T
|
Quarterly
Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
£
|
Transition
Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
Delaware
|
84-0637348
|
(State or
other jurisdiction of incorporation
or organization)
|
(IRS
employer identification
number)
|
Large Accelerated Filer
£
|
Accelerated Filer
£
|
Non-Accelerated
Filer £
|
Smaller Reporting Company
T
|
(Do
not check if smaller reporting company)
|
Part
I - Financial Information
|
||
Item 1.
Financial Statements (restated)
|
||
3-4
|
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5-6
|
||
7
|
||
8
|
||
9-31
|
||
32-34
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28-29
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||
36
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||
Part
II - Other Information
|
||
37
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37
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37
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37
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38
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38
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39
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40
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PART
I -
|
ITEM
1. Financial Statements
|
June
30,
2008
(Unaudited
and Restated)
|
December
31
2007
(Audited
and Restated)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 23,338,000 | $ | 25,373,000 | ||||
Restricted
cash and cash equivalents
|
5,312,000 | 3,633,000 | ||||||
Accounts
receivable (net)
|
30,386,000 | 21,311,000 | ||||||
Due
from related parties
|
223,000 | 32,000 | ||||||
Prepaid
expenses
|
2,009,000 | 1,391,000 | ||||||
Derivative
contracts
|
418,000 | 1,332,000 | ||||||
Inventory
at cost
|
5,356,000 | 3,705,000 | ||||||
Deferred
income tax
|
11,783,000 | 1,582,000 | ||||||
Total
current assets
|
78,825,000 | 58,359,000 | ||||||
Property
and equipment, at cost
|
||||||||
Oil
and gas properties (successful efforts method), net
|
226,194,000 | 237,852,000 | ||||||
Field
service equipment and other, net
|
9,001,000 | 8,209,000 | ||||||
Net
property and equipment
|
235,195,000 | 246,061,000 | ||||||
Other
assets
|
936,000 | 1,245,000 | ||||||
Total
assets
|
$ | 314,956,000 | $ | 305,665,000 |
June
30,
2008
(Unaudited
and Restated)
|
December
31,
2007
(Audited
and Restated)
|
|||||||
LIABILITIES
and STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
bank debt
|
$ | 18,000,000 | $ | 34,950,000 | ||||
Accounts
payable
|
37,225,000 | 26,780,000 | ||||||
Current
portion of asset retirement and other long term obligation
|
2,171,000 | 1,065,000 | ||||||
Derivative
liability short term
|
31,765,000 | 4,340,000 | ||||||
Accrued
liabilities
|
11,394,000 | 10,032,000 | ||||||
Due
to related parties
|
316,000 | 520,000 | ||||||
Total
current liabilities
|
100,871,000 | 77,687,000 | ||||||
Long-term
bank debt
|
101,050,000 | 120,050,000 | ||||||
Indebtedness
to related parties
|
20,000,000 | -- | ||||||
Asset
retirement obligation
|
18,822,000 | 16,936,000 | ||||||
Derivative
liability long term
|
23,847,000 | 3,369,000 | ||||||
Deferred
income taxes
|
18,993,000 | 26,022,000 | ||||||
Total
liabilities
|
283,583,000 | 244,064,000 | ||||||
Minority
interest
|
11,705,000 | 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
2008
|
769,000 | 769,000 | ||||||
Paid
in capital
|
11,024,000 | 11,024,000 | ||||||
Retained
earnings
|
79,635,000 | 72,885,000 | ||||||
Accumulated
other comprehensive income(loss), net
|
(35,058,000 | ) | (3,618,000 | ) | ||||
56,370,000 | 81,060,000 | |||||||
Treasury
stock, at cost, 4,642,912 common shares at 2008 and 4,558,544 common
shares at 2007
|
(36,702,000 | ) | (32,388,000 | ) | ||||
Total
stockholders' equity
|
19,668,000 | 48,672,000 | ||||||
Total
liabilities and stockholders, equity
|
$ | 314,956,000 | $ | 305,665,000 |
2008
Restated
|
2007
Restated
|
|||||||
Revenue:
|
||||||||
Oil
and gas sales
|
$ | 74,648,000 | $ | 52,234,000 | ||||
Field
service income
|
12,749,000 | 11,800,000 | ||||||
Administrative
overhead fees
|
4,499,000 | 4,812,000 | ||||||
Other
income
|
197,000 | 166,000 | ||||||
Total
revenue
|
92,093,000 | 69,012,000 | ||||||
Costs
and expenses:
|
||||||||
Lease
operating expense
|
21,160,000 | 17,013,000 | ||||||
Field
service expense
|
9,583,000 | 9,050,000 | ||||||
Depreciation,
depletion and amortization
|
35,629,000 | 20,611,000 | ||||||
General
and administrative expense
|
7,290,000 | 7,050,000 | ||||||
Exploration
costs
|
299,000 | 419,000 | ||||||
Total
costs and expenses
|
73,961,000 | 54,143,000 | ||||||
Add
gain/(loss) on sale and exchange of assets
|
78,000 | 611,000 | ||||||
Income
from operations
|
18,210,000 | 15,480,000 | ||||||
Other
income and expenses
|
||||||||
Less:
Interest expense
|
4,376,000 | 4,512,000 | ||||||
Add
interest income
|
261,000 | 495,000 | ||||||
Less:
Minority interest
|
3,894,000 | 1,914,000 | ||||||
Income
before provision for income taxes
|
10,201,000 | 9,549,000 | ||||||
Provision
for income taxes
|
3,451,000 | 3,438,000 | ||||||
Net
income
|
$ | 6,750,000 | $ | 6,111,000 | ||||
Basic
income per common share
|
$ | 2.20 | $ | 1.91 | ||||
Diluted
income per common share
|
$ | 1.76 | $ | 1.55 |
2008
Restated
|
2007
Restated
|
|||||||
Revenue:
|
||||||||
Oil
and gas sales
|
$ | 40,547,000 | $ | 29,968,000 | ||||
Field
service income
|
6,494,000 | 5,904,000 | ||||||
Administrative
overhead fees
|
2,300,000 | 2,482,000 | ||||||
Other
income
|
(5,000 | ) | 165,000 | |||||
Total
revenue
|
49,336,000 | 38,519,000 | ||||||
Costs
and expenses:
|
||||||||
Lease
operating expense
|
11,454,000 | 9,474,000 | ||||||
Field
service expense
|
4,804,000 | 4,499,000 | ||||||
Depreciation,
depletion and amortization
|
18,709,000 | 12,917,000 | ||||||
General
and administrative expense
|
4,065,000 | 3,852,000 | ||||||
Exploration
costs
|
242,000 | 58,000 | ||||||
Total
costs and expenses
|
39,274,000 | 30,800,000 | ||||||
Add
gain/(loss) on sale and exchange of assets
|
93,000 | 348,000 | ||||||
Income
from operations
|
10,155,000 | 8,067,000 | ||||||
Other
income and expenses
|
||||||||
Less:
Interest expense
|
1,929,000 | 2,829,000 | ||||||
Add
interest income
|
104,000 | 268,000 | ||||||
Less:
Minority interest
|
2,248,000 | 1,139,000 | ||||||
Income
before provision for income taxes
|
6,082,000 | 4,367,000 | ||||||
Provision
for income taxes
|
2,063,000 | 1,573,000 | ||||||
Net
income
|
$ | 4,019,000 | $ | 2,794,000 | ||||
Basic
income per common share
|
$ | 1.31 | $ | 0.88 | ||||
Diluted
income per common share
|
$ | 1.05 | $ | 0.71 |
Common Stock
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Paid In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income/Loss
|
Treasury
Stock
|
Total
|
||||||||||||||||||||||
Balance
at December 31, 2007
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 72,885,000 | $ | (3,618,000 | ) | $ | (32,388,000 | ) | $ | 48,672,000 | |||||||||||||
Purchased
84,368 shares of common Stock
|
(4,314,000 | ) | (4,314,000 | ) | ||||||||||||||||||||||||
Net
income
|
6,750,000 | 6,750,000 | ||||||||||||||||||||||||||
Other
comprehensive Income, net of taxes
|
(31,440,000 | ) | (31,440,000 | ) | ||||||||||||||||||||||||
Balance
at June 30, 2008
|
7,694,970 | $ | 769,000 | $ | 11,024,000 | $ | 79,635,000 | $ | (35,058,000 | ) | $ | (36,702,000 | ) | $ | 19,668,000 |
2008
Restated
|
2007
Restated
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 6,750,000 | $ | 6,111,000 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
35,629,000 | 20,611,000 | ||||||
Dry
hole and abandonment expense
|
-- | 318,000 | ||||||
Gain
on sale of properties
|
(78,000 | ) | (611,000 | ) | ||||
Provision
for deferred taxes
|
1,340,000 | 2,767,000 | ||||||
Minority
interest in earnings of partnerships
|
3,894,000 | 1,914,000 | ||||||
Changes
in assets and liabilities:
|
||||||||
(Increase)
decrease in accounts receivable
|
(7,112,000 | ) | 7,711,000 | |||||
(Increase)
decrease in due from related parties
|
738,000 | 743,000 | ||||||
(Increase)
decrease in inventories
|
459,000 | 2,496,000 | ||||||
(Increase)
decrease in prepaid expenses and other assets
|
(1,581,000 | ) | (456,000 | ) | ||||
Increase
(decrease) in accounts payable
|
12,860,000 | (3,069,000 | ) | |||||
Increase
(decrease) in accrued liabilities
|
1,404,000 | (170,000 | ) | |||||
Increase
(decrease) in due to related parties
|
(384,000 | ) | (1,000 | ) | ||||
Net
cash provided by operating activities
|
||||||||
Net
cash provided by operating activities:
|
53,919,000 | 38,364,000 | ||||||
Cash
flows from investing activities:
|
||||||||
Capital
expenditures, including exploration expense
|
(33,126,000 | ) | (70,211,000 | ) | ||||
Proceeds
from sale of property and equipment
|
78,000 | 611,000 | ||||||
Net
cash (used in) investing activities
|
(33,048,000 | ) | (69,600,000 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Purchase
of treasury stock
|
(4,314,000 | ) | (2,382,000 | ) | ||||
Proceeds
from long-term bank debt
|
72,175,000 | 65,285,000 | ||||||
Repayment
of long-term bank debt
|
(87,959,000 | ) | (41,609,000 | ) | ||||
Distribution
to minority interest
|
(2,808,000 | ) | (1,990,000 | ) | ||||
Net
cash provided by (used in) financing activities
|
(22,906,000 | ) | 19,304,000 | |||||
Net
increase (decrease) in cash and cash equivalents
|
(2,035,000 | ) | (11,932,000 | ) | ||||
Cash
and cash equivalents at the beginning of the period
|
25,373,000 | 29,056,000 | ||||||
Cash
and cash equivalents at the end of the period
|
$ | 23,338,000 | $ | 17,124,000 |
As
Reported
June 2008
|
Cumulative
Effective of Prior Year
Adjustments
|
Current
Year Adjustments
|
Notes
|
As
Restated
June 2008
|
||||||||||||||||
ASSETS:
|
||||||||||||||||||||
Current
assets:
|
||||||||||||||||||||
Cash
and cash equivalents
|
$ | 20,775,000 | $ | 4,060,000 | $ | (1,497,000 | ) |
b
|
$ | 23,338,000 | ||||||||||
Restricted
cash and cash equivalents
|
5,312,000 | -- | -- | 5,312,000 | ||||||||||||||||
Accounts
receivable, net
|
29,080,000 | 963,000 | 343,000 |
b
|
30,386,000 | |||||||||||||||
Due
from related parties
|
281,000 | (180,000 | ) | 122,000 |
b
|
223,000 | ||||||||||||||
Prepaid
expenses
|
2,009,000 | -- | -- | 2,009,000 | ||||||||||||||||
Derivative
contracts
|
418,000 | -- | -- | 418,000 | ||||||||||||||||
Inventory
at cost
|
5,360,000 | (6,000 | ) | 2,000 |
b
|
5,356,000 | ||||||||||||||
Deferred
income tax
|
11,783,000 | -- | -- | 11,783,000 | ||||||||||||||||
Total
current assets
|
75,018,000 | 4,837,000 | (1,130,000 | ) | 78,825,000 | |||||||||||||||
Property
and equipment, at cost:
|
||||||||||||||||||||
Oil
and gas properties (successful efforts method), net
|
221,299,000 | 4,681,000 | 214,000 |
a,b
|
226,194,000 | |||||||||||||||
Field
service equipment
|
9,001,000 | -- | -- | 9,001,000 | ||||||||||||||||
Total
net property and equipment
|
230,300,000 | 4,681,000 | 214,000 | 235,195,000 | ||||||||||||||||
Other
assets
|
871,000 | 65,000 | -- |
b
|
936,000 | |||||||||||||||
Total
assets
|
$ | 306,189,000 | $ | 9,583,000 | $ | (816,000 | ) | $ | 314,956,000 |
As
Reported
June 2008
|
Cumulative
Effective of Prior Year Adjustment
|
Current
Year Adjustment
|
Notes
|
June
2008
Restated
|
||||||||||||||||
LIABILITIES
and STOCKHOLDERS’ EQUITY:
|
||||||||||||||||||||
Current
liabilities:
|
||||||||||||||||||||
Current
bank debt
|
$ | 18,000,000 | $ | -- | $ | -- | $ | 18,000,000 | ||||||||||||
Accounts
payable
|
37,352,000 | 54,000 | (181,000 | ) |
b
|
37,225,000 | ||||||||||||||
Current
portion of asset retirement and other long-term
obligations
|
2,171,000 | -- | -- | 2,171,000 | ||||||||||||||||
Derivative
liability short term
|
31,765,000 | -- | -- | 31,765,000 | ||||||||||||||||
Accrued
liabilities
|
11,238,000 | 79,000 | 77,000 |
b
|
11,394,000 | |||||||||||||||
Due
to related parties
|
1,179,000 | (1,043,000 | ) | 180,000 |
b
|
316,000 | ||||||||||||||
Total
current liabilities
|
101,705,000 | (910,000 | ) | 76,000 | 100,871,000 | |||||||||||||||
Long-term
bank debt
|
101,050,000 | -- | -- | 101,050,000 | ||||||||||||||||
Indebtedness
to related parties
|
20,000,000 | -- | 20,000,000 | |||||||||||||||||
Asset
retirement obligations
|
17,406,000 | 1,398,000 | 18,000 |
b
|
18,822,000 | |||||||||||||||
Derivative
liability long term
|
23,847,000 | -- | -- | 23,847,000 | ||||||||||||||||
Deferred
income taxes
|
19,788,000 | (908,000 | ) | 113,000 |
a,b
|
18,993,000 | ||||||||||||||
Total
liabilities
|
283,796,000 | (420,000 | ) | 207,000 | 283,583,000 | |||||||||||||||
Minority
interest
|
1,313,000 | 11,616,000 | (1,224,000 | ) |
b
|
11,705,000 | ||||||||||||||
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
2008 and 2007
|
769,000 | -- | -- | 769,000 | ||||||||||||||||
Paid
in capital
|
11,024,000 | -- | -- | 11,024,000 | ||||||||||||||||
Retained
earnings
|
81,047,000 | (1,613,000 | ) | 201,000 |
a
|
79,635,000 | ||||||||||||||
Accumulated
other comprehensive income (loss), net
|
(35,058,000 | ) | -- | -- | (35,058,000 | ) | ||||||||||||||
57,782,000 | (1,613,000 | ) | 201,000 | 56,370,000 | ||||||||||||||||
Treasury
stock, at cost 4,642,912 common shares in 2008 and 4,558,544 in
2008
|
(36,702,000 | ) | -- | -- | (36,702,000 | ) | ||||||||||||||
Total
stockholders’ equity
|
21,080,000 | (1,613,000 | ) | 201,000 | 19,668,000 | |||||||||||||||
Total
liabilities and stockholders’ equity
|
$ | 306,189,000 | $ | 9,583,000 | $ | (816,000 | ) | $ | 314,956,000 |
Common Stock
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Paid In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income/Loss
|
Treasury
Stock
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2007
|
7,694,970 | $ | 769,000 |
11,024,000
|
74,498,000
|
(3,618,000
|
) |
(32,388,000
|
) |
50,285,000
|
|||||||||||||||
Purchased
84,368 shares of common Stock
|
(4,314,000 | ) | (4,314,000 | ) | |||||||||||||||||||||
Net
income
|
6,549,000 | 6,549,000 | |||||||||||||||||||||||
Other
comprehensive Income, net of taxes
|
(31,440,000 | ) | (31,440,000 | ) | |||||||||||||||||||||
Balance
at June 30, 2008
|
7,694,970 | $ | 769,000 |
$ 11,024,000
|
$ | 81,047,000 | $ | (35,058,000 | ) | $ | (36,702,000 | ) | $ | 21,080,000 |
Common Stock
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Paid In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income/Loss
|
Treasury
Stock
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2007
|
7,694,970 | $ | 769,000 |
11,024,000
|
72,885,000
|
(3,618,000
|
) |
(32,388,000
|
) |
(48,672,000
|
) | ||||||||||||||
Purchased
84,368 shares of common Stock
|
|
(4,314,000 | ) | (4,314,000 | ) | ||||||||||||||||||||
Net
income
|
6,750,000 | 6,549,000 | |||||||||||||||||||||||
Other
comprehensive Income, net of taxes
|
(31,440,000 | ) | (31,440,000 | ) | |||||||||||||||||||||
Balance
at June 30, 2008
|
7,694,970 | $ | 769,000 |
$ 11,024,000
|
$ | 79.635,000 | $ | (35,058,000 | ) | $ | (36,702,000 | ) | $ | 19,668,000 |
As
Reported
June 2008
|
Current
year
adjustments
|
Notes
|
As
Restated
June 2008
|
|||||||||||||
Revenue:
|
||||||||||||||||
Oil
and gas sales
|
$ | 67,889,000 | $ | 6,759,000 |
b
|
$ | 74,648,000 | |||||||||
Field
service income
|
12,718,000 | 31,000 |
b
|
12,749,000 | ||||||||||||
Administrative
overhead fees
|
4,499,000 | -- | 4,499,000 | |||||||||||||
Other
income
|
197,000 | -- | 197,000 | |||||||||||||
85,303,000 | 6,790,000 | 92,093,000 | ||||||||||||||
Costs
and expenses:
|
||||||||||||||||
Lease
operating expense
|
18,722,000 | 2,438,000 |
b
|
21,160,000 | ||||||||||||
Field
service expense
|
9,574,000 | 9,000 |
b
|
9,583,000 | ||||||||||||
Depreciation,
depletion and amortization
|
35,690,000 | (61,000 | ) |
a,b
|
35,629,000 | |||||||||||
General
and administrative expense
|
7,033,000 | 257,000 |
b
|
7,290,000 | ||||||||||||
Exploration
costs
|
299,000 | -- | 299,000 | |||||||||||||
71,318,000 | 2,643,000 | 73,961,000 | ||||||||||||||
Add
gain on sale and exchange of assets
|
78,000 | -- | 78,000 | |||||||||||||
Income
from operations
|
14,063,000 | 4,147,000 | 18,210,000 | |||||||||||||
Other
income and expense:
|
||||||||||||||||
Less
interest expense
|
4,376,000 | -- | 4,376,000 | |||||||||||||
Add
interest income
|
200,000 | 61,000 |
b
|
261,000 | ||||||||||||
Less
minority interest
|
-- | 3,894,000 |
b
|
3,894,000 | ||||||||||||
Income
before provision for income taxes
|
9,887,000 | 314,000 | 10,201,000 | |||||||||||||
Provision
for income taxes
|
3,338,000 | 113,000 |
a
|
3,451,000 | ||||||||||||
Net
income
|
$ | 6,549,000 | $ | 201,000 | $ | 6,750,000 | ||||||||||
Basic
net income per common share
|
$ | 2.13 | $ | 0.07 | $ | 2.20 | ||||||||||
Diluted
net income per common share
|
$ | 1.71 | $ | 0.05 | $ | 1.76 |
As
Reported
June 2008
|
CurrentYear
Adjustments
|
Notes
|
As
Restated
June 2008
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
$ | 6,549,000 | $ | 201,000 |
a
|
$ | 6,750,000 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
35,690,000 | (61,000 | ) |
a,b
|
35,629,000 | |||||||||||
Gain
on sale of properties
|
(78,000 | ) | -- | (78,000 | ) | |||||||||||
Provision
for deferred income taxes
|
1,227,000 | 113,000 |
a
|
1,340,000 | ||||||||||||
Minority
interest in earnings of partnerships
|
-- | 3,894,000 |
b
|
3,894,000 | ||||||||||||
Changes
in assets and liabilities:
|
||||||||||||||||
(Increase)
decrease in accounts receivable
|
(8,732,000 | ) | 1,620,000 |
b
|
(7,112,000 | ) | ||||||||||
(Increase)
decrease in due from related parties
|
(68,000 | ) | 806,000 |
b
|
738,000 | |||||||||||
(Increase)
decrease in inventories
|
463,000 | (4,000 | ) |
b
|
459,000 | |||||||||||
(Increase)
decrease in prepaid expenses and other assets
|
(1,646,000 | ) | 65,000 |
b
|
(1,581,000 | ) | ||||||||||
Increase
(decrease) in accounts payable
|
13,047,000 | (187,000 | ) |
b
|
12,860,000 | |||||||||||
Increase
(decrease) in accrued liabilities
|
1,560,000 | (156,000 | ) |
b
|
1,404,000 | |||||||||||
Increase
(decrease) in due to related parties
|
(384,000 | ) | -- | (384,000 | ) | |||||||||||
Net
cash provided by operating activities
|
47,628,000 | 6,291,000 | 53,919,000 | |||||||||||||
Cash
flows from investing activities
|
||||||||||||||||
Capital
expenditures, including exploration expense
|
(28,146,000 | ) | (4,980,000 | ) |
b
|
(33,126,000 | ) | |||||||||
Proceeds
from sale of properties and equipment
|
78,000 | -- | 78,000 | |||||||||||||
Net
cash used in investing activities
|
(28,068,000 | ) | (4,980,000 | ) | (33,048,000 | ) | ||||||||||
Cash
flows from financing activities
|
||||||||||||||||
Purchase
of stock for treasury
|
(4,314,000 | ) | -- | (4,314,000 | ) | |||||||||||
Increase
in long-term bank debt and other long-term obligations
|
72,175,000 | -- | 72,175,000 | |||||||||||||
Repayment
of long-term bank debt and other long-term obligations
|
(87,959,000 | ) | -- | (87,959,000 | ) | |||||||||||
Distribution
to minority interest
|
-- | (2,808,000 | ) |
b
|
(2,808,000 | ) | ||||||||||
Net
cash provided by (used in) financing activities
|
(20,098,000 | ) | (2,808,000 | ) | (22,906,000 | ) | ||||||||||
Net
increase(decrease) in cash and cash equivalents
|
(538,000 | ) | (1,497,000 | ) | (2,035,000 | ) | ||||||||||
Cash
and cash equivalents at the beginning of the period
|
21,313,000 | 4,060,000 |
b
|
25,373,000 | ||||||||||||
Cash
and cash equivalents at the end of the period
|
$ | 20,775,000 | $ | 2,563,000 | $ | 23,338,000 |
As
Reported
December 2007
|
Cumulative
effect of Adjustments
|
Current
Year Adjustments
|
Notes
|
As
Restated
December 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:
|
||||||||||||||||||||
Oil
and gas properties (successful efforts method), net
|
233,171,000 | 3,581,000 | 1,100,000 |
a,b
|
237,852,000 | |||||||||||||||
Field
service equipment and other, net
|
8,209,000 | -- | -- | 8,209,000 | ||||||||||||||||
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 |
As
Reported
June 2007
|
Current
year
adjustments
|
Notes
|
As
Restated
June 2007
|
|||||||||||||
Revenue:
|
||||||||||||||||
Oil
and gas sales
|
$ | 47,672,000 | $ | 4,562,000 |
b
|
$ | 52,234,000 | |||||||||
Field
service income
|
11,782,000 | 18,000 |
b
|
11,800,000 | ||||||||||||
Administrative
overhead fees
|
4,812,000 | -- | 4,812,000 | |||||||||||||
Other
income
|
166,000 | -- | 166,000 | |||||||||||||
64,432,000 | 4,580,000 | 69,012,000 | ||||||||||||||
Costs
and expenses:
|
||||||||||||||||
Lease
operating expense
|
14,797,000 | 2,216,000 |
|
b
|
17,013,000 | |||||||||||
Field
service expense
|
9,050,000 | -- | 9,050,000 | |||||||||||||
Depreciation,
depletion and amortization
|
20,600,000 | 11,000 |
a,b
|
20,611,000 | ||||||||||||
General
and administrative expense
|
6,790,000 | 260,000 |
b
|
7,050,000 | ||||||||||||
Exploration
costs
|
419,000 | -- | 419,000 | |||||||||||||
51,656,000 | 2,487,000 | 54,143,000 | ||||||||||||||
Add
gain on sale and exchange of assets
|
611,000 | -- | 611,000 | |||||||||||||
Income
from operations
|
13,387,000 | 2,093,000 | 15,480,000 | |||||||||||||
Other
income and expense:
|
||||||||||||||||
Less:
Interest expense
|
4,512,000 | -- | 4,512,000 | |||||||||||||
Add
interest income
|
417,000 | 78,000 |
b
|
495,000 | ||||||||||||
Less:
Minority interest
|
-- | 1,914,000 |
b
|
1,914,000 | ||||||||||||
Income
before provision for income taxes
|
9,292,000 | 257,000 | 9,549,000 | |||||||||||||
Provision
for income taxes
|
3,345,000 | 93,000 |
a
|
3,438,000 | ||||||||||||
Net
income
|
$ | 5,947,000 | $ | 164,000 | $ | 6,111,000 | ||||||||||
Basic
net income per common share
|
$ | 1.86 | $ | 0.05 | $ | 1.91 | ||||||||||
Diluted
net income per common share
|
$ | 1.50 | $ | 0.05 | $ | 1.55 |
As
Reported
June 2007
|
CurrentYear
Adjustments
|
Notes
|
As
Restated
June 2007
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
$ | 5,947,000 | $ | 164,000 |
a
|
$ | 6,111,000 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||
Depreciation,
depletion, amortization and accretion on discounted
liabilities
|
20,600,000 | 11,000 |
a,b
|
20,611,000 | ||||||||||||
Dry
hole and abandonment costs
|
318,000 | -- | 318,000 | |||||||||||||
Gain
on sale of properties
|
(611,000 | ) | -- | (611,000 | ) | |||||||||||
Provision
for deferred income taxes
|
2,674,000 | 93,000 |
a
|
2,767,000 | ||||||||||||
Minority
interest in earnings of partnerships
|
-- | 1,914,000 |
b
|
1,914,000 | ||||||||||||
Changes
in assets and liabilities:
|
||||||||||||||||
(Increase)
decrease in accounts receivable
|
6,800,000 | 911,000 |
b
|
7,711,000 | ||||||||||||
(Increase)
decrease in due from related parties
|
389,000 | 354,000 |
b
|
743,000 | ||||||||||||
(Increase)
decrease in inventories
|
2,506,000 | (10,000 | ) |
b
|
2,496,000 | |||||||||||
(Increase)
decrease in prepaid expenses and other assets
|
(522,000 | ) | 66,000 |
b
|
(456,000 | ) | ||||||||||
Increase
(decrease) in accounts payable
|
(2,963,000 | ) | (106,000 | ) |
b
|
(3,069,000 | ) | |||||||||
Increase
(decrease) in accrued liabilities
|
(28,000 | ) | (142,000 | ) |
b
|
(170,000 | ) | |||||||||
Increase
(decrease) in due to related parties
|
(18,000 | ) | 17,000 |
b
|
(1,000 | ) | ||||||||||
Net
cash provided by operating activities
|
35,092,000 | 3,272,000 | 38,364,000 | |||||||||||||
Cash
flows from investing activities
|
||||||||||||||||
Capital
expenditures, including exploration expense
|
(68,399,000 | ) | (1,812,000 | ) |
b
|
(70,211,000 | ) | |||||||||
Proceeds
from sale of properties and equipment
|
611,000 | -- | 611,000 | |||||||||||||
Net
cash used in investing activities
|
(67,788,000 | ) | (1,812,000 | ) | (69,600,000 | ) | ||||||||||
Cash
flows from financing activities
|
||||||||||||||||
Purchase
of stock for treasury
|
(2,382,000 | ) | -- | (2,382,000 | ) | |||||||||||
Increase
in long-term bank debt and other long-term obligations
|
65,285,000 | -- | 65,285,000 | |||||||||||||
Repayment
of long-term bank debt and other long-term obligations
|
(41,609,000 | ) | -- | (41,609,000 | ) | |||||||||||
Distribution
to minority interest
|
-- | (1,990,000 | ) |
b
|
(1,990,000 | ) | ||||||||||
Net
cash provided by (used in) financing activities
|
21,294,000 | (1,990,000 | ) | 19,304,000 | ||||||||||||
Net
increase(decrease) in cash and cash equivalents
|
(11,402,000 | ) | (530,000 | ) | (11,932,000 | ) | ||||||||||
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
|
$ | 13,251,000 | $ | 3,873,000 | $ | 17,124,000 |
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 the basis of the acquired interest in 2005. This change in the
basis of oil and gas properties resulted in a reduction of depletion and
depreciation expense of $314,180 and $257,472 for the three
months ended June 2008 and June 2007 respectively, and corresponding
reductions in accumulated depletion and depreciation. The change in
depletion and depreciation expense resulted in the noted change in
deferred taxes.
|
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 our controlling interests in
unincorporatedentities.
|
June 30, 2008
Restated
|
December 31, 2007
Restated
|
|||||||
Accounts
Receivable:
|
||||||||
Joint
interest billing
|
$ | 6,795,000 | $ | 3,192,000 | ||||
Trade
receivables
|
2,565,000 | 2,352,000 | ||||||
Oil
and gas sales
|
21,065,000 | 14,785,000 | ||||||
Income
tax receivable
|
-- | 795,000 | ||||||
Other
|
243,000 | 415,000 | ||||||
$ | 30,668,000 | $ | 21,539,000 | |||||
Less,
allowance for doubtful accounts
|
(282,000 | ) | (228,000 | ) | ||||
$ | 30,386,000 | $ | 21,311,000 | |||||
Accounts
Payable:
|
||||||||
Trade
|
$ | 17,081,000 | $ | 12,364,000 | ||||
Royalty
and other owners
|
15,824,000 | 11,209,000 | ||||||
Other
|
4,320,000 | 3,207,000 | ||||||
Total
|
$ | 37,225,000 | $ | 26,780,000 | ||||
Accrued
Liabilities:
|
||||||||
Compensation
and related expenses
|
$ | 3,135,000 | $ | 1,687,000 | ||||
Property
cost
|
2,974,000 | 4,551,000 | ||||||
Income
tax
|
2,147,000 | -- | ||||||
Other
|
3,138,000 | 3,794,000 | ||||||
Total
|
$ | 11,394,000 | $ | 10,032,000 |
June 30,
2008
|
December 31,
2007
|
|||||||
Proved
oil and gas properties, at cost
|
$ | 390,725,000 | $ | 378,908,000 | ||||
Unproved
oil and gas properties, at cost
|
13,461,000 | 4,458,000 | ||||||
Less,
accumulated depletion and depreciation
|
(177,992,000 | ) | (145,514,00 | ) | ||||
$ | 226,194,000 | $ | 237,852,000 | |||||
Field
service equipment and other
|
19,546,000 | 18,029,000 | ||||||
Less,
accumulated depreciation
|
(10,545,000 | ) | (9,820,000 | ) | ||||
$ | 9,001,000 | $ | 8,209,000 | |||||
Total
net property and equipment
|
$ | 235,195,000 | $ | 246,061,000 |
Operating Leases
|
||||
2008
|
$ | 297,000 | ||
2009
|
350,000 | |||
2010
|
71,000 | |||
2011
|
5,000 | |||
Thereafter
|
— | |||
Total
minimum payments
|
$ | 723,000 |
June 30, 2008
|
December 31, 2007
|
|||||||
Asset
retirement obligation – beginning of period
|
$ | 17,361,000 | $ | 7,047,000 | ||||
Liabilities
incurred
|
268,000 | 468,000 | ||||||
Liabilities
settled
|
(134,000 | ) | (367,000 | ) | ||||
Accretion
expense
|
567,000 | 461,000 | ||||||
Revisions
in estimated liabilities
|
1,211,000 | 9,752,000 | ||||||
Asset
retirement obligation – end of period
|
$ | 19,273,000 | $ | 17,361,000 |
|
•
|
Level
1: Valuations utilizing quoted, unadjusted prices for identical assets or
liabilities in active markets that the Company has the ability to access.
This is the most reliable evidence of fair value and does not require a
significant degree of judgment. Examples include exchange-traded
derivatives and listed equities that are actively
traded.
|
|
•
|
Level
2: Valuations utilizing quoted prices in markets that are not considered
to be active or financial instruments for which all significant inputs are
observable, either directly or indirectly for substantially the full term
of the asset or liability. Financial instruments that are valued using
models or other valuation methodologies are included. Models used should
primarily be industry-standard models that consider various assumptions
and economic measures, such as interest rates, yield curves, time value,
volatilities, contract terms, current market prices, credit risk or other
market-corroborated inputs. Examples include most over-the-counter
derivatives (non-exchange traded), physical commodities, most structured
notes and municipal and corporate
bonds.
|
|
•
|
Level
3: Valuations utilizing significant, unobservable inputs. This provides
the least objective evidence of fair value and requires a significant
degree of judgment. Inputs may be used with internally developed
methodologies and should reflect an entity’s assumptions using the best
information available about the assumptions that market participants would
use in pricing an asset or liability. Examples include certain corporate
loans, real-estate and private equity investments and long-dated or
complex over-the-counter
derivatives.
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
Balance as of
June 30,
2008
|
|||||||||||||
Assets
|
||||||||||||||||
Interest
Rate Contracts
|
— | — | $ | 534,000 | $ | 534,000 | ||||||||||
Total
Assets
|
— | — | $ | 534,000 | $ | 534,000 | ||||||||||
Liabilities
|
||||||||||||||||
Commodity
Derivative Contracts
|
— | — | $ | (35,592,000 | ) | $ | (35,592,000 | ) | ||||||||
Total
Liability
|
— | — | $ | (35,592,000 | ) | $ | (35,592,000 | ) |
Net
liabilities as of January 1, 2008
|
$ | (3,618,000 | ) | |
Total
realized and unrealized losses:
|
||||
Included
in earnings
|
(4,284,000 | ) | ||
Included
in other comprehensive income
|
(27,719,000 | ) | ||
Purchases,
sales, issuances and settlements, net
|
563,000 | |||
Net
liabilities as of June 30, 2008
|
$ | (35,058,000 | ) |
(a)
|
Amounts
reported in net income are classified as sales for commodity derivative
instruments and as a reduction to interest expense for interest rate swap
instruments.
|
Crude Oil Price Collar
|
||||||||||||||||||||
Contract Period
|
Volume In Mbbl
|
Weighted Average Price
Floor/Ceiling/Third Tier
(per Bbl)
|
Net Unrealized
(Loss)/Gain(In thousands)
|
|||||||||||||||||
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
|
170 | $ | (5,398 | ) | ||||||||||||||||
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 | $ | (10,585 | ) | ||||||||||||||||
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 | $ | (8,494 | ) | ||||||||||||||||
First
Quarter 2011
|
45 | $ | 65.00/ | $ | 84.14 | |||||||||||||||
Full
Year 2011
|
45 | $ | (1,517 | ) |
Natural Gas Price Swaps
|
||||||||||||
Contract Period
|
Volume
in Mmcf
|
Weighted Average
Price (per Mcf)
|
Net Unrealized
Gain
(In thousands)
|
|||||||||
Third
Quarter 2008
|
1,005 | 8.07 | (3,333 | ) | ||||||||
Fourth
Quarter 2008
|
1,005 | 8.07 | (3,604 | ) | ||||||||
Full
Year 2008
|
2,010 | $ | 8.04 | $ | (6,937 | ) | ||||||
First
Quarter 2009
|
975 | $ | 9.75 | $ | (2,662 | ) | ||||||
Full
Year 2009
|
975 | $ | 9.75 | $ | (2,662 | ) |
Six Months Ended June 30,
2008
|
Six Months Ended June 30,
2007
|
|||||||||||||||||||||||
Net
Income
|
Number of
Shares
|
Per Share
Amount
|
Net
Income
|
Number of
Shares
|
Per Share
Amount
|
|||||||||||||||||||
Net
income per common share
|
$ | 6,750,000 | 3,074,725 | $ | 2.20 | $ | 6,111,000 | 3,199,343 | $ | 1.91 | ||||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||||||||||
Options
|
753,132 | 753,089 | ||||||||||||||||||||||
Diluted
net income per common share
|
$ | 6,750,000 | 3,827,857 | $ | 1.76 | $ | 6,111,000 | 3,952,432 | $ | 1.55 |
Three Months Ended
June 30, 2008
|
Three Months Ended
June 30, 2007
|
|||||||||||||||||||||||
Net
Income
|
Number of
Shares
|
Per Share
Amount
|
Net
Income
|
Number of
Shares
|
Per Share
Amount
|
|||||||||||||||||||
Net
income per Common share
|
$ | 4,019,000 | 3,057,831 | $ | 1.31 | $ | 2,794,000 | 3,185,640 | $ | 0.88 | ||||||||||||||
Effect
of dilutive Securities:
|
||||||||||||||||||||||||
Options
|
753,563 | 753,264 | ||||||||||||||||||||||
Diluted
net income per common share
|
$ | 4,019,000 | 3,811,394 | $ | 1.05 | $ | 2,794,000 | 3,938,904 | $ | 0.71 |
Item 2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Item 2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
|
Six months Ended
June 30,
|
Three Months Ended
June 30,
|
|||||||||||||||||||||||
2008
|
2007
|
Increase /
(Decrease)
|
2008
|
2007
|
Increase /
(Decrease)
|
|||||||||||||||||||
Barrels
of Oil Produced
|
320,000 | 264,000 | 56,000 | 165,000 | 159,000 | 6,000 | ||||||||||||||||||
Average
Price Received
|
$ | 94.19 | $ | 56.64 | $ | 37.55 | $ | 108.50 | $ | 57.48 | $ | 51.02 | ||||||||||||
Oil
Revenue
|
$ | 30,140,000 | $ | 14,953,000 | $ | 15,187,000 | $ | 17,902,000 | $ | 9,139,000 | $ | 8,763,000 | ||||||||||||
MCF
of Gas Produced
|
4,723,000 | 4,685,000 | 38,000 | 2,341,000 | 2,663,000 | (322,000 | ) | |||||||||||||||||
Average
Price Received
|
$ | 9.42 | $ | 7.96 | $ | 1.46 | $ | 9.67 | $ | 7.82 | $ | 1.85 | ||||||||||||
Gas
Revenue
|
$ | 44,508,000 | $ | 37,281,000 | $ | 7,227,000 | $ | 22,645,000 | $ | 20,829,000 | $ | 1,816,000 | ||||||||||||
Total
Oil & Gas Revenue
|
$ | 74,648,000 | $ | 52,234,000 | $ | 22,414,000 | $ | 40,547,000 | $ | 29,968,000 | $ | 10,579,000 |
Item 2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
|
Six months Ended
June 30,
|
Three Months Ended
June 30,
|
|||||||||||||||||||||||
2008
|
2007
|
Increase /
(Decrease)
|
2008
|
2007
|
Increase /
(Decrease)
|
|||||||||||||||||||
Oil
Price
|
$ | 109.26 | $ | 55.53 | $ | 53.73 | $ | 128.49 | $ | 56.97 | $ | 71.52 | ||||||||||||
Gas
Price
|
$ | 9.83 | $ | 7.14 | $ | 2.69 | $ | 10.90 | $ | 7.59 | $ | 3.31 |
Item 3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM 4T.
|
CONTROLS
AND PROCEDURES
|
Item 1.
|
LEGAL
PROCEEDINGS
|
Item 1A.
|
RISK
FACTORS
|
Item 2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
2008 Month
|
Number of
Shares
|
Average Price
Paid per share
|
Maximum Number of Shares
that May Yet Be Purchased
Under The Plan (1)
|
|||||||||
January
|
60,684 | $ | 50.06 | 224,871 | ||||||||
February
|
558 | $ | 54.68 | 224,313 | ||||||||
March
|
10,465 | $ | 50.25 | 213,848 | ||||||||
April
|
5,500 | $ | 58.05 | 208,348 | ||||||||
May
|
435 | $ | 61.23 | 207,913 | ||||||||
June
|
6,726 | $ | 55.62 | 201,187 | ||||||||
Total/Average
|
84,368 | $ | 51.13 |
(1)
|
In
December 1993, we announced that our board of directors authorized a stock
repurchase program whereby we may purchase outstanding shares of our
common stock from time-to-time, in open market transactions or negotiated
sales. A total of 2,700,000 shares have been authorized, to date, under
this program. Through June 30, 2008 we repurchased a total of
2,498,813 shares under this program for $32,422,977 at an average price of
$13.38 per share. Additional purchases may occur as market conditions
warrant. We expect future purchases will be funded with internally
generated cash flow or from working
capital.
|
Item 3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
Item 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
For
|
Withheld
|
|||||||
Beverly
A. Cummings
|
2,187,879 | 95,053 | ||||||
Charles
E. Drimal, Jr.
|
2,188,349 | 94,583 | ||||||
Matthias
Eckenstein
|
2,181,394 | 101,538 | ||||||
H.
Gifford Fong
|
2,181,180 | 101,752 | ||||||
Thomas
S. T. Gimbel
|
2,278,530 | 4,393 | ||||||
Clint
Hurt
|
2,278,435 | 4,497 | ||||||
Jan
K. Smeets
|
2,192,639 | 90,293 | ||||||
None
|
Item 5.
|
OTHER
INFORMATION
|
Item 6.
|
EXHIBITS
|
Exhibit No.
|
|
10.26.2
|
Amended
and Restated Credit Agreement among Prime Offshore L.L.C. between Guaranty
Bank, FSB, as agent and the Lenders party hereto effective March 31,
2008.
|
10.27.3
|
Subordinated
Promissory Note dated effective March 31, 2008 in the face principal
amount of up to $50,000,000 executed by Prime Offshore L.L.C. and payable
to Artic Management Corporation.
|
10.27.4
|
Mortgage,
Deed of Trust, Security Agreement, Financing Statement and Assignment of
Production Dated effective as of March 31, 2008 from Prime Offshore L.L.C.
to Mathias Eckenstein TTEE for Artic Management Corporation (first
lien).
|
10.27.5
|
Mortgage,
Deed of Trust, Security Agreement, Financing Statement and Assignment of
Production Dated effective as of March 31, 2008 from Prime Offshore L.L.C.
to Mathias Eckenstein TTEE for Artic Management Corporation (second
lien).
|
10.27.6
|
Pledge
Agreement dated as effective March 31, 2008 between Prime Offshore L.L.C.
and Artic Management Corporation (General Partner Interest in FWOE
Partners L.P.)
|
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).
|
PrimeEnergy
Corporation
|
|
(Registrant)
|
|
March
24, 2009
|
/s/ Charles E. Drimal,
Jr.
|
(Date)
|
Charles
E. Drimal, Jr.
|
President
|
|
Principal
Executive Officer
|
|
March
24, 2009
|
/s/ Beverly A. Cummings
|
(Date)
|
Beverly
A. Cummings
|
Executive
Vice President
|
|
Principal
Financial and Accounting
Officer
|