SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One)
þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2005
o
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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 0-16203
Delta Petroleum Corporation
| Colorado | 84-1060803 | |||
| (State or other jurisdiction of | (I.R.S. Employer | |||
| incorporation or organization) | Identification No.) | |||
| 370 17th Street, Suite 4300 | ||||
| Denver, Colorado | 80202 | |||
| (Address of principal executive offices) | (Zip Code) |
(303) 293-9133
(Registrant’s telephone number, including area code)
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. Yes þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
41,587,000 shares of common stock $.01 par value were outstanding as of May 5, 2005.
INDEX
The terms “Delta,” “Company,” “we,” “our,” and “us” refer to Delta Petroleum Corporation unless the
context suggests otherwise.
i
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
| March 31, | June 30, | |||||||
| 2005 | 2004 | |||||||
| (In thousands) | ||||||||
| ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 7,850 | $ | 2,078 | ||||
Marketable securities available for sale |
1,002 | 912 | ||||||
Trade accounts receivable, net |
26,184 | 9,092 | ||||||
Prepaid assets |
1,755 | 1,136 | ||||||
Inventory |
3,583 | 1,350 | ||||||
Other current assets |
1,107 | 385 | ||||||
Total current assets |
41,481 | 14,953 | ||||||
Property and Equipment: |
||||||||
Oil and gas properties, successful efforts method of accounting |
||||||||
Unproved |
105,593 | 136,467 | ||||||
Proved |
306,717 | 136,425 | ||||||
Drilling and trucking equipment |
12,336 | 3,965 | ||||||
Other |
2,777 | 1,147 | ||||||
Total property and equipment |
427,423 | 278,004 | ||||||
Less accumulated depreciation and depletion |
(35,025 | ) | (21,665 | ) | ||||
Net property and equipment |
392,398 | 256,339 | ||||||
Long term assets: |
||||||||
Investment in LNG project |
1,022 | 1,022 | ||||||
Deferred financing costs |
5,754 | 131 | ||||||
Partnership net assets |
125 | 259 | ||||||
Total long term assets |
6,901 | 1,412 | ||||||
| $ | 440,780 | $ | 272,704 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current Liabilities: |
||||||||
Current portion of long-term debt |
$ | 104 | $ | 109 | ||||
Accounts payable |
33,109 | 12,326 | ||||||
Other accrued liabilities |
2,490 | 1,855 | ||||||
Derivative instruments |
6,744 | — | ||||||
Total current liabilities |
42,447 | 14,290 | ||||||
Long-term Liabilities: |
||||||||
7% senior unsecured notes |
149,253 | — | ||||||
Credit facility |
27,000 | 69,375 | ||||||
Asset retirement obligation |
3,228 | 2,542 | ||||||
Derivative instruments |
2,841 | — | ||||||
Other debt, net |
270 | 255 | ||||||
Total long-term liabilities |
182,592 | 72,172 | ||||||
Minority Interest |
— | 245 | ||||||
Commitments |
||||||||
Stockholders’ Equity: |
||||||||
Preferred stock, $.10 par value; authorized 3,000,000 shares,
none issued |
— | — | ||||||
Common stock, $.01 par value; authorized 300,000,000 shares,
issued 41,488,000 shares at March 31, 2005 and 38,447,000
at June 30, 2004 |
415 | 384 | ||||||
Additional paid-in capital |
234,111 | 207,811 | ||||||
Accumulated other comprehensive income (loss) |
(8,962 | ) | 342 | |||||
Unearned compensation |
(977 | ) | — | |||||
Accumulated deficit |
(8,846 | ) | (22,540 | ) | ||||
Total stockholders’ equity |
215,741 | 185,997 | ||||||
| $ | 440,780 | $ | 272,704 | |||||
See accompanying notes to consolidated financial statements.
1
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (In thousands except per share amounts) | ||||||||
Revenue: |
||||||||
Oil and gas sales |
$ | 24,578 | $ | 10,594 | ||||
Drilling and trucking |
2,332 | — | ||||||
Loss on derivative instruments, net |
(344 | ) | (286 | ) | ||||
Total revenue |
26,566 | 10,308 | ||||||
Operating expenses: |
||||||||
Lease operating expense |
4,410 | 2,035 | ||||||
Production taxes |
1,509 | 471 | ||||||
Transportation costs |
113 | 75 | ||||||
Depreciation, depletion and amortization |
5,393 | 3,085 | ||||||
Exploration expense |
1,663 | 1,698 | ||||||
Dry hole costs |
19 | 210 | ||||||
Drilling and trucking operations |
2,012 | — | ||||||
Professional fees |
411 | 308 | ||||||
General and administrative |
4,202 | 1,722 | ||||||
Total operating expenses |
19,732 | 9,604 | ||||||
Operating income |
6,834 | 704 | ||||||
Other income and (expense): |
||||||||
Other income (expense) |
(161 | ) | 43 | |||||
Minority interest |
403 | — | ||||||
Interest and financing costs |
(2,136 | ) | (373 | ) | ||||
Total other expense |
(1,894 | ) | (330 | ) | ||||
Income from continuing operations |
4,940 | 374 | ||||||
Discontinued operations: |
||||||||
Income from operations of properties sold, net |
— | 298 | ||||||
Gain on sale of properties |
— | 1,782 | ||||||
Net income |
$ | 4,940 | $ | 2,454 | ||||
Basic income per common share: |
||||||||
Income from continuing operations |
$ | 0.12 | $ | 0.01 | ||||
Discontinued operations |
— | 0.08 | ||||||
Net income |
$ | 0.12 | $ | 0.09 | ||||
Diluted income per common share: |
||||||||
Income from continuing operations |
$ | 0.12 | $ | 0.01 | ||||
Discontinued operations |
— | 0.07 | ||||||
Net income |
$ | 0.12 | $ | 0.08 | ||||
See accompanying notes to consolidated financial statements.
2
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
| Nine Months Ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (In thousands except per share amounts) | ||||||||
Revenue: |
||||||||
Oil and gas sales |
$ | 64,235 | $ | 25,375 | ||||
Drilling and trucking |
2,632 | — | ||||||
Loss on derivative instruments, net |
(437 | ) | (666 | ) | ||||
Total revenue |
66,430 | 24,709 | ||||||
Operating expenses: |
||||||||
Lease operating expense |
10,461 | 5,494 | ||||||
Production taxes |
4,415 | 1,205 | ||||||
Transportation costs |
285 | 193 | ||||||
Depreciation, depletion and amortization |
14,052 | 6,877 | ||||||
Exploration expense |
2,946 | 1,966 | ||||||
Dry hole costs |
2,692 | 387 | ||||||
Drilling and trucking operations |
3,086 | — | ||||||
Professional fees |
1,258 | 920 | ||||||
General and administrative |
10,306 | 4,443 | ||||||
Total operating expenses |
49,501 | 21,485 | ||||||
Operating income |
16,929 | 3,224 | ||||||
Other income and (expense): |
||||||||
Other income (expense) |
(310 | ) | 78 | |||||
Minority interest |
718 | — | ||||||
Interest and financing costs |
(4,372 | ) | (1,458 | ) | ||||
Total other expense |
(3,964 | ) | (1,380 | ) | ||||
Income from continuing operations |
12,965 | 1,844 | ||||||
Discontinued operations: |
||||||||
Income from operations of properties sold, net |
729 | 872 | ||||||
Gain on sale of properties |
— | 1,754 | ||||||
Net income |
$ | 13,694 | $ | 4,470 | ||||
Basic income per common share: |
||||||||
Income from continuing operations |
$ | 0.32 | $ | 0.07 | ||||
Discontinued operations |
0.02 | 0.11 | ||||||
Net income |
$ | 0.34 | $ | 0.18 | ||||
Diluted income per common share: |
||||||||
Income from continuing operations |
$ | 0.31 | $ | 0.07 | ||||
Discontinued operations |
0.01 | 0.09 | ||||||
Net income |
$ | 0.32 | $ | 0.16 | ||||
See accompanying notes to consolidated financial statements.
3
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
| Accumulated | ||||||||||||||||||||||||||||||||
| other | ||||||||||||||||||||||||||||||||
| Additional | comprehensive | |||||||||||||||||||||||||||||||
| Common Stock | paid-in | income | Comprehensive | Unearned | Accumulated | |||||||||||||||||||||||||||
| (In thousands) | Shares | Amount | capital | (loss) | income (loss) | compensation | deficit | Total | ||||||||||||||||||||||||
Balance June 30, 2004 |
38,447 | $ | 384 | 207,811 | 342 | — | (22,540 | ) | 185,997 | |||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
— | — | — | — | 13,694 | — | 13,694 | 13,694 | ||||||||||||||||||||||||
Other comprehensive gain, net of tax |
||||||||||||||||||||||||||||||||
Unrealized gain on equity securities, net |
— | — | — | 90 | 90 | — | — | 90 | ||||||||||||||||||||||||
Change in fair value of derivative
hedging instruments |
— | — | — | (9,394 | ) | (9,394 | ) | — | — | (9,394 | ) | |||||||||||||||||||||
Comprehensive income |
4,390 | |||||||||||||||||||||||||||||||
Shares issued for oil and gas properties |
1,571 | 16 | 22,175 | — | — | — | 22,191 | |||||||||||||||||||||||||
Shares issued for equipment |
131 | 1 | 1,892 | — | — | — | 1,893 | |||||||||||||||||||||||||
Shares issued for cash upon exercise of
options |
1,264 | 13 | 889 | — | — | — | 902 | |||||||||||||||||||||||||
Issuance of options below market |
— | — | 346 | — | (346 | ) | — | — | ||||||||||||||||||||||||
Issuance of restricted stock grants |
75 | 1 | 998 | — | (999 | ) | — | — | ||||||||||||||||||||||||
Amortization of unearned compensation |
— | — | — | — | 368 | — | 368 | |||||||||||||||||||||||||
Balance March 31, 2005 |
41,488 | $ | 415 | 234,111 | (8,962 | ) | (977 | ) | (8,846 | ) | 215,741 | |||||||||||||||||||||
See accompanying notes to consolidated financial statements.
4
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
| Nine Months Ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (In thousands) | ||||||||
Cash flows operations activities: |
||||||||
Net income |
$ | 13,694 | $ | 4,470 | ||||
Adjustments to reconcile net income to cash
provided by operating activities: |
||||||||
Depreciation and depletion |
13,844 | 6,829 | ||||||
Depreciation and depletion – discontinued operations |
208 | 329 | ||||||
Accretion of abandonment obligation |
208 | 48 | ||||||
Stock compensation expense |
368 | 195 | ||||||
Amortization of deferred financing costs |
590 | 269 | ||||||
Other |
493 | — | ||||||
Minority interest |
(718 | ) | — | |||||
Gain on sale of oil and gas properties |
— | (1,754 | ) | |||||
Net changes in operating assets and operating liabilities: |
||||||||
Increase in trade accounts receivable |
(17,298 | ) | (1,432 | ) | ||||
Increase in prepaid assets |
(619 | ) | (450 | ) | ||||
Increase in inventory |
(2,233 | ) | (1,169 | ) | ||||
(Increase) decrease in other current assets |
(724 | ) | 175 | |||||
Increase in accounts payable trade |
15,997 | 1,879 | ||||||
Increase (decrease) in other accrued liabilities |
635 | (153 | ) | |||||
Net cash provided by operating activities |
24,445 | 9,236 | ||||||
Cash flows from investing activities: |
||||||||
Additions to property and equipment, net |
(133,101 | ) | (24,835 | ) | ||||
Proceeds from sales of oil and gas properties |
18,721 | 11,013 | ||||||
Drilling and trucking transactions |
(6,082 | ) | — | |||||
Payment on investment in LNG project |
— | (772 | ) | |||||
Decrease in long term assets |
134 | 37 | ||||||
Net cash used in investing activities |
(120,328 | ) | (14,557 | ) | ||||
Cash flows from financing activities: |
||||||||
Stock issued for cash upon exercise of options |
902 | 3,312 | ||||||
Stock issued for cash, net |
— | 29,690 | ||||||
Proceeds from borrowings |
317,172 | 14,204 | ||||||
Payment of financing fees |
(6,965 | ) | (220 | ) | ||||
Repayment of borrowings |
(209,454 | ) | (15,496 | ) | ||||
Net cash provided by financing activities |
101,655 | 31,490 | ||||||
Net increase in cash and cash equivalents |
5,772 | 26,169 | ||||||
Cash at beginning of period |
2,078 | 2,271 | ||||||