, it is anticipated that Santa Fe Energy will still have modest
production growth in 1999 and be in a position to more rapidly accelerate both
oil and gas production as prices recover.
Santa Fe Energy recently announced the pending merger with Snyder Oil
Corporation (NYSE:SNY) creating Santa Fe Snyder Corporation, a financially
strong exploration and production company with a good growth profile even in
today's commodity price environment. The merger is subject to shareholder
approvals and other customary closing conditions and regulatory approvals.
Completion of the merger is anticipated in the second quarter of 1999.
Santa Fe Energy Resources is an independent oil and gas exploration and
production company with headquarters in Houston, Texas. It has production in
the United States, Argentina, Indonesia and Gabon with additional exploration
activities in other regions of the world. Its common stock is traded on the New
York Stock Exchange under the symbol SFR.
This news release contains forward-looking statements within the meaning of the
Securities Litigation Reform Act. The statements regarding future capital
expenditures, anticipated production and the pending merger reflect the
company's current views with respect to future events and financial performance.
Actual results could differ materially from those projected as a result of
certain factors. A discussion of these factors is included in the Company's
periodic reports filed with the Securities and Exchange Commission including its
Annual Report on Form 10-K.
For more information about Santa Fe Energy Resources, please visit
http://www.sfer.com
- Financials follow -
<PAGE>
SANTA FE ENERGY RESOURCES, INC.
FOURTH QUARTER 1998 SUMMARY STATISTICS (Unaudited)
(In millions of dollars, except as noted)
THREE MONTHS
ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------- ----------------
1998 1997 1998 1997(1)
------- ------ ------- -------
OPERATIONAL
Crude Oil and Liquids(MMBbls) 4.0 3.0 14.8 11.1
Natural Gas (Bcf) 15.6 15.9 65.0 63.8
Total MMBOE 6.6 5.6 25.7 21.7
FINANCIAL
Revenues $ 68.5 $ 89.2 $ 291.0 $ 333.5
Operating Income (Loss) $ (125.6) $ 7.0 $ (154.0) $ 60.6
Net Income (Loss) $ (81.0) $ 3.6 $ (98.7) $ 35.2
Earnings (Loss) to Common Shares $ (81.0) $ 3.6 $ (98.7) $ 23.2
Earnings (Loss) Per Share (in dollars) $ (0.79) $ 0.04 $ (0.96) $ 0.24
Discretionary Cash Flow $ 31.6 $ 51.0 $ 141.7 $ 194.2
Discretionary Cash Flow Per Share
(in dollars) $ 0.31 $ 0.50 $ 1.38 $ 1.97
Average Shares Outstanding
(in millions) 102.2 103.0 102.6 98.6
(1) 1997 amounts exclude Monterey Resources
<PAGE>
SANTA FE ENERGY RESOURCES, INC.
FOURTH QUARTER 1998 RESULTS OF OPERATIONS (Unaudited)
THREE MONTHS YEAR MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
--------------- ---------------
1998 1997 1998 1997(1)
------ ------ ------ -------
CRUDE OIL AND LIQUIDS
Sales Volumes (MBbls/day)
Domestic 20.4 21.3 21.2 21.1
Argentina 5.4 5.5 5.4 4.9
Indonesia 15.3 5.6 12.3 4.3
Gabon 2.5 - 1.8 -
------ ------ ------ ------
43.6 32.4 40.7 30.3
====== ====== ====== ======
Sales Prices ($/Bbl)
Unhedged
Domestic $ 10.36 $ 17.17 $ 11.60 $ 18.07
Argentina 8.61 16.28 10.73 16.93
Indonesia 11.10 17.90 11.91 17.58
Gabon 8.98 - 11.59 -
Total 10.32 17.15 11.58 17.82
Hedged 10.32 17.19 11.74 18.02
Revenues ($/millions)
Sales
Domestic $ 19.5 $ 33.7 $ 89.4 $ 139.4
Argentina 4.3 8.2 21.3 30.5
Indonesia 15.6 9.2 53.4 27.4
Gabon 2.1 - 7.7 -
------ ------ ------ ------
41.5 51.1 171.8 197.3
Hedging - 0.1 2.5 2.2
Net Profits Payments (1.3) (0.7) (3.0) (3.5)
------ ------ ------ ------
$ 40.2 $ 50.5 $ 171.3 $ 196.0
====== ====== ====== ======
NATURAL GAS
Sales Volumes (MMcf/day)
Domestic 144.0 148.7 152.1 153.0
Argentina 24.7 24.0 25.7 21.4
Indonesia 0.3 0.3 0.2 0.3
------ ------ ------ ------
169.0 173.0 178.0 174.7
====== ====== ====== ======
Sales Prices ($/Mcf)
Domestic $ 1.96 $ 2.76 $ 2.01 $ 2.38
Argentina 1.21 1.18 1.30 1.30
Indonesia 0.97 1.04 1.01 1.04
Total 1.85 2.54 1.91 2.25
Revenues ($/millions)
Sales
Domestic $ 26.0 $ 37.8 $ 111.7 $ 133.1
Argentina 2.8 2.6 12.2 10.1
Indonesia - - 0.1 0.1
------ ------ ------ ------
28.8 40.4 124.0 143.3
Net Profits Payments (0.7) (1.7) (4.9) (5.8)
------ ------ ------ ------
$ 28.1 $ 38.7 $ 119.1 $ 137.5
====== ====== ====== ======
(1) 1997 amounts exclude Monterey Resources
<PAGE>
SANTA FE ENERGY RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In millions of dollars, except as noted)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------- ----------------
1998 1997 1998 1997(1)
------ ------- ------ --------
<S> <C> <C> <C> <C>
REVENUES
Sales of crude oil and liquids $ 40.2 $ 50.5 $ 171.3 $ 196.0
Sales of natural gas 28.1 38.7 119.1 137.5
Other 0.2 - 0.6 -
------ ------ ------ -------
TOTAL REVENUES 68.5 89.2 291.0 333.5
------ ------ ------ -------
COSTS AND EXPENSES
Production and operating 31.2 24.6 112.5 87.6
Exploration, including dry hole costs 27.9 20.1 71.1 48.2
Depletion, depreciation and amortization 37.5 27.8 136.1 105.5
Impairment of oil and gas properties 87.8 - 87.8 -
General and administrative 5.6 5.9 19.7 20.5
Taxes (other than income) 4.0 3.4 16.3 14.7
Loss (gain) on disposition of assets 0.1 0.4 1.5 (3.6)
------ ------ ------ -------
TOTAL COSTS AND EXPENSES 194.1 82.2 445.0 272.9
------ ------ ------ -------
INCOME (LOSS) FROM OPERATIONS (125.6) 7.0 (154.0) 60.6
Interest income 2.6 0.3 6.2 1.5
Interest expense (6.8) (3.2) (22.0) (12.1)
Interest capitalized 1.6 1.6 7.2 5.7
Other income (expense) (0.1) (0.2) (0.3) (0.6)
------ ------ ------ -------
INCOME (LOSS) BEFORE INCOME TAXES (128.3) 5.5 (162.9) 55.1
Income tax (expense) benefit
Current 7.0 (2.6) 11.4 6.0
Deferred 40.3 0.7 52.8 (25.9)
------ ------ ------ -------
NET INCOME (LOSS) (81.0) 3.6 (98.7) 35.2
Preferred dividend requirement - - - (3.6)
Convertible preferred premium - - - (8.4)
------ ------ ------ -------
EARNINGS (LOSS) TO COMMON SHARES $ (81.0) $ 3.6 $ (98.7) $ 23.2
====== ====== ====== =======
EARNINGS (LOSS) PER COMMON SHARE,
BASIC AND DILUTED (IN DOLLARS) $ (0.79) $ 0.04 $ (0.96) $ 0.24
====== ====== ====== =======
Average Shares Outstanding (in millions)
Basic 102.2 103.0 102.6 98.6
====== ====== ====== =======
Diluted 103.7 106.2 104.8 100.6
====== ====== ====== =======
</TABLE>
(1) 1997 amounts exclude Monterey Resources
<PAGE>
SANTA FE ENERGY RESOURCES, INC.
CONSOLIDATED CASH FLOWS (Unaudited)
(In millions of dollars, except as noted)
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
December 31, December 31,
--------------- ---------------
1998 1997 1998 1997(1)
------ ------ ------ -------
<S> <C> <C> <C> <C>
Earnings (Loss) to Common Shares $ (81.0) $ 3.6 $ (98.7) $ 23.2
Add Back Non Cash Items:
Depletion, Depreciation and Amortization and Impairments 37.5 27.8 136.1 105.5
Impairment of Oil and Gas Properties 87.8 -- 87.8 --
Deferred Income Taxes (40.3) (0.7) (52.8) 25.9
Premium on Conversion of 7% Preferred Stock -- -- -- 8.4
Other 1.2 1.4 3.9 4.9
Add Back Income Statement Items Deemed Discretionary:
Exploratory Dry Hole Costs 18.7 10.7 38.4 23.7
Exploration Expense, other than dry holes 9.2 9.4 32.7 24.5
Tax Reimbursement from Monterey Resources -- -- -- (12.1)
Administrative Expenses Related to Spin Off of Monterey Resources -- -- -- 1.1
Pension Curtailment Benefit Related to Spin Off of Monterey Resources -- -- -- (1.6)
Interest Capitalized (1.6) (1.6) (7.2) (5.7)
Net Loss (Gain) on Disposition of Assets 0.1 0.4 1.5 (3.6)
------ ------ ------ ------
Discretionary Cash Flow $ 31.6 $ 51.0 $ 141.7 $ 194.2
Discretionary Cash Disbursements and Receipts:
Changes in Operating Assets and Liabilities 0.7 (9.0) (1.2) 12.7
Capital Expenditures (excluding capitalized interest) (30.5) (52.2) (184.6) (167.0)
Exploration Expense, other than dry holes (9.2) (9.4) (32.7) (24.5)
Acquisition of Producing Properties (17.7) 0.4 (117.6) (84.9)
Proceeds from Property Sales 0.2 0.1 2.0 32.5
Dividends from Monterey Resources -- -- -- 16.8
------ ------ ------ ------
Net Cash Flow Before Financing Activities (24.9) (19.1) (192.4) (20.2)
Net Change in Long-Term Lines of Credit 24.4 19.2 208.9 18.2
Issuance of Santa Fe Energy Resources, Inc. Common Stock -- -- -- --
Treasury Stock Reissued -- 0.6 1.6 2.8
Treasury Stock Purchased (1.2) (0.5) (11.6) (0.5)
------ ------ ------ ------
Increase (Decrease) in Cash (1.7) 0.2 6.5 0.3
====== ====== ====== ======
Cash at End of Period $ 12.1 $ 5.6 $ 12.1 $ 5.6
====== ====== ====== ======
Discretionary Cash Flow Per Share (in dollars) $ 0.31 $ 0.50 $ 1.38 $ 1.97
====== ====== ====== ======
</TABLE>
(1) 1997 amounts exclude Monterey Resources
<PAGE>
SANTA FE ENERGY RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(In millions of dollars, except as noted)
DECEMBER 31, DECEMBER 31,
1998 1997
---------- ----------
(unaudited)
ASSETS
Current Assets:
Cash $ 12.1 $ 5.6
Other Current Assets 103.9 107.2
--------- ---------
Total Current Assets 116.0 112.8
Property and Equipment, net 718.3 649.7
Other Assets 24.7 26.4
--------- ---------
TOTAL ASSETS $ 859.0 $ 788.9
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 123.3 $ 106.7
Other Current Liabilities 15.9 27.3
--------- ---------
Total Current Liabilities 139.2 134.0
Long-Term Debt 330.6 121.7
Other Long-Term Obligations 40.8 40.0
Deferred Income Taxes -- 38.5
Shareholders' Equity 348.4 454.7
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 859.0 $ 788.9
========= =========
CAPITALIZATION
Long-Term Debt 48.7% 21.1%
Shareholders' Equity 51.3% 78.9%
--------- ---------
100.0% 100.0%
========= =========
