<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT 1934
For the quarterly period ended September 30, 1995
---------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT 1934
For the transition period from to
-------------------- --------------------------
(Amended by Exch Act Rel No. 312905. eff 4/26/93.)
Commission File Number: 33-58831
--------------------------------------------------------
GOODRICH PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 76-446913
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)
5847 SAN FELIPE, SUITE 700, HOUSTON, TEXAS 77057
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(713) 780-9494
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common shares outstanding as of November 6, 1995: 41,804,510
1
<PAGE>
GOODRICH PETROLEUM CORPORATION
FORM 10-Q/A
SEPTEMBER 30, 1995
INDEX
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Consolidadated Balance Sheets
September 30, 1995 (Unaudited) and December 31, 1994........ 3
Consolidated Statements of Operations
Nine Months Ended September 30, 1995 and 1994 (Unaudited)... 5
Consolidated Statements of Operations
Three Months Ended September 30, 1995 and 1994 (Unaudited).. 6
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1995 and 1994 (Unaudited)... 7
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 1995 and 1994 (Unaudited)... 8
Notes to Consolidated Financial Statements................... 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 15
PART II - OTHER INFORMATION 21
</TABLE>
ITEM 1. LEGAL PROCEEDINGS.
ITEM 2. CHANGES IN SECURITIES.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
2
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.................... $ 182,257 $ 710,762
Marketable securities........................ 844,000 ---
Accounts receivable
Trade and other............................. 170,379 ---
Accrued oil and gas revenue................. 962,061 934,910
Prepaid expenses and other................... 282,279 ---
----------- -----------
Total current assets..................... 2,440,976 1,645,672
----------- -----------
PROPERTY AND EQUIPMENT
Oil and gas properties....................... 17,970,321 7,271,549
Furniture, fixtures and equipment............ 100,000 ---
----------- ------------
18,070,321 7,271,549
Less accumulated depletion and depreciation.. (2,116,801) (1,309,866)
----------- ------------
Total property & equipment............... 15,953,520 5,961,683
----------- ------------
OTHER ASSETS
Investment in pipeline joint venture......... 4,992,619 ---
Deferred charges............................. 125,011 623,141
----------- ------------
5,117,630 623,141
----------- ------------
TOTAL ASSETS......................... $23,512,126 $ 8,230,496
=========== ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -------------
<S> <C> <C>
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt..................... $ --- $ 1,816,723
Accounts payable...................................... 345,271 135,916
Accrued liabilities................................... 891,059 109,074
Reserve for contingent liabilities.................... 718,080 ---
----------- -----------
Total current liabilities......................... 1,954,410 $ 2,061,713
----------- -----------
LONG TERM DEBT.......................................... 11,000,000 8,250,000
OTHER LIABILITIES....................................... 610,471 ---
STOCKHOLDERS' EQUITY (DEFICIT)
Partners' capital (deficit)........................... --- (2,081,217)
Preferred stock, par value $1.00 per share;
authorized 10,000,000 shares; issued
1,098,710 in 1995 (liquidating pre-
ference $10 per share, aggregating to
$10,987,100)...................................... 1,098,710 ---
Common stock, par value - $0.20 per share;
authorized 100,000,000 shares; issued
39,530,452 in 1995................................ 7,906,090 ---
Additional paid-in capital............................ 1,291,101 ---
Accumulated deficit................................... (433,056) ---
Unrealized gain on marketable securities.............. 84,400 ---
----------- -----------
Total stockholders' equity (deficit).............. 9,947,245 (2,081,217)
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY........................................ $23,512,126 $ 8,230,496
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
OPERATING REVENUES
Oil and gas sales................................ $3,582,548 $3,623,149
Pipeline joint venture........................... 113,937 ---
---------- ----------
Total operating revenues..................... 3,696,485 3,623,149
---------- ----------
OPERATING EXPENSES
Lease operating expense and production taxes..... 534,819 484,696
Depletion, depreciation and amortization......... 907,562 758,740
General and administrative....................... 197,044 26,615
---------- ----------
Total operating expenses..................... 1,639,425 1,270,051
---------- ----------
OPERATING INCOME................................... 2,057,060 2,353,098
OTHER INCOME (EXPENSE)
Interest Expense................................. (900,767) (789,187)
Other, net....................................... 34,079 12,372
---------- ----------
Total other income (expense)................. (866,688) (776,815)
---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM
AND INCOME TAXES............................. 1,190,372 $1,576,283
==========
Income Taxes..................................... ---
----------
INCOME BEFORE EXTRAORDINARY ITEM................... 1,190,372
Extraordinary item-early extinguishment of debt.. 482,906
----------
NET INCOME......................................... $ 707,466
Preferred stock dividend......................... 107,960
----------
EARNINGS AVAILABLE TO COMMON STOCK................. $ 599,506
==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------------------------
1995 1994
----------- ----------
<S> <C> <C>
OPERATING REVENUES
Oil and gas sales.............................. $1,414,410 1,632,382
Pipeline joint venture......................... 113,937 ---
---------- ---------
Total operating revenues................... 1,528,347 1,632,382
---------- ---------
EXPENSES
Lease operating expenses and production taxes.. 238,386 237,674
Depletion, depreciation and amortization....... 500,322 337,097
General and administrative..................... 193,737 8,823
---------- ---------
Total operating expenses................... 932,445 583,594
---------- ---------
OPERATING INCOME................................. 595,902 1,048,788
OTHER INCOME (EXPENSE)
Interest Expense............................... (363,542) (305,209)
Other, net..................................... 21,177 5,404
---------- ---------
Total other income (expense)............... (342,365) (299,805)
---------- ---------
INCOME BEFORE EXTRAORDINARY ITEM
AND INCOME TAXES............................... 253,537 $ 748,983
=========
Income taxes................................... ---
----------
INCOME BEFORE EXTRAORDINARY ITEM................. 253,537
Extraordinary item-early extinguishment
of debt.................................... 482,906
----------
NET INCOME (LOSS)................................ $ (229,369)
Preferred stock dividend....................... 107,960
----------
LOSS AVAILABLE TO COMMON STOCK................... $ (337,329)
==========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------------------------
1995 1994
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................... $ 707,466 $ 1,576,283
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, depreciation and amortization............. 907,562 758,740
Amortization of deferred debt financing costs........ 84,752 86,095
Extraordinary item-early extinguishment
of debt.......................................... 482,906 ---
Payment of contingent liability...................... (31,920) ---
Payment of other liabilities......................... (64,529) ---
(Increase) decrease in:
Accounts receivable.............................. 458,272 (524,006)
Prepaid expenses and other....................... (269,534) (40,772)
(Decrease) increase in
Accounts payable................................. 181,728 (125,666)
Accrued liabilities.............................. 97,505 54,128
------------ -----------
Net cash provided by operating activities...... 2,554,208 1,784,802
------------ -----------
INVESTING ACTIVITIES
Sale of investment....................................... 9,600,000 ---
Cash paid in connection with business combination........ (1,088,432) ---
Overdraft bank balances assumed in business combination.. (451,414) ---
Capital expenditures..................................... (18,350) (3,728,504)
------------ -----------
Net cash provided by (used in)
investing activities......................... 8,041,804 (3,728,504)
------------ -----------
FINANCING ACTIVITIES
Proceeds from bank borrowings............................ 21,000,000 5,719,933
Principal payments of bank borrowings.................... (30,692,841) (1,119,643)
Partnership distributions................................ (1,132,735) (2,689,971)
Payment of debt financing costs......................... (83,020) ---
Preferred stock dividend................................. (215,921) ---
------------ -----------
Net cash provided by (used in)
financing activities......................... (11,124,517) 1,910,319
------------ -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................. (528,505) (33,383)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD...................................... 710,762 752,138
------------ -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD............................................ $ 182,257 $ 718,755
============ ===========
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30 ,1995
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Partner's ----------------------- ------------------------ Additional
Capital Number Number Paid-In Accumulated
(Deficit) of shares Par Value of shares Par Value Capital Deficit
----------- ---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,1995.. $(2,081,217) --- --- --- --- --- ---
Partnership distributions.. (1,229,344) --- --- --- --- --- ---
Business Combination....... 3,310,561 1,098,710 1,098,710 39,530,452 7,906,090 258,539 ---
Unrealized appreciation of --- --- --- --- --- --- ---
marketable securities
available for sale........
Preferred stock dividend... --- --- --- --- --- --- (107,960)
Net income................. --- --- --- --- --- 1,032,562 (325,096)
----------- --------- ---------- ---------- ---------- ---------- ---------
BALANCE AT SEPTEMBER 30,
1995...................... $ --- 1,098,710 $1,098,710 39,530,452 $7,906,090 $1,291,101 $(433,056)
=========== ========= ========== ========== ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Gain on Total
Marketable Stockholders'
Securities Equity (Deficit)
----------- ----------------
<S> <C> <C>
BALANCE AT JANUARY 1,1995.. --- (2,081,217)
Partnership distributions.. --- (1,229,344)
Business Combination....... --- 12,573,900
Unrealized appreciation of
marketable securities
available for sale........ 84,400 84,400
Preferred stock dividend... --- (107,960)
Net income................. --- 707,466
----------- ----------
BALANCE AT SEPTEMBER 30,
1995...................... $ 84,400 $9,947,245
=========== ==========
</TABLE>
See notes to consolidated financial statements.
8
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1995 and 1994
NOTE A - BUSINESS COMBINATION
On August 15, 1995, the transactions contemplated by the Agreement and Plan of
Merger among Patrick Petroleum Company ("Patrick"), La/Cal Energy Partners
("La/Cal"), Goodrich Petroleum Corporation (the "Company"), and Goodrich
Acquisition, Inc. were completed. The Agreement provided for a combination of
Patrick and La/Cal, as a result of which the businesses previously conducted by
Patrick and La/Cal are now conducted by the Company, which is a Delaware
corporation formed for the purpose of consummating such transactions, and its
subsidiaries. The combination of Patrick and La/Cal was effected primarily by
two concurrent transactions: (a) the contribution by La/Cal of all of its
assets and liabilities (excluding cash and accounts receivable accrued prior to
March 1, 1995, and interest thereon) to the Company in exchange for 19,765,226
shares of the Company's common stock (the "Common Stock") and (b) the merger of
Goodrich Acquisition with and into Patrick (the "Merger") whereby (i) each
outstanding share of Patrick common stock ("Patrick Common Stock") was converted
into one share of Common Stock; (ii) each outstanding share of Patrick Series B
Convertible Preferred Stock was converted into one share of the Company's Series
A Convertible Preferred Stock and (iii) Patrick, the surviving corporation in
the Merger, became a wholly-owned subsidiary of the Company.
NOTE B - BASIS OF PRESENTATION
The combination transactions were accounted for as a purchase business
combination in accordance with Accounting Principles Board Statement No. 16,
Business Combinations whereby La/Cal was deemed to be the acquiror and Patrick
the acquiree. Accordingly, on August 15, 1995, the Company recorded the assets
and liabilities of Patrick at fair value, whereas the assets and liabilities of
La/Cal are reflected at historical book value. The consolidated financial
statements reflect the operations solely of La/Cal for periods prior to August
15, 1995, whereas such financial statements reflect the operations of the
combined entities for periods subsequent to August 15, 1995.
The consolidated financial statements presented here should be read in
connection with the audited financial statements included in Patrick's 1994
Annual Report on Form 10-K and La/Cal's 1994 and 1993 audited financial
statements and the condensed unaudited pro forma financial statements included
in the Company's Registration Statement on Form S-4 dated June 13, 1995 and
Current Report on Form 8-K/A as of August 15, 1995.
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the Company as
of September 30, 1995 and the results of its operations for the nine and three
months ended September 30, 1995 and 1994.
9
<PAGE>
The results of operations for the nine and three month periods ended September
30, 1995 are not necessarily indicative of the results to be expected for the
full year and are significantly impacted by the accounting for the combination
transactions as discussed above.
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL - For a description of the accounting policies followed by La/Cal and
continued by the company, refer to the notes to the La/Cal 1994 and 1993
financial statements included in the Company's Registration Statement on
Form S-4 dated June 13, 1995.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand,
demand deposit accounts and temporary cash investments with maturities of ninety
days or less at date of purchase.
MARKETABLE SECURITIES - Under Statement of Financial Accounting Standards No.
115, the Company is required to segregate any debt and equity securities it
might hold into one of the following categories: trading, available-for-sale or
held-to-maturity. Trading securities and available-for-sale securities are
carried at their fair values. Changes in the fair values of trading securities
are recorded in the statement of operations. Changes in the fair value of
available-for-sale securities are recorded as a component of stockholders'
equity until such securities are sold. Held-to-maturity securities are carried
at cost adjusted for amortized premium or discount.
The Company has classified its marketable securities as "available-for-sale".
INVESTMENT IN PIPELINE JOINT VENTURE - The Company's investment consists of a
20% interest in an intrastate natural gas pipeline joint venture. The Company's
carrying basis in the investment was established at August 15, 1995 (fair value)
and is being amortized on a basis which matches the amortization with the
monthly maximum average contract quantities over the remaining term of the joint
venture which is estimated to terminate in 2000.
INCOME TAXES - The federal income tax effect of La/Cal's activities (prior to
August 15, 1995) was not reflected in the financial statements since such taxes
were the responsibility of the individual partners of La/Cal.
Goodrich follows the provisions of Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes which requires the liability method of
accounting for deferred income taxes. Deferred tax assets are subject to an
ongoing assessment of realizability. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
EARNINGS PER SHARE - Earnings per share information has not been presented due
to the combined entities being in corporate form for only the 45 day period from
August 15, 1995 to September 30, 1995.
10
<PAGE>
NOTE D - PATRICK ASSETS AND LIABILITIES ACQUIRED
On August 15, 1995, the Company recorded the combination transactions which
effect was primarily the recording of the assets and liabilities of Patrick at
their fair value. Such amounts were as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash overdraft $ (451,414)
Marketable securities 759,600
Accounts receivable 676,040
Prepaid expenses and other current assets 12,745
Investment in Penske Corporation 9,600,000
Investment in pipeline joint venture 5,079,754
Property and equipment 10,780,422
Accounts payable (27,627)
Accrued liabilities (688,070)
Reserve for contingent liabilities (750,000)
Long term debt (10,626,118)
Other liabilities (703,000)
------------
$ 13,662,332
============
</TABLE>
As discussed in Note B to the consolidated financial statements, the Company
accounted for the business combination in accordance with Accounting Principles
Board Opinion No. 16, Business Combinations. Accordingly, the net assets and
liabilities of Patrick have been recorded based on estimates of fair value as of
August 15, 1995.
NOTE E - SALE OF INVESTMENT IN PENSKE CORPORATION
On September 18, 1995, the Company received $9,600,000 cash as redemption of its
investment in the Penske Corporation. The proceeds were used to pay down the
company's long term debt along with related accrued interest. No gain or loss
resulted from the transaction.
NOTE F - LONG TERM DEBT
Long term debt recorded on the December 31, 1994 balance sheet represented
La/Cal's 10% Senior Secured General Obligation Notes ("the General Obligation
Notes"). This debt was paid off in connection with the business combination.
The Company has a credit facility with a bank which provides for a total
borrowing base determined by the bank every six months in part, based on the
Company's oil and gas reserve information. Any and all amounts drawn are due
and payable on June 1, 1997. Interest on related borrowings is based on either
of two methods at the option of the Company: the bank's prime lending rate or
LIBOR plus 2%. Interest rates are set on specific draws for one, two, three or
six month periods, also at the option of the Company.
The original borrowing base of $22,000,000 was reduced to $15,000,000 after the
sale of the Company's investment in the Penske Corporation (see Note E above),
in accordance with the specific provisions of the credit facility. The amount
drawn by the Company as of September 30, 1995 was $11,000,000.
11
<PAGE>
The credit facility requires minimum net worth and debt service ratios be
maintained by the Company. On November 13, 1996, the bank amended the minimum
net worth covenant which lowered the minimum net worth requirement to
$11,000,000 plus 50% of net income subsequent to September 30, 1995. On March
26, 1996, the bank amended the minimum net net worth covenant which lowered the
minimum net worth requirement to $8,500,000 plus 50% of net income subsequent to
September 30, 1995.
Substantially all of the Company's assets are pledged to secure this credit
facility.
NOTE G - EXTRAORDINARY ITEM-EARLY EXTINGUISHMENT OF DEBT
La/Cal's General Obligation Notes were paid off in connection with the business
combination and the related unamortized debt financing costs in the amount of
$482,906 were charged to operations as an extraordinary item, in the third
quarter of 1995.
NOTE H - PRO FORMA FINANCIAL INFORMATION
Selected results of operations on a pro forma basis as if the combination
transactions had occurred on January 1, 1995 and January 1, 1994, respectively,
are as follows:
<TABLE>
<CAPTION>
For the nine months ended
September 30,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Revenues $7,089,300 $7,035,909
Income before extraordinary item 2,414,688 4,496,866
Net income 1,931,782 4,496,866
Income applicable to common stock 1,245,861 3,791,866
Income per share before extraordinary item .04 .10
Income per common share $ .03 $ .10
</TABLE>
(Note) The pro forma operations for the nine months ended September 30, 1995
contain a net gain on the sale of an investment which accounted for $1,563,762
of net income and $.04 income per share. The operations information for the
nine months ended September 30, 1994 contains a net gain on sale of investments
which accounted for $6,447,102 of net income and $.16 income per share. Also
the operations for the nine months ended September 30, 1994 has been adjusted to
eliminate operations related to certain oil and gas properties sold by Patrick
in December, 1994 in order to present comparable amounts.
NOTE I - COMMITMENTS AND CONTINGENCIES
The U.S. Environmental Protection Agency ("EPA") has identified the Company as a
potentially responsible party ("PRP") for the cost of clean-up of "hazardous
substances" at an oil field waste disposal site in Vermilion Parish, Louisiana.
The EPA has estimated that the total cost of long-term clean-up of the site will
be approximately $15.4 million with the Company's percentage of responsibility
to be approximately 3.09%. As of September 30, 1995, the Company has paid
approximately $115,000 in costs related to this matter and has an accrual for an
additional $400,000 for the remaining liability. The EPA and PRPs will continue
to evaluate the site and revise estimates
12
<PAGE>
for the long-term clean-up of the site. There can be no assurance that the cost
of clean-up and the Company's percentage responsibility will not be higher than
currently estimated by the EPA. In addition, under the federal environmental
laws, the liability costs for the clean-up of the site is joint and several
among all PRPs. Therefore, the ultimate cost of the clean-up to the Company
could be significantly higher than the amount presently accrued for this
liability.
Additionally, the Company is party to a number of lawsuits arising in the normal
course of business. The Company has defended and intends to continue to defend
these actions vigorously and believes, based on currently available information,
that adverse settlements, if any, in excess of insurance coverage or amounts
already provided, will not be material to its financial position or results of
operations.
NOTE J - INCOME TAXES
At December 31, 1994, the book basis of La/Cal's net assets exceeded their tax
basis by $3,798,000.
Based on preliminary purchase price calculations, the Company estimates it will
have gross deferred tax assets in excess of gross deferred tax liabilities. The
largest component of deferred tax assets is the net operating loss carryforwards
obtained from Patrick which are expected to approximate $13,000,000 (tax
effected). The Company has recorded a valuation allowance against its gross
deferred tax assets which will produce a net deferred tax asset of zero.
NOTE K - PREFERRED STOCK
In accordance with the terms of the combination transactions, all of the
outstanding shares of PPC's Series B Convertible Preferred Stock were converted
into Goodrich Series A Convertible Stock except for 76,290 shares for which
appraisal rights have been exercised.
The Preferred Stock has a par value of $1.00 per share with a liquidation
preference of $10.00 per share, is convertible at the option of the holder at
any time, unless earlier redeemed, into shares of Common Stock of the Company at
an initial conversion rate of 3.33 shares of Common stock per share of
Preferred. The Preferred Stock also will automatically convert to Common Stock
if the closing price for the Preferred Stock exceeds $15.00 per share for ten
consecutive trading days. Upon any conversion of a share of Preferred Stock
prior to the close of business on September 15, 1997, the stockholder will
receive one Common Stock purchase warrant to purchase one share of Common Stock
at $5.00 per share, subject to adjustment in certain events. Any outstanding
warrants can be called on thirty days notice for $4.25 per warrant and will
expire on September 15, 1997.
The Preferred Stock is redeemable in whole or in part, at $12.00 per share, plus
accrued and unpaid dividends. Dividends on the Preferred Stock accrue at an
annual rate of 8%.
13
<PAGE>
NOTE L - SUBSEQUENT EVENT
As a result of the combination transactions, the Company was required to offer a
special conversion right to all holders of the Preferred Stock for a period of
61 days beginning August 18, 1995. On October 18, 1995, holders of 363,851
shares of the Company's preferred stock elected to convert their shares to
Common Stock at an exchange rate of 6.25 to 1. This conversion resulted in the
Company issuing an additional 2,274,058 shares of Common Stock and resulted in
734,859 preferred shares outstanding.
NOTE M - STOCK OPTION AND INCENTIVE PROGRAMS
Goodrich currently has two plans which provide for stock option and other
incentive awards for the Company's key employees and consultants and its
directors. The Goodrich Petroleum Corporation 1995 Stock Option Plan allows the
Board of Directors, through its Compensation Committee, to grant stock options,
restricted stock awards, stock appreciation rights, long-term incentive awards,
and phantom stock awards, or any combination thereof to key employees and
consultants. The Goodrich Petroleum Corporation 1995 Nonemployee Director Stock
Option Plan provides for the grant of options to each director who is not and
has never been an employee of the Company.
Grants of 950,000 common stock options were made on August 15, 1995 under the
two plans. The average exercise price of such options is $0.99 per share.
Additionally, the Company assumed approximately 1,465,000 options to purchase
common stock from Patrick with an average exercise price of $2.25 per share and
assumed approximately 200,000 options with exercise prices ranging from $2.50 to
$3.00 pe share.
14
<PAGE>
Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Background of Business Combination and Basis of Presentation
- ------------------------------------------------------------
On August 15, 1995, the transactions contemplated by the Agreement and Plan of
Merger among Patrick Petroleum Company ("Patrick"), La/Cal Energy Partners
("La/Cal"), Goodrich Petroleum Corporation (the "Company"), and Goodrich
Acquisition, Inc. were completed. The Agreement provided for a combination of
Patrick and La/Cal, as a result of which the businesses previously conducted by
Patrick and La/Cal are now conducted by the Company, which is a Delaware
corporation formed for the purpose of consummating such transactions, and its
subsidiaries. The combination of Patrick and La/Cal was effected primarily by
two concurrent transactions: (a) the contribution by La/Cal of all of its
assets and liabilities (excluding cash and accounts receivable accrued prior to
March 1, 1995, and interest thereon) to the Company in exchange for 19,765,226
shares of the Company's common stock (the "Common Stock") and (b) the merger of
Goodrich Acquisition with and into Patrick (the "Merger") whereby (i) each
outstanding share of Patrick common stock ("Patrick Common Stock") was converted
into one share of Common Stock; (ii) each outstanding share of Patrick Series B
Convertible Preferred Stock was converted into one share of the Company's Series
A Convertible Preferred Stock and (iii) Patrick, the surviving corporation in
the Merger, became a wholly-owned subsidiary of the Company.
As a result, comparison of the current and prior period financial statements
presented are significantly impacted by the combination transactions.
Changes in Financial Position (September 30, 1995 versus December 31, 1994)
- ---------------------------------------------------------------------------
As noted above, the balance sheet presented as of December 31, 1994 reflects the
assets and liabilities of La/Cal only whereas the balance sheet as of September
30, 1995 reflects the assets and liabilities of the combined entities.
Variances in significant asset, liability and equity accounts are addressed in
the following paragraphs. See Note D to the consolidated financial statements
for additional information.
The September 30, 1995 balance sheet reflects the Company's investment in
marketable securities and investment in a pipeline joint venture which were
assets held by Patrick. Net property and equipment reflects an increase of
approximately $10,000,000 due to the addition of oil and gas properties of
Patrick which were recorded at the fair value on August 15, 1995 offset by
depletion, depreciation and amortization for the nine months ended September 30,
1995.
As of September 30, 1995, the Company has recorded a reserve for contingent
liabilities of approximately $ 718,000, of which $400,000 is related to possible
future amounts payable in its role as a potentially responsible party for the
cost of clean-up of "hazardous substances" at an oil field waste disposal site.
This liability was attributable to Patrick and recorded by the Company in
connection with the combination transactions.
15
<PAGE>
The September 30, 1995 balance sheet reflects $891,059 in accrued liabilities
and $610,471 in other liabilities. Included in these amounts are the current
($415,000) and long-term ($610,471) portions of the Company's obligation under
consulting agreements with the Company's chairman and his son, a former employee
of Patrick.
Long term debt as of September 30, 1995 represents the outstanding balance under
the Company's credit facility with a bank. The original amount drawn under the
facility immediately following the merger was $21,000,000 but was reduced to
$11,000,000 at September 30, 1995 primarily due to proceeds from the sale of the
investment in the Penske Corporation (see Note E to the consolidated financial
statements). Debt outstanding as of December 31, 1994 reflected amounts issued
under La/Cal's 10% Senior Secured General Obligation Notes. This debt was paid
off in connection with the combination.
Due to La/Cal being a partnership and its recorded liabilities exceeding its
assets, the December 31, 1994 balance sheet reflects an amount for partners'
deficit of $2,081,217. The September 30, 1995 balance sheet reflects
stockholder equity accounts of the Company, a corporation. Convertible
preferred stock of Patrick was converted into preferred stock of Goodrich and
recorded at its par value of $1,098,710. Common stock reflects 39,530,452
shares issued in the merger transactions at $.20 per share par value. The
September 30, 1995 additional paid in capital balance is the result of the
effects of the combination transactions, primarily the elimination of partners'
deficit of La/Cal issuance of the Company's common and preferred stock, and the
recording of Patrick's assets and liabilities at fair value.
Retained earnings at September 30, 1995 reflect only the operations of the
Company since August 15, 1995, the date the combination transactions.
Changes in Results of Operations
- --------------------------------
As noted above, the statements of operations for the nine and three months ended
September 30, 1994 reflect the operations of La/Cal only, whereas the statement
of operations for the nine and three months ended September 30, 1995 reflect the
operations solely of La/Cal prior to the combination date (August 15, 1995) and
the operations of the combined entities subsequent to the combination date.
Variances in significant operating captions are addressed in the following
paragraphs.
Nine months ended September 30, 1995 versus nine months ended September 30, 1994
- - Operating revenues in 1995 amounted to $3,696,485 and were $40,601 (1%) lower
than 1994 due to lower oil and gas sales which was primarily due to lower
average gas prices for the period (see volume and price table below). This was
partially offset by the revenues from the pipeline joint venture which was
acquired from Patrick and contributed $113,937 in 1995.
16
<PAGE>
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gas (MCF) 1,764,583 $ 1.57 1,650,577 $ 1.95
Oil (BBLS) 49,066 $16.72 25,267 $16.10
</TABLE>
Lease operating expense and production taxes were $50,123 or 10% higher and
depletion, depreciation and amortization was $148,822 or 20% higher than 1994
due to the inclusion of the combined entities subsequent to August 15, 1995.
The large variance ($170,429) in general and administrative expenses is due to
the fact that La/Cal was provided substantially all of its general and
administrative expenses at no cost by an affiliate whereas the Company provides
its own general and administrative services. Additionally, as a public company,
the Company incurs a higher level of general and administrative expenses than as
a privately held company. However, based on the Company's current and
anticipated future level of operations on a combined basis, such expenses were,
and are anticipated to continue to be, less than the combined historical general
and administrative expenses of La/Cal and Patrick.
Interest expense was $111,580 (14%) higher in 1995 due to the Company having
outstanding debt of $21,000,000 for the period from August 15, 1995 to September
18, 1995 and La/Cal having slightly higher average debt outstanding in 1995. A
partial offsetting factor to this was the Company's lower effective interest
rate from August 15, 1995 to September 30, 1995.
The statements of operations reflect no income taxes due to: 1) the individual
partners of La/Cal being responsible for such taxes for the periods containing
the operations of La/Cal only (see Note J to consolidated financial statements
for pro forma income tax information) and 2) the Company incurring a loss for
the period from August 15, 1995 through September 30, 1995, as a result of the
extraordinary item.
In connection with the combination transactions, the Company paid off La/Cal's
General Obligation Notes and the related unamortized debt financing costs of
$482,906 were charged to operations as an extraordinary item in the third
quarter of 1995.
The Company assumed Patrick's Convertible Preferred Stock and has incurred
related dividends of $107,960 from August 15, 1995 to September 30, 1995.
Three months ended September 30, 1995 versus three months ended September 30,
1994 - Operating revenues were $1,414,410 in 1995 and were $217,972 (13%) lower
than 1994. This was due to lower oil and gas revenues resulting from lower
volumes of gas production and lower average oil and gas prices for the period
(see volume and price table below). This factor was offset somewhat by revenues
from the pipeline joint venture which was acquired from Patrick which
contributed $113,937 in 1995.
17
<PAGE>
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gas (MCF) 584,637 $ 1.49 745,832 $ 1.90
Oil (BBLS) 32,717 $16.67 12,543 $17.05
</TABLE>
Lease operating expense and production taxes were approximately the same in 1995
as in 1994 as La/Cal expenses were less than in 1994. Depletion, depreciation
and amortization was $163,225 or 48% higher than 1994 due to the inclusion of
the merged entities subsequent to August 15, 1995 which included depletion,
depreciation and amortization on the assets acquired from Patrick (at fair value
bases).
The large variance ($184,914) in general and administrative expenses is due to
the fact that La/Cal was provided general and administrative expenses at no cost
by an affiliate whereas the Company provides its own general and administrative
services. Additionally, as a public company, the Company incurs a higher level
of general and administrative expenses than as a privately held company.
However, based on the Company's current and anticipated future level of
operations on a combined basis, such expenses were, and are anticipated to
continue to be less than, the combine historical general and administrative
expenses of La/Cal and Patrick.
Interest expense was $58,333 (19%) higher in 1995 due to the Company having
outstanding debt of $21,000,000 for the period from August 15, 1995 to September
18, 1995 offset by La/Cal having slightly lower average debt outstanding during
the 1995 period and the Company's lower effective interest rate from August 15,
1995 to September 30, 1995.
The statement of operations reflect no income taxes due to: 1) the individual
partners of La/Cal being responsible for such taxes for the periods containing
the operations of La/Cal only (see notes to consolidated financial statements
for pro forma income tax information) and 2) the Company incurring a loss for
the period from August 15, 1995 through September 30, 1995, as a result of the
extraordinary item.
In connection with the combination transactions, the Company paid off La/Cal's
General Obligation Notes and the related unamortized debt financing costs of
$482,906 were charged to operations as an extraordinary item in the third
quarter of 1995.
The Company assumed Patrick's Convertible Preferred Stock and has incurred
related dividends of $107,960 from August 15, 1995 to September 30, 1995.
18
<PAGE>
Liquidity and Capital Resources (Nine months ended September 30, 1995 versus
- ----------------------------------------------------------------------------
nine months ended September 30, 1994)
-------------------------------------
Net cash provided by operating activities was $2,554,208 in 1995 compared to
$1,784,802 in 1994. The Company's accompanying consolidated statements of cash
flows identify major differences between net income and net cash provided by
operating activities for each of the nine month periods. For additional
information relating to the operating results of the Company, see "Changes in
Results of Operations".
Net cash provided by investing activities amounted to $8,041,804 in 1995
compared to net cash used of $3,728,504 in 1994. The year ended December 31,
1995 reflects the receipt by the Company of $9,600,000 cash in September from
the sale of the investment in the Penske Corporation as well as the payment by
the Company of $1,088,432 in connection with the business combination. The year
ended December 31, 1994 reflects $3,728,504 in capital expenditures due to
extensive drilling and completion activities related to the La/Cal oil and gas
wells during that period. Drilling and completion activities were suspended
during 1995 in anticipation of the combination transactions.
Net cash used by financing activities in 1995 total $11,124,517 compared to net
cash provided by financing activities of $1,910,319 in 1994.
The 1995 amount included the borrowing of $21,000,000 by the Company which was
used primarily to pay off the debt assumed from La/Cal and Patrick
($19,777,531). The remainder of the loan proceeds were used to provide working
capital and pay accrued interest. The year ended December 31, 1995 also
reflects debt paydowns as follows: 1) $915,310 by La/Cal on its General
Obligation Notes prior to August 15, 1995; 2) $9,500,000 by the Company on its
credit facility in September from the Penske sale proceeds; 3) $500,000 by the
Company on its credit facility from operations/working capital. The 1995 amount
also includes partnership distributions by La/Cal of $1,132,735 prior to August
15, 1995 and the Company's preferred stock dividend for the third quarter in the
amount of $215,921.
The 1994 amount consists of La/Cal borrowings used to partially fund the capital
expenditures mentioned above and partnership distributions of $2,689,971.
Additionally, it includes subsequent payments of $1,119,643 on such debt.
Other
The Company has a credit facility with a bank which provides for a total
borrowing base determined by the bank every six months in part, based on the
Company's oil and gas reserve information. Any and all amounts drawn are due
and payable on June 1, 1997. Interest on related borrowings is based on either
of two methods at the option of the Company: the bank's prime lending rate or
LIBOR plus 2%. Interest rates are set on specific draws for one, two, three or
six month periods, also at the option of the Company.
19
<PAGE>
The original borrowing base of $22,000,000 was reduced to $15,000,000 after the
sale of the Company's investment in the Penske Corporation (see Note E above),
in accordance with the specific provisions of the credit facility. The amount
drawn by the Company as of September 30, 1995 was $11,000,000.
The Company plans to incur capital expenditures in the amount of approximately
$6,000,000 in the fourth quarter of 1995 and calendar 1996 (15 month period).
The Company would expect to finance such expenditures from operating cash flow
and draws on its bank credit facility.
The Company's business strategy is to explore and develop drilling prospects
along the Gulf Coast and West Texas and pursue strategic acquisitions of oil and
gas properties that offer additional development drilling opportunities. It is
anticipated that such acquisitions would be financed with bank or other
institutional borrowings.
20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
The Company's credit facility requires minimum net worth and debt service
ratios be maintained by the Company. Accordingly, the Company had
$1,137,287 available for the payment of dividends at September 30, 1995.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Results of Votes of Security Holders.
None.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation of Goodrich
Petroleum Corporation
3.2 Amended and Restated Bylaws of Goodrich Petroleum Corporation
10.1 Consulting Services Agreement between Leo E. Bromberg and
Goodrich Petroleum Corporation
(b) Reports on Form 8-K
1) Form 8-K filed as of August 15, 1995 reporting the closing of
the merger between and among Goodrich Petroleum Corporation,
Patrick Petroleum Company and La/Cal Energy Partners.
2) Form 8-K/A filed as of August 15, 1995 providing:
a) historical financial statements of Patrick Petroleum Company
and La/Cal Energy Partners as of June 30, 1995, December 31,
1994 and 1993 and for the six months ended June 30, 1995 and
the years ended December 31, 1994, 1993, and 1992.
b) pro forma financial statements of Goodrich Petroleum
Corporation as of June 30, 1995 and for the six months ended
June 30, 1995 and the year ended December 30, 1994.
21
<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.
Goodrich Petroleum Corporation
-------------------------------------
Goodrich Petroleum Corporation
March 28, 1996 /s/ Walter G. Goodrich
- -------------------------------- -------------------------------------
Date Walter G. Goodrich, President and
Chief Executive Officer
March 28, 1996 /s/ Roland L. Frautschi
- -------------------------------- -------------------------------------
Date Roland L. Frautschi, Vice President,
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 182,257
<SECURITIES> 844,000
<RECEIVABLES> 1,132,440
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,440,976
<PP&E> 18,070,321
<DEPRECIATION> 2,116,801
<TOTAL-ASSETS> 23,512,126
<CURRENT-LIABILITIES> 1,954,410
<BONDS> 11,000,000
0
1,098,710
<COMMON> 7,906,090
<OTHER-SE> 942,445
<TOTAL-LIABILITY-AND-EQUITY> 23,512,126
<SALES> 3,696,485
<TOTAL-REVENUES> 3,696,485
<CGS> 0
<TOTAL-COSTS> 1,639,425
<OTHER-EXPENSES> (34,079)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 900,767
<INCOME-PRETAX> 1,190,372
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,190,372
<DISCONTINUED> 0
<EXTRAORDINARY> 482,906
<CHANGES> 0
<NET-INCOME> 707,466
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
