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 September 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 October 29, 2004
Common Stock, $0.005 Par Value		65,749,693

VINTAGE PETROLEUM, INC.

FORM 10-Q

THREE MONTHS ENDED SEPTEMBER 30, 2004

TABLE OF CONTENTS


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

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

	Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2004 and 2003	6

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

	Consolidated Statements of Cash Flows for the Nine Months Ended September 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	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	49

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Submission of Matters to a Vote of Security Holders	52

Item 5.	Other Information	52

Item 6.	Exhibits	52

	Signatures	53

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PART I

FINANCIAL INFORMATION

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ITEM 1. FINANCIAL STATEMENTS

VINTAGE PETROLEUM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares

and per share amounts)

(Unaudited)

ASSETS


	September 30, 2004		December 31, 2003
CURRENT ASSETS:
Cash and cash equivalents	$	46,012	$	32,264
Accounts receivable -
Oil and gas sales		115,861		78,321
Joint operations		8,616		7,480
Deferred income taxes		21,513		—
Prepaids and other current assets		10,638		6,660
Assets of discontinued operations		253,387		224,321

Total current assets		456,027		349,046

PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, successful efforts method		2,023,933		1,835,588
Oil and gas gathering systems and plants		23,890		23,344
Other		27,903		26,334

		2,075,726		1,885,266
Less accumulated depreciation, depletion and amortization		908,462		829,055

Total property, plant and equipment, net		1,167,264		1,056,211

DEFERRED INCOME TAXES		14,558		—

OTHER ASSETS, net		42,513		41,581

TOTAL ASSETS	$	1,680,362	$	1,446,838

See notes to unaudited consolidated financial statements.

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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

(In thousands, except shares

and per share amounts)

(Unaudited)

LIABILITIES AND STOCKHOLDERS’ EQUITY


	September 30, 2004		December 31, 2003
CURRENT LIABILITIES:
Revenue payable	$	37,541	$	22,641
Accounts payable - trade		53,578		48,548
Current income taxes payable		21,815		17,316
Derivative financial instruments payable		59,968		7,551
Other payables and accrued liabilities		88,796		54,852
Liabilities of discontinued operations		79,454		46,093

Total current liabilities		341,152		197,001

LONG-TERM DEBT		676,547		699,943

DEFERRED INCOME TAXES		85,214		54,311

LONG-TERM LIABILITY FOR ASSET RETIREMENT OBLIGATIONS		77,577		72,158

DERIVATIVE FINANCIAL INSTRUMENTS PAYABLE AND OTHER		16,338		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, 66,181,811 and 64,720,975 shares issued and 65,657,693 and 64,281,199 outstanding, respectively		331		324
Capital in excess of par value		354,217		337,080
Retained earnings		96,974		22,844
Accumulated other comprehensive income		40,293		70,482

		491,815		430,730
Less treasury stock, at cost, 524,118 and 439,776 shares		4,319		3,117
Less unamortized cost of restricted stock awards		3,962		5,127

Total stockholders’ equity		483,534		422,486

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,680,362	$	1,446,838

See notes to unaudited consolidated financial statements.

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VINTAGE PETROLEUM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
REVENUES:
Oil, condensate and NGL sales	$	136,382		$	105,269		$	367,320		$	323,806
Gas sales		49,158			25,282			127,284			86,545
Sulfur sales		234			440			949			1,305
Gas marketing		17,897			15,445			50,131			59,978

Total revenues		203,671			146,436			545,684			471,634

COSTS AND EXPENSES:
Production costs		34,335			33,266			105,379			91,329
Transportation and storage costs		3,318			1,761			7,500			5,120
Production and ad valorem taxes		5,732			3,997			16,557			12,756
Export taxes		12,778			7,409			25,691			25,814
Exploration costs		12,435			6,061			21,000			17,395
Gas marketing		16,857			14,798			47,409			58,093
General and administrative		12,806			11,848			41,723			34,667
Stock compensation		1,153			1,861			7,091			4,295
Depreciation, depletion and amortization		26,720			21,392			72,687			65,463
Impairment of proved oil and gas properties		—			—			3,915			—
Accretion		1,685			1,523			4,932			4,422
Other operating (income) expense		1,671			(701	)		(1,933	)		941

Total costs and expenses		129,490			103,215			351,951			320,295

OPERATING INCOME		74,181			43,221			193,733			151,339

OTHER (INCOME) EXPENSE:
Interest expense		12,625			17,818			39,321			54,328
Loss on early extinguishment of debt		—			—			9,903			1,426
(Gain) loss on disposition of assets		(17	)		—			(72	)		667
Foreign currency exchange (gain) loss		(285	)		(915	)		(1,112	)		6,653
Other non-operating expense		15,721			818			15,991			41

Net other expense		28,044			17,721			64,031			63,115

Income from continuing operations before income taxes and cumulative effect of change in accounting principle		46,137			25,500			129,702			88,224

INCOME TAX PROVISION (BENEFIT):
Current		15,701			5,128			44,114			39,609
Deferred		3,024			5,034			5,115			(2,057	)

Total income tax provision		18,725			10,162			49,229			37,552

Income from continuing operations before cumulative effect of change in accounting principle		27,412			15,338			80,473			50,672
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of income tax provision (benefit) of $(184), $221, $130 and $25,480		(397	)		(3,583	)		3,086			(14,042	)

Income before cumulative effect of change in accounting principle		27,015			11,755			83,559			36,630
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, net of income tax provision of $4,104		—

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