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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11516
REMINGTON OIL AND GAS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2369148
(State or other jurisdiction (IRS employer
of incorporation or organization) identification no.)
8201 PRESTON ROAD, SUITE 600, DALLAS, TEXAS 75225-6211
(Address of principal executive offices)
(Zip code)
(214) 210-2650
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
There were 22,438,475 outstanding shares of Common Stock, $0.01 par value, on
November 6, 2001.
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REMINGTON OIL AND GAS CORPORATION
TABLE OF CONTENTS
PAGE
----
PART I, FINANCIAL INFORMATION............................... 2
ITEM 1. FINANCIAL STATEMENTS.............................. 2
Condensed Consolidated Balance Sheets.................. 2
Condensed Consolidated Statements of Income............ 3
Condensed Consolidated Statements of Cash Flows........ 4
Notes to Condensed Consolidated Financial Statements... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............... 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK....................................... 9
PART II, OTHER INFORMATION.................................. 10
ITEM 1. LEGAL PROCEEDINGS................................. 10
ITEM 2. CHANGES IN SECURITIES............................. 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................... 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS........................................... 10
ITEM 5. OTHER INFORMATION................................. 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................. 10
1
PART I, FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REMINGTON OIL AND GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- ------------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents................................. $ 8,553 $ 18,131
Restricted cash and cash equivalents...................... -- 2,592
Accounts receivable....................................... 19,162 21,142
Prepaid expenses and other current assets................. 3,058 2,375
--------- ---------
Total current assets........................................ 30,773 44,240
--------- ---------
Properties
Oil and natural gas properties (successful-efforts
method)................................................. 412,515 336,558
Other properties.......................................... 2,873 2,701
Accumulated depreciation, depletion and amortization...... (218,002) (201,506)
--------- ---------
Total properties............................................ 197,386 137,753
--------- ---------
Other assets
Cash collateral for Phillips judgment..................... -- 9,000
Other assets.............................................. 866 1,481
--------- ---------
Total other assets.......................................... 866 10,481
--------- ---------
Total assets................................................ $ 229,025 $ 192,474
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities.................. $ 46,191 $ 25,273
Short-term notes payable and current portion of long-term
notes payable........................................... 3,563 7,229
--------- ---------
Total current liabilities................................... 49,754 32,502
--------- ---------
Long-term liabilities
Phillips judgment......................................... -- 19,733
Notes payable............................................. 37,000 24,685
8 1/4% Convertible subordinated notes payable due in
2002.................................................... 1,454 5,880
Other long-term payables.................................. 4,585 6,966
Deferred income tax liability............................. 7,094 --
--------- ---------
Total long-term liabilities................................. 50,133 57,264
--------- ---------
Total liabilities........................................... 99,887 89,766
--------- ---------
Commitments and contingencies (Note 2)
Stockholders' equity
Preferred stock, $.01 par value, 25,000,000 shares
authorized, no shares outstanding....................... -- --
Common stock, $.01 par value, 100,000,000 shares
authorized, 22,302,287 shares issued and 22,267,928
shares outstanding in 2001, 21,598,605 shares issued and
21,564,246 outstanding in 2000.......................... 223 216
Additional paid-in capital................................ 52,914 45,897
Restricted common stock................................... 8,055 --
Unearned compensation..................................... (4,929) --
Retained earnings......................................... 72,875 56,595
--------- ---------
Total stockholders' equity.................................. 129,138 102,708
--------- ---------
Total liabilities and stockholders' equity.................. $ 229,025 $ 192,474
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
2
REMINGTON OIL AND GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
2001 2000 2001 2000
-------- -------- ------- -------
Revenues
Oil sales............................................ $ 6,848 $ 8,657 $22,481 $24,348
Gas sales............................................ 15,559 13,355 72,543 32,355
Other income......................................... 350 13,497 1,902 14,863
------- ------- ------- -------
Total revenues......................................... 22,757 35,509 96,926 71,566
------- ------- ------- -------
Costs and expenses
Operating costs and expenses......................... 4,815 2,143 10,798 7,118
Net Profits interest expense......................... -- 213 751 1,271
Exploration expenses................................. 6,089 344 10,260 1,553
Depreciation, depletion and amortization............. 9,370 5,465 27,619 14,664
General and administrative........................... 757 1,156 3,563 3,766
Stock based compensation............................. 366 34 3,281 122
Settlements.......................................... -- 2,200 13,524 5,416
Interest and financing expense....................... 770 1,250 2,963 3,413
------- ------- ------- -------
Total costs and expenses............................... 22,167 12,805 72,759 37,323
------- ------- ------- -------
Income before taxes and minority interest.............. 590 22,704 24,167 34,243
------- ------- ------- -------
Income tax expense................................... 207 -- 7,887 --
Minority interest in income of subsidiaries.......... -- -- -- (5)
------- ------- ------- -------
Net income............................................. $ 383 $22,704 $16,280 $34,248
======= ======= ======= =======
Basic income per share................................. $ 0.02 $ 1.06 $ 0.75 $ 1.60
======= ======= ======= =======
Diluted income per share............................... $ 0.02 $ 0.99 $ 0.68 $ 1.53
======= ======= ======= =======
Weighted average shares outstanding (Basic)............ 22,103 21,477 21,827 21,417
======= ======= ======= =======
Weighted average shares outstanding (Diluted).......... 24,589 23,084 24,354 22,516
======= ======= ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
3
REMINGTON OIL AND GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2001 2000
-------- --------
Cash flow provided by operations
Net income (loss)......................................... $ 16,280 $ 34,248
Adjustments to reconcile net income
Depreciation, depletion and amortization............... 27,619 14,664
Deferred income taxes.................................. 7,887 --
Amortization of deferred charges....................... 132 210
Deferred net profits expense........................... 1,270 --
Dry hole costs......................................... 7,052 736
Minority interest in income of subsidiaries............ -- (5)
Royalty settlement..................................... -- 3,216
Stock based compensation............................... 3,281 122
(Gain) on sale of properties........................... -- (12,632)
Changes in working capital
Decrease (increase) in accounts receivable............. 1,972 (4,475)
(Increase) decrease in prepaid expenses and other
current assets........................................ (1,208) 412
Increase in accounts payable and accrued liabilities... 20,727 10,846
Decrease (increase) in restricted cash................. 11,592 (550)
-------- --------
Net cash flow provided by operations...................... 96,604 46,792
-------- --------
Cash from investing activities
Payments for capital expenditures...................... (94,304) (36,583)
Proceeds from property sales........................... -- 15,212
-------- --------
Net cash (used in) investing activities................... (94,304) (21,371)
-------- --------
Cash from financing activities
Proceeds from note payable............................. 17,500 1,790
Loan origination costs................................. (307) --
Payments on notes payable and long-term accounts
payable............................................... (11,232) (6,489)
Common stock issued.................................... 1,018 15
Reduction in temporary equity.......................... (18,857) --
Dividends paid to minority stockholders of
subsidiaries.......................................... -- (18)
-------- --------
Net cash (used in) financing activities................... (11,878) (4,702)
-------- --------
Net (decrease) increase in cash and cash equivalents........ (9,578) 20,719
Cash and cash equivalents at beginning of period.......... 18,131 4,356
-------- --------
Cash and cash equivalents at end of period.................. $ 8,553 $ 25,075
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
4
REMINGTON OIL AND GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Remington Oil and Gas Corporation is an independent oil and gas exploration
and production company incorporated in Delaware. Our oil and gas properties are
located in the offshore Gulf of Mexico and onshore Gulf Coast.
We prepared these financial statements according to the instructions for
Form 10-Q. Therefore, the financial statements do not include all disclosures
required by accounting principles generally accepted in the United States.
However, we have recorded all transactions and adjustments necessary to fairly
present the financial statements included in this Form 10-Q. The adjustments
made are normal and recurring. We have reclassified certain items in the prior
year periods to conform with current year presentation. The following notes
describe only the material changes in accounting policies, account details or
financial statement notes during the first nine months of 2001. Therefore,
please read these financial statements and notes to the financial statements
together with the audited financial statements and notes to financial statements
in our 2000 Form 10-K. The income statements for the three and nine months ended
September 30, 2001, cannot necessarily be used to project results for the full
year.
NEW ACCOUNTING STANDARDS
On January 1, 2001, we adopted Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities." As
amended, the statement is effective for all fiscal years beginning after June
15, 2000. Currently we do not utilize any derivative instruments that fall under
the criteria defined in the accounting standard. Accordingly, the adoption of
SFAS No. 133 did not have a material effect on our financial statements or
disclosures.
NOTE 2. CONTINGENCIES
PHILLIPS PETROLEUM LITIGATION
On May 22, 2001, we settled the litigation with Phillips Petroleum Company
and acquired Phillips' Net Profits interest in South Pass block 89, offshore
Louisiana. We paid $21.25 million cash and issued 1,189,344 shares of our common
stock as consideration for the settlement and assignment of the Net Profits
interest.
Of the total $42.5 million settlement, we had previously recorded $20.2
million as an accrued liability. We recorded $12.3 million of the remaining
$22.3 million as additional settlement expense and capitalized $10.0 million as
the cost for our purchase of the Net Profits interest. In addition, we charged
the remaining $1.2 million deferred net profits expense related to a royalty
settlement in 2000 to the settlement expense.
We agreed to purchase up to 100,000 shares per week from Phillips at
$17.867 per share in the event that Phillips was unable to sell the shares at or
above that price. Subsequently, Phillips sold 33,900 shares on the open market,
and we purchased the remaining 1,155,444 shares at a total cost of $20.6
million.
NOTE 3. STOCK BASED COMPENSATION AND RESTRICTED COMMON STOCK
In June 1999, the Board of Directors approved a contingent stock grant to
our employees and directors. The number of shares granted is relative to the
employee's salary (or base number in the case of directors) and the closing
stock price on June 17, 1999. In order for the grant to become effective, the
price of our stock had to increase from $4.19 per share to a trigger price of
$10.42 per share and close at or above $10.42 per share for 20 consecutive
trading days. The required increase in the stock price represented the
equivalent of a compounded annual rate of return of 20% for five years. This
trigger was achieved on January 24, 2001. When the stock grant became effective,
we recorded $8.1 million as restricted common stock, $5.7 million as unearned
compensation reported as a separate reduction in stockholders' equity on the
balance sheet, and
5
REMINGTON OIL AND GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$2.4 million as stock based compensation expense. The $5.7 million unearned
compensation expense will be amortized quarterly over the next five years as the
shares vest. We amortized $695,000 during the second and third quarters of this
year and recorded it as part of our stock based compensation expense. The shares
will be issued only if the employees and directors remain with the company
through the vesting dates.
NOTE 4. 8 1/4% CONVERTIBLE SUBORDINATED NOTES
During the nine months ended September 30, 2001, holders of $4.4 million
face amount of the 8 1/4% convertible subordinated notes due December 1, 2002,
converted their notes into common stock at the prescribed conversion ratio of
one share of common stock for each $11.00 of principal amount of notes.
Subsequent to September 30, 2001, holders converted an additional $1.4 million
of the notes into common stock, and we redeemed the remaining $95,000 of the
notes for cash at a call price of 101.65%.
NOTE 5. INCOME PER SHARE
The following table presents our calculation of basic and diluted income
per share.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
2001 2000 2001 2000
-------- -------- ------- -------
Net income available for basic income per
share........................................ $ 383 $22,704 $16,280 $34,248
Interest expense on the notes (net of tax)... 40 80 184 240
------- ------- ------- -------
Net income available for diluted income per
share........................................ $ 423 $22,784 $16,464 $34,488
======= ======= ======= =======
Basic income per share......................... $ 0.02 $ 1.06 $ 0.75 $ 1.60
======= ======= ======= =======
Diluted income per share....................... $ 0.02 $ 0.99 $ 0.68 $ 1.53
======= ======= ======= =======
Weighted average
Total common shares for basic income per
share........................................ 22,103 21,477 21,827 21,417
Dilutive stock options outstanding (treasury
stock method)............................. 1,486 1,066 1,486 558
Common stock grant........................... 663 -- 663 --
Warrant issued............................... 66 -- 66 --
Shares assumed issued by conversion of the
notes..................................... 271 541 312 541
------- ------- ------- -------
Total common shares for diluted income per
share........................................ 24,589 23,084 24,354 22,516
======= ======= ======= =======
Potential issues of common stock for diluted
income per share
Weighted average warrant outstanding......... -- 200 -- 200
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion will assist in the understanding of our financial
position and results of operations. The information below should be read in
conjunction with the financial statements, the related notes to financial
statements, and our Form 10-K for the year ended December 31, 2000.
Our discussion contains both historical and forward-looking information. We
assess the risks and uncertainties about our business, long-term strategy, and
financial condition before we make any forward-looking statements, but we cannot
guarantee that our assessment is accurate or that our goals and projections can
or will be met. Statements concerning results of future exploration,
exploitation, development, and acquisition expenditures as well as revenue,
expense, and reserve levels are forward-looking statements. We make assumptions
about commodity prices, drilling results, production costs, administrative
expenses, and interest costs that we believe are reasonable based on currently
available information of known facts and trends.
This discussion is primarily an update to the Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the 2000
Form 10-K. We recommend that you read this discussion in conjunction with the
Form 10-K.
Our long-term strategy is to increase shareholder value by economically
increasing reserves, production, and cash flow on an annual basis. At the same
time, we believe it is important to maintain a strong balance sheet by keeping
our total debt at a manageable level. We will balance our capital expenditures,
financed primarily by operating cash flow and bank debt, among exploration,
development, and acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
On September 30, 2001, our current liabilities exceeded our current assets
by $19.0 million. Our current ratio is .62 to 1. The current ratio decreased
from December 31, 2000 because of the decrease in cash and cash equivalents and
increase in current liabilities. Our cash and cash equivalents decreased because
we used cash for a portion of the Phillips Petroleum settlement in May 2001, and
the third quarter purchase of 1,155,444 shares issued to Phillips in the
settlement. As of September 30, 2001, our current liabilities increased because
of accrued capital expenditures for the ongoing construction of three platforms
and the drilling of three wells. We expect that our current ratio will improve
by year end as we use the available cash flow from operations and long-term bank
line of credit to reduce current liabilities and fund our capital expenditures
for the fourth quarter.
For the nine months ended September 30, 2001, net cash flow provided by
operations, before changes in working capital, increased by $23.0 million as
compared to the same period in the prior year primarily because of increased gas
revenues. Gas revenue increased by $40.2 million, or 124%. Gas production
increased by 6.6 Bcf, or 70%, which added $29.8 million to revenue and average
gas prices increased by $1.09, or 32%, which added $10.4 million to revenue.
During the first nine months of 2001, we incurred capital expenditures
totaling $94.3 million for drilling and completion activities, construction and
installation of platform facilities, and lease acquisitions and the purchase of
the Net Profits interest from Phillips Petroleum. During the remainder of 2001,
we expect to incur costs of approximately $25.0 million for our exploration and
development activities. We expect that our cash flow from operations and
available bank line of credit will be adequate to fund the capital budget for
the reminder of this year.
On May 22, 2001, we settled the litigation with Phillips Petroleum Company
and acquired Phillips' Net Profits interest in South Pass block 89, offshore
Louisiana. We paid $21.25 million cash and issued 1,189,344 shares of our common
stock as consideration for the settlement and assignment of the Net Profits
interest. Subsequently, Phillips sold 33,900 shares on the open market, and we
purchased the remaining 1,155,444 shares at a total cost of $20.6 million.
During the nine months ended September 30, 2001, holders of $4.4 million
face amount of the 8 1/4% convertible subordinated notes due December 1, 2002,
converted their notes into common stock at the prescribed conversion ratio of
one share of common stock for each $11.00 of principal amount of notes.
7
Subsequent to September 30, 2001, holders converted an additional $1.4 million
of the notes into common stock, and we redeemed the remaining $95,000 of the
notes for cash at a call price of 101.65%.
As of June 15, 2001, our amended credit facility has a borrowing base of
$75.0 million. As of November 6, 2001, we had $57.0 million borrowed under the
facility. The banks review the borrowing base semi-annually and may increase or
decrease the borrowing base relative to the new estimate of proved oil and gas
reserves. Our oil and gas properties are pledged as collateral for the line of
credit. Additionally, we have agreed not to pay dividends. The line of credit
expires on May 3, 2004, when all principal becomes due.
RESULTS OF OPERATIONS
We recorded net income for the first nine months of 2001 of $16.3 million
or $0.75 per share basic and $0.68 per share diluted compared to net income for
the first nine months of 2000 of $34.2 million or $1.60 per share basic and
$1.53 per share diluted. For the three months ended September 30, 2001, we
recorded net income of $383,000 or $0.02 per share, basic and diluted, compared
to $22.7 million or $1.06 per share basic and $0.99 per share diluted for the
three months ended September 30, 2000. Net income decreased during the three and
nine months of 2001 compared to 2000 because of lower oil and gas prices, and
increased exploration expenses including dry hole costs. Further, in 2000 we
sold certain South Texas properties and recognized a non-recurring gain of $12.5
million. In addition, net income for the first nine months of 2001 is lower
because of a one time pre-tax charge of $13.5 million in connection with the
settlement of the Phillips litigation recorded in May 2001. The following table
reflects the increase or decrease in oil and gas sales revenue due to the
changes in prices and volumes.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
2001 2000 2001 2000
-------- -------- ------- -------
(IN THOUSANDS, EXCEPT PRICES)
Oil production volume (Bbls)................... 292 311 905 924
Oil sales revenue.............................. $ 6,848 $ 8,657 $22,481 $24,348
Price per barrel............................... $ 23.45 $ 27.84 $ 24.84 $ 26.35
(Decrease) in oil sales revenue due to:
Change in prices............................. $(1,365) $(1,395)
Change in production volume.................. (444) (472)
------- -------
Total (decrease) in oil sales revenue.......... $(1,809) $(1,867)
======= =======
Gas production volume (Mcf).................... 5,442 3,192 16,140 9,522
Gas sales revenue.............................. $15,559 $13,355 $72,543 $32,355
Price per Mcf.................................. $ 2.86 $ 4.18 $ 4.49 $ 3.40
Increase (decrease) in gas sales revenue due
to:
Change in prices............................. $(4,213) $10,379
Change in production volume.................. 6,417 29,809
------- -------
Total increase in gas sales revenue............ $ 2,204 $40,188
======= =======
Oil revenue during the third quarter and first nine months of 2001
decreased when compared to 2000. Gulf of Mexico oil production increased by
73,000 barrels and 43,000 barrels during the three and nine months of 2001
compared to the same periods in the prior year. These increases were more than
offset by decreased production from Mississippi and South Texas. In addition,
the average oil prices decreased which caused oil revenues to decrease by
$444,000 for the three months ended September 30, 2001, and by $472,000 for the
nine months ended September 30, 2001, when compared to the same periods in the
prior year.
Gas revenues for the first nine months of 2001 increased $40.2 million or
124% compared to the prior year because of the 70% increase in production and
the 32% increase in the average price per Mcf. Offshore Gulf of Mexico gas
production increased by 7.0 Bcf, or 94%. However, gas production from the
onshore gulf coast
8
decreased by 0.4 Bcf, or 18% because of the sale of certain South Texas
Properties in August 2000. Gas revenues during the third quarter of 2001
increased $2.2 million or 16% compared to the third quarter of 2000 because of
the 70% increase in production partially offset by a 32% decrease in the average
price per Mcf. Offshore Gulf of Mexico gas production increased by 2.2 Bcf, or
84%. In addition, gas production from the onshore gulf coast increased slightly
during the third quarter of 2001.
Operating expenses including net profits expense increased during the three
and nine months ended September 30, 2001, compared to the same period in 2000
primarily because of an increase in the number of producing properties.
Exploration expense increased by $5.7 million during the third quarter of
2001 and by $8.7 million during the first nine months of 2001 primarily because
of increased dry hole costs and increased seismic expenditures in Mississippi
and the Gulf of Mexico. During the first three quarters we drilled two
non-commercial wells and impaired another property in the Gulf of Mexico for a
total charge of $6.1 million. We also drilled five non-commercial wells in the
onshore gulf coast area. Depreciation, depletion, and amortization expense
increased by $3.9 million during the third quarter of 2001 and by $13.0 million
during the first nine months of 2001 compared to the same periods in the prior
year because of increased production and an increase in the number of producing
properties.
When the stock grant approved by the Board of Directors in June 1999 became
effective on January 24, 2001, we recorded $8.1 million as restricted common
stock, $5.7 million as unearned compensation reported as a separate reduction in
stockholders' equity on the balance sheet, and $2.4 million as stock based
compensation expense. During the second and third quarters of 2001, we amortized
an additional $695,000 of the unearned compensation and included it in stock
based compensation expense. The shares will be issued only if the employees or
directors remain with the company through the vesting dates.
On May 22, 2001, we settled the litigation with Phillips Petroleum Company.
Of the total $42.5 million settlement, we had previously recorded $20.2 million
as an accrued liability. We recorded $12.3 million of the remaining $22.3
million as additional settlement expense and capitalized $10.0 million as the
cost for our purchase of the net profits interest. In addition, we charged the
remaining $1.2 million deferred net profits expense related to a royalty
settlement in 2000 to the settlement expense. During 2000, we reached two
separate agreements with the Minerals Management Service concerning the
royalties due on offshore Gulf of Mexico properties. Because of the agreements,
we recorded an expense of $2.2 million during the third quarter of 2000 and $5.4
million during the first nine months of 2000.
Interest and financing expense decreased by 38% during the third quarter of
2001 and by 13% during the first nine months of 2001 because of lower interest
rates applicable to our outstanding debt and because we are no longer accruing
interest on the Phillips judgment.
During the first nine months of 2001, we recorded income tax expense
totaling $7.9 million, all of which we estimate is deferred. We fully utilized
our net deferred income tax benefit during 2000 and the first quarter of 2001.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risk sensitive instrument at September 30, 2001, is a revolving
line of credit from a bank. At September 30, 2001, the unpaid principal balance
under the line was $37.0 million. The interest rate on this debt is sensitive to
market fluctuations, however, we do not believe that significant fluctuations in
the market rate of interest have a material effect on our consolidated financial
position, results of operations, or cash flow from operations.
9
PART II, OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Incorporated herein by reference is the discussion of litigation set forth
in Part I, Item 1, Notes to Condensed Consolidated Financial Statements -- Note
2. Contingencies of this Form 10-Q.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2.0## -- Agreement and Plan of Merger dated as of June 22, 1998, by
and between Remington Oil and Gas Corporation and S-Sixteen
Holding Company.
3.1* -- Certificate of Incorporation, as amended.
3.2# -- Certificate of Amendment of Certificate of Incorporation of
Box Energy Corporation.
3.2.1## -- Certificate of Amendment of Certificate of Incorporation of
Remington Oil and Gas Corporation.
3.3### -- By-Laws as amended.
4.1* -- Form of Indenture Box Energy Corporation to United States
Trust Company of New York, Trustee, dated December 1, 1992,
8 1/4% Convertible Subordinated Notes due December 1, 2002.
10.1* -- Farmout Agreement with Aminoil USA, Inc., effective May 1,
1977, dated May 9, 1977.
10.2* -- Transportation Agreement with CKB Petroleum, Inc. dated
March 1, 1985, as amended on April 19, 1989.
10.3* -- Agreement of Compromise and Amendment to Farmout Agreement,
dated July 3, 1989.
10.4** -- Pension Plan of Box Energy Corporation, effective April 16,
1992.
10.5*** -- First Amendment to the Pension Plan of Box Energy
Corporation dated December 16, 1993.
10.6+ -- Second Amendment to the Pension Plan of Box Energy
Corporation dated December 31, 1994.
10.7+++ -- Agreement by and between Box Energy Corporation and James A.
Watt.
10.8# -- Box Energy Corporation Severance Plan.
10.9 -- Box Energy Corporation 1997 Stock Option Plan (as amended
June 17, 1999 and May 23, 2001).
10.10# -- Box Energy Corporation Non-Employee Director Stock Purchase
Plan
10.11++ -- Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and two
executive officers.
10.12++ -- Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and an
executive officer.
10
10.13++++ -- Employment Agreement effective January 31, 2000, by and between Remington Oil and Gas
Corporation and James A. Watt.
10.14++++++ -- Form of Contingent Stock Grant Agreement -- Directors.
10.15++++++ -- Form of Contingent Stock Grant Agreement -- Employees.
10.16++++++ -- Form of Amendment to Contingent Stock Grant Agreement -- Directors.
10.17++++++ -- Form of Amendment to Contingent Stock Grant Agreement -- Employees.
10.18- -- Compromise and Settlement Agreement between Remington Oil and Gas Corporation and
Phillips Petroleum Company dated May 22, 2001.
(b) No Forms 8-K were filed during the quarter ended September 30, 2001.
---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-2 (file number 33-52156) filed with the Commission and effective on
December 1, 1992.
** Incorporated by reference to the Company's Form 10-K (file number 0-19967)
for the fiscal year ended December 31, 1992, filed with the Commission and
effective on or about March 30, 1993.
*** Incorporated by reference to the Company's Form 10-K (file number 0-19967)
for the fiscal year ended December 31, 1993, filed with the Commission and
effective on or about March 30, 1994.
+ Incorporated by reference to the Company's Form 10-K (file number 0-19967)
for the fiscal year ended December 31, 1994, filed with the Commission and
effective on or about March 30, 1995.
+++ Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended June 30, 1997, filed with the Commission and
effective on or about August 12, 1997.
# Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1997, filed with the Commission and
effective on or about March 30, 1998.
## Incorporated by reference to the Company's Registration Statement on Form
S-4 (file number 333-61513) filed with the Commission and effective on
November 27, 1998.
### Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1998, filed with the Commission and
effective on or about March 30, 1999.
++ Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended September 30, 1999, filed with the Commission
and effective on or about November 12, 1999.
++++ Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1999, filed with the Commission and
effective on or about March 30, 2000.
++++++Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 2000, filed with the Commission and
effective on or about March 16, 2001.
- Incorporated by reference to the Company's Form 8-K (file number 1-11516)
filed with the Commission on or about May 31, 2001.
11
SIGNATURES
Pursuant to the requirements 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.
REMINGTON OIL AND GAS CORPORATION
Date: November 9, 2001 By: /s/ JAMES A. WATT
--------------------------------------
James A. Watt
President and Chief Executive Officer
Date: November 9, 2001 By: /s/ J. BURKE ASHER
--------------------------------------
J. Burke Asher
Vice President/Finance
12
INDEX TO EXHIBITS
2.0## -- Agreement and Plan of Merger dated as of June 22, 1998, by
and between Remington Oil and Gas Corporation and S-Sixteen
Holding Company.
3.1* -- Certificate of Incorporation, as amended.
3.2# -- Certificate of Amendment of Certificate of Incorporation of
Box Energy Corporation.
3.2.1## -- Certificate of Amendment of Certificate of Incorporation of
Remington Oil and Gas Corporation.
3.3### -- By-Laws as amended.
4.1* -- Form of Indenture Box Energy Corporation to United States
Trust Company of New York, Trustee, dated December 1, 1992,
8 1/4% Convertible Subordinated Notes due December 1, 2002.
10.1* -- Farmout Agreement with Aminoil USA, Inc., effective May 1,
1977, dated May 9, 1977.
10.2* -- Transportation Agreement with CKB Petroleum, Inc. dated
March 1, 1985, as amended on April 19, 1989.
10.3* -- Agreement of Compromise and Amendment to Farmout Agreement,
dated July 3, 1989.
10.4** -- Pension Plan of Box Energy Corporation, effective April 16,
1992.
10.5*** -- First Amendment to the Pension Plan of Box Energy
Corporation dated December 16, 1993.
10.6+ -- Second Amendment to the Pension Plan of Box Energy
Corporation dated December 31, 1994.
10.7+++ -- Agreement by and between Box Energy Corporation and James A.
Watt.
10.8# -- Box Energy Corporation Severance Plan.
10.9 -- Box Energy Corporation 1997 Stock Option Plan (as amended
June 17, 1999 and May 23, 2001).
10.10# -- Box Energy Corporation Non-Employee Director Stock Purchase
Plan
10.11++ -- Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and two
executive officers.
10.12++ -- Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and an
executive officer.
10.13++++ -- Employment Agreement effective January 31, 2000, by and
between Remington Oil and Gas Corporation and James A. Watt.
10.14++++++ -- Form of Contingent Stock Grant Agreement -- Directors.
10.15++++++ -- Form of Contingent Stock Grant Agreement -- Employees.
10.16++++++ -- Form of Amendment to Contingent Stock Grant
Agreement -- Directors.
10.17++++++ -- Form of Amendment to Contingent Stock Grant
Agreement -- Employees.
10.18- -- Compromise and Settlement Agreement between Remington Oil
and Gas Corporation and Phillips Petroleum Company dated May
22, 2001.
---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-2 (file number 33-52156) filed with the Commission and effective on
December 1, 1992.
** Incorporated by reference to the Company's Form 10-K (file number 0-19967)
for the fiscal year ended December 31, 1992, filed with the Commission and
effective on or about March 30, 1993.
*** Incorporated by reference to the Company's Form 10-K (file number 0-19967)
for the fiscal year ended December 31, 1993, filed with the Commission and
effective on or about March 30, 1994.
+ Incorporated by reference to the Company's Form 10-K (file number 0-19967)
for the fiscal year ended December 31, 1994, filed with the Commission and
effective on or about March 30, 1995.
+++ Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended June 30, 1997, filed with the Commission and
effective on or about August 12, 1997.
# Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1997, filed with the Commission and
effective on or about March 30, 1998.
## Incorporated by reference to the Company's Registration Statement on Form
S-4 (file number 333-61513) filed with the Commission and effective on
November 27, 1998.
### Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1998, filed with the Commission and
effective on or about March 30, 1999.
++ Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended September 30, 1999, filed with the Commission
and effective on or about November 12, 1999.
++++ Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1999, filed with the Commission and
effective on or about March 30, 2000.
++++++Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 2000, filed with the Commission and
effective on or about March 16, 2001.
- Incorporated by reference to the Company's Form 8-K (file number 1-11516)
filed with the Commission on or about May 31, 2001.