<PAGE> 1
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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No 0-26484
DLB OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA 73-1358299
(State or other jurisdiction of (IRS Employer Identification No )
incorporation of organization)
1601 NORTHWEST EXPRESSWAY, SUITE 700
OKLAHOMA CITY, OKLAHOMA 73118-1401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 848-8808
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 report),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
The number of shares outstanding of Registrant's common stock, $.001
par value, as of July 31, 1997 was 12,975,000.
<PAGE> 2
DLB OIL & GAS, INC.
TABLE OF CONTENTS
FORM 10-Q QUARTERLY REPORT
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets
June 30, 1997 (Unaudited) and December 31, 1996 4
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended June 30, 1997 and 1996 and the
Six Months Ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 16
Disclosure Regarding Forward-Looking Statements 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 26
Signatures 28
</TABLE>
2
<PAGE> 3
DLB OIL & GAS, INC
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
FORMING A PART OF FORM 10-Q QUARTERLY REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION
3
<PAGE> 4
DLB OIL & GAS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
--------------- ---------------
1997 1996
--------------- ---------------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,115,000 $ 4,060,000
Accounts receivable 11,804,000 8,998,000
Prepaid expenses 1,178,000 337,000
------------- -------------
Total current assets 20,097,000 13,395,000
------------- -------------
Property and equipment - at cost, based on the
full cost method of accounting for oil and
natural gas properties:
Oil and natural gas properties subject to
amortization 128,786,000 109,325,000
Oil and natural gas properties not subject
to amortization 24,497,000 18,570,000
Natural gas processing plants and gathering
systems 2,513,000 1,728,000
Saltwater disposal system 1,119,000 1,119,000
Drilling equipment 18,752,000 --
Other property and equipment 2,246,000 1,223,000
------------- -------------
177,913,000 131,965,000
Accumulated depreciation, depletion and
amortization (34,436,000) (27,007,000)
------------- -------------
143,477,000 104,958,000
------------- -------------
Investments in Waggoner (Barbados) Ltd. 3,239,000 3,186,000
Other assets 16,243,000 7,902,000
------------- -------------
Total assets $ 183,056,000 $ 129,441,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 7,937,000 $ 8,119,000
Revenue and royalty distributions payable 3,938,000 3,125,000
Accrued liabilities 2,298,000 872,000
Notes payable 494,000 --
Drilling advances and other liabilities 122,000 42,000
------------- -------------
Total current liabilities 14,789,000 12,158,000
------------- -------------
Long term debt 80,073,000 37,200,000
Deferred income taxes 19,825,000 15,851,000
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock, 130,000,000 shares authorized;
13,000,000 shares issued; 12,975,000 outstanding
at June 30, 1997 and December 31, 1996 13,000 13,000
Treasury stock (25,000 shares at June 30, 1997
and December 31, 1996, at cost) (181,000) (181,000)
Additional paid in capital 57,910,000 57,910,000
Retained earnings 10,627,000 6,490,000
------------- -------------
Total shareholders' equity 68,369,000 64,232,000
------------- -------------
Commitments and contingencies
Total liabilities and
shareholders' equity $ 183,056,000 $ 129,441,000
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
DLB OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Oil and natural gas sales $ 9,399,000 $ 5,515,000 $21,535,000 $ 9,996,000
Contract drilling 4,807,000 -- 7,220,000 --
Natural gas gathering, processing and transportation, net 390,000 313,000 789,000 390,000
Interest and other 76,000 96,000 131,000 292,000
----------- ----------- ----------- -----------
14,672,000 5,924,000 29,675,000 10,678,000
Expenses:
Lease operating 2,396,000 1,236,000 4,458,000 2,113,000
Gross production taxes 605,000 354,000 1,340,000 688,000
Contract drilling 3,413,000 -- 5,031,000 --
Depreciation, depletion, and amortization 4,038,000 2,031,000 7,428,000 3,825,000
General and administrative 1,149,000 738,000 2,042,000 1,465,000
Interest 1,621,000 251,000 2,732,000 251,000
Loss on sale of assets -- -- -- 208,000
----------- ----------- ----------- -----------
13,222,000 4,610,000 23,031,000 8,550,000
----------- ----------- ----------- -----------
Income before income taxes 1,450,000 1,314,000 6,644,000 2,128,000
Income taxes 547,000 494,000 2,507,000 803,000
=========== =========== =========== ===========
Net income $ 903,000 $ 820,000 $ 4,137,000 $ 1,325,000
=========== =========== =========== ===========
Net income per common share $ 0.07 $ 0.06 $ 0.31 $ 0.10
=========== =========== =========== ===========
Weighted average common and common equivalent shares 13,455,000 12,975,000 13,459,000 12,981,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
DLB OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,137,000 $ 1,325,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, depletion, and
amortization 7,428,000 3,825,000
Deferred income taxes 2,507,000 803,000
Loss on sale of assets -- 208,000
Increase in accounts receivable (4,000) (1,891,000)
Increase in prepaid expenses (644,000) (75,000)
Decrease in accounts payable, distributions payable
and accrued liabilities (538,000) (1,384,000)
Increase (decrease) in drilling advances and other liabilities 80,000 (151,000)
Amortization of note issuance costs 91,000 --
------------ ------------
Net cash provided by operating activities 13,057,000 2,660,000
------------ ------------
Cash flows from investing activities:
Expenditures for property and equipment (31,272,000) (40,520,000)
Purchase of investments and other assets (7,296,000) (3,690,000)
Proceeds from sales of assets -- 1,380,000
Purchase of Bonray Drilling Corporation net of cash acquired (12,824,000) --
------------ ------------
Net cash used in investing activities (51,392,000) (42,830,000)
------------ ------------
Cash flows from financing activities
Proceeds of long-term debt 97,480,000 30,000,000
Payments of long-term debt (54,900,000) --
Payments of debt issuance costs (1,190,000) --
Purchase of treasury stock -- (181,000)
------------ ------------
Net cash provided by (used in) financing activities 41,390,000 29,819,000
------------ ------------
Net decrease in cash and cash equivalents: 3,055,000 (10,351,000)
Cash and cash equivalents beginning of period 4,060,000 14,313,000
------------ ------------
Cash and cash equivalents end of period $ 7,115,000 $ 3,962,000
============ ============
Supplemental cash flow information:
Cash payments for interest $ 2,452,000 $ 251,000
============ ============
Supplemental schedule of noncash investing activities:
Property and equipment received from settlement of contingency $ -- $ 231,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 and 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION, DESCRIPTION OF BUSINESS AND PRINCIPALS OF CONSOLIDATION
DLB Oil & Gas, Inc., ("DLB" or the "Company") is an independent energy
company engaged primarily in the exploration, development, production
and acquisition of oil and gas properties in the Mid-Continent region
and the coastal and shallow onshore regions of south Louisiana, two of
the most prolific oil and gas producing regions in the United States.
The Company's principal producing fields are presently concentrated in
Oklahoma. In addition, through its wholly owned subsidiaries, Bonray
Drilling Corporation ("Bonray"), which was acquired in February 1997,
and Gathering Energy Marketing Company, LLC ("GEMCO"), the Company is
engaged in the land contract drilling of oil and gas wells and in the
gathering, processing, transportation and marketing of hydrocarbons,
respectively.
The accompanying consolidated financial statements include the
consolidated accounts of the Company and its wholly owned
subsidiaries. The Company accounts for its investment in Waggoner
(Barbados) Ltd. using the equity method of accounting. All significant
intercompany transactions and balances have been eliminated in
consolidation.
7
<PAGE> 8
DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
BASIS OF PRESENTATION
The accompanying consolidated financial statements and notes thereto
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
consolidated financial statements and notes thereto should be read in
conjunction with the consolidated financial statements and notes
included in DLB's 1996 annual report on Form 10-K.
USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported
amounts of revenues and expenses during the reporting periods, to
prepare these consolidated financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates.
(2) ACQUISITIONS
AMERADA HESS PROPERTIES
On May 31, 1996, the Company acquired certain Oklahoma oil and natural
gas properties from Amerada Hess Corporation ("Amerada Hess") for
approximately $32,100,000, with $25,500,000 allocated to producing
properties and $6,600,000 allocated to undeveloped leasehold and to
nonproducing perpetual mineral interests. The Company funded the
purchase through use of cash funds and borrowings of $30,000,000 from
its credit facilities.
Total estimated proved reserves attributable to the acquired Amerada
Hess properties as of May 31, 1996, net to the Company, were 6.8
Mmboe. Proved reserves attributable to such acquired properties were
divided approximately 43% oil and 57% natural gas. (The quantities of
proved reserves in this paragraph were prepared by the Company's
internal engineers and based on an independent reserve study prepared
as of January 1, 1996 by DeGolyer and MacNaughton and are unaudited.)
Results prior to May 31, 1996 are not included in DLB's consolidated
financial statements.
BONRAY DRILLING CORPORATION
On February 10, 1997, the Company purchased approximately 98% of the
outstanding common stock of Bonray Drilling Corporation ("Bonray")
through a tender offer. DLB paid $30.00 per share, or approximately
$12,700,000. Upon completion of the tender offer and subsequent
merger, Bonray Drilling Corporation became a subsidiary of DLB.
8
<PAGE> 9
DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Bonray owns a total of 15 rigs, including six rigs capable of drilling
wells over 20,000 feet and nine rigs capable of drilling wells from
7,500 to 15,000 feet. Two of the six deep drilling rigs were
remobilized and placed in operation during the second quarter of 1997.
Ten rigs were in service or available for service at the time of
acquisition with three in stacked status.
This acquisition was accounted for using purchase accounting. As a
result, DLB's consolidated financial statements only include the
results of operations from February 10, 1997. See Note 7.
WEST COTE BLANCHE BAY FIELD
On March 11, 1997, the Company purchased Texaco Exploration and
Production, Inc.'s 50% interest in the shallow rights in the West Cote
Blanche Bay Field ("WCBB") located in Saint Mary's Parish, Louisiana.
The purchase includes the right to operate existing and future wells
completed above the Robb "C" (a geologic marker located at
approximately 10,500 feet) and the right to operate the related
production facilities which include oil and gas pipelines, salt water
disposal wells, compression facilities and related equipment. The
purchase price was $12,300,000. Proved reserves attributable to the
acquisition were estimated at approximately 12.2 Mmboe (million
barrels of oil equivalent) as of January 1, 1997, and are essentially
100% oil. (The quantities of proved reserves in this paragraph were
prepared by the Company's internal engineers and based on an
independent reserve study prepared as of January 1, 1997 by
Netherland, Sewell and Associates, Inc. and are unaudited.)
The remaining 50% working interest in the shallow rights to the WCBB
property is owned by WRT Energy. As part of the WRT Energy
reorganization plan, DLB contributed the acquired interest in WCBB
(described above) to WRT Energy in exchange for 5.0 million common
shares in the reorganized WRT Energy. (See Notes 3 and 7.)
Additionally, the Company purchased approximately $6,000,000 of
obligations of WRT Energy that relate to the West Cote Blanche Bay
Field properties. Such obligations were also converted into common
shares of the new WRT Energy and are included in the equity
percentages disclosed in Notes 3 and 7.
(3) INVESTMENT IN OTHER ASSETS
During 1996 and 1997, the Company acquired senior unsecured notes and
other credit obligations of WRT Energy Corporation ("WRT Energy"), an
oil and gas company operating under the provisions of Chapter 11 of
the United States Bankruptcy Code since February of 1996. These notes
and other credit obligations are being accounted for using the cost
method. At June 30, 1997, the Company's cost of these notes and other
credit obligations was approximately $15,055,000.
On November 29, 1996, as amended on January 20, 1997 and March 11,
1997, the Company and Wexford Management LLC ("Wexford"), an entity
affiliated with the Chairman of the board of directors of the Company,
filed a joint plan of reorganization with WRT Energy. No competing
9
<PAGE> 10
DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
reorganization plans were filed. This plan was confirmed on April 28,
1997 and was consummated on July 11, 1997. Under the plan, a new WRT
Energy was created with approximately 22.07 million shares of common
stock outstanding. In addition, the Company and Wexford funded a
rights offering associated with the reorganization plan of WRT Energy.
The rights to purchase new common stock of WRT Energy were offered to
all unsecured creditors of WRT Energy. Pursuant to provisions of the
plan, the Company and Wexford committed to purchase the rights not
exercised by other creditors. Based upon the notes and other credit
obligations, the Company's pro rata portion of the rights offering was
$3,754,000. The Company exchanged its WRT Energy notes, the Company's
interest in the West Cote Blanche Bay Field acquired in March of 1997
(described in Note 2) and other assets for an approximate 48% equity
interest in the new WRT Energy. See Note 7 for further discussion.
10
<PAGE> 11
DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(4) LONG-TERM DEBT
On March 5, 1997, the Company established a revolving credit facility
with a group of financial institutions ( "1997 Facility") in the
amount of $85,000,000, with an underlying borrowing base of
$80,000,000. This facility was used to refinance indebtedness under
the Company's 1995 credit facility with the remainder to be used for
funding of acquisitions and general corporate purposes. The maturity
of the 1997 facility is March 2002. On July 11, 1997 the underlying
borrowing base was changed to $65.0 million.
Under the terms of the 1997 facility, the Company may elect to be
charged at the bank's prime rate plus 1/2 of 1% plus a specified
margin or the rate at which Eurodollar deposits for one, two, three,
six or twelve months are offered to the bank in the Interbank
Eurodollar market plus a specified margin. Loans made under the 1997
facility are payable in full on the maturity date.
The 1997 facility contains restrictive covenants requiring, among
other things, maintenance at specific levels of tangible net worth,
working capital, and specific financial ratios, as well as limiting
the payment of dividends.
On July 11, 1997, the Company established an additional credit
facility ("New Credit Facility"), via one of its wholly owned
subsidiaries, with a banking institution, which provides for
borrowings up to $23,000,000. This new facility was used to finance
the Company's obligations under the WRT rights offering and to
partially refinance indebtedness under the 1997 Facility. The maturity
date of this facility is January 11, 1999.
Under the terms of the New Credit Facility, the Company may elect to
be charged interest at the higher of the rate of interest publicly
announced by the administrative agent at its prime rate in effect at
its principal office in New York City and the federal funds effective
rate from time to time plus 0.5% ("ABR") plus a specified margin or
the Eurodollar rate plus a specified margin. The New Credit Facility
contains restrictive covenants requiring among other things,
maintenance at specific levels of tangible net worth, working capital
and specific financial ratios, as well as limiting payment of
dividends.
(5) SHAREHOLDERS' EQUITY
On February 7, 1996, the Company adopted a common stock repurchase
plan. Under the terms of the plan, up to $5,000,000 of common stock
could have been repurchased from time to time. Pursuant to the plan,
25,000 shares were repurchased for $181,000. The Company holds
repurchased stock as treasury stock. The repurchase plan expired
August 5, 1996.
In 1995, the Company adopted a stock option plan ("the Plan") pursuant
to which the Company's Board of Directors may grant stock options to
officers and key employees. Pursuant to the Plan, options were granted
in 1995 to purchase up to 1,625,000 shares of authorized but unissued
common stock. Stock options are granted with an exercise price equal
to the stock's fair market value at the date of grant. All stock
options have ten year terms and vest ratably over a five year term.
11
<PAGE> 12
DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On February 9, 1997, the Plan was amended to permit the granting of
options to employees to purchase 325,000 additional shares under the
Plan with basically the same terms as the original grants (with the
exception of the exercise price). Of this amount, 40,000 and 48,750
options have been granted as of June 30, 1997 at prices of $13.00 per
share and $14.25 per share respectively.
(6) COMMITMENTS AND CONTINGENCIES
In February 1996, the Company settled claims submitted to arbitration
against a joint venture partner alleging breach of contract and
tortious conduct. The claims arose under the terms of the Carmen Field
Joint Venture Agreement ("CFJV") dated May 26, 1993, between the
Company and Magic Circle Acquisition Corporation ("Magic Circle"). The
settlement agreement provided for mutual release of all claims arising
out of the CFJV, dissolution of the CFJV, distribution to the Company
of its interest in the CFJV oil and gas properties, the payment of
$3,349,000 to the Company and transfer to the Company of its share of
a gathering system in Stephens County, Oklahoma, and transfer to Magic
Circle gathering, processing and compression facilities in Alfalfa and
Woodward Counties, Oklahoma. As a result of the settlement, the
Company recognized a $208,000 loss, including $212,000 of related
legal fees.
(7) SUBSEQUENT EVENTS
On July 11, 1997, the Second Amended Joint Plan of Reorganization
under Chapter 11 of the United States Bankruptcy Code, as proposed by
DLB, WRT Energy and Wexford dated as of March 11, 1997 (as modified by
the technical modifications set forth in the Joint Motion for Approval
of Technical Modifications to the Plan of Reorganization and those
announced at the Confirmation hearing commencing on April 28, 1997,
hereinafter referred to as the "Plan"), of WRT Energy became effective
pursuant to its terms and conditions. In addition, the transactions
contemplated by the Plan to occur on the effective date of the Plan
were consummated in accordance with the terms and conditions of the
Plan. Pursuant to the terms and conditions of the Plan, WRT Energy was
merged with and into WRT Energy Corporation, now a Delaware
corporation ("WRT").
As a result of the consummation of the Plan, DLB acquired 10.35
million shares, representing approximately 48%, of the outstanding
common stock of WRT. Of such shares, 5.0 million shares were received
by DLB for the contribution of WCBB and certain related assets which
were purchased by DLB in March 1997 for approximately $13.5 million
which includes $1.0 million for plugging and abandonment obligations
and 1.7 million shares were received for certain obligations of WRT
Energy purchased by the Company for approximately $6.0 million. In
addition, 1.6 million shares were issued in respect of certain credit
obligations of WRT Energy which DLB had acquired for $6.6 million and
1.1 million shares were issued to DLB upon its $3.8 million exercise of
stock rights pursuant to an offering that was an integral part of the
Plan. Also, 0.9 million shares were issued for the $2.6 million paid
for capital expenditures and other allowed general unsecured claims and
liens. DLB used cash flow from operations and borrowings under the 1997
Facility the New Credit Facility to fund its purchase of such credit
obligations and shares.
12
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DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
An additional 1.41 million shares, currently in escrow, will be
distributed upon resolution of certain post closing matters.
The following pro forma financial statements have been prepared under
the assumption that all 1997 acquisitions occurred as of January 1,
1997.
ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 30, 1997
----------------
(PRO FORMA)
----------------
(UNAUDITED)
<S> <C>
Current assets:
Cash and cash equivalents 12,427,000
Accounts receivable 14,231,000
Prepaid expenses 2,048,000
------------
Total current assets 28,706,000
------------
Property and equipment - at cost, based on the full cost
method of accounting for oil and natural gas properties 247,438,000
------------
Accumulated depreciation, depletion and amortization (34,436,000)
------------
218,002,000
------------
Investments in Waggoner (Barbados) Ltd. 3,239,000
Other assets 2,140,000
------------
Total assets $247,087,000
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 21,035,000
Long term debt 100,174,000
Deferred income taxes 19,825,000
Minority interest 36,672,000
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized; no shares
issued and outstanding --
Common stock, 130,000,000 shares authorized;
13,000,000 shares issued; 12,975,000 outstanding 13,000
at June 30, 1997 and December 31, 1996
Treasury stock (25,000 shares at June 30, 1997
and December 31, 1996, at cost) (181,000)
Additional paid in capital 57,910,000
Retained earnings 11,639,000
------------
Total shareholders' equity 69,381,000
Commitments and contingencies
Total liabilities and shareholders' equity $247,087,000
============
</TABLE>
13
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DLB OIL & GAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997
(Pro Forma)
-------------
(Unaudited)
<S> <C>
Revenues:
Oil and natural gas sales $31,923,000
Contract drilling 8,855,000
Natural gas gathering, processing
and transportation, net 789,000
Interest and other 254,000
===========
$41,821,000
Expenses:
Lease operating 9,316,000
Gross production taxes 1,427,000
Contract drilling 6,408,000
Depreciation, depletion, and amortization 9,392,000
General and administrative 4,505,000
Taxes other than income 22,000
Interest 4,548,000
Loss on sale of assets 2,000
-----------
$35,620,000
-----------
Income before income taxes 6,201,000
Deferred income taxes 2,252,000
-----------
Net income $ 3,949,000
===========
Net income per common share $ 0.29
===========
Weighted average common shares outstanding 13,459,000
===========
</TABLE>
14
<PAGE> 15
DLB OIL & GAS, INC
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
FORMING A PART OF FORM 10-Q QUARTERLY REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q included `forward-looking statements" within the
meaning of Section 27A of the Securities Exchange Act of 1934 (the "Exchange
Act"). All statements, other than statements of historical facts, included in
the Form 10-Q that address activities, events or developments that the Company
expects or anticipates will or may occur in the future, including such things as
estimated future net revenues from oil and gas reserves and the present value
thereof, future capital expenditures (including the amount and nature thereof),
business strategy and measures to implement strategy, competitive strengths,
goals, expansion and growth o the Company's business and operations, plans,
references to future success, references to intentions as to future matters and
other such matters are forward-looking statements, These statements are based on
certain assumptions and analysis made by the Company in light of its experience
and it perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate in the
circumstances. However, whether actual results and developments will conform
with the Company's expectations and predictions is subject to a number of risks
and uncertainties; general economic, market or business conditions; the
opportunities (or lack thereof) that may be presented to and pursued by the
Company; competitive actions by other oil and gas companies; changes in laws or
regulations; and other factors, many of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in the Form
10-Q are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized, or even if realized, that they will have the expected consequences to
or the effects on the Company or its business or operations.
The following discussion is intended to assist in an understanding of
the Company's financial position as of June 30, 1997, and its results of
operations for the three month and the six month periods ended June 30, 1997
and 1996. The Consolidated Financial Statements and Notes included in this
report contain additional information and should be referred to in conjunction
with this discussion. It is presumed that the readers have read or have access
to DLB's 1996 annual report on Form 10-K.
16
<PAGE> 17
RESULTS OF OPERATIONS
The following table sets forth certain financial and production
information of the Company
<TABLE>
<CAPTION>
FINANCIAL DATA (in thousands) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Oil $ 4,937 $ 3,178 $ 9,658 $ 5,849
Natural gas 4,462 2,337 11,877 4,147
------- ------- ------- -------
9,399 5,515 21,535 9,996
Contract drilling 4,807 -- 7,220 --
Natural gas gathering, processing & trans 390 313 789 390
Interest & other income 76 96 131 292
------- ------- ------- -------
14,672 5,924 29,675 10,678
------- ------- ------- -------
Expenses
Lease operating (1) 2,396 1,236 4,458 2,113
Gross production taxes 605 354 1,340 688
Contract drilling 3,413 -- 5,031 --
General & administrative (2) 1,149 738 2,042 1,465
Loss on sale of asset -- -- -- 208
------- ------- ------- -------
7,563 2,328 12,871 4,474
EBITDA (3) 7,109 3,596 16,804 6,204
Depreciation, depletion & amortization (4) 4,038 2,031 7,428 3,825
Earnings before interest and taxes 3,071 1,565 9,376 2,379
Interest expense 1,621 251 2,732 251
Earnings before income taxes 1,450 1,314 6,644 2,128
Income taxes - deferred 547 494 2,507 803
------- ------- ------- -------
Net income $ 903 $ 820 $ 4,137 $ 1,325
======= ======= ======= =======
PER SHARE DATA
Net income $ 0.07 $ 0.06 $ 0.31 $ 0.10
======= ======= ======= =======
Weighted average common and common equivalent shares 13,455 12,975 13,459 12,981
PRODUCTION DATA (in thousands except prices)
Oil (Mbbl) 233 153 441 296
Natural gas (Mmcf) 2,109 1,059 4,275 1,942
Barrel oil equivalent (MBOE) 585 330 1,154 620
Oil ($/Bbl) $ 21.17 $ 20.82 $ 21.92 $ 19.77
Gas ($/Mcf) 2.12 2.21 2.78 2.14
$/BOE 16.07 16.76 18.68 16.13
EXPENSE DATA ($/BOE)
Lease operating $ 4.10 $ 3.75 $ 3.86 $ 3.41
Gross production taxes 1.04 1.07 1.16 1.11
Depreciation, depletion and amortization (4) 5.65 5.68 5.41 5.72
General and administrative (2) 1.51 2.24 1.41 2.36
</TABLE>
17
<PAGE> 18
(1) The components of lease operating expense may vary substantially among
wells depending on the methods of recovery employed and other factors,
but generally include administrative overhead, maintenance and repairs
and labor and utilities.
(2) General and administrative expense relating to oil and gas operations
is $0.9 and $1.6 million and general and administrative expenses
associated with contract drilling operations is $0.2 and $0.4 million
for the three month and six month periods ended June 30, 1997. (Only
general and administrative expenses relating to oil and gas operations
were used in the general and administrative expense per Boe
calculation.)
(3) EBITDA is defined as earnings before interest, taxes, depreciation,
depletion and amortization. EBITDA is an analytical measure frequently
used by securities analysts and is presented to provide additional
information about the Company's ability to meet its future debt
service, capital expenditure and working capital requirements. EBITDA
should not be considered as a better measure of the Company's
operating performance than net income or as a better measure of
liquidity than cash flow from operations.
(4) DD&A related to oil and gas operations is $3.3 million and $1.9
million for the three months ended June 30, 1997 and 1996
respectively. DD&A related to oil and gas operations in $6.2 million
and $3.5 million for the six months ended June 30, 1997 and 1996
respectively. DD&A related to contract drilling operations is $0.6
million for the three months ended June 30, 1997 and $0.9 million for
the six months ended June 30, 1997. The remaining $0.1 million and
$0.1 million for the three months ended June 30, 1997 and 1996
respectively and $0.3 million and $0.3 million for the six months
ended June 30, 1997 and 1996 respectively of DD&A related to gas
processing, gathering and disposal assets and other non-oil and gas
property equipment. (Only DD&A related to oil and gas operations was
used in the DD&A per Boe calculations.)
18
<PAGE> 19
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE THREE MONTHS ENDED
JUNE 30, 1996
REVENUES ~ Total revenues for the three months ended June 30, 1997 were $14.7
million, an increase of $8.7 million from the comparable period in 1996. The
148% increase in revenues was primarily related to the inclusion for the full
1997 period of revenues in the second quarter of 1997 from the production of
the Amerada Hess properties, which were acquired May 31, 1996 and operations of
Bonray Drilling Corporation, which was acquired in February 1997. Revenues
attributable to Bonray Drilling Corporation for the three month period ended
June 30, 1997 were $4.8 million.
Production of oil and gas was 233 Mbbl and 2,109 Mmcf, respectively, during the
three months ended June 30, 1997 as compared to 153 Mbbl and 1059 Mmcf,
respectively during the same period of 1996. The increases in production
primarily caused oil and gas sales revenues to increase $3.9 million to $9.4
million in 1997. The average price received for oil slightly increased to
$21.17 per barrel during the three months ended June 30, 1997 from $20.82 for
the three months ended June 30, 1996. The average price received for natural
gas slightly decreased to $2.12 per Mcf during the three months ended June 30,
1997 from $2.21 per Mcf for the same period of 1996.
LEASE OPERATING EXPENSE ~ Lease operating expense increased to $2.4 million for
the three months ended June 30, 1997 from $1.2 million for the same period of
1996. On a Boe basis, lease operating expenses were $4.10 per Boe for the three
months ended June 30, 1997 as compared to $3.75 per Boe for the comparable
period of 1996. This increase per Boe was primarily due to an increase in
workovers on DLB properties during the three months ended June 30, 1997 as
compared to the same period in 1996.
GROSS PRODUCTION TAXES ~ Gross production taxes increased 71% to $0.6 million
during the three months ended June 30, 1997 from $0.4 million during the same
period of 1996. This increase was due to increased oil and gas sales revenues.
CONTRACT DRILLING EXPENSE ~ Contract drilling expense was $3.4 million for the
three months ended June 30, 1997. This expense relates to the operation of the
drilling rigs acquired in the acquisition of Bonray Drilling Corporation in
February 1997. (See Note 2 to the consolidated financial statements.)
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE ~ Depreciation, depletion and
amortization (DD&A) expense was $4.0 million and $2.0 million for the three
months ended June 30, 1997 and 1996, respectively. The increase in DD&A was
primarily a result of the increased production due to the Amerada Hess
properties acquisition in May 1996. The DD&A rate per Boe related to oil and
gas properties slightly decreased to $5.65 from $5.68 for the three months
ended June 30, 1997 and 1996, respectively.
GENERAL AND ADMINISTRATIVE EXPENSE ~ General and administrative expense
increased 56% to $1.1 million for the three months ended June 30, 1997 from
$0.7 million during the same period of 1996. The increase was primarily
attributable to $0.3 million of general and administrative expenses, as a
result of the Company's drilling rig operations.
19
<PAGE> 20
INTEREST EXPENSE ~ Interest expense for the three months ended June 30, 1997
was $1.6 million. The Company's average debt outstanding was $79.3 million for
three months ended June 30, 1997 as compared to $12.8 million for the three
months ended June 30, 1996. The average amount of debt outstanding increased
due to the acquisitions of the Amerada Hess properties, Bonray Drilling
Corporation, West Cote Blanche Bay and investments in obligations of WRT
Energy. (See Note 2 to the consolidated financial statements.)
INCOME BEFORE INCOME TAXES ~ Income before income taxes increased to $1.5
million for the three months ended June 30, 1997 from $1.3 million for the same
period of 1996 primarily due to the factors described above, including
increased oil and gas revenues due to the acquisition of the Amerada Hess
properties and Bonray Drilling. This increase in revenues was partially offset
by increased lease operating expenses, contract drilling expenses, depreciation
and interest expense.
NET INCOME ~ Net income increased to $0.9 million for the three months ended
June 30, 1997 from $0.8 million the same period in 1996 as a result of the
items described above. The effective income tax rate remained constant at
approximately 38%.
20
<PAGE> 21
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996
REVENUES ~ Total revenues for the six months ended June 30, 1997 were $29.7
million, an increase of $19.0 million from the comparable period in 1996. The
178% increase in revenues was primarily related to the inclusion of revenues
during the full period from the production of the Amerada Hess properties,
which were acquired in May 1996 and operations of Bonray Drilling Corporation
which was acquired in February 1997. In addition, a 16% increase in product
prices contributed to increased revenues during the six months ended June 30,
1997 as compared to the same period in 1996. Revenues attributable to Bonray
Drilling Corporation for the six month period ended June 30, 1997 were $7.2
million.
Production of oil and gas was 441 Mbbl and 4,275 Mmcf, respectively, during the
six months ended June 30, 1997 as compared to 296 Mbbl and 1,942 Mmcf,
respectively during the same period of 1996. The increases in production
primarily caused oil and gas sales revenues to increase $11.5 million to $21.5
million in 1997. The average price received for oil increased to $21.92 per
barrel during the six months ended June 30, 1997 from $19.77 for the six months
ended June 30, 1996. The average price received for natural gas slightly
increased to $2.78 per Mcf during the six months ended June 30, 1997 from $2.14
per Mcf for the same period of 1996.
LEASE OPERATING EXPENSE ~ Lease operating expense increased to $4.5 million for
the six months ended June 30, 1997 from $2.1 million for the same period of
1996. On a Boe basis, lease operating expenses were $3.86 per Boe for the six
months ended June 30, 1997 as compared to $3.41 per Boe for the comparable
period of 1996. This increase per Boe was primarily due to an increase in
workovers on DLB properties in the six months ended June 30, 1997 as compared
to the same period in 1996.
GROSS PRODUCTION TAXES ~ Gross production taxes increased 95% to $1.3 million
during the six months ended June 30, 1997 from $0.7 million during the same
period of 1996. This increase was due to increased oil and gas sales revenues.
CONTRACT DRILLING EXPENSE ~ Contract drilling expense was $5.0 million for the
six months ended June 30, 1997. This expense relates to the operation of the
drilling rigs acquired in the acquisition of Bonray Drilling Corporation in
February 1997. (See Note 2 to the consolidated financial statements.)
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE ~ DD&A expense was $7.4
million and $3.8 million for the six months ended June 30, 1997 and 1996,
respectively. The increase in DD&A was primarily a result of the increased
production due to the Amerada Hess properties acquisition in May 1996. The DD&A
rate per Boe related to oil and gas properties decreased to $5.41 from $5.72
for the six months ended June 30, 1997 and 1996 respectively, resulting
primarily from the increase in reserves due to the Amerada Hess properties
acquisition.
GENERAL AND ADMINISTRATIVE EXPENSE ~ General and administrative expense
increased 39% to $2.0 million for the six months ended June 30, 1997 from $1.5
million during the same period of 1996. The increase was primarily attributable
to the $0.4 million of general and administrative expenses, as a result of the
Company's drilling rig operations.
21
<PAGE> 22
INTEREST EXPENSE ~ Interest expense for the six months ended June 30, 1997 was
$2.7 million. The Company's average debt outstanding was $66.5 million for six
months ended June 30, 1997 compared to $6.4 million for the six months ended
June 30, 1996. The average amount of debt outstanding increased due to the
acquisitions of the Amerada Hess properties, Bonray Drilling Corporation, West
Cote Blanche Bay and investments in obligations of WRT Energy. (See Note 2 to
the consolidated financial statements.)
NET LOSS ON SALE OF ASSETS ~ The Company recognized a net loss of $0.2 million
loss on the sale of assets for the six months ended June 30, 1996 as a result
of the dissolution of the CFJV and the related sale of gathering, processing
and compression facilities. (See Note 6 to the consolidated financial
statements.)
INCOME BEFORE INCOME TAXES ~ Income before income taxes increased to $6.6
million for the six months ended June 30, 1997 from $2.1 million for the same
period of 1996 primarily due to the factors described above, including
increased oil and gas revenues due to the acquisition of the Amerada Hess
properties and Bonray Drilling. This increase in revenues was partially offset
by increased lease operating expenses, contract drilling expenses, depreciation
and interest expense.
NET INCOME ~ Net income increased to $4.1 million for the six months ended June
30, 1997 from $1.3 million the same period in 1996 as a result of the items
described above, primarily increased production and increased prices. The
effective income tax rate remained constant at 38%.
22
<PAGE> 23
CAPITAL EXPENDITURES, CAPITAL RESOURCES AND LIQUIDITY
The following table presents comparative cash flows of the Company for the six
months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------------
1997 1996
---------------- ----------------
(in thousands)
<S> <C> <C>
Net cash provided by operating activities $ 13,057 $ 2,660
Net cash used in investing activities (51,392) (42,830)
Net cash provided by (used in) financing activities 41,390 29,819
</TABLE>
Net cash provided from operating activities increased $10.4 million to $13.1
million during the six months ended June 30, 1997 from $2.7 million during the
same period of 1996, relating to an increase in net income as well as positive
changes in working capital components.
Net cash used in investing activities was $51.4 million for the six months
ended June 30, 1997, as compared to $42.8 million during the same period of
1996. The increase of $8.6 million was primarily attributable to acquisitions
of Bonray Drilling Corporation and the West Cote Blanche Bay field, and
expenditures for the exploration, development and acquisitions of other
property and equipment. (See Note 2 to the consolidated financial statements.)
As of June 30, 1997, the Company had cash balances of $7.1 million and working
capital of $5.3 million. The increase in working capital of $4.1 million as of
June 30, 1997, from $1.2 million as of December 31, 1996, is primarily a result
of net income of $4.1 million for the six months ended June 30, 1997.
CAPITAL EXPENDITURES ~ The following table sets forth the Company's
expenditures for exploration, development, property acquisition, drilling
equipment, gas plant and gathering facilities and other property and equipment
for the six months ended June 30, 1997 and 1996.
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------------
1997 1996
--------------- ----------------
(in thousands)
<S> <C> <C>
Exploration costs $ 11,919 $ 4,707
Development costs 5,469 3,402
Property acquisition costs 7,999 31,902
Drilling equipment 17,398 --
Gas plant and gathering facilities 786 356
Other property and equipment 525 153
--------------- ----------------
$ 44,096 $ 40,520
=============== ================
</TABLE>
The Company has budgeted up to $66.0 million in capital expenditures in 1997.
In addition to the capital expenditures set forth in the table above, the
Company anticipates additional capital expenditures of up to approximately
$18.0 million for oil and gas exploration activities. The aggregate level of
capital
23
<PAGE> 24
expenditures in 1997 for drilling activities and the allocation thereof is
highly dependent upon the Company's success rate on exploration drilling and
prevailing conditions in the oil and gas industry, as well as the Company's
funding available under its credit facilities. (See Liquidity discussion
below.) Accordingly, the actual level of capital expenditures and the
allocation of such expenditures may vary materially from the above estimates.
CAPITAL RESOURCES ~ Prior to the Company's initial public offering in July
1995, the Company's cash requirements had been met primarily through capital
contributions from shareholders, cash generated from operations and borrowings
under credit facilities. Subsequently, the Company has relied primarily on cash
flows from operations and borrowings under its credit facilities for additional
capital resources.
On March 5, 1997, the Company established a new revolving credit facility with
a group of financial institutions, which, as amended, provides for aggregate
borrowings of up to $85.0 million. Borrowings under the 1997 Credit Facility
were used to refinance indebtedness under a prior credit facility and to fund
the WCBB Acquisition. The aggregate borrowing base was changed to $65.0 million
effective July 11, 1997.
Under the terms of the 1997 Credit Facility, the Company may elect to be
charged at the bank's prime rate plus 50 basis points plus a specified margin
or the rate at which Eurodollar deposits for one, two, three, six or twelve
months are offered to the bank in the Interbank Eurodollar market plus a
specified margin. Loans made under the 1997 Credit Facility are payable in full
on March 2002, the maturity date. The 1997 Credit Facility is secured by
substantially all of the Company's assets and contains various restrictive
covenants. As of June 30, 1997, outstanding borrowings under the 1997 credit
facility were $80.0 million. As of July 11, 1997, outstanding borrowings under
the 1997 credit facility were $60.0 million, which leaves $5.0 million in
available borrowing capacity.
On July 11, 1997, the Company established an additional credit facility, via
one of its wholly owned subsidiaries, with a banking institution, which
provides for borrowings up to $23,000,000. This facility was used to finance
the Company's obligations under the WRT rights offering and to partially
refinance indebtedness under the 1997 Facility. The maturity date of this
facility is January 11, 1999. As of July 11, 1997, outstanding borrowings were
$23.0 million.
Under the terms of the New Credit Facility, the Company may elect to be charged
the ABR rate plus a specified margin or the Eurodollar rate plus a specified
margin. The loan agreement contains restrictive covenants requiring among other
things, maintenance at specific levels of tangible net worth, working capital
and specific financial ratios, as well as limiting payment of dividends.
LIQUIDITY ~ The Company intends to meet the remainder of its 1997 capital
requirements and its other obligations primarily from existing cash balances,
cash flow from operations and borrowings to the extent of availability under
the 1997 Credit Facility and the New Credit Facility. The Company's cash flow
from operations will be dependent upon its future performance, which will be
subject to prevailing economic conditions and to financial and business
conditions and other factors, many of which are beyond its control. Should
sufficient financing not be available, implementation of the Company's 1997
capital program would be delayed and, accordingly, the Company's growth
strategy could be adversely affected. The Company is also currently exploring
strategic alternatives that may include the sale of specific assets or
activities of the Company to generate the necessary cash flows to meet its 1997
obligations.
24
<PAGE> 25
The Company does not intend to pay dividends on its common stock in the near
future. The Company will redeploy earnings generated as it continues its growth
strategies.
In future periods, the Company expects to recognize deferred income taxes of
approximately 37% to 39% of income before income taxes. The majority of the
Company's income tax expense is expected to be recognized as deferred income
tax expense due to the current tax treatment of oil and gas exploration costs.
The Company may from time to time enter into certain swap or hedge transactions
in an attempt to mitigate price volatility on production that is subject to
market sensitive pricing. To the extent the Company is unable to effect such
transactions, continued fluctuations in oil and gas prices could have an effect
on the Company's operating results. The Company has entered into futures
contracts to fix the sales price of certain of its gas production during 1997.
The Company has entered into gas futures contracts for the months of September
and October, with volumes ranging from 140,000 to 150,000 Mcf of gas per month
and prices ranging from $1.92 per Mcf in September to $1.94 per Mcf in October.
These futures contracts are designed to mitigate the effect of anticipated
lower product prices in the third quarter of 1997 as compared to the seond
quarter of 1997.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED ~ In February
1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997, and restatement of prior-period earnings per share data is required. The
new standard will not apply to DLB's financial statements until the fourth
quarter of 1997. SFAS No. 128 revises the current calculation methods and
presentation of primary and fully diluted earnings per share. The company has
reviewed the requirements of SFAS No. 128, and has concluded that they will
increase DLB's historical primary earnings per share amounts to $.07 per
share for the second quarter of 1997 and be consistent for the diluted earnings
per share amount $.07.
25
<PAGE> 26
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by item 601 of Regulation S-K are as
follows:
2.0 Agreement for Purchase and Sale dated April 16,
1996, between Amerada Hess Corporation and DLB Oil &
Gas, Inc. (the "Agreement for Purchase and Sale").
(4)
2.1 Letter agreement amending Agreement for Purchase and
Sale dated May 7, 1996.(3)
2.2 Letter agreement amending Agreement for Purchase and
Sale dated May 31, 1996.(3)
3.3 Amended and Restated Certificate of Incorporation
(1)
3.4 Amended and Restated Bylaws (1)
10.5 Lease of office space, Oklahoma City, Oklahoma (1)
10.6 Credit Agreement dated December 28, 1995, between
Registrant and First Union National Bank of North
Carolina (2)
10.7 Stock Option Agreement by and between Registrant and
Mike Liddell (1)
10.8 Stock Option Agreement by and between Registrant and
Mark Liddell (1)
10.9 Employment Agreement by and between Registrant and
Mike Liddell (1)
10.10 Employment Agreement by and between Registrant and
Mark Liddell (1)
10.11 DLB Oil & Gas Stock Option Plan (1)
10.12 DLB Oil & Gas Omnibus Equity Compensation Plan (1)
10.13 Shareholder's Agreement by and among Charles E.
Davidson, Mike Liddell and Mark Liddell dated May
25, 1995 (1)
10.14 Agreement for Dissolution of Joint Venture dated
February 9, 1996, between DLB Oil & Gas, Inc., Magic
Circle Acquisition Corporation and Magic Circle
Energy Corporation, Carmen Field Limited
Partnership, and Carmen Field Joint Venture (2)
10.15 First Amendment to the Credit Agreement dated June
30, 1996, between Registrant and First Union
National Bank of North Carolina (4)
10.16 Credit Agreement Dated as March 5, 1997 between
Registrant and Chase Manhattan Bank (5)
10.17 Second Amended Disclosure Statement Under 11 U.S.C.
Section 1125 in Support of Debtor and DLBW's Second
Amended Joint Plan of Reorganization Under Chapter
22 of the United States Bankruptcy Code (5)
10.18 Texaco Agreements (5)
10.19 First Amendment to the Credit Agreement dated March
12, 1997, between Registrant and Chase Manhattan
Bank (5)
10.20 Warrant Agreement dated July 10, 1997 (7) 10.21
Registration Rights Agreement dated July 10, 1997
(7) 10.22 Commitment Agreement dated January 20,
1997 (7)
10.23 Subscription Rights Agreement (7)
10.24 Liquidating Trust Agreement dated July 10, 1997 (7)
21.0 Subsidiaries of the Company (1)
26
<PAGE> 27
-----------------
(1) Previously filed as an exhibit to Registration No.
33-92786 on Form S-1 and incorporated herein by
reference.
(2) Previously filed as an exhibit to Form 10-K for the year
ended December 31, 1995, and incorporated herein by
reference.
(3) Previously filed as an exhibit to Form 8-K on May 12,
1996, and incorporated herein by reference.
(4) Previously filed as an exhibit to Form 10-Q filed on
August 14, 1996.
(5) Previously filed as an exhibit to Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference.
(6) Pursuant to Item 601(b)(2) of Regulation S-K, the
exhibits and schedules to Exhibit 2.0 are omitted.
Exhibit 2.0 contains a list identifying the contents of
its exhibits and schedules, and registrant agrees to
furnish supplemental copies of such exhibits and
schedules to the Securities and Exchange Commission upon
request.
(7) Previously filed as an exhibit to Form 8-K on July 28,
1997.
Copies of the foregoing exhibits filed with this report or
incorporated by reference are available from the Company upon
written request and payment of a reasonable copying fee.
(b) Registrant filed the following reports on Form 8-K's
filed the quarter ended June 30, 1997:
Form 8-K filed July 28, 1997 disclosing the
Consummation of Second Amended Joint Plan of
Reorganization under Chapter 11 of the United
States Bankruptcy Code, as proposed by DLB Oil &
Gas, Inc., WRT Energy Corporation and Wexford
Management LLC dated as of March 11, 1997 of
Debtor became effective pursuant to its terms and
conditions on July 11, 1997.
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
DLB OIL & GAS, INC.
Date: August 14, 1997 /s/ Mark Liddell.
---------------------------------------
Mark Liddell, President
Date: August 14, 1997 /s/ Ronald D. Youtsey
---------------------------------------
Ronald D. Youtsey,
Chief Financial Officer
28
<PAGE> 29
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,115
<SECURITIES> 0
<RECEIVABLES> 11,804
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,087
<PP&E> 177,913
<DEPRECIATION> 34,436
<TOTAL-ASSETS> 183,056
<CURRENT-LIABILITIES> 14,788
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 69,356
<TOTAL-LIABILITY-AND-EQUITY> 183,056
<SALES> 9,399
<TOTAL-REVENUES> 14,672
<CGS> 3,001
<TOTAL-COSTS> 3,001
<OTHER-EXPENSES> 4,038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,621
<INCOME-PRETAX> 1,450
<INCOME-TAX> 547
<INCOME-CONTINUING> 903
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 903
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
