UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
COMMISSION FILE NUMBER 1-10671
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One): [X] Form 10-K [ ] Form 20-F [ ] Form 11-K [ ] Form 10-Q
[ ] Form N-SAR [ ] Form N-CSR
For Period Ended: December 31, 2002
[ ] Transition Report on Form 10-K [ ] Transition Report on Form 10-Q
[ ] Transition Report on Form 20-F [ ] Transition Report on Form N-SAR
[ ] Transition Report on Form 11-K
For the Transition Period Ended:
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Read attached instruction sheet before preparing form. Please print or type.
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE COMMISSION HAS
VERIFIED ANY INFORMATION CONTAINED HEREIN.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I -- REGISTRANT INFORMATION
Full name of registrant: The Meridian Resource Corporation
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Former name if applicable:
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Address of principal executive office (Street and number):
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1401 Enclave Parkway, Suite 300
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City, state and zip code: Houston, Texas 77077
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PART II -- RULES 12b-25 (b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate) [X]
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
(b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, 11-K, Form N-SAR or Form N-CSR, or portion thereof,
will be filed on or before the fifteenth calendar day following the
prescribed due date; or the subject quarterly report or transition report
on Form 10-Q, or portion thereof, will be filed on or before the fifth
calendar day following the prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
PART III -- NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
N-SAR, N-CSR, or the transition report portion thereof, could not be filed
within the prescribed time period.
The Company has been working with its lenders under its senior credit
facility to reach an agreement regarding the scheduled redetermination of an
appropriate borrowing base. The current borrowing base under the Company's
senior credit agreement was established on September 23, 2002, at $165 million,
with the borrowing base redetermination date scheduled for November 30, 2002.
The Company and its senior lenders have entered into an amendment of the
agreement, effective March 28, 2003, to eliminate the November 30, 2002
redetermination date and to reschedule the borrowing base redetermination date
for April 30, 2003, and quarterly thereafter. The Company's current borrowing
base is $165 million, which is the same as that established upon the signing of
the original credit agreement.
On March 31, 2003, the Company received notice from its senior lenders
that effective April 30, 2003 the borrowing base will be established at $138.5
million. Accordingly, the Company will reflect the difference of $26.5 million
as a current maturity of its long-term debt and will be required to make up the
deficiency through the addition of reserves or value to its current reserve base
or pay the senior lenders this deficiency within ninety days of the effective
date of April 30, 2003 or one hundred and twenty (120) days from this date. As
a result of the potential liquidity implications associated with the recent
notice, additional time will be required to enable us to determine appropriate
disclosures to be provided in our Form 10-K and determine the extent, if any,
this may result in a going concern modification of the report on the Company's
financial statements for the year ended December 31, 2002 to be issued by the
Company's auditors. The Company believes that it can satisfy this deficiency
through a combination of the addition of reserves, third-party financing,
property sales, and cash flow
The reasons stated above causing the inability to file the Form 10-K
on a timely basis could not be eliminated by the Company without unreasonable
effort or expense. The Form 10-K will be filed no later than the fifteenth
calendar day following the prescribed due date.
PART IV-- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
James H. Shonsey (281) 597-7043
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(Name) (Area Code) (Telephone Number)
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(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of
1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s). |X| Yes [ ] No
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(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof? Yes
|X| No [ ]
If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
SEE THE COMPANY'S PRESS RELEASE DATED MARCH 31, 2003, A COPY OF WHICH IS
ATTACHED HERETO AS ANNEX A.
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-2-
The Meridian Resource Corporation
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(Name of Registrant as Specified in Charter)
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has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date April 1, 2003 By /s/ James H. Shonsey
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James H. Shonsey
Chief Financial Officer
INSTRUCTION: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
ATTENTION
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INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL
VIOLATIONS (SEE 18 U.S.C. 1001).
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-3-
ANNEX A
[MERIDIAN LETTERHEAD]
[MERIDIAN LOGO] NEWS
THE MERIDIAN RESOURCE CORPORATION ANNOUNCES 2002
YEAR-END FINANCIAL RESULTS AND PROVIDES
OPERATIONAL UPDATE
Houston, Texas - March 31, 2003 - The Meridian Resource Corporation (NYSE: TMR)
today announced financial results for its fourth quarter and year-end 2002. For
the three months ended December 31, 2002, the Company reported that
discretionary cash flow (see accompanying reconciliation) totaled $15.4 million,
or $0.22 per fully diluted share, compared to $18.3 million, or $0.34 per fully
diluted share, for the same quarter of 2001. Oil and gas revenues for the
current period were $24.3 million compared to $28.0 million for the
corresponding period of 2001. On an earnings basis, the Company reported a net
loss of $2.2 million, or $0.04 per fully diluted share for the quarter, compared
to a net loss of $6.0 million, or $0.13 per fully diluted share, for the
corresponding period of 2001.
2002 ANNUAL FINANCIAL RESULTS
For the full year 2002, discretionary cash flow totaled $66.2 million, or $1.00
per fully diluted share, compared to $121.7 million, or $2.18 per fully diluted
share, for calendar year 2001. Oil and gas revenue during calendar year 2002
totaled $107.0 million, or $3.71 per Mcfe, compared to $176.6, or $4.46 per
Mcfe, for calendar year 2001. Earnings for the year were reported at a net loss
of $52.0 million, or $1.05 per fully diluted share, compared to net income of
$22.6 million, or $0.43 per fully diluted share, for the corresponding period of
2001. The net loss for 2002 was primarily the result of a $69.1 million charge
from a write-down of proved undeveloped reserves on the Company's Kent Bayou
well.
The changes in earnings and discretionary cash flow for 2002 compared to the
corresponding period of 2001 resulted from the combination of a 27% decline in
oil and gas production on an Mcfe basis coupled with a 17% decrease in the price
received for oil and gas sales. The volume declines are the result of property
sales completed during 2001, storm related shut-ins and natural rate declines in
producing wells. The Company reported total production of 28.9 billion cubic
feet of gas equivalent ("Bcfe") for calendar year 2002 compared to 39.6 Bcfe for
calendar year 2001.
Oil and gas operating expenses decreased by $4.7 million to $11.9 million, to
$0.41 per Mcfe, during calendar year 2002 compared to $16.6 million, or $0.42
per Mcfe, for the prior period. Similarly, production taxes decreased by $3.5
million, or 30%, for the calendar year 2002 compared to 2001. These declines
were primarily due to decreased production volumes resulting from the previously
discussed property sales and shut-ins.
General and administrative expenses decreased by $1.7 million, or 12%, to $11.8
million for the year ended December 31, 2002 compared to $13.5 million for the
corresponding period of 2001. This reduction is in part a result of savings
realized from staff reductions and the purchase and retirement of certain
outstanding well bonus plan interests. Interest expense decreased by $4.6
million, or 23%,
Page 1
to $15.5 million for calendar year 2002 from $20.1 million for 2001 primarily as
a result of lower outstanding borrowings coupled with lower interest rates on
the outstanding balances. During the year, Meridian reduced its total
outstanding indebtedness by $31.2 million from $235.0 million to approximately
$203.8 million.
The current borrowing base under the Company's existing senior credit agreement
was established on September 23, 2002, at $165 million, with the borrowing base
redetermination date scheduled for November 30, 2002. The Company and its senior
lenders have entered into an amendment of the agreement to eliminate the
November 30, 2002 redetermination date and to reschedule the borrowing base
redetermination date for April 30, 2003, and quarterly thereafter. As a result,
the Company's current borrowing base is $165 million, as established upon the
signing of the original credit agreement. On March 31, 2003, the Company
received notice from its senior lenders that effective April 30, 2003 the
borrowing base will be established at $138.5 million. Accordingly, the Company
will reflect the difference as a current maturity of its long-term debt and will
be required to pay the senior lenders this deficiency within ninety days (90) of
the effective date of April 30, 2003. Though no assurances can be made that
sufficient funds will be available to pay this deficiency, management believes
that such a payment can be managed from the Company's current cash sources,
third party capital in the form of subordinated debt and/or from the sale of oil
and gas properties.
OPERATIONS UPDATE
As previously announced, Meridian successfully completed its Biloxi Marshlands
6-1 well, located in St. Bernard Parish, Louisiana during the fourth quarter of
2002. The well reached a total depth of 10,800' measured depth (9,000' TVD) and
encountered over 180' of net pay in the targeted Cris "I" sand. The well was
placed on production on March 15, 2003 and is currently producing at a gross
rate of approximately 10,000 Mcf per day, which singularly represents an
increase of 10% of current daily production. During March 2003, the Company
participated in the State of Louisiana oil and gas lease sale, and successfully
bid on five additional tracts in the area covering approximately 740 acres. The
Company's working interest in the Biloxi Marshlands No. 6-1 well is 93%. Several
additional development and exploratory wells are planned in the area during
2003.
Following the drilling of the Biloxi Marshlands 6-1 well, the Company
constructed a barge based production facility and installed approximately five
miles of 8" pipeline capable of processing and transporting the production from
the current well and future wells on the Biloxi Marshland acreage.
Meridian expects to begin the second phase of its 3-D seismic program on the
Biloxi Marshlands acreage during April 2003. The survey will encompass at least
105 square miles and is expected to be complete during the third quarter of
2003.
The Hughes No. 2 well in Jefferson Davis Parish, Louisiana has been drilled to a
total depth of 17,850' measured depth and a completion in the Bol Mex 5 sand
series is currently underway. The well is a replacement for the Hughes No. 1
that experienced cementing problems during the completion phase and was
subsequently abandoned. During February 2003, the Company completed the
construction of production facilities for the Hughes No. 2 and is currently
conducting final completion operations on the well. Meridian is the operator of
the well and owns an approximate 94% working interest and a 70% net revenue
interest in the well.
Also in Jefferson Davis Parish, Louisiana, in the Company's Thornwell field,
Meridian participated in the drilling of the Blank Living Trust well, which
encountered 20' of pay at a depth of 11,960'. The well was placed on production
flowing at a rate of 9,000 Mcf of gas per day and 183 barrels of oil per day
Page 2
during the fourth quarter of 2002. The Company owns an approximate 26% working
interest and a 17% net revenue interest in the well.
Recompletion operations are underway on the Thibodaux No. 1 well in the
Company's Ramos Field. Once recompleted to the Operc 3 interval, the Company
expects the well to produce at rates of 10,000 Mcfe per day or more. Meridian is
operator of the Ramos Field and owns a 65% working interest and a 44% net
revenue interest in the well.
In the Lakeside Field located in Cameron Parish, Louisiana, Meridian completed
its Lacassane No. 1 well in the Alliance sand at a depth of approximately
10,750'. The well initially tested at rates of 1,425 Mcfe of gas per day from
the lower part of the sand and additional perforations are now being added to
include the upper member of the sand. The Company owns a 73% working interest in
the well.
The capital expenditure budget for 2003 is currently forecast between $35
million and $40 million for seismic and drilling activity, primarily focused in
the Biloxi Marshlands project area. The first development well is the Biloxi
Marshlands 6-2 well, which is scheduled for April 2003. Other operations will
include a 12,500' well in Ship Shoal Block 320, and certain other shallow, lower
risk opportunities including additional wells in the Biloxi Marshlands project
area. As previously announced, the Company has changed its exploration focus to
concentrate on multiple shallower, low risk projects with broad
exploitation/development potential interspersed with one or more of the
Company's traditional higher risk, but much higher potential, projects.
The Company will be filing its annual report on Form 10-K no later than April
15, 2003, once the Company's independent auditors have completed their audit of
Meridian's financial statements for the year ended December 31, 2002.
SAFE HARBOR STATEMENT AND DISCLAIMER
Statements identified by the words "expects," "projects," "plans," and certain
of the other foregoing statements may be deemed "forward-looking statements."
Although Meridian believes that the expectations reflected in such
forward-looking statements are reasonable, these statements involve risks and
uncertainties that may cause actual future activities and results to be
materially different from those suggested or described in this press release.
These include risks inherent in the drilling of oil and natural gas wells,
including risks of fire, explosion, blowout, pipe failure, casing collapse,
unusual or unexpected formation pressures, environmental hazards, and other
operating and production risks inherent in oil and natural gas drilling and
production activities, which may temporarily or permanently reduce production or
cause initial production or test results to not be indicative of future well
performance or delay the timing of sales or completion of drilling operations;
risks with respect to oil and natural gas prices, a material decline in which
could cause the Company to delay or suspend planned drilling operations or
reduce production levels; and risks relating to the availability of capital to
fund drilling operations that can be adversely affected by adverse drilling
results, production declines and declines in oil and gas prices.
These and other risks are described in the Company's documents and reports,
available from the U.S. Securities and Exchange Commission.
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The Meridian Resource Corporation is an independent oil and natural gas company
engaged in the exploration for and development of oil and natural gas in
Louisiana, Texas, and the Gulf of Mexico. Meridian has access to an extensive
inventory of seismic data and, among independent producers, is a leader in using
3-D seismic technology to analyze prospects, define risk, and target
high-potential wells for exploration and development. Meridian is headquartered
in Houston, Texas, and has a field office in Weeks Island, Louisiana. Meridian
stock is traded on the New York Stock Exchange under the symbol "TMR."
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FOR MORE INFORMATION CONTACT:
James H. Shonsey or John Collins at (281)-597-7000
Meridian Resource Corporation Website: www.tmrc.com
Page 3
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUMMARY OPERATIONS DATA
(In thousands, except prices and per share data)
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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2002 2001 2002 2001
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Production
Oil (Mbbl) 424 769 2,213 2,918
Natural Gas (Mmcf) 3,122 5,319 15,578 22,085
Mmcfe 5,667 9,936 28,856 39,594
Mmcfe (Daily Rate) 61.6 108.0 79.1 108.5
Average Prices
Oil (per bbl) $ 27.23 $ 18.98 $ 24.67 $ 25.17
Natural Gas (per Mcf) 4.08 2.53 3.36 4.67
Per Mcfe 4.28 2.82 3.71 4.46
Oil and Natural Gas Revenues $ 24,277 $ 28,029 $ 106,992 $ 176,646
Lease Operating Expenses 3,113 3,682 11,935 16,625
Per Mcfe 0.55 0.37 0.41 0.42
Severance and Ad Valorem Taxes 1,599 2,439 8,235 11,761
Per Mcfe 0.28 0.25 0.29 0.30
General and Administrative Expense 2,716 1,355 11,820 13,506
Per Mcfe 0.48 0.14 0.41 0.34
Interest Expense 2,759 3,941 15,455 20,092
Per Mcfe 0.49 0.40 0.54 0.51
Discretionary Cash Flow (Fully Diluted) (1) $ 15,363 $ 18,270 $ 66,177 $ 121,720
Per Diluted Share 0.22 0.34 1.00 2.18
Per MCFE 2.71 1.84 2.29 3.07
Net Earnings (Loss) Applicable to Common
Stockholders $ (2,223) $ (6,041) $ (52,012) $ 22,551
Per Diluted Common Share $ (0.04) $ (0.13) $ (1.05) $ 0.43
Diluted Shares (without giving effect to
anti-dilution) 70,668 53,518 66,299 55,842
(1) See accompanying table for a reconciliation of net income (loss) applicable
to common stockholders to discretionary cash flow.
Page 4
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share)
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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2002 2001 2002 2001
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Revenues:
Oil and natural gas $ 24,277 $ 28,029 $ 106,992 $ 176,646
Price risk management activities (87) -- -- --
Interest and other 184 178 478 1,414
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Total revenues 24,374 28,207 107,470 178,060
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Operating costs and expenses:
Oil and natural gas operating 3,113 3,682 11,935 16,625
Severance and ad valorem taxes 1,599 2,439 8,235 11,761
Depletion and depreciation 14,791 15,685 60,972 67,450
Impairment of long-lived assets -- 6,580 69,124 6,580
General and administrative 2,716 1,355 11,820 13,506
Issuance of stock grants -- 5,566 -- 5,566
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Total operating costs & expenses 22,219 35,307 162,086 121,488
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Net earnings (loss) before interest and income 2,155 (7,100) (54,616) 56,572
taxes
Other expenses:
Interest expense 2,759 3,941 15,455 20,092
Taxes on income:
Current 198 (100) 298 (300)
Deferred -- (4,900) (22,300) 13,800
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Net earnings (loss) (802) (6,041) (48,069) 22,980
Dividends on preferred stock 1,421 -- 3,943 429
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Net earnings (loss) applicable to common
stockholders $ (2,223) $ (6,041) $ (52,012) $ 22,551
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Net earnings (loss) per share:
- Basic $ (0.04) $ (0.13) $ (1.05) $ 0.47
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- Diluted $ (0.04) $ (0.13) $ (1.05) $ 0.43
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Weighted average common shares outstanding:
- Basic 49,992 47,950 49,763 48,350
- Diluted 49,992 47,950 49,763 55,842
Page 5
THE MERIDIAN RESOURCE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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2002 2001 2002 2001
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RECONCILIATION OF NET EARNINGS (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS TO DISCRETIONARY CASH
FLOW:
NET EARNINGS (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ (2,223) $ (6,041) $ (52,012) $ 22,551
Adjustments to reconcile net earnings (loss)
applicable to common stockholders to
discretionary cash flow:
Depreciation, depletion & amortization 14,791 15,685 60,972 67,450
Impairment of long-lived assets -- 6,580 69,124 6,580
Amortization of deferred issuance costs 589 520 3,564 2,060
Deferred income taxes -- (4,900) (22,300) 13,800
Other amortization 5 5 20 10
Issuance of stock grants -- 5,566 -- 5,566
Non-cash compensation 384 546 1,630 2,039
Non-cash price risk management 87 -- -- --
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Discretionary Cash Flow (Basic) 13,633 17,961 60,998 120,056
Interest on convertible sub-debt (net of tax) 309 309 1,236 1,235
Dividend on preferred stock 1,421 -- 3,943 429
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DISCRETIONARY CASH FLOW (DILUTED) $ 15,363 $ 18,270 $ 66,177 $ 121,720
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