<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000943861
<NAME> GOODRICH PETROLEUM CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<EXCHANGE-RATE> 1
<CASH> 358,183
<SECURITIES> 0
<RECEIVABLES> 1,863,354
<ALLOWANCES> 24,989
<INVENTORY> 0
<CURRENT-ASSETS> 2,345,978
<PP&E> 54,573,894
<DEPRECIATION> 15,318,583
<TOTAL-ASSETS> 42,276,169
<CURRENT-LIABILITIES> 20,452,130
<BONDS> 17,500,000
0
1,546,318
<COMMON> 1,049,541
<OTHER-SE> 1,728,180
<TOTAL-LIABILITY-AND-EQUITY> 42,276,169
<SALES> 2,822,869
<TOTAL-REVENUES> 2,941,696
<CGS> 0
<TOTAL-COSTS> 2,937,970
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 520,480
<INCOME-PRETAX> (1,036,249)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,036,249)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> 0
</TABLE>
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 March 31, 1999
-----------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT 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 (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
At May 6, 1999 there were 5,247,705 shares of Goodrich Petroleum
Corporation common stock outstanding.
1
<PAGE>
GOODRICH PETROLEUM CORPORATION
FORM 10-Q
March 31, 1998
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
March 31, 1999 (Unaudited) and December 31, 1998.............. 3-4
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1999 and 1998.................... 5
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1999 and 1998.................... 6
Consolidated Statements of Stockholders' Equity (Unaudited)
Three Months Ended March 31, 1999 and 1998.................... 7
Notes to Consolidated Financial Statements....................... 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 11-15
PART II - OTHER INFORMATION 16
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>
March 31, December 31,
1999 1998
----------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.......................... $ 358,183 $ 95,630
Marketable equity securities....................... - 0 - 358,700
Accounts receivable
Trade and other, net of allowance................ 736,631 2,197,179
Accrued oil and gas revenue...................... 1,101,734 1,089,226
Prepaid insurance.................................. 149,430 184,898
----------- -----------
Total current assets......................... 2,345,978 3,925,633
----------- -----------
PROPERTY AND EQUIPMENT
Oil and gas properties (successful efforts method). 54,675,053 53,320,832
Furniture, fixtures and equipment.................. 198,841 195,279
----------- -----------
54,873,894 53,516,111
Less accumulated depletion, depreciation
and amortization................................. (15,318,583) (13,720,009)
----------- -----------
Net property and equipment................... 39,555,311 39,796,102
----------- -----------
OTHER ASSETS........................................ 374,880 314,853
----------- -----------
TOTAL ASSETS.......................... $ 42,276,169 $ 44,036,588
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long term debt............... $ 12,000,000 $ 29,500,000
Accounts payable................................ 7,033,804 7,763,507
Accrued liabilities............................. 1,418,326 1,813,693
----------- -----------
Total current liabilities................. 20,452,130 39,077,200
----------- -----------
LONG TERM DEBT ............................... 17,500,000 ---
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 5,232,403 shares.......... 1,049,541 1,049,541
Additional paid-in capital...................... 15,226,027 15,226,027
Accumulated deficit............................. (13,497,847) (12,461,598)
Accumulated other comprehensive income.......... --- (400,900)
----------- -----------
Total stockholders' equity................ 4,324,039 4,959,388
----------- -----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY.................... $ 42,276,169 $ 44,036,588
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
----------- ------------
<S> <C> <C>
REVENUES
Oil and gas sales.............................. $ 2,822,869 2,389,224
Other.......................................... 118,827 48,559
----------- -----------
Total revenues........................... 2,941,696 2,437,783
----------- -----------
EXPENSES
Lease operating expense and production taxes... 666,754 673,767
Depletion, depreciation and amortization....... 1,308,553 1,126,566
Exploration.................................... 398,781 610,870
Interest expense............................... 520,480 385,575
General and administrative..................... 563,882 649,520
----------- -----------
Total costs and expenses................. 3,458,450 3,446,298
----------- -----------
LOSS ON SALE OF ASSETS.......................... (519,495) ---
----------- -----------
LOSS BEFORE INCOME TAXES........................ (1,036,249) (1,008,515)
Income taxes .................................. --- ---
----------- -----------
NET LOSS ..................................... (1,036,249) (1,008,515)
Preferred stock dividends...................... --- 313,912
----------- -----------
LOSS APPLICABLE TO
COMMON STOCK .................................. $ (1,036,249) (1,322,427)
=========== ===========
BASIC LOSS PER AVERAGE
COMMON SHARE .................................. $ (.20) (.25)
=========== ===========
DILUTED LOSS PER AVERAGE
COMMON SHARE .................................. $ (.20) (.25)
=========== ===========
AVERAGE COMMON SHARES
OUTSTANDING .................................. 5,247,705 5,229,307
=========== ===========
See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $ (1,036,249) (1,008,515)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depletion, depreciation and amortization....... 1,308,553 1,126,566
Amortization of leasehold costs................ 290,021 123,774
Loss on sale of asset.......................... 519,495 ---
Capital expenditures charged to income......... 4,564 364,470
Payment of contingent liability................ --- (1,703)
Payment of other liabilities................... --- (80,260)
----------- ----------
1,086,384 524,332
Net change in:
Accounts receivable............................ 1,448,040 1,741,539
Prepaid insurance and other.................... (24,559) 46,836
Accounts payable............................... (580,358) (58,090)
Accrued liabilities............................ (395,367) (627,141)
----------- ----------
Net cash provided by operating activities... 1,534,140 1,627,476
----------- ----------
INVESTING ACTIVITIES
Proceeds from sales of assets...................... 240,105 ---
Capital expenditures............................... (1,511,692) (3,106,922)
----------- ----------
Net cash used in investing activities....... (1,271,587) (3,106,922)
----------- ----------
FINANCING ACTIVITIES
Proceeds from bank borrowings...................... --- 1,500,000
Principal payments of bank borrowings.............. --- (500,000)
Preferred stock dividends.......................... --- (313,912)
----------- ----------
Net cash provided by financing activities.. --- 686,088
----------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................................... 262,553 (793,358)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD................................ 95,630 793,358
----------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD...................................... $ 358,183 ---
=========== ==========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 1999 and 1998
(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, 1997..... 796,318 $ 796,318 750,000 $ 750,000 5,232,403 $ 1,046,481
Net loss......................... --- --- --- --- --- ---
Preferred stock dividends........ --- --- --- --- --- ---
-------- --------- ----------- ------------ ----------- ------------
Balance at March 31, 1998........ 796,318 $ 796,318 750,000 $ 750,000 5,232,403 $ 1,046,481
======== ========= =========== ============ =========== ============
Balance at December 31, 1998..... 796,318 $ 796,318 750,000 $ 750,000 5,247,705 $ 1,049,541
Net loss......................... --- --- --- --- --- ---
Realized loss on sale of
marketable securities.......... --- --- --- --- --- ---
-------- --------- ----------- ------------ ----------- ------------
Balance at March 31, 1999........ 796,318 $ 796,318 750,000 $ 750,000 5,247,705 $ 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, 1997..... $ 15,146,095 $ (3,490,618) $ 84,400 $ 14,332,676
Net loss......................... --- 1,008,515 --- (1,008,515)
Preferred stock dividends........ --- (313,912) --- (313,912)
----------- ----------- ------------- ---------------
Balance at March 31, 1998........ $ 15,146,095 $ (4,813,045) $ (84,400) $ 13,010,249
=========== ============ ============== ===============
Balance at December 31, 1998..... $ 15,226,027 $ (12,461,598) $ (400,900) $ 4,959,388
Net loss......................... --- (1,036,249) --- (1,036,249)
Realized loss on sale of
marketable securities.......... --- --- 400,900 400,900
----------- ------------ ------------- --------------
Balance at March 31, 1999........ $ 15,226,027 $ (13,497,847) $ - 0 - $ 4,324,039
=========== ============ ============= ==============
</TABLE>
*Dividends are cumulative and arrearages amounted to $313,912, or $.06 per share
at March 31, 1999
See notes to consolidated financial statements.
7
<PAGE>
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(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, 1998.
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 March 31, 1999 and the results of its operations for the three months ended
March 31, 1999 and 1998.
The results of operations for the three-month period ended March 31, 1999 are
not necessarily indicative of the results to be expected for the full year.
NOTE B - Indebtedness
- ---------------------
On May 12, 1999 the Company signed a definitive agreement with Compass Bank to
restructure its existing credit facility. Accordingly, $17,500,000 previously
shown as current maturities at December 31, 1998 is now shown in long-term debt
at March 31, 1999. The credit facility provides for a borrowing base facility of
$20,500,000 with monthly reductions of $50,000 beginning on April 1, 1999 and
May 1, 1999, $200,000 on June 1, 1999 and $300,000 on July 1, 1999 and each
month thereafter. Semi-annual borrowing base determinations will be made
beginning July 1, 1999 based in part on the Company's oil and gas reserve
information. The maturity date for amounts drawn under the bank Borrowing Base
facility is February 1, 2001. Interest on such facility is based on LIBOR plus
2%, and rates are set on specific draws for one, two, three or six month periods
at the option of the Company.
The facility also establishes a Tranche A in the amount of $9,000,000. The
maturity date for the Tranche A facility is December 1, 1999. The Tranche A
requires that excess cash flow from operations, as defined in the agreement, be
applied to outstanding principal and interest until the maturity date, with
interest based on the Compass Bank Index Rate plus 2%.
The credit facility requires the net proceeds of asset sales be used to
extinguish outstanding principal and interest under the borrowing base facility
8
<PAGE>
and Tranche A. Additionally, under the terms of the terms of the credit
facility, the Company may not make any distributions or pay dividends, including
dividends on any class of its preferred stock, until Tranche A is paid in full.
Substantially all of the Company's assets are pledged to secure this credit
facility.
NOTE C - Liquidity and Management's Plan
- ----------------------------------------
The unaudited consolidated financial statements have been prepared assuming the
Company will continue as a going concern. The following discusses the Company's
current liquidity and management's plan.
Liquidity - As disclosed in Note B, the Company's current liabilities
---------
include current maturities of long term debt in the amount of $12,000,000, and
exceed current assets by $18,106,000. Additionally, the Company is unable to
incur additional debt under its credit facility or from any other sources until
such time as its stockholders' equity balance is greater than the liquidation
preference of the Series A Preferred Stock of approximately $7.9 million.
Management's Plan - Due to the Company's existing current working capital
------------------
deficiency, required pay downs under its credit facility and the restrictions
imposed by the Series A Preferred Stock, management is exploring a number of
alternatives that are directed toward making the Company profitable and
improving its liquidity. The principal strategies include:
1) raising additional capital through the issuance of equity securities;
or a combination of equity and subordinated debt;
2) acquisition of value enhancing oil and gas properties that offer
additional development opportunities and increased cash flow;
3) mergers and/or acquisitions by other entities;
4) reducing operating costs;
5) sale of certain oil and gas properties;
6) renegotiation or amendment of the Company's credit facility and
capital structure
As with any plan of this nature, its ultimate realization will depend upon
the cooperation of creditors, potential investors and others. As a result, the
outcome of the plan cannot presently be determined and no adjustments related to
the specific considerations of management's plan have been made in the
accompanying consolidated financial statements. Should the plan not be
completed, the Company may not be able to liquidate liabilities as they come
due.
9
<PAGE>
NOTE D - 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 March 31, 1999, 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.
NOTE E - Income Taxes
- ---------------------
No provision for income taxes has been recorded for the Company for the three
months ended March 31, 1999 and 1998 due to its incurring a net loss for each
period.
10
<PAGE>
Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Changes in Results of Operations
- --------------------------------
Three months ended March 31, 1999 versus three months ended March 31,1998
Total revenues for the three months ended March 31, 1999 amounted to $2,942,000
and were $504,000 higher than the $2,438,000 for the three months ended March
31, 1998 due to higher oil and gas revenues. Oil and gas sales were $434,000
higher due primarily to the recording of previously suspended oil and gas sales
of approximately $350,000 on certain properties until the Company's ownership in
the properties was perfected. Additionally, oil and gas sales were higher due to
increased volumes, partially offset by significantly lower oil and gas prices
for the current period. The Company incurred a loss on the sale of marketable
equity securities of $519,000 for the three months ended March 31, 1999.
The following table reflects the production volumes and pricing information for
the periods presented.
<TABLE>
<CAPTION>
Three months Three months
ended March 31, 1999 ended March 31, 1998
Production Average Price Production Average Price
<S> <C> <C> <C> <C>
Gas (Mcf)......... 884,956 $ 1.82 544,303 $ 2.43
Oil (Bbls)........ 114,620 10.55 70,363 15.16
</TABLE>
Lease operating expense and production taxes were $667,000 for the three months
ended March 31, 1999, versus $674,000 for the three months ended March 31, 1998.
Depletion, depreciation and amortization was $1,309,000 for the three months
ended March 31, 1999 versus $1,127,000 for the three months ended March 31,
1998, or $182,000 higher due to slightly higher depletion rates and higher
volumes in the first quarter of 1999 versus 1998. Exploration expense in the
first quarter of 1999 was $399,000 versus $611,000 in the first quarter of 1998,
or $212,000 lower due primarily to seismic costs and prospect depreciation of
$34,000 and $290,000 respectively, in the first quarter of 1999 versus $437,000
and $124,000 respectively, in the same period in 1998.
Interest expense was $520,000 in the three months ended March 31, 1999 compared
to $386,000 in the first quarter of 1998 due to higher average debt outstanding
for the quarter ended March 31, 1999.
General and administrative expenses amounted to $564,000 in the three months
ended March 31, 1999 versus $649,000 in the first quarter of 1998.
11
<PAGE>
On March 23, 1999 the Company announced that it suspended payment of its regular
quarterly cash dividend on both classes of its preferred stock. This measure was
taken to conserve cash for corporate and operating purposes. The Company has no
plans to reinstate the cash dividends in the foreseeable future. Preferred stock
dividends amount to $314,000 for the three months ended March 31, 1998.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities was $1,534,000 in the three months
ended March 31, 1999 compared to $1,627,000 in the three months ended March 31,
1998. 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 $1,272,000 for the first quarter
of 1999 compared to $3,107,000 in 1998. The three months ended March 31, 1999
reflects capital expenditures totaling $1,512,000 and proceeds from the sale of
marketable equity securities of $240,000. The three months ended March 31, 1998
consists of capital expenditures of $3,107,000.
Net cash provided by financing activities was $-0- for the current period as
compared to $686,000 in the prior year period. The 1998 amount includes
borrowings of $1,500,000 by the Company under its line of credit and pay downs
under this line of credit of $500,000.
On May 12, 1999 the Company signed a definitive agreement with Compass Bank to
restructure its existing credit facility. Accordingly, $17,500,000 previously
shown as current maturities at December 31, 1998 is now shown in long-term debt
at March 31, 1999. The credit facility provides for a borrowing base facility of
$20,500,000 with monthly reductions of $50,000 beginning on April 1, 1999 and
May 1, 1999, $200,000 on June 1, 1999 and $300,000 on July 1, 1999 and each
month thereafter. Semi-annual borrowing base determinations will be made
beginning July 1, 1999 based in part on the Company's oil and gas reserve
information. The maturity date for amounts drawn under the bank Borrowing Base
facility is February 1, 2001. Interest on such facility is based on LIBOR plus
2%, and rates are set on specific draws for one, two, three or six month periods
at the option of the Company.
The facility also establishes a Tranche A facility in the amount of $9,000,000.
The maturity date for the Tranche A facility is December 1, 1999. The Tranche A
requires that excess cash flow from operations, as defined in the agreement, be
applied to outstanding principal and interest until the maturity date, with
interest based on the Compass Bank Index Rate plus 2%.
The credit facility requires the net proceeds of asset sales be used to
extinguish outstanding principal and interest under the borrowing base facility
and Tranche A. Additionally, under the terms of the credit facility, the Company
may not make any distributions or pay dividends, including dividends on any
class of its preferred stock, until Tranche A is paid in full.
12
<PAGE>
The terms of the Company's Series A Preferred Stock provide that the Company
will not incur additional debt until after such time as it reports financial
results which show the Company's stockholders' equity to be less than the
liquidation preference of the Series A Preferred Stock. As of March 31, 1999 the
Company's stockholders' equity was approximately $4.3 million and the
liquidation preference on the outstanding shares of the Series A Preferred Stock
was approximately $7.9 million. As a result, the Company is unable to incur
additional debt under its credit facility or from other sources at the present
time.
Due to the Company's existing current working capital deficiency, required pay
downs under its credit facility and the restrictions imposed by the Series A
Preferred Stock, management is exploring a number of alternatives that are
directed toward making the Company profitable and improving its liquidity. The
principal strategies include:
1) raising additional capital through the issuance of equity securities;
or a combination of equity and subordinated debt;
2) acquisition of value enhancing oil and gas properties that offer
additional development opportunities and increased cash flow;
3) mergers and/or acquisitions by other entities;
4) reducing operating costs;
5) sale of certain oil and gas properties;
6) renegotiation or amendment of the Company's credit facility and
capital structure
As with any plan of this nature, its ultimate realization will depend upon the
cooperation of creditors, potential investors and others. As a result, the
outcome of the plan cannot presently be determined and no adjustments related to
the specific considerations of management's plan have been made in the
accompanying consolidated financial statements. Should the plan not be
completed, the Company may not be able to liquidate liabilities as they come
due. In addition, the Company's current liquidity situation and its agreement
with Compass Bank have resulted in a suspension of new drilling expenditures
until such time as certain aforementioned principle strategies have been
effected. The Company incurred $1,512,000 in capital expenditures in the three
months ended March 31, 1999, related primarily to recompletion of existing wells
and maintenance of existing leases.
Year 2000
- ---------
The Company is in the process of assessing the ability of its various electronic
operating systems, and those of significant third parties, to appropriately
consider periods and dates after December 31, 1999. The Company's senior
financial management has taken responsibility for identifying, addressing and
monitoring its Year 2000 issues. These individuals report to the Audit Committee
of the Board of Directors on a periodic basis. For Company systems identified as
not being Year 2000 compliant, the Company has developed plans to correct these
systems and expects to be compliant on the systems by the end of the second
quarter of 1999.
13
<PAGE>
As for third parties with which the Company has a material relationship, the
Company is in various stages of discussions and conclusions related to the
ability of those third parties to become compliant and the related timing
thereof.
The estimated costs associated with becoming Year 2000 compliant are not
expected to be material to the Company.
The Company has begun, but not yet completed, a comprehensive analysis of the
operational problems and costs (including loss of revenues) that would be
reasonably likely to result from the failure by the Company and certain third
parties to complete efforts necessary to achieve Year 2000 compliance timely. A
contingency plan has not been developed for dealing with the most reasonably
likely worst case scenario, and such scenario has not yet been clearly
identified. The Company currently plans to complete such analysis and
contingency planning by the end of the second quarter of 1999.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Company's Year 2000 efforts
are expected to significantly reduce the Company's level of uncertainty about
the Year 2000 problem. The Company believes that, with the implementation of new
business systems and completion of the various above-mentioned tasks as
scheduled, the possibility of interruptions to normal operations should be
significantly reduced.
Stock Listing
- -------------
The Company has been notified by the NASDAQ Stock Market that it may not be able
to sustain compliance with certain of the Market's listing requirements for its
Series A Preferred Stock. The Company plans to submit a business plan to the
Market in response to the notice.
Disclosure Regarding Forward-Looking Statement
- ----------------------------------------------
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 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
14
<PAGE>
engineering data relating to underground accumulations of oil and gas, as well
as other risks discussed in detail in the Company's Annual Report on 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.
15
<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.
None.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 - Amendment to Credit Agreement between Goodrich
Petroleum Company, LLC and Compass dated May 1, 1999
27 - Financial Data Schedule
(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)
May 14, 1999 /s/ Walter G. Goodrich
- --------------------- ----------------------------------
Date Walter G. Goodrich, President and
Chief Executive Officer
May 14, 1999 /s/ Roland L. Frautschi
- --------------------- ----------------------------------
Date Roland L. Frautschi, Senior Vice
President, Chief Financial Officer
and Treasurer
17
<PAGE>
EIGHTH AMENDMENT TO CREDIT AGREEMENT
This EIGHTH AMENDMENT TO CREDIT AGREEMENT (this "Eighth
Amendment") is made and entered into effective as of May 1, 1999, by and between
GOODRICH PETROLEUM COMPANY, L.L.C. ("GP"), a Louisiana limited liability
company, successor by merger to GOODRICH PETROLEUM COMPANY OF LOUISIANA, a
Nevada corporation ("GPCL"), (the "Borrower"), GOODRICH PETROLEUM CORPORATION, a
Delaware corporation, ("Goodrich"), and COMPASS BANK, an Alabama state chartered
banking institution (the "Lender").
W I T N E S S E T H:
WHEREAS, GPCL, GPC, Inc. of Louisiana (which was merged into
GPCL), 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, and Second Amendment to
Credit Agreement dated as of June 1, 1996, and Letter Amendment dated November
12, 1996, and by Third Amendment to Credit Agreement dated as of January 31,
1997, and by Fourth Amendment to Credit Agreement dated as of June 1, 1997 and
by Fifth Amendment to Credit Agreement dated as of October 16, 1997, and as
amended by Letter Amendment dated February 25, 1998, and as amended by Sixth
Amendment to Credit Agreement dated as of March 27, 1998, and as further amended
by Seventh Amendment to Credit Agreement dated as of December 21, 1998 (as
amended, the "Agreement"), pursuant to which the Lender has extended credit to
GPCL and GP and Goodrich has guaranteed the payment and performance of certain
indebtedness and other obligations of GPCL and GP 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 Eighth Amendment, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
I.1 Terms Defined Above. As used herein, each of the terms
"Agreement," "Borrower," "Eighth Amendment," "GP," "GPCL", "Goodrich," and
"Lender" shall have the meaning assigned to such term hereinabove.
I.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.
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<PAGE>
I.3 References. References in this Eighth Amendment to Article or
Section numbers shall be to Articles and Sections of this Eighth Amendment,
unless expressly stated to the contrary. References in this Eighth Amendment to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof," and
"hereunder" shall be to this Eighth Amendment in its entirety and not only to
the particular Article or Section in which such reference appears.
I.4 Articles and Sections. This Eighth 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 Eighth 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.
I.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
The Borrower, Guarantor and the Lender hereby amend the
Agreement in the following particulars:
2.01 Amendment of Section 1.2. Section 1.2 of the Agreement
is hereby amended as follows:
The following definitions are added, deleted and/or amended to
read as follows:
"Commitment Termination" Date shall mean February 1, 2001.
"Debt Service" shall mean, for any period and with respect to
Indebtedness of Goodrich on a consolidated basis, the sum of
(a) all principal payments made during such period other than
with respect to the Obligations plus (b) required principal
payments with respect to the Obligation. For purposes of this
definition required payments under Tranche A will not be
considered.
"Excess Cash Flow" shall mean Net Income as reported for the
Borrower (and its parent on a consolidated basis) plus: (a)
depreciation, depletion, amortization and other non-cash
expenses and (b) reported losses on the sale of assets; less
(w) non-cash income, (x) reported gains on the sale of assets,
2
<PAGE>
(y) approved budgeted capital expenditures, and (z) the
monthly principal reductions set forth in Section 2.23.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period, determined in accordance with GAAP.
"Tranche A Principal" shall mean the sum of $9,000,000.
2.02 Addition of Section 2.4A. Section 2.4A shall be added to the
Agreement to read as follows:
"2.4A Repayment of Tranche A Principal and Interest. Accrued
and unpaid interest at the Index Rate plus two percent (2%) on Tranche
A Principal shall be due and payable monthly commencing on the first
day of June, 1999, and continuing on the first day of each calendar
month thereafter until December 1, 1999, when all accrued interest and
principal shall be due and payable. Any payments on Tranche A Principal
shall permanently reduce Tranche A Principal by a like amount. Borrower
shall not be allowed to reborrow under the Tranche A Principal."
2.03 Amendment of Section 2.7(a). Section 2.7(a) of the Agreement
shall be amended to read as follows:
"2.7 Borrowing Base Determinations. (a) The Borrowing Base as
of March 29, 1999, is acknowledged by the Borrower and the Lender to be
$20,500,000. The Borrowing Base shall be reduced on April 1 and May 1,
1999, by $50,000 each date and on June 1, 1999, by $200,000. Commencing
on July 1, 1999, and continuing on the first day of each calendar month
thereafter until the earlier of the date such amount is redetermined or
the Commitment Termination Date, the amount of the Borrowing Base shall
be reduced by $300,000."
2.04 Addition of Section 2.23. Section 2.23 shall be added to the
Agreement to read as follows:
"2.23 Excess Cash Flow Application. Beginning May 1, 1999, and
continuing on the first day of each month thereafter until the earlier
of December 1, 1999, or the payment in full of Tranche A Principal
together with all accrued interest, the Excess Cash Flow shall be
applied as follows:
(a) Up to $200,000 of Excess Cash Flow: 100% shall be applied
to Tranche A Principal;
(b) Excess Cash Flow over $200,000 and up to $500,000: 75%
shall be applied to Tranche A Principal with the balance
being retained by the Borrower for working capital and
other general corporate purposes;
3
<PAGE>
(c) Excess Cash Flow in excess of $500,000: 50% shall be
applied to Tranche A Principal with the balance being
retained by the Borrower for working capital and other
general corporate purposes.
Provided, however, if the application of this provision in regard to
Excess Cash Flow results in cash on hand of the Borrower (and/or its
parent on a consolidated basis) being less than $100,000, the amount of
the payment set forth in this section shall be reduced to the extent
necessary to allow cash on hand to be at least $100,000."
2.05 Addition of Section 5.20. Section 5.20 shall be added to the
Agreement to read as follows:
"5.20 Additional Reporting Requirements. (A) Deliver to the
Lender within 45 days of each month end the following:
(i) a monthly statement of the calculation of Excess Cash
Flow;
(ii) a capital expenditure budget for the next six month
period. The amount of such capital expenditure budget
shall be subject to the approval of the Lender and such
approval shall be effective for a period of six months
from the date of such approval or until such time as an
increase is requested and if actual capital
expenditures do not exceed the approved budgeted
amount, the determination of capital expenditures shall
be at the sole discretion of the Borrower;
(iii) a report of monthly production of its Oil and Gas
Properties, setting forth production volumes for oil,
gas, other hydrocarbons and water, broken out by major
fields.
(B) Deliver to the Lender within 15 days of each month end a
report setting forth all accounts payable with amounts due and aged
according to invoice date."
2.06 Addition of Section 5.21. Section 5.21 shall be added to the
Agreement to read as follows:
"5.21 Asset Sales Proceeds. Upon the sale of any Property,
100% of the net proceeds from such sale shall be applied as follows:
(i) first, to reduce the Borrowing Base to the extent of
the allocated Borrowing Base value for such Property
as decided by the Lender in its sole discretion; and
(ii) the remainder to be applied to Tranche A Principal."
4
<PAGE>
2.07 Addition of Section 5.22. Section 5.22 shall be added to the
Agreement to read as follows:
"5.22 Cash Collateral Account. (a) The Borrower shall
establish a cash collateral account with the Lender, being account
number ________ in the name of the Borrower. The Borrower shall send
notices to purchasers of production representing a minimum of 90% of
sales proceeds (based on average over the prior six months) to begin
immediately to remit via wire transfer the proceeds from production
into the above account. Such notices shall be in the form on the
attached Exhibit A. Borrower will execute a Collateral Assignment of
Deposit Accounts and Security Agreement pledging the above account as
well as any other account with the Lender."
(b) The Borrower and the Lender acknowledge that the
Collateral is comprised of Borrower's undivided interest in Oil and Gas
Properties and accordingly cash deposited in the Cash Collateral
Account may include the interests of other Persons ("Other Revenues").
The Lender agrees that if it receives appropriate evidence that a part
of such funds are Other Revenues, such funds will be released to such
Persons. The Lender shall not be liable, however, for any actions by
the Lender which are taken in compliance with the terms of this
Agreement and the Security Instruments with respect to the Other
Revenues in the Cash Collateral Account which are taken before the
Lender received such evidence that such funds are Other Revenues."
2.08 Amendment of Section 6.7. Section 6.7 of the Agreement shall
be amended to read as follows:
"6.7 Dividends and Distributions. Neither the Borrower nor the
Guarantor shall declare, pay or make, whether in cash or other
Property, any dividend or distribution on any membership interest or
any share of its capital stock at any time Tranche A Principal is
outstanding or at any time that a Default or Event of Default exists or
would occur as a result thereof."
2.09 Amendment of Section 6.11. Section 6.11 is amended to read
as follows:
"6.11 Consolidated Tangible Net Worth. Permit Consolidated
Tangible Net Worth at any time to be less than $3,750,000 plus, for all
fiscal quarters ending subsequent to December 31, 1998, plus 50% of
positive Consolidated Net Income and 100% of all cash equity proceeds.
2.10 Addition of Section 6.13. Section 6.13 shall be added to the
Agreement to read as follows:
"6.13 Accounts Payable. Permit vendor accounts as they apply
to the Borrower payable to exceed $2,500,000 as of June 30, 1999."
5
<PAGE>
2.11 Additions to Section 7.1. Section 7.1 of the Agreement shall
be amended to read as follows by adding the following subparagraph:
"(m) an Event of Default shall occur automatically and
without any further notice to the Borrower if any
reduction in the Borrowing Base as described in
Section 2.7(a) is not made on the first day of each
month beginning 2:00 p.m. central time on June 1,
1999; and
(n) an Event of Default shall occur automatically and
without any further notice should the payment of
royalties on its Oil and Gas Properties not be made
when due."
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:
III.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 Eighth Amendment executed
by the Borrower and Goodrich, as requested by the Lender;
and
(b) a current list (including addresses) of purchasers of
production;
(c) Collateral Assignment of Deposit Accounts and Security
Agreement from the Borrower pledging certain accounts
with the Lender;
(d) Security Agreement (Pledge of Certificate of Ownership)
with blank power of sale from the Guarantor, as Debtor,
to the Lender, as Secured Party pledging 100% of its
interest in the Borrower;
(e) six month capital budget of the Borrower acceptable to
the Lender prior to the execution of the First Amendment
and which shall be subject to the terms of Section 5.20;
and
(f) such other agreements, documents, items, instruments,
opinions, certificates, waivers, consents, and evidence
as the Lender may reasonably request.
III.2 Accuracy of Representations and Warranties. The
representations and warranties contained in Article IV of the Agreement and in
6
<PAGE>
any other Loan Document shall be true and correct, except as affected by the
transactions contemplated in the Agreement and this Eighth Amendment.
III.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 Eighth Amendment.
ARTICLE V
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 Eighth Amendment and the documents executed in connection herewith.
ARTICLE VI
MISCELLANEOUS
VI.1 Scope of Amendment. The scope of this Eighth Amendment is
expressly limited to the matters addressed herein and this Eighth 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
Eighth Amendment.
VI.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 Eighth Amendment.
VI.3 Parties in Interest. All provisions of this Eighth Amendment
shall be binding upon and shall inure to the benefit of the Borrower, the
Lender, Goodrich, and their respective successors and permitted assigns.
VI.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.
7
<PAGE>
VI.5 Entire Agreement. THIS EIGHTH 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 EIGHTH 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.
VI.6 Governing Law. THIS EIGHTH 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 OF LAW.
VI.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 EIGHTH 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.
VI.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 EIGHTH 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 EIGHTH 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 EIGHTH AMENDMENT.
IN WITNESS WHEREOF, this Eighth Amendment is executed
effective as of the date first hereinabove written.
BORROWER:
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
-------------------------------
Roland L. Frautschi
Management Committee Member
8
<PAGE>
GUARANTOR:
GOODRICH PETROLEUM CORPORATION
By:
-------------------------------
Roland L. Frautschi
Chief Financial Officer and Treasurer
LENDER:
COMPASS BANK
By:
-------------------------------
Dorothy Marchand Wilson
Senior Vice President
9
<PAGE>
EIGHTH AMENDMENT TO
CREDIT AGREEMENT
between
GOODRICH PETROLEUM COMPANY, L.L.C.
and
COMPASS BANK
Effective as of
May 1, 1999
<PAGE>
EXHIBIT A
[FORM OF LETTER]
Re: Owner Number
REMITTANCE ADDRESS CHANGE NOTICE
Dear Gentlemen:
Effective immediately please wire amounts to Goodrich Petroleum Company, L.L.C.
at the following account.
Goodrich Petroleum Company, L.L.C.
Account Number ____________
Compass Bank
ABA Number _____________
Please note that going forward, these remittance instructions cannot be changed
without written notice from both Goodrich Petroleum Company, L.L.C. and Compass
Bank. If you have any questions or need additional information before changing
the address please call me at (318) 429-1375.
Sincerely,
- ------------------------
333 Texas Street, Suite 1350 - Shreveport, Louisiana 71101
Telephone: (318) 429-1375 - Telecopy: (318) 429-2296
A-i
