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 - FEBRUARY 17, 2000
(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.
February 17, 2000
ITEM 5. OTHER EVENTS.
On February 17, 2000, HS Resources, Inc., a Delaware corporation ("HSR"
or the "Company"), issued its fourth quarter earnings press release. A copy of
the earnings press release is attached hereto as Exhibit 99.1.
ITEM 7(c). EXHIBITS FILED.
Exhibit Number Description
- -----------------------------
99.1 Earnings Press Release, dated February 17, 2000.
2
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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: February 18, 2000.
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FOR IMMEDIATE RELEASE
February 17, 2000
HS RESOURCES, INC.
1999 FOURTH QUARTER AND ANNUAL RESULTS
INCREASED EARNINGS, CASH FLOW, PRODUCTION AND RESERVES
San Francisco, California - HS Resources, Inc. (NYSE:HSE) today announced its
1999 fourth quarter and year-end operating and financial results. For the
quarter, the Company reported net income of $6.7 million ($0.35 per share)
compared to a net loss of $11.3 million ($0.61 per share) for the comparable
prior year period. Current period results reflect higher production and product
prices and lower per-unit operating costs. Operating cash flow increased by 90%
to $31.2 million ($1.63 per share) for the fourth quarter of 1999 from $16.4
million ($0.88 per share) during the prior year period. The weighted average
diluted number of shares outstanding was 19.1 million for the fourth quarter of
1999 compared to 18.6 million for the comparable 1998 period.
For the full year, oil and gas revenues increased to a record $164.7 million, up
10% from the prior year even though 1998 results included production and
revenues from mid-continent properties that were sold effective September 1,
1998. Net income was $11.7 million ($0.62 per share) compared to a net loss of
$18.6 million ($1.00 per share) for 1998. Operating cash flow was $92.5 million
($4.90 per share), up 25% from $72.9 million ($3.92 per share) for the prior
year.
FOURTH QUARTER OPERATING RESULTS. Quarterly production was 15.2 billion cubic
feet of natural gas ("Bcf") and 640,000 barrels of oil ("Bbl"), or 19.1 Bcf
equivalents ("Bcfe"), a 15% increase over 1998. Natural gas represented 79.8% of
the Company's production on an energy-equivalent basis. This production increase
was due to the Company's ongoing exploitation activities in the Denver-Julesburg
("D-J") Basin and its exploratory efforts in the onshore Gulf Coast region.
During the quarter, the D-J Basin contributed 89% of Company production and the
Gulf Coast region contributed 11%. D-J Basin production was up 4% from the prior
year period, to an average of 185 million cubic feet of gas equivalent ("MMcfe")
per day, and the Gulf Coast production was up 428% from the comparable prior
period to an average of 22.1 MMcfe per day. Fourth quarter 1999 Gulf Coast
production was down slightly from the third quarter as a result of down time
related to workovers on three high volume wells, which more than offset volume
additions from three new wells brought on line during the quarter. At
December 31, 1999, Gulf Coast net production was 27.1 MMcfe/day.
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Product prices were up significantly from the prior period. Including the
effects of hedging, the average oil price was $16.24 per Bbl, a 21% increase
from $13.41 per Bbl during the prior year period. The average gas price improved
to $2.50 per thousand cubic feet ("Mcf") from $1.97 during the prior year
period, an increase of 27%. On a combined basis, the average price was $2.54 per
Mcf equivalent ("Mcfe"), a 25% increase over the $2.03 reported for the prior
period.
During the quarter, HS reduced aggregate cash operating costs (production taxes,
lease operating expenses and overhead) by 14% on a per-unit basis, from $0.71
per Mcfe to $0.61 per Mcfe. Depreciation, depletion and amortization ("DD&A")
decreased to $0.73 per Mcfe in 1999 from $0.84 in the comparable prior year
period as a result of an increase in the Company's proved reserves relative to
capitalized costs.
CALENDAR YEAR 1999 OPERATING RESULTS. Total production for the year increased
to 73.3 Bcfe, up 1% from the 72.7 Bcfe produced during 1998. However,
year-over-year comparisons are misleading because of the September 1, 1998 sale
of mid-continent properties. Excluding the 1998 production from those
properties, the year-to-year comparison represents a 15% increase in annual
production. Natural gas represented 80% of the Company's production on an
energy-equivalent basis.
Including the effects of hedging, the average oil price was $15.70 per Bbl, an
8% increase from $14.58 per Bbl during the prior year. The average gas price
improved to $2.16 per Mcf from $1.96 during the prior year, an increase of 10%.
On a combined basis, the average price was $2.25 per Mcfe, a 9% increase over
the $2.06 reported for the prior period.
For the full year, per-unit cash operating costs declined 10% from $0.67 per
Mcfe in 1998 to $0.60 per Mcfe in 1999, and DD&A decreased to $0.74 per Mcfe in
1999 from $0.84 in the prior year.
1999 YEAR-END RESERVES. At year-end 1999 HS had total proved reserves of 1.1
trillion cubic feet of natural gas equivalent ("Tcfe") or 185.3 million barrels
of oil equivalent ("MMBoe") consisting of 40.6 million Bbl of oil and 868 Bcf of
natural gas. Natural gas constituted 78% of the reserves, and 66% of the
reserves were developed. The Company added new proved reserves of 146 Bcfe (24.4
MMBoe) representing a 14% increase over year-end 1998 reserves of 170.3 MMBoe
and a reserves replacement rate of approximately 200% of 1999 production. New
reserves were primarily attributable to activities in the D-J Basin and the Gulf
Coast region. In addition, the Company posted upward revisions of reserves in
place amounting to 23 Bcfe (3.8 MMBoe) and had net sales of reserves totaling 6
Bcfe (1.1 MMBoe).
The pretax net present value of the reserves, discounted at 10%, was $1.05
billion compared to $531.9 million reported at year-end 1998. Reserve values
were calculated based on constant prices and costs using year-end field prices
of $2.49 per Mcf and $23.55 per Bbl for the 1999 year end and $9.99 per Bbl and
$1.94 per Mcf for 1998. No adjustment was made in either year
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for the effects of product price hedges. Reserve additions from all sources
during 1999 (net of production and sales) amounted to 163 Bcfe (27.2 MMBoe). All
costs, both capitalized and expensed, related to the Company's development,
exploitation and exploration programs amounted to $95.6 million, or $0.59 per
MMcfe ($3.52 per Boe) of reserves added.
OPERATIONS UPDATE. During 1999 the D-J Basin District successfully completed 397
individual development activities, including 148 in the fourth quarter,
consisting of refracs, recompletions, new drills and deepenings. In the J-infill
project, twenty wells (eight new drills and twelve deepenings) were drilled and
successfully completed to the J Sand during the fourth quarter bringing the full
year 1999 totals to 80 J Sand completions (28 new drills and 52 deepenings) with
an average working interest to HS of more than 95%. The average J Sand
completion continues to add approximately 850 MMcfe of reserves per completion
(722 MMcfe net) with initial flow rates into the pipeline ranging between 500
Mcf per day and 1,500 Mcf per day. The current project inventory includes about
400 additional J Sand infill locations.
The active pace of activities in the Codell refrac program continued during the
fourth quarter, with 110 wells refraced, bringing the total number of refracs
conducted during the year to 272. Since its inception in 1997, more than 570
refracs have been conducted. Project economics have consistently achieved rates
of return in the high 60% range, without considering the added value of tax
credits from qualified wells. More than one third of the Codell refracs
performed this year qualified for Section 29 tax credit monetization. The
current project inventory includes more than 300 additional Codell refrac
candidates plus about 140 J Sand refrac candidates.
Twelve Dakota tests were conducted during the fourth quarter with eleven of
these activities conducted in conjunction with J Sand Infill deepening or new
drill operations. Two of these twelve operations established commercial Dakota
reserves. Incremental costs to evaluate this zone are often minimal (less than
$15,000) due to the close proximity of the Dakota formation to the J Sand
formation (150 feet or less).
During 1999, the Gulf Coast District drilled or participated in 26 wells (10.8
net), of which fifteen (6.0 net) were successful, resulting in 58% gross and 55%
net success rates with indicated reserves of more than 650 MBoe per well. HS
operated sixteen of these wells, ten of which were discoveries. For the fourth
quarter of 1999, HS drilled or participated in eight wells (3.1 net), of which
five (2.3 net) were successful, resulting in 63% gross and 72% net success
rates. HS operated five of these wells, four of which were successful.
At year-end 1999, five wells (2.25 net) were awaiting pipeline hookup. In
addition, two wells that were drilling at year-end have been successfully
completed and are also waiting on pipeline hookup. The Company estimates that
its total Gulf Coast net daily production could reach 45-50 MMcfe per day once
these wells are on line. A total of five wells are currently drilling in the
Gulf Coast.
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In the Northern Rockies, HS and its partners drilled and completed a normally
pressured Lance formation test, the HSR Scarlet-Federal 11-24, in its South
Jonah Project. The completion included one of the area's largest fracs, and the
well currently is producing gas and frac fluids.
HEDGE POSITION FOR CALENDAR YEAR 2000. The Company currently has approximately
50% of its calendar year 2000 natural gas production hedged at an estimated
$2.50 per Mcf, net to the wellhead. Approximately 25% of the Company's expected
oil production is hedged at an average price of $21.00 per Bbl net to the
wellhead. These hedge positions are subject to change as the year progresses.
CALENDAR YEAR 2000 CAPEX PROGRAM. The Company's current operating and financial
plan for calendar year 2000 calls for capital expenditures of $100 to $110
million, with approximately 50% devoted to D-J Basin activity, 40% to the Gulf
Coast, and the balance to other activities and contingencies. Remaining cash
flow from operations is expected to be applied to debt repayment. However, these
preliminary allocations are subject to revision throughout the year depending
such things as product prices and results of operations. The Company currently
anticipates that it will be able to increase production and reserves while
spending less than its available cash flow.
FORWARD LOOKING STATEMENTS. Statements concerning indicated production
estimates, expectation of hedge position changes, capital spending plans and
allocations, debt repayment plans and implied ability, ability to increase
production and reserves while spending less than available cash flow, drilling,
exploration, exploitation, development and other plans; numbers of drilling or
development opportunities; 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,
gathering system and processing plant operating constraints, Company objectives
and business judgment and other factors, both within and outside of the
Company's control. The Company has no obligation to update its forward looking
statements. The Company's forward looking statements are qualified in their
entirety by these and other factors more fully set forth in 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 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
www.hsresources.com
[email protected]
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<CAPTION>
HS Resources, Inc.
Summary of 1999 Operations
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
Quarter Ended Year Ended
December 31, December 31,
------------------------------------------------
1999 1998 1999 1998
------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Oil & gas sales $48,379 $ 33,488 $164,660 $150,087
Trading and transportation 19,788 12,847 52,662 54,144
Other gas revenues 2,809 2,347 10,132 8,560
Gathering and transmission system revenues 1,286 -- 1,286 --
Interest and other income 200 257 610 1,405
------- -------- -------- --------
Total revenues 72,462 48,939 229,350 214,196
------- -------- -------- --------
Expenses:
Production taxes 2,652 2,597 10,309 10,422
Lease operating 7,079 7,297 28,014 30,410
Cost of trading and transportation 18,125 11,541 49,567 50,451
Gathering and transmission system operating expense 386 -- 386 --
DD&A 13,928 13,904 54,400 61,223
Exploratory and abandonment 4,427 12,412 13,525 15,420
Geological and geophysical 2,057 3,067 6,837 14,308
Impairment and (gain)/loss on sales
of oil and gas properties 57 5,316 (1,171) 11,986
General and administrative 1,881 1,822 5,823 8,061
Interest 11,124 9,249 42,781 41,990
------- -------- -------- --------
Total expenses 61,716 67,205 210,471 244,271
------- -------- -------- --------
Income (loss) before provision
(benefit) for income taxes 10,746 (18,266) 18,879 (30,075)
Provision (benefit) for income taxes 4,094 (6,959) 7,193 (11,459)
------- -------- -------- --------
Net income (loss) $ 6,652 $(11,307) $ 11,686 $(18,616)
======= ======== ======== ========
Net income (loss) per share - diluted $ 0.35 $ (0.61) $ 0.62 $ (1.00)
======= ======== ======== ========
Outstanding shares - diluted 19,107 18,577 18,888 18,609
======= ======== ======== ========
Operating cash flow (a) $31,215 $ 16,433 $ 92,470 $ 72,862
======= ======== ======== ========
Operating cash flow per share - diluted $ 1.63 $ 0.88 $ 4.90 $ 3.92
======= ======== ======== ========
(a) Net income before geological and geophysical, exploratory and abandonment,
depreciation, depletion and amortization, impairment and (gain)/loss on
sales of oil and gas properties and income taxes.
</TABLE>
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<TABLE>
<CAPTION>
HS Resources, Inc.
Summary of 1999 Operations
SUMMARY PRODUCTION, PRICE AND COST DATA
Quarter Ended Year Ended
December 31, December 31,
--------------------------------------------------------------
% %
1999 1998 Change 1999 1998 Change
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Production by district (MMcfe):
D-J Basin and Northern Rockies 17,024 16,140 5% 66,171 62,771 5%
Gulf Coast 2,029 384 428% 7,072 1,044 577%
Mid-Continent 3 -- -- 14 8,934 -100%
Total production (MMcfe) 19,056 16,524 15% 73,257 72,749 1%
Period Production:
Oil (MBbl) 640 587 9% 2,410 2,630 -8%
Gas (MMcf) 15,214 13,003 17% 58,799 56,969 3%
Equivalent Gas (MMcfe) 19,056 16,524 15% 73,257 72,749 1%
Equivalent Barrels (MBoe) 3,176 2,754 15% 12,210 12,125 1%
Daily Production:
Oil (Bbl) 6,959 6,378 9% 6,602 7,206 -8%
Gas (Mcf) 165,371 141,336 17% 161,092 156,080 3%
Equivalent Gas (Mcfe) 207,127 179,605 15% 200,705 199,314 1%
Equivalent Barrels (Boe) 34,521 29,934 15% 33,451 33,219 1%
Average oil price (Bbl) $ 16.24 $ 13.41 21% $ 15.70 $ 14.58 8%
Average gas price (Mcf) $ 2.50 $ 1.97 27% $ 2.16 $ 1.96 10%
Average price (Mcfe) $ 2.54 $ 2.03 25% $ 2.25 $ 2.06 9%
Average price (Boe) $ 15.23 $ 12.16 25% $ 13.49 $ 12.38 9%
Costs:
G&A per Mcfe $ 0.10 $ 0.11 -9% $ 0.08 $ 0.11 -27%
LOE per Mcfe $ 0.37 $ 0.44 -16% $ 0.38 $ 0.42 -10%
DD&A per Mcfe $ 0.73 $ 0.84 -13% $ 0.74 $ 0.84 -12%
G&A per Boe $ 0.59 $ 0.66 -11% $ 0.48 $ 0.66 -27%
LOE per Boe $ 2.23 $ 2.65 -16% $ 2.29 $ 2.51 -9%
DD&A per Boe $ 4.39 $ 5.05 -13% $ 4.46 $ 5.05 -12%
(DD&A includes depreciation
on non oil and gas assets)
</TABLE>
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<CAPTION>
HS Resources, Inc.
Summary of 1999 Operations
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Assets
Current assets $ 77,662 $ 60,265
Oil & gas properties 992,334 924,663
Accumulated DD&A (227,692) (175,729)
Gas gathering and transportation facilities 54,628 5,891
Accumulated DD&A (2,016) (1,616)
Other assets 16,262 18,965
--------- ---------
Total assets $ 911,178 $ 832,439
========= =========
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities $ 95,044 $ 79,164
Bank debt 227,000 230,000
Payable to KMI 47,107 --
9 7/8% Subordinated notes, due 2003 74,771 74,712
9 1/4% Subordinated notes, due 2006 230,813 230,205
Other long-term liabilities & deferred revenue 15,804 21,359
Deferred taxes 53,246 44,138
Stockholders' equity 167,393 152,861
--------- ---------
Total liabilities and stockholders' equity $ 911,178 $ 832,439
========= =========
</TABLE>
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<CAPTION>
HS Resources, Inc.
Summary of 1999 Operations
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended
December 31,
-----------------------
1999 1998
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 11,686 $ (18,616)
Depreciation, depletion and amortization 54,400 61,223
Impairment and (gain)/loss on sales of oil and gas properties (1,171) 11,986
Amortization of deferred charges, debt issue costs
and deferred compensation 4,210 2,621
Surrendered and expired acreage 5,211 10,422
Transfer treasury stock to 401(k) plan 763 549
Gain on sale of fixed assets -- (235)
Deferred income tax provision (benefit) 7,008 (14,106)
(Increase) decrease in accounts receivable (22,523) (1,186)
Increase in accounts payable and accrued expenses 18,524 10,069
Decrease in deferred revenue, net (8,908) (965)
Other (4,189) (1,257)
-------- ---------
Net cash provided by operating activities 65,011 60,505
-------- ---------
Cash flows from investing activities:
Exploration, development and leasehold costs (75,209) (98,307)
Purchase of unproved and proved properties -- (4,754)
Purchase of workover equipment (875) --
Gas gathering and transportation facilities additions (1,629) (28)
Other property additions (353) (859)
Net proceeds from the sale of oil and gas properties 3,026 151,031
Proceeds from the sale of fixed assets -- 1,234
Increase in property related payables 2,809 3,694
-------- ---------
Net cash (used in) provided by investing activities (72,231) 52,011
-------- ---------
Cash flows from financing activities:
Proceeds from debt 81,000 154,750
Repayments of debt (84,000) (256,000)
Debt issuance costs -- (2,460)
Exercise of options 1,701 468
Issuance of common stock 611 --
Purchase of treasury stock (2,055) (6,524)
Payment of officer note and interest 823 --
-------- ---------
Net cash used in financing activities (1,920) (109,766)
-------- ---------
Net (decrease) increase in cash and
cash equivalents (9,140) 2,750
Cash and cash equivalents, beginning
of the period 9,658 6,908
-------- ---------
Cash and cash equivalents, end of
the period $ 518 $ 9,658
======== =========
</TABLE>
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<CAPTION>
HS Resources, Inc.
Summary of 1999 Operations
1999 DEVELOPMENT, EXPLOITATION AND EXPLORATION COSTS
(In Thousands)
Year Ended 12/31/99
----------------------------------------------------
D-J Gulf Northern
Basin Coast Rockies Other Total
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Capitalized Costs
Land $ 54 $ 5,021 $ 125 % 578 $ 5,778
Exploration Drilling -- 10,377 1,686 -- 12,063
Development Drilling 10,928 -- -- -- 10,928
Recompletions and Refracs 39,189 401 (9) -- 39,581
Acquisitions 174 6 -- 21 201
Capitalized Interest & Other 5,462 935 197 64 6,658
------- ------- ------- ------- -------
Total Capitalized Costs 55,807 16,740 1,999 663 75,209
------- ------- ------- ------- -------
Costs Charged to Income Statement
Geological &Geophysicall 307 5,670 419 441 6,837
Exploratory Dryholes 206 4,795 -- -- 5,001
Surrendered & Expired Acreage (1) 284 4,320 533 74 5,211
Other Exploratory 462 2,415 372 64 3,313
------- ------- ------- ------- -------
Total G&G and Exploration Costs 1,259 17,200 1,324 579 20,362
------- ------- ------- ------- -------
Total Development, Exploitation
and Exploration Costs $57,066 $33,940 $ 3,323 $ 1,242 $95,571
======= ======= ======= ======= =======
(1) Includes non-cash charges in the current period for certain previously
capitalized leasehold costs attributable to expired acreage and associated
capitalized interest.
</TABLE>
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