UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: DECEMBER 31, 2002 Commission file number: 1-10671
THE MERIDIAN RESOURCE CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 76-0319553
(State of incorporation) (I.R.S. Employer
Identification No.)
1401 ENCLAVE PARKWAY, SUITE 300, HOUSTON, TEXAS 77077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 281-597-7000
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) (Name of each exchange on which registered)
Common Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
Aggregate market value of shares of common stock held by non-affiliates
of the Registrant at June 30, 2002: $182,962,375
Number of shares of common stock outstanding at April 25, 2003: 50,162,304
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EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (the "Amendment") is being filed to
amend the annual report on Form 10-K of The Meridian Resource Corporation (the
"Company") filed with the Securities and Exchange Commission on April 15, 2003
(the "Original Report on Form 10-K"). The sole purpose of this Amendment is to
include Items 10, 11, 12, 13, 14 and 15 previously intended to be incorporated
by reference through the Company's proxy statement for its 2003 annual meeting
of shareholders. The Company will not be filing its proxy statement for its 2003
annual meeting within 120 days following the end of its fiscal year 2002, and,
therefore, is filing this Amendment. The Amendment does not amend any other
disclosure in the Original Report on Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICES OF THE REGISTRANT.
DIRECTORS
The Company's Bylaws provide that the Board of Directors shall be
classified into three classes: Class I Directors, Class II Directors and Class
III Directors. Each class serves for a term of three years or until a director's
successor is duly elected and qualified.
Set forth below is certain information concerning the current directors
of the Company, with each person's business experience for at least the past
five years.
PRESENT POSITIONS EXPIRATION OF
NAME AGE WITH THE COMPANY DIRECTOR SINCE PRESENT TERM
---- --- ---------------- -------------- -------------
James T. Bond 78 Class I Director 1997 2003
Jack A. Prizzi 68 Class I Director 1993 2003
E. L. Henry 67 Class II Director 1998 2004
Joe E. Kares 59 Class II Director 1990 2004
Gary A. Messersmith 54 Class II Director 1997 2004
Michael J. Mayell 55 Class III and President 1990 2005
Joseph A. Reeves, Jr 56 Class III Director, Chairman 1990 2005
of the Board and Chief
Executive Officer
James T. Bond is President of JTB Exploration and was formerly General
Manager of H.L. Hawkins, Jr. Oil and Gas located in Houston and New Orleans,
Louisiana. He has been associated with such company for over fifty years.
Jack A. Prizzi has served as Managing Director of Jack A. Prizzi and
Co., an investment and financial advisory firm in New York, New York, since
December 1988.
E. L. Henry has been a partner with the law firm of Adams and Reese
L.L.P. in Baton Rouge, Louisiana since 1987. Mr. Henry was formerly Commissioner
of the Division of Administration for the State of Louisiana from 1980 through
1984, a member of the Louisiana House of Representatives from 1968 through 1980
and Speaker of the Louisiana House of Representatives from 1972 through 1980.
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Joe E. Kares has been a partner with the public accounting firm of
Kares & Cihlar in Houston, Texas since 1980.
Gary A. Messersmith has been a partner with the law firm of Looper,
Reed & McGraw, a Professional Corporation, in Houston, Texas since 2001, and
from 1982 to 2001 was a partner with the law firm of Fouts & Moore, L.L.P. in
Houston, Texas.
Michael J. Mayell is President of the Company. Prior to assuming such
position with the Company, Mr. Mayell held a similar position with TMR from 1988
to 1990.
Joseph A. Reeves, Jr. is Chairman of the Board and Chief Executive
Officer of the Company. Prior to assuming his positions with the Company, Mr.
Reeves held similar positions with the Company's predecessor, Texas Meridian
Resources, Ltd. ("TMR"), from 1988 until 1990.
EXECUTIVE OFFICERS
The following table provides information with respect to the executive
officers of the Company. Each executive officer has been elected to serve until
his or her successor is duly appointed or elected by the Board of Directors or
his or her earlier removal or resignation from office.
YEAR FIRST
ELECTED
NAME OF OFFICER POSITION WITH THE COMPANY AGE AS OFFICER
--------------- ------------------------- --- ----------
Joseph A. Reeves, Jr. Chairman of the Board 56 1990
and Chief Executive Officer
Michael J. Mayell Director and President 55 1990
James H. Shonsey Executive Vice President 51 2001
and Chief Financial Officer
Lloyd V. DeLano Senior Vice President and Chief Accounting Officer 52 1993
James W. Carrington, Jr. Executive Vice President - Land and Legal - TMRX 52 1998
For additional information regarding Messrs. Reeves and Mayell, see "Directors",
above.
James H. Shonsey joined the Company as Vice President of Corporate
Finance and Capital Markets in September 2001. Mr. Shonsey has over 28 years of
experience in corporate finance. Most recently, he was the Chief Financial
Officer of Westport Resources Corporation in Denver, Colorado. At Westport, Mr.
Shonsey was responsible for all the financial activities including Treasury,
Financial Reporting, Tax, and Financial Accounting. While Vice President at
Snyder Oil Corporation, he performed various financial duties from 1991 to 1997,
and he was the Director of Operations Accounting at Apache Corporation from 1987
to 1991. Mr. Shonsey resigned from the Company effective April 30, 2003.
Lloyd V. DeLano joined the Company in January 1992 performing contract
work and became an employee of the Company in October 1992. Mr. DeLano was named
Vice President -
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Director of Accounting of The Meridian Resource & Exploration Company (a wholly
owned subsidiary of the Company) in April 1993 and in June 1996 was named Vice
President and Chief Accounting Officer of the Company. Mr. DeLano is a Certified
Public Accountant with 30 years of oil and natural gas experience.
James W. Carrington, Jr. joined the Company in March 1998 as Vice
President of Land of The Meridian Resource & Exploration Company (a wholly owned
subsidiary of the Company). Prior to assuming his position with the Company, Mr.
Carrington was employed by CNG Producing Company.
Other than Mr. Bond, who is Mr. Mayell's father-in-law, there are no
family relationships among the officers and directors of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent shareholders are
required by the regulations promulgated under Section 16(a) to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 2002, through December 31, 2002, all filing requirements applicable
to officers, directors and greater than ten-percent shareholders were in
compliance.
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ITEM 11. EXECUTIVE COMPENSATION.
The following tables contain compensation data for the five highest
paid executive officers serving at the end of 2002 whose 2002 salary and annual
bonus compensation exceeded $100,000, and other individuals who would otherwise
have been included in this table but for the fact that such individuals were not
serving as executive officers of the Company at the end of 2002 (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------------------------------- ------------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary($)(1) Bonus($)(1)(2) Compensation($)(5) Award($)(1) Options(#) Compensation($)(3)
------------------ ---- ------------ ------------- ----------------- ----------- ---------- ------------------
Joseph A. Reeves, Jr 2002 $ 57,693 $ 879,071 $ 58,810 $ 800,000 $ -- $ 11,000
CEO 2001 40,613 760,000 -- 834,160 -- 10,500
2000 41,557 800,987 -- 800,000 -- 10,500
Michael J. Mayell 2002 $ 57,693 $ 879,071 $ 58,810 $ 800,000 $ -- $ 11,000
President 2001 40,613 760,000 -- 834,160 -- 10,500
2000 41,557 800,987 -- 800,000 -- 10,500
James H. Shonsey 2002 $ 191,667 $ 59,375 $ -- -- $ -- $ 11,000
Executive Vice President & 2001 78,333 -- -- -- -- 2,844
Chief Financial Officer(4) 2000 -- -- -- -- -- --
Lloyd V. DeLano 2002 $ 167,999 $ 433,781 $ -- -- $ -- $ 11,000
Senior Vice President and 2001 167,999 437,395 -- -- -- 10,500
Chief Accounting Officer 2000 162,076 421,750 -- -- -- 10,500
James W. Carrington, Jr 2002 $ 166,812 $ 417,789 $ -- -- $ -- $ 10,009
Executive Vice President, 2001 166,812 419,014 -- -- -- 10,500
Land and Legal - TMRX 2000 160,931 454,406 -- -- -- 10,500
(1) Salary and bonus compensation excludes amounts deferred by
Messrs. Reeves and Mayell pursuant to a deferred compensation plan (the
"DCP"), which have been reported in the Restricted Stock Award column.
The DCP was approved by the Board of Directors and the shareholders of
the Company in 1996 as a method to preserve the Company's liquidity and
further align the executive officers' interests with those of the
Company's shareholders. No actual shares of Common Stock are issued and
the officer has no rights with respect to any shares unless and until
there is a distribution. Distributions cannot be made until the death,
retirement or termination of employment of the officer. Until
distribution, the value of such stock rights are subject to the general
credit of the Company and the market value of the Common Stock.
Pursuant to the DCP, the Company also granted to each officer an equal
matching deferral, which is subject to a one-year vesting and is
included in the Restricted Stock Award column. Under the terms of the
grants, the employee and matching deferrals are allocated to a Common
Stock account in which units are credited to the accounts of the
officer based on the number of shares that could be purchased at the
market price of the Common Stock at December 31, 1997 ($9 9/16 per
share), for the deferrals during the first half of 1998; at June 30,
1998 ($7 1/16 per share), for the deferrals during the second half of
1998; at December 31, 1998 ($3 3/16 per share), for the deferrals
during the first half of 1999; June 30, 1999 ($3 7/8 per share), for
the deferrals during the second half of 1999; at December 31, 1999
($3.0625 per share) for the deferrals during the first half of 2000; at
June 30, 2000 ($5.703125 per share) for the deferrals during the second
half of 2000; at December 31, 2000 ($8.625 per share) for the deferrals
during the first half of 2001; and at June 30, 2001 ($7.17 per share)
for the deferrals during the second half of 2001 and at December 31,
2001 ($3.99 per share) for deferrals during the first half of 2002 and
at June 30, 2002 ($3.72 per share) for deferrals during the second half
of 2002. Pursuant to the DCP, Messrs. Reeves and Mayell each elected to
defer $400,000, $417,080 and $400,000 of their compensation for 2000,
2001 and 2002 respectively. As of December 31, 2002, each of Messrs.
Reeves and Mayell had rights to 921,476 shares (including matching
deferrals) with a total value (including matching deferrals) as of
December 31, 2002 of $829,328. An amount equal to the dividends, if
any, that would have otherwise been paid with respect to such shares
had they actually been issued will be credited to the respective Common
Stock accounts as well.
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(2) Under the Company's Well Bonus Plan, Mr. DeLano received
bonus amounts in 2002, 2001 and 2000 as follows: $376,781, $437,395 and
$421,750, respectively. Under the same plan Mr. Carrington was paid in
2002, 2001 and 2000 the following amounts: $360,839, $419,014 and
$398,970, respectively.
(3) Includes Company contributions to its 401(k) plan.
(4) Mr. Shonsey began employment with the Company in September
2001 and resigned effective as of April 30, 2003.
(5) Includes the value conveyed during the applicable year
attributable to net profits interests assigned to the Named Executive
Officer during the applicable year in connection with their employment
agreements. In connection with such employment agreements, the Company
adopted in 1994 a program under which net profits interests are granted
to certain key employees of the Company in prospects and wells that the
Company is pursuing and drilling. In general, the net profits interest
is 2.00% of any well and is subject to proportional reduction to the
Company's interests. Pursuant to these arrangements, during 2002, net
profits interests of 2% were granted to each of Messrs. Reeves and
Mayell in various prospects acquired by the Company in 2002. Although
such grants were intended to provide long-term incentive for the
executive officer or employee by aligning his or her interests with
those of the Company in its drilling efforts, such grants are not
subject to vesting, the continued employment of the individual with the
Company or other conditions. Accordingly, such grants are considered
part of the Company's annual compensation package and not compensation
under a long-term incentive plan. Each grant of a net profits interest
is reflected in this table at a value based on a third party appraisal
of the interest granted or the Company's current estimate of value for
those prospects for which a third party appraisal has not yet been
completed. Such values are appraisals or estimates only and the actual
realized value of such interests may prove to be higher or lower than
the amounts reflected in this table. See also "-Employment Agreements"
and "-Well Bonus Plans and NPI Rights" below.
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The following table summarizes the number and value of options
exercised by the Named Executive Officers during 2002, as well as the number and
value of unexercised options owned by the Named Executive Officers as of
December 31, 2002.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 2002
AND DECEMBER 31, 2002 OPTION VALUE
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
2002(#) 2002($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable(1) Unexercisable
----------------------------- --------------- ----------- ---------------- --------------------
Joseph A. Reeves, Jr. (1) -- -- 1,725,000/----- -----/-----
Michael J. Mayell (1) -- -- 1,725,000/----- -----/-----
James H. Shonsey -- -- 5,000/5,000 -----/-----
Lloyd V. DeLano -- -- 75,000/----- -----/-----
James W. Carrington, Jr. -- -- 17,500/----- -----/-----
(1) Excludes (i) the warrants (the "General Partner Warrants")
granted to each of Messrs. Reeves and Mayell in October 1990 in
connection with the Company's formation and (ii) warrants ("Executive
Officer Warrants") issued in prior years to Messrs. Reeves and Mayell
in connection with the surrender of certain "Class B Warrants" to the
Company. The value of these warrants at December 31, 2002, based on the
difference between the market price of the Common Stock at December 31,
2002 and the exercise price of the respective warrants, was $725,820.40
for each of Messrs. Reeves and Mayell.
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EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement ("Employment
Agreement") with each of Messrs. Reeves and Mayell. Each Employment Agreement is
for a term of three years, renewable annually for a term to extend three years
from such renewal date. Each Employment Agreement provides for compensation in a
minimum amount of $289,800 per annum along with annual bonuses in cash
substantially consistent with previous annual bonuses, to be reviewed at least
annually for possible increases, and additional bonuses and other perquisites in
accordance with Company policy. If either of Messrs. Reeves or Mayell terminates
his employment for "Good Reason" (as defined below), or is terminated by the
Company for other than "Good Cause" (as defined below), such individual would
receive a cash lump sum payment equal to the sum of (i) the base salary for the
remainder of the employment period under the Employment Agreement, (ii) an
amount equal to the last annual bonus paid to him, (iii) two times the sum of
his annual base salary and last annual bonus, (iv) all compensation previously
deferred and any accrued interest thereon, (v) a lump-sum retirement benefit
equal to the actuarial equivalent of the benefits lost by virtue of the early
termination of the employee and (vi) continuation of benefits under the
Company's benefit plans. If either of Messrs. Reeves or Mayell dies or is
terminated by the Company for Good Cause, such individual or such individual's
estate, as applicable, would receive all payments then due him under the
Employment Agreement through the date of termination, including a prorated
annual bonus and any compensation previously deferred. Each of Messrs. Reeves
and Mayell also is entitled under his Employment Agreement to certain gross-up
payments if an excise tax is imposed pursuant to Section 4999 of the Internal
Revenue Code, which imposes an excise tax on certain severance payments in
excess of three times an annualized compensation amount following certain
changes in control.
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The term "Good Reason" is defined in each Employment Agreement, with
respect to each of Messrs. Reeves and Mayell, generally to mean (i) a change in
the nature or scope of the duties or responsibilities of such individual, unless
remedied by the Company, (ii) any failure by the Company to pay any form of
compensation stated in each Employment Agreement, unless remedied by the
Company, (iii) requiring such individual to be based at any office or location
30 miles or more from the current location of the Company, other than travel
reasonably required in the performance of such individual's responsibilities,
(iv) any purported termination by the Company of such individual's employment
other than due to death or for Good Cause or (v) any failure of the Company to
require a successor of the Company to assume the terms of the Employment
Agreement. The term "Good Cause" is defined in each Employment Agreement,
generally to mean (i) such individual has been convicted of a felony that is no
longer subject to direct appeal, (ii) such individual has been adjudicated to be
mentally incompetent so as to affect his ability to serve the Company and such
adjudication is no longer subject to direct appeal or (iii) such individual has
been found guilty of fraud or willful misfeasance so as to materially damage the
Company and such finding is no longer subject to direct appeal.
In connection with the execution of their Employment Agreements, both
Messrs. Reeves and Mayell were granted a 2% net profits interest in the oil and
natural gas production from the Company's properties to the extent the Company
acquires a mineral interest therein. The net profits interest for Messrs. Reeves
and Mayell applies to all properties on which the Company expends funds during
their employment with the Company. The net profits interests represent real
property rights that are not subject to vesting or continued employment with the
Company. Messrs. Reeves and Mayell did not participate in the Well Bonus Plans
(as such term is defined under "-Well Bonus Plans and NPI Rights" below) for any
particular property to the extent their original 2% net profits interest grant
covered such property. See also note 5 under "-Summary Compensation Table"
above and "-Well Bonus Plans and NPI Rights" below.
Mr. Lloyd V. DeLano entered into an employment agreement with the
Company under which he is given the title Senior Vice President and Chief
Accounting Officer of the Company. Mr. DeLano's employment agreement provides
that he will receive a monthly salary of $14,000 and an annual bonus in the
amount determined in the discretion of the Company's Board of Directors. If Mr.
DeLano is terminated, depending on the circumstances, he may be entitled to
receive a payment equal to six times his monthly salary. Also, if a change in
control of the Company occurs, he may be entitled to receive his monthly salary
for eighteen months after such event.
Mr. James W. Carrington, Jr. entered into an employment agreement with
the Company under which he is given the title Executive Vice President - Land
and Legal. Mr. Carrington's employment agreement provides that he will receive a
monthly salary of $13,901 and an annual bonus in the amount determined in the
discretion of the Company's Board of Directors. If Mr. Carrington is terminated,
depending on the circumstances, he may be entitled to receive a payment equal to
six times his monthly salary. Also, if a change in control of the Company
occurs, he may be entitled to receive his monthly salary for eighteen months
after such event.
THE INCENTIVE PLANS
The Incentive Plans authorize the Board of Directors or a Committee of
the Board of Directors to issue stock options, stock appreciation rights,
restricted stock and performance awards.
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The aggregate number of shares of Common Stock that currently may be issued
under the Incentive Plans is 8,209,840, which represents approximately 16.4% of
the total number of shares of Common Stock outstanding. There are currently
7,764,075 shares allocated to outstanding options or existing or future stock
rights under deferred compensation arrangements under the Incentive Plans.
Therefore, approximately 445,765 shares are available for grant of additional
options or stock-based compensation. As of December 31, 2002, none of the stock
options granted under the Incentive Plans were "in-the-money".
WELL BONUS PLANS AND NPI RIGHTS
During 1998, the Company implemented a net profits program that was
adopted effective as of November 1997. All employees participated in this
program. Pursuant to this program, the Company adopted three separate well bonus
plans: (i) The Meridian Resource Corporation Geoscientist Well Bonus Plan (the
"Geoscientist Plan"), (ii) The Meridian Resource Corporation TMR Employees Trust
Well Bonus Plan (the "Trust Plan") and (iii) The Meridian Resource Corporation
Management Well Bonus Plan (the "Management Plan"), and with the Trust Plan and
the Geoscientist Plan, (the "Well Bonus Plans"). The Executive Committee of the
Board of Directors, which is comprised of Messrs. Reeves and Mayell,
administered each of the Well Bonus Plans. The participants in each of the Well
Bonus Plans were designated by the Executive Committee in its sole discretion.
Participants in the Management Plan were limited to executive officers of the
Company and other key management personnel designated by the Executive
Committee. Neither Messrs. Reeves nor Mayell participated in the Management
Plan, except with respect to a small number of wells and prospects not covered
by their original net profits grants described under "-Employment Agreements"
above. The participants in the Trust Plan generally were all employees of the
Company that did not participate in one of the other Well Bonus Plans. Pursuant
to the Well Bonus Plans, the Executive Committee designated, in its sole
discretion, the individuals and wells that participated in each of the Well
Bonus Plans. The Executive Committee also determined the percentage bonus that
was paid under each well and the individuals that participated thereunder. The
Well Bonus Plans covered all properties on which the Company expended funds
during each participant's employment with the Company, with the percentage bonus
generally ranging from less than .1% to .5% of the net profits derived from each
well included in the well bonus plan, depending on the level of the employee.
Effective March 2001, the participants in the Geoscientist Plan were
notified that no additional future wells would be placed into the plan. During
2002, the Executive Committee decided to modify this position and for certain
key geoscientists the plan will include future new wells.
Effective December 2001, an agreement was executed to repurchase and
terminate certain interests in the Well Bonus Plans from current and former
employees in exchange for the issuance of Common Stock. The offering was for a
total of 1,940,991 shares of our Common Stock. The Common Stock was issued on
February 4, 2002, at the then current price of $3.48 per share.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive an annual retainer,
payable in quarterly installments, of $20,000. Non-employee directors also are
reimbursed for expenses incurred in
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attending Board of Directors and committee meetings, including those for travel,
food and lodging. Directors and members of committees of the Board of Directors
who are employees of the Company or its affiliates are not compensated for their
Board of Directors and committee activities.
The Company has a Non-Employee Director Stock Option Plan (the
"Director Stock Option Plan") pursuant to which options to purchase up to
570,000 shares of Common Stock may be granted. Under the Director Stock Option
Plan, each non-employee director is granted, on the date of his appointment,
election, reappointment or re-election as a member of the Board of Directors, an
option ("Director Option") to purchase 15,000 shares of Common Stock at an
exercise price per share equal to the fair market value of a share of Common
Stock on the date of grant. The duration of each Director Option is five years
from the date of grant, and each Director Option may be exercised in whole or in
part at any time after the date of grant; provided, however, that the option
vests with respect to 25% of the shares of Common Stock covered by such Director
Option one year after the date of grant, with respect to an additional 25% of
such shares of Common Stock two years after the date of grant, and with respect
to the remaining shares of Common Stock three years after the date of grant.
There are currently outstanding options to acquire 193,000 shares under the
Director Stock Option Plan with a weighted average exercise price of $4.45 per
share. There are currently 310,000 additional shares available for grant under
the Director Stock Option Plan.
REPORT ON EXECUTIVE COMPENSATION
GENERAL POLICY
The Company's executive compensation program is designed to attract,
motivate and retain talented management personnel and to reward management for
successfully performing their duties and improving shareholder value.
Compensation and incentives are provided through the combination of cash
salaries and bonuses, stock option and other stock-based awards, and grants of
net profit interests in the Company's drilling prospects. The Company's overall
compensation package is intended to provide the Company's executive officers
with above average compensation for above average results and performance, with
an emphasis on compensation that rewards the executive for actions that have
demonstrably benefited the long-term interests of the Company. Decisions with
respect to compensation for any particular executive officer or employee are
based on a number of subjective factors, including the individual's performance
and contribution to the future growth of the Company, the financial and
operational results of the Company and industry and market conditions and the
need to insure the continued employment of individuals that the Board of
Directors believes are key to the long-term prospects of the Company.
Decisions with respect to the cash compensation of the Company's
executive officers were made in a bifurcated manner during 2002. The Employee
Compensation Committee of the Board of Directors, which is comprised of Messrs.
Reeves and Mayell set the salaries of all employees (except for themselves),
including elected officers and other senior executives, and granted cash bonuses
to such elected officers and other senior executives. Cash compensation
decisions with respect to Messrs. Reeves and Mayell were approved by the Board
of Directors, with Messrs. Reeves and Mayell abstaining. Decisions with respect
to the granting of stock-based awards and the payment of other non-cash
compensation for all of the Company's executive officers, including Messrs.
Reeves
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and Mayell, were made by the full Board of Directors, with each of Messrs.
Reeves and Mayell abstaining with respect to matters pertaining to either one of
them.
The components of the Company's executive compensation program are more
specifically summarized below.
BASE SALARY.
The base salaries of the Company's employees are determined
based on their positions with the Company, their talents and experience
and competitive market factors, including the desire by the Company to
attract and retain executives with expertise and proven success in 3-D
seismic exploration. Generally, base salaries are received in cash,
however, the Company adopted a deferred compensation program in 1996
that allows the Company's Chief Executive Officer, President and other
officers to receive payment of their salaries in deferred stock rights
in lieu of cash compensation. The purpose of this deferred compensation
program is to preserve company liquidity and further align the
executive officers' interests with those of the Company's shareholders.
Stock cannot be issued under such deferred compensation arrangements
until the death, retirement or termination of the executive officer,
and until such issuance, the value of such stock rights are subject to
the general credit of the Company and changes in market value for the
Company's Common Stock.
In reviewing the base salaries of the Company's executive
officers, the Company considers data from published reports regarding
compensation of executive officers from a cross section of other energy
companies, which may or may not include companies represented in the
peer group used in completing the Company's performance graph. These
reports are used as a check on the general competitiveness of the
Company's salaries and not as a means to mathematically establish
salaries within specified percentiles of salary ranges.
BONUS COMPENSATION.
Bonus compensation is provided to the Company's executive
officers and other employees from time to time based on their
employment agreements, if any, the financial results of the Company and
various subjective factors, including the executive's or employee's
contribution to the Company's success in finding reserves and acquiring
prospects, identifying and obtaining sources of capital for the Company
and increasing shareholder value. A Christmas bonus of up to one
month's base salary was awarded and paid during 2000, 2001 and 2002 to
the Company's employees.
NET PROFIT INTERESTS.
The Company believes that the granting of participation
interests in the Company's prospects to its employees promotes in them
a proprietary interest in the Company's exploration efforts that
benefits the Company and its shareholders. To achieve this objective,
the Company grants an interest (either in the form of a bonus or real
property right, depending on the level of the employee) in the net
profits received from all wells drilled to all of its employees,
including its executive officers. Each employee's level of
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participation in these well bonus plans is based on various factors,
including the employee's tenure, salary level, job classification and
contribution to the Company's long-term prospects.
LONG-TERM INCENTIVE COMPENSATION.
The Board of Directors believes that long-term incentive
compensation is an important component of the Company's compensation
program and that the value of long-term incentive compensation should
be directly related to increases in shareholder value. Thus, as part of
total compensation, the Company provides long-term incentive
compensation to its executive officers through stock options under the
Company's stock option plans.
Under the Company's existing stock option plans (collectively,
the "Incentive Plans"), the Board of Directors has the authority to
grant to the Company's executive officers and key employees options to
purchase shares of Common Stock for terms of up to ten years, with
vesting conditions established by the Board of Directors, and other
forms of stock-based compensation including restricted stock. Awards
under the Incentive Plans are intended to provide incentives to the
participants to increase shareholder value by providing benefits that
are directly related to the market value of the Common Stock. The Board
of Directors believes that stock-based compensation provides a
desirable form of incentive to the Company's executive officers in that
stock-based compensation received by an executive officer generally
will be of no value to the officer unless the value of the Common Stock
increases.
If a stock option or other stock-based award is granted to an
executive officer, the number of shares of Common Stock subject to the
granted option or award will be based on, among other things, the level
of responsibility of the executive officer and the anticipated
contribution of the officer to the future growth of the Company. The
Board of Directors also considers the amount and terms of the options
and other stock-based benefits held by the executive officers.
DISCUSSION OF COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND PRESIDENT
During 2002, Messrs. Reeves' and Mayell's salaries and bonuses were
paid in accordance with their employment agreements except that each received an
additional $100,000 bonus in recognition for their efforts in raising additional
capital during 2002. The Board of Directors believes that the granting of these
stock options and the approval of these bonus payments further aligns Messrs.
Reeves and Mayell's interests with those of the Company and further insures
their continued employment with the Company and rewards them for their efforts
that were instrumental to the future prospects of the Company.
TAX MATTERS
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986,
as amended, currently imposes a $1 million limitation on the deductibility of
certain compensation paid to the Company's five highest paid executive officers.
Excluded from the limitation is compensation that
-13-
is "performance based". Excluded compensation must meet certain criteria,
including being based upon predetermined objective standards approved by the
Company's shareholders. Awards under the Incentive Plans as well as bonus and
salary compensation awarded to the Company's executive officers do not currently
satisfy the requirements of Section 162(m); however, since the Company currently
does not expect to be paying federal income taxes in the near future, the Board
of Directors and Executive Compensation Committee do not believe that such
non-deductibility will have a material effect on the Company. The Board of
Directors intend to take into account the potential application of Section
162(m) with respect to incentive compensation awards and other compensation
decisions made by them in the future.
Joseph A. Reeves, Jr. Michael J. Mayell
James T. Bond E. L. Henry
Joe E. Kares Gary A. Messersmith
Jack A. Prizzi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above, certain components of the compensation of the
executive officers of the Company, other than Messrs. Reeves and Mayell, are
determined by the Employee Compensation Committee of the Board of Directors of
the Company, which is comprised of Messrs. Reeves and Mayell. Stock-based and
other non-cash compensation decisions with respect to the Company's executive
officers are made by the full Board of Directors, with each of Messrs. Reeves
and Mayell abstaining with respect to matters pertaining to either one of them.
For a discussion of certain transactions between the Company and members of the
Board of Directors, see "Certain Relationships and Related Transactions"
beginning on page 19 of this report. In addition, cash compensation decisions
during 2002 with respect to Messrs. Reeves and Mayell were made by the full
Board of Directors, with each of Messrs. Reeves and Mayell abstaining.
-14-
STOCK PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the New York Stock Exchange Market Index and Peer Group Index from
December 31, 1997 through December 31, 2002. The graph assumes that the value of
the investment in the Common Stock and each index was $100 at December 31, 1997,
and that all dividends were reinvested.
DECEMBER 31, 1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
The Company 100 33 32 90 42 9
NYSE Market Index 100 119 130 133 122 99
Peer Group Index 100 89 92 150 113 92
The Company's Peer Group is comprised of Anadarko Petroleum
Corporation, Apache Corporation, Burlington Resources Inc., Chesapeake Energy
Corporation, EEX Corporation, Noble Affiliates, Inc., Ocean Energy, Inc., Pogo
Producing Company, Questar Corporation and The Williams Company Inc.
-15-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 25, 2003, with
respect to the beneficial ownership of Common Stock by (a) each director, (b)
each Named Executive Officer, (c) each shareholder known by the Company to be
the beneficial owner of more than 5% of the Common Stock and (d) all executive
officers and directors of the Company as a group.
NUMBER OF
SHARES
BENEFICIALLY
NAME OWNED (1) PERCENT
--------------------------------------------------------- ---------------------- ---------------
Joseph A. Reeves, Jr. (2) 4,442,337 8.2%
Michael J. Mayell (3) 4,334,584 8.0%
James H. Shonsey (4)** 5,000 *
Lloyd V. DeLano (5) 115,319 *
James W. Carrington, Jr. (6) 79,477 *
James T. Bond (7) 35,000 *
E. L. Henry (8) 35,500 *
Joe E. Kares (9) 42,500 *
Gary A. Messersmith (10) 55,972 *
Jack A. Prizzi (11) 43,300 *
All executive officers and directors as a group (10
persons) (2), (3), (4), (5), (6), (7), (8), (9), (10),
(11) 9,188,989 15.7%
Shell Oil Company (12) 7,082,030 14.1%
Kayne Anderson Capital Advisers, L.P. (13) 6,812,117 13.6%
*Less than one percent.
**Resigned effective April 30, 2003.
-16-
(1) Shares of Common Stock which are not outstanding but which
can be acquired by a person upon exercise of an option or warrant
within sixty days are deemed outstanding for the purpose of computing
the percentage of outstanding shares beneficially owned by such person.
(2) Includes 397,362 shares, 507,993 shares, 714,000 shares
and 1,725,000 shares of Common Stock that Mr. Reeves has the right to
acquire upon the exercise of the General Partner Warrant, Executive
Warrants, and stock options under the Company's stock option plans,
respectively. Also includes 1,097,982 vested shares underlying deferred
compensation arrangements. Excludes 96,417 unvested shares under
deferred compensation arrangements. Mr. Reeves' business address is
1401 Enclave Parkway, Suite 300, Houston, Texas 77077.
(3) Includes 289,609 shares, 507,993 shares, 714,000 shares
and 1,725,000 shares of Common Stock that Mr. Mayell has the right to
acquire upon the exercise of the General Partner Warrant, Executive
Warrants, and stock options under the Company's stock option plans,
respectively. Also includes 1,097,982 vested shares underlying deferred
compensation arrangements. Excludes 96,417 unvested shares under
deferred compensation arrangements. Mr. Mayell's business address is
1401 Enclave Parkway, Suite 300, Houston, Texas 77077.
(4) Includes 5,000 shares of Common Stock that Mr. Shonsey has
the right to acquire upon the exercise of stock options. Excludes 5,000
shares underlying options that are not exercisable within 60 days.
(5) Includes 75,000 shares of Common Stock that Mr. DeLano has
the right to acquire upon the exercise of stock options.
(6) Includes 17,500 shares of Common Stock that Mr. Carrington
has the right to acquire upon the exercise of stock options.
(7) Includes 15,000 shares of Common Stock that Mr. Bond has
the right to acquire upon the exercise of stock options.
(8) Includes 35,500 shares of Common Stock that Mr. Henry has
the right to acquire upon the exercise of stock options. Excludes 7,500
shares underlying options that are not exercisable within 60 days.
(9) Includes 42,500 shares of Common Stock that Mr. Kares has
the right to acquire upon the exercise of stock options. Excludes 7,500
shares underlying options not exercisable within 60 days.
(10) Includes 42,500 shares of Common Stock that Mr.
Messersmith has the right to acquire upon the exercise of stock
options. Excludes 7,500 shares underlying options not exercisable
within 60 days.
(11) Includes 35,000 shares of Common Stock that Mr. Prizzi
has the right to acquire upon the exercise of stock options.
(12) Based solely upon a Schedule 13D filed with the
Securities and Exchange Commission. Shell Oil Company controls Shell
Louisiana Onshore Properties Inc. ("SLOPI"). Shell Oil Company's
business address is One Shell Plaza, Houston, Texas 77002. SLOPI's
business address is P.O. Box 7986, Newark, Delaware.
(13) Based upon a Schedule 13G filed with the Securities and
Exchange Commission. The business address of Kayne Anderson Capital
Advisers, L.P., is 1800 Avenue of the Stars, 2nd Floor, Los Angeles,
California 90067.
-17-
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2002,
with respect to our compensation plans (including individual compensation
arrangements) under which equity securities are authorized for issuance:
Number of securities
remaining available for
Number of securities to Weighted-average future issuance under
be issued upon exercise exercise price of equity compensation plans
of outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in column (a)(1))
------------- ----------------------- -------------------- ---------------------------
Equity compensation plans
approved by security holders 6,606,579 $4.16 445,765
Equity compensation plans not
approved by security holders -- -- --
Total 6,606,579 $4.16 445,765
(1) Does not include 3,600,000 shares which have been reserved for issuance in
lieu of cash compensation under the Company's deferred compensation plan, which
plan was approved by security holders.
-18-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
PARTICIPATION INTERESTS
In the ordinary course of business, the Company offers participation in
exploration prospects to industry partners. Terms of each participation vary
depending on the risk and economic conditions existing in the oil and gas
industry at the time of grant. In addition, in an effort to provide the
Company's executive officers and key employees with additional incentive to
identify and develop successful exploratory prospects for the Company, the
Company has adopted a policy of offering to its principal executive officers and
key employees responsible for the identification and development of prospects
the right to participate in each of the prospects pursued by the Company. Such
participation is required to be on the same terms and conditions as the Company
and its outside partners and is currently limited in aggregate to an approximate
8% working interest in any prospect. The maximum percentage that either Messrs.
Reeves and Mayell may elect to participate in any prospect is a 4% working
interest. Since 1994, each of Messrs. Reeves and Mayell have participated in
every prospect that the Company has drilled on a 1.5% working interest basis
(other than the Chocolate Bayou Field in which they had a 3.5% interest and
certain prospects completed prior to 1994, in which Messrs. Reeves and Mayell
have working interests of up to 2.5%) and upon the same terms and conditions as
other third party working interest owners.
During 2002, both Messrs. Reeves and Mayell, either personally or
through wholly owned or affiliated corporations, participated as working
interest owners in properties of the Company. Under the terms of the operating
and other agreements relating to the Company's wells and prospects, the Company,
as operator, incurs various expenses relating to the prospect or well that are
then billed to the working interest owner. During 2002, each of TODD (a company
owned by Mr. Reeves) and Sydson (a company owned by Mr. Mayell) were indebted to
the Company for certain expenses paid by the Company in respect of their working
interest in various prospects and wells in which the Company acted as operator.
TODD and Sydson collectively invested approximately $3,289,000 for the
year ended December 31, 2002, in oil and natural gas drilling activities for
which the Company was the operator. Net amounts due from TODD and Mr. Reeves
were approximately $186,000 as of December 31, 2002. Net amounts due from Sydson
and Mr. Mayell were approximately $1,370,000.
OTHER
Joe E. Kares, a member of the Executive Compensation Committee, is a
partner in the public accounting firm of Kares & Cihlar, which provided the
Company and its affiliates with accounting services for the years ended December
31, 2002, 2001, 2000 and 1999 and received fees of approximately $282,000,
$269,000, $304,000 and $283,000, respectively. These fees exceeded 5% of the
gross revenues of Kares & Cihlar for 2002. The Company believes that these fees
were equivalent to the fees that would have been paid to similar firms providing
its services in arm's length transactions.
-19-
Mr. Messersmith is a partner in the law firm of Looper, Reed & McGraw,
a Professional Corporation, and from 1982 to 2001 was a partner with the law
firm of Fouts & Moore, L.L.P., in Houston, Texas, which periodically provided
legal services for the Company. In addition, the Company has Mr. Messersmith on
personal retainer of $8,333.33 per month relating to services provided to the
Company and a bonus in the form of personal property valued at $12,500 was
awarded during 2002. Mr. Messersmith also participated in the Well Bonus Plans
pursuant to which he was paid approximately $377,000 during 2002.
-20-
ITEM 14. CONTROLS AND PROCEDURES.
Within the 90-day period prior to the filing of this report, an
evaluation was conducted under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of our disclosure
controls and procedures are effective. There have been no significant changes in
our internal controls or in other factors that could significantly affect these
controls subsequent to the date of our evaluation.
ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Ernst & Young LLP served as the Company's principal independent
accountants for the fiscal year ended December 31, 2002.
The following table presents fees for the audits of the Company's
annual consolidated financial statements for 2002 and 2001 and for other
services provided by Ernst & Young LLP.
2002 2001
-------- --------
Audit Fees............................................................ $387,150 $384,100
Audit-Related Fees.................................................... -- --
Tax Fees.............................................................. $64,020 $154,926
All Other Fees........................................................ -- --
TAX FEES
Tax fees are primarily for tax compliance and tax consulting services.
The Audit Committee has concluded that the provision of tax services is
compatible with maintaining Ernst & Young LLP's independence.
-21-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE MERIDIAN RESOURCE CORPORATION
BY: /s/ JOSEPH A. REEVES, JR.
-----------------------------------
Chief Executive Officer
(Principal Executive Officer)
Director and Chairman of the Board
Date: April 30, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
NAME TITLE DATE
BY: /s/ JOSEPH A. REEVES, JR. Chief Executive Officer April 30, 2003
----------------------------------- (Principal Executive Officer)
Joseph A. Reeves, Jr. Director and Chairman
of the Board
BY: /s/ MICHAEL J. MAYELL President and Director April 30, 2003
-----------------------------------
Michael J. Mayell
BY: /s/ JAMES H. SHONSEY Chief Financial Officer April 30, 2003
-----------------------------------
James H. Shonsey
BY: /s/ LLOYD V. DELANO Chief Accounting Officer April 30, 2003
-----------------------------------
Lloyd V. DeLano
BY: /s/ JAMES T. BOND Director April 30, 2003
-----------------------------------
James T. Bond
BY: /s/ JOE E. KARES Director April 30, 2003
-----------------------------------
Joe E. Kares
BY: /s/ GARY A. MESSERSMITH Director April 30, 2003
-----------------------------------
Gary A. Messersmith
-22-
CERTIFICATIONS
I, Joseph A. Reeves, Jr., certify that:
1. I have reviewed this annual report on Form 10-K/A, Amendment No. 1, of
The Meridian Resource Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: April 30, 2003
/s/ JOSEPH A. REEVES, JR.
---------------------------------
Joseph A. Reeves, Jr.
Chief Executive Officer
-23-
CERTIFICATIONS
I, Michael J. Mayell, certify that:
1. I have reviewed this annual report on Form 10-K/A, Amendment No. 1, of
The Meridian Resource Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: April 30, 2003
/s/ MICHAEL J. MAYELL
----------------------------
Michael J. Mayell
President
-24-
CERTIFICATIONS
I, James H. Shonsey, certify that:
1. I have reviewed this annual report on Form 10-K/A, Amendment No.1, of
The Meridian Resource Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: April 30, 2003
/s/ JAMES H. SHONSEY
-----------------------------
James H. Shonsey
Chief Financial Officer
-25-
CERTIFICATIONS
I, Lloyd V. DeLano, certify that:
1. I have reviewed this annual report on Form 10-K/A, Amendment No.1, of
The Meridian Resource Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: April 30, 2003
/s/ LLOYD V. DE LANO
----------------------------
Lloyd V. DeLano
Chief Accounting Officer