The Meridian Resource Corp. (TMR, Financial) filed Quarterly Report for the period ended 2009-09-30.
Meridian Resource Corporation is an independent oil and natural gas company that explores for, acquires and develops oil and natural gasproperties utilizing 3-D seismic technology. Their operations are focused on the onshore oil and gas regions in south Louisiana, the Texas Gulf Coast and offshore in the Gulf of Mexico. The Meridian Resource Corp. has a market cap of $26.8 million; its shares were traded at around $0.29 with and P/S ratio of 0.2.
General and Administrative Expense. General and administrative expense was $4.5 million in the third quarter of 2009 compared to $5.9 million in the third quarter of 2008. The $1.4 million decrease was primarily due to reductions in staff and associated costs, partially offset by approximately $800,000 in legal and consulting fees incurred in the third quarter of 2009 to originate certain forbearance agreements described below. On an equivalent unit of production basis, general and administrative expenses decreased $0.44 per Mcfe to $1.50 per Mcfe for the third quarter of 2009 compared to $1.94 per Mcfe for the comparable 2008 period primarily due to the Companys staff reductions.
Depletion and Depreciation. Depletion and depreciation expense decreased $22.3 million (43%) during the first nine months of 2009 to $29.2 million, from $51.5 million for the same period of 2008. This was primarily the result of the decline in the depletion rate as compared to the 2008 period. The reduction in the rate is due to the decrease in the carrying value of oil and natural gas properties which resulted from the significant impairment write-downs to the properties recorded in December 2008 and March 2009. On a unit basis, depletion and depreciation expense decreased by $1.95 per Mcfe, to $2.98 per Mcfe for the nine months ended September 30, 2009, compared to $4.93 per Mcfe for the same period in 2008.
General and Administrative Expense. General and administrative expense was $12.2 million for the first nine months of 2009 and for the same period in 2008 was $15.2 million. This decrease was primarily due to reductions in staff and associated costs, partially offset by approximately $800,000 in legal and consulting fees incurred in the third quarter of 2009 to originate certain forbearance agreements described below. On an equivalent unit of production basis, general and administrative expenses decreased $0.22 per Mcfe to $1.24 per Mcfe for the first nine months of 2009 compared to $1.46 per Mcfe for the comparable 2008 period.
Cash Flows. Net cash provided by operating activities was $16.9 million for the nine months ended September 30, 2009, as compared to $72.9 million for the same period in 2008. The decrease of $56 million was primarily due to lower crude oil and natural gas prices, and to a lesser extent, lower natural gas production volumes, which reduced revenues by $55.0 million. The impact of the revenue decrease was mitigated by a total of $13.4 million in reduced expenses for lease operations, severance and ad valorem taxes, general and administrative, and hurricane-related expenses. Partially offsetting these improvements was an increase in interest expense totaling $2.1 million. The remainder of the decrease in cash flow from operations is due to changes in working capital account balances. The cash outflow from these working capital accounts primarily reflects the paydown in 2009 of obligations to vendors and joint interest partners as we decreased our drilling and other capital expenditures, establishing a lower base of payables related to operations. Other working capital changes included paydown of our retention bonus obligation to our employees (a non-recurring item), which was $2.0 million at the beginning of the year, and a reduction in payables to royalty owners of $1.6 million due to declines in commodities prices. Our trade receivables provided $5.4 million in funds, as that balance also moved to a lower base due to decreased revenues, whereas during the first nine months of 2008, it increased $3.9 million, a use of funds. We anticipate that our cash from operations will continue to be impacted by volatility in the prices of crude oil and natural gas.
As required by the Bank Forbearance Agreement, on September 3, 2009 the Company paid the Lenders $2.0 million of principal owed under the Credit Facility. The agreement required additional monthly principal payments of the greater of excess cash flow, as defined in the agreement, or $1.0 million for each of the months September through December 2009. Accordingly, the Company paid the Lenders $1.0 million on each of September 10, September 30, and October 30, 2009, bringing the current balance to $89.5 million as of November 9, 2009. An additional $1.0 million payment is scheduled for December 10, 2009 under the terms of the Bank Forbearance Agreement (or a greater amount if excess cash flow is greater than $1.0 million). The Company also agreed to pay a forbearance fee of $945,000, one-fourth of which was paid on each of September 3, September 30, and October 30, 2009, and one-fourth of which remains to be paid on December 2, 2009. The entire fee was charged to interest expense in the third quarter of 2009. In addition, the Company incurred approximately $800,000 in legal and consulting fees to originate the Bank Forbearance Agreement and other related agreements. Upon execution of the Third Amendment to Forbearance and Amendment Agreement on October 20, 2009, the Company agreed to pay an additional $226,000 in forbearance fees to the Lenders for an extension of time to comply with certain terms of the Bank Forbearance Agreement, which will be payable on November 15, 2009. This will be charged to interest expense in the fourth quarter of 2009.
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Meridian Resource Corporation is an independent oil and natural gas company that explores for, acquires and develops oil and natural gasproperties utilizing 3-D seismic technology. Their operations are focused on the onshore oil and gas regions in south Louisiana, the Texas Gulf Coast and offshore in the Gulf of Mexico. The Meridian Resource Corp. has a market cap of $26.8 million; its shares were traded at around $0.29 with and P/S ratio of 0.2.
Highlight of Business Operations:
Depletion and Depreciation. Depletion and depreciation expense decreased $7.8 million (49%) during the third quarter of 2009 to $8.1 million, from $15.9 million for the same period of 2008. This was primarily the result of the decline in the depletion rate as compared to the 2008 period. The reduction in the rate is due to the decrease in the carrying value of oil and natural gas properties which resulted from the significant impairment write-downs to the properties recorded in December 2008 and March 2009. On a unit basis, depletion and depreciation expense decreased by $2.50 per Mcfe, to $2.69 per Mcfe for the three months ended September 30, 2009, compared to $5.19 per Mcfe for the same period in 2008.General and Administrative Expense. General and administrative expense was $4.5 million in the third quarter of 2009 compared to $5.9 million in the third quarter of 2008. The $1.4 million decrease was primarily due to reductions in staff and associated costs, partially offset by approximately $800,000 in legal and consulting fees incurred in the third quarter of 2009 to originate certain forbearance agreements described below. On an equivalent unit of production basis, general and administrative expenses decreased $0.44 per Mcfe to $1.50 per Mcfe for the third quarter of 2009 compared to $1.94 per Mcfe for the comparable 2008 period primarily due to the Companys staff reductions.
Depletion and Depreciation. Depletion and depreciation expense decreased $22.3 million (43%) during the first nine months of 2009 to $29.2 million, from $51.5 million for the same period of 2008. This was primarily the result of the decline in the depletion rate as compared to the 2008 period. The reduction in the rate is due to the decrease in the carrying value of oil and natural gas properties which resulted from the significant impairment write-downs to the properties recorded in December 2008 and March 2009. On a unit basis, depletion and depreciation expense decreased by $1.95 per Mcfe, to $2.98 per Mcfe for the nine months ended September 30, 2009, compared to $4.93 per Mcfe for the same period in 2008.
General and Administrative Expense. General and administrative expense was $12.2 million for the first nine months of 2009 and for the same period in 2008 was $15.2 million. This decrease was primarily due to reductions in staff and associated costs, partially offset by approximately $800,000 in legal and consulting fees incurred in the third quarter of 2009 to originate certain forbearance agreements described below. On an equivalent unit of production basis, general and administrative expenses decreased $0.22 per Mcfe to $1.24 per Mcfe for the first nine months of 2009 compared to $1.46 per Mcfe for the comparable 2008 period.
Cash Flows. Net cash provided by operating activities was $16.9 million for the nine months ended September 30, 2009, as compared to $72.9 million for the same period in 2008. The decrease of $56 million was primarily due to lower crude oil and natural gas prices, and to a lesser extent, lower natural gas production volumes, which reduced revenues by $55.0 million. The impact of the revenue decrease was mitigated by a total of $13.4 million in reduced expenses for lease operations, severance and ad valorem taxes, general and administrative, and hurricane-related expenses. Partially offsetting these improvements was an increase in interest expense totaling $2.1 million. The remainder of the decrease in cash flow from operations is due to changes in working capital account balances. The cash outflow from these working capital accounts primarily reflects the paydown in 2009 of obligations to vendors and joint interest partners as we decreased our drilling and other capital expenditures, establishing a lower base of payables related to operations. Other working capital changes included paydown of our retention bonus obligation to our employees (a non-recurring item), which was $2.0 million at the beginning of the year, and a reduction in payables to royalty owners of $1.6 million due to declines in commodities prices. Our trade receivables provided $5.4 million in funds, as that balance also moved to a lower base due to decreased revenues, whereas during the first nine months of 2008, it increased $3.9 million, a use of funds. We anticipate that our cash from operations will continue to be impacted by volatility in the prices of crude oil and natural gas.
As required by the Bank Forbearance Agreement, on September 3, 2009 the Company paid the Lenders $2.0 million of principal owed under the Credit Facility. The agreement required additional monthly principal payments of the greater of excess cash flow, as defined in the agreement, or $1.0 million for each of the months September through December 2009. Accordingly, the Company paid the Lenders $1.0 million on each of September 10, September 30, and October 30, 2009, bringing the current balance to $89.5 million as of November 9, 2009. An additional $1.0 million payment is scheduled for December 10, 2009 under the terms of the Bank Forbearance Agreement (or a greater amount if excess cash flow is greater than $1.0 million). The Company also agreed to pay a forbearance fee of $945,000, one-fourth of which was paid on each of September 3, September 30, and October 30, 2009, and one-fourth of which remains to be paid on December 2, 2009. The entire fee was charged to interest expense in the third quarter of 2009. In addition, the Company incurred approximately $800,000 in legal and consulting fees to originate the Bank Forbearance Agreement and other related agreements. Upon execution of the Third Amendment to Forbearance and Amendment Agreement on October 20, 2009, the Company agreed to pay an additional $226,000 in forbearance fees to the Lenders for an extension of time to comply with certain terms of the Bank Forbearance Agreement, which will be payable on November 15, 2009. This will be charged to interest expense in the fourth quarter of 2009.
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