FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
February 18, 1997
VASTAR RESOURCES, INC.
(exact name of registrant as specified in charter)
Delaware 1-13108 95-4446177
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
15375 Memorial Drive, Houston, Texas 77079
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 584-6000
<PAGE>
Item 5. Other Events
1. The following is an excerpt from a press release issued by Vastar Resources,
Inc. on January 22, 1997:
January 22, 1997
FOR IMMEDIATE RELEASE
VASTAR POSTS RECORD 1996 EARNINGS;
144 PERCENT RESERVE REPLACEMENT;
EIGHT PERCENT PRODUCTION GROWTH
Houston, TX -- Vastar Resources, Inc. (NYSE: VRI) today announced
record earnings of $220.0 million, or $2.26 per share, an increase of
114 percent from the $102.6 million ($1.06 per share) in 1995. Fourth
quarter net income of $69.1 million ($.71 per share) also set a
quarterly net income record, and compares to $38.4 million ($.39 per
share) in 1995.
"1996 was an outstanding year for Vastar," said Chairman, President
and CEO Michael Wiley. "We're particularly pleased with our operational
performance and with the important steps we took in 1996 to create
further growth opportunities. Complementing our operations, strong
commodity prices played a significant role in our financial results."
In 1996 the company:
o Increased its average annual net production of natural gas,
crude oil and natural gas liquids to 1,165 million cubic
feet equivalent per day (MMcfed), an eight percent increase
over 1995;
o Replaced 144 percent of its 1996 production at a
replacement cost of $.93 per thousand cubic feet
equivalent (Mcfe);
o Established a significant position in the Gulf of Mexico
deepwater play, acquiring an inventory of high quality
prospects and securing a three-year commitment for a
drilling rig to operate in 5,000 foot water depths. The
rig is currently being upgraded, with modifications
expected to be complete by the fourth quarter 1997;
o Expanded its 3D seismic database, adding over one
thousand square miles of data onshore and nearly 800 blocks
of data offshore, including over 420 deepwater blocks; and
increased its substantial land position by acquiring
undeveloped leasehold acreage both offshore and onshore;
o Maintained a leading low-cost position with cash production
costs (operating costs; selling, general and administrative
expenses; & production-related taxes) of $.56 per Mcfe; and
o Grew its marketed volumes of natural gas to an annual
average 2.9 billion cubic feet per day (Bcfd), with the
fourth quarter averaging 3.4 Bcfd.
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<PAGE>
Capital spending in 1996 totaled $567 million, including $259
million for exploration, $257 million for development, and $51
million for acquisition of producing assets. Expenditures for seismic
and undeveloped leasehold accounted for approximately $113 million, of
which $38 million (excludes related staff costs) was invested to lay the
foundation for Vastar's Gulf of Mexico deepwater program.
In 1996, Vastar added 632 billion cubic feet equivalent (Bcfe) of
proved reserves (623 Bcfe net of divestitures) at a replacement cost of
$.93 per Mcfe. Exclusive of acquisitions, the company added 503 Bcfe of
proved reserves. From all sources, Vastar replaced 144 percent of
production. Production replaced through the drill bit was 114 percent.
The company more than replaced production in all products--natural gas,
crude and condensate, and natural gas liquids.
Vastar ended the year with 2.916 trillion cubic feet equivalent
(Tcfe) of proved reserves (80 percent developed), compared to 2.725 Tcfe
at year end 1995.
The fourth quarter 1996 posted record net income of $69.1 million.
Highlights of the quarter included a greater than 15 percent increase in
San Juan Basin coal seam gas production compared to the fourth quarter of 1995;
the late fourth quarter start-up of Vastar's 1995 Bastian Bay discovery in
the South Pass 60 field; and the year-end start-up of the Norphlet well
in Mobile 904. Vastar's wellhead prices for natural gas and realized
prices for liquids were up significantly versus last year's fourth
quarter, also contributing to the strong financial performance.
Partially offsetting these benefits were increased exploration expenses
which were driven by higher capital investment and the higher costs of rigs
and related services, primarily in the Gulf of Mexico.
Vastar Resources, Inc., headquartered in Houston, Texas, finds,
develops, produces and markets natural gas and liquid hydrocarbons.
# # # #
Contact: Lisa Marshall, (281) 584-3448 (Media)
Barbara Fitzgerald, (281) 584-3477 (Investor Relations)
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<PAGE>
<TABLE>
<CAPTION>
VASTAR RESOURCES, INC.
SUMMARY OF OPERATIONS
(Unaudited)
(Millions of dollars except per share amounts)
For the three months For the year
ended December 31, ended December 31,
1996 1995 1996 1995
<S>
<C> <C> <C> <C>
REVENUES
Sales and other operating revenues $1,121.6 $588.6 $3,381.8 $1,993.4
Other revenues 2.4 19.3 20.8 36.8
----- ----- ------- -------
Gross revenues 1,124.0 607.9 3,402.6 2,030.2
Less: Purchases (823.6) (383.4) (2,372.6)(1,246.4)
Delivery expenses (16.3) (12.3) (63.4) (44.3)
----- ----- ------- -------
Net revenues 284.1 212.2 966.6 739.5
EXPENSES
Operating expenses 34.7 31.8 136.1 127.9
Dry hole costs 35.3 12.2 82.6 69.0
Other exploration expenses 20.0 16.2 76.8 55.2
Undeveloped leasehold amortization 6.9 6.7 27.0 27.0
Depreciation, depletion and
amortization 70.9 83.0 275.9 263.3
Selling, general and
administrative expenses 19.0 9.8 62.0 51.2
Taxes other than income taxes 11.4 6.9 41.2 32.7
Interest expense 13.4 15.0 52.3 57.0
----- ----- ------- -------
Total expenses 211.6 181.6 753.9 683.3
----- ----- ------- -------
Income before income taxes 72.5 30.6 212.7 56.2
Income tax provision (benefit) 3.4 (7.8) (7.3) (46.4)
----- ----- ------- -------
Net income $69.1 $38.4 $220.0 $102.6
===== ===== ======= =======
Earned per share*<F1> $0.71 $0.39 $2.26 $1.06
<FN>
<F1>*The average number of shares outstanding for the three months and
year ended December 31, 1996, were 97,259,943 and 97,255,970,
respectively.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
VASTAR RESOURCES, INC.
SUMMARY OF OPERATIONS
(Unaudited)
For the three months For the year
ended December 31, ended December 31,
1996 1995 1996 1995
<S>
<C> <C> <C> <C>
OPERATIONS
Total production (MMcfed-net) 1,147 1,089 1,165 1,082
Natural gas:
Production (MMcfd-net) 852 832 872 810
Average wellhead price (per Mcf) $2.28 $1.58 $1.81 $1.38
Crude oil:
Production (Mbd-net) 33.3 31.6 34.2 32.7
Avg realized price (per barrel) $24.63 $18.43 $21.49 $18.43
Natural gas liquids:
Production (Mbd-net) 15.8 11.2 14.6 12.6
Avg realized price (per barrel) $18.77 $11.38 $15.01 $11.39
NATURAL GAS MARKETING
Sales (MMcfd-net) 3,436 2,388 2,940 2,140
Average sales price (per Mcf) $2.77 $1.92 $2.34 $1.63
Margin** ($millions)<F2> $10.0 $11.1 $46.8 $38.8
<FN>
<F2>**Margin reflects the pretax income from gas marketing activities before
related staff and support costs.
</FN>
</TABLE>
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<PAGE>
2. Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends
The Company's ratios of earnings to fixed charges for the years
ended December 31, 1996, 1995 and 1994, and the three months ended
December 31, 1993 were 5.07, 1.99, 3.32 and 1.22, respectively. These
ratios were computed by dividing earnings by fixed charges. For this
purpose, earnings include income before income taxes and fixed charges.
Fixed charges include interest and amortization of debt expenses and the
estimated interest component of rentals.
During the three years ended December 31, 1996, 1995 and 1994 and the
three months ended December 31, 1993, there were no shares of preferred stock
outstanding.
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<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The following document is included as an Exhibit:
Exhibit
No. Description
_______ ____________
12 Statement Setting Forth Detail of Computation of Ratio of
Earnings to Fixed Charges
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Vastar Resources, Inc. has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VASTAR RESOURCES, INC.
(Registrant)
Dated: February 18, 1997
/s/ Joseph P. McCoy
-------------------------
(signature)
Joseph P. McCoy
Vice President and Controller
(Duly authorized Officer and
Principal Accounting Officer)
<TABLE>
<CAPTION>
VASTAR RESOURCES, INC.
EXHIBIT 12
STATEMENT SETTING FORTH DETAIL OF COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
For the three
For the year ended months ended
December 31, December 31,
------------------ -------------
(Millions of dollars) 1996 1995 1994 1993
except ratio amounts) ----- ----- ----- -----
<S>
<C> <C> <C> <C>
Income from continuing operations
before income taxes, minority
interest and cumulative effect of
change in accounting principle (1) $212.7 $ 56.2 $153.6 $ 1.0
Fixed Charges:
Interest expense charged to income,
and portion of rentals
representative of interest 52.3 57.0 66.3 4.5
Capitalized Interest --- --- --- ---
------ ------ ------ ------
Total fixed charges (2) 52.3 57.0 66.3 4.5
------ ------ ------ ------
Earnings (1) + (2) $265.0 $113.2 $219.9 $ 5.5
====== ====== ====== ======
Ratio of earnings to fixed charges 5.07 1.99 3.32 1.22
====== ====== ====== ======
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings include income before income
taxes and fixed charges. Fixed charges include interest expense, amortization
of debt expenses, and the estimated interest component of rentals.
During the three years ended December 31, 1996, 1995 and 1994 and the three
months ended December 31, 1993 the Company has no issuances of preferred stock.
The ratio of earnings to combined fixed charges and preferred stock dividends
for each of the above time periods is the same as the ratio of earnings to
fixed charges.
