<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000943861
<NAME> GOODRICH PETROLEUM CORPORATION
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<CASH> 263,181
<SECURITIES> 548,600
<RECEIVABLES> 3,213,357
<ALLOWANCES> 24,989
<INVENTORY> 0
<CURRENT-ASSETS> 4,086,689
<PP&E> 46,752,116
<DEPRECIATION> 11,020,273
<TOTAL-ASSETS> 40,069,281
<CURRENT-LIABILITIES> 7,036,109
<BONDS> 23,500,000
0
1,546,318
<COMMON> 1,049,541
<OTHER-SE> 6,937,313
<TOTAL-LIABILITY-AND-EQUITY> 40,069,281
<SALES> 4,405,084
<TOTAL-REVENUES> 4,702,180
<CGS> 0
<TOTAL-COSTS> 7,857,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 803,682
<INCOME-PRETAX> (3,959,282)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,959,282)
<EPS-PRIMARY> (.88)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000943861
<NAME> GOODRICH PETROLEUM CORPORATION
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 333,476
<SECURITIES> 633,000
<RECEIVABLES> 3,842,834
<ALLOWANCES> 24,989
<INVENTORY> 0
<CURRENT-ASSETS> 4,924,573
<PP&E> 37,945,076
<DEPRECIATION> 6,698,859
<TOTAL-ASSETS> 39,501,180
<CURRENT-LIABILITIES> 4,599,064
<BONDS> 18,000,000
0
1,547,318
<COMMON> 1,046,481
<OTHER-SE> 14,308,317
<TOTAL-LIABILITY-AND-EQUITY> 39,501,180
<SALES> 6,415,189
<TOTAL-REVENUES> 6,665,874
<CGS> 0
<TOTAL-COSTS> 5,223,645
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 686,196
<INCOME-PRETAX> 756,033
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 756,033
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000943861
<NAME> GOODRICH PETROLEUM CORPORATION
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 1,200,493
<SECURITIES> 675,200
<RECEIVABLES> 3,201,146
<ALLOWANCES> 24,945
<INVENTORY> 0
<CURRENT-ASSETS> 5,235,796
<PP&E> 36,510,199
<DEPRECIATION> 5,784,656
<TOTAL-ASSETS> 39,481,573
<CURRENT-LIABILITIES> 4,186,970
<BONDS> 18,000,000
0
1,551,149
<COMMON> 8,360,902
<OTHER-SE> 7,302,292
<TOTAL-LIABILITY-AND-EQUITY> 39,481,573
<SALES> 3,433,643
<TOTAL-REVENUES> 3,597,419
<CGS> 0
<TOTAL-COSTS> 2,540,749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 319,712
<INCOME-PRETAX> 736,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 736,958
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
---------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
-------------------- ---------------------
Commission File Number: 1-7940
------------------------------------------------
Goodrich Petroleum Corporation
(Exact name of registrant as specified in its charter)
Delaware 76-0466193
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer ID. No.)
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
At July 31, 1998, there were 5,247,703 shares of Goodrich Petroleum
Corporation common stock outstanding.
1
<PAGE>
GOODRICH PETROLEUM CORPORATION
FORM 10-Q
June 30, 1998
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
June 30, 1998 (Unaudited) and December 31, 1997....................... 3-4
Consolidated Statements of Operations (Unaudited)
Six Months Ended June 30, 1998 and 1997............................... 5
Three Months Ended June 30, 1998 and 1997................................ 6
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 1998 and 1997............................... 7
Consolidated Statements of Stockholders' Equity (Unaudited)
Six Months Ended June 30, 1998 and 1997............................... 8
Notes to Consolidated Financial Statements............................... 9-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 11-14
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.
2
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.......................... $ 263,181 $ 793,358
Marketable equity securities....................... 548,600 844,000
Accounts receivable
Trade and other, net of allowance................ 2,347,827 1,354,776
Accrued oil and gas revenue...................... 840,541 1,641,969
Prepaid insurance.................................. 85,540 174,201
Other ............................................. 1,000 4,000
---------- ----------
Total current assets......................... 4,086,689 4,812,304
----------- ----------
PROPERTY AND EQUIPMENT
Oil and gas properties (successful efforts method). 46,560,624 41,154,687
Furniture, fixtures and equipment.................. 191,492 180,966
----------- -----------
46,752,116 41,335,653
Less accumulated depletion, depreciation
and amortization................................. (11,020,273) (8,869,783)
----------- -----------
Net property and equipment................... 35,731,843 32,465,870
----------- -----------
OTHER ASSETS......................................... 250,749 259,744
----------- -----------
TOTAL ASSETS....................... $ 40,069,281 $37,537,918
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................. $ 3,782,545 $ 1,996,887
Accrued liabilities.............................. 3,253,564 2,708,355
----------- -----------
Total current liabilities.................. 7,036,109 4,705,242
----------- -----------
LONG TERM DEBT ................................. 23,500,000 18,500,000
STOCKHOLDERS' EQUITY
Preferred stock; authorized 10,000,000 shares:
Series A convertible preferred stock, par
value $1.00 per share; issued and out-
standing 796,318 shares (liquidation
preference $10 per share, aggregating
to $7,963,180)................................ 796,318 796,318
Series B convertible preferred stock, par
value $1.00 per share; issued and out-
standing 750,000 shares (liquidation
preference $10 per share, aggregating
to $7,500,000)................................ 750,000 750,000
Common stock, par value $0.20 per share;
authorized 25,000,000 shares; issued
and outstanding 5,247,703 and
5,232,403 shares............................ 1,049,541 1,046,481
Additional paid-in capital........................ 15,226,027 15,146,095
Accumulated deficit............................... (8,077,714) (3,490,618)
Accumulated other comprehensive income............ (211,000) 84,400
----------- -----------
Total stockholders' equity.................. 9,533,172 14,332,676
----------- -----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY...................... $ 40,069,281 $ 37,537,918
=========== ===========
</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,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
REVENUES
Oil and gas sales.............................. $ 4,405,084 5,596,188
Pipeline joint venture......................... --- 819,001
Other.......................................... 297,096 250,685
----------- -----------
Total revenues........................... 4,702,180 6,665,874
----------- -----------
EXPENSES
Lease operating expense and production taxes... 1,287,314 1,085,281
Depletion, depreciation and amortization....... 2,102,268 2,649,929
Exploration.................................... 3,171,425 399,038
Interest expense............................... 803,682 686,196
General and administrative..................... 1,296,773 1,089,397
----------- -----------
Total costs and expenses................. 8,661,462 5,909,841
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES............... (3,959,282) 756,033
Income taxes .................................. --- ---
---------- -----------
NET INCOME (LOSS)............................... (3,959,282) 756,033
Preferred stock dividends...................... 627,814 577,417
----------- -----------
EARNINGS (LOSS) APPLICABLE TO
COMMON STOCK .................................. $ (4,587,096) 178,616
=========== ===========
BASIC EARNINGS (LOSS) PER AVERAGE
COMMON SHARE .................................. $ (.88) .03
============ ===========
DILUTED EARNINGS (LOSS) PER AVERAGE
COMMON SHARE .................................. $ (.88) .03
============ ===========
AVERAGE COMMON SHARES
OUTSTANDING .................................. 5,235,824 5,226,159
</TABLE>
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,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
REVENUES
Oil and gas sales............................... $ 2,015,860 2,713,055
Pipeline joint venture.......................... --- 268,491
Other........................................... 248,537 86,909
----------- -----------
Total revenues............................ 2,264,397 3,068,455
----------- -----------
EXPENSES
Lease operating expense and production taxes.... 613,547 532,440
Depletion, depreciation and amortization........ 975,702 1,358,214
Exploration..................................... 2,560,555 262,626
Interest expense................................ 418,107 366,484
General and administrative...................... 647,253 529,616
----------- -----------
Total costs and expenses.................. 5,215,164 3,049,380
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES................ (2,950,767) 19,075
Income taxes ................................... --- ---
----------- -----------
NET INCOME (LOSS)................................ (2,950,767) 19,075
Preferred stock dividends....................... 313,902 314,102
----------- -----------
LOSS APPLICABLE TO COMMON STOCK.................. $ (3,264,669) (295,027)
=========== ===========
LOSS PER AVERAGE COMMON SHARE.................... $ (.62) (.06)
=========== ===========
AVERAGE COMMON SHARES
OUTSTANDING ................................. 5,242,270 5,226,748
</TABLE>
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,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................... $ (3,959,282) 756,033
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion, depreciation and amortization......... 2,102,268 2,649,929
Amortization of leasehold costs.................. 295,247 116,141
Amortization of deferred debt financing costs.... --- 27,694
Gain on sale of oil and gas properties........... (4,206) (18)
Capital expenditures charged to income........... 2,588,062 14,609
Payment of contingent liability.................. (107,625) (82,751)
Payment of other liabilities..................... (160,518) (160,520)
---------- ----------
753,946 3,321,117
Net change in (exclusive of acquisition in 1997):
Accounts receivable.............................. (191,623) (300,709)
Prepaid insurance and other...................... 91,661 100,214
Accounts payable................................. (1,051,251) (780,397)
Accrued liabilities.............................. 38,021 755,821
---------- ----------
Net cash provided by (used in)
operating activities.................. (359,246) 3,096,046
--------- ----------
INVESTING ACTIVITIES
Proceeds from sales of oil and gas properties....... 49,091 370,000
Acquisition of oil and gas properties............... (129,325) (1,516,866)
Exploration and drilling capital expenditures paid.. (4,462,883) (1,918,919)
---------- ----------
Net cash used in investing activities..... (4,543,117) (3,065,785)
---------- ----------
FINANCING ACTIVITIES
Proceeds from bank borrowings....................... 5,500,000 9,000,000
Principal payments of bank borrowings............... (500,000) (8,463,919)
Preferred stock dividends........................... (627,814) (577,417)
---------- ----------
Net cash provided by (used in)
financing activities.................. 4,372,186 (41,336)
---------- ----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS.................................... (530,177) (11,075)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD................................. 793,358 344,551
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD....................................... $ 263,181 333,476
========== ==========
NON-CASH INVESTING ACTIVITIES -
Accrued capital expenditures........................ 3,695,232 1,497,665
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Series A Series B
Preferred Stock Preferred Stock Common Stock
--------------- --------------- ------------
Number of Par Number of Par Number of Par
Shares Value Shares Value Shares* Value*
------ ----- ------ ----- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996..... 801,149 $ 801,149 --- $ --- 5,225,564 $ 1,045,113
Net income....................... --- --- --- --- --- ---
Unrealized appreciation of marketable
securities available for sale.. --- --- --- --- --- ---
Issuance of Series B Preferred
Stock.......................... --- --- 750,000 750,000 --- ---
Preferred Stock dividends........ --- --- --- --- --- ---
Conversion of preferred stock to
common stock................... (3,831) (3,831) --- --- 2,993 599
Employee stock grants............ --- --- --- --- 3,846 769
-------- --------- ----------- ------------ ----------- ------------
Balance at June 30, 1997......... 797,318 $ 797,318 750,000 $ 750,000 5,232,403 $ 1,046,481
======== ========= =========== ============ =========== ============
Balance at December 31, 1997..... 796,318 $ 796,318 750,000 $ 750,000 5,232,403 $ 1,046,481
Net loss......................... --- --- --- --- --- ---
Unrealized depreciation of marketable
securities available for sale..
Preferred stock dividends........ --- --- --- --- 15,300 3,060
Employee and director stock grants
-------- --------- ----------- ------------ ----------- ------------
Balance at June 30, 1998......... 796,318 $ 796,318 750,000 $ 750,000 5,247,703 $ 1,049,541
======== ========= =========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income - Unrealized
Additional Gain (Loss) on Total
Paid-In Accumulated Marketable Stockholders'
Capital* Deficit Equity Securities Equity
---------- ----------- -------------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996..... $ 8,375,282 $ (896,444) $ (189,900) $ 9,135,200
Net income....................... --- 756,033 --- 756,033
Unrealized appreciation of marketable
securities available for sale.. --- --- 63,300 63,300
Issuance of Series B Preferred
Stock.......................... 6,750,000 --- --- 7,500,000
Preferred stock dividends........ --- (577,417) --- (577,417)
Conversion of preferred stock to
common stock................... 3,232 --- --- ---
Employee stock grants............ 24,231 --- --- 25,000
------------ ----------- ------------ -----------
Balance at June 30, 1997........ $ 15,152,745 $ (717,828) $ (126,600) $ 16,902,116
=========== ============ ============== ===============
Balance at December 31, 1997..... $ 15,146,095 $ (3,490,618) $ 84,400 $ 14,332,676
Net loss......................... --- (3,959,282) --- (3,959,282)
Unrealized depreciation of marketable
securities available for sale.. --- --- (295,400) (295,400)
Preferred stock dividends........ --- (627,814) --- (627,814)
Employee and director stock grants 79,932 --- --- 82,992
----------- ------------ ------------- --------------
Balance at June 30, 1998........ $ 15,226,027 $ (8,077,714) $ (211,000) $ 9,533,172
=========== ============ ============= ==============
</TABLE>
* All 1997 share and dollar amounts have been restated to retroactively reflect
the March 1998 reverse stock split.
See notes to consolidated financial statements.
8
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1998 and 1997
(Unaudited)
NOTE A - 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, 1997.
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, 1998 and the results of its operations for the six and three months
ended June 30, 1998 and 1997.
The results of operations for the six and three month periods ended June 30,
1998 are not necessarily indicative of the results to be expected for the full
year.
NOTE B - 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 Company has estimated that the remaining cost of long-term clean-up of the
site will be approximately $4.5 million with the Company's percentage of
responsibility to be approximately 3.05%. As of June 30, 1998, the Company has
paid approximately $321,000 in costs related to this matter and has $92,000
accrued for the remaining liability. These costs have not been discounted to
their present value. The EPA and the 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. 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 estimated or
accrued for this liability.
9
<PAGE>
NOTE C - Income Taxes
- ---------------------
No provision for income taxes has been recorded for the Company for the six and
three months ended June 30, 1997 due to its ability to utilize net operating
loss carryforwards to offset financial taxable income.
NOTE D - Pro Forma Financial Results of Operations
- --------------------------------------------------
Selected results of operations on a pro forma basis for the six months ended
June 30, 1997 as if the La/Cal II Acquisition had occurred on January 1, 1997
are as follows:
Revenues............................. $ 7,187,000
Net income........................... 991,000
Earnings applicable to
common stock..................... 361,200
Basic and diluted earnings per
average common share............. $ .07
NOTE E - Stockholders' Equity
- -----------------------------
On March 12, 1998, the Company effected a one for eight reverse stock split of
its common stock. All share and per share amounts of prior periods presented
have been adjusted to retroactively give effect to the reverse stock split.
NOTE F - Comprehensive Income
- -----------------------------
Comprehensive income for the three and six months ended June 30, 1998 and 1997
is as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------- --------------------
1998 1997 1998 1997
--------- --------- ---------- --------
<S> <C> <C> <C> <C>
Net income (loss) $ (3,959,282) 756,033 (2,950,767) 19,075
Other comprehensive income -
Unrealized appreciation
(depreciation) on mar-
ketable equity securities (295,400) 63,300 (295,400) 63,300
----------- --------- ----------- --------
Comprehensive income (loss) $ (4,254,682) 819,333 (3,246,167) 82,375
=========== ========= =========== ========
</TABLE>
10
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
1997 Acquisition
- ----------------
On January 31, 1997, the Company acquired the oil and gas properties of La/Cal
Energy Partners II ("La/Cal II") and certain working interest owners (the
"La/Cal II Properties") for a purchase price of $16.5 million ("La/Cal II
Acquisition"). The purchase price was comprised of $1.5 million cash, the
assumption of $7.5 million of La/Cal II long-term debt and the issuance of
750,000 shares of Series B convertible preferred stock of the Company ("Series B
Preferred Stock") with an aggregate liquidation value of $7.5 million. In
connection with the La/Cal II Acquisition, the Company's borrowing base was
increased to $22.5 million and the Company borrowed an additional $9 million
under its bank credit facility, which was used to repay $7.5 million of La/Cal
II debt and to pay the $1.5 million cash portion of the purchase price. The
Series B Preferred Stock has a dividend rate of 8.25% per annum and each share
of Series B Preferred Stock is convertible into 1.12 shares of common stock.
Such shares are redeemable by the Company after January 31, 2001 at $10.00 per
share.
Changes in Results of Operations
- --------------------------------
Six months ended June 30, 1998 versus six months ended June 30, 1997
Total revenues for the six months ended June 30, 1998 amounted to $4,702,000 and
were $1,964,000 lower than the $6,666,000 for the six months ended June 30, 1997
due to lower oil and gas revenues and the loss of revenues from the pipeline
joint venture. Oil and gas sales were $1,191,000 lower due primarily to lower
oil prices along with decreased gas production of approximately 13%. Revenues
from the pipeline joint venture were $0 in the first six months of 1998 compared
to $819,000 in 1997 due to the sale of the asset in the fourth quarter of 1997.
The following table reflects the production volumes and pricing information for
the periods presented.
<TABLE>
<CAPTION>
Six months Six months
ended June 30, 1998 ended June 30, 1997
------------------- -------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gas (Mcf).......... 1,106,260 $ 2.27 1,269,607 $ 2.33
Oil (Bbls)......... 136,152 13.87 138,087 19.06
Lease operating expense and production taxes were $1,287,000 for the six months
ended June 30, 1998, versus $1,085,000 for the six months ended June 30, 1997,
</TABLE>
11
<PAGE>
or $202,000 higher due primarily to the Company not incurring in the 1997 period
ad valorem taxes related to the La/Cal II properties which were the
responsibility of the La/Cal II partners. Depletion, depreciation and
amortization was $2,102,000 for the six months ended June 30, 1998, versus
$2,650,000 for the six months ended June 30, 1997, or $548,000 lower due to no
amortization of the pipeline joint venture in the current period compared to
$566,000 in the same period a year ago.
Exploration expense for the six months ended June 30, 1998 was $3,171,000 versus
$399,000 for the same period of 1997, or $2,772,000 higher due primarily to dry
hole costs of $2,107,000 in the current period compared to $14,000 for the same
period of 1997. Additionally, seismic costs of $575,000 were incurred for the
six months ended June 30, 1998 versus $127,000 in the same period in 1997.
Interest expense was $804,000 in the six months ended June 30, 1998 compared to
$686,000 in the six months ended June 30, 1997 due to higher average debt
outstanding for the six months ended June 30, 1998.
General and administrative expenses amounted to $1,297,000 in the six months
ended June 30, 1998 versus $1,089,000 in the six months ended June 30, 1997 due
largely to expenses associated with the addition of six employees in May 1997.
The Company's preferred stock dividends amounted to $628,000 for the six months
ended June 30, 1998 compared to $577,000 for the prior year. The increase is due
to six months of dividends being paid on the Company's Series B Preferred Stock
in the current year versus five months in the prior year.
Three months ended June 30, 1998 versus three months ended June 30,1997
Total revenues for the three months ended June 30, 1998 amounted to $2,264,000
and were $804,000 lower than the $3,068,000 for the three months ended June 30,
1997. Oil and gas sales were $697,000 lower due primarily to lower oil prices
and decreased gas production of approximately 18%. Revenues from the pipeline
joint venture were $0 in the second quarter of 1998 compared to $268,000 in 1997
due to the sale of the asset in the fourth quarter of 1997.
The following table reflects the production volumes and pricing information for
the periods presented.
<TABLE>
<CAPTION>
Three months Three months
ended June 30, 1998 ended June 30, 1997
------------------- -------------------
Production Average Price Production Average Price
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gas (Mcf).......... 561,957 $ 2.13 681,729 $ 2.15
Oil (Bbls)......... 65,789 12.49 71,730 17.36
</TABLE>
12
<PAGE>
Lease operating expense and production taxes were $614,000 for the three months
ended June 30, 1998, versus $532,000 for the three months ended June 30, 1997,
or $81,000 higher. Depletion, deprecation and amortization was $976,000 for the
three months ended June 30, 1997, versus $1,358,000 for the three months ended
June 30, 1997, or $383,000 lower than the second quarter of 1997 due to no
amortization of the pipeline joint venture in the current period compared to
$174,000 in the same period a year ago and the 1997 period containing $98,000 of
accelerated depletion on a well that was to be plugged and abandoned.
The Company incurred $2,561,000 of exploration expense in the second quarter of
1998, compared to $263,000 in the second quarter of 1997, or $2,298,000 higher
primarily due to dry hole costs of $2,107,000 in the second quarter of 1998
versus $14,000 in 1997.
Interest expense was $418,000 in the three months ended June 30, 1998 compared
to $366,000 in the second quarter of 1997 due to higher average debt outstanding
for the quarter ended June 30, 1998.
General and administrative expenses amounted to $647,000 in the three months
ended June 30, 1998 versus $530,000 in the second quarter of 1997.
Liquidity and Capital Resources
- -------------------------------
Net cash used in operating activities was $359,000 in the six months ended June
30, 1998 compared to net cash provided by operating activities of $3,096,000 in
the six months ended June 30, 1997. 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.
Net cash used in investing activities totaled $4,543,000 for the six months
ended June 30, 1998 compared to $3,066,000 in 1997. The six months ended June
30, 1998 is composed almost entirely of cash paid for exploration and drilling
capital expenditures in the period of $4,463,000. The six months ended June 30,
1997 reflects $1,919,000 in exploration and drilling capital expenditures and
$1,517,000 of cash paid in connection with the purchase of oil and gas
properties offset by $370,000 in proceeds from the sale of certain oil and gas
properties located in Montana.
Net cash provided by financing activities was $4,372,000 for the six months
ended June 30, 1998 as compared to net cash used of $41,000 in the prior year
period. The 1998 amount includes borrowings of $5,500,000 by the Company under
its line of credit and pay downs under this line of credit of $500,000. The 1997
amount included the borrowing of $9,000,000 by the Company under its line of
credit which was used to payoff the debt assumed from La/Cal II and to pay the
cash portion of the purchase price. The 1997 amount also includes pay downs of
$1,000,000 and the payoff of La/Cal II debt of $7,464,000. The 1998 period also
includes preferred dividends of $628,000 (six months), whereas the 1997 period
contains dividends of $577,000 (five months).
13
<PAGE>
The Company has a credit facility with a bank which provides for a total
borrowing base determined by the bank every six months based in part, on the
Company's oil and gas reserve information. Such borrowing base is currently
$26,000,000. The maturity date for all amounts drawn under the bank credit
facility is June 1, 2000. Interest 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 Company's credit facility requires that
minimum net worth and debt service ratios be maintained by the Company.
Accordingly, the Company had $533,172 available for the payment of dividends at
June 30, 1998. The amount outstanding under this facility as of June 30, 1998
was $23,500,000.
The Company had $8,287,440 in capital expenditures in the six months ended June
30, 1998. The Company's budget for 1998 capital expenditures was set at the
beginning of the year at $12,500,000. Such budget is under constant review
during the year and could change due to actual and estimated cash flow,
commodity prices, borrowing capacity and other factors. The Company expects to
fund capital expenditures for the remainder of 1998 from operating cash flow and
borrowings under its bank credit facility.
The Company has assessed its electronic operating systems to identify those that
are not Year 2000 compliant, is developing plans to correct noncompliant
systems, and has started correcting certain systems. Due to the nature of the
systems involved, the cost of this effort is expected to be insignificant. The
Company is also in the process of communicating with significant vendors and
business partners to determine its risks relative to these third parties'
systems on which the Company relies. Although the Company expects to have all of
its systems compliant by mid 1999, there can be no assurance that the Company
will not be adversely affected if internal or third-party operating systems
encounter Year 2000 problems.
Disclosure Regarding Forward-Looking Statements
- -----------------------------------------------
Certain statements in this quarterly report on Form 10-Q regarding future
expectations and plans for future activities may be regarded as "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. They are subject to various risks, such as financial market conditions,
operating hazards, drilling risks, and the inherent uncertainties in
interpreting engineering data relating to underground accumulations of oil and
gas, as well as other risks discussed in detail in the Company's Annual Report
or Form 10-K and other filings with the Securities and Exchange Commission.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Shareholders of the Company was held on May 20, 1998.
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 III Directors and Class I Director
- ----------------------------------------------------
FOR WITHHELD
Jeff Benhard (Class I) 4,635,034 25,206
Benjamin F. Edwards, II 4,633,489 26,751
Walter G. Goodrich 4,635,376 24,864
Arthur A. Seeligson 4,528,968 113,272
Adoption of the Goodrich Petroleum Corporation Nonemployee Directors
- --------------------------------------------------------------------------------
Compensation Plan
- -----------------
FOR AGAINST WITHHELD
4,065,003 578,202 17,035
Ratification of the appointment of KPMG Peat Marwick LLP as the Company's
- --------------------------------------------------------------------------------
independent auditors for 1998
- -----------------------------
FOR AGAINST WITHHELD NON-VOTE
4,631,948 22,173 5,119 1,000
Item 5. Other Information.
Not applicable.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 - Amendment letter dated July 9, 1998 related to the Credit Agreement
between Goodrich Petroleum Company of Louisiana, GPC, Inc. of Louisiana
and Compass Bank.
27.1 - Financial Data Schedule
27.2 - Restated Financial Data Schedule for Quarter ending June 30, 1997
27.3 - Restated Financial Data Schedule for Quarter ending March 31, 1997
(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
(registrant)
August 13, 1998 /s/ Walter G. Goodrich
--------------- ----------------------------------
Date Walter G. Goodrich, President and
Chief Executive Officer
August 13, 1998 /s/ Roland L. Frautschi
--------------- ----------------------------------
Date Roland L. Frautschi, Senior Vice
President, Chief Financial Officer
and Treasurer
17
<PAGE>
Exhibit 4.1
July 9, 1998
Mr. Roland Frautschi
Chief Financial Officer
Goodrich Petroleum Corporation
333 Texas Street, Suite 1375
Shreveport, LA 71101-2300
Re: Credit Agreement by and between Patrick Petroleum Corporation of Michigan
("Borrower") and Compass Bank-Houston ("Lender"), dated August 16, 1998 (as
subsequently, amended, restated, or supplemented, the "Credit Agreement").
Dear Roland:
Effective June 30, 1998, Section 6.11 of the Credit Agreement shall be amended
to read as follows:
"6.11 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
-------------------------------
Worth at any time to be less than $9,000,000.00 plus, for all fiscal
quarters ending on or after June 30, 1998, 50% of positive Consolidated
Net Income and 100% of all cash equity proceeds, net of expenses
incurred in connection with the offering transaction."
The scope of this amendment is expressly limited to the matters addressed herein
and these amendments shall not serve as a waiver of any past, present, or future
breach, Default, or Event of Default under the Credit Agreement, except to the
extent, if any, that any such breach, Default, or Event of Default is remedied
by the effect of this amendment.
Please not that all capitalized terms used but not defined herein shall have the
meanings attributed thereto in the Credit Agreement.
Kindly acknowledge your agreement and acceptance of the above by initialing page
1 of this document below and executing page 2 of the document in the space
provided. Please send a copy of the executed document via facsimile to (713)
968-8292 and forward the signed original to my attention.
Sincerely,
COMPASS BANK
By: /s/ John Lozano
-----------------
John Lozano
Banking Officer
<PAGE>
Page Two
AGREED TO AND ACCEPTED AS OF THIS 10th DAY OF JULY, 1998:
GOODRICH PETROLEUM COMPANY OF LOUISIANA
GPC, INC. OF LOUISIANA
By: /s/ Roland Frautschi
---------------------
Roland Frautschi
Chief Financial Officer
