UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-26444
FORCENERGY INC
(Exact name of registrant as specified in its charter)
Delaware 65-0429338
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2730 S.W. 3rd Avenue, Suite 800
Miami, Florida
33129-2237
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code: (305) 856-8500
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 twelve
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. Yes X. No __.
As of April 30, 1997, 22,667,749 shares of Common Stock, $.01
per value, were outstanding.
<PAGE>
FORCENERGY INC
--------------
INDEX
Page
Part I. FINANCIAL INFORMATION: Number
------
Item 1. Financial Statements
a) Consolidated Balance Sheets - March 31, 1997 and
December 31, 1996 1
b) Consolidated Statements of Operations - Three months
ended March 31, 1997 and 1996 2
c) Consolidated Statements of Cash Flows - Three months
ended March 31, 1997 and 1996 3
d) Notes to Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
FORCENERGY INC
--------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
--------------------------
March 31, December 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS:
Current Assets:
Cash $ 50,029 $ 9,669
Accounts receivable, net 33,719 29,416
Other current assets 11,490 10,673
--------- ---------
Total current assets 95,238 49,758
--------- ---------
Investment in surety bonds, at cost 3,981 3,926
--------- ---------
Property, plant and equipment, at cost
(full cost method) net of accumulated
depletion, depreciation and amortization 625,837 523,711
--------- ---------
Other assets 19,060 8,530
--------- ---------
$ 744,116 $ 585,925
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
Current Liabilities:
Accounts payable $ 15,386 $ 8,643
Other accrued liabilities 65,362 34,370
--------- ---------
Total current liabilities 80,748 43,013
--------- ---------
Long-term debt 375,100 272,932
--------- ---------
Deferred income taxes 27,997 21,044
--------- ---------
Stockholders' Equity:
Preferred stock, $.01 par value;
5,000,000 shares authorized;
none issued or outstanding
Common stock, $.01 par value;
50,000,000 shares authorized;
22,643,396 and 22,577,838 issued
and outstanding at March 31, 1997
and December 31, 1996, respectively 226 226
Capital in excess of par value 246,193 246,032
Retained earnings 13,852 2,678
--------- ---------
Total stockholders' equity 260,271 248,936
--------- ---------
$ 744,116 $ 585,925
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
FORCENERGY INC
--------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
(in thousands, except per share data)
-------------------------------------
Three Months Ended March 31,
1997 1996
---------- ----------
Revenues:
Oil and gas sales $ 70,580 $ 28,342
Other 425 126
-------- --------
71,005 28,468
-------- --------
Expenses:
Lease operating 16,185 8,736
Depletion, depreciation and amortization 25,457 11,556
Production taxes 1,059 724
General and administrative 3,682 1,790
-------- --------
46,383 22,806
-------- --------
Income from operations 24,622 5,662
Interest and other income 322 111
Interest expense, net of amounts
capitalized (6,848) (2,874)
-------- --------
Income before income taxes 18,096 2,899
Income tax provision 6,922 1,081
-------- --------
Net income $ 11,174 $ 1,818
======== ========
Net income per common and common
equivalent share $ .47 $ .10
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
FORCENERGY INC
--------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
(in thousands)
----------------------------
Three Months Ended March 31,
1997 1996
----------- ----------
Cash flows from operating activities:
Net income $ 11,174 $ 1,818
-------- --------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion, depreciation and amortization 25,867 11,794
Deferred taxes 6,922 1,081
Deferred interest -- 770
Other (55) (41)
Decrease (increase) in accounts receivable 1,496 (2,296)
Increase in other current assets (2,467) (2,543)
Increase in accounts payable 1,763 891
Increase in other accrued liabilities 14,314 1,834
-------- --------
47,840 11,490
-------- --------
Net cash provided by operating activities: 59,014 13,308
-------- --------
Cash flows from investing activities:
Acquisitions of oil and gas properties (61,690) --
Capital expenditures (43,798) (30,362)
Investment in unconsolidated subsidiary (7,146) --
Sales of oil and gas properties -- 1,072
Increase (decrease) in other assets (2,229) 53
-------- ---------
Net cash used in investing activities (114,863) (29,237)
--------- ---------
Cash flows from financing activities:
Borrowings under senior credit facility 81,262 37,425
Repayments under senior credit facility (179,094) (24,391)
Issuance of long-term debt, net of expenses 193,849 --
Issuance of common stock, net 192 --
--------- ---------
Net cash provided by financing activities 96,209 13,034
--------- ---------
Net increase (decrease) in cash 40,360 (2,895)
Cash at beginning of period 9,669 2,996
--------- ---------
Cash at end of period $ 50,029 $ 101
========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest: $ 1,112 $ 3,540
Investing activities:
At March 31, 1997 and December 31, 1996 the Company had accrued additions
to oil and gas properties amounting to approximately $29,343,000 and
$17,155,000, respectively.
The accompanying notes are an integral part of these financial statements.
<PAGE>
FORCENERGY INC
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial
statements include the accounts of Forcenergy Inc and its
subsidiaries (the "Company") after elimination of intercompany
balances and transactions.
The unaudited interim consolidated financial statements of the
Company for the periods indicated herein have been prepared by
the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and in accordance with
generally accepted accounting principles for interim financial
reporting. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments, consisting of normal
recurring accruals, necessary to present fairly the information
in the accompanying consolidated financial statements have been
included. Interim period results are not necessarily indicative
of the results of operations or cash flows for a full year
period. Certain minor amounts previously reported in the
financial statements of the prior periods have been reclassified
here to conform to the current period presentation.
NOTE 2 -- EARNINGS PER SHARE
Earnings per share ("EPS") is calculated based on the weighted
average number of shares outstanding during each period for
common stock, and when dilutive, common stock equivalents. The
dilutive effect of common stock equivalents was greater than 3%
for the three months ended March 31, 1997 and less than 3% for
the three months ended March 31, 1996. Weighted average common
and common equivalent shares were 23,943,406 and 18,260,447 for
the three months ended March 31, 1997 and 1996, respectively.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard No. 128,
Earnings Per Share (SFAS 128). SFAS 128 specifies new standards
for the computation, presentation and disclosure requirements for
EPS. SFAS 128 is intended to improve the EPS information
provided in financial statements by simplifying the existing
computational guidelines, by revising the disclosure requirements
to provide more consistent and meaningful information and by
increasing the comparability of EPS data on an international
basis. Some of the changes made to simplify the EPS computation
include: (a) eliminating the presentation of primary EPS and
replacing it with basic EPS, with the principal difference being
that common stock equivalents (CSEs) are not considered in
computing basic EPS; (b) eliminating the modified treasury stock
method and the three percent materiality provision; and (c)
revising the contingent share provisions and the supplemental EPS
data requirements. SFAS 128 also makes a number of changes to
existing disclosure requirements. SFAS 128 is effective for
financial statements issued for periods ending after December 15,
1997. The Company will adopt SFAS 128 effective December 31,
1997 and will restate EPS for all periods presented. The
following table represents pro forma EPS as calculated under SFAS
128:
Three Months Ended
March 31,
------------------------------------------------
(basic) (diluted)
------------------------------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Earnings per share $.49 $.10 $.47 $.10
Weighted average common and
common equivalent shares 22,578,566 18,260,447 23,943,406 18,365,859
NOTE 3 -- LONG TERM DEBT
8 1/2% Senior Subordinated Notes
On February 14, 1997, the Company closed on a private
placement (pursuant to Rule 144A) of $200 million in 8 1/2%
Senior Subordinated Notes, Series A, priced at $99.338, with
an effective yield to maturity of 8.6% (the "8 1/2% Notes"), and
which mature on February 15, 2007. The 8 1/2% Notes were issued
under an Indenture (the "8 1/2% Notes Indenture") which provides
that interest will be payable in arrears semiannually on February
15 and August 15 of each year, commencing August 15, 1997.
The 8 1/2% Notes are redeemable in whole or in part at the
option of the Company, at any time on or after February 15, 2002,
at the redemption prices set forth below plus, in each case,
accrued and unpaid interest, if any, thereon.
Year Percentage
2002 104.250%
2003 102.833%
2004 101.417%
2005 and thereafter 100.000%
Prior to February 15, 2002, the Company may redeem the 8
1/2% Notes, in whole or in part, at the Make-Whole Price, plus
accrued and unpaid interest, if any, through the date of
redemption. The Make-Whole Price is defined as the greater of
(i) the sum of outstanding principal amount and Make-Whole Amount
(defined below) of such 8 1/2% Notes, and (ii) the redemption
price of such 8 1/2% Notes on February 15, 2002, determined
pursuant to the 8 1/2% Notes Indenture (104.25% of the principal
amount). The Make-Whole Amount is defined as the excess, if any,
<PAGE>
FORCENERGY INC
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
of (i) the present value of the remaining interest, premium and
principal payments due on such 8 1/2% Notes as if the 8 1/2%
Notes were redeemed on February 15, 2002, computed using a
discount rate equal to the Treasury Rate plus 50 basis points,
over (ii) the outstanding principal amount of the 8 1/2% Notes.
In addition, during the first 36 months after February 11, 1997,
the Company may redeem up to $70 million in aggregate principal
amount of the 8 1/2% Notes at a redemption price of 108.5% of
the principal amount thereofplus accrued and unpaid interest,
if any, thereon to the redemption date with the net proceeds
of an offering of common equity of the Company; provided that
at least $130.0 million in aggregate principal amount of the 8 1/2%
Notes remain outstanding immediately after the occurrence of such
redemption. Any such redemption must occur within 60 days of
the date of the closing of such common equity offering.
Upon a "change of control" in the Company, as defined
in the 8 1/2% Notes Indenture, the 8 1/2% Note holders may
require, at their election, that the Company prepay all or a
portion of the 8 1/2% Notes at a purchase price equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, thereon. Furthermore, under certain
circumstances, the Company may become obligated to offer to
purchase all or a portion of the 8 1/2% Notes at 100% of the
principal amount thereof, together with accrued and unpaid
interest, if any, with the net proceeds of certain asset sales.
The 8 1/2% Notes Indenture contains certain covenants which
include the following: (i) limitations on disposition of proceeds
from asset sales; (ii) limitations on payment of dividends,
distributions or certain investments; (iii) limitations on the
incurrence of additional indebtedness or liens (iv) limitations
on sale and leaseback transactions; (v) limitations on mergers,
consolidations and transfers of substantially all of the
Company's assets; and (vi) limitations on certain transactions
with affiliates.
The 8 1/2% Notes are subordinate to the Senior Credit
Facility and rank pari passu with all existing and future
subordinated indebtedness of the Company, including the 9 1/2%
Senior Subordinated Notes.
In connection with the private placement, the Company is
currently offering to exchange ("Exchange Offer") the Series A
notes for Series B notes which have been registered pursuant to a
Registration Statement on Form S-4 which was effective on April
18, 1997. The form and terms of the Series B notes are identical
in all material respects to the form and term of the Series A
notes except for certain transfer restrictions and registration
rights relating to the Series B notes. The Exchange Offer
expires on May 23, 1997, unless extended.
Senior Credit Facility
On March 31, 1997 the Company's Senior Credit Facility was
amended to reduce the borrowing rates under the facility, to
extend the term of the revolver and to revise various
administrative provisions of the facility. Specifically, the
facility now provides for a base borrowing rate on advances under
the revolver at either the prime rate or LIBOR plus 1.0%, at the
election of the Company. The amendment also provides for
borrowings on a revolving basis through January 1, 1999, at which
time the amounts outstanding convert to a term loan with
quarterly payments of principal and accrued interest through June
30, 2002. Future annual principal payments, as a percentage of
the principal balance outstanding at the conversion to the term
loan, will be 36% in 1999, 30% in 2000, 23% in 2001 and 11% in
2002. Additionally, the borrowing base was reduced to $50 million
under the Company's direction with semi-annual redetermination
provisions.
NOTE 4 -- FINANCIAL INSTRUMENTS
The Company has entered into forward sales and swap
arrangements with respect to approximately 26% of its estimated
net natural gas production through the third quarter of 1997 at a
weighted average price of approximately $2.26 per Mcf. The
Company has also hedged approximately 15% of its estimated net
oil production through the second quarter of 1997 at a weighted
average price of $17.96 per Bbl. The Company has hedged an
additional 20% of its net oil production through the end of the
year using collar arrangements with a floor of $18.00 per Bbl and
ceilings of $23.90 and $26.30 per Bbl. The production
percentages reflected assume current production rates.
<PAGE>
FORCENERGY INC
--------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Production Data
The following table sets forth the Company's historical oil
and natural gas production data during the periods indicated
(production in thousands):
Three Months Ended March 31,
----------------------------
1997 1996
---------- -----------
Production:
Liquids (Mbbls) (1) 1,889 853
Natural gas (MMcf) 12,672 6,092
Total (MMcfe) 24,006 11,210
Average realized sales prices (2):
Oil (per Bbl) $ 20.43 $ 17.40
Plant products (per Bbl) 19.00 11.58
Liquids (1) 20.37 16.88
Natural gas (per Mcf) 2.53 2.29
Expenses (per Mcfe):
Lease operating $ .67 $ .78
Production taxes .04 .06
Depletion, depreciation and
amortization 1.06 1.03
General and administrative, net .15 .16
_____________
(1) Includes crude oil, condensate and natural gas liquids.
(2) Net of effects of hedging
Comparison of the Three Month Period ended March 31, 1997 and
March 31, 1996
Operating and Net Income. Operating income increased by
335% to $24.6 million for the first quarter of 1997 compared to
the $5.7 million reported for the first quarter of 1996. Net
income for the three months ended March 31, 1997 increased to
$11.2 million compared to $1.8 million for the same period last
year. The improvement in both operating and net income was
attributable primarily to higher production volumes and, to a
lesser extent, higher net realized oil and gas prices.
Production. The Company's net liquids production rose to
1,889 Mbbls for the first quarter of 1997 from 853 Mbbls in the
comparable 1996 period, a 121% improvement. Net gas production
increased to 12,672 Mmcf in the 1997 quarter, a 108% increase
over the 6,092 Mmcf produced in the same period last
<PAGE>
year. On an equivalent unit basis, oil and gas production
increased to 24,006 Mmcfe for the 1997 quarter, 114% more than
the 11,210 Mmcfe produced during the 1996 period. The increase
in oil and gas production stems primarily from the success of the
Company's drilling program, acquisition of Gulf of Mexico
producing properties during 1996 and early 1997 and oil
production added by the recently acquired Cook Inlet, Alaska
properties.
Revenues. Revenues for the 1997 quarter increased to $71.0
million, a 149% improvement over the $28.5 million reported for
the same period last year, primarily because of the higher
production volumes and, to a lesser extent, higher net realized
prices. Average net realized liquid prices rose to $20.37 per
barrel for the 1997 period, a 21% increase over the $16.88 per
barrel received for the first quarter of 1996. Average net
realized gas prices rose to $2.53 per Mcf in the first quarter of
1997, an 11% increase over the $2.29 per Mcf reported for the
1996 period.
Average prices received for field production for the 1997
quarter were $21.61 per bbl and $2.88 per mcf for oil and natural
gas, respectively. After taking into account the effects of 1997
hedging activities entered into to guarantee a certain level of
cash flow from production, specifically a $2.1 million reduction
in oil revenue and a $4.4 million reduction in gas revenue, net
realized prices were reduced to $20.43 per bbl and $2.53 per mcf
for oil and natural gas, respectively. Average prices received
for field production for the first quarter of 1996 were $18.40
per bbl and $2.30 per mcf for oil and natural gas, respectively.
After taking into account the effects of hedging activities
during the 1996 quarter, specifically a $779,000 reduction in oil
revenue and a $90,000 reduction in gas revenue, net realized
prices were reduced to $17.40 per bbl and $2.29 per mcf for oil
and natural gas, respectively.
Lease Operating Expenses. Lease operating expenses were
$16.2 million for the first quarter of 1997 compared to the
$8.7 million reported for the same period last year. The
increase related primarily to lease operating expenses associated
with new oil and gas properties acquired in 1996 and early 1997.
On an equivalent unit of production basis, expenses decreased to
$.67 per Mcfe for the 1997 quarter from $.78 per Mcfe for the
comparable 1996 period, a decrease attributable to increased
production on existing properties stemming from successful
drilling activities and from lower workover costs.
Depletion, Depreciation and Amortization ("DD&A"). DD&A
expense increased to $25.5 million for the 1997 period from the
$11.6 million reported for the first quarter of 1996. The
increase resulted from higher production levels and an increase
in the DD&A rate per unit of production to $1.06 per Mcfe,
compared to $1.03 per Mcfe for the same period last year.
General and Administrative Costs. General and
administrative costs were $3.7 million for the first quarter of
1997 compared with $1.8 million reported for the 1996 period, an
increase attributable to the overall growth of the Company during
the latter part of 1996 and the first quarter of 1997. On an
equivalent Mcfe produced basis, general and administrative
expenses decreased to $.15 per Mcfe for the 1997 period from a
rate of $.16 per Mcfe for the same period last year, primarily
due to the higher production levels in 1997.
Interest Expense. Interest expense, net of amounts
capitalized, increased to $6.8 million for the 1997 quarter
compared to $2.9 million for the first quarter of 1996. The
increase in interest expense was primarily due to the increase
in long-term debt incurred in funding the acquisition program
and, to a lesser extent, higher interest rates on the fixed
rate long-term subordinated debt issues.
Income Tax Provision (Benefit). Income tax expense
increased to $6.9 million for the 1997 quarter, from $1.1 million
for the same period last year, due to the improvement in results
of operations compared to the 1996 period.
<PAGE>
Liquidity and Capital Resources
The Company has historically funded its operations,
acquisitions, capital expenditures and working capital
requirements through cash flow from operations, bank borrowings
and private and public placements of debt and equity securities.
The Company's primary sources of funds for each of the periods
indicated herein were as follows:
Three Months Ended March 31,
---------------------------
1997 1996
--------- ----------
Net cash provided by operating activities $ 59,014 $ 13,308
Borrowings under the Senior Credit Facility 81,262 37,425
Issuance of long-term debt, net of expenses 193,849 --
The Company had approximately $50.0 million in cash at March
31, 1997 compared to $9.7 million at the end of 1996. Working
capital was $14.5 million at March 31, 1997 compared with $6.7
million at December 31, 1996. The increase in cash represents
excess proceeds from the 8 1/2% Notes issued in February 1997,
after repayment of substantially all outstanding borrowings under
the Senior Credit Facility. The increase in working capital was
mainly attributable to the increase in the Company's cash
balances partially offset by the increase in accrued liabilities
associated with the Company's 1997 drilling program.
Forcenergy generated approximately $59.0 million in cash
from operations during the first quarter of 1997 compared to
$13.3 million during the same period in 1996. This increase was
due to the successful 1996/1997 drilling programs, acquired
production and, to a lesser extent, higher net realized oil and
gas prices.
Total capital expenditures were $112.6 million for the three
months ended March 31, 1997, including $61.7 million for
acquisitions. Funding for these expenditures was provided
through the Company's existing Senior Credit Facility and cash
from operations.
During February 1997, the Company closed on a private
placement of $200 million in 8 1/2% Senior Subordinated Notes
priced at $99.338 for a yield to maturity of 8.6%. The Company
received approximately $194.0 million in net proceeds and used
the majority of those proceeds to repay all outstanding
indebtedness under the Company's Senior Credit Facility. On
March 31, 1997, at the discretion of the Company, the borrowing
base under the facility was reduced to $50 million. At April 30,
1997, the Company had approximately $44 million available under
the facility.
The Company's capital expenditure budget for 1997, exclusive
of acquisitions, is estimated to be approximately $195 million.
Forcenergy will continue to evaluate its capital spending plans
throughout the year. Actual levels of capital expenditures may
vary significantly due to a variety of factors, including
drilling results, oil and gas prices, industry conditions and
outlook, future acquisitions of properties and the availability
of capital. Although the 1997 budget does not incorporate any
acquisitions, the Company will continue to selectively seek
acquisition opportunities where it believes significant
exploration and development potential exists.
The Company utilizes, from time to time, forward sales
contracts and commodity swaps for portions of its current oil and
gas production to achieve more predictable cash flows and to
reduce its exposure to fluctuations in oil and gas prices. The
remaining portion of current production is not hedged so
<PAGE>
as to provide the Company the opportunity to benefit from
increases in prices on that portion of the production, should
price increases materialize. The Company has entered into
forward sales and swap arrangements with respect to approximately
26% of its estimated net natural gas production through the third
quarter of 1997 at a weighted average price of approximately
$2.26 per Mcf. The Company has also hedged approximately 15% of
its estimated net oil production through the second quarter of
1997 at a weighted average price of $17.96 per Bbl. In addition,
the Company has hedged another 20% of its current net oil
production through the end of the year using collar arrangements
with a floor of $18.00 per Bbl and ceilings of $23.90 and $26.30
per Bbl.
Management believes that the cash on hand at March 31, 1997,
cash flows from operations and borrowing capacity under the
Company's Senior Credit Facility will be adequate to meet future
liquidity needs, including funding the Company's financial
obligations and capital expenditure program.
DISCLSOURE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking
statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All statements other than statements of historical fact
included in this Form 10-Q, including without limitation,
statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the
planned capital expenditures, increases in oil and gas
production, 1997 activities, the Company's financial position,
business strategy and other plans and objectives for future
operations, are forward-looking statements. 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 have been correct. There are numerous
uncertainties inherent in estimating quantities of proved oil and
natural gas reserves and in projecting future rates of production
and timing of development expenditures, including many factors
beyond the control of the Company. Reserve engineering is a
subjective process of estimating underground accumulations of oil
and natural gas that cannot be measured in an exact way, and the
accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation
and judgment. As a result, estimates made by different
engineers often vary from one another. In addition, results of
drilling, testing and production subsequent to the date of an
estimate may justify revisions of such estimates and such
revisions, if significant, would change the schedule of any
future production and development drilling. Accordingly, reserve
estimates are generally different from the quantities of oil and
natural gas that are ultimately recovered. All subsequent
written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified
in their entirety by such factors.
<PAGE>
Part II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 -- Form of Indenture dated as of February
14, 1997 among the Company, as issuer,
and Bankers Trust, as Trustee (filed
as Exhibit 4.4 to the Annual Report on Form
10-K for the fiscal year ended December 31,
1996 and is included herein by reference
(File No. 000-26444))
4.2 -- Registration Rights Agreement dated February
11, 1997 by and among the Company
and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation, Lehman
Brothers and ING Barings (U.S.) Securities,
Inc. (filed as Exhibit 4.4 to the
Registration Statement on Form S-4 filed on
April 10, 1997, as amended on April 18, 1997,
and is included herein by reference (File No.
333-24927))
10.1 -- Fourth Restatement of Credit Agreement
by and among Forcenergy Inc and ING
(U.S.) Capital Corporation and certain
financial institutions named therein as
Lenders (filed as Exhibit 10.1 to the
Registration Statement on Form S-4 filed on
April 10, 1997, as amended on April 18, 1997,
and is included herein by reference (File No.
333-24927))
11.1 -- Computation of Earnings per Share
27 -- Financial Data Schedule
(b) Reports on Form 8-K
On January 14, 1997 and, as amended on March 17, 1997,
the Company filed a Current Report on Form 8-K reporting the
acquisition of certain properties in the Cook Inlet and
Prudhoe Bay areas of Alaska from Marathon Oil Company.
On February 21, 1997, the Company filed a Current Report
on Form 8-K reporting the private placement of $200 million in
Senior Subordinated Notes priced at $99.338, with a coupon of
8.5% and yield to maturity of 8.6%.
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, in
the City of Miami, State of Florida, on the 13th day of May,
1997.
FORCENERGY INC
--------------
By: ________________________________________
E. Joseph Grady
Vice President - Chief Financial Officer
EXHIBIT 11.1
FORCENERGY INC
--------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(in thousands, except per share data)
PRIMARY EARNINGS PER SHARE
Three Months Ended
March 31,
--------------------
1997 1996
-------- --------
Net Income $ 11,174 $ 1,818
Weighted Average Common and Common Equivalent
Shares Outstanding 23,943 18,260
-------- --------
Primary Earnings Per Share $ .47 $ .10
======== ========
FULLY DILUTED EARNINGS PER SHARE
Three Months Ended
March 31,
--------------------
1997 1996
-------- --------
Net Income $ 11,174 $ 1,818
Effect of conversion of 7% Exchangeable
Subordinated Notes on interest expense -- 1,364
Tax effect related to interest expense -- (509)
-------- --------
Net Income as adjusted $ 11,174 $ 2,673
Weighted Average Common and Common
Equivalent Shares Outstanding 23,975 20,757
-------- --------
Fully Diluted Earnings Per Share $ .47 $ .13
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING (PRIMARY EPS)
Three Months Ended
March 31,
---------------------
1997 1996
-------- --------
Weighted Average Shares of Common Stock 22,579 18,260
Dilutive Common Stock Equivalents, Greater
than 3% 1,364 --
-------- --------
Effect on Primary EPS 23,943 18,260
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING (FULLY DILUTED EPS)
Three Months Ended Ended
March 31,
--------------------
1997 1996
-------- --------
Weighted Average Common and Common Equivalent
Shares Outstanding 22,643 (1) 18,260
Dilutive Common Stock Equivalents 1,332 (1) 154 (2)
Other Potentially Dilutive Securities: Conversion
of 7% Exchangeable Subordinated Notes -- 2,343
-------- --------
23,975 20,757
======== ========
(1) The fully diluted weighted average shares outstanding calculation for
the first quarter of 1997 assumes that exercises of options to purchase
65,558 shares of common stock occurred on January 1, 1997.
(2) Less than 3% effect on primary earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED INTERIM MARCH 31, 1997 BALANCE SHEET AND
STATEMENT OF OPERATIONS OF FORCENERGY INC FOR THE THREE MONTH
PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
/LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 50,029
<SECURITIES> 0
<RECEIVABLES> 33,719
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,490
<PP&E> 625,837
<DEPRECIATION> 0
<TOTAL-ASSETS> 744,116
<CURRENT-LIABILITIES> 80,748
<BONDS> 375,100
0
0
<COMMON> 226
<OTHER-SE> 260,045
<TOTAL-LIABILITY-AND-EQUITY> 744,116
<SALES> 70,580
<TOTAL-REVENUES> 71,005
<CGS> 0
<TOTAL-COSTS> 46,383
<OTHER-EXPENSES> (322)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,848
<INCOME-PRETAX> 18,096
<INCOME-TAX> 6,922
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,174
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
