<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
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 NO. 0-22892
TATHAM OFFSHORE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 76-0269967
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
600 TRAVIS
SUITE 7400
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 224-7400
(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 TWELVE MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO __
AS OF MAY 9, 1997, THERE WERE OUTSTANDING 27,256,859 SHARES OF COMMON
STOCK, PAR VALUE $0.01 PER SHARE, OF THE REGISTRANT.
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<PAGE> 2
TATHAM OFFSHORE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet as of March 31, 1997 (unaudited) and June 30, 1996................3
Unaudited Consolidated Statement of Operations for the Three and Nine Months
Ended March 31, 1997 and 1996, respectively...............................................4
Unaudited Consolidated Statement of Cash Flows for the Nine Months
Ended March 31, 1997 and 1996.............................................................5
Consolidated Statement of Stockholders' Equity for the
Nine Months Ended March 31, 1997 (unaudited)..............................................6
Notes to Consolidated Financial Statements...................................................7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................................10
PART II. OTHER INFORMATION.....................................................................16
Legal Proceedings
Changes in Securities
Defaults Upon Senior Securities
Submission of Matters to a Vote of Security Holders
Other Information
Exhibits and Reports on Form 8-K
</TABLE>
2
<PAGE> 3
TATHAM OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,710 $ 4,764
Stock subscriptions receivable -- 12,242
Accounts receivable from joint venture partners 244 719
Receivable from affiliates 1,775 968
Prepaid expenses 1,896 1,943
-------- --------
Total current assets 14,625 20,636
-------- --------
Oil and gas properties:
Oil and gas properties, at cost, using
successful efforts method 81,070 78,158
Less - accumulated depreciation, depletion,
amortization and impairment 16,700 13,258
-------- --------
Oil and gas properties, net 64,370 64,900
-------- --------
Prepaid expenses 10,177 11,594
-------- --------
Total assets $ 89,172 $ 97,130
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,667 $ 4,654
Accounts payable to affiliates 348 3,101
Note payable to affiliate 867 1,734
-------- --------
Total current liabilities 2,882 9,489
Long-term debt to affiliate 60,000 60,000
Other noncurrent liabilities 9,261 8,779
-------- --------
72,143 78,268
-------- --------
Stockholders' equity (Note 3):
Preferred stock, $0.01 par value, 110,000,000 shares authorized as of March
31, 1997 and June 30, 1996, 24,393,611 and 18,724,530 shares issued and
outstanding at March 31, 1997 and June 30, 1996, respectively 244 187
Common stock, $0.01 par value, 250,000,000 shares authorized as of
March 31, 1997 and June 30, 1996, 27,231,341 and 25,500,320 shares
issued and outstanding at March 31, 1997 and June 30, 1996,
respectively 272 255
Warrants outstanding to purchase shares of Convertible Exchangeable
Preferred Stock -- 2,883
Additional paid-in capital 84,226 80,004
Accumulated deficit (67,713) (64,467)
-------- --------
17,029 18,862
-------- --------
Total liabilities and stockholders' equity $ 89,172 $ 97,130
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE> 4
TATHAM OFFSHORE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
-------------------- --------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenue:
Oil and gas sales $ 6,206 $ 5,900 $ 16,508 $ 11,109
-------- -------- -------- --------
Costs and expenses:
Production and operating expenses 2,609 2,313 6,037 11,068
Exploration expenses 47 101 375 333
Depreciation, depletion and amortization 1,359 460 3,500 840
Management fee and general and administrative
expenses allocated from affiliate 756 916 2,305 3,476
General and administrative expenses 656 562 1,645 1,980
-------- -------- -------- --------
5,427 4,352 13,862 17,697
-------- -------- -------- --------
Operating income (loss) 779 1,548 2,646 (6,588)
Interest income 176 32 422 75
Gain on sale of oil and gas properties -- 11,322 -- 22,641
Interest and other financing costs -- -- -- (256)
Interest expense - affiliate (2,075) (2,239) (6,314) (6,032)
-------- -------- -------- --------
Net (loss) income (1,120) 10,663 (3,246) 9,840
Preferred stock dividends (970) (112) (2,944) (112)
-------- -------- -------- --------
Net (loss) income available to common shareholders $ (2,090) $ 10,551 $ (6,190) $ 9,728
======== ======== ======== ========
Net (loss) income per share:
Primary $ (0.08) $ 0.42 $ (0.23) $ 0.39
======== ======== ======== ========
Fully diluted $ (0.08) $ 0.33 $ (0.23) $ 0.36
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
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TATHAM OFFSHORE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (3,246) $ 9,840
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation, depletion and amortization 3,500 840
Gain on sale of oil and gas properties -- (22,641)
Other 1,859 997
Changes in operating working capital:
Decrease in accounts receivable from joint
venture partners 475 3,095
Increase in receivable from affiliates (807) (404)
Decrease in prepaid expenses 29 71
Decrease in accounts payable and accrued liabilities (2,987) (6,477)
(Decrease) increase in accounts payable to affiliates (2,753) 6,287
-------- --------
Net cash used in operating activities (3,930) (8,392)
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (2,912) (6,823)
Proceeds from sale of oil and gas properties -- 15,000
-------- --------
Net cash (used in) provided by investing activities (2,912) 8,177
-------- --------
Cash flows from financing activities:
Proceeds from issuance of Series A Preferred Stock 12,242 --
Proceeds from issuance of Series B Preferred Stock 74 --
Proceeds from issuance of Series C Preferred Stock 1,339 --
Proceeds from offering of Warrants, net of underwriting
fees and commissions -- 12,060
Offering costs -- (769)
Proceeds from notes payable to affiliate -- 8,000
Repayment of notes payable to affiliate (867) (8,000)
Repayment of notes payable -- (10,468)
-------- --------
Net cash provided by financing activities 12,788 823
-------- --------
Net increase in cash and cash equivalents 5,946 608
Cash and cash equivalents at beginning of year 4,764 3,864
-------- --------
Cash and cash equivalents at end of period $ 10,710 $ 4,472
======== ========
Cash paid for interest $ 5,470 $ 6,100
</TABLE>
The accompanying notes are an integral part of this financial statement.
5
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TATHAM OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
Warrants
outstanding
to purchase
shares of
Preferred Stock Common Stock Convertible
-------------------- ------------------- Exchangeable Additional
Number of Number of Preferred paid-in Accumulated
Shares Par Value Shares Par Value Stock capital deficit Total
--------- --------- --------- --------- --------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996 18,725 $187 25,500 $255 $2,883 $80,004 $(64,467) $18,862
Conversion of Series A
Preferred Stock into
Common Stock
(unaudited) (734) (7) 1,731 17 -- (10) -- --
Issuance of Series B
Preferred Stock
(unaudited) 74 1 -- -- (34) 107 -- 74
Issuance of Series C
Preferred Stock
(unaudited) 1,338 13 -- -- (602) 1,928 -- 1,339
Conversion of Warrants into
Mandatory Redeemable
Preferred Stock (unaudited) 4,991 50 -- -- (2,247) 2,197 -- --
Net loss for the nine
months ended
March 31, 1997
(unaudited) -- -- -- -- -- -- (3,246) (3,246)
------ ----- ------ ---- ------ ------ -------- -------
Balance, March 31,
1997 (unaudited) 24,394 $ 244 27,231 $272 $ -- $84,226 $(67,713) $17,029
====== ===== ====== ==== ====== ======= ======== =======
</TABLE>
The accompanying notes are an integral part of this financial statement.
6
<PAGE> 7
TATHAM OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:
Tatham Offshore, Inc. ("Tatham Offshore" or the "Company") is an independent
energy company engaged in the development, exploration and production of oil
and gas reserves located primarily offshore the United States in the Gulf of
Mexico (the "Gulf") and offshore eastern Canada. The Company is an
approximately 37%-owned subsidiary of DeepTech International Inc. ("DeepTech"),
a diversified energy company, which, through its affiliates, is engaged in
providing contract drilling services, oil and gas gathering and transmission,
technology and engineering services, geological and geophysical technology
services, gas processing and liquids marketing, oil and gas marketing and,
through the Company and other affiliates, oil and gas exploration, development
and production.
The accompanying consolidated financial statements have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
statement of the results of operations for the period covered by such
statements. These interim consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto contained
in the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996.
NOTE 2 - RELATED PARTY TRANSACTIONS:
The management agreement between the Company and DeepTech provides for an
annual management fee which is intended to reimburse DeepTech for the estimated
costs of its operational, financial, accounting and administrative services
provided to the Company. Effective July 1, 1996, the management agreement was
amended to provide for an annual management fee of 24% of DeepTech's overhead
expenses. During the nine months ended March 31, 1997, DeepTech charged Tatham
Offshore $2.3 million under this agreement.
As of March 31, 1997, the Company had $60.0 million aggregate principal amount
of Convertible Promissory Notes (the "Subordinated Notes") outstanding, all of
which were held by DeepTech. Interest expense related to this borrowing totaled
$5.3 million for the nine months ended March 31, 1997.
On November 1, 1995, the Company converted $1.7 million of its accounts payable
to an affiliate into an unsecured promissory note (the "Affiliate Note"). The
Affiliate Note bears interest at 14.5% per annum, payable quarterly, and is
payable to DeepTech in six monthly installments which began on January 31,
1997.
During the nine months ended March 31, 1997, the Company sold substantially all
of its oil and gas production to Offshore Gas Marketing, Inc. ("Offshore
Marketing"), an affiliate of the Company. The Company's proceeds from Offshore
Marketing are reduced by a nominal discount which is a marketing fee to
Offshore Marketing.
Effective December 10, 1996, Flextrend Development Company, L.L.C. ("Flextrend
Development"), an affiliate of the Company, exercised its option to permanently
retain 50% of the assigned working interest in the Viosca Knoll Block 817,
Garden Banks Block 72 and Garden Banks Block 117 properties (the "Assigned
Properties") in exchange for forgiving 50% of the then-existing Payout Amount
exclusive of the $7.5 million plus interest added to the Payout Amount in
connection with the restructuring of certain transportation agreements with the
Partnership. Accordingly, Tatham Offshore is entitled to receive a reassignment
of one-half interest in the Assigned Properties (37 1/2% working interest in
Viosca Knoll Block 817, 25% working interest in Garden Banks Block 72 and a 25%
working interest in Garden Banks Block 117) after Flextrend Development has
received net revenues equal to the Payout Amount. Flextrend Development remains
obligated to fund any further development costs attributable to the Company's
portion of the working interests, such costs to be added to the Payout Amount.
Flextrend Development's election to retain 50% of the assigned working interest
in all three of the Assigned Properties reduced the Payout Amount from $94.0
million to $50.8 million. Subsequent to December 10, 1996, only 50% of the
development and operating costs attributable to the Assigned Properties are
added to the Payout Amount and 50% of the net revenue from the assigned working
interests in the Assigned Properties will reduce the Payout Amount. As of March
31, 1997, the Payout Amount was $48.1 million comprised of (a) the sum of (i)
initial acquisition and transaction costs of $32.1 million, (ii) development
and operating costs of $90.4 million, (iii) prepaid
7
<PAGE> 8
TATHAM OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
demand charges of $7.5 million and (iv) interest of $14.7 million reduced by
(b) the sum of (i) net revenue of $53.4 million and (ii) forgiveness of $43.2
million of the Payout Amount as a result of Flextrend Development's decision to
retain 50% of the acquired working interest in the Assigned Properties. Tatham
Offshore and the Partnership have agreed that in the event the Company
furnishes the Partnership with a financing commitment from a lender with a
credit rating of BBB- or better covering 100% of the then outstanding Payout
Amount, the interest rate utilized to compute the Payout Amount shall be
adjusted from and after the date of such commitment to the interest rate
specified in such commitment.
NOTE 3 - STOCKHOLDERS' EQUITY:
The following table summarizes the Company's outstanding equity:
<TABLE>
<CAPTION>
Share Outstanding at Conversion/
------------------------------- Liquidation Dividend Dividends Exchange
Equity June 30, 1996 March 31, 1997 Preference Rate In Arrears Features
<S> <C> <C> <C> <C> <C> <C>
Senior Preferred
Stock (a) 7,500 7,500 $1,000 per share 9% $ 788,000 (e)
Series A Preferred
Stock (b) 18,717,030 17,982,193 $1.50 per share 12% 2,428,000 (f)(g)
Series B Preferred
Stock -- 74,379 $1.00 per share 8% 3,000 (f)(g)
Series C Preferred
Stock (c) -- 1,338,162 $0.50 per share 4% 6,700 (f)(g)
Mandatory Redeemable
Preferred Stock (d) -- 4,991,377 $0.50 per share -- -- (g)(h)
Warrants 6,403,918 -- N/A -- -- (i)
Common Stock 25,500,320 27,231,341 N/A -- -- --
</TABLE>
(a) Leviathan Gas Pipeline Partners, L.P. (the "Partnership"), an
affiliate of the Company, holds all outstanding shares.
(b) DeepFlex Production Services, Inc. ("DeepFlex Services"), an
affiliate of the Company, holds 4,670,957 shares of the outstanding
Series A Preferred Stock.
(c) DeepFlex Services holds 1,016,957 shares of the outstanding Series C
Preferred Stock.
(d) DeepFlex Services holds 4,312,086 shares of the outstanding Mandatory
Redeemable Preferred Stock.
(e) The Partnership has made an irrevocable offer to the Company to sell
all or any portion of the Senior Preferred Stock at a price equal to
$1,000 per share, plus interest thereon at 9% per annum less the sum
of any dividends paid thereon. In the event the Company does not
purchase the Senior Preferred Stock on or before September 30, 1998,
then for a period of 90 days thereafter it shall be convertible into
Series A Preferred Stock. The conversion ratio shall be equal to (i)
the liquidation preference amount plus accumulated unpaid dividends
divided by (ii) the arithmetic average of closing prices for the 20
trading days following October 1, 1998 of the Series A Preferred
Stock.
(f) At any time until December 31, 1998, each share may be exchanged for
four Exchange Warrants each of which entitles the holder thereof to
purchase one share of common stock at $0.653 per share. At any time,
the holder may convert the liquidation value and unpaid dividends into
shares of common stock at $0.653 per share.
(g) On or after July 1, 1997, redeemable at the option of the Company.
(h) The Company is required to redeem at a redemption price of $0.50 per
share if the Company redeems any shares of Series A, B or C Preferred
Stock. The Company is also required to redeem at a redemption price of
$0.50 per share from net proceeds from the sale of common stock
pursuant to the exercise of Exchange Warrants, subject to certain
conditions.
(i) All outstanding Warrants were automatically converted into Mandatory
Redeemable Preferred Stock on January 1,1997.
The Company adopted Statement of Financial Accounting Standard ("SFAS") No. 123
"Accounting for Stock Based Compensation" effective July 1, 1996. While SFAS No.
123 encourages entities to adopt the fair value method of accounting for their
stock-based compensation plans, the Company has elected to continue to utilize
the intrinsic value method under Accounting Principles Board Opinion NO. 25,
"Accounting for Stock Issued to Employees". Thus, the adoption of SFAS No. 123
did not have a material adverse effect on the Company's financial position or
results of operations. During the nine months ended March 31, 1997, the Company
issued 90,000 options and 790,000 stock appreciation rights, respectively,
pursuant to the Company's Non-Employee Director Stock Option Plan and the
Amended Equity Incentive Plan.
8
<PAGE> 9
TATHAM OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - EARNINGS PER SHARE:
Primary earnings (loss) per share is computed by dividing common equity in net
income (loss) by the weighted average number of shares and common stock
equivalents outstanding during the period. The weighted average number of
shares outstanding for purposes of computing primary earnings (loss) per share
were 26,892,187 shares and 25,120,948 shares for the three months ended March
31, 1997 and 1996, respectively. The weighted average number of shares for the
nine months ended March 31, 1997 and 1996 were 26,443,958 shares and 25,061,134
shares, respectively. Fully diluted earnings per share assumes the exercise of
certain outstanding warrants and other convertible securities. The weighted
average number of shares outstanding for purposes of computing fully diluted
earnings (loss) per share for the three months ended March 31, 1997 and 1996
were 26,892,187 shares and 31,790,296 shares, respectively. The weighted
average number of shares outstanding for purposes of computing fully diluted
earnings (loss) per share for the nine months ended March 31, 1997 and 1996
were 26,443,958 shares and 27,268,081 shares, respectively.
SFAS No. 128, "Earnings per Share", was issued in February 1997. SFAS No. 128
establishes new guidelines for computing and presenting earnings per share and
is effective for financial statements for both interim and annual periods
ending after December 15, 1997. Earlier application of SFAS No. 128 is not
permitted; however, pro forma earnings per share may be disclosed in the notes
to the consolidated financial statements in the periods prior to adoption. Pro
forma basic net income per share is equal to the disclosed primary earnings
per share for the three and nine months ended March 31, 1997. Due to the
current net losses of the Company, the Company has no dilutive potential
common shares.
NOTE 5 - COMMITMENTS AND CONTINGENCIES:
In the ordinary course of business, the Company is subject to various laws and
regulations. In the opinion of management, compliance with existing laws and
regulations will not materially affect the financial position of the Company.
The Company is involved in certain legal proceedings which have arisen in the
ordinary course of business. Management believes that the outcome of such
proceedings will not have a material adverse effect on the Company's financial
position.
The Company anticipates substantial future capital expenditures associated with
the full development of its oil and gas properties. Realization of the full
potential of the Company's properties is dependent upon the ability to obtain
sufficient additional capital or project financing.
In September 1996, the Company entered into a drilling arrangement (the
"Drilling Arrangement") with Sedco Forex Division of Schlumberger Technology
Corporation ("Sedco Forex"). The Drilling Arrangement includes the use of
either the semisubmersible drilling rig, the FPS Bill Shoemaker, owned by an
affiliate of DeepTech, or a substitute rig capable of drilling in up to 1,500
feet of water. The Drilling Arrangement will become effective upon the
mobilization of a rig to the Company's initial location. The initial contract
term of the Drilling Arrangement is for 90 days or, if sooner, the completion
of the Company's initial drilling operation and the mobilization of the rig to
another location. The Company may, at its option, extend the initial contract
term through (i) three successive one well options or (ii) two successive one
year terms. Under the terms of the Drilling Arrangement, the Company has
committed to pay Sedco Forex a drilling rate of $70,000 per day with a standby
rate of $66,700 per day. As security for its obligations under the Drilling
Arrangement, the Company is required to post an irrevocable letter of credit or
cash collateral of $6.3 million, which amount is equal to the aggregate
operating day rate for the contract term. In the event that the Company
exercises its option to extend the Drilling Arrangement, the Company and Sedco
Forex must agree upon additional security for the extension period. During the
term of the Drilling Arrangement, the Company has the right to sub-contract the
rig to other operators. If the rig is sub-contracted to another operator, the
Company will receive the difference between the sub-contract rate and the above
agreed upon rates, if any. The FPS Bill Shoemaker is owned by an affiliate of
DeepTech and operated by Sedco Forex under a charter agreement. Sedco Forex has
the right to substitute a similar drilling rig for the FPS Bill Shoemaker in
the event the FPS Bill Shoemaker is unavailable due to a prior contract
commitment for work offshore Canada. In the event Sedco Forex mobilizes the rig
to Canada, the Company has (i) an option to use the FPS Bill Shoemaker in the
Newfoundland Grand Banks Area rather than the substitute rig to complete the
initial contract term prior to the use by the third party, subject to
availability, and subject to higher contract rates to account for the
additional costs incurred by Sedco Forex as a result of operations offshore
Canada, and (ii) an additional option, upon completion of the third party work
and subject to the use of the rig for one other project, to contract to use the
rig for the drilling of one well at the then prevailing contract price.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Company's
consolidated financial statements and notes thereto included in Part I of this
quarterly report.
GENERAL
Tatham Offshore is an independent energy company engaged in the development and
production of, and the exploration for, offshore oil and gas reserves, with
activities currently concentrated primarily in the flextrend and deepwater
areas of the Gulf and offshore eastern Canada. The Company's current portfolio
of mineral leaseholds consists of 15 offshore oil and gas leases in the Gulf
which include producing properties and undeveloped acreage.
The following discussion is intended to assist in the understanding of the
Company's financial condition and results of operations for the three and nine
months ended March 31, 1997.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1996
Revenue from oil and gas sales totaled $6.2 million for the three months ended
March 31, 1997 as compared with $5.9 million for the three months ended March
31, 1996. During the three months ended March 31, 1997, the Company sold 2,075
million cubic feet ("MMcf") of gas and 45,000 barrels of oil at average prices
of $2.51 per thousand cubic feet ("Mcf") and $22.39 per barrel, respectively.
During the same period in 1996, the Company sold 1,285 MMcf of gas and 110,000
barrels of oil at average prices of $2.92 per Mcf and $19.57 per barrel,
respectively. The increase in oil and gas revenue is primarily due to increased
production from the Company's Viosca Knoll Block 817 project and higher oil
prices partially offset by lower oil and gas production from the Company's
Ewing Bank 914 #2 well and lower gas prices.
Production and operating expenses for the three months ended March 31, 1997
totaled $2.6 million as compared with $2.3 million for the same period in 1996.
The increase in production and operating expenses of $0.3 million is comprised
of an increase of $0.8 million in operating costs related primarily to a
production payment equal to 25% of the net operating cash flow from the
Company's working interest in the Viosca Knoll Block 817 property offset by a
decrease of $0.5 million in the cost of transportation services related to
lower oil and gas production from the Ewing Bank 914 #2 well and the
restructuring of certain transportation agreements with the Partnership.
Exploration expenses for the three months ended March 31, 1997 totaled $47,000
as compared with $0.1 million for the three months ended March 31, 1996.
Exploration costs during the three months ended March 31, 1996 included
expenses incurred under the amended technology services agreement with an
affiliate of the Company.
Depreciation, depletion and amortization totaled $1.4 million for the three
months ended March 31, 1997 as compared with $0.5 million for the three months
ended March 31, 1996. Depreciation, depletion and amortization for the three
months ended March 31, 1997 reflected costs applicable to the Company's
investment in the Viosca Knoll Block 817 project, the West Delta 35 project and
the Ewing Bank 914 #2 well. Depreciation, depletion and amortization for the
three months ended March 31, 1996 reflected costs primarily applicable to the
Company's investment in the West Delta 35 project and the Ewing Bank 914 #2
well. The increase in depreciation, depletion and amortization expense is
primarily attributable to the initiation of production from the first well at
Viosca Knoll Block 817 in December 1995 and from an additional seven wells
during 1996.
General and administrative expenses, including the management fee allocated
from DeepTech, for the three months ended March 31, 1997 were $1.4 million as
compared with $1.5 million for the same period in 1996. The decrease in general
and administrative expenses reflected a decrease in staff and overhead expenses
allocated to the Company under its management agreement with DeepTech of $0.2
million offset by an increase in direct general and administrative expenses of
$0.1 million. As a result of DeepTech's reduction of services provided to the
Company, the Company amended its management agreement with DeepTech effective
July 1, 1996 to provide for a 24% overhead allocation as compared to a 27.4%
overhead allocation during the three months ended March 31, 1996.
Operating income for the three months ended March 31, 1997 was $0.8 million as
compared with operating income of $1.5 million for the three months ended March
31, 1996. The change in operating income was due to the items discussed above.
10
<PAGE> 11
During the three months ended March 31, 1996, the Company recognized an $11.3
million gain related to the sale of its working interests in the Assigned
Properties to Flextrend Development as a result of the Company waiving its
remaining options to prepay the existing Payout Amount and receive a
reassignment of its working interests.
Interest expense, net of interest income, for the three months ended March 31,
1997 totaled $1.9 million as compared with $2.2 million for the three months
ended March 31, 1996. For the three months ended March 31, 1997 and 1996, $1.8
million of the interest expense was attributable to interest payable to
DeepTech on the Subordinated Notes.
After taking into account $1.0 million of preferred stock dividends in arrears,
the Company's net loss available to common shareholders for the three months
ended March 31, 1997 was $2.1 million as compared with net income available to
common shareholders for the three months ended March 31, 1996 of $10.6 million
after taking into account $0.1 million of preferred stock dividends in arrears.
NINE MONTHS ENDED MARCH 31, 1997 COMPARED WITH NINE MONTHS ENDED MARCH 31, 1996
Revenue from oil and gas sales totaled $16.5 million for the nine months ended
March 31, 1997 as compared with $11.1 million for the nine months ended March
31, 1996. During the nine months ended March 31, 1997, the Company sold 5,354
MMcf of gas and 153,000 barrels of oil at average prices of $2.43 per Mcf and
$22.86 per barrel, respectively. During the same period in 1996, the Company
sold 1,999 MMcf of gas and 332,000 barrels of oil at average prices of $2.58
per Mcf and $17.97 per barrel, respectively. The increase in oil and gas
revenue is primarily due to increased production from the Company's Viosca
Knoll Block 817 project and higher oil prices partially offset by lower oil and
gas production from the Company's Ewing Bank 914 #2 well and lower gas prices.
Production and operating expenses for the nine months ended March 31, 1997
totaled $6.0 million as compared with $11.1 million for the same period in
1996. The decrease in production and operating expenses of $5.1 million is
comprised of (i) a decrease of $3.6 million in the cost of transportation
services primarily related to lower oil production and the restructuring of
certain transportation agreements with the Partnership, (ii) a decrease in
workover and repair expenses of $2.0 million, (iii) a decrease of $0.4 million
in operating costs primarily related to the Company's Viosca Knoll Block 817
project and (iv) an increase of $0.9 million related to a production payment
equal to 25% of the net operating cash flow from the Company's working interest
in the Viosca Knoll Block 817 property. During the nine months ended March 31,
1996, the Company incurred $2.3 million of workover and repair expenses related
to the Ewing Bank 914 #2 well.
Exploration expenses for the nine months ended March 31, 1997 totaled $0.4
million as compared with $0.3 million for the nine months ended March 31, 1996.
Exploration costs during the nine months ended March 31, 1997 and 1996 included
expenses incurred under the amended technology services agreement with an
affiliate of the Company.
Depreciation, depletion and amortization totaled $3.5 million for the nine
months ended March 31, 1997 as compared with $0.8 million for the nine months
ended March 31, 1996. Depreciation, depletion and amortization for the nine
months ended March 31, 1997 reflected costs applicable to the Company's
investment in the Viosca Knoll Block 817 project, the West Delta 35 project and
the Ewing Bank 914 #2 well. Depreciation, depletion and amortization for the
nine months ended March 31, 1996 reflected costs primarily applicable to the
Company's investment in the West Delta 35 project and the Ewing Bank 914 #2
well. The increase in depreciation, depletion and amortization expense is
primarily attributable to the initiation of production from the first well at
Viosca Knoll Block 817 in late December 1995 and from an additional seven wells
during 1996.
General and administrative expenses, including the management fee allocated
from DeepTech, for the nine months ended March 31, 1997 were $4.0 million as
compared with $5.5 million for the same period in 1996. The decrease in general
and administrative expenses of $1.5 million reflected a decrease in direct
general and administrative expenses of $0.3 million and a decrease in staff and
overhead expenses allocated to the Company under its management agreement with
DeepTech of $1.2 million. As a result of DeepTech's reduction of services
provided to the Company, the Company amended its management agreement with
DeepTech effective July 1, 1996 to provide for a 24% overhead allocation as
compared to an effective 33% overhead allocation during the nine months ended
March 31, 1996.
Operating income for the nine months ended March 31, 1997 was $2.6 million as
compared with an operating loss of $6.6 million for the nine months ended March
31, 1996. The change in operating income (loss) was due to the items discussed
above.
11
<PAGE> 12
During the nine months ended March 31, 1996, the Company recognized an $22.6
million gain primarily related to the sale of its working interests in the
Assigned Properties to Flextrend Development, as a result of the Company
waiving its options to prepay the existing Payout Amount and receive a
reassignment of its working interests.
Interest expense, net of interest income, for the nine months ended March 31,
1997 totaled $5.9 million as compared to $6.2 million for the nine months ended
March 31, 1996. For the nine months ended March 31, 1997 and 1996, $5.3 million
of the interest expense was attributable to interest payable to DeepTech on the
Subordinated Notes.
After taking into account $2.9 million of preferred stock dividends in arrears,
the Company's net loss available to common shareholders for the nine months
ended March 31, 1997 was $6.2 million as compared with net income available to
common shareholders for the nine months ended March 31, 1996 of $9.7 million
after taking into account $0.1 million in preferred stock dividends in arrears.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Cash. The Company intends to satisfy its immediate capital
requirements and other working capital needs primarily from cash on hand and
cash generated from continuing operations. At March 31, 1997, the Company had
$10.7 million of cash and cash equivalents.
Cash from continuing operations is derived primarily from production from the
Company's Viosca Knoll Block 817 project which is currently producing a total
of approximately 106.0 MMcf of gas and 313 barrels of oil per day. Tatham
Offshore currently owns a 25% working interest in the Viosca Knoll Block 817
project which interest is subject to a production payment equal to 25% of the
net operating cash flow from such working interest.
Tatham Offshore also has producing wells at Ewing Bank Block 914 and at its
Silent Beauty project at West Delta Block 35 which contribute to cash from
continuing operations. The Company owns a 100% working interest in the Ewing
Bank 914 #2 well and a 38% working interest in the Silent Beauty project.
During the three months ended March 31, 1997, the Ewing Bank 914 #2 well
produced an average of approximately 370 barrels of oil and 0.8 MMcf of gas per
day. In April 1997, the Ewing Bank 914 #2 well was shut-in due to mechanical
problems with the well. The Company is currently evaluating the alternatives
available to restore production on the Ewing Bank 914 #2 well. The Silent
Beauty project is currently producing at a rate of approximately 6.1 MMcf of
gas and 80 barrels of oil per day.
As a result of a rights offering in February 1996, the Company received $12.6
million in gross proceeds ($11.3 million in net proceeds) pursuant to the
exercise of Rights to purchase 25,120,948 Warrants at $0.50 per warrant. A
total of 20,129,571 Warrants were exercised to purchase 18,717,030 shares,
74,379 shares and 1,338,162 shares of Series A, B and C Preferred Stock,
respectively, at $1.00 per share which generated an additional $20.1 million in
proceeds to the Company.
On January 1, 1997, the remaining 4,991,377 Warrants outstanding were
automatically converted, without any action on the part of the holder thereof,
into an equal number of shares of Mandatory Redeemable Preferred Stock with a
liquidation preference of $0.50 per share. At any time until December 31, 1998,
each share of Series A, B or C Preferred Stock may be exchanged for four
Exchange Warrants each of which shall entitle the holder thereof to purchase
one share of Common Stock at $0.653 per share. The Exchange Warrants will
expire July 1, 1999. Alternatively, at any time, the holder of any shares of
Series A, B or C Preferred Stock will have the right, at the holder's option,
to convert the liquidation value of such stock and accrued and unpaid dividends
into shares of Common Stock at $0.653 per share. On and after July 1, 1997, the
Convertible Exchangeable Preferred Stock will be redeemable at the option of
the Company. Through April 30, 1997, a total of 745,029 shares of Series A
Preferred Stock had been converted into 1,756,539 shares of Common Stock.
Uses of Cash. The Company's primary uses of cash consist of (i) amounts due
under the Subordinated Notes, (ii) expenses associated with operating its
producing properties, including its production payment and leasehold
abandonment liabilities, (iii) capital expenditures necessary to fund its
portion of the development costs attributable to its working interests,
including its obligations under the Drilling Arrangement, (iv) platform access
fees and processing and commodity charges payable to the Partnership, (v)
payments due under the management agreement with DeepTech and (vi) amounts due
under the Affiliate Note.
As of March 31, 1997, Tatham Offshore had $60.0 million aggregate principal
amount of Subordinated Notes outstanding, the maximum principal amount of
Subordinated Notes issuable, all of which were held by DeepTech. The
Subordinated Notes bear interest at a rate of 11 3/4% per annum, payable in
arrears (approximately $1.8 million per
12
<PAGE> 13
quarter); provided, however, that effective July 1, 1997, interest shall accrue
at a rate of 13% per annum. The principal amount of the Subordinated Notes is
payable in seven equal annual installments of approximately $8.6 million each
commencing August 1, 1999. For the nine months ended March 31, 1997, Tatham
Offshore paid DeepTech $5.3 million in interest on the Subordinated Notes.
During the nine months ended March 31, 1997, the Company completed its
abandonment of its West Cameron 436 property, in which it owned a 47% working
interest, at a net cost to the Company of $1.0 million. For the nine months
ended March 31, 1997, the Company's production payment obligations totaled $2.0
million.
Tatham Offshore is obligated to pay to the Partnership commodity charges, based
on the volume of oil and gas transported or processed, under certain
transportation agreements. Also, the Company is obligated to pay to the
Partnership $1.6 million in platform access fees annually relative to its 25%
working interest in its Viosca Knoll Block 817 property.
The management fee agreement between the Company and DeepTech provides for an
annual management fee which is intended to reimburse DeepTech for the estimated
costs of its operational, financial, accounting and administrative services
provided to Tatham Offshore. Effective July 1, 1996, the management agreement
was amended to provide for an annual management fee of 24% of DeepTech's
overhead expenses. For the nine months ended March 31, 1997, the Company was
charged $2.3 million in management fees pursuant to this agreement.
On November 1, 1995, the Company converted $1.7 million of its accounts payable
to an affiliate into the Affiliate Note. The principal is payable to DeepTech
in six monthly installments which began on January 31, 1997. Tatham Offshore
has made $1.2 million of principal payments to DeepTech through April 30, 1997.
Liquidity Outlook. In order to improve liquidity and partially address its
capital requirements in recent years, Tatham Offshore (i) sold, subject to
certain reversionary rights, all of its then-existing working interests in the
Assigned Properties to Flextrend Development for $30 million, (ii) raised
additional equity through the sale of Warrants and Series A, B and C Preferred
Stock, (iii) prepaid certain of its demand charge obligations through the
assignment of certain assets pursuant to an agreement with the Partnership and
(iv) reduced its overhead by lowering the level of services required under its
management agreement with DeepTech.
Flextrend Development has initiated production from each of the Assigned
Properties. As discussed above, the Viosca Knoll Block 817 (Phar Lap) is
currently producing approximately 106.0 MMcf of gas and 313 barrels of oil per
day. In addition, five producing wells on Garden Banks Block 72 (Spectacular
Bid) are currently producing approximately 3,250 barrels of oil, 12.5 MMcf of
gas and 130 barrels of water per day. The Garden Banks Block 117 (Spend A Buck)
property is currently producing approximately 1,500 barrels of oil, 3.3 MMcf of
gas and 4,000 barrels of water per day from one well. Flextrend Development has
drilled a second successful well at Garden Banks Block 117 which should be
placed on production during May 1997.
Effective December 10, 1996, Flextrend Development exercised its option to
permanently retain 50% of the assigned working interest in all three of the
Assigned Properties in exchange for forgiving 50% of the then-existing Payout
Amount exclusive of the $7.5 million plus interest added to the Payout Amount
in connection with the restructuring of certain transportation agreements with
the Partnership. Accordingly, Tatham Offshore is entitled to receive a
reassignment of one-half interest in the Assigned Properties (37 1/2% working
interest in Viosca Knoll Block 817, 25% working interest in Garden Banks Block
72 and a 25% working interest in Garden Banks Block 117) after Flextrend
Development has received net revenues equal to the Payout Amount. Flextrend
Development remains obligated to fund any further development costs
attributable to the Company's portion of the working interests, such costs to
be added to the Payout Amount. Flextrend Development's election to retain 50%
of the assigned working interest in all three of the Assigned Properties
reduced the Payout Amount from $94.0 million to $50.8 million. Subsequent to
December 10, 1996, only 50% of the development and operating costs attributable
to the Assigned Properties are added to the Payout Amount and 50% of the net
revenue from the assigned working interests in the Assigned Properties will
reduce the Payout Amount. As of March 31, 1997, the Payout Amount was $48.1
million comprised of (a) the sum of (i) initial acquisition and transaction
costs of $32.1 million, (ii) development and operating costs of $90.4 million,
(iii) prepaid demand charges of $7.5 million and (iv) interest of $14.7 million
reduced by (b) the sum of (i) net revenue of $53.4 million and (ii) forgiveness
of $43.2 million of the Payout Amount as a result of Flextrend Development's
decision to retain 50% of the acquired working interest in the Assigned
Properties. Tatham Offshore and the Partnership have agreed that in the event
the Company furnishes the Partnership with a financing commitment from a lender
with a credit rating of BBB- or better covering 100%
13
<PAGE> 14
of the then outstanding Payout Amount, the interest rate utilized to compute
the Payout Amount shall be adjusted from and after the date of such commitment
to the interest rate specified in such commitment.
In September 1996, the Company entered into the Drilling Arrangement with Sedco
Forex. The Drilling Arrangement includes the use of either the semisubmersible
drilling rig, the FPS Bill Shoemaker, or a substitute rig capable of drilling
in up to 1,500 feet of water. The Drilling Arrangement will become effective
upon the mobilization of a rig to the Company's initial location. The initial
contract term of the Drilling Arrangement is for 90 days or, if sooner, the
completion of the Company's initial drilling operation and the mobilization of
the rig to another location. The Company may, at its option, extend the initial
contract term through (i) three successive one well options or (ii) two
successive one year terms. Under the terms of the Drilling Arrangement, the
Company has committed to pay Sedco Forex a drilling rate of $70,000 per day
with a standby rate of $66,700 per day. As security for its obligations under
the Drilling Arrangement, the Company is required to post an irrevocable letter
of credit or cash collateral of $6.3 million, which amount is equal to the
aggregate operating day rate for the contract term. In the event that the
Company exercises its option to extend the Drilling Arrangement, the Company
and Sedco Forex must agree upon additional security for the extension period.
During the term of the Drilling Arrangement, the Company has the right to
sub-contract the rig to other operators. If the rig is sub-contracted to
another operator, the Company will receive the difference between the
sub-contract rate and the above agreed upon rates, if any. The FPS Bill
Shoemaker is owned by an affiliate of DeepTech and operated by Sedco Forex
under a charter agreement. Sedco Forex has the right to substitute a similar
drilling rig for the FPS Bill Shoemaker in the event the FPS Bill Shoemaker is
unavailable due to a prior contract commitment for work offshore Canada. In the
event Sedco Forex mobilizes the rig to Canada, the Company has (i) an option to
use the FPS Bill Shoemaker in the Newfoundland Grand Banks Area rather than the
substitute rig to complete the initial contract term prior to the use by the
third party, subject to availability, and subject to higher contract rates to
account for the additional costs incurred by Sedco Forex as a result of
operations offshore Canada, and (ii) an additional option, upon completion of
the third party work and subject to the use of the rig for one other project,
to contract to use the rig for the drilling of one well at the then prevailing
contract price.
The Company has recently begun evaluating opportunities to acquire certain
license interests offshore eastern Canada. Emphasis is being placed on license
interests that could be acquired in exchange for (i) new securities to be
issued by the Company, (ii) convertible notes to be issued by the Company,
(iii) a portion of the Company's existing leasehold interests, particularly its
Sunday Silence field, or (iv) in connection with the Company's rights to
utilize the FPS Bill Shoemaker.
The Company currently intends to fund its operations with cash on hand and cash
from continuing operations. The restructuring of the Company's existing demand
charge obligations with the Partnership, the reduction of its overhead, the
initiation of full production from the Viosca Knoll Block 817 (Phar Lap)
project and improved commodity prices enabled the Company to generate
approximately $0.7 million in positive cash flow for the three months ended
March 31, 1997. The Company does not currently anticipate generating
significant positive cash flow prior to the first to occur of (i) obtaining a
refinancing commitment which could allow the Company to reacquire all or a
portion of the Assigned Properties from Flextrend Development, (ii) actual
payout of the Payout Amount and the resulting reversion of one-half of the
Assigned Properties or (iii) the initial production from the Company's Sunday
Silence field. In order to initiate production from the Sunday Silence field,
the Company will require substantial additional capital to install a production
facility and drill additional development wells. There can be no assurance,
however, that the Company will be able to obtain additional financing on terms
that are acceptable to the Company.
To meet additional capital needs, the Company will continue to pursue the
implementation of its business strategy which will focus primarily on (i)
attempting to develop and initiate production from the Company's Sunday Silence
field under a farmout or financing arrangement with an industry partner or
financial institution, (ii) monitoring production from the Assigned Properties
in an effort to maximize the value of its reversionary interest and attempting
to obtain a financing commitment to reacquire the properties or, at a minimum,
to cause a reduction in the interest rate utilized in the calculation of the
Payout Amount, (iii) attempting to sell or farmout interests in its other
properties, including Genuine Risk (Ship Shoal Block 331) and (iv) maximizing
the value of its rights under the Drilling Arrangement with Sedco Forex
regarding the FPS Bill Shoemaker.
The ability of the Company to satisfy its future capital needs will depend upon
its success in implementing its business strategy, particularly its ability to
develop and initiate production from the Sunday Silence field. Although the
Company has pursued farmout and outside financing arrangements for its Sunday
Silence project, as of this date, the Company has not been able to obtain an
acceptable farmout arrangement with an industry partner or develop a financing
arrangement
14
<PAGE> 15
under the current economic conditions. On November 28, 1995, a federal law was
enacted that offers deepwater royalty relief for certain federal leases located
in 200 meters or greater of water depth in the Gulf. For federal leases
acquired prior to November 20, 1995, an applicant must demonstrate that the
proposed new production for which the royalty relief is sought would not be
economic to develop absent the royalty relief. Under the new legislation, a
minimum of the first 52.5 million equivalent barrels of oil production from the
Sunday Silence project would be exempt from federal royalties if such relief is
granted. The Company submitted an application relative to its Sunday Silence
field which was deemed complete by the Minerals Management Service ("MMS")
effective November 13, 1996. Under federal law, the MMS has up to 180 days to
evaluate the application once the application is deemed complete. In February
1997, the MMS requested additional information and clarification of the
submitted data which tolled the review period until this information was
supplied by the Company. The Company submitted the additional information
requested by the MMS in March 1997, and the MMS resumed its review of the
Company's application. The 180-day review period now extends through June 8,
1997. The Company believes that if the requested royalty abatement is granted,
the resulting improved economics for the project will be sufficient to obtain
development financing or an industry farmout arrangement. However, there can be
no assurance that the Company will be able to obtain the requested royalty
abatement, enter into a farmout or financing arrangement on favorable terms,
successfully develop the Sunday Silence field or initiate production therefrom
on a timely basis, if at all.
The Company has never declared or paid dividends on its common or preferred
stock. The Company expects to retain all available earnings generated by its
operations for the growth and development of its business.
UNCERTAINTY OF FORWARD LOOKING STATEMENTS AND INFORMATION
This quarterly report contains certain forward looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. Such statements are
typically punctuated by words or phrases such as "anticipate," "estimate,"
"project," "should," "may," "management believes," and words or phrases of
similar import. Although management believes that such statements and
expressions are reasonable and made in good faith, it can give no assurance
that such expectations will prove to have been correct. Such statements are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated or projected. Among the key factors that may have a direct bearing on
the Company's results of operations and financial condition are: (i)
competitive practices in the industry in which the Company competes, (ii) the
impact of current and future laws and government regulations affecting the
industry in general and the Company's operations in particular, (iii)
environmental liabilities to which the Company may become subject in the future
that are not covered by an indemnity or insurance, (iv) the impact of oil and
natural gas price fluctuations and (v) significant changes from expectations of
capital expenditures and operating expenses and unanticipated project delays.
The Company disclaims any obligation to update any forward-looking statements
to reflect events or circumstances after the date hereof.
15
<PAGE> 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
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
None.
(b) Reports on Form 8-K
None.
16
<PAGE> 17
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.
TATHAM OFFSHORE, INC.
Date: May 13 , 1997 By: /s/ DENNIS A. KUNETKA
--------- -----------------------------------
Dennis A. Kunetka
Senior Vice President - Corporate Finance
(Signing on behalf of the Registrant and as
Principal Accounting Officer)
17
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
- ------- ----
<S> <C>
27 INDEX TO EXHIBITS
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) TATHAM
OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS OF MARCH 31,
1997 INCLUDED IN ITS FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 10,710
<SECURITIES> 0
<RECEIVABLES> 2,019
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,625
<PP&E> 81,070
<DEPRECIATION> 16,700
<TOTAL-ASSETS> 89,172
<CURRENT-LIABILITIES> 2,882
<BONDS> 0
0
244
<COMMON> 272
<OTHER-SE> 16,513
<TOTAL-LIABILITY-AND-EQUITY> 89,172
<SALES> 16,508
<TOTAL-REVENUES> 16,508
<CGS> 6,037
<TOTAL-COSTS> 6,412
<OTHER-EXPENSES> 3,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,314
<INCOME-PRETAX> (3,246)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,190)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,190)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
