SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
Form 10-Q
(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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------- -------
Commission file number 1-11516
REMINGTON OIL AND GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2369148
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
8201 Preston Road, Suite 600, Dallas, Texas 75225-6211
(Address of principal executive offices)
(Zip code)
(214) 210-2650
(Registrant's telephone number, including area code)
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 shorter period than
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
--- ---
There were 3,221,510 outstanding shares of Class A (Voting) Common
Stock, $1 par value, on August 4,1998. There were also 17,147,298
outstanding shares of Class B (Non-Voting) Common Stock, $1 par value,
on such date.
<PAGE>
Remington Oil and Gas Corporation
INDEX
PART I FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Condensed Balance Sheets as of June 30, 1998 and
December 31, 1997 3
Condensed Statements of Income - Three and six months
ended June 30, 1998 and 1997 4
Condensed Statements of Cash Flows - Six months ended
June 30, 1998 and 1997 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Remington Oil and Gas Corporation
Condensed Balance Sheets
(In thousands, except share data)
June 30, December 31,
1998 1997
----------- -------------
Assets (Unaudited)
Current assets
Cash and cash equivalents $ 4,613 $ 4,552
Accounts receivable - oil and natural
gas 4,445 5,725
Accounts receivable - other 304 268
Note receivable - S-Sixteen Holding
Company 5,309 6,192
Prepaid expenses and other current
assets 1,852 2,118
----------- -------------
Total current assets 16,523 18,855
----------- -------------
Properties
Oil and natural gas properties
(successful-efforts method) 235,223 220,481
Other properties 2,241 2,800
Accumulated depreciation, depletion
and amortization (155,422) (144,548)
----------- -------------
Total properties 82,042 78,733
Other assets
Deferred charges (net of accumulated
amortization) 911 927
----------- -------------
Total other assets 911 927
----------- -------------
Total assets $ 99,476 $ 98,515
=========== =============
Liabilities and stockholders' equity
Liabilities
Current liabilities
Accounts payable $ 8,391 $ 8,694
Accrued interest payable 264 264
Accrued transportation payable
related party 274 305
Net Profits expense payable 932 594
Short-term notes payable 9,700 6,000
----------- -------------
Total current liabilities 19,561 15,857
----------- -------------
Convertible subordinated notes payable 38,371 38,371
----------- -------------
Total Liabilities 57,932 54,228
----------- -------------
Commitments and contingencies (Note 7)
Stockholders' equity
Common stock, $1.00 par value
Class A (Voting) - 15,000,000
shares authorized, 3,250,110
shares issued 3,250 3,250
Class B (Non-Voting) - 30,000,000
shares authorized, 17,571,570
shares issued 17,572 17,553
Additional paid-in capital 25,283 25,197
Treasury stock, at cost, 28,600
shares Class A, and 424,272 shares
Class B (3,161) (3,465)
Retained earnings (1,400) 1,752
----------- -------------
Total stockholders' equity 41,544 44,287
----------- -------------
Total liabilities and stockholders'
equity $ 99,476 $ 98,515
=========== =============
See accompanying Notes to Financial Statements.
<PAGE>
Remington Oil and Gas Corporation
Condensed Statements of Income
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
Oil sales $ 3,981 $ 5,270 $ 8,308 $ 10,533
Gas sales 7,427 10,635 14,755 21,406
Other income 648 1,062 1,500 2,255
---------- ---------- ---------- ----------
Total revenues 12,056 16,967 24,563 34,194
Costs and expenses
Operating costs and expenses 2,124 1,700 4,494 3,127
Net Profits interest expense 1,411 2,236 3,043 4,705
Exploration expenses 1,758 2,507 3,631 3,906
Depreciation, depletion and
amortization 5,573 6,928 11,934 12,154
General and administrative 1,281 2,645 2,552 5,143
Reorganization expense - 435 - 638
Interest and financing expense 1,066 1,226 2,061 2,451
---------- ---------- ---------- ----------
Total costs and expenses 13,213 17,677 27,715 32,124
---------- ---------- ---------- ----------
Income (loss) before taxes (1,157) (710) (3,152) 2,070
---------- ---------- ---------- ----------
Income tax expense (benefit) - (248) - 725
---------- ---------- ---------- ----------
Net income (loss) $ (1,157) $ (462) $ (3,152) $ 1,345
========== ========== ========== ==========
Basic and diluted income per share $ (0.06) $ (0.02) $ (0.15) $ 0.06
========== ========== ========== ==========
Weighted average shares outstanding 20,387 20,668 20,370 20,735
========== ========== ========== ==========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
Remington Oil and Gas Corporation
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
1998 1997
--------- ---------
Cash flow provided by operations
Net income (loss) $ (3,152) $ 1,345
Depreciation, depletion and amortization 11,934 12,154
Amortization of deferred charges 120 130
Amortization of premium on marketable
securities - 31
Deferred income tax expense (benefit) - 725
Dry hole and impaired property costs 1,255 1,981
Decrease in accounts receivable 1,244 1,817
Decrease (increase) in prepaid expenses and
other current assets 266 (243)
(Increase) in deferred charges (104) -
Increase (decrease) in accounts payable and
accrued expenses 4 (43)
(Gain) loss on sale of properties (70) 56
--------- ---------
Net cash flow provided by operations 11,497 17,953
--------- ---------
Cash from investing activities
Payments for capital expenditures (16,540) (11,677)
Proceeds from property sales 112 288
--------- ---------
Net cash used in investing activities (16,428) (11,389)
--------- ---------
Cash from financing activities
Proceeds from notes payable 3,800 -
Payments on notes payable (100) -
Sales and maturities of marketable
securities - 2,730
Investment in marketable securities - (597)
Notes receivable - S-Sixteen Holding Company - (7,250)
Principal repayments - S-Sixteen Holding
Company 883 351
Common stock issued 409 -
Repurchase common stock - (3,120)
--------- ---------
Net cash provided by financing activities 4,992 (7,886)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 61 (1,322)
Cash and cash equivalents at beginning of
period 4,552 2,997
--------- ---------
Cash and cash equivalents at end of period $ 4,613 $ 1,675
========= =========
See accompanying Notes to Financial Statements.
<PAGE>
Remington Oil and Gas Corporation
Notes to Financial Statements
Note 1. Accounting Policies and Basis of Presentation
Remington Oil and Gas Corporation, a Delaware corporation (the
"Company" or "Remington"), is an independent oil and gas exploration
and production company. The Company's activities and properties are
located in three core areas, offshore Gulf of Mexico,
Mississippi/Alabama and onshore Gulf Coast.
The financial statements are prepared according to the
instructions to Form 10-Q and may not include all disclosures required
for financial statements prepared in conformity with generally accepted
accounting principles. The results of operations and financial position
for the interim periods presented include all transactions and
adjustments which management believes are necessary for fair
presentation. All adjustments are of a normal recurring nature. The
results of operations for the three and six months ended June 30, 1998,
are not necessarily indicative of the results for the full year. The
financial statements and related notes to the financial statements
presented in this Form 10-Q should be read together with the audited
financial statements of the Company for the year ended December 31,
1997. There were no material changes in the significant accounting
policies, details of accounts or notes to the financial statements
during the interim periods except as presented below.
Note 2. Proposed Merger
S-Sixteen Holding Company, a Delaware corporation ("SSHC"), owns
1,840,525 shares (approximately 57%) of the Class A (Voting) Common
Stock ("Remington Class A Stock") of Remington and 294,643 shares of
the Class B (Non-Voting) Common Stock ("Remington Class B Stock"). SSHC
is owned by an entity controlled by Mr. J. R. Simplot of Boise, Idaho.
On June 22, 1998, Remington and SSHC executed an Agreement and Plan of
Merger under which SSHC will merge into Remington with Remington being
the surviving corporation (the "Merger"). In addition, in connection
with the Merger, Remington will convert its two classes of common stock
into a single class (the "Conversion of Stock"). The Merger and the
Conversion of Stock are hereinafter referred to as the "Transaction."
Upon the consummation of the Transaction, the Company will
exchange 1.15 shares of new voting common stock ("Remington Common
Stock") for each share of outstanding Remington Class A Stock not
directly owned by SSHC, 1 share of Remington Common Stock for each
share of outstanding Remington Class B Stock not directly owned by SSHC
and 72.329 shares of Remington Common Stock for each share of
outstanding common stock in SSHC (the "Conversion of Stock"). After the
Conversion of Stock, the sole stockholder of SSHC will own 2,785,028
shares of Remington Common Stock. In addition, SSHC's sole stockholder
will receive a stock warrant to purchase up to 300,000 shares of
Remington Common Stock at various prices, and the note payable to
Remington by SSHC will be canceled. See Note 4. Note Receivable S-
Sixteen Holding Company. The 1,840,525 shares of Remington Class A
Stock and 88,668 shares of Remington Class B Stock owned directly by
SSHC will be canceled as will the Remington Class A Stock and Remington
Class B Stock held as treasury stock by Remington. A Special Meeting of
Stockholders of the Company is planned for late summer or early fall to
consider and vote upon the proposal to approve and adopt the Agreement
and Plan of Merger.
In addition, Mr. Simplot, who controls SSHC's sole stockholder,
beneficially owns 2,845,000 shares of Remington Class B Stock, which
will be converted into a like number of shares of Remington Common
Stock pursuant to the Transaction. Thus, upon the consummation of the
Transaction, Mr. Simplot and his affiliates (not including shares
beneficially held by Mr. David H. Hawk and Mr. James Arthur Lyle,
SSHC's nominees to Remington's Board of Directors) will beneficially
own 5,630,028 shares of Remington Common Stock, representing
approximately 27% of the outstanding class.
One of the subsidiaries of SSHC that would be acquired by
Remington as part of the Merger is CKB Petroleum, Inc. ("CKBP"), which
currently transports all of the Company's oil production from the South
Pass Area blocks in the Gulf of Mexico, to Venice, Louisiana. See Note
6. Related Party Transactions.
Note 3. Subsequent Event
On July 31, 1998, the Company and Texas Eastern Transmission
Corporation ("TETCO") agreed to terminate the South Pass Block 89 long-
term gas sales contract effective June 30, 1998 (the "TETCO Contract
Termination"). TETCO made a Termination Payment (as defined in the
agreement) to the Company in the amount of $49.8 million. As part of
the termination agreement, TETCO was released from the gas purchase
contract, including gas substitution and indemnification rights
thereunder, as well as related indemnification and other obligations
under a 1990 settlement agreement. Remington will sell all gas produced
on and after July 1, 1998 from South Pass Block 89 on the spot
market. Under the gas contract, which was to expire in July 2002, the
Company was receiving $12.38 per Mcf for gas produced from the southern
portion of South Pass Block 89 and $6.83 per Mcf for gas produced from
the northern portion of the block, with the gas price escalating 10%
per year. Gas sales revenue received under the long-term contract in
excess of the average non contract spot market price for this block was
$5.8 million for the first six months of 1998 and was estimated to be
$4.3 million for the last six months of 1998. Approximately one-half of
the value of the contract, as evaluated by the Company's independent
reservoir engineers at January 1, 1998 was associated with a high risk
and undrilled well location in the Company's U-1/1 reservoir. Reserves
for this location were 78 MBbls and 3,141 MMcf at January 1, 1998. At
June 30, 1998 the net capitalized cost remaining for South Pass Block
89 platform B was $7.4 million. The Company may incur an impairment
charge because of the reduction in the price received for natural gas
production from this block but the amount, if any, has not yet been
determined. In the third quarter the Company will reassess the block in
order to comply with Statement of Financial Accounting Standard
("SFAS") No. 121 entitled "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
The Company filed a declaratory judgment action against Phillips
in federal district court in Dallas, Texas requesting the court to
declare that none of the proceeds received from the TETCO Contract
Termination are owed to Phillips by virtue of a 33% Net Profits
interest in South Pass Block 89.
Note 4. Note Receivable S-Sixteen Holding Company
The Company extended the maturity date of the $6.95 million note
receivable from SSHC, dated June 3, 1997, from May 29, 1998 to November
29, 1998. The balance on June 30, 1998 was $5.3 million. The note
receivable will be canceled at the effective time of the Transaction.
However, in accordance with the Agreement and Plan of Merger, SSHC will
continue to make payments until such effective time. See Note 2.
Proposed Merger.
Note 5. Notes Payable
Remington has $38.4 million of 8 1/4% Convertible Subordinated
Notes ("Notes") outstanding on June 30, 1998. The Indenture for the
Notes (the "Indenture") provides that if a "change in control" occurs,
the Company shall, pursuant to the Indenture, offer to purchase on the
40th Business Day following the date on which such "change in control"
occurs, any and all of the then outstanding Notes at a purchase price
equal to 100% of the principal amount of the Notes, plus accrued but
unpaid interest on the Notes. If the Merger takes place, a "change in
control" will occur since the holders of a majority of the Remington
Class A Stock immediately prior to the Transaction will not receive at
least a majority of the voting common stock of the continuing or
surviving corporation. See Note 2. Proposed Merger.
Remington may not have sufficient cash to purchase all of the
Notes tendered. In such event, the Company would have to explore other
avenues for the means to purchase the tendered Notes including, but not
limited to, obtaining bank financing and/or utilizing the public and
private debt and equity markets. The Company anticipates that until
the Phillips litigation in Louisiana state court is resolved, the case will
continue to impede the Company's access to credit and capital markets, and
the Company may also consider the sale or other disposition of assets. In
addition, Remington's Board of Directors has the ability to withdraw the
Company from the Transaction up until the effective time of the Transaction if
the Board determines that the impact of the Transaction on the
Company's liquidity is unacceptable to the Board.
The due date of the Company's line of credit with a borrowing base
of $10.0 million has been extended to September 1998. The line of
credit was renewed in 1995, 1996 and 1997 and the Company expects to
renew or replace this line of credit in September. The line of credit
is collateralized by the Company's oil and gas properties. The balance
on June 30, 1998 was $9.7 million, and letters of credit totaling
$250,000 have been issued against this line of credit. On June 30,
1998, a violation of a negative covenant concerning the current ratio
existed. The violation did not become an "Event of Default" as defined
in the note agreement because it is not continuing.
Note 6. Related Party Transactions
SSHC controls approximately 57% of the outstanding Class A Stock
of the Company and 94% of the outstanding shares of CKBP. Under both
applicable law and Board of Directors' resolution, transactions with
affiliates must be approved by the Board of Directors, be fair and
reasonable to the Company and be on terms no less favorable to the
Company than can be obtained from an unaffiliated party in an arm's-
length transaction.
CKBP owns a minority interest in the pipeline that transports oil
from South Pass Area blocks in the Gulf of Mexico, to Venice,
Louisiana. The pipeline tariff is $2.75 per barrel and is published
with the Federal Energy Regulatory Commission. The rate is consistent
with rates offered by unrelated parties from the South Pass Area to
Venice. Transportation expense incurred and payable to CKBP was
$863,000 and $825,000 for the three months ended June 30, 1998 and
1997, respectively and $1.7 million and $1.6 million for the six months
ended June 30, 1998 and 1997, respectively.
In April 1992, the Company acquired all of the assets and assumed
all of the liabilities of OKC Limited Partnership (the "Partnership").
Under the Partnership Agreement, the general partners were entitled to
advancement of litigation expenses if they were named parties to
litigation in their capacity as general partners. Accordingly, the
Company was obligated to advance litigation expenses to the general
partners. In addition, the Company advanced litigation expenses on
behalf of certain directors and officers of the Company in applicable
situations. The litigation for which advancements were made has been
either settled or dismissed. However, during the three and six months
ending June 30, 1997, the Company advanced $57,000 and $73,000,
respectively, on behalf of the above parties.
Interest income accrued on the note receivable from SSHC was
$139,000 and $283,000 for the three and six months ended June 30, 1998,
respectively and $114,000 for the three months ended June 30, 1997.
Principal payments received from SSHC during the same periods totaled
$336,000, $883,000 and $351,000, respectively. The balance of the note
receivable on June 30, 1998, was $5.3 million. See Note 4. Note
Receivable - S-Sixteen Holding Company.
During the three and six months ended June 30, 1998, the Company
incurred executive search fees totaling $33,000 and $40,000,
respectively, to Preng and Associates, Inc., an entity controlled by a
member of the Board of Directors. Executive search fees paid to Preng
and Associates, Inc. during the six months ended June 30, 1997 were
$76,000.
Note 7. Contingencies
Phillips Petroleum Case
The Company and Phillips Petroleum Company are engaged in a
dispute concerning the Net Profits interest in South Pass Block 89. In
this litigation, Phillips contends that pursuant to its 33% Net Profits
interest in South Pass Block 89, it was entitled to receive an
overriding royalty for months in which "net profits" were not achieved;
that an excessive oil transportation fee was being charged to the Net
Profits account; and that the entire $69.6 million cash payment that
had been received by the Partnership from the 1990 settlement of
previous litigation should have been credited to the Net Profits
account instead of the $5.8 million that was credited. On the latter
claim, Phillips seeks to receive in excess of $21.5 million, while on
the first two claims Phillips alleged aggregate damages of several
million dollars. In addition, Phillips, under Louisiana Mineral Code,
is seeking double damages and cancellation of the farmout agreement
that created the Net Profits interest. Remington denies Phillips'
claims and vigorously defended against them during a non-jury trial
held in April 1997. In addition to contesting the claims of Phillips,
the Company asserted a counterclaim at trial that Phillips had breached
a settlement agreement regarding previous litigation between the
parties and claimed damages in excess of $10.0 million. The parties
presented oral arguments to the court on September 3, 1997 and are
awaiting a ruling by the trial judge. Certain possible results of the
Phillips Petroleum Case could have a material adverse effect on the
Company. Statement of Financial Accounting Standards No. 5 entitled
"Accounting for Contingencies" ("SFAS 5"), in pertinent part requires
that a loss contingency be accrued if it is probable that a liability
has been incurred and that the amount thereof can be reasonably
estimated. The complexities of the Phillips case are such that the
Company is unable to determine whether the probability exists that a
liability has been incurred. Further, the Company cannot reasonably
estimate the amount of any possible adverse outcome. Accordingly, no
loss contingency accrual can be made at this time in accordance with
SFAS 5.
Other Contingencies
The Company is not a party to any material pending legal
proceedings other than the foregoing.
Note 8. Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130 entitled "Reporting
Comprehensive Income." The statement establishes standards for
reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. For the three and six
months ended June 30, 1998 and 1997, comprehensive income includes net
income (loss) and unrealized gains on marketable securities. The impact
of adopting SFAS No. 130 is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1998 1997 1998 1997
-------- ------- -------- ------
Net income (loss) $(1,157) $ (710) $(3,152) $1,345
Unrealized gain on marketable
securities - 196 - 54
-------- ------- -------- ------
Net comprehensive income (loss) $(1,157) $ (514) $(3,152) $1,399
======== ======= ======== ======
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion will assist in the understanding of the
Company's financial position and results of operations. The information
below should be read in conjunction with the financial statements, the
related notes to financial statements and the Company's Form 10-K for
the year ended December 31, 1997.
This discussion contains historical information and certain
forward-looking statements that involve risks and uncertainties about
the business, long-term strategy, financial condition and future of the
Company. Statements concerning results of future exploration,
exploitation, development and acquisition expenditures and expense and
reserve levels are forward-looking statements. These statements are
based on assumptions concerning commodity prices, drilling results and
production, and administrative and interest costs that management
believes are reasonable based on currently available information of
known facts and trends. In addition, statements concerning the
Transaction, as defined below, are forward-looking statements and
include the assumption by management that the Transaction will be
consummated. Management's assumptions and the Company's future
performance are both subject to a wide range of business risks and
there is no assurance that these goals and projections can or will be
met.
Remington Oil and Gas Corporation (the "Company" or "Remington")
is an independent oil and gas exploration and production company. The
activities and properties of the Company are located in the offshore
Gulf of Mexico, onshore Gulf Coast and Mississippi/Alabama. The long-
term strategy is to economically increase reserves, production, and
cash flow on an annual basis, resulting in increased shareholder value.
Capital expenditures financed primarily by operating cash flow and bank
debt will entail a balanced exploration, development and acquisition
program.
S-Sixteen Holding Company, a Delaware corporation ("SSHC"), owns
1,840,525 shares (approximately 57%) of the Class A (Voting) Common
Stock ("Remington Class A Stock") of Remington and 294,643 shares of
the Class B (Non-Voting) Common Stock ("Remington Class B Stock"). SSHC
is owned by an entity controlled by Mr. J.R. Simplot of Boise, Idaho.
On June 22, 1998, Remington and SSHC executed an Agreement and Plan of
Merger under which SSHC will merge into Remington with Remington being
the surviving corporation (the "Merger"). In addition, in connection
with the Merger, Remington will convert its two classes of common stock
into a single class (the "Conversion of Stock"). The Merger and the
Conversion of Stock are hereinafter referred to as the "Transaction".
Upon the consummation of the Transaction, the Company will
exchange 1.15 shares of new voting common stock ("Remington Common
Stock") for each share of outstanding Remington Class A Stock not
directly owned by SSHC, 1 share of Remington Common Stock for each
share of outstanding Remington Class B Stock not directly owned by SSHC
and 72.329 shares of Remington Common Stock for each share of
outstanding common stock in SSHC (the "Conversion of Stock"). After the
Conversion of Stock, the sole stockholder of SSHC will own 2,785,028
shares of Remington Common Stock. In addition, SSHC's sole stockholder
will receive a stock warrant to purchase up to 300,000 shares of
Remington Common Stock at various prices and the note payable to
Remington by SSHC will be canceled. The 1,840,525 shares of Remington
Class A Stock and 88,668 shares of Remington Class B Stock owned
directly by SSHC will be canceled as will the Remington Class A Stock
and Remington Class B Stock held as treasury stock by Remington. A
Special Meeting of Stockholders of the Company is planned for late
summer or early fall to consider and vote upon the proposal to approve
and adopt the Agreement and Plan of Merger.
In addition, Mr. Simplot, who controls SSHC's sole stockholder,
beneficially owns 2,845,000 shares of Remington Class B Stock which
will be converted into a like number of shares of Remington Common
Stock pursuant to the Transaction. Thus, upon the consummation of the
Transaction, Mr. Simplot and his affiliates (not including shares
beneficially held by Mr. David H. Hawk and Mr. James Arthur Lyle,
SSHC's nominees to Remington's Board of Directors) will beneficially
own 5,630,028 shares of Remington Common Stock, representing
approximately 27% of the outstanding class.
One of the subsidiaries of SSHC that would be acquired by
Remington as part of the Merger is CKB Petroleum, Inc. ("CKBP"), which
currently transports all of the Company's oil production from the South
Pass Area blocks in the Gulf of Mexico, to Venice, Louisiana.
On July 31, 1998, the Company and Texas Eastern Transmission
Corporation ("TETCO") agreed to terminate the South Pass Block 89 long-
term gas sales contract effective June 30, 1998. TETCO made a
Termination Payment (as defined in the agreement) to the Company in the
amount of $49.8 million (the "TETCO Contract Termination"). As part of
the termination agreement, TETCO was released from the gas purchase
contract, including gas substitution and indemnification rights
thereunder, as well as related indemnification and other obligations
under a 1990 settlement agreement. Remington will sell all gas produced
on and after July 1, 1998 from South Pass Block 89 on the spot
market. Under the gas contract, which was to expire in July 2002, the
Company was receiving $12.38 per Mcf for gas produced from the southern
portion of South Pass Block 89 and $6.83 per Mcf for gas produced from
the northern portion of the block, with the gas price escalating 10%
per year. Gas sales revenue received under the long-term contract in
excess of the average non contract spot market price for this block was
$5.8 million for the first six months of 1998 and was estimated to be
$4.3 million for the last six months of 1998. Approximately one-half of
the value of the contract, as evaluated by the Company's independent
reservoir engineers at January 1, 1998, was associated with a high risk
and undrilled well location in the Company's U-1/1 reservoir. Reserves
for this location were 78 MBbls and 3,141 MMcf at January 1, 1998. At
June 30, 1998, the net capitalized cost remaining for South Pass Block
89 platform B was $7.4 million. The Company may incur an impairment
charge as a result of the reduction in the price received for natural
gas production from this block but the amount, if any, has not yet been
determined. In the third quarter the Company will reassess the block in
order to comply with Statement of Financial Accounting Standard
("SFAS") No. 121 entitled "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
Gas sales revenue from this block accounted for approximately 32%
of the Company's total revenue. However, the Company has observed a
steady decline in production from Well B-20S. Production from Well B-
20S, which is from the U-1/1 reservoir, accounts for a significant
portion of the total gas production from this block. Current estimates
have the well fully depleted during the first or second quarter of
1999. In the past, the long-term gas sales contract provided some
protection against significant decreases in market prices for gas
production. However, after the TETCO Contract Termination the Company
revenues, net income and cash flow provided by operations will be fully
affected by the market fluctuations in oil and gas prices.
Two recently issued SFAS's have been or will be adopted by the
Company in 1998; SFAS No. 130 entitled "Reporting Comprehensive Income"
and SFAS No. 131 entitled "Disclosures about Segments of an Enterprise
and Related Information." SFAS No. 130 requires the Company to report
"comprehensive income" and its components in the financial statements.
Comprehensive income represents changes in the stockholders' equity
accounts other than for items required by accounting standards to be
reported as direct adjustments to paid-in-capital, retained earnings or
other non-income equity accounts during the reporting period. Such
changes include net income as well as other charges and credits to
stockholders' equity accounts that are excluded from net income. The
effects of SFAS No. 130 are summarized in Note 8 of Notes to the
Financial Statements - Comprehensive Income. SFAS No. 131 will be
adopted in December of 1998. This statement establishes standards for
reporting information about operating segments and related disclosures
about products and services, geographic areas, and major customers.
This statement is not anticipated to have a material impact on the
Company's financial disclosures.
Liquidity and Capital Resources
The Company's balance sheet liquidity decreased during the first
six months of 1998. At December 31, 1997, current assets exceeded
current liabilities by $3.0 million and the current ratio was
approximately 1.2 to 1. At June 30, 1998, the Company's current
liabilities exceeded current assets by $3.0 million and the current
ratio was 0.84 to 1. The decrease in liquidity resulted primarily from
the excess of capital expenditures over the net cash flow from
operations. The Company's liquidity increased significantly on July 31,
1998 after receiving $49.8 million from the TETCO Contract Termination.
Cash flow from operations for the first six months of 1998
decreased $6.4 million, or 35%, compared to the first six months of
1997, primarily because of a 21% decrease in oil sales revenue and a
31% decrease in gas sales revenue. Although total oil production
increased 25% or 138,000 barrels, average oil prices for the first six
months of 1998 were $11.97 per barrel compared to $18.93 per barrel
during the first six months of 1997. In addition, gas sales revenue
from South Pass Blocks 86 and 89 platforms B and C decreased $7.9
million during the first six months of 1998 compared to the same period
in the prior year. The decrease resulted from lower gas production from
these platforms of 879,000 Mcf.
Throughout the year, the Company has financed capital expenditures
through cash flow from operations and bank debt. Although management
decreased its capital and exploration budget by 20% for 1998 due to the
lower oil prices and the resulting lower net cash flow from operations,
the Company was committed to significant capital expenditures for the
first six months of 1998. Drilling and completion costs incurred during
the first six months of 1998 for West Cameron Block 170, Eugene Island
Block 135 and Parker Creek totaled $10.3 million or 62% of the total
capital expenditures. Other capital expenditures included $2.7 million
in the onshore Gulf Coast area, $1.7 million on Main Pass Block 262,
$1.2 million in the Mississippi/Alabama area and $524,000 for unproved
property acquisitions. Capital expenditures in the Gulf Coast area
included a $1.6 million acquisition in Lavaca County, Texas. The
Company expects to complete the exploratory well drilled on Main Pass
Block 262, but has yet to fully evaluate the results of drilling
operations. Other capital expenditures in the Mississippi/Alabama area
included drilling costs totaling $866,000 for a non-commercial well in
Wayne County, Mississippi.
The Company is committed to an additional well in South Pass Block
87 and has budgeted capital expenditures for another well in South Pass
Block 87, a side track or a new well in South Pass Block 89, additional
development expenditures for West Cameron Block 170, additional
development wells in the Parker Creek Field and exploration drilling in
the onshore Gulf Coast. The approved budget for capital expenditures
for 1998 totaled $35.0 million.
Sources of cash other than from operations include the repayment
of the note receivable by SSHC through August 1998. After the
Transaction, CKBP will become a subsidiary of the Company and the cash
paid for transportation will remain in the consolidated companies. If
the Transaction is not approved by Remington stockholders, SSHC will be
required to continue to repay the note receivable as scheduled.
The Company's existing line of credit with a current borrowing
base of $10.0 million expires in September 1998. The Company
anticipates renewing or replacing this line again in 1998. The Company
has borrowed $9.7 million and has issued letters of credit totaling
$250,000 against this line of credit. On June 30, 1998, a violation of
a negative covenant concerning the current ratio existed. The violation
did not become an "Event of Default" as defined in the note agreement
because it is not continuing.
The Transaction will cause a "change in control" as defined in the
Indenture to the Notes ("Indenture"). The Indenture provides that in
the event a "change in control" occurs, the Company shall, by way of an
offer, purchase any tendered Notes on the 40th Business Day following
the date on which such "change in control" occurs, at a purchase price
equal to 100% of the principal amount of the Notes, plus accrued but
unpaid interest on the Notes. Remington may not have sufficient cash to
purchase all of the Notes tendered. In such event, the Company would
have to explore other avenues for the means to purchase the tendered
Notes including, but not limited to, obtaining bank financing and/or
utilizing the public and private debt and equity markets. The Company
anticipates that until the Phillips litigation in Louisiana state court is
resolved, the case will continue to impede the Company's access to credit and
capital markets, and the Company may also consider the sale or other
disposition of assets. In addition, Remington's Board of Directors has
the ability to withdraw the Company from the Transaction up until the
effective time of the Transaction if the Board determines that the
impact of the Transaction on the Company's liquidity is unacceptable to
the Board.
The Company and Phillips Petroleum Company are engaged in a
dispute concerning the Net Profits interest in South Pass Block. In
this litigation, Phillips contends that pursuant to its 33% Net Profits
interest in South Pass Block 89, it was entitled to receive an
overriding royalty for months in which "net profits" were not achieved;
that an excessive oil transportation fee was being charged to the Net
Profits account; and that the entire $69.6 million cash payment that
had been received by the Partnership from the 1990 settlement of
previous litigation should have been credited to the Net Profits
account instead of the $5.8 million that was credited. Phillips seeks
to receive in excess of $43.0 million for its claims. In addition,
Phillips, under Louisiana Mineral Code, is seeking double damages and
cancellation of the farmout agreement that created the Net Profits
interest. Remington denies Phillips' claims and vigorously defended
against them during a non-jury trial held in April 1997. In addition to
contesting the claims of Phillips, the Company asserted a counterclaim
at trial that Phillips had breached a settlement agreement regarding
previous litigation between the parties and claimed damages in excess
of $10.0 million. The parties presented oral arguments to the court on
September 3, 1997 and are awaiting a ruling by the trial judge.
The Company filed a declaratory judgment action against Phillips
in federal district court in Dallas, Texas requesting the court to
declare that none of the proceeds received from the TETCO Contract
Termination are owed to Phillips by virtue of a 33% Net Profits
interest in South Pass Block 89.
Certain possible results of the Phillips litigation and the
Company's declaratory judgment action if not successful, could have a
material adverse effect on Remington.
Results of Operations
The following table summarizes oil and gas production by area and
average prices for the three and six months ended June 30, 1998 and
1997.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Production
Oil MBbls
Offshore Gulf of Mexico 275 249 536 483
Mississippi/Alabama 53 48 102 66
Onshore Gulf Coast 24 3 52 3
Other 3 2 4 4
------ ------ ------ ------
Total oil production 355 302 694 556
====== ====== ====== ======
Gas MMcf
Offshore Gulf of Mexico 1,761 2,063 3,313 3,864
Mississippi/Alabama - 2 - -
Onshore Gulf Coast 205 73 451 74
Other 3 7 4 -
------ ------ ------ ------
Total gas production 1,969 2,145 3,768 3,938
====== ====== ====== ======
Average Prices
Oil (per barrel) $11.22 $17.45 $11.97 $18.93
Gas (per Mcf) $ 3.77 $ 4.96 $ 3.92 $ 5.44
</TABLE>
The Company recorded a net loss for the three and six months ended
June 30, 1998 of $1.2 million and $3.2 million compared to a net loss
for the three months ended June 30, 1997 of $462,000 and net income for
the six months ended June 30, 1997 of $1.3 million. Lower average oil
prices and lower gas production from South Pass Block 89 combined to
reduce total revenues by $4.9 million or 29% and by $9.6 million, or
28%, for the three and six-month periods. Lower total revenues were
offset by a reduction in total costs and expenses of $4.5 million, or
25%, and $4.4 million, or 14%, for the three and six-month periods.
The lower average oil prices caused oil revenues to decrease $2.0
million for the three months ended June 30, 1998 compared to the three
months ended June 30, 1997 and $4.4 million for the six months ended
June 30, 1998 compared to the six months ended June 30, 1997.
Additional oil sales revenue from the increase in oil production offset
the lower oil sales revenue caused by lower prices by $650,000 and 2.1
million for the three and six months ended June 30, 1998 compared to
the same periods in 1997. Oil production increased by approximately 18%
and 25% for the three and six months ended June 30, 1998 compared to
the same periods in the prior year. Oil production from the Gulf of
Mexico increased as a result of production from the three wells on
Eugene Island Block 135 and a net increase from the four South Pass
area blocks. Production from Eugene Island Block 135 began in the third
quarter of 1997 from a single well. Oil production from the Parker
Creek field in the Mississippi/Alabama area increased by 5,000 barrels
and 33,000 barrels for the three and six months ended June 30, 1998
compared to the same periods in 1997. Oil production in the onshore
Gulf Coast area increased as a result of the third and fourth quarter
acquisitions of oil and gas properties in South Texas.
Gas sales revenues decreased $3.2 million and $6.7 million for the
three and six months ended June 30, 1998 compared to the three and six
months ended June 30, 1997. The decrease is the result primarily of
lower natural gas production from South Pass Block 89 and Main Pass
Block 262 partially offset by an increase in natural gas production
from South Pass Block 87, Eugene Island Block 135 and the Gulf Coast
area.
Prior to the TETCO Contract Termination, gas production from South
Pass Block 89 was sold under a long-term gas sales contract. The total
volume of gas sold under the long-term contract was 422,000 Mcf and
891,000 Mcf for the three and six months ended June 30, 1998 compared
to 831,000 Mcf and 1.6 Bcf for the three and six months ended June 30,
1997. The decrease is primarily related to the depletion of Well B-20S
that is producing in the U-sand reservoir. Gas sales revenue related to
the long-term contract decreased $3.9 million and $7.5 million for the
three and six months ended June 30, 1998 compared to the same periods
in the prior year.
Gas sales revenue from the non-contract gas increased $650,000 and
$848,000 for the three and six months ended June 30, 1998 compared to
the same periods in the prior year. Excluding the gas production sold
from South Pass Block 89, gas production for the three and six months
ended June 30, 1998 increased 18% and 25% compared to the prior year.
This increase in non-contract gas production increased gas sales
revenue by $537,000 and $1.5 million for the three and six months ended
June 30, 1998 compared to the same periods in the prior year. Although
the overall average price decreased for the three and six months ended
June 30, 1998 compared to the prior year, the reduction is caused by
the lower gas production from South Pass Block 89 as a percentage of
the total volume of gas sold. Spot gas prices for the three months
ended June 30, 1998 were $0.08 per Mcf higher than for the three months
ended June 30, 1997, which increased gas sales revenue by $124,000.
However, for the six months ended June 30, 1998 compared to the six
months ended June 30, 1997 the average spot gas price decreased by
$0.24 per Mcf which partially offset the increase from non-contract gas
production by $690,000.
Other income decreased 39% and 33% for the three and six months
ended June 30, 1998 compared to the same periods in 1997 because of the
lower amount of interest income received during 1998. Interest income
decreased because of the lower cash, cash equivalents and marketable
securities in 1998 compared to the first six months of 1997.
Operating costs increased 25% for the three months ended June 30,
1998 and 44% for the first six months of 1998 compared to the same
periods in the prior year. The operating expenses increased because of
new producing properties and rig stack charges incurred on South Pass
Block 89 Platform B. Net profits expense decreased $825,000, or 37%,
and $1.7 million, or 35%, for the three and six months ended June 30,
1998 compared to the same periods in the prior year because of the
lower oil and gas revenue on South Pass Block 89. Exploration expenses
decreased $749,000, or 30%, for the three months ended June 30, 1998
compared to June 30, 1997 because of lower 2-D and 3-D seismic costs.
Depreciation depletion and amortization decreased 20% during the
three months ended June 30, 1998 compared to the three months ended
June 30, 1997 as a result of upward revisions to proved developed
producing oil and gas reserves at June 30, 1998 for South Pass Block 89
platform B and Eugene Island Block 135. The upward revision decreased
the current depreciation depletion and amortization rate, which is
calculated using the units-of-production method. The Company increased
the estimated net proved producing oil and gas reserves for South Pass
Block 89, because Well B-20S had overproduced the original estimated
proved producing oil reserves at January 1, 1998. In addition, the
Company added proved developed oil and gas reserves associated with
Well A-3 on Eugene Island Block 135. Also included in the second
quarter and first six months of 1998 are impairment charges for
unproved leasehold costs totaling $440,000.
General and administrative expenses decreased 52% and 50% for the
three and six months ended June 30, 1999 compared to the same periods
in the prior year. The decrease results from lower legal costs,
primarily the Phillips Petroleum litigation and lower employee costs.
Reorganization expense incurred during the second quarter and first six
months of 1997 includes the payment of severance benefits to employees
that either resigned or were terminated during those periods.
Interest expense decreased $160,000, or 13%, and $390,000, or 16%,
for the three and six months ended June 30, 1998 compared to the same
period in the prior year because of the repurchase by the Company of
$16.7 million of the outstanding Notes in October 1997. The lower
interest expense that resulted from the lower amount of Notes
outstanding was partially offset by increased interest expense on the
increased bank line of credit balance outstanding for the second
quarter and first half of 1998.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated herein by this reference is the discussion of
litigation set forth in Part I, Item 1. Notes to the Financial
Statements - Note 7. Contingencies of this Form 10-Q.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1* Certificate of Incorporation, as amended.
3.2 ### Certificate of Amendment of Certificate of Incorporation of
Box Energy Corporation.
3.3++ By-Laws as amended.
4.1* Form of Indenture Box Energy Corporation to United States
Trust Company of New York, Trustee, dated December 1, 1992, 8 1/4%
Convertible Subordinated Notes due December 1, 2002.
10.1* Amended and Restated Certificate and Articles of Limited
Partnership of OKC Limited Partnership.
10.2* Restatement and Amendment of Gas Purchase Contract dated
July 15, 1982, as amended October 5, 1982, December 21, 1982, and
December 26, 1984.
10.3* Assignment of Lease, dated May 26, 1977.
10.4* Oil and Gas Lease of Submerged Lands under the Outer
Continental Shelf Lands Act dated July 1, 1967, covering all of Block
89, South Pass Area and East Addition by the United States of America,
as Lessor, dated July 1, 1967, said lease having been assigned to Box
Energy Corporation as of April 15, 1992.
10.5* Oil and Gas Lease of Submerged Lands under the Outer
Continental Shelf Lands Act dated July 1, 1967, covering all of Block
86, South Pass Area and East Addition by the United States of America,
as Lessor, dated July 1, 1983, said lease having been assigned to Box
Energy Corporation as of April 15, 1992.
10.6* Oil and Gas Lease of Submerged Lands under the Outer
Continental Shelf Lands Act dated July 1, 1967, covering all of Block
87, South Pass Area and East Addition by the United States of America,
as Lessor, dated September 1, 1985, said lease having been assigned to
Box Energy Corporation as of April 15, 1992.
10.7* Farmout Agreement with Aminoil USA, Inc., effective May 1,
1977, dated May 9, 1977.
10.8* Transportation Agreement with CKB Petroleum, Inc. dated
March 1, 1985, as amended on April 19, 1989.
10.9* Agreement of Compromise and Amendment to Farmout Agreement
dated July 3, 1989.
10.10* Settlement Agreement with Texas Eastern Transmission
Corporation dated November 14, 1990.
10.11* Guarantee of Panhandle Eastern Corporation dated November
21, 1990.
10.12* Bill of Sale and Assumption of Obligations from OKC Limited
Partnership dated April 15, 1992.
10.13* Asset Purchase Agreement dated April 15, 1992.
10.14* 1992 Incentive Stock Option Plan of Box Energy Corporation.
10.15** Pension Plan of Box Energy Corporation, effective April 16,
1992.
10.16# First Amendment to the Pension Plan of Box Energy
Corporation dated December 16, 1993.
10.17## Second Amendment to the Pension Plan of Box Energy
Corporation dated December 31, 1994.
10.18+ Form of Executive Severance Agreement dated as of December
12, 1995 by and between Box Energy Corporation and key employees.
10.19+ Form of Letter Agreement regarding severance benefits dated
as of December 12, 1995 by and between Box Energy Corporation and
employees not covered by Executive Severance Agreements.
10.20*** Amended and Restated Promissory Note between Box Energy
Corporation and Box Brothers Holding Company.
10.21*** Amended and Restated Pledge Agreement between Box Energy
Corporation and Box Brothers Holding Company.
10.22*** Agreement by and between Box Energy Corporation and James
A. Watt.
10.23### Box Energy Corporation Severance Plan.
10.24### Box Energy Corporation 1997 Stock Option Plan.
10.25### Box Energy Corporation Non-Employee Director Stock Purchase
Plan.
10.26### Form of Executive Employment Agreement, effective August
29, 1997, by and between Box Energy Corporation and two executive
officers.
11.1 Statement regarding Computation of Income per share.
27 Financial Data Schedule
(b) No Forms 8-K were filed during the quarter ended June 30, 1998.
- ----------
* Incorporated by reference to the Company's Registration
Statement on Form S-2 (file number 33-52156) filed with the Commission
and effective on December 1, 1992.
** Incorporated by reference to the Company's Form 10-K (file
number 0-19967) for the fiscal year ended December 31, 1992 filed with
the Commission and effective on or about March 30, 1993.
# Incorporated by reference to the Company's Form 10-K (file
number 0-19967) for the fiscal year ended December 31, 1993 filed with
the Commission and effective on or about March 30, 1994.
## Incorporated by reference to the Company's Form 10-K (file
number 0-19967) for the fiscal year ended December 31, 1994 filed with
the Commission and effective on or about March 30, 1995.
+ Incorporated by reference to the Company's Form 10-K (file
number 0-19967) for the fiscal year ended December 31, 1995 filed with
the Commission and effective on or about April 1, 1996.
++ Incorporated by reference to the Company's Form 10-K (file
number 1-11516) for the fiscal year ended December 31, 1996 filed with
the Commission and effective on or about March 31, 1997.
*** Incorporated by reference to the Company's Form 10-Q (file
number 1-11516) for the fiscal quarter ended June 30, 1997 filed with
the Commission and effective on or about August 12, 1997
### Incorporated by reference to the Company's Form 10-K (file
number 1-11516) for the fiscal year ended December 31, 1997 filed with
the Commission and effective on or about March 30, 1998.
<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.
REMINGTON OIL AND GAS CORPORATION
Date: August 5, 1998 By: (James A. Watt)
--------------- ----------------------------------
James A. Watt
President and Chief Executive Officer
Date: August 5, 1998 By: (J. Burke Asher)
--------------- ----------------------------------
J. Burke Asher
Vice President/Finance
Remington Energy Corporation
Computation of Earnings per Share
Exhibit 11.1
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income (loss) available for basic income
per share $ (1,157) $ (462) $ (3,152) $ 1,345
Interest expense on the Notes
(net of tax) (1) - - - -
--------- --------- --------- ---------
Net income (loss) available for diluted
income per share $ (1,157) $ (462) $ (3,152) $ 1,345
========= ========= ========= =========
Basic income (loss) per share $ (0.06) $ (0.02) $ (0.15) $ 0.06
========= ========= ========= =========
Diluted income (loss) per share $ (0.06) $ (0.02) $ (0.15) $ 0.06
========= ========= ========= =========
Weighted average
Class A Stock 3,222 3,246 3,222 3,248
Class B Stock 17,165 17,422 17,148 17,487
--------- --------- --------- ---------
Total common shares for basic income (loss)
per share 20,387 20,668 20,370 20,735
========= ========= ========= =========
Dilutive stock options outstanding (treasury
stock method) (1) - - - -
Shares assumed issued by conversion of the
Notes (1) - - - -
--------- --------- --------- ---------
Total common shares for diluted income
(loss) per share 20,387 20,668 20,370 20,735
========= ========= ========= =========
(1) Non dilutive.
Potential increase to net income for diluted
income per share
Interest expense on Notes (net of tax) 514 736 1,029 1,464
Potential issues of common stock for diluted
income per share
Weighted average stock options granted 801 279 755 279
Weighted average shares issued assuming
conversion of Notes 3,488 5,007 3,488 5,007
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REMINGTON OIL AND GAS CORPORATION'S FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000874992
<NAME> REMINGTON OIL AND GAS CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 4,613 4,613
<SECURITIES> 0 0
<RECEIVABLES> 4,749 4,749
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 16,525 16,525
<PP&E> 237,464 237,464
<DEPRECIATION> 155,422 155,422
<TOTAL-ASSETS> 99,476 99,476
<CURRENT-LIABILITIES> 19,561 19,561
<BONDS> 38,371 38,371
0 0
0 0
<COMMON> 20,822 20,822
<OTHER-SE> 20,722 20,722
<TOTAL-LIABILITY-AND-EQUITY> 99,476 99,476
<SALES> 11,408 23,063
<TOTAL-REVENUES> 12,056 24,563
<CGS> 10,866 23,102
<TOTAL-COSTS> 12,147 25,654
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,066 2,061
<INCOME-PRETAX> (1,157) (3,152)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,157) (3,152)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,157) (3,152)
<EPS-PRIMARY> (.06) (.15)
<EPS-DILUTED> (.06) (.15)
</TABLE>
