SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - MAY 4, 1999
(DATE OF EARLIEST EVENT REPORTED)
HS RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NO. 0-18886
DELAWARE 94-303-6864
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
ONE MARITIME PLAZA, 15TH FLOOR, SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415)433-5795
<PAGE>
FORM 8-K
HS RESOURCES, INC.
May 4, 1999
ITEM 5. OTHER EVENTS.
On May 4, 1999, HS Resources, Inc., a Delaware corporation ("HSR" or the
"Company"), issued its first quarter earnings press release. A copy of the
earnings press release is attached hereto as Exhibit 99.1. The transcript of the
earnings conference call held Tuesday, May 4, 1999, as edited by the Company,
can be found on the Company's internet site at http//www.hsresources.com. Click
on Investor Info and then click on Quarterly Earnings Conference Call to listen
to the audio version or click on Transcript to read the transcript.
ITEM 7(C). EXHIBITS FILED.
EXHIBIT NUMBER DESCRIPTION
- -------------------------------
99.1 Earnings Press Release, dated May 4, 1999.
<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 hereunto duly authorized.
HS RESOURCES, INC.
By: /s/ James M. Piccone
---------------------------------------------
James M. Piccone
Vice President
Dated: May 13, 1999.
FOR IMMEDIATE RELEASE
May 4, 1998
HS RESOURCES ANNOUNCES FIRST QUARTER RESULTS
San Francisco, California - HS Resources, Inc. (NYSE:HSE) today announced its
operating and financial results for the quarter ended March 31, 1999. During the
quarter, the Company earned $106,241, or $0.01 per share, and reported operating
cash flow of $18.4 million, or $1.00 per share. That compares to earnings of
$4.1 million, or $0.22 per share, and operating cash flow of $25.2 million, or
$1.35 per share, for the comparable prior year period. The results for the
quarter reflect sharply lower oil and gas prices, partially offset by improved
operating fundamentals.
During the quarter, the Company produced 17.53 billion cubic feet of gas
equivalent (Bcfe), or 2.92 million barrels of oil equivalent (MMBoe).
Approximately 80% of the production was natural gas (13.97 billion cubic feet)
and 20% was oil (594,000 barrels). On September 1, 1998, the Company sold
certain Mid-Continent properties that produced 3.40 Bcfe during the first
quarter of 1998. Excluding production from the sold Mid-Continent properties,
production for the first quarter of 1999 increased by 17% over the prior
comparable period. In aggregate, first quarter 1999 production amounted to 95%
of the 18.37 Bcfe produced during the prior year period, including Mid-Continent
production.
Quarterly production revenues, including the effects of product price hedging,
decreased 20% from the comparable prior year period, to $36.1 million from $45.4
million, as the combination of modestly lower production (reflecting the
Mid-Continent sale) was compounded by commodity prices which were dramatically
lower, despite the Company's successful hedging activity. The quarterly average
gas price realized by the Company, including hedging benefits, was $2.04 per
thousand cubic feet (Mcf), a 14% decline from $2.37 realized in the first
quarter of 1998. Realized oil prices suffered a more precipitous 25% decline, to
$12.80 from $16.96 per barrel (Bbl). Hedging activities improved realized prices
by $0.38 per Mcf and $1.37 per Bbl in 1999, and improved realized prices by
$0.23 per Mcf and $2.19 per Bbl in 1998.
Aggregate lease operating expenses decreased by 6% from $7.1 million to $6.7
million, and per-unit lease operating expenses declined 2% to $0.38 from $0.39
per Mcfe ($2.29 and $2.33 per Boe, respectively). Overhead expense was reduced
by 23% in aggregate, while per-unit overhead declined by 20%, from $0.10 to
$0.08 per Mcfe ($0.60 to $0.48 per Boe) for the comparative quarters. Aggregate
interest expense declined 3%, while per-unit interest expense was essentially
flat.
HS Resources also announced certain results from its oil and gas operations:
<PAGE>
D-J Basin quarterly production increased 12% in 1999 compared to 1998 due to the
Company's ongoing exploitation and development program on the Company's
extensive producing property base, including those properties acquired from
Amoco in December 1997. During the first quarter, the Company conducted 94
Codell refracs, drilled and completed three new J-Sand wells, and deepened five
existing wells to the J-Sand. The Company also deepened twelve wells to the
Dakota formation, two of which are in production with average initial production
rates of 200-400 Mcf per day, while the remaining wells are being tested or
awaiting fracture stimulation.
In the Gulf Coast region, HS drilled six wells (2.5 net), of which four (2.0
net) were successful, resulting in a success rate of 67% (80% net). Successful
wells were drilled in the North Gillis, Lox B, Big Creek and Edgerly project
areas. Dry holes were drilled in Devillier and Iowa/Woodlawn. The JA Richard et
ux #1 was completed in North Gillis, in which the Company has a 37.5% working
interest (WI), with preliminary gross reserves estimated to be 7.2 Bcfe, and
bringing the Company's North Gillis success rate to nine of eleven. At Lox B
(50% WI), the M Half Circle #1 tested at 8.6 MMcf and 530 Bbl per day. Completed
in the Oligocene formation, the well was placed on line on April 21. At Big
Creek (100% WI), the Nesvadba #1, the first well in the program, tested dry in
the Yegua, and is being completed in the Vicksburg. Certain previously completed
wells were brought on line subsequent to the end of the quarter, including the
Louis H. Adams #1 in the Indian Village project area, which went on line the
first week in April and is producing almost 10 MMcfe per day. Four additional
wells are awaiting pipeline hookup. Interpretation of 3-D seismic is continuing
on 18 project areas, and seismic recording has begun on the Starks project 3-D
program. The Company anticipates that its active Gulf Coast drilling program
will continue during the second quarter and through the remainder of 1999.
Chairman and Chief Executive Officer Nicholas J. Sutton stated, "Our results for
the first quarter of 1999 reflect the continuing benefits of our core program,
despite the difficult product price environment. Through our drilling and
development activities in the D-J Basin and the Gulf Coast we have replaced
almost all of the production attributable to the Mid-Continent properties which
we sold in September. Furthermore, we continue to improve our operating
efficiencies, both on an absolute and per-Mcfe basis. As the current results
indicate, with combined lease operating and overhead costs of $0.46 per Mcfe
($2.77 per Boe) we generate strong cash margins at even very low price levels."
HS Resources President P. Michael Highum commented, "Our first quarter results
are very satisfying to the Company. Our D-J District is on target, completing
approximately 115 of the approximately 250 activities planned for the year.
These activities, which range from recompletions and reworks to well deepenings
and new well drillings, are drawn from our inventory of several thousand
specifically identified opportunities. In the Gulf Coast, our activities
continue to demonstrate the validity of our efforts in that region, adding
reserves, production and cash flow. We believe that we will see significant
production increases from our Gulf Coast properties as the year progresses."
Chief Financial Officer James E. Duffy added, "Our hedging position provided
meaningful price protection during the first quarter. Overall, with our
increased pro-forma production and reduced per-unit costs, our financial
measures are strong and our debt coverage numbers remain solid.
<PAGE>
The combination of production growth in our core areas, price support from our
hedging activities and the $150 million of debt repayment as a result of the
September Mid-Continent sale contributed to our strong financial position. We
have substantial availability under our bank facility which provides us with
significant financial flexibility. In addition, we have in place appropriate
hedges covering approximately 60% of our gas production across the traditionally
weaker summer months, and plan to add hedges for winter production when and as
the market provides the opportunity for us to do so at prices which we believe
will generate superior results."
Statements concerning debt repayment ability, drilling, exploration,
exploitation, development and other plans, expectations concerning production
levels, financial flexibility and strength, expected future operating
efficiencies, hedging plans and all similar statements or implications are
forward looking statements within the meaning of Federal securities laws. Actual
results or events may differ materially from these forward looking statements,
depending upon a variety of factors, including commodity prices, availability of
capital, results of exploration and other drilling, cash flow from operations,
costs of materials and labor, availability of equipment, regulatory burdens,
opportunities to secure favorable hedges, Company objectives and business
judgment and other factors, both within and outside of the Company's control.
The Company's forward looking statements are qualified in their entirety by
these and other factors more fully set forth on the company's report on Form
10-K filed March 31, 1999.
HS Resources, Inc. is an independent oil and gas exploration and development
company with active projects in the D-J Basin, Northern Rocky Mountain and Gulf
Coast regions. The common stock of HS Resources, Inc. is traded on the New York
Stock Exchange under the symbol "HSE".
Contact: Theodore Gazulis
Vice President
415-433-5795
[email protected]
<PAGE>
<TABLE>
HS Resources, Inc.
Summary of 1999 Operations
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<CAPTION>
Quarter Ended
March 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
Revenues:
Oil & gas sales $36,088 $45,372
Trading and transportation 9,300 16,324
Other gas revenues 2,524 1,869
Interest and other income 156 204
------- -------
Total revenues 48,068 63,769
------- -------
Expenses:
Production taxes 2,148 2,998
Lease operating 6,691 7,146
Cost of trading and transportation 8,982 15,797
DD&A 14,198 15,482
Exploratory and abandonment 2,018 516
Geological and geophysical 2,022 2,618
General and administrative 1,409 1,838
Interest 10,429 10,781
------- -------
Total expenses 47,897 57,176
------- -------
Income before provision
for income taxes 171 6,593
Provision for income taxes 65 2,512
------- -------
Net income $ 106 $ 4,081
======= =======
Net income per share - diluted $ 0.01 $ 0.22
======= =======
Outstanding shares - diluted 18,419 18,709
======= =======
Operating cash flow (a) $18,409 $25,209
======= =======
Operating cash flow per share - diluted $ 1.00 $ 1.35
======= =======
</TABLE>
(a) Net income before geological and geophysical, exploratory and abandonment,
depreciation, depletion and amortization and income taxes.
<PAGE>
<TABLE>
HS Resources, Inc.
Summary of 1999 Operations
SUMMARY PRODUCTION, PRICE AND COST DATA
<CAPTION>
Quarter Ended
March 31,
---------------------------------
%
1999 1998 Change
-------- -------- --------
<S> <C> <C> <C>
Production by district (MMcfe):
D-J Basin and Northern Rockies 16,492 14,693 12%
Gulf Coast 1,036 282 267%
Mid-Continent 3 3,396 -100%
Total production (MMcfe) 17,531 18,371 -5%
Period Production:
Oil (MBbl) 594 691 -14%
Gas (MMcf) 13,967 14,225 -2%
Equivalent Gas (MMcfe) 17,531 18,371 -5%
Equivalent Barrels (MBoe) 2,922 3,062 -5%
Daily Production:
Oil (Bbl) 6,601 7,676 -14%
Gas (Mcf) 155,185 158,055 -2%
Equivalent Gas (Mcfe) 194,793 204,113 -5%
Equivalent Barrels (Boe) 32,465 34,019 -5%
Average oil price (Bbl) $ 12.80 $ 16.96 -25%
Average gas price (Mcf) $ 2.04 $ 2.37 -14%
Average price (Mcfe) $ 2.06 $ 2.47 -17%
Average price (Boe) $ 12.35 $ 14.82 -17%
Costs:
G&A per Mcfe $ 0.08 $ 0.10 -20%
LOE per Mcfe $ 0.38 $ 0.39 -3%
DD&A per Mcfe $ 0.81 $ 0.84 -4%
G&A per Boe $ 0.48 $ 0.60 -20%
LOE per Boe $ 2.29 $ 2.33 -2%
DD&A per Boe $ 4.86 $ 5.06 -4%
(DD&A includes depreciation
on non oil and gas assets)
</TABLE>
<PAGE>
<TABLE>
HS Resources, Inc.
Summary of 1999 Operations
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Assets
Current assets $ 55,073 $ 60,265
Oil & gas properties 943,818 924,663
Accumulated DD&A (189,409) (175,729)
Other assets 23,283 23,240
--------- ---------
Total assets $ 832,765 $ 832,439
========= =========
March 31, December 31,
1999 1998
--------- ------------
Liabilities and Stockholders' Equity
Current liabilities $ 80,362 $ 79,164
Bank debt 227,000 230,000
9 7/8% Subordinated notes, due 2003 74,727 74,712
9 1/4% Subordinated notes, due 2006 230,357 230,205
Other long-term liabilities & deferred revenue 21,430 21,359
Deferred taxes 44,203 44,138
Stockholders' equity 154,686 152,861
--------- ---------
Total liabilities and stockholders' equity $ 832,765 $ 832,439
========= =========
</TABLE>
<PAGE>
<TABLE>
HS Resources, Inc.
Summary of 1999 Operations
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<CAPTION>
Quarter Ended
March 31,
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 106 $ 4,081
Depreciation, depletion and amortization 14,198 15,482
Amortization of deferred charges, debt issue costs
and deferred compensation 1,171 570
Surrendered and expired acreage 735 --
Transfer treasury stock to 401(k) plan -- 549
Deferred income tax provision 65 2,376
Decrease (increase) in accounts receivable 1,526 (5,378)
Increase in accounts payable and accrued expenses 5,730 7,871
Decrease in deferred revenue, net (2,524) (783)
Other 14 (713)
-------- --------
Net cash provided by operating activities 21,021 24,055
-------- --------
Cash flows from investing activities:
Exploration, development and leasehold costs (19,891) (27,890)
Purchase of unproved and proved properties -- (3,075)
Gas gathering and transportation facilities additions (88) (17)
Other property additions (125) (178)
Increase (decrease) in property related payables (1,937) 5,049
-------- --------
Net cash used in investing activities (22,041) (26,111)
-------- --------
Cash flows from financing activities:
Proceeds from debt -- 6,000
Repayments of debt (3,000) (5,000)
Exercise of options -- 627
Issuance of common stock 611 --
Purchase of treasury stock -- (1,601)
Other -- 294
-------- --------
Net cash (used in) provided by financing activities (2,389) 320
-------- --------
Net decrease in cash and
cash equivalents (3,409) (1,736)
Cash and cash equivalents, beginning
of the period 9,659 6,908
-------- --------
Cash and cash equivalents, end of
the period $ 6,250 $ 5,172
======== ========
</TABLE>
<PAGE>
<TABLE>
HS Resources, Inc.
Summary of 1999 Operations
1999 DEVELOPMENT, EXPLOITATION AND EXPLORATION COSTS
(In Thousands)
<CAPTION>
Three Months Ended 3/31/99
----------------------------------------------------------
Northern
D-J Basin Gulf Coast Rockies Other Total
--------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Capitalized Costs
Land $ 22 $ 1,140 $ 20 $ 16 $ 1,198
Exploration Drilling -- 3,745 480 -- 4,225
Development Drilling 1,704 -- -- -- 1,704
Recompletions and Refracs 10,929 -- (30) -- 10,899
Acquisitions -- -- -- 15 15
Capitalized Interest & Other 1,551 236 49 14 1,850
------- ------- ------- ------- -------
Total Capitalized Costs 14,206 5,121 519 45 19,891
------- ------- ------- ------- -------
Costs Charged to Income
Statement
Geological & Geophysical 100 1,624 168 129 2,021
Exploratory Dryholes -- 453 -- -- 453
Surrendered & Expired Acreage 15 687 33 -- 735
Other Exploratory 78 648 86 18 830
------- ------- ------- ------- -------
Total G&G and Exploration
Costs 193 3,412 287 147 4,039
------- ------- ------- ------- -------
Total Development,
Exploitation
and Exploration Costs $14,399 $ 8,533 $ 806 $ 192 $23,930
======= ======= ======= ======= =======
</TABLE>
