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Form 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from . . . . to . . . .
Commission File Number: 1-7627
WAINOCO OIL CORPORATION
(Exact name of registrant as specified in its charter)
Wyoming 74-1895085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Smith Street, Suite 2100 77002-4367
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 658-9900
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock New York Stock Exchange
Alberta Stock Exchange
12% Senior Notes, due 2002 New York Stock Exchange
10 3/4% Subordinated Debentures, due 1998 American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
7 3/4% Convertible Subordinated Debentures, Due 2014
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
rule 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.
Yes X No . . .
As of February 17, 1995, there were 27,250,842 common shares
outstanding, and the aggregate market value of the common shares
(based upon the closing price of these shares on the New York Stock
Exchange) of Wainoco Oil Corporation held by nonaffiliates was
approximately $119.2 million at that date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended
December 31, 1994 are incorporated by reference into Items 1 and 2
of Part I and Items 5 through 8 of Part II.
Portions of the Annual Proxy Statement for the year ended December 31,
1994 are incorporated by reference into Items 10 through 13 of Part
III.
Table of Contents
Part I
Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Part II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 12
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Disagreements on Accounting and Financial Disclosure 12
Part III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial
Owners and Management 12
Item 13. Certain Relationships and Related Transactions 12
Part IV
Item 14. Financial Statements Schedules, Exhibits
and Reports on Form 8-K 12
PART 1
ITEM 1. BUSINESS
Overview
As used herein, the terms (Wainoco) and (Company) refer to
Wainoco Oil Corporation and its subsidiaries. Wainoco was originally
incorporated in Canada in 1949 and changed its jurisdiction of
incorporation to Wyoming in 1976. The Company's Canadian assets are
held by Wainoco Oil Corporation, a Wyoming corporation, its United
States oil and gas assets are held through its subsidiary, Wainoco Oil
& Gas Company, a Delaware corporation, and its refining assets are
held through its subsidiary, Frontier Holdings Inc. (Frontier), a
Delaware corporation. The Company directs its activities from its
corporate office in Houston, Texas and its division offices in
Calgary, Alberta, Canada and Denver, Colorado.
Wainoco explored for and produced oil and gas in western Canada,
selected areas of the midcontinent, the Los Angeles Basin and the Gulf
Coast (onshore and offshore) during 1994. In the fourth quarter of
1994, Wainoco announced that it intended to cease all exploration
activities in the United States and sell its United States oil and
gas assets. Wainoco is in the process of selling all of its United
States oil and gas properties, except for its Conroe field reserves
and other minor properties.
Wainoco is also engaged in the business of crude oil refining and
wholesale marketing of refined petroleum products, including various
grades of gasoline, diesel fuel, asphalt, natural gas liquids and
petroleum coke. In addition, the Company purchases the crude oil to
be refined and markets the refined petroleum products produced by the
Refinery.
Oil and Gas Exploration and Production Operations
The oil and gas activities of the Company consist of geological
and geophysical evaluation of prospective oil and gas properties, the
acquisition of oil and gas leases or other interests in exploratory
prospects, the drilling of test wells, the acquisition of interests in
developed or partially developed properties and the development and
operation of properties for the production of oil and gas. At
December 31, 1994, approximately 85% of the Company's proved reserves,
on a British Thermal Unit (BTU) equivalent basis, was natural gas.
During 1994, oil represented 34% and gas represented 66% of oil and
gas revenues. The Company's oil and gas exploration and production
activities are conducted directly by the Company or through joint
drilling and operating arrangements. Wainoco acts as the operator of
the majority of its production and prospects.
Canada Activities in Canada are conducted through Wainoco Oil
Corporation with emphasis on exploration, development and production
in the western Canadian provinces of British Columbia and Alberta. At
December 31, 1994, approximately 77% of estimated proved gas reserves,
approximately 28% of estimated proved oil reserves and approximately
26% of identifiable assets of the Company were located in western
Canada. For the year ended December 31, 1994, Canadian operations
contributed approximately 58% of the Company's oil and gas revenue.
During 1994, the exchange rate of the Canadian dollar averaged
approximately U.S. $.7322. The accounts of the Canadian division have
been translated in accordance with generally accepted accounting
principles as described in Note 1 of the Financial Statements in the
1994 Annual Report to Shareholders which is incorporated herein by
reference.
United States Activities in the United States are conducted
through Wainoco Oil & Gas Company with the production of properties in
selected areas of the midcontinent, the Los Angeles Basin and the Gulf
Coast (onshore and shallow offshore regions). See "Business -
Overview" for a discussion of the sale of United States properties.
Refining Operations
Wainoco's refining activities are conducted through Frontier (the
Refinery), which was acquired in October 1991. The Refinery is
located on approximately 120 acres in Cheyenne, Wyoming, which
property is owned by the Company. The Refinery has a permitted crude
capacity of 41,000 bpd with an effective operating capacity of 38,000
bpd, which represents approximately 7% of the rated crude distillation
capacity in the Rocky Mountain region. The Refinery can also process
in excess of 4,000 bpd of purchased natural gasoline, butanes and
other petroleum liquids. One of Frontier's competitive advantages
relative to most other Rocky Mountain refineries is that it includes
substantially all of the major refinery units that comprise a complex
refinery, including a coker. Therefore, the Refinery has the
capability of producing a higher yield of lighter, more valuable
petroleum products such as gasoline and diesel fuel from heavier, less
costly feedstocks such as heavy sour crude oil. The Refinery's units
have the capacity to process a high percentage (up to 90%) of lower
cost, more abundant sour crude oil. The plant's downstream unit
configuration affords the Refinery gasoline octane capability equal to
or higher than that of most of its competitors. Frontier also owns a
25,000 bpd undivided interest in a crude oil pipeline from Guernsey,
Wyoming to Cheyenne. This pipeline was constructed to help serve the
Refinery's long-term strategic crude oil needs.
The Refinery's gasoline and distillates sales each accounted for
more than 10% of consolidated revenues. As a percent of consolidated
revenue, gasoline sales were 49%, 50% and 53% and distillates sales
were 31%, 29% and 28% in 1994, 1993 and 1992, respectively.
Industry Segments
The Company's industry segment information for the three years
ended December 31, 1994, is set forth in Note 7 of the Financial
Statements in the 1994 Annual Report to Shareholders which is
incorporated herein by reference. The Company's discussion of the
restructuring of its United States oil and gas operations is set forth
in Note 9 of the Financial Statements in the 1994 Annual Report to
Shareholders which is incorporated herein by reference.
Operating Hazards and Risks
The Company's oil and gas exploration and production operations
are subject to all of the risks normally incident to the exploration
for and production of oil and gas including blow-outs, cratering,
pollution and fires, each of which could result in damage to or
destruction of oil and gas wells or production facilities or damage to
persons and property. As is common in the oil and gas industry, the
Company is not fully insured against all of these risks, either
because insurance is not available or because the Company has elected
not to insure due to high premium costs. The occurrence of a
significant event that is not fully insured against could have a
material adverse effect on the Company and its financial position and
results of operation.
The Company's refinery operations are subject to significant
interruption if the refinery were to experience a major accident or
fire or if it were damaged by severe weather or other natural
disaster. Should the crude oil pipeline become inoperative, crude oil
would be supplied to the Refinery by an alternative pipeline and from
additional tank trucks. A substantial portion, but not all, of such
loss would be covered by business interruption, property or other
insurance carried by Frontier. Frontier's safety measures
substantially mitigate but do not eliminate the risk of damage to the
Refinery or the environment and personal injury should a major adverse
event occur. The occurrence of a significant event that is not fully
insured against could have a material adverse effect on the Company
and its financial position and results of operation.
Competition
Oil and gas operations The Company encounters strong competition
from other independent operators and from major oil companies in
acquiring properties suitable for exploration, in contracting for
drilling equipment, in securing trained personnel and in marketing oil
and gas production. Many of these competitors have financial
resources and staffs substantially larger than those available to the
Company. The availability of a ready market for oil and gas
discovered by the Company depends on numerous factors beyond its
control including the extent of production and imports and exports of
oil and gas, the demand for its products, the proximity and capacity
of natural gas pipelines and the effect of state, provincial or
federal regulations.
Competition in the acquisition of oil and gas prospects and
properties has been intense and remains so for prime prospects. The
Company's ability to discover reserves depends on its ability to
select and acquire suitable prospects for future exploration.
Although the Company generates the major portion of its oil and gas
prospects internally, it depends to some extent upon prospects offered
to it by independent consultants and other persons or entities in the
petroleum industry.
Refining operations Frontier's business is highly competitive
and price is the principal basis of competition. The most important
competitive product marketing area in the Rocky Mountain region is the
Denver market, principally because it is the major population center
in the Rockies. There are at least 17 refineries in the Rocky
Mountain region (including those owned by several major integrated oil
companies). In addition, two refineries are located in Denver and
three product pipelines from outside the Rockies terminate in the
area. Frontier also serves western Nebraska and eastern Wyoming.
Many of the refineries in the Rocky Mountain region are owned by
companies that have significantly greater financial resources and/or
refining capacity than Frontier. Certain of these competitors, as
integrated oil companies, also have the advantage of owning or
controlling crude oil reserves or other sources of crude oil supply,
crude oil and product pipelines and service stations and other product
marketing outlets.
Principal Competitors. Based on proximity to the Denver and
Cheyenne areas, Frontier's principal competitors in the wholesale
segment are Sinclair Oil Company (Sinclair) with a 54,000 bpd refinery
near Rawlins, Wyoming and a 22,000 bpd refinery in Casper, Wyoming,
Total Petroleum (North America) Ltd. (Total) with a 32,000 bpd
refinery in Denver, Colorado and Conoco, Inc. (Conoco) with a 50,000
bpd refinery in Denver, Colorado. Frontier sells its products
exclusively at wholesale, principally to independent retailers,
jobbers and major oil companies, while Sinclair, Total and Conoco
service both the retail and wholesale markets.
Frontier is favorably positioned to purchase its crude oil and
feedstock requirements. Because many other refiners in the Rocky
Mountain region have significantly lower sour crude capacity, Frontier
is able to purchase a significant amount of its sour crude oil and all
of its sweet crude oil from the region. Regional production of crude
oil still exceeds regional refining capacity. Frontier also purchases
Canadian sour crude oil, which is available via pipeline into
Guernsey, Wyoming.
Frontier and its principal competitors all service the Denver
market. Because their refineries are located in Denver, Total's and
Conoco's product transportation costs in servicing that area are lower
than those of Frontier. Conversely, Frontier has lower crude
transportation costs due to its proximity to Guernsey, Wyoming, the
major crude oil pipeline hub in the Rocky Mountain region, and further
due to its ownership interest in the crude oil pipeline.
Capital Improvement Program. Since its acquisition by Wainoco,
Frontier has completed a significant capital improvement program for
the refinery. The most significant projects included: (i) the
construction of new sulfur recovery and amine treating units which
increased sour crude processing capacity, (ii) the expansion of the
capacity of the delayed coker unit from 8,200 bpd to 10,000 bpd, (iii)
the upgrading and expansion of the distillate hydrotreater and
construction of a hydrogen plant for adequate hydrogen supply and (iv)
several projects, including 1994 projects, which improve the
reliability and safety of various refinery units.
The capital improvement program enables the Refinery to produce
low sulfur diesel as required by the Clean Air Act Amendments of 1990,
increases the amount of sour crude processed and improves the
operating reliability of the Refinery. The improvements also
increased the Refinery's diesel capacity. In addition, Frontier has
incurred capital expenditures as a result of studies required under
the Occupational Safety and Health Act (OSHA).
Strategic Position. Because the Refinery includes substantially
all of the major refinery units that comprise a complex refinery,
Wainoco believes that it potentially has three significant advantages
over its principal competitors and most other refineries in the
region.
First, the Refinery has the capacity to process a high percentage
(up to 90%) of sour crude oil, while most refineries in the Rocky
Mountain region can process only sweet crude or smaller percentages of
sour crude. Refineries that have the ability to process sour crude
can benefit from the lower cost of sour relative to sweet crude oil,
which is often referred to as the "sweet/sour spread." During 1994,
Frontier's cost for sour crude oil has ranged from approximately $3.26
to $4.20 per barrel lower than its cost for sweet crude.
Second, Frontier owns a 10,000 bpd coker, which, among other
things, enables the Refinery to upgrade resid and other heavy
feedstocks into lighter, more valuable petroleum products. Coker
capacity was expanded to 10,000 bpd at the end of 1992 to accommodate
a 10-year agreement to process heavy feedstocks for Conoco. There are
presently only four other cokers in the region.
Third, because of Frontier's combination of downstream process
units, the Company believes that the Refinery has octane capability
equal to or greater than most of its competitors. This capability
enabled Frontier to be the first to introduce 91 octane premium
unleaded gasoline to the Rocky Mountain region. (Due to different
altitudes, gasoline used in the Rocky Mountain region generally has an
octane rating two points lower than corresponding grades of gasoline
elsewhere in the United States.)
In addition, as a result of stringent environmental protection
laws and the high cost of the requisite plant modifications, Wainoco
believes that, in general, refiners in the Rocky Mountain region will
face barriers to substantially expanding refinery capacities or sour
crude processing capability.
Based in part on the foregoing factors, the Company believes that
Frontier is capable of competing effectively in its market. In
particular, Frontier has sold and expects to continue to sell refined
products at competitive prices.
Markets. Frontier sells to a broad base of independent
retailers, jobbers and major oil companies in the region. Its largest
customer, CITGO Petroleum Products, comprises approximately 17% of
Frontier's 1994 sales. Prices are determined by local marketing
conditions and at the "terminal rack" such that the customer typically
supplies his own truck transportation.
Effect of Crude Oil and Refined Product Prices. Frontier's
income and cash flow are derived from the margin between its costs to
obtain and refine crude oil and the price for which it can sell
products produced in its refining process. The price at which
Frontier can sell gasoline and its other refined products will be
strongly influenced by the price of crude oil. Although an increase
or decrease in the price of crude oil generally results in a
corresponding increase or decrease in the price of gasoline and
refined products, changes in the prices of refined products generally
lag behind changes in the price for crude oil, both upward and
downward. Frontier maintains inventories of crude oil, intermediate
products and refined products, the value of each of which is subject
to rapid fluctuations in market prices. Inventories are recorded at
the lower of cost on a first in, first out (FIFO) basis or market. A
rapid and significant movement in the market prices for crude oil or
refined products could have an adverse short-term impact on earnings
and cash flow. Crude oil prices, in general, are affected by a number
of factors, including domestic and international demand, domestic and
foreign energy legislation, production guidelines established by the
Organization of Petroleum Exporting Countries (OPEC), relative
supplies of other fuels, such as natural gas, and changing
international economic and political conditions.
Frontier can process a high percentage of sour crude oil,
enabling it to benefit from the lower cost of sour crude relative to
sweet crude. Because income and cash flow from refining operations
are dependent in part on this cost differential, any narrowing of the
sweet/sour crude spread would likely cause a reduction in operating
margin and a decrease in earnings and cash flow of the Refinery. A
narrowing of the sweet/sour crude spread could result from, among
other things, a decrease in the supply of sour crude or an increase in
sour crude refining capacity of the Refinery's competitors.
General Wainoco competes with other oil and gas concerns and
other investment opportunities, whether or not related to the
petroleum industry, in raising capital. The Company's ability to
compete successfully in the capital markets is largely dependent on
the success of its oil and gas exploration activities, refining
activities and the economic environment in which it operates.
Gas Markets
The Company continues to sell the majority of its natural gas
production under long-term gas contracts managed by companies
(aggregators) who purchase large volumes of natural gas from many
producers and resell this gas throughout North America. The price
paid for this gas is a "net-back" price per unit of gas established by
subtracting transportation, processing, storage and administrative
costs from the total revenue generated from all the monthly sales of
gas. Since 1993, North America appears to have established a better
balance of demand and supply of natural gas. During earlier periods
of lower load factors, the Company negotiated the right to market such
excess volumes not taken by the primary purchaser, to other markets.
Such excess volumes are sold in the spot market.
To diversify gas sales and optimize production, Wainoco also
sells a portion of its gas production under short-term contracts.
Generally, one-year renewable contracts have been used for this
purpose with gas prices that are normally negotiated annually as a
fixed price per unit of sales or an indexed price compared to the New
York Mercantile Exchange (NYMEX) futures price. Firm transportation
and gas processing capacity from major pipeline companies have been
obtained in Canada to ensure continued ability to produce pursuant to
these contracts. The tariffs associated with this firm pipeline
capacity must be paid regardless of the Company's natural gas
productive capacity. The Company has not committed for pipeline
capacity in excess of our existing deliverability dedicated to short-
term gas contracts. Any productive capacity above our firm pipeline
capacity must be marketed on an interruptible basis. The Company's
commitment for firm pipeline capacity is approximately $3.5 million in
1995, $1.2 million in 1996, $.9 million in 1997 and $.6 million a year
from 1998 through 2001. The 1995 commitment represents approximately
55% of gross productive capacity, which thereafter will range from 17%
to 28% through 2001.
Government Regulations
Oil & Gas Operations
Environmental Laws and Regulations. The Company's oil and gas
exploration and production activities are subject to laws and
regulations relating to environmental quality and pollution control.
The Company believes that such legislation and regulations have had no
material adverse effect on its present method of operation. In the
future, changes in Canadian or United States federal, state,
provincial and local government environmental controls could require
the Company to make significant expenditures. The magnitude of such
expenditures cannot be predicted. Environmental legislation in
Alberta has undergone a major revision to update and consolidate the
various acts now applicable to the industry into the Environmental
Protection and Enhancement Act (EPEA) effective September 1, 1993.
The EPEA brings a wider range of activities within the scope of
environmental regulation. Environmental standards and penalties are
generally stricter under the EPEA than under the environmental
regulatory regime it replaces.
Wainoco's Canadian oil and gas production is subject to the
payment to provincial governments, among others, of a specified
percentage of production revenue as a royalty. Royalties paid to the
Province of Alberta are subject to a rebate called the Alberta Royalty
Tax Credit (ARTC). Prior to 1995, the ARTC was based on a price-
sensitive formula using the average West Texas Intermediate (WTI)
quarterly oil price. The maximum annual ARTC limit was $1.4 million
in each of 1994 and 1993 and $1.5 million in 1992. The Company
recognized ARTC's of $1.1 million, $621,000 and $590,000 in 1994, 1993
and 1992, respectively. The Alberta government has made changes and
continues to consider further changes in its royalty structure
(including royalty exemption periods). During 1994, the Province of
Alberta announced various changes regarding determination of the ARTC
effective January 1, 1995. Gas prices will now be included in
determination of the ARTC rate. Also the maximum qualifying royalty
amount and the maximum royalty rebate percentages are to be reduced.
These changes will result in a decrease of approximately 10% in the
ARTC to be received by Wainoco.
The North American Free Trade Agreement (NAFTA) implemented in
1994 is between the Governments of Canada, the United States and
Mexico. NAFTA carrys forward most of the material energy terms
contained in the Free Trade Agreement (FTA). The FTA implemented in
1989 between Canada and the United States was intended to foster a
more open North American marketplace with a minimum of direct
government interference. Under FTA both countries are prohibited from
imposing minimum export or import price requirements or maintaining
any discriminatory export taxes, duties or charges. FTA also provides
for the elimination of the United States tariffs and the elimination
of customs user fees which were previously imposed. NAFTA provides
for the reduction of Mexican restrictive trade practices in the energy
sector and prohibits discriminatory border restrictions and export
taxes. NAFTA also provides for clearer disciplines on regulators to
avoid discriminatory actions and to minimize disruption of contractual
arrangements, which is important for Canadian natural gas exports.
Refinery Operations The Company's refinery operations are
subject to laws and regulations relating to environmental quality and
pollution control. Potentially to be among these requirements are
regulations recently proposed by the Environmental Protection Agency
under the authority of Title 3 of the Clean Air Act Amendments of 1990
(the "Act") which, if promulgated, may require the Company to expend
approximately $4 million over the next four years to improve the
Refinery's control of emissions of certain petroleum materials
designated as hazardous by the Act. Because other refineries will be
required to make similar expenditures, the Company does not expect
such expenditures to materially adversely impact its competitive
position.
Frontier is party to formal agreements with both state and
federal agencies requiring the investigation and possible eventual
remediation of certain areas of the Refinery's property which may have
been impacted by past operational activities. The Company has been
addressing, over the past nine years, tasks required under a consent
decree (Consent Decree) entered by the Wyoming State District Court on
November 28, 1984 and involving the State of Wyoming, Department of
Environmental Quality and the predecessor owners of the Refinery.
This action primarily addressed the threat of groundwater and surface
water contamination at the Refinery. As a result of these
investigative efforts, substantial capital expenditures and
remediation of conditions found to exist have already taken place or
are in progress. The continuing requirement for groundwater
remediation activities is the only significant task remaining in
connection with the Consent Decree. Additionally, Frontier entered
into a consent order with the federal Environmental Protection Agency
on September 24, 1990 pursuant to the Resource Conservation and
Recovery Act. The order requires the technical investigation of the
Refinery to determine if certain areas of the Refinery have been
adversely impacted by past operational activities. Based upon the
results of the investigation, additional remedial action could be
required.
In the wake of new state legislation, the Company and the Wyoming
Department of Environmental Quality have recently been negotiating the
terms of an administrative consent decree that would generally
parallel the above-referenced federal order and, upon finalization,
replace the Consent Decree. Completion of this effort will result in
the elimination of certain equivocal state Consent Decree
requirements, the unification of state and federal regulatory
expectations regarding site investigation and remediation and,
consequently, a streamlining of the Company's current environmental
obligations. It is further anticipated that, upon eventual state
administration of the federal corrective actions program, the federal
Administrative Order on Consent may be rescinded.
The Company has been and will be responsible for costs related to
compliance with or remediations resulting from environmental
regulations. There are currently no identified environmental
remediation projects of which the costs can be reasonably estimated.
However, the continuation of the present investigative process, other
more extensive investigations over time or changes in regulatory
requirements could result in future liabilities.
Seasonality
At the Refinery, due to seasonal increases in tourist related
volume and road construction work, a higher demand exists in the Rocky
Mountain region for gasoline and asphalt products during the summer
months than during the winter months. Diesel demand is relatively
constant throughout the year because two major east-west truck routes,
and at least two railroads, extend into or through Frontier's
principal marketing area. However, reduced road construction during
the winter months does somewhat reduce demand for diesel. The
Refinery normally schedules its maintenance turnaround work during the
spring of each year. During the spring of 1995, the Refinery has
scheduled no significant turnaround work on its major operating units.
Employees
At December 31, 1994, the Company had 400 full-time employees,
down from 417 a year earlier. The Company's 86 full-time employees in
oil and gas operations include 6 geologists, 1 geophysicist, 3 land
men in exploration and development and 8 petroleum engineers in
drilling and production. In conjunction with the sale of United
States oil and gas properties, the Company currently expects to
further reduce its United States oil and gas staff by 17 full-time
employees during 1995. The Company employs 303 full-time people in
the refining operations, 40 at the Denver office and 263 at the
Refinery. The Refinery employees include 83 administrative and
technical personnel and 180 union members. The union members are
represented by seven bargaining units, the largest being the Oil,
Chemical and Atomic Workers International Union. Six AFL-CIO
affiliated unions represent the Refinery's craft workers. The Company
considers relations with all of its employees to be good. The current
three-year contracts expire in May 1996.
ITEM 2. PROPERTIES
As used in this Form 10-K, bbl means one barrel, bpd means one
barrel per day, bopd means one barrel of oil per day, mbbls means one
thousand barrels, mmbbls means one million barrels, mmbblse means one
million barrels equivalent, mcf means one thousand cubic feet, mmcf
means one million cubic feet, bcf means one billion cubic feet, and
bcfe means one billion cubic feet equivalent. Equivalent gas is based
on British Thermal Units at a ratio of six mcf of gas to one bbl of
oil.
Refining Operations
Years Ended December 31, 1994 1993 1992
------ ------ ------
Charges (bpd)
Sweet crude 6,165 6,581 8,766
Sour crude 27,025 25,909 21,015
Other feed and blend stocks 4,105 2,957 3,079
------ ------ ------
Total 37,295 35,447 32,860
Manufactured product yields (bpd)
Gasoline 16,106 15,129 13,131
Distillates 13,094 11,777 10,877
Asphalt and other 6,575 7,128 7,485
------ ------ ------
Total 35,775 34,034 31,493
Total product sales (bpd)
Gasoline 19,437 19,837 19,499
Distillates 12,628 11,819 11,330
Asphalt and other 6,724 7,682 6,500
------ ------ ------
Total 38,789 39,338 37,329
Operating margin information (per sales bbl)
Average sales price $22.06 $22.60 $24.39
Material costs
(under FIFO inventory accounting) 16.18 17.09 19.56
------ ------ ------
Product spread 5.88 5.51 4.83
Operating expenses excluding depreciation 3.45 3.55 3.18
Depreciation .53 .42 .28
------ ------ ------
Operating margin $ 1.90 $ 1.54 $ 1.37
Manufactured product margin
before depreciation (per bbl) $ 2.46 $ 2.09 $ 1.76
Purchased product margin
(per purchased product bbl) $ 1.35 $ (.41) $ .77
Sweet/sour spread (per bbl) $ 3.61 $ 4.48 $ 5.53
Average sales price (per sales bbl)
Gasoline $24.57 $25.24 $27.78
Distillates 23.48 25.06 25.57
Asphalts and other 12.18 12.00 12.16
Oil and Gas Operations
Wainoco is in the process of selling all of its United States oil
and gas properties, except for its Conroe field reserves and other
minor properties. At December 31, 1994, the sales of United States
properties have not been reflected in the following oil and gas
information. See principal oil and gas properties for a summary of
the Conroe field, the major property to remain after completion of the
property sales. See "Business - Overview" for a discussion of the
sale of United States properties.
Production The following table summarizes the Company's net oil
and gas production, average daily production, weighted average sales
prices and average production (lifting) cost per dollar of oil and gas
sales for the periods indicated. Average daily production is computed
by dividing net production by the number of days per year. Average
sales prices are presented in United States dollars before deduction
of production taxes. Production costs are expressed in United States
dollars including lifting costs and production taxes. Average
production cost is computed by dividing production costs by gross oil
and gas sales.
Years Ended December 31, 1994 1993 1992
-------- -------- --------
Net Gas Produced (mmcf)
Canada 15,325 15,938 15,995
United States 2,993 2,504 2,954
-------- -------- --------
Total 18,318 18,442 18,949
Average Daily Gas Production (mmcf)
Canada 42 44 44
United States 8 7 8
-------- -------- --------
50 51 52
Average Gas Sales Price (per mcf)
Canada $ 1.31 $ 1.15 $ 1.00
United States 2.08 2.12 1.81
Weighted Average 1.43 1.28 1.12
Net Oil Produced (bbls)
Canada 224,000 232,000 267,000
United States 696,000 747,000 844,000
-------- -------- --------
920,000 979,000 1,111,000
Average Daily Oil Production (bbls)
Canada 614 636 730
United States 1,907 2,046 2,306
-------- -------- --------
2,521 2,682 3,036
Average Oil Sales Price (per bbl)
Canada $ 12.80 $ 12.85 $ 14.13
United States 14.99 16.85 18.51
Weighted Average 14.45 15.90 17.46
Average Production Cost
(per dollar of oil and gas sales)
Canada $ .25 $ .25 $ .26
United States .43 .45 .41
Weighted Average .33 .34 .34
Average Production Cost
(per BTU equivalent mcf of production)
Canada $ .34 $ .31 $ .29
United States 1.01 1.16 1.08
Weighted Average .54 .53 .54
Oil and gas drilling activities The following table shows the
number of completed wells in which the Company has participated, the
net interest to the Company in those wells and the results thereof for
the periods indicated (excluding those wells drilled under farm out
arrangements). As of December 31, 1994, the Company had no wells in
progress.
Exploratory Development
----------------------------- -----------------------------
Oil Gas Dry Total Oil Gas Dry Total
----- ----- ----- ----- ----- ----- ----- -----
Gross Wells
1994
Canada 3 12 10 25 0 12 3 15
United States 3 1 3 7 0 6 0 6
----- ----- ----- ----- ----- ----- ----- -----
6 13 13 32 0 18 3 21
1993
Canada 5 8 7 20 0 0 0 0
United States 0 0 2 2 15 0 1 16
----- ----- ----- ----- ----- ----- ----- -----
5 8 9 22 15 0 1 16
1992
Canada 5 1 8 14 1 1 0 2
United States 0 1 3 4 0 0 0 0
----- ----- ----- ----- ----- ----- ----- -----
5 2 11 18 1 1 0 2
Net Wells
1994
Canada 0.64 5.85 4.08 10.57 0 2.22 0.42 2.64
United States 1.50 0.25 0.95 2.70 0 0.12 0 0.12
----- ----- ----- ----- ----- ----- ----- -----
2.14 6.10 5.03 13.27 0 2.34 0.42 2.76
1993
Canada 2.34 2.80 3.15 8.29 0 0 0 0
United States 0 0 0.46 0.46 0.09 0 0.44 0.53
----- ----- ----- ----- ----- ----- ----- -----
2.34 2.80 3.61 8.75 0.09 0 0.44 0.53
1992
Canada 1.88 0.50 3.61 5.99 0.06 0.35 0 0.41
United States 0 0.33 1.13 1.46 0 0 0 0
----- ----- ----- ----- ----- ----- ----- -----
1.88 0.83 4.74 7.45 0.06 0.35 0 0.41
Principal oil and gas properties The following presentation is a
summary description of the Company's most significant oil and gas
properties. During 1994, the Company's production was not curtailed
other than for mechanical problems relating to pipeline and compressor
repairs and maintenance.
In the Monias area (British Columbia) the Company has an average
working interest of 41.6%. Two pipelines collect gas from the area,
allowing the Company flexibility in seeking gas purchasers. In 1994,
Wainoco sold 86% under long-term contract to CanWest Gas Supply Inc.
(CanWest), Northwest Pacific Energy Marketing Inc. and B.C. Gas Inc.
and 14% to Canadian industrial gas users or exported to the United
States under short-term contracts.
In the Maple Glen-Leo area (Alberta) the Company has an average
working interest of 45%. During 1994, 98% of gas sales were made
under long-term contracts with Pan-Alberta Gas Ltd. (Pan-Alta) and
Western Gas Marketing Limited (WGML) and Altresco Pittsfield, a
cogeneration market, while 2% was sold into the Alberta industrial gas
market.
In the Oak field (British Columbia) the Company has an average
working interest of 44.4%. During 1994, all production was sold to
CanWest under long-term contracts.
In the Wardlow area (Alberta) the Company has an average working
interest of 85.6% and 27 additional undeveloped well locations on
proved acreage. Wainoco holds overriding royalty interests in 17,280
gross proved acres and 2,560 gross unproved acres. All 1994
production was sold under long-term contracts to Pan-Alta and WGML.
In the North Cache field (British Columbia) the Company has an
average working interest of 68.5%. During 1994, 98% of production was
sold under long-term contracts to CanWest and 2% was sold to Canadian
industrial gas users or to export markets in the United States under
short-term contracts.
In the Septimus area (British Columbia) the Company has an
average working interest of 59.1%. Annual production was sold to
Canadian industrial gas users or export markets in the United States
under short-term contracts.
In the Conroe field (Texas) the Company has a unit working
interest of 18%. Oil production was sold to Exxon Company U.S.A. and
Texaco Trading and Transportation and plant products and gas
production were sold to Union Pacific Resources.
The following table presents data for the year and as of December
31, 1994.
Average Daily
Production Proved Reserve
------------- --------------
Gross Acreage Discounted
Gross ----------------------- Gas Oil Gas Oil Net Cash
Wells Productive Undeveloped (mcf) (bbls) (mmcf) (mbbls) Flows
----- ---------- ----------- ----- ------ ----- ------- ---------
(in thousands)
Canada
Monias area,
British Columbia 38 20,383 14,678 12,301 40 29,444 92 $13,967
Maple Glen-Leo area, Alberta 61 47,206 7,680 5,984 45 10,353 86 6,927
Oak area, British Columbia 15 8,033 6,177 3,197 57 9,198 110 6,683
Wardlow area, Alberta 116 18,240 2,080 3,121 0 9,271 0 4,766
North Cache field,
British Columbia 5 2,760 3,106 1,488 17 10,993 125 4,420
Septimus area,
British Columbia 4 1,947 13,573 2,614 14 9,349 46 3,795
United States
Conroe field, Texas(1) 1 2,442 0 35 616 25,523 998 $19,140
(1) Gross wells: 1 unit with 160 wells.
Productive wells The following table shows the Company's gross
and net interests in productive oil and gas wells at December 31,
1994.
Oil (1) Gas (1) Total (1)
--------------- --------------- ---------------
Gross Net Gross Net Gross Net
------ ------ ------ ------ ------ ------
Canada 90 19.1 415 210.4 505 229.5
United States(2) 72 27.7 29 10.0 101 37.7
------ ------ ------ ------ ------ ------
162 46.8 444 220.4 606 267.2
(1) One or more completions in the same bore hole are counted as one
well. The data in the table includes 43 gross (34.6 net) gas wells
and one gross (1 net) oil well with multiple completions.
(2) Includes producing units which contain numerous wells. Each unit
is counted as one gross well and the unit working interest is included
in the net wells.
Acreage The table below summarizes the Company's interest in
productive and undeveloped acreage as of December 31, 1994.
Productive Undeveloped
------------------ ------------------
Gross Net Gross Net
-------- -------- -------- --------
United States
Arkansas 340 97 0 0
California 200 200 41 41
Colorado 2,360 425 43,398 13,124
Louisiana 14,401 2,738 11,272 3,144
Michigan 102 1 0 0
Mississippi 521 171 108 36
Montana 1,905 231 0 0
New Mexico 17,292 2,919 0 0
Oklahoma 0 0 240 240
Texas 17,464 7,295 2,685 2,294
Wyoming 7,542 635 69,118 18,704
------- ------- ------- -------
62,127 14,712 126,862 37,583
Canada
Alberta 281,368 79,448 139,538 60,039
British Columbia 66,268 22,872 115,813 55,313
Northwest Territories
and Beaufort Sea 0 0 12,775 262
------- ------- ------- -------
347,636 102,320 268,126 115,614
Total 409,763 117,032 394,988 153,197
======= ======= ======= =======
Reserves Incorporated herein by reference is the Supplemental
Financial Information contained in the 1994 Annual Report to
Shareholders which presents the estimated net quantities of the
Company's proved oil and gas reserves and the standardized measure of
discounted future net cash flows attributable to such reserves.
Pursuant to regulations of the United States Department of
Energy, Wainoco is required to file an annual report of proved
reserves with the Federal Energy Regulatory Commission (FERC). The
reserve information included in the Supplemental Financial Information
is not inconsistent with the reserve information which will be
furnished to the FERC. Wainoco has not filed oil or gas reserve
information with any other federal agency within the past year, other
than information similar to that included herein.
Other Properties
The Company leases approximately 27,000 square feet of office
space in Houston for its corporate and U.S. oil and gas exploration
and production headquarters under a six-year lease expiring in 1998.
In Canada, the Company leases approximately 17,000 square feet in
Calgary for its Canadian oil and gas exploration and production office
under a lease expiring in 2000. Frontier leases approximately 23,000
square feet in Denver, Colorado for its refining operations
headquarters under a lease expiring in 1995.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings which in the opinion of management
would have a material adverse impact on the Company. See Item 1.
Business - Government Regulations regarding certain ongoing
proceedings regarding environmental matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information in the 1994 Annual Report to Shareholders under
the heading "Common Stock" is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information in the 1994 Annual Report to Shareholders under
the heading "Five Year Financial Data" is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information in the 1994 Annual Report to Shareholders under
the heading "Financial Review" is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and the data contained in the 1994
Annual Report to Shareholders are incorporated herein by reference.
See index to financial statements and supplemental data appearing
under Item 14(a)1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
The information called for by Part III of this Form is
incorporated by reference from the Company's definitive proxy
statement to be filed with the Commission pursuant to Regulation 14A
within 120 days after the close of its last fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a)1. Financial Statements and Supplemental Data Page*
- -----------------------------------------------------------------------------------------------
Consolidated Statements of Operations 18
Consolidated Balance Sheets 19
Consolidated Statements of Cash Flows 20
Consolidated Statements of Shareholders' Equity 21
Notes to Financial Statements 22
Report of Independent Public Accountants 31
Oil and Gas Producing Activities 32
Selected Quarterly Financial Data 16
*Reference to pages in the 1994 Annual Report to Shareholders (as
published), which portions thereof are incorporated herein by
reference.
(a)2. Financial Statements Schedules
Report of Independent Public Accountants
Schedule I - Condensed Financial Information of Registrant
Other Schedules are omitted because of the absence of the
conditions under which they are required or because the required
information is included in the financial statements or notes thereto.
(a)3. List of Exhibits
* 3.1 - Articles of Domestication of the Company, as amended (filed
as Exhibit 2.3 to Registration Statement No. 2-62518 and Exhibit 2.2
to Registration Statement No. 2-69149).
* 3.2 - Fourth restated By-Laws of the Company as amended through
February 20, 1992 (filed as Exhibit 3.2 to Form 10-K dated December
31, 1992).
* 4.1 - Indenture dated as of October 1, 1978, between the Company
and First City National Bank of Houston, as Trustee relating to the
Company's 10 % Subordinated Debentures due 1998 (filed as Exhibit 2.5
to Registration Statement No. 2-59649).
* 4.2 - Agreement of Resignation, Appointment and Acceptance by and
among the Company, First City National Bank of Houston (Resigning
Trustee) and Texas Commerce Bank National Association, Houston,
(Successor Trustee) relating to the Company's 10 3/4 % Subordinated
Debentures due 1998 (filed as Exhibit 4.2 to Form 10-K dated December
31, 1985).
* 4.3 - First Supplemental Indenture dated as of January 20, 1987
between the Company and Texas Commerce Bank National Association,
supplementing and amending the Indenture dated as of October 1, 1978,
relating to the Company's 10 3/4% Subordinated Debentures due 1998
(filed as Exhibit 4.3 to Form 10-K dated December 31, 1986).
* 4.6 - Indenture dated as of June 1, 1989 between the Company and
Texas Commerce Trust Company of New York as Trustee relating to the
Company's 7 3/4% Convertible Subordinated Debentures due 2014 (filed
as Exhibit 4.6 to Form 10-K dated December 31, 1989).
* 4.7 - Indenture dated as of August 1, 1992 between the Company and
Bank One, N.A., as Trustee relating to the Company's 12% Senior Notes
due 2002 (filed as Exhibit 4.7 to Form 10-K dated December 31, 1992).
* 10.1 - Amended and Restated Credit Agreement dated June 29, 1994
with certain banks and Morgan Bank of Canada (filed as Exhibit 10.01
to Form 10-Q dated June 30, 1994).
* 10.2 - Amended and Restated Credit and Guaranty Agreement dated May
31, 1994 with certain banks and Morgan Guaranty Trust Company of New
York (filed as Exhibit 10.02 to Form 10-Q dated June 30, 1994).
* 10.3 - Revolving Credit and Letter of Credit Agreement dated August
10, 1992 among Frontier Oil and Refining Company, certain banks and
Union Bank (filed as Exhibit 10.8 to Form 10-K dated December 31,
1992).
* 10.4 - First Amendment dated October 8, 1992 to Loan Agreement among
Frontier Oil and Refining Company, certain banks and Union Bank (filed
as Exhibit 10.9 to Form 10-K dated December 31, 1992).
* 10.5 - Waiver and Amendment dated March 17, 1993 to Loan Agreement
dated August 10, 1992 with certain banks and Union Bank (filed as
Exhibit 10.19 to Form 10-K dated December 31, 1993).
* 10.6 - Second Amendment dated April 30, 1993 to Loan Agreement dated
August 10, 1992 with certain banks and Union Bank (filed as Exhibit
10.20 to Form 10-K dated December 31, 1993).
* 10.7 - Waiver letter dated August 31, 1993 to Loan Agreement dated
August 10, 1992 with certain banks and Union Bank (filed as Exhibit
10.21 to Form 10-K dated December 31, 1993).
* 10.8 - Waiver letter dated October 15, 1993 to Loan Agreement dated
August 10, 1992 with certain banks and Union Bank (filed as Exhibit
10.22 to Form 10-K dated December 31, 1993).
* 10.9 - Third Amendment dated December 31, 1993 to Loan Agreement
dated August 10, 1992 with certain banks and Union Bank (filed as
Exhibit 10.23 to Form 10-K dated December 31, 1993).
*10.10 - Fourth Amendment dated July 6, 1994 to Loan Agreement dated
August 10, 1992 with certain banks and Union Bank (filed as Exhibit
10.03 to Form 10-Q dated June 30, 1994).
*10.11 - Credit Agreement dated September 10, 1993 among Wainoco Oil &
Gas Company and Cullen Center Bank and Trust (filed as Exhibit 10.24
to Form 10-K dated December 31, 1993).
*10.12 - Interest Rate Swap Agreement dated August 5, 1991 between the
Company and Morgan Guaranty Trust Company of New York (filed as
Exhibit 10.10 to Form 10-K dated December 31, 1992).
*10.13 - Waiver and Amendment Agreement dated May 1, 1992 between the
Company and Morgan Guaranty Trust Company of New York (filed as
Exhibit 10.11 to Form 10-K dated December 31, 1992).
*10.14 - Amendment Agreement dated December 31, 1992 to Interest Rate
Swap Agreement dated August 5, 1991 between the Company and Morgan
Guaranty Trust Company of New York (filed as Exhibit 10.12 to Form 10-
K dated December 31, 1992).
*10.15 - The 1968 Incentive Stock Option Plan as amended and restated
(filed as Exhibit 10.1 to Form 10-K dated December 31, 1987).
*10.16 - The 1977 Stock Option Plan as amended and restated (filed as
Exhibit 10.2 to Form 10-K dated December 31, 1989).
*10.17 - Employment Agreement dated May 26, 1992 between the Company
and Clark Johnson (filed as Exhibit 10.16 to Form 10-K dated December
31, 1992).
*10.18 - Engagement Contract between the Company and John B. Ashmun
(filed as Exhibit 10.1 to Form 10-Q dated March 31, 1994).
10.19 - Wainoco Deferred Compensation Plan dated October 29, 1993.
10.20 - Wainoco Deferred Compensation Plan for Directors dated May 1,
1994.
13.1 - Portions of the Company's 1994 Annual Report covering pages
12 through 16 and 18 through 36.
* 21.1 - Subsidiaries of the Registrant (filed as Exhibit 22.1 to Form
10-K dated December 31, 1992).
23 - Consent of Arthur Andersen LLP.
27 - Financial Data Schedule.
*Asterisk indicates exhibits incorporated by reference as shown.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Company during the
fourth quarter of 1994.
(c) Exhibits
The Company's 1994 Annual Report is available upon request.
Shareholders of the Company may obtain a copy of any other exhibits to
this Form 10-K at a charge of $.25 per page. Requests should be
directed to:
Mrs. Michal King
Corporate Communications
Wainoco Oil Corporation
1200 Smith Street, Suite 2100
Houston, Texas 77002-4367
(d) Schedules
Report of Independent Public Accountants on Financial Statement
Schedules:
To Wainoco Oil Corporation:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Wainoco Oil
Corporation's annual report to shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated February
21, 1995. Our audits were made for the purpose of forming an opinion
on those statements taken as a whole. The schedule listed in the
index above is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
February 21, 1995
Wainoco Oil Corporation
Condensed Financial Information of Registrant
Balance Sheets
As of December 31, Schedule I
- -----------------------------------------------------------------------------------
(in thousands)
1994 1993
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,102 $ 498
Receivables 4,276 3,726
Other current assets 326 145
-------- --------
Total current assets 6,704 4,369
-------- --------
Property, Plant and Equipment, at cost -
Oil and gas properties, on a full-cost basis 151,184 148,717
Furniture, fixtures and other 751 718
-------- --------
151,935 149,435
Less - Accumulated depreciation,
depletion and amortization (83,489) (77,078)
-------- --------
68,446 72,357
Investment in Subsidiaries 153,875 175,504
Other Assets 5,136 5,268
-------- --------
$234,161 $257,498
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,070 $ 4,278
Other accrued liabilities 6,146 6,172
-------- --------
Total current liabilities 10,216 10,450
Deferred Income Taxes 1,718 1,598
Deferred Revenues and Other 535 936
Payable to Affiliated Companies 16,446 20,274
Long-Term Debt 155,797 158,200
Shareholders' Equity 49,449 66,040
-------- --------
$234,161 $257,498
======== ========
The "Notes to Condensed Financial Information of Registrant" and the
"Notes to Financial Statements of Wainoco Oil Corporation and
Subsidiaries" are an integral part of these financial statements.
Wainoco Oil Corporation
Condensed Financial Information of Registrant
Statements of Operations
For the three years ended December 31, Schedule I
- ------------------------------------------------------------------------------------
(in thousands)
1994 1993 1992
-------- -------- --------
Revenues:
Oil and gas sales $ 22,901 $ 21,250 $ 19,708
Equity in earnings of subsidiaries 1,122 16,599 9,149
Other income 1,232 991 913
-------- -------- --------
25,255 38,840 29,770
-------- -------- --------
Costs and Expenses:
Oil and gas operating costs 5,672 5,326 5,117
Selling and general expenses 4,790 4,494 4,549
Depreciation, depletion and amortization 10,407 9,347 9,307
-------- -------- --------
20,869 19,167 18,973
-------- -------- --------
Operating Income 4,386 19,673 10,797
Interest Expense, net 17,828 17,684 12,190
-------- -------- --------
Income (Loss) Before Income Taxes (13,442) 1,989 (1,393)
Provision (Benefit) for Income Taxes (835) (515) (415)
-------- -------- --------
Net Income (Loss) $(12,607) $ 2,504 $ (978)
======== ======== ========
The "Notes to Condensed Financial Information of Registrant" and the
"Notes to Financial Statements of Wainoco Oil Corporation and
Subsidiaries" are an integral part of these financial statements.
Wainoco Oil Corporation
Condensed Financial Information of Registrant
Statements of Cash Flow
For the three years ended December 31, Schedule I
- ------------------------------------------------------------------------------------
(in thousands)
1994 1993 1992
-------- -------- --------
Operating Activities
Net income (loss) $(12,607) $ 2,504 $ (978)
Equity in earnings of subsidiaries (1,122) (16,599) (9,149)
Depreciation, depletion and amortization 10,407 9,347 9,307
Other (375) 591 3,488
-------- -------- --------
Net cash provided (used) by operating activities (3,697) (4,157) 2,668
-------- -------- --------
Investing Activities
Additions to property, plant and equipment (10,817) (6,480) (5,703)
Proceeds from sale of property 928 945 179
Acquisition costs and other (1,233) 343 1,163
-------- -------- --------
Net cash used by investing activities (11,122) (5,192) (4,361)
-------- -------- --------
Financing Activities
Long-term borrowings -
Senior Notes 0 0 100,000
Bank debt 10,664 18,700 2,200
Repayments -
Bank debt (10,664) (22,700) (42,200)
Debentures (2,500) (4,999) 0
Common stock offering & commitments 0 21,725 0
Change in intercompany balances, net (3,829) (13,665) (54,063)
Dividends paid to Parent 22,750 9,860 0
Other 38 (20) (4,115)
-------- -------- --------
Net cash provided by financing activities 16,459 8,901 1,822
Effect of exchange rate changes on cash (36) (215) (233)
-------- -------- --------
Increase (decrease) in cash and cash equivalents 1,604 (663) (104)
Cash and cash equivalents - beginning of period 498 1,162 1,266
-------- -------- --------
Cash and cash equivalents - end of period $ 2,102 $ 499 $ 1,162
======== ======== ========
The "Notes to Condensed Financial Information of Registrant" and the
"Notes to Financial Statements of Wainoco Oil Corporation and
Subsidiaries" are an integral part of these financial statements.
Wainoco Oil Corporation
Notes to Condensed Financial Information of Registrant
December 31, 1994 Schedule I
- ----------------------------------------------------------------------
(1) General
The accompanying condensed financial statements of Wainoco Oil
Corporation (Registrant) should be read in conjunction with the
consolidated financial statements of the Registrant and its
subsidiaries included in the Registrant's 1994 Annual Report to
Shareholders.
(2) Oil and gas properties
All of the Registrant's oil and gas properties are located in
Canada. Information relating to the Registrant's oil and gas
operations is disclosed in the "Notes to the Financial Statements of
Wainoco Oil Corporation and Subsidiaries."
(3) Long-term debt
The components (in thousands) of long-term debt are as follows:
1994 1993
-------- --------
12% Senior Notes $100,000 $100,000
7 3/4% Convertible Subordinated Debentures 46,000 46,000
10 3/4% Subordinated Debentures 9,797 12,200
-------- --------
$155,797 $158,200
======== ========
(4) Five-year maturities of long-term debt
The estimated five-year maturities of long-term debt are $2.5
million in 1996 and 1997 and $5.0 million in 1998.
(5) Restructuring of operations
Wainoco's subsidiary, Wainoco Oil & Gas Company, intends to cease
oil and gas exploration activities in the United States and sell all
of its United States oil and gas properties, except for its Conroe
field and some minor properties. Information relating to the
restructuring and sale are disclosed in the "Notes to Financial
Statements of Wainoco Oil Corporation and Subsidiaries."
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 on the date indicated.
WAINOCO OIL CORPORATION
By: /s/ James R. Gibbs
James R. Gibbs
President
(chief executive officer)
Date: February 21, 1995
- ----------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of Wainoco Oil Corporation and in the capacities and on the
date indicated.
/s/ James R. Gibbs /s/ Paul B. Loyd, Jr.
- ------------------------------ --------------------------
James R. Gibbs Paul B. Loyd, Jr.
President and Director Director
(chief executive officer)
/s/ Julie H. Edwards
- ------------------------------ --------------------------
Julie H. Edwards James S. Palmer
Senior Vice President - Finance Director
and Chief Financial Officer
(principal financial officer)
/s/ George E. Aldrich /s/ Derek A. Price
- ------------------------------ --------------------------
George E. Aldrich Derek A. Price
Vice President - Controller Director
(principal accounting officer)
/s/ Douglas Y. Bech /s/ Carl W. Schafer
- ------------------------------ --------------------------
Douglas Y. Bech Carl W. Schafer
Director Director
Date: February 21, 1995