<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> 519,495
<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-BASIC> (.26)
<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
(1999 amounts in arrears)................... 313,912 313,912
----------- -----------
LOSS APPLICABLE TO
COMMON STOCK .................................. $ (1,350,161) (1,322,427)
=========== ===========
BASIC LOSS PER AVERAGE
COMMON SHARE .................................. $ (.26) (.25)
=========== ===========
DILUTED LOSS PER AVERAGE
COMMON SHARE .................................. $ (.26) (.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.
NOTE F - Loss Per Share
- -----------------------
During 1999, the Company suspended dividend payments on its Series A and Series
B convertible preferred stock. Dividends on both classes of its preferred stock
are cumulative and arrearages amounted to $314,000 at March 31, 1999.
Accordingly, undeclared dividends held in arrears have been added to the
Company's net loss in computing earnings per share amounts applicable to common
stockholders.
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 dividends are
cumulative and arrearages amounted to $314,000 at March 31, 1999. 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
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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.
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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.
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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
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