VINTAGE PETROLEUM INC - 10-Q Quarterly Report

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 June 30, 2004

¨	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 July 30, 2004
Common Stock, $0.005 Par Value		65,174,644

VINTAGE PETROLEUM, INC.

FORM 10-Q

THREE MONTHS ENDED JUNE 30, 2004

TABLE OF CONTENTS


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of June 30, 2004, and December 31, 2003	4

	Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2004 and 2003	6

	Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income for the Six Months Ended June 30, 2004	8

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003	9

	Notes to Unaudited Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	45

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	47

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Submission of Matters to a Vote of Security Holders	48

Item 5.	Other Information	48

Item 6.	Exhibits and Reports on Form 8-K	48

	Signatures	50

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VINTAGE PETROLEUM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares

and per share amounts)

(Unaudited)

ASSETS


	June 30, 2004		December 31, 2003
CURRENT ASSETS:
Cash and cash equivalents	$	75,470	$	54,880
Accounts receivable–
Oil and gas sales		99,654		89,674
Joint operations		11,938		9,359
Prepaids and other current assets		17,413		14,702

Total current assets		204,475		168,615

PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, successful efforts method		2,796,217		2,717,193
Oil and gas gathering systems and plants		23,725		23,344
Other		30,071		29,072


		2,850,013		2,769,609

Less accumulated depreciation, depletion and amortization		1,582,080		1,535,715

Total property, plant and equipment, net		1,267,933		1,233,894

OTHER ASSETS, net		43,108		44,329

TOTAL ASSETS	$	1,515,516	$	1,446,838

See notes to unaudited consolidated financial statements.

VINTAGE PETROLEUM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

(In thousands, except shares

and per share amounts)

(Unaudited)

LIABILITIES AND STOCKHOLDERS’ EQUITY


	June 30, 2004		December 31, 2003
CURRENT LIABILITIES:
Revenue payable	$	33,984	$	26,654
Accounts payable – trade		51,779		55,601
Current income taxes payable		13,204		19,933
Derivative financial instruments payable		30,293		7,876
Other payables and accrued liabilities		80,627		70,028

Total current liabilities		209,887		180,092

LONG-TERM DEBT		699,046		699,943

DEFERRED INCOME TAXES		50,157		54,302

LONG-TERM LIABILITY FOR ASSET RETIREMENT OBLIGATIONS		91,809		89,076

OTHER LONG-TERM LIABILITIES		554		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, 65,392,733 and 64,720,975 shares issued and 64,937,989 and 64,281,199 outstanding, respectively		327		324
Capital in excess of par value		346,683		337,080
Retained earnings		73,235		22,844
Accumulated other comprehensive income		51,829		70,482

		472,074		430,730
Less treasury stock, at cost 454,744 and 439,776 shares		3,246		3,117
Less unamortized cost of restricted stock awards		4,765		5,127

Total stockholders’ equity		464,063		422,486

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,515,516	$	1,446,838

See notes to unaudited consolidated financial statements.

VINTAGE PETROLEUM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
REVENUES:
Oil, condensate and NGL sales	$	123,698		$	111,485		$	243,662		$	237,700
Gas sales		62,470			48,036			115,955			107,479
Sulfur sales		350			703			908			1,209
Gas marketing		23,884			26,741			46,140			59,661

Total revenues		210,402			186,965			406,665			406,049

COSTS AND EXPENSES:
Production costs		44,245			39,753			89,968			76,581
Transportation and storage costs		3,142			2,357			5,091			4,784
Production and ad valorem taxes		5,818			4,026			11,514			8,759
Export taxes		6,706			8,183			12,912			18,405
Exploration costs		9,573			32,449			13,933			46,527
Gas marketing		22,902			26,386			44,457			58,423
General and administrative		17,061			14,386			33,965			27,840
Stock compensation		2,176			1,482			5,938			2,434
Depreciation, depletion and amortization		29,550			34,783			61,805			72,077
Impairment of proved oil and gas properties		–			12,571			3,915			12,571
Accretion		1,970			1,832			3,939			3,579
Other operating (income) expense		1,151			403			(3,745	)		1,579

Total costs and expenses		144,294			178,611			283,692			333,559

OPERATING INCOME		66,108			8,354			122,973			72,490

OTHER (INCOME) EXPENSE:
Interest expense		12,674			18,016			26,695			36,557
Loss on early extinguishment of debt		–			–			9,903			1,426
(Gain) loss on disposition of assets		4			(305	)		(55	)		345
Foreign currency exchange (gain) loss		(1,960	)		3,514			(838	)		7,151
Other non-operating (income) expense		531			(1,665	)		(96	)		(1,444	)

Net other expense		11,249			19,560			35,609			44,035

Income (loss) from continuing operations before income taxes and cumulative effect of change in accounting principle		54,859			(11,206	)		87,364			28,455

INCOME TAX PROVISION (BENEFIT):
Current		13,520			16,369			26,168			30,832
Deferred		3,930			(18,888	)		4,652			(16,408	)

Total income tax provision (benefit)		17,450			(2,519	)		30,820			14,424

Income (loss) from continuing operations before cumulative effect of change in accounting principle		37,409			(8,687	)		56,544			14,031
INCOME FROM DISCONTINUED OPERATIONS, net of income tax provision of $38,226		–			–			–			10,844

Income (loss) before cumulative effect of change in accounting principle		37,409			(8,687	)		56,544			24,875
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, net of income tax provision of $4,104		–			–			–			7,119

NET INCOME (LOSS)	$	37,409		$	(8,687	)	$	56,544		$	31,994

See notes to unaudited consolidated financial statements.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents