<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT 1934
For the quarterly period ended June 30, 1996
----------------------------------------
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 76-466913
- --------------------------------------------------------------------------------
(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. [X] Yes [ ] 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 August 9, 1996: 41,804,510
1
<PAGE>
GOODRICH PETROLEUM CORPORATION
FORM 10-Q
JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<S> <C>
Consolidated Balance Sheets
June 30, 1996 (Unaudited) and December 31, 1995............ 3
Consolidated Statements of Operations
Six Months Ended June 30, 1996 and 1995 (Unaudited)........ 5
Three Months Ended June 30, 1996 and 1995 (Unaudited)...... 6
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 (Unaudited)........ 7
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 1996 and 1995 (Unaudited)........ 8
Notes to Consolidated Financial Statements.................. 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 11
PART II - OTHER INFORMATION 15
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.
</TABLE>
2
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................. $ 480,375 $ 613,450
Marketable equity securities............... 886,200 759,600
Accounts receivable
Trade and other, net of allowance......... 203,778 170,593
Accrued oil and gas revenue............... 1,006,550 1,014,709
Accrued pipeline joint venture............ 438,000 530,792
Prepaid insurance.......................... 169,355 302,113
Other...................................... 53,950 33,532
----------- -----------
Total current assets................... 3,238,208 3,424,789
----------- -----------
PROPERTY AND EQUIPMENT
Oil and gas properties..................... 17,054,186 16,262,033
Furniture, fixtures and equipment.......... 108,376 101,333
----------- -----------
17,162,562 16,363,366
Less accumulated depletion, depreciation
and amortization.......................... (3,414,523) (2,217,425)
----------- -----------
Total property and equipment........... 13,748,039 14,145,941
----------- -----------
OTHER ASSETS
Investment in pipeline joint venture, net.. 4,110,124 4,676,500
Deferred charges........................... 96,401 135,486
----------- -----------
4,206,525 4,811,986
----------- -----------
TOTAL ASSETS....................... $21,192,772 $22,382,716
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable...................................... $ 733,020 $ 656,886
Accrued liabilities................................... 1,631,189 1,740,028
---------- ------------
Total current liabilities......................... 2,364,209 2,396,914
---------- ------------
LONG TERM DEBT.......................................... 9,000,000 9,750,000
OTHER LIABILITIES....................................... 369,685 572,990
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00 per share;
authorized 10,000,000 shares; issued
811,149 at June 30, 1996 (liquidating
preference $10 per share, aggregating to
$8,111,490) and 734,859 at December
31, 1995.......................................... 811,149 734,859
Common stock, par value - $0.20 per share;
authorized 100,000,000 shares; issued
and outstanding 41,804,510........................ 8,360,902 8,360,902
Additional paid-in capital............................ 1,123,850 1,200,140
Accumulated deficit................................... (963,623) (633,089)
Unrealized gain on marketable equity securities....... 126,600 ---
---------- -----------
Total stockholders' equity........................ 9,458,878 9,662,812
---------- -----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY............................... $21,192,772 $22,382,716
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------------
1996 1995
----------- ------------
<S> <C> <C> <C>
REVENUES
Oil and gas sales............................. $ 3,783,139 2,168,138
Pipeline joint venture........................ 825,901 ---
Other, net.................................... 204,467 12,902
----------- ------------
Total revenues............................ 4,813,507 2,181,040
----------- ------------
EXPENSES
Lease operating expense and production taxes.. 704,833 296,433
Depletion, depreciation and amortization...... 1,864,064 407,240
Exploration................................... 764,779 ---
Interest expense.............................. 412,533 537,225
General and administrative.................... 1,073,412 3,307
----------- ------------
Total costs and expenses.................. 4,819,621 1,244,205
----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES............... (6,114) $ 936,835
============
Income taxes.................................. ---
----------
NET LOSS........................................ (6,114)
Preferred stock dividends..................... 324,420
-----------
LOSS AVAILABLE TO COMMON STOCK.................. $ (330,534)
============
LOSS PER AVERAGE COMMON SHARE................... $ (.01)
============
AVERAGE COMMON SHARES OUTSTANDING............... 41,804,510
============
PRO FORMA INFORMATION:
Income before income taxes...................... $ 936,835
Pro forma income taxes 1)....................... 365,366
-----------
Pro forma net income............................ $ 571,469
============
Pro forma earnings per average common share..... $ .03
============
Pro forma average common shares outstanding 2).. $19,765,226
============
- --------------------
</TABLE>
1) No provision for income taxes is included in the consolidated statements of
operations for the six months ended June 30, 1995, for the operations of
La/Cal Energy Partners (predecessor company), due to La/Cal being a
partnership and income taxes having been the responsibility of the
individual partners of La/Cal. Certain unaudited pro forma information
relating to the Company's results of operations had La/Cal been a
corporation, is shown here.
2) For purposes of this presentation the number of pro forma shares used for
the six months ended June 30, 1995, is 19,765,226 shares, the number issued
by the Company in exchange for La/Cal's net assets contributed.
See notes to consolidated financial statements.
5
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------------------
1996 1995
------------ ------------
<S> <C> <C> <C>
REVENUES
Oil and gas sales............................. $ 1,880,258 1,041,049
Pipeline joint venture........................ 243,591 ---
Other, net.................................... 38,870 6,571
----------- -----------
Total revenues............................ 2,162,719 1,047,620
----------- -----------
EXPENSES
Lease operating expense and production taxes.. 376,741 146,484
Depletion, depreciation and amortization...... 770,859 178,995
Exploration................................... 546,762 ---
Interest expense.............................. 205,702 262,380
General and administrative.................... 545,134 (19,022)
----------- -----------
Total costs and expenses.................. 2,445,198 568,837
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES............... (282,479) $ 478,783
Income taxes................................ ----------- ===========
NET LOSS........................................ $ (282,479)
Preferred stock dividends..................... 162,190
-----------
LOSS AVAILABLE TO COMMON STOCK.................. $ (444,669)
===========
LOSS PER AVERAGE COMMON SHARE................... $ (.01)
===========
AVERAGE COMMON SHARES OUTSTANDING............... 41,804,510
===========
PRO FORMA INFORMATION:
Income before income taxes...................... $ 478,783
Pro forma income taxes 1)....................... 186,726
-----------
Pro forma net income............................ $ 292,057
===========
Pro forma earnings per average common share..... $ .01
===========
Pro forma average common shares outstanding 2).. 19,765,226
===========
- --------------------
</TABLE>
1) No provision for income taxes is included in the consolidated statements of
operations for the three months ended June 30, 1995, for the operations of
La/Cal Energy Partners (predecessor company), due to La/Cal being a
partnership and income taxes having been the responsibility of the
individual partners of La/Cal. Certain unaudited pro forma information
relating to the Company's results of operations had La/Cal been a
corporation, is shown here.
2) For purposes of this presentation the number of pro forma shares used for
the three months ended June 30, 1995, is 19,765,226 shares, the number
issued by the Company in exchange for La/Cal's net assets contributed.
See notes to consolidated financial statements.
6
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
----------------------------
1996 1995
----------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................................... $ (6,114) 936,835
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion, depreciation and amortization......... 1,864,064 407,240
Amortization of deferred debt financing costs.... 40,347 57,395
Gain on sale of oil and gas properties........... (47,123) ---
Capital expenditures charged to income........... 626,779 ---
Payment of other liabilities..................... (203,305) ---
(Increase) decrease in:
Accounts receivable.......................... 67,766 233,727
Prepaid insurance and other.................. 112,340 ---
(Decrease) increase in
Accounts payable............................. 76,134 (13,467)
Accrued liabilities.......................... (108,839) (61,351)
------------ -----------
Net cash provided by operating activities.. 2,422,049 1,560,379
----------- -----------
INVESTING ACTIVITIES
Proceeds from sales of oil and gas properties........ 277,500 ---
Capital expenditures................................. (1,747,948) ---
Cash paid in connection with business combination.... --- (346,331)
Other................................................ --- 1,304
---------- -----------
Net cash used in investing activities...... (1,470,448) (345,027)
---------- -----------
FINANCING ACTIVITIES
Principal payments of bank borrowings................ (750,000) (797,162)
Partnership distributions............................ --- (413,900)
Payment of debt financing costs..................... (10,256) ---
Preferred stock dividends............................ (324,420) ---
---------- ----------
Net cash used in financing activities...... (1,084,676) (1,211,062)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS..................................... (133,075) 4,290
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD.................................. 613,450 710,762
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD........................................ $ 480,375 715,052
========== ==========
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------------- -------------------------------
Partners' Number Number
Capital of of Par
(Deficit) shares Par Value shares Value
----------- ----------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994...................... $(2,081,217) --- $ --- --- $ ---
Net income................. 936,835 --- --- --- ---
Partnership distributions.. (413,900) --- --- --- ---
---------- ------- ------- ---------- -----------
BALANCE AT JUNE 30, 1995... (1,558,282) --- --- --- ---
========== ======= ======= ========== ===========
BALANCE AT DECEMBER 31,
1995...................... --- 734,859 734,859 41,804,510 8,360,902
Net loss................... --- --- --- --- ---
Unrealized appreciation of
marketable securities
available for sale........ --- --- --- --- ---
Preferred stock dividends.. --- --- --- --- ---
Reinstatement of preferred
stock under appraisal
rights.................... --- 76,290 $ 76,290 --- ---
---------- ------- ------- ---------- -----------
BALANCE AT JUNE 30, 1996... $ --- 811,149 811,149 41,804,510 8,360,902
========== ======= ======= ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Additional Gain on Total
Paid-In Accumulated Equity Stockholders'
Capital Deficit Securities Equity (Deficit)
---------- -------------- ------------ -----------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994...................... --- --- --- (2,081,217)
Net income................. --- --- --- 936,835
Partnership distributions.. --- --- --- (413,900)
--------- -------- ------- ----------
BALANCE AT JUNE 30, 1995... --- --- --- (1,558,282)
========= ======== ======= ==========
BALANCE AT DECEMBER 31,
1995...................... 1,200,140 (633,089) --- 9,662,812
Net loss................... --- (6,114) --- (6,114)
Unrealized appreciation of
marketable securities
available for sale........ --- --- 126,600 126,600
Preferred stock dividends.. --- (324,420) --- (324,420)
Reinstatement of preferred
stock under appraisal
rights.................... (76,290) --- --- ---
--------- -------- ------- ----------
BALANCE AT JUNE 30, 1996... 1,123,850 (963,623) 126,600 9,458,878
========= ======== ======= ==========
</TABLE>
See notes to consolidated financial statements.
8
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1996 and 1995
NOTE A - BUSINESS COMBINATION
As noted in the Company's 1995 annual report on Form 10-K, a business
combination of Patrick Petroleum Company ("Patrick"), La/Cal Energy Partners
("La/Cal") and Goodrich Petroleum Corporation (the "Company") took place in
August, 1995. As a result of the accounting for the combination transactions,
the financial statements for the three and six months ended June 30, 1995
reflect solely the operations of La/Cal whereas the financial statements for the
three and six months ended June 30, 1996 reflect the operations of the combined
entities.
NOTE B - BASIS OF PRESENTATION
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to rules and regulations of the
Securities and Exchange Commission; however, the Company believes the
disclosures which are made are adequate to make the information presented not
misleading. The financial statements and footnotes included in this Form 10-Q
should be read in conjunction with the financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended December
31, 1995, specifically as it relates to the business combination and the related
impact on the basis of presentation of the accompanying financial statements.
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 June 30, 1996 and the results of its operations for the three and six months
ended June 30, 1996 and 1995.
The results of operations for the three and six month periods ended June 30,
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE C - 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
9
<PAGE>
responsibility to be approximately 3.09%. As of June 30, 1996, the Company has
paid approximately $135,000 in costs related to this matter and accrued an
additional $379,000 for the remaining liability. The EPA and PRPs will continue
to evaluate the site and revise estimates 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 results or 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 D - PRO FORMA FINANCIAL RESULTS OF OPERATIONS
Selected results of operations on a pro forma basis as if the combination
transactions had occurred on January 1, 1995 are as follows:
<TABLE>
<CAPTION>
For the six months ended
June 30, 1995
------------------------
<S> <C>
Revenues........................... $6,951,168
Net income......................... 2,355,531
Income applicable to common stock.. 1,885,531
Income per average common share.... $ .05
</TABLE>
The pro forma operations above contain a net gain on the sale of an investment
which accounted for $1,563,762 of revenue and net income and amounted to $ .04
income per share.
10
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Business Combination
As noted in the Company's 1995 annual report on Form 10-K, a business
combination of Patrick Petroleum Company ("Patrick"), La/Cal Energy Partners
("La/Cal") and Goodrich Petroleum Corporation (the "Company") took place in
August, 1995. As a result of the accounting for the combination transactions,
the financial statements for the three and six months ended June 30, 1995
reflect solely the operations of La/Cal whereas the financial statements for the
three and six months ended June 30, 1996 reflect the operations of the combined
entities. As a result, comparison of the current and prior period financial
statements presented are significantly impacted by the combination transactions.
Changes in Results of Operations
Six months ended June 30, 1996 versus six months ended June 30, 1995
Total revenues for the six months ended June 30, 1996 amounted to $4,814,000 and
were $2,163,000 higher than the $2,651,000 for the six months ended June 30,
1995. Oil and gas sales were $1,615,000 higher due substantially to increased
oil production as a result of the inclusion of revenues of the combined entities
in the six months ended June 30, 1996 along with increased oil prices for the
period. Gas production for the six months ended June 30, 1996 was lower
primarily due to the early abandonment of two wells producing from a gas
reservoir in the Lake Charles field and a third well producing at a reduced
rate. One of the abandoned wells has recently been recompleted to an oil
reservoir. The dollar impact of this decrease was more than offset by increased
gas prices for the period. (see volume and price table below). Additionally,
the six months ended June 30, 1996 includes the revenues from the pipeline joint
venture which was acquired in the Patrick transaction and contributed $826,000
in the current period. Included in other, net for the six months ended June 30,
1996 ($204,000) are gains amounting to $47,000 on the sale of certain oil and
gas properties, substantially all in North Dakota, revenue received by the
Company as operator of certain wells and other miscellaneous income items.
<TABLE>
<CAPTION>
Six months Six months
ended June 30, 1996 ended June 30, 1995
------------------------- -------------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gas (Mcf)... 813,565 $ 2.52 1,179,946 $ 1.61
Oil (Bbls).. 87,046 19.87 16,349 16.82
</TABLE>
11
<PAGE>
Lease operating expense and production taxes were $705,000 for the six months
ended June 30, 1996 versus $296,000 for the six months ended June 30, 1995 or
$408,000 higher due to the higher production volumes. Depletion, deprecation
and amortization was $1,864,000 versus $407,000 or $1,457,000 higher than 1995
due to the addition of the Patrick oil and gas properties and the pipeline joint
venture subsequent to August 15, 1995. The Company incurred $765,000 of
exploration expense in 1996, whereas there was no such expense in 1995 due to
La/Cal having virtually no exploration activities. Included in 1996 exploration
expense is $470,000 of costs related to dry holes during the period.
General and administrative expenses amounted to $1,073,000 in the six months
ended June 30, 1996 versus $3,000 in 1995 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 a privately held company.
Interest expense was $413,000 in the six months ended June 30, 1996 compared to
$537,000 (23% lower) in 1995 due to the Company having slightly lower average
debt outstanding and a lower effective interest rate in the six months ended
June 30, 1996 than La/Cal during the same period in 1995.
The Company's preferred stock dividends amounted to $324,000 for the six months
ended June 30, 1996.
Three months ended June 30, 1996 versus three months ended June 30, 1995
Total revenues in the second quarter of 1996 amounted to $2,163,000 and were
$1,115,000 higher than the $1,048,000 in the second quarter of 1995. Oil and
gas sales were $839,000 higher due substantially to increased oil production as
a result of the inclusion of revenues of the combined entities in the second
quarter of 1996 along with increased oil prices for the period. Gas production
for the three months ended June 30, 1996 was lower primarily due to the early
abandonment of two wells producing from a gas reservoir in the Lake Charles
field and a third well producing at a reduced rate. One of the abandoned wells
has recently been recompleted to an oil reservoir. The dollar impact of this
decrease was more than offset by increased gas prices for the period. (see
volume and price table below). Additionally, the second quarter of 1996
includes the revenues from the pipeline joint venture which was acquired in the
Patrick transaction and contributed $244,000 in the current period.
12
<PAGE>
<TABLE>
<CAPTION>
Three months Three months
ended June 30, 1996 ended June 30, 1995
------------------------- -------------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gas (Mcf)... 402,789 $ 2.59 568,559 $ 1.62
Oil (Bbls).. 39,702 21.11 6,519 18.28
</TABLE>
Lease operating expense and production taxes were $377,000 in the second quarter
of 1996 versus $146,000 in the second quarter of 1995 or $230,000 higher due to
the higher production volumes. Depletion, deprecation and amortization was
$771,000 versus $179,000 or $592,000 higher than 1995 due to the addition of the
Patrick oil and gas properties and the pipeline joint venture subsequent to
August 15, 1995. The Company incurred $545,000 of exploration expense in 1996,
whereas there was no such expense in 1995 due to La/Cal having virtually no
exploration activities. Included in 1996 exploration expense is $438,000 of
costs related to dry holes during the period.
General and administrative expenses amounted to $545,000 in the second quarter
of 1996 versus $(19,000) in 1995 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 a privately held company.
Interest expense was $206,000 in the second quarter of 1996 compared to $262,000
(22% lower) in 1995 due to the Company having slightly lower average debt
outstanding and a lower effective interest rate in the three months ended June
30, 1996 than La/Cal during the same period in 1995.
The Company's preferred stock dividends amounted to $162,000 for the three
months ended June 30, 1996.
Liquidity and Capital Resources
Net cash provided by operating activities was $2,422,000 in the six months ended
June 30, 1996 compared to $1,560,000 in the six months ended June 30, 1995. 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 periods presented.
The six months ended June 30, 1996 reflects $1,748,000 in capital expenditures
offset by $277,000 in proceeds from the sale of certain oil and gas properties,
substantially all in North Dakota. La/Cal did not incur any capital
expenditures during the six months ended June 30, 1995 and incurred $346,000 in
connection with the business combination.
Net cash used by financing activities was $1,085,000 for the current period as
compared to $1,211,000 in the prior year period. The 1996 amount is composed
primarily of repayments of
13
<PAGE>
bank borrowings of $750,000 and preferred stock dividends of $324,000. The six
months ended June 30, 1995 contained $797,000 in repayment of bank borrowings
and $414,000 of partnership distributions by La/Cal.
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. Such borrowing base is $12,800,000.
Any and all amounts drawn are due and payable on June 1, 1998. 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
options of the Company. The Company's credit facility requires minimum net
worth and debt service ratios be maintained by the Company. Accordingly, the
Company had $862,000 available for the payment of dividends at June 30, 1996.
The amount drawn by the Company under this facility as of June 30, 1996 was
$9,000,000.
The Company had $1,748,000 in capital expenditures in the six months ended June
30, 1996. The Company plans to incur capital expenditures in the amount of
approximately $7,000,000 in calendar 1996. The Company plans to finance such
expenditures from operating cash flow and draws on its bank credit facility.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
See Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Shareholders of the Company was held on May 22,
1996. Set forth below is a brief description of each matter acted upon at the
meeting and the number of votes cast for, against or withheld, and abstaining or
not voting as to each matter.
Election of Class I Directors
FOR WITHHELD
Sheldon Appel 33,135,371 260,148
John C. Napley 33,132,340 263,179
J. Michael Watts 33,113,674 281,845
Approval of the Amendment to the 1995 Goodrich Petroleum Corporation Nonemployee
Directors Stock Option Plan
FOR AGAINST ABSTAIN
31,830,998 1,192,751 371,770
Ratification of the appointment of KPMG Peat Marwick, LLP as the Company's
independent auditors for 1996
FOR AGAINST ABSTAIN
33,166,292 130,527 98,700
15
<PAGE>
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4. Second Amendment to Credit Agreement between Goodrich Petroleum
Company of Louisiana and Compass Bank dated June 1, 1996.
(b) Reports on Form 8-K
None
16
<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
August 12, 1996 /s/ Walter G. Goodrich
------------------- ---------------------------------
Date Walter G. Goodrich, President and
Chief Executive Officer
August 12, 1996 /s/ Roland L. Frautschi
-------------------- ----------------------------------
Date Roland L. Frautschi, Senior Vice
President, Chief Financial Officer
and Treasurer
(Principal Financial Officer)
17
<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made
and entered into effective as of June 1, 1996, by and between GOODRICH PETROLEUM
COMPANY OF LOUISIANA, a Nevada corporation, formerly known as American National
Petroleum Company, successor by merger to Patrick Petroleum Corporation of
Michigan, a Michigan corporation (the "Borrower"), GOODRICH PETROLEUM
CORPORATION, a Delaware corporation, successor by merger to Patrick Petroleum
Company ("Goodrich"), and COMPASS BANK, a state chartered Texas banking
corporation formerly known as Compass Bank - Houston (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lender, and Goodrich are parties to the
Credit Agreement dated August 16, 1995, as amended by First Amendment to Credit
Agreement dated as of December 15, 1995, and Letter Amendment dated March 26,
1996 (as amended, the "Agreement"), pursuant to which the Lender has extended
credit to the Borrower, and Goodrich has guaranteed the payment and performance
of certain indebtedness and other obligations of the Borrower to the Lender; and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in the Agreement and this Amendment, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used herein, each of the terms "Agreement,"
"Amendment," "Borrower," "Goodrich," and "Lender" shall have the meaning
assigned to such term hereinabove.
1.2 Terms Defined in Agreement. As used herein, each term defined in the
Agreement shall have the meaning assigned thereto in the Agreement, unless
expressly provided herein to the contrary.
1.3 References. References in this Amendment to Article or Section
numbers shall be to Articles and Sections of this Amendment, unless expressly
stated to the contrary. References in this Amendment to "hereby," "herein,"
"hereinafter," "hereinabove," "hereinbelow," "hereof," and "hereunder" shall be
to this Amendment in its entirety and not only to the particular Article or
Section in which such reference appears.
1
<PAGE>
1.4 Articles and Sections. This Amendment, for convenience only, has been
divided into Articles and Sections and it is understood that the rights, powers,
privileges, duties, and other legal relations of the parties hereto shall be
determined from this Amendment as an entirety and without regard to such
division into Articles and Sections and without regard to headings prefixed to
such Articles and Sections.
1.5 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural and likewise
the plural shall be understood to include the singular. Words denoting sex shall
be construed to include the masculine, feminine, and neuter, when such
construction is appropriate, and specific enumeration shall not exclude the
general, but shall be construed as cumulative. Definitions of terms defined in
the singular and plural shall be equally applicable to the plural or singular,
as the case may be.
ARTICLE II
AMENDMENTS TO AGREEMENT
The Agreement is hereby amended as follows:
2.1 References to Lender. All references to the term "Lender" in the
Agreement and the other Loan Documents are hereby amended to refer to the Lender
as such term is defined in this Amendment.
2.2 Amendment of Section 1.2. The definition of "Commitment Termination
Date" set forth in Section 1.2 of the Agreement is hereby amended to read as
follows:
" 'Commitment Termination Date' shall mean June 1, 1998. "
2.3 Amendment of Section 2.7(a). The first sentence of Section 2.7(a) of
the Agreement is hereby amended to read as follows:
"2.7 Borrowing Base Determinations. (a) The Borrowing Base as of
the date of June 1, 1996, is acknowledged by the Borrower and the Lender to
be $12,800,000."
2.4 Amendment of Section 6.11. Effective as of December 1, 1995, SECTION
6.11 OF THE AGREEMENT IS HEREBY AMENDED TO READ AS FOLLOWS:
"Consolidated Tangible Net Worth. Permit Consolidated Tangible
Net Worth at any time to be less than $8,500,000 plus, for all fiscal
quarters ending subsequent to September 30, 1995, 50% of positive
Consolidated Net Income and 100% of all cash equity proceeds, net of
expenses incurred in connection with the offering transaction."
2
<PAGE>
ARTICLE III
CONDITIONS
The obligation of the Lender to amend the Agreement as provided herein
is subject to the fulfillment of the following conditions precedent:
3.1 Receipt of Documents and Other Items. The Lender shall have received,
reviewed, and approved the following documents and other items, appropriately
executed when necessary and in form and substance satisfactory to the Lender:
(a) multiple counterparts of this Amendment executed by the Borrower
and Goodrich, as requested by the Lender;
(b) Ratification and Assumption of and Amendment to Security
Agreement (Stock Pledge) executed by the Borrower, and Financing Statement
Changes constituent thereto; and
(c) Stock certificate issued in replacement of the Marcum Stock and
stock power endorsed in blank in connection therewith.
3.2 Accuracy of Representations and Warranties. The representations and
warranties contained in Article IV of the Agreement and in any other Loan
Document shall be true and correct, except as affected by the transactions
contemplated in the Agreement and this Amendment.
3.3 Matters Satisfactory to Lender. All matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory to
the Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and Goodrich hereby expressly re-makes, in favor
of the Lender, all of the representations and warranties set forth in Article IV
of the Agreement and set forth in any other Loan Document to which it is a
party, and represents and warrants that all such representations and warranties
remain true and unbreached, except as affected by the transactions contemplated
in the Agreement and this Amendment.
3
<PAGE>
ARTICLE IV
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and confirm the
Agreement and the other Loan Documents to which it is a party, in all things in
accordance with the terms and provisions thereof, as amended by this Amendment
and the documents executed in connection herewith.
ARTICLE VI
MISCELLANEOUS
6.1 Scope of Amendment. The scope of this Amendment is expressly limited
to the matters addressed herein and this Amendment shall not operate as a waiver
of any past, present, or future breach, Default, or Event of Default under the
Agreement, except to the extent, if any, that any such breach, Default, or Event
of Default is remedied by the effect of this Amendment.
6.2 Agreement as Amended. All references to the Agreement in any document
heretofore or hereafter executed in connection with the transactions
contemplated in the Agreement shall be deemed to refer to the Agreement as
amended by this Amendment.
6.3 Parties in Interest. All provisions of this Amendment shall be
binding upon and shall inure to the benefit of the Borrower, the Lender,
Goodrich, and their respective successors and permitted assigns.
6.4 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the parties hereto and their respective
successors and permitted assigns. No other Person shall have standing to require
satisfaction of such provisions in accordance with their terms and any or all of
such provisions may be freely waived in whole or in part by the Lender at any
time if in its sole discretion it deems it advisable to do so.
6.5 Entire Agreement. THIS AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SUPERSEDES ANY
PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, AMONG SUCH PARTIES REGARDING THE
SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS AMENDMENT, THE AGREEMENT, AND
THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT
AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
6.6 Governing Law. IS AMENDMENT AND ALL ISSUES ARISING IN CONNECTION
HEREWITH AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OFF LAW.
4
<PAGE>
6.7 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT
THE SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN
HOUSTON, HARRIS COUNTY, TEXAS. EACH OF THE BORROWER AND GOODRICH HEREBY SUBMITS
TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON,
HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR
CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE
LENDER IN ACCORDANCE WITH THIS SECTION.
6.8 Waiver of Rights to Jury Trial. EACH OF THE BORROWER, GOODRICH, AND
THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF
THIS AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR
OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF
THIS AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH
RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT FOR
THE LENDER ENTERING INTO THIS AMENDMENT.
IN WITNESS WHEREOF, this Amendment is executed effective as of the
date first hereinabove written.
GOODRICH PETROLEUM COMPANY
OF LOUISIANA
By: /s/ Walter G. Goodrich
-----------------------
Walter G. Goodrich
President
GOODRICH PETROLEUM CORPORATION
By: /s/ Walter G. Goodrich
-----------------------
Walter G. Goodrich
President
5
<PAGE>
COMPASS BANK
By: /s/ Dorothy M. Wilson
----------------------
Dorothy Marchand Wilson
Vice President
6
<PAGE>
EXHIBIT II
DISCLOSURES
Section 4.22
Subsidiaries of Goodrich
Name State of Incorporation
---- ----------------------
Goodrich Petroleum Company of Nevada
Louisiana
Subsidiaries of Borrower
Name State of Incorporation
---- ----------------------
Pecos Pipeline & Producing Company Texas
National Marketing Company Delaware
LECE, Inc. Texas
Drilling & Workover Company, Inc. Louisiana
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 480,375
<SECURITIES> 886,200
<RECEIVABLES> 1,739,686
<ALLOWANCES> 91,358
<INVENTORY> 0
<CURRENT-ASSETS> 3,238,208
<PP&E> 17,162,562
<DEPRECIATION> 3,414,523
<TOTAL-ASSETS> 21,192,772
<CURRENT-LIABILITIES> 2,364,209
<BONDS> 9,000,000
0
811,149
<COMMON> 8,360,902
<OTHER-SE> 286,827
<TOTAL-LIABILITY-AND-EQUITY> 21,192,772
<SALES> 4,609,040
<TOTAL-REVENUES> 4,813,507
<CGS> 0
<TOTAL-COSTS> 4,407,088
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 412,533
<INCOME-PRETAX> (6,114)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,114)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,114)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
