x
|
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
84-0637348
|
(state
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification
No.)
|
One
Landmark Square,
Stamford,
CT
|
06901
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
Accelerated Filer ¨
|
Accelerated
Filer ¨
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Non-Accelerated
Filer ¨
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Smaller
Reporting Company x
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PART
I
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4
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|||
12
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|||
16
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|||
16
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|||
21
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|||
21
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PART
II
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|||
22
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|||
23
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|||
23
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|||
27
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|||
29
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|||
29
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|||
29
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|||
30
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|||
PART
III
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|||
31
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|||
31
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|||
31
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|||
31
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|||
31
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PART
IV
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|||
32
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|||
35
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PART
I -
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ITEM
1. Business
|
|
ITEM
2. Properties
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PART
II -
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ITEM
6. Selected Financial Data
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|
ITEM
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
|
ITEM
8. Financial Statements and Supplemental
Data
|
Oil
Purchasers:
|
||||
Texon
Distributing L.P.
|
30 | % | ||
Plains
All American Inc.
|
54 | % | ||
Gas
Purchasers:
|
||||
Unimark
LLC
|
12 | % | ||
Cokinos
Energy Corporation
|
57 | % |
|
-
|
restrict
the types, quantities and concentration of various substances that can be
released into the environment in connection with drilling and production
activities;
|
|
-
|
limit
or prohibit drilling activities on certain lands lying within wilderness,
wetlands and other protected areas;
and
|
|
-
|
Impose
substantial liabilities for pollution resulting from our
operations.
|
|
-
|
unit
production expenses primarily related to the control and limitation of air
emissions and the disposal of produced
water;
|
|
-
|
capital
costs to drill exploration and development wells primarily related to the
management and disposal of drilling fluids and other oil and natural gas
exploration wastes; and
|
|
-
|
capital
costs to construct, maintain and upgrade equipment and
facilities.
|
|
-
|
to
remove or remediate previously disposed wastes, including wastes disposed
or released by prior owners or
operators;
|
|
-
|
to
clean up contaminated property, including contaminated groundwater; or to
perform remedial operations to prevent future
contamination.
|
|
-
|
the
level of consumer product demand;
|
|
-
|
weather
conditions;
|
|
-
|
political
conditions in natural gas and oil producing regions, including the Middle
East;
|
|
-
|
the
ability of the members of the Organization of Petroleum Exporting
Countries to agree to and maintain oil price and production
controls;
|
|
-
|
the
price of foreign imports;
|
|
-
|
actions
of governmental authorities;
|
|
-
|
pipeline
capacity constraints;
|
|
-
|
inventory
storage levels;
|
|
-
|
domestic
and foreign governmental
regulations;
|
|
-
|
the
price, availability and acceptance of alternative fuels;
and
|
|
-
|
overall
economic conditions
|
|
-
|
unexpected
drilling conditions, pressure or irregularities in
formations;
|
|
-
|
equipment
failures or accidents;
|
|
-
|
adverse
weather conditions;
|
|
-
|
compliance
with governmental requirements; and
|
|
-
|
shortages
or delays in the availability of drilling rigs or crews and the delivery
of equipment.
|
|
-
|
the
results of exploration efforts and the acquisition, review and analysis of
the seismic data;
|
|
-
|
the
availability of sufficient capital resources to us and the other
participants for the drilling of the
prospects;
|
|
-
|
the
approval of the prospects by other participants after additional data has
been compiled;
|
|
-
|
economic
and industry conditions at the time of drilling, including prevailing and
anticipated prices for natural gas and oil and the availability of
drilling rigs and crews;
|
|
-
|
our
financial resources and results;
and
|
|
-
|
the
availability of leases and permits on reasonable terms for the
prospects.
|
|
-
|
the
quality and quantity of available
data;
|
|
-
|
the
interpretation of that data;
|
|
-
|
the
accuracy of various mandated economic assumptions;
and
|
|
-
|
the
judgment of the persons preparing the
estimate.
|
|
-
|
blowouts,
cratering and explosions;
|
|
-
|
mechanical
problems;
|
|
-
|
uncontrolled
flows of natural gas, oil or well
fluids;
|
|
-
|
formations
with abnormal pressures;
|
|
-
|
pollution
and other environmental risks; and
|
|
-
|
natural
disasters.
|
2007
|
2006
|
2005
|
||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||
Exploratory:
|
||||||||||||||||||||||||
Oil
|
-- | -- | — | — | 1 | .500 | ||||||||||||||||||
Gas
|
-- | -- | 5 | 3.750 | 11 | 3.510 | ||||||||||||||||||
Dry
|
1 | .375 | 1 | .400 | 1 | 1.000 | ||||||||||||||||||
Development:
|
||||||||||||||||||||||||
Oil
|
30 | 13.88 | 41 | 22.141 | 17 | 8.500 | ||||||||||||||||||
Gas
|
-- | -- | 28 | 11.664 | 15 | 7.790 | ||||||||||||||||||
Dry
|
-- | -- | — | — | 4 | 2.410 | ||||||||||||||||||
Total:
|
||||||||||||||||||||||||
Oil
|
30 | 13.88 | 41 | 22.141 | 18 | 9.000 | ||||||||||||||||||
Gas
|
-- | -- | 33 | 15.414 | 26 | 11.300 | ||||||||||||||||||
Dry
|
1 | .375 | 1 | .400 | 5 | 3.410 | ||||||||||||||||||
31 | 14.255 | 75 | 37.955 | 49 | 23.710 |
Gross
|
Net
|
|||||||
Producing
wells (1)
|
||||||||
Oil
Wells
|
926 | 365 | ||||||
Gas
Wells
|
1,186 | 517 | ||||||
Producing
Acres
|
315,640.83 | 106,589.27 |
(1)
|
A
gross well or gross acre is a well or an acre in which a working interest
is owned. A net well or net is the sum of the fractional revenue interests
owned in gross wells or gross acres. Wells are classified by their primary
product. Some wells produce both oil and
gas.
|
2007
|
2006
|
2005
|
||||||||||
Oil
(barrels)
|
561,000 | 456,000 | 443,000 | |||||||||
Gas
(Mcf)
|
11,312,000 | 6,411,000 | 5,641,000 |
2007
|
2006
|
2005
|
||||||||||
Average
sales price per barrel
|
$ | 66.94 | 61.10 | 52.75 | ||||||||
Average
sales price Per Mcf
|
$ | 7.50 | 6.83 | 7.44 | ||||||||
Average
production costs per net equivalent barrel (1)
|
$ | 14.24 | 16.62 | 16.80 |
(1)
|
Net
equivalent barrels are computed at a rate of 6 Mcf per
barrel.
|
Leasehold
Interests
|
Mineral
Interests
|
Royalty
Interests
|
||||||||||||||||||||||
State
|
Gross
Acres
|
Net
Acres
|
Gross
Acres
|
Net
Acres
|
Gross
Acres
|
Net
Acres
|
||||||||||||||||||
Colorado
|
22 | 11 | 799 | 23 | -- | -- | ||||||||||||||||||
Gulf
of Mexico
|
58,837 | 43,454 | -- | -- | -- | -- | ||||||||||||||||||
Montana
|
-- | -- | 13,984 | 59 | 786 | 5 | ||||||||||||||||||
Nebraska
|
-- | -- | 2,553 | 331 | -- | -- | ||||||||||||||||||
North
Dakota
|
-- | -- | 640 | 1 | -- | -- | ||||||||||||||||||
Oklahoma
|
5,942 | 3,754 | 320 | 1 | -- | -- | ||||||||||||||||||
Texas
|
8,388 | 5,138 | 680 | 16 | -- | -- | ||||||||||||||||||
New
Mexico
|
116 | 38 | -- | -- | -- | -- | ||||||||||||||||||
West
Virginia
|
603 | 603 | -- | -- | -- | -- | ||||||||||||||||||
Wyoming
|
1,000 | 125 | 5,043 | 35 | 140 | 35 | ||||||||||||||||||
TOTAL
|
74,907 | 53,123 | 24,019 | 466 | 926 | 40 |
Reserve Category
|
||||||||||||||||||||||||
Proved Developed
|
Proved Undeveloped
|
Total
|
||||||||||||||||||||||
As
of
12-31
|
Oil
(bbls)
|
Gas
(Mcf)
|
Oil
(bbls)
|
Gas
(Mcf)
|
Oil
(bbls)
|
Gas
(Mcf)
|
||||||||||||||||||
2005
|
4,529,000 | 54,373,000 | 183,000 | 968,000 | 4,712,000 | 55,341,000 | ||||||||||||||||||
2006
|
4,986,000 | 75,434,000 | 219,000 | 2,479,000 | 5,205,000 | 77,913,000 | ||||||||||||||||||
2007
|
5,640,000 | 58,814,000 | 952,000 | 2,598,000 | 6,592,000 | 61,412,000 |
Proved Developed
|
Proved Undeveloped
|
Total
|
||||||||||||||||||||||||||||||
As
of
12-31
|
Future
Net
Revenue
|
Present
Value
Of
Future
Net Revenue
|
Future
Net
Revenue
|
Present
Value 10
Of
Future
Net Revenue
|
Future
Net
Revenue
|
Present
Value 10
Of
Future
Net Revenue
|
Present
Value 10
Of
Future
Income Taxes
|
Standardized
Measure
of
Discounted Cash flow
|
||||||||||||||||||||||||
2005
|
$ | 435,525,000 | 244,817,000 | 12,510,000 | 6,663,000 | 448,035,000 | 251,480,000 | 77,991,000 | 173,489,000 | |||||||||||||||||||||||
2006
|
$ | 409,525,000 | 269,139,000 | 13,836,000 | 7,077,000 | 423,361,000 | 276,216,000 | 60,028,000 | 216,188,000 | |||||||||||||||||||||||
2007
|
$ | 449,372,000 | 266,405,000 | 60,392,000 | 21,062,000 | 509,764,000 | 287,467,000 | 62,007,000 | 225,460,000 |
Appalachian
|
Gulf Coast
|
Mid-
Continent
|
West Texas
|
Offshore
|
Other
|
Total
|
||||||||||||||||||||||
Proved
Reserves at Year End (Mmcfe)
|
||||||||||||||||||||||||||||
Developed
|
13,162 | 7,078 | 29,251 | 27,793 | 14,162 | 1,208 | 92,654 | |||||||||||||||||||||
Undeveloped
|
8,309 | 8,309 | ||||||||||||||||||||||||||
Total
|
13,162 | 7,078 | 29,251 | 36,102 | 14,162 | 1,208 | 100,963 | |||||||||||||||||||||
Average
Daily Production (Mmcfe per day)
|
3 | 3 | 7 | 8 | 18 | 1 | 40 | |||||||||||||||||||||
Gross
Wells
|
732 | 505 | 734 | 324 | 21 | 81 | 2,397 | |||||||||||||||||||||
Net
Wells
|
377 | 180 | 280 | 106 | 11 | 15 | 969 | |||||||||||||||||||||
Gross
Operated Wells
|
498 | 332 | 446 | 219 | 17 | 68 | 1,580 |
2008
|
2009
|
2010
|
||||||||||||||||||||||
State
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||||
GULF
OF MEXICO
|
11,520 | 8,640 | 12,757 | 8,894 | -- | -- | ||||||||||||||||||
OKLAHOMA
|
1,660 | 1,455 | 799 | 799 | 85 | 85 | ||||||||||||||||||
TEXAS
|
319 | 112 | 3,520 | 2,974 | 877 | 877 | ||||||||||||||||||
NEW
MEXICO
|
163 | 54 | -- | -- | -- | -- | ||||||||||||||||||
WEST
VIRGINIA
|
121 | 121 | -- | -- | -- | 11 | ||||||||||||||||||
COLORADO
|
-- | -- | -- | -- | 22 | 11 | ||||||||||||||||||
TOTAL
|
13,783 | 10,382 | 17,077 | 12,668 | 1,544 | 984 |
2007
|
High
|
Low
|
2006
|
High
|
Low
|
||||||||||||||
First
Quarter
|
$ | 64.97 | $ | 50.10 |
First
Quarter
|
$ | 83.42 | $ | 48.83 | ||||||||||
Second
Quarter
|
$ | 64.90 | $ | 54.75 |
Second
Quarter
|
$ | 86.75 | $ | 66.35 | ||||||||||
Third
Quarter
|
$ | 58.60 | $ | 53.00 |
Third
Quarter
|
$ | 81.26 | $ | 59.09 | ||||||||||
Fourth
Quarter
|
$ | 56.95 | $ | 52.43 |
Fourth
Quarter
|
$ | 72.98 | $ | 64.05 |
Number of
|
Average Price Paid
|
Maximum
Number of
Shares
that May Yet
Be Purchased Under The
|
||||||||||
2007 Month
|
Shares
|
per share
|
Program
|
|||||||||
January
|
40 | $ | 60.00 | 365,854 | ||||||||
February
|
2,986 | 55.15 | 362,868 | |||||||||
March
|
19,478 | 54.24 | 343,390 | |||||||||
April
|
3,000 | 55.05 | 340,390 | |||||||||
May
|
8,000 | 55.00 | 332,390 | |||||||||
June
|
10,000 | 55.45 | 322,390 | |||||||||
July
|
11,000 | 55.02 | 311,390 | |||||||||
August
|
12,282 | 55.00 | 299,108 | |||||||||
September
|
88 | 55.05 | 299,020 | |||||||||
October
|
1 | 55.05 | 299,019 | |||||||||
November
|
13,012 | 55.01 | 286,007 | |||||||||
December
|
452 | 55.19 | 285,555 | |||||||||
Total/Average/Remainder
|
80,339 | $ | 54.89 |
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
Revenues
|
$ | 156,146,000 | 101,823,000 | 87,224,000 | 62,379,000 | 46,673,000 | ||||||||||||||
Income
from operations
|
$ | 26,690,000 | 35,904,000 | 44,721,000 | 11,385,000 | 8,982,000 | ||||||||||||||
Net
income
|
$ | 7,920,000 | 18,708,000 | 23,604,000 | 7,275,000 | 5,702,000 | ||||||||||||||
Income
per common share
|
$ | 2.50 | 5.65 | 6.95 | 2.04 | 1.56 | ||||||||||||||
Diluted
net income per common share
|
$ | 2.02 | 4.60 | 5.70 | 1.70 | 1.31 | ||||||||||||||
Total
assets
|
$ | 305,655,000 | 300,108,000 | 117,336,000 | 69,926,000 | 58,255,000 | ||||||||||||||
Long-term
obligations
|
$ | 166,377,000 | 167,624,000 | 43,267,000 | 30,290,000 | 26,925,000 | ||||||||||||||
Cash
dividends
|
None
|
None
|
None
|
None
|
None
|
2007
|
2006
|
Increase (Decrease)
|
||||||||||
Barrels
of Oil Produced
|
561,000 | 456,000 | 105,000 | |||||||||
Average
Price Received (rounded)
|
$ | 66.94 | $ | 61.10 | $ | 5.84 | ||||||
Oil
Revenue
|
$ | 37,553,000 | $ | 27,863,000 | $ | 9,690,000 | ||||||
Mcf
of Gas Produced
|
11,312,000 | 6,411,000 | 4,901,000 | |||||||||
Average
Price Received (rounded)
|
$ | 7.50 | $ | 6.83 | $ | 0.67 | ||||||
Gas
Revenue
|
$ | 84,808,000 | $ | 43,787,000 | $ | 41,021,000 | ||||||
Total
Oil & Gas Revenue
|
$ | 122,361,000 | $ | 71,650,000 | $ | 50,711,000 |
2006
|
2005
|
Increase(Decrease)
|
||||||||||
Barrels
of Oil Produced
|
456,000 | 443,000 | 13,000 | |||||||||
Average
Price Received (rounded)
|
$ | 61.10 | $ | 52.75 | $ | 8.35 | ||||||
Oil
Revenue
|
$ | 27,863,000 | $ | 23,370,000 | $ | 4,493,000 | ||||||
Mcf
of Gas Produced
|
6,411,000 | 5,641,000 | 770,000 | |||||||||
Average
Price Received (rounded)
|
$ | 6.83 | $ | 7.44 | $ | (0.61 | ) | |||||
Gas
Revenue
|
$ | 43,787,000 | $ | 41,950,000 | $ | 1,837,000 | ||||||
Total
Oil & Gas Revenue
|
$ | 71,650,000 | $ | 65,320,000 | $ | 6,330,000 |
Crude
Oil Price Collar
|
||||||||||||
Contract Period
|
Volume
In Mbbl
|
Weighted
Average Price Floor/Ceiling/Third Tier (per
Bbl)
|
Net
Unrealized (Loss)/Gain (In
thousands)
|
|||||||||
First
Quarter 2008
|
23 |
$65/ $79.25/ $100.00
|
||||||||||
First
Quarter 2008
|
51 | $ | 60.00/ $81.25 | |||||||||
First
Quarter 2008
|
15 | $ | 60.00/ $78.00 | |||||||||
Second
Quarter 2008
|
21 |
$65/ $79.25/ $100.00
|
||||||||||
Second
Quarter 2008
|
51 | $ | 60.00/ $81.25 | |||||||||
Second
Quarter 2008
|
15 | $ | 60.00/ $78.00 | |||||||||
Third
Quarter 2008
|
20 |
$65/ $79.25/ $100.00
|
||||||||||
Third
Quarter 2008
|
51 | $ | 60.00/ $81.25 | |||||||||
Third
Quarter 2008
|
15 | $ | 60.00/ $78.00 | |||||||||
Fourth
Quarter 2008
|
18 |
$65/ $79.25/ $100.00
|
||||||||||
Fourth
Quarter 2008
|
51 | $ | 60.00/ $81.25 | |||||||||
Fourth
Quarter 2008
|
15 | $ | 60.00/ $78.00 | |||||||||
Full
Year 2008
|
346 | $ | (2,779 | ) | ||||||||
First
Quarter 2009
|
51 | $ | 60/ $79.70 | |||||||||
First
Quarter 2009
|
6 | $ | 60/ $77.75 | |||||||||
First
Quarter 2009
|
12 | $ | 65/ $86.50 | |||||||||
Second
Quarter 2009
|
17 | $ | 60/ $79.70 | |||||||||
Second
Quarter 2009
|
38 | $ | 60/ $77.40 | |||||||||
Second
Quarter 2009
|
2 | $ | 60/ $77.75 | |||||||||
Second
Quarter 2009
|
12 | $ | 65/ $86.50 | |||||||||
Third
Quarter 2009
|
57 | $ | 60/ $77.40 | |||||||||
Third
Quarter 2009
|
12 | $ | 65/ $86.50 | |||||||||
Fourth
Quarter 2009
|
57 | $ | 60/ $77.40 | |||||||||
Fourth
Quarter 2009
|
12 | $ | 65/ $86.50 | |||||||||
Full
Year 2009
|
276 | $ | (1,463 | ) | ||||||||
First
Quarter 2010
|
51 | $ | 65/ $80.90 | |||||||||
First
Quarter 2010
|
9 | $ | 65/ $84.14 | |||||||||
Second
Quarter 2010
|
51 | $ | 65/ $80.90 | |||||||||
Second
Quarter 2010
|
9 | $ | 65/ $84.14 | |||||||||
Third
Quarter 2010
|
51 | $ | 65/ $80.90 | |||||||||
Third
Quarter 2010
|
9 | $ | 65/ $84.14 | |||||||||
Fourth
Quarter 2010
|
51 | $ | 65/ $80.90 | |||||||||
Fourth
Quarter 2010
|
9 | $ | 65/ $84.14 | |||||||||
Full
Year 2010
|
240 | $ | (651 | ) | ||||||||
First
Quarter 2011
|
45 | $ | 65/ $84.14 | |||||||||
Full
Year 2011
|
45 | $ | (41 | ) |
Natural Gas Price Swaps
|
||||||||||||
Contract Period
|
Volume in Mmcf
|
Weighted
Average Price (per
Mcf)
|
Net
Unrealized Gain (In
thousands)
|
|||||||||
First
Quarter 2008
|
645 | $ | 8.96 | $ | 593 | |||||||
Second
Quarter 2008
|
1,005 | 8.07 | 285 | |||||||||
Third
Quarter 2008
|
1,005 | 8.07 | 150 | |||||||||
Fourth
Quarter 2008
|
1,005 | 8.07 | (175 | ) | ||||||||
Full
Year 2008
|
3,660 | $ | 8.23 | $ | 853 | |||||||
First
Quarter 2009
|
975 | $ | 9.76 | $ | 463 | |||||||
Full
Year 2009
|
975 | $ | 9.76 | $ | 463 |
3.1
|
Restated
Certificate of Incorporation of PrimeEnergy Corporation (Incorporated by
reference to Exhibit 3.1 of PrimeEnergy Corporation Form 10-K for the year
ended December 31, 2004)
|
|
3.2
|
Bylaws
of PrimeEnergy Corporation (Incorporated by reference to Exhibit 3.2 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2004)
|
|
10.3.1
|
Adoption
Agreement #003 dated 4/23/2002, MassMutual Life Insurance Company
Flexinvest Prototype Non-Standardized 401(k) Profit-Sharing Plan; EGTRRA
Amendment to the PrimeEnergy employees 401(k) Savings Plan; MassMutual
Retirement Services Flexinvest Defined Contribution Prototype Plan;
Protected Benefit Addendum; Addendum to the Administrative Services
Agreement Loan Agreement; Addendum to Administrative Services Agreement
GUST Restatement Provisions; General Trust Agreement (Incorporated by
reference to Exhibit 10.3.1 of PrimeEnergy Corporation Form 10-K for the
year ended December 31, 2002) (1)
|
|
10.3.2
|
First
Amendment to the PrimeEnergy Corporation Employees 401(k) Savings Plan
(Incorporated by reference to Exhibit 10.3.2 of PrimeEnergy Corporation
Form 10-K for the year ended December 31, 2007)
|
|
10.4
|
Amended
and Restated Agreement of Limited Partnership, FWOE Partners L.P., dated
as of August 22, 2005 (Incorporated by reference to Exhibit 10.3 of
PrimeEnergy Corporation Form 8-K for events of August 22,
2005)
|
|
10.4.1
|
Contribution
Agreement between F-W Oil Exploration L.L.C. and FWOE Partners L.P. dated
as of August 22, 2005 (Incorporated by reference to exhibit 10.4 of
PrimeEnergy Corporation Form 8-K for events of August 22,
2005)
|
|
10.18
|
Composite
copy of Non-Statutory Option Agreements (Incorporated by reference to
Exhibit 10.18 of PrimeEnergy Corporation Form 10-K for the year ended
December 31, 2004) (1)
|
|
10.22.5
|
Amended
and Restated Credit Agreement among PrimeEnergy Corporation, PrimeEnergy
Management Corporation, Prime Operating Company, Eastern Oil Well Service
Company, Southwest Oilfield Construction Company, EOWS Midland Company and
Guaranty Bank, FSB as Agent and Letter of Credit Issuer and BNP Paribas,
as Co-Documentation Agent and JPMorgan Chase Bank, N.A., as
Co-Documentation Agent and the Lenders Signatory hereto, December 28, 2006
(Incorporated by reference to Exhibit 10.22.5 of PrimeEnergy Corporation
Form 10-K for the year ended December 31, 2006)
|
|
10.22.5.1
|
Letter
from BNP Paribas regarding Amended and Restated Credit Agreement effective
as of December 28, 2006, among PrimeEnergy Corporation, et al, and
Guaranty Bank, FSB (Incorporated by reference to Exhibit 10.22.5.1 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.23.2
|
Amended
and Restated Security Agreement between PrimeEnergy Corporation,
PrimeEnergy Management Corporation, Prime Operating Company, Eastern Oil
Well Service Company, Southwest Oilfield Construction Company, EOWS
Midland Company, (debtor) and Guaranty Bank, FSB as Agent (secured party)
December 28, 2006 (Incorporated by reference to Exhibit 10.23.2 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
10.23.3
|
Amended
and Restated Security Agreement (Membership Pledge) by PrimeEnergy
Corporation in favor of Guaranty Bank, FSB as Agent December 28, 2006
(Incorporated by reference to Exhibit 10.23.3 of PrimeEnergy Corporation
Form 10-K for the year ended December 31, 2006)
|
|
10.23.4
|
Amended
and Restated Security Agreement between PrimeEnergy Corporation,
PrimeEnergy Management Corporation, Prime Operating Company, Eastern Oil
Well Service Company, Southwest Oilfield Construction Company, EOWS
Midland Company, (debtor) and Guaranty Bank, FSB as Agent (secured party)
December 28, 2006 (Incorporated by reference to Exhibit 10.23.4 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.23.5
|
Amended
and Restated Security Agreement between Eastern Oil Well Service Company,
EOWS Midland Company,(debtor) and Guaranty Bank, FSB as Agent (secured
party) December 28, 2006 (Incorporated by reference to Exhibit 10.23.5 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.23.6
|
Security
Agreement between Eastern Oil Well Service Company, EOWS Midland
Company,(debtor) and Guaranty Bank, FSB as Agent (secured party) December
28, 2006 (Incorporated by reference to Exhibit 10.23.6 of PrimeEnergy
Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.23.7
|
Amended
and Restated Security Agreement between Southwest Oilfield Construction
Company, (debtor) and Guaranty Bank, FSB as Agent (secured party) December
28, 2006 (Incorporated by reference to Exhibit 10.23.7 of PrimeEnergy
Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.23.8
|
Amended
and Restated Security Agreement effective between EOWS Midland Company,
(debtor) and Guaranty Bank, FSB as Agent (secured party) December 28, 2006
(Incorporated by reference to Exhibit 10.23.8 of PrimeEnergy Corporation
Form 10-K for the year ended December 31, 2006)
|
|
10.25
|
Credit
Agreement dated as of June 1, 2006 (but effective for all purposes as of
August 22, 2005), between Prime Offshore L.L.C. as Borrower and
PrimeEnergy Corporation as Lender (Incorporated by reference to Exhibit
10.25 of PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.26
|
Credit
Agreement dated June 29, 2006 between Prime Offshore L.L.C. and Guaranty
Bank, FSB as Agent and a Lender (Incorporated by reference to Exhibit
10.26 of PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.26.1
|
Subordination
Agreement effective as of June 29, 2006, between Prime Offshore L.L.C.,
PrimeEnergy Corporation, and Guaranty Bank, FSB (Incorporated by reference
to Exhibit 10.26.1 of PrimeEnergy Corporation Form 10-K for the year ended
December 31, 2006)
|
|
10.27
|
Security
Agreement effective June 29, 2006 between Prime Offshore L.L.C., and
Guaranty Bank, FSB (debtor) and Guaranty Bank, FSB as Agent (secured
party) (Incorporated by reference to Exhibit 10.27 of PrimeEnergy
Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.27.1
|
Mortgage,
Deed of Trust, Security Agreement, Financing Statement and Assignment of
Production effective as of June 29, 2006, from Prime Offshore L.L.C. and
Guaranty Bank, FSB (Incorporated by reference to Exhibit 10.27.1 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.27.2
|
Pledge
Agreement as of June 29, 2006, between Guaranty Bank, FSB and Prime
Offshore L.L.C. (Incorporated by reference to Exhibit 10.27.2 of
PrimeEnergy Corporation Form 10-K for the year ended December 31,
2006)
|
|
10.28
|
Completion
and Liquidity Maintenance Agreement effective as of June 29, 2006, between
PrimeEnergy Corporation, Guaranty Bank, FSB, and Prime Offshore, L.L.C.
(Incorporated by reference to Exhibit 10.28 of PrimeEnergy Corporation
Form 10-K for the year ended December 31, 2006)
|
|
10.29
|
Put
Right Agreement effective as of June 29, 2006, by and among PrimeEnergy
Corporation and Prime Offshore L.L.C. (Incorporated by reference to
Exhibit 10.29of PrimeEnergy Corporation Form 10-K for the year ended
December 31,
2006)
|
14
|
PrimeEnergy
Corporation Code of Business Conduct and Ethics (Incorporated by reference
to Exhibit 14 of PrimeEnergy Corporation Form 10-K for the year ended
December 31, 2006)
|
|
21
|
Subsidiaries
(filed herewith)
|
|
23
|
Consent
of Ryder Scott & Company L.P. (filed herewith)
|
|
Certification
of Chief Executive Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as amended (filed
herewith)
|
||
Certification
of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as amended (filed
herewith)
|
||
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
|
||
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
|
(1)
|
Management
contract or compensatory plan or arrangement required to be filed as an
Exhibit to this Form 10-K
|
PrimeEnergy
Corporation
|
|||
By:
|
/s/ CHARLES E. DRIMAL, JR
|
||
Charles
E. Drimal, Jr.
|
|||
President
|
/s/ CHARLES E.DRIMAL, JR.
|
Director
and President;
|
|||||
Charles
E. Drimal, Jr.
|
The
Principal Executive Officer
|
|||||
/s/ BEVERLY A. CUMMINGS
|
Director,
Vice President and
|
|||||
Beverly
A. Cummings
|
Treasurer;
The Principal
|
|||||
Financial
and Accounting Officer
|
||||||
Director
|
/s/ CLINT HURT
|
Director
|
||||
Matthias
Eckenstein
|
Clint
Hurt
|
|||||
/s/ H. GIFFORD FONG
|
Director
|
/s/ JAN K. SMEETS
|
Director
|
|||
H.
Gifford Fong
|
Jan
K. Smeets
|
|||||
/s/ THOMAS S.T. GIMBEL
|
Director
|
|||||
Thomas
S.T. Gimbel
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Financial
Statements (restated):
|
||
Consolidated
Balance Sheets – December 31, 2007 and 2006
|
F-3
|
|
Consolidated
Statements of Operations - for the years ended December 31, 2007, 2006 and
2005
|
F-5
|
|
Consolidated
Statement of Stockholders’ Equity - for the years ended December 31, 2007,
2006 and 2005
|
F-6
|
|
Consolidated
Statements of Cash Flows - for the years ended December 31, 2007, 2006 and
2005
|
F-7
|
|
Notes
to Consolidated Financial Statements
|
F-8
|
|
Supplementary
Information (restated):
|
||
Capitalized
Costs Relating to Oil and Gas Producing Activities, years ended December
31, 2007, 2006 and 2005
|
F-32
|
|
Costs
Incurred in Oil and Gas Property Acquisition, Exploration and Development
Activities, years ended December 31, 2007, 2006 and 2005
|
F-32
|
|
Standardized
Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas
Reserves, years ended December 31, 2007, 2006 and 2005
|
F-33
|
|
Standardized
Measure of Discounted Future Net Cash Flows and Changes Therein
Relating to Proved Oil and Gas Reserves, years ended December 31, 2007,
2006 and 2005
|
F-34
|
|
Reserve
Quantity Information, years ended December 31, 2007, 2006 and
2005
|
F-35
|
|
Results
of Operations from Oil and Gas Producing Activities, years ended December
31, 2007, 2006 and 2005
|
F-36
|
|
Notes
to Supplementary Information
|
F-37
|
2007
Audited
and Restated
|
2006
Audited
and Restated
|
|||||||
ASSETS:
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 25,373,000 | $ | 29,056,000 | ||||
Restricted
cash and cash equivalents
|
3,633,000 | 2,528,000 | ||||||
Accounts
receivable, net
|
21,311,000 | 33,664,000 | ||||||
Due
from related parties
|
32,000 | 429,000 | ||||||
Prepaid
expenses
|
1,391,000 | 1,269,000 | ||||||
Derivative
contracts
|
1,332,000 | 6,085,000 | ||||||
Inventory
at cost
|
3,705,000 | 3,518,000 | ||||||
Deferred
income tax
|
1,582,000 | -- | ||||||
Total
current assets
|
58,359,000 | 76,549,000 | ||||||
Property
and equipment, at cost:
|
||||||||
Proved
oil and gas properties at cost
|
378,908,000 | 293,837,000 | ||||||
Unproved
oil and gas properties at cost
|
4,458,000 | 5,047,000 | ||||||
Less:
Accumulated depletion and depreciation
|
145,514,000 | 83,563,000 | ||||||
237,852,000 | 215,321,000 | |||||||
Field
and office equipment
|
18,029,000 | 15,793,000 | ||||||
Less:
Accumulated depreciation
|
9,820,000 | 8,351,000 | ||||||
8,209,000 | 7,442,000 | |||||||
Total
net property and equipment
|
246,061,000 | 222,763,000 | ||||||
Other
assets
|
1,245,000 | 796,000 | ||||||
Total
assets
|
$ | 305,665,000 | $ | 300,108,000 |
2007
Audited
and Restated
|
2006
Audited
and Restated
|
|||||||
LIABILITIES
and STOCKHOLDERS’ EQUITY:
|
||||||||
Current
liabilities:
|
||||||||
Current
bank debt
|
$ | 34,950,000 | $ | -- | ||||
Accounts
payable
|
26,780,000 | 42,627,000 | ||||||
Current
portion of asset retirement and other long-term
obligations
|
1,065,000 | 345,000 | ||||||
Derivative
liability short term
|
4,340,000 | 1,961,000 | ||||||
Accrued
liabilities
|
10,032,000 | 22,098,000 | ||||||
Due
to related parties
|
520,000 | 165,000 | ||||||
Total
current liabilities
|
77,687,000 | 67,196,000 | ||||||
Long-term
bank debt
|
120,050,000 | 136,460,000 | ||||||
Asset
retirement obligations
|
16,936,000 | 6,890,000 | ||||||
Derivative
liability long term
|
3,369,000 | -- | ||||||
Deferred
income taxes
|
26,022,000 | 24,274,000 | ||||||
Total
liabilities
|
244,064,000 | 234,820,000 | ||||||
Minority
interest
|
12,929,000 | 12,533,000 | ||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, $.10 par value, authorized 5,000,000 shares; none
issued
|
||||||||
Common
stock, $.10 par value, authorized 10,000,000 shares; issued 7,694,970 in
2007 and 2006
|
769,000 | 769,000 | ||||||
Paid
in capital
|
11,024,000 | 11,024,000 | ||||||
Retained
earnings
|
72,885,000 | 64,965,000 | ||||||
Accumulated
other comprehensive income (loss), net
|
(3,618,000 | ) | 3,976,000 | |||||
81,060,000 | 80,734,000 | |||||||
Treasury
stock, at cost 4,558,544 common shares in 2007 and 4,478,145 in
2006
|
(32,388,000 | ) | (27,979,000 | ) | ||||
Total
stockholders’ equity
|
48,672,000 | 52,755,000 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 305,665,000 | $ | 300,108,000 |
2007
Audited
and Restated
|
2006
Audited
and Restated
|
2005
Audited
and Restated
|
||||||||||
Revenue:
|
||||||||||||
Oil
and gas sales
|
$ | 122,361,000 | $ | 71,650,000 | $ | 65,320,000 | ||||||
Field
service income
|
24,340,000 | 20,357,000 | 15,226,000 | |||||||||
Administrative
overhead fees
|
9,041,000 | 9,704,000 | 7,068,000 | |||||||||
Loss
on derivative instruments, net
|
-- | -- | (415,000 | ) | ||||||||
Other
income
|
404,000 | 112,000 | 25,000 | |||||||||
156,146,000 | 101,823,000 | 87,224,000 | ||||||||||
Costs
and expenses:
|
||||||||||||
Lease
operating expense
|
34,841,000 | 25,337,000 | 23,241,000 | |||||||||
Field
service expense
|
17,724,000 | 15,802,000 | 12,804,000 | |||||||||
Depreciation,
depletion and amortization
|
64,507,000 | 14,370,000 | 11,784,000 | |||||||||
General
and administrative expense
|
12,349,000 | 12,977,000 | 11,048,000 | |||||||||
Exploration
costs
|
633,000 | 1,162,000 | 664,000 | |||||||||
130,054,000 | 69,648,000 | 59,541,000 | ||||||||||
Add
gain on sale and exchange of assets
|
598,000 | 3,729,000 | 16,588,000 | |||||||||
Income
from operations
|
26,690,000 | 35,904,000 | 44,271,000 | |||||||||
Other
income and expense:
|
||||||||||||
Less:
Interest expense
|
11,062,000 | 2,091,000 | 1,531,000 | |||||||||
Add
interest income
|
852,000 | 508,000 | 153,000 | |||||||||
Less:
Minority interest
|
4,728,000 | 5,173,000 | 5,613,000 | |||||||||
Income
before provision for income taxes
|
11,752,000 | 29,148,000 | 37,280,000 | |||||||||
Provision
for income taxes
|
3,832,000 | 10,440,000 | 13,676,000 | |||||||||
Net
income
|
$ | 7,920,000 | $ | 18,708,000 | $ | 23,604,000 | ||||||
Basic
net income per common share
|
$ | 2.50 | $ | 5.65 | $ | 6.95 | ||||||
Diluted
net income per common share
|
$ | 2.02 | $ | 4.60 | $ | 5.70 |
|
|
|
Accumulated
|
|||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||
Common
Stock
|
Paid
In
|
Retained
|
Comprehensive
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income (Loss)
|
Treasury Stock
|
Total
|
||||||||||||||||||||||
Balance
at December 31, 2004
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 22,653,000 | $ | -- | $ | (16,209,000 | ) | $ | 18,237,000 | ||||||||||||||
Purchased
164,410 shares of common stock
|
(4,456,000 | ) | (4,456,000 | ) | ||||||||||||||||||||||||
Net
income
|
23,604,000 | 23,604,000 | ||||||||||||||||||||||||||
Balance
at December 31, 2005
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 46,257,000 | $ | -- | $ | (20,665,000 | ) | $ | 37,385,000 | ||||||||||||||
Purchased
110,990 shares of common stock
|
(7,314,000 | ) | (7,314,000 | ) | ||||||||||||||||||||||||
Net
income
|
18,708,000 | 18,708,000 | ||||||||||||||||||||||||||
Other
comprehensive income, net of taxes
|
3,976,000 | 3,976,000 | ||||||||||||||||||||||||||
Balance
at December 31, 2006
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 64,965,000 | $ | 3,976,000 | $ | (27,979,000 | ) | $ | 52,755,000 | ||||||||||||||
Purchased
80,399 shares of common stock
|
(4,409,000 | ) | (4,409,000 | ) | ||||||||||||||||||||||||
Net
income
|
7,920,000 | 7,920,000 | ||||||||||||||||||||||||||
Other
comprehensive income (loss), net of taxes
|
(7,594,000 | ) | (7,594,000 | ) | ||||||||||||||||||||||||
Balance
as of December 31, 2007
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 72,885,000 | $ | (3,618,000 | ) | $ | (32,388,000 | ) | $ | 48,672,000 |
2007
Audited
and Restated
|
2006
Audited
and Restated
|
2005
Audited
and Restated
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ | 7,920,000 | $ | 18,708,000 | $ | 23,604,000 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
64,507,000 | 14,370,000 | 11,784,000 | |||||||||
Dry
hole and abandonment costs
|
343,000 | 510,000 | 262,000 | |||||||||
Gain
on sale of properties
|
(598,000 | ) | (3,729,000 | ) | (16,588,000 | ) | ||||||
Non-cash
incentive compensation expense
|
-- | 1,313,000 | -- | |||||||||
Provision
for deferred income taxes
|
1,215,000 | 11,787,000 | 4,907,000 | |||||||||
Minority
interest in earnings of partnerships
|
4,728,000 | 5,173,000 | 5,613,000 | |||||||||
Changes
in assets and liabilities:
|
||||||||||||
(Increase)
decrease in accounts receivable
|
14,276,000 | (15,480,000 | ) | (6,406,000 | ) | |||||||
(Increase)
decrease in due from related parties
|
1,306,000 | 484,000 | (207,000 | ) | ||||||||
(Increase)
decrease in inventories
|
325,000 | (3,136,000 | ) | (6,000 | ) | |||||||
(Increase)
decrease in prepaid expenses and other assets
|
(175,000 | ) | 6,449,000 | (7,251,000 | ) | |||||||
Increase
(decrease) in accounts payable
|
126,000 | 3,510,000 | 5,232,000 | |||||||||
Increase
(decrease) in accrued liabilities
|
53,000 | (1,518,000 | ) | 5,217,000 | ||||||||
Increase
(decrease) in due to related parties
|
1,088,000 | (620,000 | ) | 431,000 | ||||||||
Net
cash provided by operating activities
|
95,114,000 | 37,821,000 | 26,592,000 | |||||||||
Cash
flows from investing activities
|
||||||||||||
Capital
expenditures, including exploration expense
|
(109,819,000 | ) | (122,704,000 | ) | (54,037,000 | ) | ||||||
Proceeds
from sale of properties and equipment
|
598,000 | 3,729,000 | 43,050,000 | |||||||||
Net
cash used in investing activities
|
(109,221,000 | ) | (118,975,000 | ) | (10,987,000 | ) | ||||||
Cash
flows from financing activities
|
||||||||||||
Purchase
of stock for treasury
|
(4,409,000 | ) | (7,314,000 | ) | (4,456,000 | ) | ||||||
Increase
in long-term bank debt and other long-term obligations
|
105,867,000 | 198,362,000 | 65,570,000 | |||||||||
Repayment
of long-term bank debt and other long-term obligations
|
(86,960,000 | ) | (91,168,000 | ) | (67,432,000 | ) | ||||||
Distribution
to minority interest
|
(4,074,000 | ) | (4,443,000 | ) | (3,456,000 | ) | ||||||
Net
cash provided by (used in) financing activities
|
10,424,000 | 95,437,000 | (9,774,000 | ) | ||||||||
Net
increase(decrease) in cash and cash equivalents
|
(3,683,000 | ) | 14,283,000 | 5,831,000 | ||||||||
Cash
and cash equivalents at the beginning of the period
|
29,056,000 | 14,773,000 | 8,942,000 | |||||||||
Cash
and cash equivalents at the end of the period
|
$ | 25,373,000 | $ | 29,056,000 | $ | 14,773,000 | ||||||
Supplemental
disclosures:
|
||||||||||||
Income
taxes paid during the year
|
$ | 1,643,000 | $ | 5,713,000 | $ | 5,076,000 | ||||||
Net
income tax refunds received during the year
|
$ | 2,623,000 | $ | — | $ | — | ||||||
Interest
paid during the year
|
$ | 11,062,000 | $ | 2,091,000 | $ | 1,531,000 |
1.
|
Description
of Operations and Significant Accounting
Policies
|
2.
|
Financial
Restatement –
The restatements reflect the change in accounting method from
proportionate consolidation of partnerships that the Company controls to
the full consolidation method. The Company had historically accounted for
its interests in twenty limited partnerships and trusts, which own
interests in oil and gas properties using the proportionate consolidation
under the guidance of EITF 00-1 as related to the extractive industries.
Under the guidance of EITF 04-05 the interests in limited partnerships and
trusts that we control should have been fully consolidated when EITF 04-05
became effective.
|
As
Reported
2007
|
Cumulative
Effect of Prior Year
Adjustments
|
Current
Year
Adjustments
|
Notes
|
As
Restated
2007
|
||||||||||||||||
ASSETS:
|
||||||||||||||||||||
Current
assets:
|
||||||||||||||||||||
Cash
and cash equivalents
|
$ | 21,313,000 | $ | 4,403,000 | $ | (343,000 | ) |
b
|
$ | 25,373,000 | ||||||||||
Restricted
cash and cash equivalents
|
3,633,000 | -- | -- | 3,633,000 | ||||||||||||||||
Accounts
receivable, net
|
20,348,000 | 694,000 | 269,000 |
b
|
21,311,000 | |||||||||||||||
Due
from related parties
|
212,000 | (226,000 | ) | 46,000 |
b
|
32,000 | ||||||||||||||
Prepaid
expenses
|
1,391,000 | -- | -- |
|
1,391,000 | |||||||||||||||
Derivative
contracts
|
1,332,000 | -- | -- | 1,332,000 | ||||||||||||||||
Inventory
at cost
|
3,711,000 | (3,000 | ) | (3,000 | ) |
b
|
3,705,000 | |||||||||||||
Deferred
income tax
|
1,582,000 | -- | -- | 1,582,000 | ||||||||||||||||
Total
current assets
|
53,522,000 | 4,868,000 | (31,000 | ) | 58,359,000 | |||||||||||||||
Property
and equipment, at cost:
|
||||||||||||||||||||
Proved
oil and gas properties at cost
|
368,828,000 | 9,139,000 | 941,000 |
a,b
|
378,908,000 | |||||||||||||||
Unproved
oil and gas properties at cost
|
4,458,000 | -- | -- | 4,458,000 | ||||||||||||||||
Less:
Accumulated depletion and depreciation
|
140,115,000 | 5,558,000 | 159,000 |
a,b
|
145,514,000 | |||||||||||||||
233,171,000 | 3,581,000 | 1,100,000 | 237,852,000 | |||||||||||||||||
Field
and office equipment
|
18,029,000 | -- | -- | 18,029,000 | ||||||||||||||||
Less:
Accumulated depreciation
|
9,820,000 | -- | -- | 9,820,000 | ||||||||||||||||
8,209,000 | -- | -- | 8,209,000 | |||||||||||||||||
Total
net property and equipment
|
241,380,000 | 3,581,000 | 1,100,000 | 246,061,000 | ||||||||||||||||
Other
assets
|
1,180,000 | 67,000 | (2,000 | ) |
b
|
1,245,000 | ||||||||||||||
Total
assets
|
$ | 296,082,000 | $ | 8,516,000 | $ | 1,067,000 | $ | 305,665,000 |
As Reported 2007
|
Cumulative
Effective of Prior Year Adjustment
|
Current
Year Adjustment
|
Notes
|
As Restated 2007
|
||||||||||||||||
LIABILITIES
and STOCKHOLDERS’ EQUITY:
|
||||||||||||||||||||
Current
liabilities:
|
||||||||||||||||||||
Current
bank debt
|
$ | 34,950,000 | $ | -- | $ | -- | $ | 34,950,000 | ||||||||||||
Accounts
payable
|
26,726,000 | (31,000 | ) | 85,000 |
b
|
26,780,000 | ||||||||||||||
Current
portion of asset retirement and other long-term
obligations
|
1,065,000 | 31,000 | (31,000 | ) |
b
|
1,065,000 | ||||||||||||||
Derivative
liability short term
|
4,340,000 | -- | -- | 4,340,000 | ||||||||||||||||
Accrued
liabilities
|
9,953,000 | 68,000 | 11,000 |
b
|
10,032,000 | |||||||||||||||
Due
to related parties
|
1,563,000 | (312,000 | ) | (731,000 | ) |
b
|
520,000 | |||||||||||||
Total
current liabilities
|
78,597,000 | (244,000 | ) | (666,000 | ) | 77,687,000 | ||||||||||||||
Long-term
bank debt
|
120,050,000 | -- | -- | 120,050,000 | ||||||||||||||||
Asset
retirement obligations
|
15,538,000 | 576,000 | 822,000 |
b
|
16,936,000 | |||||||||||||||
Derivative
liability long term
|
3,369,000 | -- | -- | 3,369,000 | ||||||||||||||||
Deferred
income taxes
|
26,930,000 | (1,093,000 | ) | 185,000 |
a,b
|
26,022,000 | ||||||||||||||
Total
liabilities
|
244,484,000 | (761,000 | ) | 341,000 | 244,064,000 | |||||||||||||||
Minority
interest
|
1,313,000 | 11,220,000 | 396,000 |
b
|
12,929,000 | |||||||||||||||
Stockholders’
equity:
|
||||||||||||||||||||
Preferred
stock, $.10 par value, authorized 5,000,000 shares; none
issued
|
||||||||||||||||||||
Common
stock, $.10 par value, authorized 10,000,000 shares; issued 7,694,970 in
2007 and 2006
|
769,000 | -- | -- | 769,000 | ||||||||||||||||
Paid
in capital
|
11,024,000 | -- | -- | 11,024,000 | ||||||||||||||||
Retained
earnings
|
74,498,000 | (1,943,000 | ) | 330,000 |
a
|
72,885,000 | ||||||||||||||
Accumulated
other comprehensive income (loss), net
|
(3,618,000 | ) | -- | -- | (3,618,000 | ) | ||||||||||||||
82,673,000 | (1,943,000 | ) | 330,000 | 81,060,000 | ||||||||||||||||
Treasury
stock, at cost 4,558,544 common shares in 2007 and 4,478,145 in
2006
|
(32,388,000 | ) | -- | -- | (32,388,000 | ) | ||||||||||||||
Total
stockholders’ equity
|
50,285,000 | (1,943,000 | ) | 330,000 | 48,672,000 | |||||||||||||||
Total
liabilities and stockholders’ equity
|
$ | 296,082,000 | $ | 8,516,000 | $ | 1,067,000 | $ | 305,665,000 |
|
|
|
Accumulated
|
|||||||||||||||||||||||||
Additional
|
Other | |||||||||||||||||||||||||||
Common Stock | Paid In | Retained | comprehensive |
|
||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Treasury Stock
|
Total
|
||||||||||||||||||||||
Balance
at December 31, 2004
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 22,653,000 | $ | -- | $ | (16,209,000 | ) | $ | 18,237,000 | ||||||||||||||
Purchased
164,410 shares of common stock
|
(4,456,000 | ) | (4,456,000 | ) | ||||||||||||||||||||||||
Net
income
|
25,955,000 | 25,955,000 | ||||||||||||||||||||||||||
Balance
at December 31, 2005
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 48,608,000 | $ | -- | $ | (20,665,000 | ) | $ | 39,736,000 | ||||||||||||||
Purchased
110,990 shares of common stock
|
(7,314,000 | ) | (7,314,000 | ) | ||||||||||||||||||||||||
Net
income
|
18,300,000 | 18,300,000 | ||||||||||||||||||||||||||
Other
comprehensive income, net of taxes
|
3,976,000 | 3,976,000 | ||||||||||||||||||||||||||
Balance
at December 31, 2006
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 66,908,000 | $ | 3,976,000 | $ | (27,979,000 | ) | $ | 54,698,000 | ||||||||||||||
Purchased
80,399 shares of common stock
|
(4,409,000 | ) | (4,409,000 | ) | ||||||||||||||||||||||||
Net
income
|
7,590,000 | 7,590,000 | ||||||||||||||||||||||||||
Other
comprehensive income (loss), net of taxes
|
(7,594,000 | ) | (7,594,000 | ) | ||||||||||||||||||||||||
Balance
as of December 31, 2007
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 74,498,000 | $ | (3,618,000 | ) | $ | (32,388,000 | ) | $ | 50,285,000 |
|
|
|
Accumulated
|
|||||||||||||||||||||||||
Additional
|
Other | |||||||||||||||||||||||||||
Common
Stock
|
Paid
In
|
Retained
|
comprehensive | |||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Treasury Stock
|
Total
|
||||||||||||||||||||||
Balance
at December 31, 2004
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 22,653,000 | $ | -- | $ | (16,209,000 | ) | $ | 18,237,000 | ||||||||||||||
Purchased
164,410 shares of common stock
|
(4,456,000 | ) | (4,456,000 | ) | ||||||||||||||||||||||||
Net
income
|
23,604,000 | 23,604,000 | ||||||||||||||||||||||||||
Balance
at December 31, 2005
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 46,257,000 | $ | -- | $ | (20,665,000 | ) | $ | 37,385,000 | ||||||||||||||
Purchased
110,990 shares of common stock
|
(7,314,000 | ) | (7,314,000 | ) | ||||||||||||||||||||||||
Net
income
|
18,708,000 | 18,708,000 | ||||||||||||||||||||||||||
Other
comprehensive income, net of taxes
|
3,976,000 | 3,976,000 | ||||||||||||||||||||||||||
Balance
at December 31, 2006
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 64,965,000 | $ | 3,976,000 | $ | (27,979,000 | ) | $ | 52,755,000 | ||||||||||||||
Purchased
80,399 shares of common stock
|
(4,409,000 | ) | (4,409,000 | ) | ||||||||||||||||||||||||
Net
income
|
7,920,000 | 7,920,000 | ||||||||||||||||||||||||||
Other
comprehensive income (loss), net of taxes
|
(7,594,000 | ) | (7,594,000 | ) | ||||||||||||||||||||||||
Balance
as of December 31, 2007
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 72,885,000 | $ | (3,618,000 | ) | $ | (32,388,000 | ) | $ | 48,672,000 |
As
Reported
|
Current
year
|
As
Restated
|
||||||||||||||
2007
|
Adjustments
|
Notes
|
2007
|
|||||||||||||
Revenue:
|
||||||||||||||||
Oil
and gas sales
|
$ | 112,708,000 | $ | 9,653,000 |
b
|
$ | 122,361,000 | |||||||||
Field
service income
|
24,302,000 | 38,000 |
b
|
24,340,000 | ||||||||||||
Administrative
overhead fees
|
9,041,000 | -- | 9,041,000 | |||||||||||||
Loss
on derivative instruments, net
|
-- | -- | -- | |||||||||||||
Other
income
|
404,000 | -- | 404,000 | |||||||||||||
146,455,000 | 9,691,000 | 156,146,000 | ||||||||||||||
Costs
and expenses:
|
||||||||||||||||
Lease
operating expense
|
30,762,000 | 4,079,000 |
b
|
34,841,000 | ||||||||||||
Field
service expense
|
17,724,000 | -- | 17,724,000 | |||||||||||||
Depreciation,
depletion and amortization
|
64,488,000 | 19,000 |
a,b
|
64,507,000 | ||||||||||||
General
and administrative expense
|
11,844,000 | 505,000 |
b
|
12,349,000 | ||||||||||||
Exploration
costs
|
633,000 | -- | 633,000 | |||||||||||||
125,451,000 | 4,603,000 | 130,054,000 | ||||||||||||||
Add
gain on sale and exchange of assets
|
598,000 | -- | 598,000 | |||||||||||||
Income
from operations
|
21,602,000 | 5,088,000 | 26,690,000 | |||||||||||||
Other
income and expense:
|
||||||||||||||||
Less:
Interest expense
|
11,062,000 | -- | 11,062,000 | |||||||||||||
Add
interest income
|
697,000 | 155,000 |
b
|
852,000 | ||||||||||||
Less:
Minority interest
|
-- | 4,728,000 |
b
|
|
4,728,000 | |||||||||||
Income
before provision for income taxes
|
11,237,000 | 515,000 | 11,752,000 | |||||||||||||
Provision
for income taxes
|
3,647,000 | 185,000 |
a
|
3,832,000 | ||||||||||||
Net
income
|
$ | 7,590,000 | $ | 330,000 | $ | 7,920,000 | ||||||||||
Basic
net income per common share
|
$ | 2.39 | $ | 0.11 | $ | 2.50 | ||||||||||
Diluted
net income per common share
|
$ | 1.93 | $ | 0.09 | $ | 2.02 |
As Reported 2007
|
CurrentYear
Adjustments
|
Notes
|
As Restated 2007
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
$ | 7,590,000 | $ | 330,000 |
a
|
$ | 7,920,000 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
64,488,000 | 19,000 |
a,b
|
64,507,000 | ||||||||||||
Dry
hole and abandonment costs
|
343,000 | -- | 343,000 | |||||||||||||
Gain
on sale of properties
|
(598,000 | ) | -- | (598,000 | ) | |||||||||||
Non-cash
incentive compensation expense
|
-- | -- | -- | |||||||||||||
Provision
for deferred income taxes
|
1,030,000 | 185,000 |
a
|
1,215,000 | ||||||||||||
Minority
interest in earnings of partnerships
|
-- | 4,728,000 |
b
|
4,728,000 | ||||||||||||
Changes
in assets and liabilities:
|
||||||||||||||||
(Increase)
decrease in accounts receivable
|
13,168,000 | 1,108,000 |
b
|
14,276,000 | ||||||||||||
(Increase)
decrease in due from related parties
|
443,000 | 863,000 |
b
|
1,306,000 | ||||||||||||
(Increase)
decrease in inventories
|
331,000 | (6,000 | ) |
b
|
325,000 | |||||||||||
(Increase)
decrease in prepaid expenses and other assets
|
(175,000 | ) | -- | (175,000 | ) | |||||||||||
Increase
(decrease) in accounts payable
|
325,000 | (199,000 | ) |
b
|
126,000 | |||||||||||
Increase
(decrease) in accrued liabilities
|
132,000 | (79,000 | ) |
b
|
53,000 | |||||||||||
Increase
(decrease) in due to related parties
|
1,088,000 | -- | 1,088,000 | |||||||||||||
Net
cash provided by operating activities
|
88,165,000 | 6,949,000 | 95,114,000 | |||||||||||||
Cash
flows from investing activities
|
||||||||||||||||
Capital
expenditures, including exploration expense
|
(106,601,000 | ) | (3,218,000 | ) |
b
|
(109,819,000 | ) | |||||||||
Proceeds
from sale of properties and equipment
|
598,000 | -- | 598,000 | |||||||||||||
Net
cash used in investing activities
|
(106,003,000 | ) | (3,218,000 | ) | (109,221,000 | ) | ||||||||||
Cash
flows from financing activities
|
||||||||||||||||
Purchase
of stock for treasury
|
(4,409,000 | ) | -- | (4,409,000 | ) | |||||||||||
Increase
in long-term bank debt and other long-term obligations
|
105,867,000 | -- | 105,867,000 | |||||||||||||
Repayment
of long-term bank debt and other long-term obligations
|
(86,960,000 | ) | -- | (86,960,000 | ) | |||||||||||
Distribution
to minority interest
|
-- | (4,074,000 | ) |
b
|
(4,074,000 | ) | ||||||||||
Net
cash provided by (used in) financing activities
|
14,498,000 | (4,074,000 | ) | 10,424,000 | ||||||||||||
Net
increase(decrease) in cash and cash equivalents
|
(3,340,000 | ) | (343,000 | ) | (3,683,000 | ) | ||||||||||
Cash
and cash equivalents at the beginning of the period
|
24,653,000 | 4,403,000 |
b
|
29,056,000 | ||||||||||||
Cash
and cash equivalents at the end of the period
|
$ | 21,313,000 | $ | 4,060,000 | $ | 25,373,000 | ||||||||||
Supplemental
disclosures:
|
||||||||||||||||
Income
taxes paid during the year
|
$ | 1,643,000 | $ | -- | $ | 1,643,000 | ||||||||||
Net
income tax refunds received during the year
|
$ | 2,623,000 | $ | -- | $ | 2,623,000 | ||||||||||
Interest
paid during the year
|
$ | 11,062,000 | $ | -- | $ | 11,062,000 |
As
Reported
|
Cumulative
Effect of Prior Year
|
Current
Year
|
As
Restated
|
|||||||||||||||||
2006
|
Adjustments
|
Adjustments
|
Notes
|
2006
|
||||||||||||||||
ASSETS:
|
||||||||||||||||||||
Current
assets:
|
||||||||||||||||||||
Cash
and cash equivalents
|
$ | 24,653,000 | $ | 3,654,000 | $ | 749,000 |
b
|
$ | 29,056,000 | |||||||||||
Restricted
cash and cash Equivalents
|
2,528,000 | -- | -- | 2,528,000 | ||||||||||||||||
Accounts
receivable, net
|
32,970,000 | 1,117,000 | (423,000 | ) |
b
|
33,664,000 | ||||||||||||||
Due
from related parties
|
655,000 | (255,000 | ) | (29,000 | ) |
b
|
429,000 | |||||||||||||
Prepaid
expenses
|
1,269,000 | -- | 1,269,000 | |||||||||||||||||
Derivative
contracts
|
6,085,000 | -- | -- |
|
6,085,000 | |||||||||||||||
Inventory
at cost
|
3,521,000 | (6,000 | ) | 3,000 |
b
|
|
3,518,000 | |||||||||||||
Deferred
income tax
|
-- | -- | -- | -- | ||||||||||||||||
Total
current assets
|
71,681,000 | 4,510,000 | 358,000 | 76,549,000 | ||||||||||||||||
Property
and equipment, at cost:
|
||||||||||||||||||||
Proved
oil and gas properties at cost
|
284,698,000 | 9,564,000 | (425,000 | ) |
a,b
|
293,837,000 | ||||||||||||||
Unproved
oil and gas properties at cost
|
5,047,000 | -- | -- | 5,047,000 | ||||||||||||||||
Less:
Accumulated depletion and depreciation
|
78,005,000 | (6,190,000 | ) | 632,000 |
a,b
|
(83,563,000 | ) | |||||||||||||
211,740,000 | 3,374,000 | 207,000 | 215,321,000 | |||||||||||||||||
Field
and office equipment
|
15,793,000 | -- | -- | 15,793,000 | ||||||||||||||||
Less:
Accumulated depreciation
|
8,351,000 | -- | -- | 8,351,000 | ||||||||||||||||
7,442,000 | -- | -- | 7,442,000 | |||||||||||||||||
Total
net property and equipment
|
219,182,000 | 3,374,000 | 207,000 | 222,763,000 | ||||||||||||||||
Other
assets
|
729,000 | 69,000 | (2,000 | ) |
b
|
796,000 | ||||||||||||||
Total
assets
|
$ | 291,592,000 | $ | 7,953,000 | $ | 563,000 | $ | 300,108,000 |
As Reported 2006
|
Cumulative
Effective of Prior Year Adjustment
|
Current
Year Adjustment
|
Notes
|
As Restated 2006
|
||||||||||||||||
LIABILITIES
and STOCKHOLDERS’ EQUITY:
|
||||||||||||||||||||
Current
liabilities:
|
||||||||||||||||||||
Current
bank debt
|
$ | -- | $ | -- | $ | -- | $ | -- | ||||||||||||
Accounts
payable
|
42,658,000 | (2,000 | ) | (29,000 | ) |
b
|
42,627,000 | |||||||||||||
Current
portion of asset retirement and other long-term
obligations
|
314,000 | 102,000 | (71,000 | ) |
b
|
345,000 | ||||||||||||||
Derivative
liability short term
|
1,961,000 | -- | -- | 1,961,000 | ||||||||||||||||
Accrued
liabilities
|
22,030,000 | 168,000 | (100,000 | ) |
b
|
22,098,000 | ||||||||||||||
Due
to related parties
|
477,000 | (779,000 | ) | 467,000 |
b
|
165,000 | ||||||||||||||
Total
current liabilities
|
67,440,000 | (511,000 | ) | 267,000 | 67,196,000 | |||||||||||||||
Long-term
bank debt
|
136,460,000 | -- | -- | 136,460,000 | ||||||||||||||||
Asset
retirement obligations
|
6,314,000 | 464,000 | 112,000 |
b
|
6,890,000 | |||||||||||||||
Derivative
liability long term
|
-- | -- | -- | -- | ||||||||||||||||
Deferred
income taxes
|
25,367,000 | (1,323,000 | ) | 230,000 |
a,b
|
24,274,000 | ||||||||||||||
Total
liabilities
|
235,581,000 | (1,370,000 | ) | 609,000 | 234,820,000 | |||||||||||||||
Minority
interest
|
1,313,000 | 11,674,000 | (454,000 | ) |
b
|
12,533,000 | ||||||||||||||
Stockholders’
equity:
|
||||||||||||||||||||
Preferred
stock, $.10 par value, authorized 5,000,000 shares; none
issued
|
||||||||||||||||||||
Common
stock, $.10 par value, authorized 10,000,000 shares; issued 7,694,970 in
2007 and 2006
|
769,000 | -- | -- | 769,000 | ||||||||||||||||
Paid
in capital
|
11,024,000 | -- | -- | 11,024,000 | ||||||||||||||||
Retained
earnings
|
66,908,000 | (2,351,000 | ) | 408,000 |
a
|
64,965,000 | ||||||||||||||
Accumulated
other comprehensive income (loss), net
|
3,976,000 | -- | -- | 3,976,000 | ||||||||||||||||
82,677,000 | (2,351,000 | ) | 408,000 | 80,734,000 | ||||||||||||||||
Treasury
stock, at cost 4,558,544 common shares in 2007 and 4,478,145 in
2006
|
(27,979,000 | ) | -- | -- | (27,979,000 | ) | ||||||||||||||
Total
stockholders’ equity
|
54,698,000 | (2,351,000 | ) | 408,000 | 52,755,000 | |||||||||||||||
Total
liabilities and stockholders’ equity
|
$ | 291,592,000 | $ | 7,953,000 | $ | 563,000 | $ | 300,108,000 |
As
Reported 2006
|
Current
year Adjustments
|
Notes
|
As
Restated 2006
|
|||||||||||||
Revenue:
|
||||||||||||||||
Oil
and gas sales
|
$ | 61,924,000 | $ | 9,726,000 |
b
|
$ | 71,650,000 | |||||||||
Field
service income
|
20,319,000 | 38,000 |
b
|
20,357,000 | ||||||||||||
Administrative
overhead fees
|
9,704,000 | -- | 9,704,000 | |||||||||||||
Loss
on derivative instruments, net
|
-- | -- | -- | |||||||||||||
Other
income
|
112,000 | -- | 112,000 | |||||||||||||
92,059,000 | 9,764,000 | 101,823,000 | ||||||||||||||
Costs
and expenses:
|
||||||||||||||||
Lease
operating expense
|
21,040,000 | 4,297,000 |
b
|
25,337,000 | ||||||||||||
Field
service expense
|
15,796,000 | 6,000 |
b
|
15,802,000 | ||||||||||||
Depreciation,
depletion and amortization
|
14,437,000 | (67,000 | ) |
a,b
|
14,370,000 | |||||||||||
General
and administrative expense
|
12,400,000 | 577,000 |
b
|
12,977,000 | ||||||||||||
Exploration
costs
|
1,162,000 | -- |
|
1,162,000 | ||||||||||||
64,835,000 | 4,813,000 | 69,648,000 | ||||||||||||||
Add
gain on sale and exchange of assets
|
3,017,000 | 712,000 | 3,729,000 | |||||||||||||
Income
from operations
|
30,241,000 | 5,663,000 | 35,904,000 | |||||||||||||
Other
income and expense:
|
||||||||||||||||
Less:
Interest expense
|
2,091,000 | -- | 2,091,000 | |||||||||||||
Add
interest income
|
360,000 | 148,000 |
b
|
508,000 | ||||||||||||
Less:
Minority interest
|
-- | 5,173,000 |
b
|
5,173,000 | ||||||||||||
Income
before provision for income taxes
|
28,510,000 | 638,000 | 29,148,000 | |||||||||||||
Provision
for income taxes
|
10,210,000 | 230,000 |
a
|
10,440,000 | ||||||||||||
Net
income
|
$ | 18,300,000 | $ | 408,000 | $ | 18,708,000 | ||||||||||
Basic
net income per common share
|
$ | 5.52 | $ | 0.13 | $ | 5.65 | ||||||||||
Diluted
net income per common share
|
$ | 4.50 | $ | 0.10 | $ | 4.60 |
As Reported 2006
|
CurrentYear
Adjustments
|
Notes
|
As Restated 2006
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
$ | 18,300,000 | $ | 408,000 |
a
|
$ | 18,708,000 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
14,437,000 | (67,000 | ) |
a,b
|
14,370,000 | |||||||||||
Dry
hole and abandonment costs
|
510,000 | -- | 510,000 | |||||||||||||
Gain
on sale of properties
|
(3,017,000 | ) | (712,000 | ) |
b
|
(3,729,000 | ) | |||||||||
Non-cash
incentive compensation expense
|
1,313,000 | -- | 1,313,000 | |||||||||||||
Provision
for deferred income taxes
|
11,557,000 | 230,000 |
a
|
11,787,000 | ||||||||||||
Minority
interest in earnings of partnerships
|
-- | 5,173,000 |
b
|
|
5,173,000 | |||||||||||
Changes
in assets and liabilities:
|
|
|||||||||||||||
(Increase)
decrease in accounts receivable
|
(16,411,000 | ) | 931,000 |
b
|
(15,480,000 | ) | ||||||||||
(Increase)
decrease in due from related parties
|
330,000 | 154,000 |
b
|
484,000 | ||||||||||||
(Increase)
decrease in inventories
|
(3,133,000 | ) | (3,000 | ) |
b
|
(3,136,000 | ) | |||||||||
(Increase)
decrease in prepaid expenses and other assets
|
6,382,000 | 67,000 |
b
|
6,449,000 | ||||||||||||
Increase
(decrease) in accounts payable
|
3,716,000 | (206,000 | ) |
b
|
3,510,000 | |||||||||||
Increase
(decrease) in accrued liabilities
|
(1,450,000 | ) | (68,000 | ) |
b
|
(1,518,000 | ) | |||||||||
Increase
(decrease) in due to related parties
|
(552,000 | ) | (68,000 | ) |
b
|
(620,000 | ) | |||||||||
Net
cash provided by operating activities
|
31,982,000 | 5,839,000 | 37,821,000 | |||||||||||||
Cash
flows from investing activities
|
||||||||||||||||
Capital
expenditures, including exploration expense
|
(121,345,000 | ) | (1,359,000 | ) |
b
|
(122,704,000 | ) | |||||||||
Proceeds
from sale of properties and equipment
|
3,017,000 | 712,000 |
b
|
3,729,000 | ||||||||||||
Net
cash used in investing activities
|
(118,328,000 | ) | (647,000 | ) | (118,975,000 | ) | ||||||||||
Cash
flows from financing activities
|
||||||||||||||||
Purchase
of stock for treasury
|
(7,314,000 | ) | -- | (7,314,000 | ) | |||||||||||
Increase
in long-term bank debt and other long-term obligations
|
198,362,000 | -- | 198,362,000 | |||||||||||||
Repayment
of long-term bank debt and other long-term obligations
|
(91,168,000 | ) | -- | (91,168,000 | ) | |||||||||||
Distribution
to minority interest
|
(4,443,000 | ) |
b
|
(4,443,000 | ) | |||||||||||
Net
cash provided by (used in) financing activities
|
99,880,000 | (4,443,000 | ) | 95,437,000 | ||||||||||||
Net
increase in cash and cash equivalents
|
13,534,000 | 749,000 | 14,283,000 | |||||||||||||
Cash
and cash equivalents at the beginning of the period
|
11,119,000 | 3,654,000 |
b
|
14,773,000 | ||||||||||||
Cash
and cash equivalents at the end of the period
|
$ | 24,653,000 | $ | 4,403,000 | $ | 29,056,000 | ||||||||||
Supplemental
disclosures:
|
||||||||||||||||
Income
taxes paid during the year
|
$ | 5,713,000 | $ | -- | $ | 5,713,000 | ||||||||||
Interest
paid during the year
|
$ | 2,091,000 | $ | -- | $ | 2,091,000 |
As
Reported
2005
|
Current
year
adjustments
|
Notes
|
As
Restated
2005
|
|||||||||||||
Revenue:
|
||||||||||||||||
Oil
and gas sales
|
$ | 53,988,000 | $ | 11,332,000 |
b
|
$ | 65,320,000 | |||||||||
Field
service income
|
15,182,000 | 44,000 |
b
|
15,226,000 | ||||||||||||
Administrative
overhead fees
|
7,068,000 | -- | 7,068,000 | |||||||||||||
Loss
on derivative instruments, net
|
(415,000 | ) | -- | (415,000 | ) | |||||||||||
Other
income
|
25,000 | -- | 25,000 | |||||||||||||
75,848,000 | 11,376,000 | 87,224,000 | ||||||||||||||
Costs
and expenses:
|
||||||||||||||||
Lease
operating expense
|
18,573,000 | 4,668,000 |
b
|
23,241,000 | ||||||||||||
Field
service expense
|
12,791,000 | 13,000 |
b
|
12,804,000 | ||||||||||||
Depreciation,
depletion and amortization
|
11,274,000 | 510,000 |
a,b
|
11,784,000 | ||||||||||||
General
and administrative expense
|
10,493,000 | 555,000 |
b
|
11,048,000 | ||||||||||||
Exploration
costs
|
664,000 | -- |
|
664,000 | ||||||||||||
53,795,000 | 5,746,000 | 59,541,000 | ||||||||||||||
Add
gain on sale and exchange of assets
|
20,334,000 | (3,746,000 | ) |
a
|
16,588,000 | |||||||||||
Income
from operations
|
42,387,000 | 1,884,000 | 44,271,000 | |||||||||||||
Other
income and expense:
|
||||||||||||||||
Less
interest expense
|
1,531,000 | -- | 1,531,000 | |||||||||||||
Add
interest income
|
98,000 | 55,000 |
b
|
153,000 | ||||||||||||
Less
minority interest
|
-- | 5,613,000 |
b
|
5,613,000 | ||||||||||||
|
||||||||||||||||
Income
before provision for income taxes
|
40,954,000 | (3,674,000 | ) | 37,280,000 | ||||||||||||
Provision
for income taxes
|
14,999,000 | (1,323,000 | ) |
a
|
13,676,000 | |||||||||||
Net
income
|
$ | 25,955,000 | $ | (2,351,000 | ) | $ | 23,604,000 | |||||||||
Basic
net income per common share
|
$ | 7.64 | $ | (0.69 | ) | $ | 6.95 | |||||||||
Diluted
net income per common share
|
$ | 6.27 | $ | (0.57 | ) | $ | 5.70 |
As Reported 2005
|
CurrentYear
Adjustments
|
Notes
|
As Restated 2005
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
$ | 25,955,000 | $ | (2,351,000 | ) |
a
|
$ | 23,604,000 | ||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|||||||||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
11,274,000 | 510,000 |
a,b
|
|
11,784,000 | |||||||||||
Dry
hole and abandonment costs
|
262,000 | -- | 262,000 | |||||||||||||
Gain
on sale of properties
|
(20,334,000 | ) | 3,746,000 |
b
|
(16,588,000 | ) | ||||||||||
Provision
for deferred income taxes
|
6,230,000 | (1,323,000 | ) |
a
|
4,907,000 | |||||||||||
Minority
interest in earnings of partnerships
|
-- | 5,613,000 |
b
|
5,613,000 | ||||||||||||
Changes
in assets and liabilities:
|
||||||||||||||||
(Increase)
decrease in accounts receivable
|
(7,803,000 | ) | 1,397,000 |
b
|
(6,406,000 | ) | ||||||||||
(Increase)
decrease in due from related parties
|
(985,000 | ) | 778,000 |
b
|
(207,000 | ) | ||||||||||
(Increase)
decrease in inventories
|
-- | (6,000 | ) |
b
|
(6,000 | ) | ||||||||||
(Increase)
decrease in prepaid expenses and other assets
|
(7,320,000 | ) | 69,000 |
b
|
(7,251,000 | ) | ||||||||||
Increase
(decrease) in accounts payable
|
5,510,000 | (278,000 | ) |
b
|
5,232,000 | |||||||||||
Increase
(decrease) in accrued liabilities
|
5,385,000 | (168,000 | ) |
b
|
|
5,217,000 | ||||||||||
Increase
(decrease) in due to related parties
|
431,000 | -- |
|
431,000 | ||||||||||||
Net
cash provided by operating activities
|
18,605,000 | 7,987,000 | 26,592,000 | |||||||||||||
Cash
flows from investing activities
|
||||||||||||||||
Capital
expenditures, including exploration expense
|
(54,440,000 | ) | 403,000 |
b
|
(54,037,000 | ) | ||||||||||
Proceeds
from sale of properties and equipment
|
46,796,000 | (3,746,000 | ) |
b
|
43,050,000 | |||||||||||
Net
cash used in investing activities
|
(7,644,000 | ) | (3,343,000 | ) | (10,987,000 | ) | ||||||||||
Cash
flows from financing activities
|
||||||||||||||||
Purchase
of stock for treasury
|
(4,456,000 | ) | -- | (4,456,000 | ) | |||||||||||
Increase
in long-term bank debt and other long-term obligations
|
65,570,000 | -- | 65,570,000 | |||||||||||||
Repayment
of long-term bank debt and other long-term obligations
|
(67,432000 | ) | -- | (67,432,000 | ) | |||||||||||
Distribution
to minority interest
|
(3,456,000 | ) |
b
|
(3,456,000 | ) | |||||||||||
Net
cash provided by (used in) financing activities
|
(6,318,000 | ) | (3,456,000 | ) | (9,774,000 | ) | ||||||||||
Net
increase in cash and cash equivalents
|
4,643,000 | 1,188,000 | 5,831,000 | |||||||||||||
Cash
and cash equivalents at the beginning of the period
|
6,476,000 | 2,466,000 |
b
|
8,942,000 | ||||||||||||
Cash
and cash equivalents at the end of the period
|
$ | 11,119,000 | $ | 3,654,000 | $ | 14,773,000 | ||||||||||
Supplemental
disclosures:
|
||||||||||||||||
Income
taxes paid during the year
|
$ | 5,076,000 | $ | -- | $ | 5,076,000 | ||||||||||
Interest
paid during the year
|
$ | 1,531,000 | $ | -- | $ | 1,531,000 |
|
a)
|
The
correction of the recorded gain on sale of assets to a partnership in
which the Company acquired a twenty percent non-controlling interest in
the year ended December 31, 2005 resulted in a decrease of $3.7 million in
gain on sale and a decrease in depletion and depreciation of $72,000 for
the year ended December 31, 2005, and a corresponding decrease in proved
oil and gas properties and accumulated depletion and depreciation as of
December 31, 2005. This change in the basis of oil and gas properties
resulted in a reduction of depletion and depreciation expense
of $638,000 and $515,000 in 2006 and 2007 respectively and
corresponding reductions in accumulated depletion and depreciation. The
change in gain and depletion and depreciation expense resulted in the
noted change in deferred taxes for each
period.
|
|
b)
|
The
restatement of these items, net of amounts described in note a, results
from the change from the proportionate consolidation method to the full
consolidation method of accounting for the limited partnerships and trusts
that we control.
|
3.
|
Significant
Acquisitions and
Dispositions
|
4.
|
Additional
Balance Sheet Information
(restated)
|
December 31,
|
||||||||
2007
|
2006
|
|||||||
Joint
interest billing
|
$ | 3,192,000 | $ | 13,054,000 | ||||
Trade
receivables
|
2,352,000 | 2,367,000 | ||||||
Oil
and gas sales
|
14,785,000 | 9,458,000 | ||||||
Income
tax receivable
|
795,000 | 3,023,000 | ||||||
Other
|
415,000 | 5,912,000 | ||||||
21,539,000 | 33,814,000 | |||||||
Less:
allowance for doubtful accounts
|
(228,000 | ) | (150,000 | ) | ||||
Total
|
$ | 21,311,000 | $ | 33,664,000 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Trade
|
$ | 12,364,000 | $ | 34,324,000 | ||||
Royalty
and other owners
|
11,209,000 | 6,232,000 | ||||||
Other
|
3,207,000 | 2,071,000 | ||||||
Total
|
$ | 26,780,000 | $ | 42,627,000 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Compensation
and related expenses
|
$ | 1,687,000 | $ | 1,584,000 | ||||
Property
costs
|
4,551,000 | 16,256,000 | ||||||
Income
tax
|
-- | 270,000 | ||||||
Other
|
3,794,000 | 3,988,000 | ||||||
$ | 10,032,000 | $ | 22,098,000 |
5.
|
Property
and Equipment
|
6.
|
Long-Term
Bank Debt - Debt
|
7.
|
Commitments
|
Operating
Leases
|
||||
2008
|
$ | 605,000 | ||
2009
|
350,000 | |||
2010
|
71,000 | |||
2011
|
5,000 | |||
Thereafter
|
-- | |||
Total
minimum payments
|
$ | 1,031,000 |
2007 Restated
|
2006 Restated
|
|||||||
Asset
retirement obligation - beginning of period
|
$ | 7,047,000 | $ | 3,160,000 | ||||
Liabilities
incurred
|
468,000 | 3,033,000 | ||||||
Liabilities
settled
|
(367,000 | ) | (348,000 | ) | ||||
Accretion
expense
|
461,000 | 149,000 | ||||||
Revisions
in estimated liabilities
|
9,752,000 | 1,053,000 | ||||||
Asset
retirement obligation - end of period
|
$ | 17,361,000 | $ | 7,047,000 |
8.
|
Contingent
Liabilities
|
9.
|
Stock
Options and Other
Compensation
|
10.
|
Income
Taxes (restated)
|
2007
|
2006
|
2005
|
||||||||||
Federal:
|
||||||||||||
Current
|
$ | 567,000 | $ | (1,814,000 | ) | $ | 8,011,000 | |||||
Deferred
|
2,662,000 | 11,638,000 | 4,106,000 | |||||||||
State:
|
||||||||||||
Current
|
660,000 | 467,000 | 803,000 | |||||||||
Deferred
|
(57,000 | ) | 149,000 | 756,000 | ||||||||
Total
|
$ | 3,832,000 | $ | 10,440,000 | $ | 13,676,000 |
December
31,
2007
|
December
31,
2006
|
|||||||
Current
assets:
|
||||||||
Compensation
allowance
|
$ | 443,000 | $ | 252,000 | ||||
Allowance
for doubtful accounts
|
56,000 | 56,000 | ||||||
Unrealized
loss on hedging transactions
|
1,083,000 | - | ||||||
Total
current deferred income tax assets
|
$ | 1,582,000 | $ | 308,000 | ||||
Current
liabilities:
|
||||||||
Unrealized
gain on hedging transactions
|
$ | -- | $ | 2,270,000 | ||||
Net
current deferred tax liability (asset)
|
$ | (1,582,000 | ) | $ | 1,962,000 | |||
Noncurrent
assets:
|
||||||||
Alternative
minimum tax credits
|
$ | 7,478,000 | $ | 7,328,000 | ||||
Net
operating loss carryfowards
|
2,526,000 | 903,000 | ||||||
Percentage
depletion carryfowards
|
1,099,000 | 351,000 | ||||||
Unrealized
gain on hedging transactions
|
953,000 | -- | ||||||
Total
noncurrent assets
|
$ | 12,056,000 | $ | 8,582,000 | ||||
Noncurrent
liabilities:
|
||||||||
Basis
differences relating to partnerships
|
$ | 1,381,000 | $ | 1,213,000 | ||||
Depletion
and depreciation
|
36,697,000 | 31,547,000 | ||||||
Unrealized
gain on hedging transactions
|
-- | 96,000 | ||||||
Total
noncurrent liabilities
|
$ | 38,078,000 | $ | 32,856,000 | ||||
Net
noncurrent deferred income tax liabilities
|
$ | 26,022,000 | $ | 24,274,000 |
December
31,
2007
|
December
31,
2006
|
December
31,
2005
|
||||||||||
Expected
tax expense
|
$ | 4,006,000 | $ | 9,923,000 | $ | 12,690,000 | ||||||
State
income tax, net of federal benefit
|
398,000 | 411,000 | 1,029,000 | |||||||||
Percentage
depletion
|
(697,000 | ) | (352,000 | ) | (429,000 | ) | ||||||
Executive
Compensation
|
125,000 | 542,000 | 467,000 | |||||||||
Other,
Net
|
-- | (84,000 | ) | (81,000 | ) | |||||||
Tax
expense
|
$ | 3,832,000 | $ | 10,440,000 | $ | 13,676,000 |
11.
|
Segment
Information and Major Customers
(restated)
|
Oil
Purchasers:
|
Gas
Purchasers:
|
|||||||||
Texon
Distributing L.P.
|
30 | % |
Unimark
LLC
|
12 | % | |||||
Plains
All American Inc.
|
54 | % |
Cokinos
Energy Corporation
|
57 | % |
12.
|
Derivative Instruments
and Hedging Activity:
|
13.
|
Related Party
Transactions (restated)
|
14.
|
Restricted
Cash and Cash Equivalents
|
15.
|
Salary
Deferral Plan
|
16.
|
Earnings
per Share (restated)
|
Year ended December 31,
2007
|
||||||||||||
Net Income
|
Number
of
Shares
|
Per
share
Amount
|
||||||||||
Net
income per common share
|
$ | 7,920,000 | 3,174,032 | $ | 2.50 | |||||||
Effect
of dilutive securities:
|
||||||||||||
Options
|
-- | 752,868 | ||||||||||
Diluted
net income per common share
|
$ | 7,920,000 | 3,926,900 | $ | 2.02 |
Year ended December 31,
2006
|
||||||||||||
Net Income
|
Number
of
Shares
|
Per
share
Amount
|
||||||||||
Net
income per common share
|
$ | 18,708,000 | 3,314,003 | $ | 5.65 | |||||||
Effect
of dilutive securities:
|
||||||||||||
Options
|
-- | 755,682 | ||||||||||
Diluted
net income per common share
|
$ | 18,708,000 | 4,069,685 | $ | 4.60 |
Year ended December 31,
2005
|
||||||||||||
Net Income
|
Number
of
Shares
|
Per
share
Amount
|
||||||||||
Net
income per common share
|
$ | 23,604,000 | 3,397,820 | $ | 6.95 | |||||||
Effect
of dilutive securities:
|
||||||||||||
Options
|
742,589 | |||||||||||
Diluted
net income per common share
|
$ | 23,604,000 | 4,140,409 | $ | 5.70 |
17.
|
Selected Quarterly
Financial Information (Restated and
Unaudited)
|
2007
|
Fourth
Quarter
|
Third
Quarter
|
Second
Quarter
|
First
Quarter
|
||||||||||||
Revenue
|
$ | 42,856,000 | $ | 44,278,000 | $ | 38,519,000 | $ | 30,493,000 | ||||||||
Operating
income
|
5,556,000 | 5,654,000 | 8,067,000 | 7,413,000 | ||||||||||||
Net
income
|
955,000 | 854,000 | 2,794,000 | 3,317,000 | ||||||||||||
Net
income per common share
|
$ | 0.32 | $ | 0.27 | $ | 0.88 | $ | 1.03 | ||||||||
Diluted
net income per common share
|
$ | 0.25 | $ | 0.22 | $ | 0.71 | $ | 0.84 |
2006
|
Fourth
Quarter
|
Third
Quarter
|
Second
Quarter
|
First
Quarter
|
||||||||||||
Revenue
|
$ | 22,768,000 | $ | 27,543,000 | $ | 26,023,000 | $ | 25,489,000 | ||||||||
Operating
income
|
5,665,000 | 13,119,000 | 8,717,000 | 8,403,000 | ||||||||||||
Net
income
|
2,494,000 | 6,712,000 | 5,421,000 | 4,081,000 | ||||||||||||
Net
income per common share
|
$ | 0.71 | $ | 2.06 | $ | 1.65 | $ | 1.23 | ||||||||
Diluted
net income per common share
|
$ | 0.59 | $ | 1.67 | $ | 1.34 | $ | 1.00 |
2007
|
2006
|
2005
|
||||||||||
Developed
oil and gas properties
|
$ | 378,908,000 | $ | 293,837,000 | $ | 134,812,000 | ||||||
Undeveloped
oil and gas properties
|
4,458,000 | 5,047,000 | 6,166,000 | |||||||||
383,366,000 | 298,884,000 | 140,978,000 | ||||||||||
Accumulated
depreciation, depletion and valuation allowance
|
145,514,000 | 83,563,000 | 71,424,000 | |||||||||
Net
capitalized costs
|
$ | 237,852,000 | $ | 215,321,000 | $ | 69,554,000 |
2007
|
2006
|
2005
|
||||||||||
Acquisition
of Properties Developed
|
$ | 371,000 | $ | 1,408,000 | $ | 1,569,000 | ||||||
Undeveloped
|
$ | 184,000 | $ | 5,047,000 | $ | 6,166,000 | ||||||
Exploration
Costs
|
$ | 633,000 | $ | 17,429,000 | $ | 664,000 | ||||||
Development
Costs
|
$ | 86,574,000 | $ | 136,968,000 | $ | 45,622,000 |
2007
|
2006
|
2005
|
||||||||||
Future
cash inflows
|
$ | 996,419,000 | $ | 747,812,000 | $ | 776,004,000 | ||||||
Future
production and development costs
|
(487,001,000 | ) | (324,750,000 | ) | (328,619,000 | ) | ||||||
Future
income tax expenses
|
(127,961,000 | ) | (103,889,000 | ) | (139,363,000 | ) | ||||||
Future
net cash flows
|
381,457,000 | 319,163,000 | 308,022,000 | |||||||||
10%
annual discount for estimated timing of cash flow
|
(155,997,000 | ) | (102,975,000 | ) | (134,533,000 | ) | ||||||
Standardized
measure of discounted future net cash flows
|
$ | 225,460,000 | $ | 216,188,000 | $ | 173,489,000 |
For Year Ended December 31,
|
2007
|
2006
|
2005
|
|||||||||
Sales
of oil and gas produced, net of production costs
|
$ | (83,990,000 | ) | $ | (43,941,000 | ) | $ | (37,527,000 | ) | |||
Net
changes in prices and production costs
|
93,088,000 | (58,710,000 | ) | 70,033,000 | ||||||||
Extensions,
discoveries and improved recovery
|
10,554,000 | 147,292,000 | 64,175,000 | |||||||||
Revisions
of previous quantity estimates
|
(16,462,000 | ) | (2,717,000 | ) | 33,492,000 | |||||||
Reserves
purchased, net of development costs
|
(23,000 | ) | (386,000 | ) | (95,000 | ) | ||||||
Net
change in development costs
|
(27,304,000 | ) | 1,870,000 | 7,914,000 | ||||||||
Reserves
sold
|
-- | -- | (64,246,000 | ) | ||||||||
Accretion
of discount
|
32,564,000 | 12,284,000 | 8,020,000 | |||||||||
Net
change in income taxes
|
(1,979,000 | ) | (7,862,000 | ) | (28,441,000 | ) | ||||||
Changes
in production rates (timing) and other
|
973,000 | (5,131,000 | ) | 8,101,000 | ||||||||
Net
change
|
7,421,000 | 42,699,000 | 61,426,000 | |||||||||
Standardized
measure of discounted future net cash flow:
|
||||||||||||
Beginning
of year
|
216,188,000 | 173,489,000 | 112,063,000 | |||||||||
End
of year
|
$ | 223,609,000 | $ | 216,188,000 | $ | 173,489,000 |
2007
|
2006
|
2005
|
||||||||||||||||||||||
Oil
(bbls.)
|
Gas
(Mcf)
|
Oil
(bbls.)
|
Gas
(Mcf)
|
Oil
(bbls.)
|
Gas
(Mcf)
|
|||||||||||||||||||
Proved
developed and undeveloped reserves:
|
||||||||||||||||||||||||
Beginning
of year
|
5,205,000 | 77,912,000 | 4,711,000 | 55,340,000 | 2,981,000 | 56,607,000 | ||||||||||||||||||
Extensions,
discoveries and improved recovery
|
941,000 | 2,343,000 | 812,000 | 31,394,000 | 807,000 | 11,087,000 | ||||||||||||||||||
Revisions
of previous estimates
|
1,007,000 | (7,531,000 | ) | 138,000 | (2,410,000 | ) | 456,000 | 5,989,000 | ||||||||||||||||
Purchases
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
Reserves
sold
|
-- | -- | -- | -- | (89,000 | ) | (12,701,000 | ) | ||||||||||||||||
Production
|
(561,000 | ) | (11,132,000 | ) | (456,000 | ) | (6,411,000 | ) | (443,000 | ) | (5,641,000 | ) | ||||||||||||
End
of year
|
6,592,000 | 61,412,000 | 5,205,000 | 77,913,000 | 4,712,000 | 55,341,000 | ||||||||||||||||||
Proved
developed reserves
|
5,640,000 | 58,814,000 | 4,986,000 | 75,434,000 | 4,529,000 | 54,373,000 |
2007
|
2006
|
2005
|
||||||||||
Revenue:
|
||||||||||||
Oil
and gas sales
|
$ | 122,361,000 | $ | 71,650,000 | $ | 65,320,000 | ||||||
Costs
and expenses:
|
||||||||||||
Lease
operating expense
|
34,841,000 | 25,337,000 | 23,241,000 | |||||||||
Exploration
costs
|
633,000 | 1,162,000 | 664,000 | |||||||||
Depreciation
and
|
||||||||||||
Depletion
|
59,792,000 | 12,704,000 | 10,635,000 | |||||||||
Income
tax expense
|
7,569,000 | 9,422,000 | 8,281,000 | |||||||||
102,835,000 | 48,625,000 | 42,821,000 | ||||||||||
Results
of operations from producing activities (excluding corporate overhead and
interest costs)
|
$ | 19,526,000 | $ | 23,025,000 | $ | 22,499,000 |
1.
|
Presentation
of Reserve Disclosure
Information
|
2.
|
Determination
of Proved Reserves
|
3.
|
Results
of Operations from Oil and Gas Producing
Activities
|
4.
|
Standardized Measure
of Discounted Future Net Cash Flows and Changes Therein Relating to Proved
Oil and Gas Reserves
|
5.
|
Changes in
Reserves
|