UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
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 1-10578
VINTAGE PETROLEUM, INC.
(Exact name of registrant as specified in charter)
| Delaware | 73-1182669 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 110 West Seventh Street Tulsa, Oklahoma | 74119-1029 | |
| (Address of principal executive offices) | (Zip Code) |
(918) 592-0101
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at April 30, 2004 | |
| Common Stock, $0.005 Par Value | 64,679,458 |
-1-
VINTAGE PETROLEUM, INC.
FORM 10-Q
THREE MONTHS ENDED MARCH 31, 2004
| Page | ||||
| PART I. |
FINANCIAL INFORMATION |
|||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets as of March 31, 2004, and December 31, 2003 |
4 | |||
| Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and 2003 |
6 | |||
| 8 | ||||
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003 |
9 | |||
| 10 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 | ||
| Item 3. |
34 | |||
| Item 4. |
39 | |||
| PART II. |
OTHER INFORMATION |
|||
| Item 1. |
41 | |||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
41 | ||
| Item 3. |
41 | |||
| Item 4. |
41 | |||
| Item 5. |
42 | |||
| Item 6. |
42 | |||
| 43 | ||||
-2-
PART I
FINANCIAL INFORMATION
-3-
ITEM 1. FINANCIAL STATEMENTS
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
(In thousands, except shares
and per share amounts)
(Unaudited)
ASSETS
| March 31, 2004 |
December 31, 2003 | |||||
| CURRENT ASSETS: |
||||||
| Cash and cash equivalents |
$ | 67,887 | $ | 54,880 | ||
| Accounts receivable- |
||||||
| Oil and gas sales |
91,978 | 89,674 | ||||
| Joint operations |
9,497 | 9,359 | ||||
| Prepaids and other current assets |
20,883 | 14,702 | ||||
| Total current assets |
190,245 | 168,615 | ||||
| PROPERTY, PLANT AND EQUIPMENT, at cost: |
||||||
| Oil and gas properties, successful efforts method |
2,758,478 | 2,717,193 | ||||
| Oil and gas gathering systems and plants |
23,461 | 23,344 | ||||
| Other |
29,586 | 29,072 | ||||
| 2,811,525 | 2,769,609 | |||||
| Less accumulated depreciation, depletion and amortization |
1,564,035 | 1,535,715 | ||||
| Total property, plant and equipment, net |
1,247,490 | 1,233,894 | ||||
| OTHER ASSETS, net |
43,462 | 44,329 | ||||
| TOTAL ASSETS |
$ | 1,481,197 | $ | 1,446,838 | ||
See notes to unaudited consolidated financial statements.
-4-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(In thousands, except shares
and per share amounts)
(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
| March 31, 2004 |
December 31, 2003 | |||||
| CURRENT LIABILITIES: |
||||||
| Revenue payable |
$ | 31,178 | $ | 26,654 | ||
| Accounts payable - trade |
53,818 | 55,601 | ||||
| Current income taxes payable |
28,734 | 19,933 | ||||
| Derivative financial instruments payable |
23,386 | 7,876 | ||||
| Other payables and accrued liabilities |
81,563 | 70,028 | ||||
| Total current liabilities |
218,679 | 180,092 | ||||
| LONG-TERM DEBT |
687,844 | 699,943 | ||||
| DEFERRED INCOME TAXES |
49,659 | 54,302 | ||||
| LONG-TERM LIABILITY FOR ASSET RETIREMENT OBLIGATIONS |
91,298 | 89,076 | ||||
| OTHER LONG-TERM LIABILITIES |
1,150 | 939 | ||||
| COMMITMENTS AND CONTINGENCIES (Note 5) |
||||||
| STOCKHOLDERS’ EQUITY, per accompanying statement: |
||||||
| Preferred stock, $0.01 par, 5,000,000 shares authorized, zero shares issued and outstanding |
— | — | ||||
| Common stock, $0.005 par, 160,000,000 shares authorized, 65,007,064 and 64,720,975 shares issued and 64,558,458 and 64,281,199 outstanding, respectively |
325 | 324 | ||||
| Capital in excess of par value |
341,831 | 337,080 | ||||
| Retained earnings |
39,071 | 22,844 | ||||
| Accumulated other comprehensive income |
58,177 | 70,482 | ||||
| 439,404 | 430,730 | |||||
| Less treasury stock, at cost, 448,606 and 439,776 shares |
3,167 | 3,117 | ||||
| Less unamortized cost of restricted stock awards |
3,670 | 5,127 | ||||
| Total stockholders’ equity |
432,567 | 422,486 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 1,481,197 | $ | 1,446,838 | ||
See notes to unaudited consolidated financial statements.
-5-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | |||||||
| 2004 |
2003 | ||||||
| REVENUES: |
|||||||
| Oil, condensate and NGL sales |
$ | 119,964 | $ | 126,215 | |||
| Gas sales |
53,485 | 59,443 | |||||
| Sulfur sales |
558 | 506 | |||||
| Gas marketing |
22,256 | 32,920 | |||||
| Total revenues |
196,263 | 219,084 | |||||
| COSTS AND EXPENSES: |
|||||||
| Production costs |
45,723 | 37,284 | |||||
| Transportation and storage costs |
1,949 | 1,971 | |||||
| Production and ad valorem taxes |
5,696 | 4,733 | |||||
| Export taxes |
6,206 | 10,222 | |||||
| Exploration costs |
4,360 | 14,078 | |||||
| Gas marketing |
21,555 | 32,037 | |||||
| General and administrative |
16,904 | 13,454 | |||||
| Stock compensation |
3,762 | 952 | |||||
| Depreciation, depletion and amortization |
32,255 | 37,294 | |||||
| Impairment of proved oil and gas properties |
3,915 | — | |||||
| Accretion |
1,969 | 1,747 | |||||
| Other operating (income) expense |
(4,896 | ) | 1,176 | ||||
| Total costs and expenses |
139,398 | 154,948 | |||||
| OPERATING INCOME |
56,865 | 64,136 | |||||
| OTHER (INCOME) EXPENSE: |
|||||||
| Interest expense |
14,021 | 18,541 | |||||
| Loss on early extinguishment of debt |
9,903 | 1,426 | |||||
| (Gain) loss on disposition of assets |
(59 | ) | 650 | ||||
| Foreign currency exchange loss |
1,122 | 3,637 | |||||
| Other non-operating (income) expense |
(627 | ) | 221 | ||||
| Net other expense |
24,360 | 24,475 | |||||
| Income from continuing operations before income taxes and cumulative effect of change in accounting principle |
32,505 | 39,661 | |||||
| INCOME TAX PROVISION: |
|||||||
| Current |
12,648 | 14,463 | |||||
| Deferred |
722 | 2,480 | |||||
| Total income tax provision |
13,370 | 16,943 | |||||
| Income from continuing operations before cumulative effect of change in accounting principle |
19,135 | 22,718 | |||||
| INCOME FROM DISCONTINUED OPERATIONS, net of income tax provision of $38,226 |
— | 10,844 | |||||
| Income before cumulative effect of change in accounting principle |
19,135 | 33,562 | |||||
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, net of income tax provision of $4,104 |
— | 7,119 | |||||
| NET INCOME |
$ | 19,135 | $ | 40,681 | |||
See notes to unaudited consolidated financial statements.
-6-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | ||||||
| 2004 |
2003 | |||||
| BASIC INCOME PER SHARE: |
||||||
| Income from continuing operations before cumulative effect of change in accounting principle |
$ | 0.30 | $ | 0.36 | ||
| Income from discontinued operations |
— | 0.17 | ||||
| Income before cumulative effect of change in accounting principle |
0.30 | 0.53 | ||||
| Cumulative effect of change in accounting principle |
— | 0.11 | ||||
| Net income |
$ | 0.30 | $ | 0.64 | ||
| DILUTED INCOME PER SHARE: |
||||||
| Income from continuing operations before cumulative effect of change in accounting principle |
$ | 0.29 | $ | 0.35 | ||
| Income from discontinued operations |
— | 0.17 | ||||
| Income before cumulative effect of change in accounting principle |
0.29 | 0.52 | ||||
| Cumulative effect of change in accounting principle |
— | 0.11 | ||||
| Net income |
$ | 0.29 | $ | 0.63 | ||
| Weighted average common shares outstanding: |
||||||
| Basic |
64,332 | 63,590 | ||||
| Diluted |
64,980 | 64,811 | ||||
See notes to unaudited consolidated financial statements.
-7-
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(In thousands, except treasury shares and per share amounts)
(Unaudited)
| Common Stock |
Treasury Stock |
Capital Value |
Un - Awards |
Retained Earnings |
Accumulated Income |
Total |
|||||||||||||||||||||||
| Shares |
Amount |
||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2003 |
64,721 | $ | 324 | $ | (3,117 | ) | $ | 337,080 | $ | (5,127 | ) | $ | 22,844 | $ | 70,482 | $ | 422,486 | ||||||||||||
| Comprehensive income: |
|||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | 19,135 | — | 19,135 | |||||||||||||||||||||
| Foreign currency translation adjustment |
— | — | — | — | — | — | (1,978 | ) | (1,978 | ) | |||||||||||||||||||
| Change in value of derivatives, net of tax |
— | — | — | — | — | — | (10,327 | ) | |||||||||||||||||||||