Item 3 - -Legal Proceedings.
State statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. In addition, there are state statutes, rules and regulations governing conservation matters, including the unitization or pooling of oil and gas properties, establishment of maximum rates of production from oil and gas wells and the spacing, plugging and abandonment of such wells. Such statutes and regulations may limit the rate at which oil and gas could otherwise be produced from the Company's properties and may restrict the number of wells that may be drilled on a particular lease or in a particular field.
Item 3. Legal Proceedings.
The U. S. Environmental Protection Agency ("EPA") has identified the Company as a potentially responsible party ("PRP") for the cost of clean-up of "hazardous substances" at an oil field waste disposal site in Vermilion Parish, Louisiana. The Company estimates that the remaining cost of long-term clean-up of the site will be approximately $3.5 million, with the Company's percentage of responsibility to be approximately 3.05%. As of December 31, 1998, the Company has paid approximately $321,000 in costs related to this matter and has $92,000 accrued for the remaining liability. These costs have not been discounted to their present value. The EPA and the PRPs will continue to evaluate the site and revise estimates for the long-term clean-up of the site. There can be no assurance that the cost of clean-up and the Company's percentage responsibility will not be higher than currently estimated. In addition, under the federal environmental laws, the liability costs for the clean-up of the site is joint and several among all PRPs. Therefore, the ultimate cost of the clean-up to the Company could be significantly higher than the amount presently estimated or accrued for this liability.
The Company is party to additional lawsuits arising in the normal course of business. The Company intends to defend these actions vigorously and believes, based on currently available information, that adverse results or judgments from such actions, if any, will not be material to its financial position or results of operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Company's common stock is traded on the New York Stock Exchange.
At March 26, 1999 the number of holders of record of the Company's common stock without determination of the number of individual participants in security position was 3,492 with 5,247,705 shares outstanding. High and low sales prices for the Company's common stock for each quarter during the calendar years 1998 and 1997 are as follows:
The prices in the table above have been adjusted to give retroactive effect to the Company's one-for-eight reverse stock split in March 1998.
The Company has not paid a cash dividend on its Common Stock and does not intend to pay such a dividend in the foreseeable future.
Item 6.
Item 6. Selected Financial Data.
Selected Statement of Operations Data:
The following table sets forth selected financial data of the Company for each of the years in the five-year period ended December 31, 1998, which information has been derived from the Company's audited financial statements. This information should be read in connection with and is qualified in its entirety by the more detailed information in the Company's financial statements under Item 8 below and Item 7, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
- - -------- (a) No provision for income taxes is included in the consolidated statements of operations for the periods ended December 31, 1994 or the period from January 1, 1995 through August 14, 1995, for the operations of La/Cal Energy Partners (predecessor company), due to La/Cal Energy Partners being a partnership and income taxes were the responsibility of the individual partners of La/Cal Energy Partners. Certain unaudited pro forma information relating to the Company's results of operations, had La/Cal Energy Partners been a corporation for those periods, is shown above. (b) For purposes of this presentation the number of pro forma shares used for periods prior to August 15, 1995, is 2,470,653 shares (adjusted retroactively for the March 1998 reverse stock split), which is the number of shares issued by the Company in exchange for La/Cal Energy Partners net assets contributed. (c) Number of shares restated to retroactively adjust for one for eight reverse stock split in March 1998. (d) The above data reflects the operations solely of La/Cal Energy Partners for periods prior to August 15,1995, whereas such data reflects the operations of La/Cal Energy Partners combined with Patrick Petroleum Company for periods subsequent to August 15, 1995. (e) Includes current maturities.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
1997 Acquisition
On January 31, 1997, the Company acquired the oil and gas properties of La/Cal Energy Partners II ("La/Cal II") and certain working interest owners for a purchase price of $16.5 million ("La/Cal II Acquisition"). The purchase price consisted of $1.5 million cash, the assumption of $7.5 million La/Cal II long-term debt and the issuance of 750,000 shares of Series B convertible preferred stock of the Company ("Series B Preferred Stock") with an aggregate liquidation value of $7.5 million. In connection with the La/Cal II Acquisition, the Company increased its borrowing base to $22.5 million and borrowed an additional $9 million to retire or (payoff) La/Cal II's debt and to pay the cash portion of the purchase price. The Series B Preferred Stock accrues dividends at a rate of 8.25% per annum and each share of Series B Preferred Stock is convertible into 1.12 shares of common stock. Such shares are redeemable by the Company after January 31, 2001 at $10.00 per share.
Results of Operations
Year ended December 31, 1998 versus year ended December 31, 1997--Total revenues in 1998 amounted to $10,592,000 and were $2,309,000 (18%) lower than total revenues in 1997 due to lower oil and gas revenues and the loss of revenues from the pipeline joint venture. Oil and gas sales were $1,515,000 lower due primarily to lower oil and gas prices, partially offset by higher production volumes. Revenues from the pipeline joint venture were $-0- in 1998 compared to $1,078,000 in 1997 due to the sale of the asset in the fourth quarter of 1997.
The following table reflects the production volumes and pricing information for the periods presented:
Lease operating expense and production taxes were $2,822,000 for 1998 compared to $2,316,000 for 1997, or $506,000 higher, due primarily to the Company not incurring, in the 1997 period, ad valorem taxes related to the La/Cal II properties which were the responsibility of the La/Cal II partners. Additionally, the 1998 period includes eight additional producing wells and twelve months of lease operating expense and production taxes for the La/Cal II properties, compared to eleven months for 1997 due to the effective date of the acquisition being January 31, 1997. Depletion, depreciation and amortization was $4,094,000 in 1998 versus $4,863,000 in 1997, or $769,000 lower, substantially due to no amortization of the pipeline joint venture in 1998 compared to $741,000 in 1997.
The Company incurred $6,010,000 of exploration expense in 1998 compared to $3,206,000 in 1997. Included in the 1998 exploration expense is $3,684,000 of costs related to dry holes during the period versus $2,342,000 of such costs in 1997.
The Company recorded an impairment in the recorded value of certain oil and gas properties in the fourth quarter of 1998 in the amount of $1,076,000 due to lower oil prices and higher than expected depletion rates. This compares to an impairment of $550,000 recorded in the same period a year ago.
Interest expense was $1,910,000 in 1998 compared to $1,417,000 (35% higher) due to the Company having higher average debt outstanding, slightly offset by a lower effective interest rate in 1998 compared to 1997.
General and administrative expenses amounted to $2,399,000 for 1998 versus $2,628,000 in 1997.
The Company's preferred stock dividends amounted to $1,256,000 for 1998 compared to $1,205,000 in 1997 or $51,000 higher due to twelve months of dividends being paid on the Company's Series B Preferred Stock in the current year versus eleven months in the prior year.
Year ended December 31, 1997 versus year ended December 31, 1996--Total revenues in 1997 increased to $12,901,000 and were $3,132,000 (32%) higher than total revenues in 1996 due to increased oil and gas revenues, offset by lower revenues from the pipeline joint venture. Oil and gas sales were $3,664,000 higher due substantially to increased revenues as a result of the La/Cal II acquisition (effective January 31, 1997) along with increased gas volumes on the pre-acquisition properties, offset somewhat by lower oil and gas prices. Revenues from the pipeline joint venture were $459,000 lower in 1997 due to the sale of the asset in the fourth quarter of 1997.
The following table reflects the production volumes and pricing information for the periods presented:
Lease operating expense and production taxes were $2,316,000 for 1997 compared to $1,615,000 for 1996 or $701,000 higher due primarily to the addition of the La/Cal II properties. Depletion, depreciation and amortization was $4,863,000 versus $3,788,000 for 1996 or $1,075,000 higher due to the addition of the La/Cal II properties, offset by approximately $300,000 less amortization of the pipeline joint venture. Included in depletion, depreciation and amortization is depletion of oil and gas properties of $4,066,000 and $2,684,000, respectively.
The Company incurred $3,206,000 of exploration expense in 1997 compared to $1,149,000 in 1996. Included in the 1997 exploration expense is $2,342,000 of costs related to dry holes during the period versus $542,000 of such costs in 1996.
The Company recorded impairments in the recorded value of certain oil and gas properties in 1997 in the amount of $550,000.
Interest expense was $1,417,000 in 1997 compared to $828,000 due to borrowings by the Company of $9,000,000 on January 31, 1997 in connection with the La/Cal II Acquisition, resulting in higher average debt outstanding than for the prior year.
General and administrative expenses amounted to $2,628,000 for 1997 versus $2,096,000 in 1996 due largely to expenses associated with the addition of six employees in 1997.
The Company recorded a gain on the sale of its interest in the pipeline joint venture of $688,000 in 1997.
The Company's preferred stock dividends amounted to $1,205,000 for the twelve months ended December 31, 1997 compared to $645,000 for 1996. The increase was due to dividends paid on the Company's Series B Convertible Preferred Stock issued on January 31, 1997 in connection with the La/Cal II Acquisition.
Liquidity and Capital Resources
Net cash provided by operating activities was $4,517,000 in 1998 compared to $6,633,000 in 1997 and $4,292,000 in 1996. The Company's accompanying consolidated statements of cash flows identify major differences between net income (loss) and net cash provided by operating activities for each of the years presented.
Net cash used by investing activities amounted to $14,959,000 in 1998 compared to $6,007,000 in 1997 and $4,082,000 in 1996. The year ended December 31, 1998 is composed almost entirely of cash paid for
exploration and drilling capital expenditures of $14,879,000. The year ended December 31, 1997 reflects non-acquisition capital expenditures of $9,157,000 and of cash paid in connection with the purchase of oil and gas properties of $2,075,000. These amounts were offset by proceeds from sale of the Company's interest in the pipeline joint venture ($3,564,000) and sale of certain oil and gas properties located in Montana. The year ended December 31, 1996 amount is substantially comprised of $3,911,000 in capital expenditures.
Net cash provided by financing activities was $9,744,000 in 1998 compared to net cash used in financing activities of $177,000 in 1997 and $479,000 in 1996. The 1998 amount includes the borrowing of $11,500,000 by the Company under its line of credit offset by paydowns during the year of $500,000. Preferred stock dividends in 1998 amounted to $1,256,000 (Series A and Series B). The 1997 amount includes the borrowing of $9,000,000 by the Company under its line of credit which was used to pay off the debt assumed in the La/Cal II Acquisition and to pay the cash portion of the purchase price. The 1997 amount also includes other borrowings of $3,000,000 against its line of credit offset by paydowns during the year of $3,500,000 and the payoff of La/Cal II debt of $7,464,000. Preferred stock dividends in 1997 amounted to $1,205,000 (Series A and Series B). The 1996 amount primarily consists of the borrowing of $1,800,000 against the Company's line of credit partially offset by debt paydowns of $1,550,000 and the payment of preferred stock dividends of $645,000 (Series A only).
At December 31, 1998, the Company was not in compliance with a restrictive covenant of its existing credit facility and, accordingly, the entire principal amount outstanding is presented in current maturities of long-term debt. The amount outstanding under the credit facility as of December 31, 1998 was $29,500,000. On March 29, 1999 the Company signed a preliminary agreement with Compass Bank to restructure its existing credit facility. The preliminary credit agreement will allow the Company to be in compliance with all covenants upon execution of the agreement. The preliminary agreement provides for a borrowing base facility of $20,500,000 with monthly reductions of $50,000 on April 1, 1999 and May 1, 1999, $200,000 on June 1, 1999 and $300,000 on July 1, 1999 and each month thereafter. Semi-annual borrowing base determinations will be made beginning July 1, 1999 based in part on the Company's oil and gas reserve information. The maturity date for amounts drawn under the Borrowing Base facility is February 1, 2001. Interest on such facility is based on LIBOR plus 2% and rates are set on specific draws for one, two, three or six month periods at the option of the Company.
The preliminary agreement also establishes a Tranche A facility in the amount of $9,000,000. The maturity date for the Tranche A facility is December 1, 1999. The Tranche A requires that excess cash flow from operations, as defined in the preliminary agreement, be applied to outstanding principal and interest until the maturity date, with interest based on the Compass Bank Index Rate plus 2%.
The preliminary agreement requires the net proceeds of asset sales be used to extinguish outstanding principal and interest under the borrowing base facility and Tranche A. Additionally, under the terms of the preliminary agreement, the Company may not make any distributions or pay dividends, including dividends on any class of its preferred stock, until Tranche A is paid in full.
Additionally, budgeted capital expenditures are required to be approved by the Lender prior to closing, and such approval shall be effective for a period of six months or until such time as an increase is requested. Furthermore, provided actual capital expenditures do not exceed the approved budgeted amount, the determination of capital expenditures is at the sole discretion of the Company. The preliminary agreement also requires that the Company's vendor accounts payable balance shall not exceed $2,500,000 as of June 30, 1999. The Company's vendor accounts payable balance was $3,721,000 at December 31, 1998. The preliminary agreement is subject to definitive documentation and Lender credit approval.
The terms of the Company's Series A Preferred Stock provide that the Company will not incur additional debt after such time as it reports financial results which show the Company's stockholders' equity to be less than the liquidation preference of the Series A Preferred Stock. As of December 31, 1998, the Company's stockholders' equity was approximately $4.9 million and the liquidation preference on the outstanding shares of the Series A Preferred Stock was approximately $7.9 million. As a result, the Company is unable to incur additional debt under its credit facility or from other sources at the present time.
Due to the Company's existing current working capital deficiency, required pay downs under its credit facility and the restrictions imposed by the Series A Preferred Stock, management is exploring a number of alternatives that are directed toward making the Company profitable and improving its liquidity. The principal strategies include:
1) raising additional capital through the issuance of equity securities, or a combination of equity and subordinated debt;
2) acquisition of value enhancing oil and gas properties that offer additional development opportunities and increased cash flow;
3) mergers and/or acquisitions by other entities;
4) reducing operating costs;
5) sale of certain oil and gas properties;
6) renegotiation or amendment of the Company's credit facility and capital structure
As with any plan of this nature, its ultimate realization will depend upon the cooperation of creditors, potential investors and others. As a result, the outcome of the plan cannot presently be determined and no adjustments related to the specific considerations of management's plan have been made in the accompanying consolidated financial statements. Should the plan not be completed, the Company may not be able to liquidate liabilities as they come due. In addition, the Company's current liquidity situation and its agreement with Compass Bank have resulted in a suspension of new drilling expenditures until such time as certain aforementioned principle strategies have been effected.
Quarterly Cash Dividends
The Company announced on March 23, 1999 that it has suspended payment of its regular quarterly cash dividend on both classes of its Preferred Stock. This measure was taken to conserve cash for corporate and operating purposes and was precipitated by the recent drop in commodity prices. The Company has no plans to reinstate the cash dividends in the foreseeable future.
Year 2000
The Company is in the process of assessing the ability of its various electronic operating systems, and those of significant third parties, to appropriately consider periods and dates after December 31, 1999. The Company's senior financial management has taken responsibility for identifying, addressing and monitoring its Year 2000 issues. These individuals report to the Audit Committee of the Board of Directors on a periodic basis. For Company systems identified as not being Year 2000 compliant, the Company has developed plans to correct these systems and expects to be compliant on the systems by the second quarter of 1999.
As for third parties with which the Company has a material relationship, the Company is in various stages of discussions and conclusions related to the ability of those third parties to become compliant and the related timing thereof.
The estimated costs associated with becoming Year 2000 compliant are not expected to be material to the Company.
The Company has begun, but not yet completed, a comprehensive analysis of the operational problems and costs (including loss of revenues) that would be reasonably likely to result from the failure by the Company and certain third parties to complete efforts necessary to achieve Year 2000 compliance timely. A contingency plan has not been developed for dealing with the most reasonably likely worst case scenario, and such scenario has not yet been clearly identified. The Company currently plans to complete such analysis and contingency planning by the second quarter of 1999.
The failure to correct a material Year 2000 problem could result in an interruption in, or failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers and customers, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition. The Company's Year 2000 efforts are expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem. The Company believes that, with the implementation of new business systems and completion of the various above-mentioned tasks as scheduled, the possibility of interruptions to normal operations should be significantly reduced.
Stock Listing
The Company was notified by the New York Stock Exchange that it is not in compliance with certain of the Exchange's minimum financial criteria for listed companies. The Company submitted a three-year business plan to the Exchange in response to the notice. The Exchange accepted the Company's business plan and will monitor its compliance with the plan on a quarterly basis. As described above, the Company's liquidity situation may make it difficult for the Company to adhere to this business plan. If the Company fails to do so, there can be no assurance that the New York Stock Exchange will not delist the Company common stock.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Debt and debt-related derivatives
The Company is exposed to interest rate risk on its short-term and long-term debt with variable interest rates ($29.5 million at December 31, 1998). Based on the overall interest rate exposure on variable rate debt at December 31, 1998 a hypothetical 2% change in the interest rates would not materially affect the Company's financial position, net income or liquidity.
Disclosure Regarding Forward-Looking Statements
This Annual Report on Form 10-K 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 facts included in this Annual Report on Form 10-K regarding reserve estimates, planned capital expenditures, future oil and gas production and prices, future drilling activity, the Company's financial position, the ability to become year 2000 compliant, 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 be 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 estimate and such revisions, if significant, would change the schedule of any further production and development drilling. Accordingly, reserve estimates are generally different from the quantities of oil and natural gas that are ultimately recovered. Additional important factors that could cause actual results to differ materially from the Company's expectations include changes in oil and gas prices, changes in regulatory or environmental policies, production difficulties, transportation difficulties and future drilling results. 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.
Item 8.
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders Goodrich Petroleum Corporation:
We have audited the accompanying consolidated balance sheets of Goodrich Petroleum Corporation and Subsidiaries as of December 31, 1998 and 1997, and the related consolidated statements of operations, stockholders' equity, comprehensive income and cash flows for each of the years in the three year period ended December 31, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Goodrich Petroleum Corporation and Subsidiaries as of December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 1998, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in note C to the consolidated financial statements, working capital deficiencies, required payments under the Company credit facility and restrictions imposed by the Company's Series A Preferred Stock raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are discussed in note C. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
KPMG LLP
Shreveport, Louisiana March 29, 1999
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
See notes to consolidated financial statements.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
See notes to consolidated financial statements.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
See notes to consolidated financial statements.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1998, 1997, and 1996
- - ----- * All share and dollar amounts have been restated to retroactively reflect the March 1998 reverse stock split
See notes to consolidated financial statements.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE A--Description of Business
The Company is in the primary business of the exploration and production of crude oil and natural gas. The subsidiaries have interests in such operations in seven states, primarily in Louisiana and Texas. Two of the Company's subsidiaries also had a minority interest in a natural gas pipeline joint venture located in the state of Texas until such interest was sold in 1997.
NOTE B--Business Combinations
On January 31, 1997, the Company acquired the oil and gas properties of La/Cal Energy Partners II ("La/Cal II") and certain working interest owners for a purchase price of $16.5 million ("La/Cal II Acquisition"). The purchase price was comprised of $1.5 million cash, the assumption of $7.5 million of La/Cal II long-term debt and the issuance of 750,000 shares of Series B convertible preferred stock of the Company ("Series B Preferred Stock") with an aggregate liquidation value of $7.5 million. In connection with the La/Cal II Acquisition, the Company borrowed an additional $9 million under its bank credit facility, which was used to repay $7.5 million of La/Cal II debt and to pay the $1.5 million cash portion of the purchase price. The Series B Preferred Stock has a dividend rate of 8.25% per annum and each share of Series B Preferred Stock is convertible into 1.12 shares of common stock. Such shares are redeemable by the Company after January 31, 2001 at $10.00 per share.
The La/Cal II acquisition was accounted for as a purchase business combination and the operations of the related properties are included in the Company's results of operations effective January 31, 1997.
NOTE C--Liquidity and Management's Plan
Liquidity--As disclosed in Note G, the Company's current liabilities include the outstanding principal balance under the Company's credit facility of $29,500,000. Additionally, the Company is unable to incur additional debt under its credit facility or from any other sources until such time as its stockholders' equity balance is greater than the liquidation preference of the Series A Preferred Stock of approximately $7.9 million.
Management's Plan--Due to the Company's existing current working capital deficiency, required pay downs under its credit facility and the restrictions imposed by the Series A Preferred Stock, management is exploring a number of alternatives that are directed toward making the Company profitable and improving its liquidity. The principal strategies include:
1) raising additional capital through the issuance of equity securities; or a combination of equity and subordinated debt;
2) acquisition of value enhancing oil and gas properties that offer additional development opportunities and increased cash flow;
3) mergers and/or acquisitions by other entities;
4) reducing operating costs;
5) sale of certain oil and gas properties;
6) renegotiation or amendment of the Company's credit facility and capital structure
As with any plan of this nature, its ultimate realization will depend upon the cooperation of creditors, potential investors and others. As a result, the outcome of the plan cannot presently be determined and no
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
adjustments related to the specific considerations of management's plan have been made in the accompanying consolidated financial statements. Should the plan not be completed, the Company may not be able to liquidate liabilities as they come due.
NOTE D--Summary of Significant Accounting Policies
Principles of Consolidation--The consolidated financial statements include the financial statements of Goodrich Petroleum Corporation, its wholly-owned subsidiaries, and one of its wholly-owned subsidiary's three wholly-owned subsidiaries. Significant intercompany balances and transactions have been eliminated in consolidation.
Oil and gas revenues--Oil and gas revenues are recorded using the accrual method of accounting.
Property and Equipment--The Company uses the successful efforts method of accounting for exploration and development expenditures.
Leasehold acquisition costs are capitalized. When proved reserves are found on an undeveloped property, leasehold cost is reclassified to proved properties. Significant undeveloped leases are reviewed periodically, and a valuation allowance is provided for any estimated decline in value. Cost of all other undeveloped leases is amortized over the estimated average holding period of the leases.
Costs of exploratory drilling are initially capitalized, but if proved reserves are not found, the costs are subsequently expensed. All other exploratory costs are charged to expense as incurred. Development costs are capitalized, including the cost of unsuccessful development wells.
The Company follows SFAS No. 121 and recognizes an impairment is when the net of future cash inflows expected to be generated by an identifiable long- lived asset and cash outflows expected to be required to obtain those cash inflows is less than the carrying value of the asset. The Company performs this comparison for its oil and gas properties on a field-by-field basis. The amount of such loss is measured based on the difference between the discounted value of such net future cash flows and the carrying value of the asset. The Company recorded such impairments in 1998 and 1997 in the amounts of $1,076,000 and $550,000, respectively. The impairments were the result of certain fields depleting earlier than anticipated.
Depreciation and depletion of producing oil and gas properties are provided under the unit-of-production method. Proved developed reserves are used to compute unit rates for unamortized tangible and intangible development costs, and proved reserves are used for unamortized leasehold costs. Estimated dismantlement, abandonment, and site restoration costs, net of salvage value, are considered in determining depreciation and depletion provisions.
Gains and losses on disposals or retirements that are significant or include an entire depreciable or depletable property unit are included in income. All other dispositions, retirements, or abandonments are reflected in accumulated depreciation, depletion, and amortization.
Cash and Cash Equivalents--Cash and cash equivalents include cash on hand, demand deposit accounts and temporary cash investments with maturities of ninety days or less at date of purchase.
Marketable Equity Securities--The Company has classified its investment in marketable equity securities as available for sale. Accordingly, unrealized holding gains and losses are excluded from earnings and are reported as other comprehensive income until realized. The Company sold its marketable equity securities in January 1999.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
Investment in Pipeline Joint Venture--Prior to its sale in October 1997, the Company's investment consisted of a 20% interest in an intrastate natural gas pipeline joint venture. The Company's carrying basis in the investment was established at August 15, 1995 (fair value) and was being amortized on a basis which matched the amortization with the monthly maximum average contract quantities over the estimated remaining term of the joint venture. Amortization amounted to $-0-, $741,000 and $1,060,000 for the years ended December 31, 1998, 1997 and 1996, respectively. The Company recorded its equity in joint venture earnings as revenues in the statement of operations in the periods when the contract payments were earned.
Income Taxes--The Company follows the provisions of SFAS No. 109, Accounting for Income Taxes which requires income taxes be accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Earnings Per Share--Basic income per Common share is computed by dividing net income available for common stockholders, for each reporting period by the weighted average number of Common shares outstanding during the period. Diluted income per Common share is computed by dividing net income available for common stockholders for each reporting period by the weighted average number of Common shares outstanding during the period, plus the effects of potentially dilutive Common shares.
Stock Based Compensation--The Company uses SFAS No. 123, Accounting for Stock-Based Compensation, which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 Accounting for Stock Issued to Employees and provide pro forma net income and pro forma earnings per share and other disclosures for employee stock options grants made in 1995 and future years as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the disclosure provisions of SFAS No. 123.
Commitments and Contingencies--Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Recoveries from third parties which are probable of realization are separately recorded, and are not offset against the related environmental liability.
Use of Estimates--Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
NOTE E--Fair Value of Financial Instruments
The following presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 1998 and 1997.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents, accounts receivable, accounts payables and accrued liabilities: The carrying amounts approximate fair value because of the short maturity of those instruments. Therefore, these instruments were not presented in the table above.
Marketable equity securities: Fair value is based on bid prices published in financial media.
Other liabilities and long-term debt: The fair value is estimated by discounting the future cash flows of each instrument at rates currently offered to the Company for similar debt instruments of comparable maturities by the Company's bankers.
NOTE F--Accrued Liabilities
Accrued liabilities as of December 31, 1998 and 1997 consisted of the following:
NOTE G--Indebtedness
Indebtedness at December 31, 1998 and 1997 consists of the following:
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
At December 31, 1998, the Company was not in compliance with a restrictive covenant of its existing credit facility, and, accordingly, the entire principal amount outstanding is presented in current maturities of long-term debt. The amount outstanding under the credit facility as of December 31, 1998 was $29,500,000. On March 29, 1999 the Company signed a preliminary agreement with Compass Bank to restructure its existing credit facility. The preliminary credit agreement will allow the Company to be in compliance with all covenants upon execution of the agreement. The preliminary agreement provides for a borrowing base facility of $20,500,000 with monthly reductions of $50,000 beginning on April 1, 1999 and May 1, 1999, $200,000 on June 1, 1999, and $300,000 on July 1, 1999 and each month thereafter. Semi-annual borrowing base determinations will be made beginning July 1, 1999 based in part on the Company's oil and gas reserve information. The maturity date for amounts drawn under the bank Borrowing Base facility is February 1, 2001. Interest on such facility is based on LIBOR plus 2% and rates are set on specific draws for one, two, three or six month periods at the option of the Company.
The preliminary agreement also establishes a Tranche A facility in the amount of $9,000,000. The maturity date for the Tranche A facility is December 1, 1999. The Tranche A requires that excess cash flow from operations, as defined in the agreement, be applied to outstanding principal and interest until the maturity date, with interest based on the Compass Bank Index Rate plus 2%.
The preliminary agreement requires the net proceeds of asset sales be used to extinguish outstanding principal and interest under the borrowing base facility and Tranche A. Additionally, under the terms of the preliminary agreement, the Company may not make any distributions or pay dividends, including dividends on any class of its preferred stock, until Tranche A is paid in full.
Additionally, budgeted capital expenditures are required to be approved by the Lender prior to closing, and such approval shall be effective for a period of six months or until such time as an increase is requested. Furthermore, provided actual capital expenditures do not exceed the approved budgeted amount, the determination of capital expenditures is at the sole discretion of the Company. The preliminary agreement also requires that the Company's vendor accounts payable balance shall not exceed $2,500,000 as of June 30, 1999. The Company's vendor accounts payable balance was $3,721,000 at December 31, 1998. The preliminary agreement is subject to definitive documentation and Lender credit approval.
Substantially all of the Company's assets are pledged to secure this credit facility.
Interest paid during 1998, 1997 and 1996 amounted to $1,904,809, $1,038,221 and $562,593, respectively.
NOTE H--Stockholders' Equity
Common Stock--On March 12, 1998 the Company effected a one for eight reverse stock split of its common stock. All share and per share amounts of all periods presented have been adjusted to retroactively give effect to the reverse stock split.
At December 31, 1998 unissued shares of Goodrich common stock were reserved in the amount of 1,167,717 shares for the conversion of convertible preferred stock and 342,692 shares for stock option plans.
Preferred Stock
The Series A Convertible Preferred Stock has a par value of $1.00 per share with a liquidation preference of $10.00 per share, and is convertible at the option of the holder at any time, unless earlier redeemed, into shares of Common Stock of the Company at an initial conversion rate of .417 shares of Common stock per share of Series A Preferred. The Series A Preferred Stock also will automatically convert to Common Stock if the closing price for the Series A Preferred Stock exceeds $15.00 per share for ten consecutive trading days. The Series A Preferred Stock is redeemable in whole or in part, at $12.00 per share, plus accrued and unpaid dividends. Dividends on the Series A Preferred Stock accrue at an annual rate of 8% and are cumulative.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
The Company issued 750,000 shares of Series B Convertible Preferred Stock in connection with its acquisition of the La/Cal II properties on January 31, 1997. The Series B Convertible Preferred Stock has a par value of $1.00 per share with a liquidation preference of $10.00 per share and rank junior to the Series A Preferred Stock. The shares of Series B Preferred Stock are convertible at the option of the holder at any time, unless earlier redeemed, into shares of Common Stock of the Company at the conversion rate of 1.12 shares of Common Stock per share of Series B Preferred Stock. The Series B Preferred Stock are not redeemable by the Company prior to January 31, 2001, and subsequently, are redeemable at $10.00 per share. Dividends on the Series B Preferred Stock accrue at an annual rate of 8.25% and are cumulative.
Stock Option and Incentive Programs--Goodrich currently has two plans which provide for stock option and other incentive awards for the Company's key employees, consultants and directors. The Goodrich Petroleum Corporation 1995 Stock Option Plan allows the Board of Directors to grant stock options, restricted stock awards, stock appreciation rights, long-term incentive awards and phantom stock awards, or any combination thereof to key employees and consultants. The Goodrich Petroleum Corporation 1997 Director Compensation Plan provides for the grant of stock and options to each director who is not and has never been an employee of the Company. Additionally, Goodrich assumed certain outstanding stock options of Patrick as a result of the business combination in 1995.
The Goodrich plans authorize grants of options to purchase up to a combined total of 437,500 shares of authorized but unissued common stock. Stock options are generally granted with an exercise price equal to the stock's fair market value at the date of grant and all stock options granted under the 1995 Stock Option Plan generally have ten year terms and five year pro rata vesting.
The per share weighted-average fair value of stock options granted during 1998, 1997 and 1996 was $2.17, $2.57 and $3.06 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: 1998--expected dividend yield 0%, risk-free interest rate of 7.5%, and an expected life of 6 years; 1997--expected dividend yield 0%, risk- free interest rate of 7.5%, and an expected life of 6 years; 1996--expected dividend yield 0%, risk-free interest rate of 7.5%, and an expected life of 6 years; expected volatility of stock over expected life of the options--35%.
The Company applies APB Opinion No. 25 in accounting for its plans and, accordingly, no compensation cost has been recognized for its stock options in the financial statements. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's net income (loss) would have been reduced to the pro forma amounts indicated below:
Earnings Per Share--Both series of the Company's convertible preferred stock and its stock options are considered to be potential common stock but have not been included in the computation of diluted earnings per share because to do so would have been antidillutive for all periods presented.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
Stock option transactions during 1998, 1997 and 1996 were as follows:
At the February 25, 1999 meeting, the Board of Directors approved a stock option surrender/regrant program whereby employees and directors of the Company could surrender their present options and be regranted options equal to 75% of their previous number of options. Vesting periods for the new options began with the regrant date and the options have an exercise price equal to the closing stock price on the date of declaration by the Board of Directors.
NOTE I--Commitments and Contingencies
The U.S. Environmental Protection Agency ("EPA") has identified the Company as a potentially responsible party ("PRP") for the cost of clean-up of "hazardous substances" at an oil field waste disposal site in Vermilion Parish, Louisiana. The Company has estimated that the remaining cost of long- term clean-up of the site will be approximately $3.5 million with the Company's percentage of responsibility to be approximately 3.05%. As of December 31, 1998, the Company has paid approximately $321,000 in costs related to this matter and has $92,000 accrued for the remaining liability. These costs have not been discounted to their present value. The EPA and the PRPs will continue to evaluate the site and revise estimates for the long-term clean-up of the site. There can be no assurance that the cost of clean-up and the Company's percentage responsibility will not be higher than currently estimated. In addition, under the federal environmental laws, the liability costs for the
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
clean-up of the site is joint and several among all PRPs. Therefore, the ultimate cost of the clean-up to the Company could be significantly higher than the amount presently estimated or accrued for this liability.
Additionally, the Company is party to a number of lawsuits arising in the normal course of business. The Company has defended and intends to continue to defend these actions vigorously and believes, based on currently available information, that adverse results or settlements, if any, in excess of insurance coverage or amounts already provided, will not be material to its financial position, liquidity or results of operations.
NOTE J--Income Taxes
Income tax expense for the years ending December 31, 1998, 1997 and the period from August 15, 1996 through December 31, 1996 consists of:
Following is a reconciliation of the U.S. statutory income tax rate to the Company's effective rate on income (loss) before income taxes for the years ended December 31, 1998, 1997 and 1996:
The significant components of deferred income tax expense for the years ended December 31, 1998, 1997 and 1996 are as follows:
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1998 and 1997 are presented below.
The valuation allowance for deferred tax assets increased $2,221,000 for the year ended December 31, 1998 and decreased $3,845,000 for the year ended December 31, 1997. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based primarily upon the level of projections for future taxable income generated primarily by the reversal of future taxable temporary differences over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowance at December 31, 1998. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
The following table summarizes the amounts and expiration dates of operating loss and investment tax credit carryforwards:
As a result of the August 15, 1995 business combination, the Company's annual utilization of its net operating and statutory depletion carryforwards generated prior to the business combination are limited under Internal Revenue Code Section 382. Such limitation is determined annually and is comprised of a base amount of $1,682,797 plus any recognized "built in gains" existing at August 15, 1995. Such limitation amounted to $13,056,000 in 1997 and is estimated to be $19,727,000 in 1998.
The Company's statutory depletion carryforwards and AMT credit carryovers have no expiration date.
The Company paid income taxes of $4,344, $0 and $107,237 in 1998, 1997 and 1996, respectively.
NOTE K--Related Party Transactions.
The Company entered into transactions with Goodrich Oil Company as described below. Goodrich Oil Company is owned by Henry Goodrich who is the chairman of the Company and the father of Walter G. Goodrich, the Company's President and Chief Executive Officer.
During 1998, 1997 and 1996, the Company paid Goodrich Oil Company $0, $74,981 and $118,775 for certain general and administrative expenses. There were no amounts payable to Goodrich Oil Company at December 31, 1998 and 1997. Goodrich Oil Company ceased to exist as an operating company in May 1997.
The Company paid $180,000, $167,500 and $150,000 to the Company's Chairman, Mr. Henry Goodrich during 1998, 1997 and 1996, respectively, under a consulting agreement which expires in August 2000.
NOTE L--Natural Gas and Crude Oil Cost Data and Results of Operations.
The following reflects the Company's capitalized costs related to natural gas and oil activities at December 31, 1998 and 1997:
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
The following table reflects certain data with respect to natural gas and oil property acquisitions, exploration and development activities:
- - -------- (a) Includes properties acquired in the La/Cal II Acquisition including portions funded with Serial B Preferred Stock ($7,500,000)
Results of operations for natural gas and oil producing activities follow:
No income taxes have been reflected above for the Company due to its estimate that net operating loss and statutory depletion loss carryforwards will be utilized to offset future taxable income.
NOTE M--Concentrations of Credit Risk and Significant Customers
Due to the nature of the industry the Company sells its oil and natural gas production to a limited number of purchasers and, accordingly, amounts receivable from such purchasers could be significant. Additionally, prior to the sale of the Company's interest in its pipeline joint venture in 1997, it received net monthly payments from its partner, Mitchell Marketing Company. Revenues from these sources as a percent of total revenues for the periods presented were as follows:
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
NOTE N--Sales of Assets
On January 5, 1999 the Company sold its investment in marketable equity securities. Proceeds from the sale amounted to $240,000 and resulted in a realized loss of $520,000.
On April 22, 1998 the Company sold its interest in certain oil and gas properties located in Texas for $49,000 resulting in a gain of $4,000.
On October 16, 1997, the Company sold its 20% interest in a natural gas pipeline joint venture. The adjusted sales price was $3,564,000 and the Company recognized a gain on the sale (both pre-tax and after-tax) in the fourth quarter of 1997 of $688,304.
The Company sold its interests in certain oil and gas properties located in Montana for $370,000 in 1997, resulting in a gain of $18. The Company sold its interest in certain oil and gas properties located in North Dakota for $325,000 in 1996, resulting in a gain of $88,000.
NOTE O--Acquisition of Oil Gas Properties
On January 31, 1997, the Company acquired the oil and gas properties of La/Cal Energy Partners II ("La/Cal II") and certain working interest owners for a purchase price of $16.5 million ("La/Cal II Acquisition"). The purchase price was comprised of $1.5 million cash, the assumption of $7.5 million La/Cal II long-term debt and the issuance of 750,000 shares of Series B convertible preferred stock of the Company ("Series B Preferred Stock") with an aggregate liquidation value of $7.5 million. In connection with the La/Cal II Acquisition, the Company increased its borrowing base to $22.5 million and borrowed an additional $9 million to payoff La/Cal II's debt and to pay the cash portion of the purchase price.
Selected results of operations on a pro forma basis as if the La/Cal II Acquisition had occurred on January 1, 1997 and January 1, 1996, respectively are as follows:
NOTE P--Supplemental Oil and Gas Reserve Information (Unaudited)
The supplemental oil and gas reserve information that follows is presented in accordance with SFAS No. 69, Disclosures about Oil and Gas Producing Activities. The schedules provide users with a common base for preparing estimates of future cash flows and comparing reserves among companies. Additional background information follows concerning the schedules.
Schedules 1 and 2--Estimated Net Proved Oil and Gas Reserves
Substantially all of the Company's reserve information related to crude oil, condensate, and natural gas liquids and natural gas was compiled based on evaluations performed by Coutret and Associates, Inc. All of the subject reserves are located in the continental United States.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
Many assumptions and judgmental decisions are required to estimate reserves. Quantities reported are considered reasonable but are subject to future revisions, some of which may be substantial, as additional information becomes available. Such additional knowledge may be gained as the result of reservoir performance, new geological and geophysical data, additional drilling, technological advancements, price changes, and other factors.
Regulations published by the Securities and Exchange Commission define proved reserves as those volumes of crude oil, condensate, and natural gas liquids and natural gas that geological and engineering data demonstrate with reasonable certainty are recoverable from known reservoirs under existing economic and operating conditions. Proved developed reserves are those volumes expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves are those volumes expected to be recovered as a result of making additional investment by drilling new wells on acreage offsetting productive units or recompleting existing wells.
Schedule 3--Standardized Measure of Discounted Future Net Cash Flows to Proved Oil and Gas Reserves
SFAS No. 69 requires calculation of future net cash flows using a ten percent annual discount factor and year end prices, costs, and statutory tax rates, except for known future changes such as contracted prices and legislated tax rates.
The calculated value of proved reserves is not necessarily indicative of either fair market value or present value of future cash flows because prices, costs, and governmental policies do not remain static; appropriate discount rates may vary; and extensive judgment is required to estimate the timing of production. Other logical assumptions would likely have resulted in significantly different amounts. Average crude oil prices received for oil and the average price received by well for natural gas, effective at the end of each year, were used for this calculation, and were $9.37 per bbl and $2.24 per Mcf, respectively as of December 31, 1998, and $16.50 per Bbl and $2.59 per Mcf, respectively as of December 31, 1997, and $23.88 per Bbl and $4.17 per Mcf, respectively as of December 31, 1996. Oil prices have subsequently increased while gas prices have subsequently declined from December 31, 1998 levels.
Schedule 3 also presents a summary of the principal reasons for change in the standard measure of discounted future net cash flows for each of the three years in the period ended December 31, 1998.
Schedule 1--Estimated Net Proved Gas Reserves (Mcf)
Schedule 2--Estimated Net Proved Oil Reserves (Barrels)
Schedule 3--Standardized Measure of Discounted Future Net Cash Flows Related to Proved Oil and Gas Reserves
- - -------- (a) Taxable income for 1998 period was entirely offset by available net operating loss carry forwards.
The following are the principal sources of change in the standardized measure of discounted net cash flows for the years shown:
GOODRICH PETROLEUM CORPORATION
Consolidated Quarterly Income Information
(Unaudited)
Prior to the sale of the Company's pipeline joint venture interest in the fourth quarter of 1997, the Company's quarterly revenues and costs and expenses were impacted by the fact that the pipeline joint venture contract required higher revenue payments in November through March versus April through October. Accordingly, the Company recorded the revenues as earned and matched related amortization with such revenues. Related revenue and amortization amounts for the first, second, third and fourth quarters of 1997 were approximately $551,000, $268,000, $266,000 and $0 and $392,000, $174,000, $174,000 and $0, respectively.
The first, second, third and fourth quarter of 1998 cost and expense amounts contain costs amounting to $0, $2,107,000, $1,496,000 and $81,000, respectively, related to dry holes. The fourth quarter amount also contains impairment of oil and gas properties of $1,076,000.
The third and fourth quarter 1997 cost and expense amounts contain costs amounting to $472,000 and $1,855,000, respectively, related to dry holes. The fourth quarter amount also contains impairment of oil and gas properties of $550,000.
All earnings (loss) per share information has been adjusted to give retroactive effect to the one-for-eight reverse stock split in March 1998.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
*
Item 11.
Item 11. Executive Compensation.
*
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
*
Item 13.
Item 13. Certain Relationships and Related Transactions.
*
*Reference is made to information under the captions "Election of Directors", "Executive Compensation", "Security Ownership of Certain Beneficial Owners and Management", and "Certain Relationships and Related Transactions", in the Company's Proxy Statement for the 1999 Annual Meeting of Stockholders.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)1. Financial Statements
The following consolidated financial statements of Goodrich Petroleum Corporation are included in Part II, Item 8:
2. Financial Statement Schedules
The schedules for which provision is made in Regulation S-X are not required under the instructions contained therein, are inapplicable, or the information is included in the footnotes to the financial statements.
(b) Reports on Form 8-K
None
(c) Exhibits
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
GOODRICH PETROLEUM CORPORATION (Registrant)
Date: March 29, 1999 /s/ Walter G. Goodrich By___________________________________ Walter G. Goodrich, President, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Date: March 29, 1999