Form 8-K
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) January 21, 2003
 
 
VINTAGE PETROLEUM, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
  
1-10578
  
73-1182669
(State or other
  
(Commission File
  
(IRS Employer
jurisdiction of
  
Number)
  
Identification No.)
incorporation)
        
 
110 West Seventh Street, Tulsa, Oklahoma
  
74119
(Address of principal executive offices)
  
(Zip Code)
 
Registrant’s telephone number, including area code (918) 592-0101
 
Not applicable
(Former name or former address, if changed since last report)
 

 
Item 5. Other Events.
 
On December 16, 2002, Vintage Petroleum, Inc. (the “Company”) reported it had signed an agreement to sell its interests in Ecuador to a major independent oil and gas company for $141.7 million, subject to certain adjustments. The sale is expected to close January 31, 2003, subject to normal conditions precedent to closing. A copy of the Company’s press release dated December 16, 2002, is attached as an exhibit hereto and incorporated herein by reference. The Company plans to use the proceeds from the sale to reduce its long-term debt.
 
The following unaudited financial information is included to supplement the Company’s previously issued consolidated financial statements included in the Company’s Form 8-K filed on November 27, 2002, and Form 10-Q for the quarter ended September 30, 2002, and presents the Company’s balance sheets and statements of operations as if the Company’s Ecuador interests were discontinued operations. Consistent with the Company’s previously issued consolidated financial statements, the Company’s Trinidad interests are also presented as discontinued operations. The unaudited financial information does not reflect any gain or loss related to the Ecuador sale.
 
For comparative purposes, income from continuing operations before cumulative change in accounting principle as reported in the Company’s Form 8-K was $134.1 million, $197.4 million and $73.4 million for the years ended December 31, 2001, 2000 and 1999, respectively. Income from continuing operations before cumulative change in accounting principle reported in the Company’s Form 10-Q for the nine months ended September 30, 2002 was $34.0 million. Additionally, the reported loss from discontinued operations was $0.6 million and $0.1 million for the years ended December 31, 2001 and 2000, respectively. The reported income from discontinued operations for the nine months ended September 30, 2002 was $14.5 million.
 
The unaudited financial information should be read in conjunction with the 2001 audited financial statements and related notes included in the Company’s Form 8-K filed on November 27, 2002, and the unaudited financial statements included in the Company’s Form 10-Q for the quarter ended September 30, 2002.
 
The following financial information of the Company is included as part of this Form 8-K:
 
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES:
   
Page
Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001 and 2000
   
3
as if the Company’s Ecuador interests were discontinued operations (Unaudited)
     
Consolidated Statements of Operations for the nine months ended September 30, 2002
     
and the years ended December 31, 2001, 2000, and 1999 as if
     
the Company’s Ecuador interests were discontinued operations (Unaudited)
   
4-5
Note to Financial Information (Unaudited)
   
6-7
 

-2-

 
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
(Unaudited) 
 
A S S E T S
 
    
September 30,
2002
     
December 31,
2001
     
December 31,
2000
CURRENT ASSETS:
                         
Cash and cash equivalents
   
$
4,868
 
   
$
6,359
 
   
$
1,370
Accounts receivable—  
                         
Oil and gas sales
   
 
93,140
 
   
 
73,246
 
   
 
136,187
Joint operations
   
 
11,836
 
   
 
12,041
 
   
 
14,049
Derivative financial instruments receivable
   
 
—  
 
   
 
4,701
 
   
 
—  
Prepaids and other current assets
   
 
23,512
 
   
 
34,382
 
   
 
10,552
Assets of discontinued operations
   
 
84,753
 
   
 
86,511
 
   
 
84,559
    
  
  
Total current assets
   
 
218,109
 
   
 
217,240
 
   
 
246,717
    
  
  
PROPERTY, PLANT AND EQUIPMENT, at cost:
                         
Oil and gas properties, successful efforts method
   
 
2,476,102
 
   
 
2,434,592
 
   
 
1,686,598
Oil and gas gathering systems and plants
   
 
22,368
 
   
 
20,508
 
   
 
19,252
Other
   
 
26,220
 
   
 
25,367
 
   
 
19,548
    
  
  
    
 
2,524,690
 
   
 
2,480,467
 
   
 
1,725,398
Less accumulated depreciation, depletion and amortization
   
 
914,828
 
   
 
803,135
 
   
 
664,410
    
  
  
    
 
1,609,862
 
   
 
1,677,332
 
   
 
1,060,988
    
  
  
GOODWILL, net of amortization
   
 
96,861
 
   
 
156,990
 
   
 
—  
    
  
  
OTHER ASSETS, net
   
 
51,784
 
   
 
56,340
 
   
 
44,297
    
  
  
    
$
1,976,616
 
   
$
2,107,902
 
   
$
1,352,002
    
  
  
L I A B I L I T I E S   A N D   S T O C K H O L D E R S’   E Q U I T Y
CURRENT LIABILITIES:
                         
Revenue payable
   
$
27,500
 
   
$
25,625
 
   
$
59,872
Accounts payable—trade
   
 
34,567
 
   
 
57,613
 
   
 
42,096
Current income taxes payable
   
 
17,218
 
   
 
21,638
 
   
 
43,187
Short-term debt
   
 
5,455
 
   
 
17,320
 
   
 
3,400
Derivative financial instruments payable
   
 
11,491
 
   
 
—  
 
   
 
—  
Other payables and accrued liabilities
   
 
56,908
 
   
 
42,471
 
   
 
57,761
Liabilities of discontinued operations
   
 
8,712
 
   
 
7,134
 
   
 
5,976
    
  
  
Total current liabilities
   
 
161,851
 
   
 
171,801
 
   
 
212,292
    
  
  
LONG-TERM DEBT
   
 
924,215
 
   
 
1,010,673
 
   
 
464,229
    
  
  
DEFERRED INCOME TAXES
   
 
180,610
 
   
 
177,777
 
   
 
46,857
    
  
  
OTHER LONG-TERM LIABILITIES
   
 
6,100
 
   
 
18,208
 
   
 
3,767
    
  
  
STOCKHOLDERS’ EQUITY, per accompanying statements:
                         
Preferred stock, $.01 par, 5,000,000 shares authorized,
zero shares issued and outstanding
   
 
—  
 
   
 
—  
 
   
 
—  
Common stock, $.005 par, 160,000,000 shares authorized,
63,404,972, 63,081,322 and 62,801,416 shares issued
    and 63,328,972, 63,081,322 and 62,801,416 outstanding
   
 
317
 
   
 
315
 
   
 
314
Capital in excess of par value
   
 
326,163
 
   
 
324,077
 
   
 
319,893
Retained earnings
   
 
409,451
 
   
 
428,443
 
   
 
303,449
Accumulated other comprehensive income (loss)
   
 
(29,426
)
   
 
(21,632
)
   
 
1,201
    
  
  
    
 
706,505
 
   
 
731,203
 
   
 
624,857
Less unamortized cost of restricted stock awards
   
 
2,665
 
   
 
1,760
 
   
 
—  
    
  
  
    
 
703,840
 
   
 
729,443
 
   
 
624,857
    
  
  
    
$
1,976,616
 
   
$
2,107,902
 
   
$
1,352,002
    
  
  
See note to financial information.
 

-3-

 
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
    
For the Nine
Months Ended
September 30,
     
For the Years Ended December 31,
    
2002
     
2001
     
2000
     
1999
REVENUES:
                                  
Oil and gas sales
   
$
422,644
 
   
$
707,090
 
   
$
649,736
 
   
$
367,571
Gas marketing
   
 
45,215
 
   
 
130,209
 
   
 
128,836
 
   
 
60,275
Oil and gas gathering
   
 
4,524
 
   
 
17,032
 
   
 
19,998
 
   
 
6,955
Gain (loss) on disposition of assets
   
 
17,259
 
   
 
26,871
 
   
 
(1,731
)
   
 
54,991
Foreign currency exchange gain (loss)
   
 
3,408
 
   
 
1,825
 
   
 
(79
)
   
 
—  
Other income (expense)
   
 
592
 
   
 
1,940
 
   
 
(21,380
)
   
 
3,733
    
  
  
  
    
 
493,642
 
   
 
884,967
 
   
 
775,380
 
   
 
493,525
    
  
  
  
COSTS AND EXPENSES:
                                  
Lease operating, including production taxes
   
 
151,005
 
   
 
204,650
 
   
 
153,522
 
   
 
120,348
Exploration costs
   
 
21,594
 
   
 
21,587
 
   
 
22,677
 
   
 
14,674
Gas marketing
   
 
43,937
 
   
 
126,373
 
   
 
123,787
 
   
 
57,550
Oil and gas gathering
   
 
5,077
 
   
 
17,759
 
   
 
17,052
 
   
 
5,153
General and administrative
   
 
36,852
 
   
 
48,130
 
   
 
39,757
 
   
 
35,465
Depreciation, depletion and amortization
   
 
138,525
 
   
 
165,984
 
   
 
98,042
 
   
 
106,485
Impairment of oil and gas properties
   
 
—  
 
   
 
29,050
 
   
 
225
 
   
 
3,306
Amortization of goodwill
   
 
—  
 
   
 
11,940
 
   
 
—  
 
   
 
—  
Interest
   
 
58,226
 
   
 
64,720
 
   
 
48,437
 
   
 
58,634
Loss on early extinguishment of debt
   
 
8,154
 
   
 
—  
 
   
 
—  
 
   
 
—  
    
  
  
  
    
 
463,370
 
   
 
690,193
 
   
 
503,499
 
   
 
401,615
    
  
  
  
Income from continuing operations before income taxes and cumulative effect of change in accounting principle
   
 
30,272
 
   
 
194,774
 
   
 
271,881
 
   
 
91,910
    
  
  
  
PROVISION (BENEFIT) FOR INCOME TAXES:
                                  
Current
   
 
19,004
 
   
 
80,535
 
   
 
68,858
 
   
 
5,876
Deferred
   
 
(17,996
)
   
 
(12,210
)
   
 
31,537
 
   
 
18,375
    
  
  
  
    
 
1,008
 
   
 
68,325
 
   
 
100,395
 
   
 
24,251
    
  
  
  
Income from continuing operations before cumulative effect of change in accounting principle
   
 
29,264
 
   
 
126,449
 
   
 
171,486
 
   
 
67,659
INCOME FROM DISCONTINUED OPERATIONS, net of income tax expense (benefit) of $18,280, $2,148, $(7,435) and $78, respectively
   
 
19,241
 
   
 
7,058
 
   
 
25,421
 
   
 
5,712
    
  
  
  
Income before cumulative effect of change in accounting principle
   
 
48,505
 
   
 
133,507
 
   
 
196,907
 
   
 
73,371
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, net of income tax benefit of zero, zero, $407 and zero, respectively
   
 
(60,547
)
   
 
—  
 
   
 
(1,014
)
   
 
—  
    
  
  
  
NET INCOME (LOSS)
   
$
(12,042
)
   
$
133,507
 
   
$
195,893
 
   
$
73,371
    
  
  
  

-4-

 
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
      
For the Nine Months Ended September 30,
     
For the Years Ended December 31,
      
2002
     
2001
   
2000
     
1999
BASIC INCOME (LOSS) PER SHARE:
                          
Income from continuing operations before cumulative effect of change in accounting principle
     
.46
 
   
2.01
   
2.74
 
   
1.17
Income from discontinued operations
     
.31
 
   
.11
   
.41
 
   
.10
      
  
  
  
Income before cumulative effect of change in accounting principle
     
.77
 
   
2.12
   
3.15
 
   
1.27
Cumulative effect of change in accounting principle
     
(.96
)
   
—  
   
(.02
)
   
—  
      
  
  
  
Net income (loss)
     
(.19
)
   
2.12
   
3.13
 
   
1.27
      
  
  
  
DILUTED INCOME (LOSS) PER SHARE:
                          
Income from continuing operations before cumulative effect of change in accounting principle
     
.46
 
   
1.98
   
2.68
 
   
1.14
Income from discontinued operations
     
.30
 
   
.11
   
.40
 
   
.10
      
  
  
  
Income before cumulative effect of change in accounting principle
     
.76
 
   
2.09
   
3.08
 
   
1.24
Cumulative effect of change in accounting principle
     
(.95
)
   
—  
   
(.02
)
   
—  
      
  
  
  
Net income (loss)
     
(.19
)
   
2.09
   
3.06
 
   
1.24
      
  
  
  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                          
Basic
     
63,181
 
   
63,023
   
62,644
 
   
57,989
      
  
  
  
Diluted
     
63,661
 
   
64,027
   
63,963
 
   
59,315
      
  
  
  
 
 
See note to financial information.

-5-

 
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 
NOTE TO FINANCIAL INFORMATION
 
For the Nine Months Ended September 30, 2002 and the Years Ended December 31, 2001, 2000 and 1999
(Unaudited)
 
1. DISCONTINUED OPERATIONS
 
On July 30, 2002, Vintage Petroleum, Inc. (the “Company”) completed the sale of its operations in Trinidad. The Company received $40 million in cash and recorded a gain of approximately $31.9 million ($14.9 million after income taxes), subject to post-closing adjustments.
 
On December 16, 2002, the Company reported it had signed an agreement to sell its interests in Ecuador to a major independent oil and gas company for $141.7 million, subject to certain adjustments. In the agreement, Vintage commits to sell for cash all of the stock of its indirect wholly-owned subsidiary, Vintage Oil Ecuador, S.A. The transaction is scheduled to close January 31, 2003, subject to normal conditions precedent to closing.
 
In accordance with the rules established by SFAS No. 144, the Company’s Trinidad operations, along with the gain on the sale, and the Company’s Ecuador operations are accounted for as discontinued operations in the accompanying consolidated financial information.
 
Following is summarized financial information for the Company’s Trinidad operations (in thousands):
 
    
Nine Months Ended September 30,
     
Years Ended December 31,
    
2002
     
2001
     
2000
     
  1999  
Loss from discontinued operations
   
$
(711
)
   
$
(980
)
   
$
(104
)
   
$
—  
Deferred tax expense (benefit)
   
 
(253
)
   
 
(343
)
   
 
—  
 
   
 
—  
    
  
  
  
Net operating loss from discontinued operations
   
 
(458
)
   
 
(637
)
   
 
(104
)
   
 
—  
Gain on sale of Trinidad operations, net of $16,939 income tax expense
   
 
14,943
 
   
 
—  
 
   
 
—  
 
   
 
—  
    
  
  
  
Income (loss) from discontinued operations, net of tax
   
$
14,485
 
   
$
(637
)
   
$
(104
)
   
$
—  
    
  
  
  
 
      
September 30,
2002
   
December 31,
2001
   
December 31, 2000
            
Current assets
     
$
—  
   
$
1,274
   
$
389
Property, plant and equipment, net
     
 
—  
   
 
7,898
   
 
2,321
      
  
  
Assets of discontinued operations
     
$
—  
   
$
9,172
   
$
2,710
      
  
  
Current liabilities
     
$
—  
   
$
972
   
$
20
      
  
  
Liabilities of discontinued operations
     
$
—  
   
$
972
   
$
20
      
  
  

-6-

 
VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 
NOTE TO FINANCIAL INFORMATION
 
For the Nine Months Ended September 30, 2002 and the Years Ended December 31, 2001, 2000 and 1999
 
Following is summarized financial information for the Company’s Ecuador operations (in thousands):
 
      
Nine Months
Ended
September 30,
   
Years Ended December 31,
      
2002
   
2001
   
2000
     
1999
Income from discontinued operations
     
$
6,350
   
$
10,186
   
$
18,497
 
   
$
5,790
Current tax expense
     
 
—  
   
 
—  
   
 
—  
 
   
 
78
Deferred tax expense (benefit)
     
 
1,595
   
 
2,491
   
 
(7,435
)
   
 
—  
      
  
  
  
Income from discontinued operations, net of tax
     
$
4,755
   
$
7,695
   
$
25,932
 
   
$
5,712
      
  
  
  
 
    
September 30,
2002
   
December 31,
2001
   
December 31,
2000
Current assets
   
$
17,486
   
$
12,650
   
$
23,941
Property, plant and equipment, net
   
 
54,293
   
 
49,814
   
 
41,745
Other assets
   
 
3,454
   
 
3,761
   
 
2,558
Deferred income taxes
   
 
9,520
   
 
11,114
   
 
13,605
    
  
  
Assets of discontinued operations
   
$
84,753
   
$
77,339
   
$
81,849
    
  
  
Current liabilities
   
$
8,712
   
$
6,162
   
$
5,956
    
  
  
Liabilities of discontinued operations
   
$
8,712
   
$
6,162
   
$
5,956
    
  
  
 
In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the assets of the Company’s Trinidad and Ecuador operations were reclassified as “Assets of discontinued operations” and the liabilities were reclassified as “Liabilities of discontinued operations” in the accompanying consolidated balance sheets as of September 30, 2002, December 31, 2001 and December 31, 2000.

-7-

 
Item 7. Financial Statements and Exhibits
 
(c) Exhibits
 
99. Press release dated December 16, 2002, issued by the Company.

-8-

 
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 hereunto duly authorized.
 
       
VINTAGE PETROLEUM, INC.
       
By:
  
/s/    Michael F. Meimerstorf        
               
Michael F. Meimerstorf
Vice President and Controller
 
Date: January 21, 2003

-9-

 
EXHIBIT INDEX
 
EXHIBIT
     
NUMBER
   
DESCRIPTION
99.
   
Press release dated December 16, 2002, issued by the Company.

-10-