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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, 1995
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.)
10000 Memorial Drive, Suite 600 77024-3411
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 688-9600
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 29, 1996, there were 27,256,002 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 $81.8 million at that
date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1995 are incorporated by reference into Items 1 and 2 of Part 1 and Items 5
through 8 of Part II.
Portions of the Annual Proxy Statement for the year ended December 31, 1995 are
incorporated by reference into Items 10 through 13 of Part III.
Table of Contents
Part I
Item 1. Business 1
Item 2. Properties 8
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Part II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13
Item 8. Financial Statements and Supplementary Data 13
Item 9. Disagreements on Accounting and Financial Disclosure 13
Part III
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners and Management 13
Item 13. Certain Relationships and Related Transactions 13
Part IV
Item 14. Financial Statements Schedules, Exhibits and Reports on Form 8-K 13
PART 1
ITEM 1. BUSINESS
Overview
Wainoco Oil Corporation was originally incorporated in Canada in 1949
and changed its jurisdiction of incorporation to Wyoming in 1976. As used
herein, the "Company" or "Wainoco" refers to Wainoco Oil Corporation and
its subsidiaries. The Company's Canadian assets are held by Wainoco Oil
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 explores for and produces oil and gas in western Canada. Prior to
the fourth quarter of 1994, Wainoco also explored for and produced oil and
gas in the United States. During the third quarter of 1994, the Company
announced that it intended to cease all exploration activities in the
United States and to sell its United States oil and gas assets. Wainoco
finalized the sale of all of its United States oil and gas properties
during 1995.
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 and petroleum coke. In addition, the
Company purchases the crude oil to be refined and markets the refined
petroleum products produced by the Frontier refinery.
- 1 -
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, 1995, approximately 89% of the Company's
proved reserves, on a British Thermal Unit ("BTU") equivalent basis, was
natural gas. During 1995, oil represented 42% and gas represented 58% 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,
1995, all estimated proved reserves and approximately 32% of identifiable
assets of the Company were located in western Canada. For the year ended
December 31, 1995, Canadian operations contributed approximately 71% of the
Company's oil and gas revenue.
During 1995, the exchange rate of the Canadian dollar averaged
approximately U.S. $.7290. The accounts of the Canadian division have been
translated in accordance with generally accepted accounting principles as
described in Note 2 of the Financial Statements in the 1995 Annual Report
to Shareholders which is incorporated herein by reference.
United States. Activities in the United States were conducted through
Wainoco Oil & Gas Company. During 1994, all United States exploration
ceased and certain properties were sold. During 1995, the remaining oil
and gas properties were sold.
Refining Operations
Wainoco's refining activities are conducted through Frontier, which was
acquired in October 1991. The refining facilities are located on
approximately 120 acres in Cheyenne, Wyoming, on property owned by
Frontier. The refinery's permitted crude capacity is 41,000 bpd with an
effective operating capacity of 38,000 bpd, which represents approximately
12% 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
provides gasoline octane capability equal to or higher than that of most of
its competitors. Frontier also owns an undivided interest equal to 25,000
bpd 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 Company's gasoline and distillate sales accounted for more than 83%
of 1995 consolidated revenues. As a percent of consolidated revenue,
gasoline sales were 52%, 49% and 50% and distillate sales were 31%, 31%
and 29% in 1995, 1994 and 1993, respectively.
Industry Segments
The Company's industry segment information for the three years ended
December 31, 1995, and the disclosure of the restructuring of its United
States oil and gas operations is set forth in Notes 6 and 8, respectively,
of the Financial Statements in the 1995 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. A
substantial portion, but not all, of such loss would be covered by business
interruption, property or other insurance carried by the Company. 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.
- 2 -
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 15 refineries in the Rocky Mountain region (including several
owned by 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 28,000 bpd refinery in Denver,
Colorado and Conoco, Inc. ("Conoco") with a 54,000 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.
- 3 -
Strategic Position. Because Frontier 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, Frontier 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 1995, Frontier's cost for sour crude
oil was approximately $2.94 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. Under the 1991 10-year
agreement to process heavy feedstocks for Conoco, 3,300 bpd of the coker's
capacity is reserved 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 16% of Frontier's 1995 sales.
Prices are determined by local market conditions at the "terminal rack" and
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 Frontier. 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 Frontier'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.
- 4 -
Gas Markets
The Company sells approximately half 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 the monthly sales of 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 available to be sold in the spot market.
To diversify gas sales, optimize production, and mitigate poor price
performance on the part of some aggregators, Wainoco increased gas sales
under short-term contracts to about half of its total 1995 production.
Generally, one-year renewable contracts have been used for this purpose
with gas prices that are negotiated annually as a fixed price per unit of
sales or a price indexed to the New York Mercantile Exchange (NYMEX)
futures price, or indexed to a specific sales point such as Sumas, British
Columbia or Empress, Alberta. Firm transportation and gas processing
capacity from major pipeline companies have been obtained in Canada to
ensure the continued ability to deliver gas pursuant to these contracts.
The tariffs associated with this firm pipeline capacity must be paid
regardless of the Company's natural gas productive capacity. During 1995
certain pipeline companies required longer term commitments to maintain
existing capacity, resulting in an increase in annual pipeline capacity
commitments. 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 $3.7 million in 1996, $2.5 million in 1997, $2 million in
1998 to 1999, $1.2 million in 2000, $.6 million in 2001, and $.5 million
from 2002 to 2009. The 1996 commitment represents approximately 39% of
gross productive capacity, and will approximate 34% from 1997 to 2000,
18% in 2001, and 4% from 2002 to 2009.
Government Regulations
Canadian 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. Environmental
legislation provides for restrictions and prohibitions on spills, releases
or emissions of various substances produced in association with certain oil
and gas industry operations. It also requires that well and facility sites
be abandoned and reclaimed to the satisfaction of provincial authorities.
A breach of such legislation may result in the imposition of fines and
penalties. In addition, certain types of operations require the submission
and approval of environmental impact assessments. Environmental
legislation is evolving in a manner which will mean stricter standards and
enforcement, civil liability, increased fines and penalties for
non-compliance (including jail terms), more stringent environmental
assessments of proposed projects and a heightened degree of responsibility
for the Company, its officers, directors and employees. As well, the trend
is away from confining liability to the polluter. Other responsible
parties can include present and prior owners, tenants and others. 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 federal, provincial and local government environmental controls
could require the Company to make significant expenditures. The magnitude
of such expenditures cannot be predicted.
Royalties and Incentives. 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. Effective January 1, 1995, gas prices are also
included in determination of the ARTC rate. The maximum annual ARTC was
$1.4 million in each of 1995, 1994 and 1993. The Company recognized
ARTC's of $.5 million, $1.1 million, and $.6 million in 1995, 1994 and
1993, respectively. The Alberta government has made changes and continues
to consider further changes in its royalty structure (including royalty
exemption periods).
Free Trade Agreement. The North American Free Trade Agreement ("NAFTA")
implemented in 1994 is among the Governments of Canada, the United States
and Mexico. NAFTA carries 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
- 5 -
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.
United States - Canada Income Tax Convention. Effective January 1, 1996
as a result of the implementation of the 1994 Protocol to the United States
- - Canada Income Tax Convention, the Company ceased to be a Canadian
resident for Canadian income tax purposes. To minimize the effects of the
implementation of the 1994 Protocol, the Company, effective December 1,
1995, undertook an internal reorganization which allowed it to protect
certain existing Canadian tax benefits which otherwise would have been lost
as a result of the Company ceasing to be a Canadian resident for Canadian
tax purposes.
Refinery Operations - The Company's refinery operations are subject to
laws and regulations relating to environmental quality and pollution
control. Among these requirements are regulations recently promulgated by
the United States Environmental Protection Agency under the authority of
Title III of the Clean Air Act Amendments of 1990 (the "Act") which will
require the Company to expend approximately $2 million by the statutory
compliance deadline of August 1, 1998 to improve the refinery's control of
emissions of certain petroleum materials designated as hazardous by the
Act. Subsequent rule making authorized by this or other titles of the Act
may necessitate additional expenditures in future years. 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 agreements with state and federal agencies
requiring the investigation and possible eventual remediation of certain
areas of Frontier's property which may have been impacted by past
operational activities. Over the past ten years, the Company has addressed
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.
Additionally, Frontier entered into an administrative order on consent
("Federal Order") with the Environmental Protection Agency on September 24,
1990 pursuant to the Resource Conservation and Recovery Act. The Federal
Order requires the technical investigation of the refinery to determine if
certain areas have been adversely impacted by past operational activities.
Based upon the results of the investigation, additional remedial action
could be required by a subsequent administrative order or permit.
In the wake of new state legislation, the Company and the Wyoming
Department of Environmental Quality have recently entered into an
administrative consent order ("State Order") that generally parallels the
Federal Order and replaces the Consent Decree. (In March 1995, the Consent
Decree was dismissed and the State Order issued). The State Order
eliminates certain equivocal Consent Decree requirements, unified state and
federal regulatory expectations regarding site investigation and
remediation and, consequently, helps to streamline certain of the Company's
current environmental obligations. It is further anticipated that, in view
of Wyoming's recent assumption of federal corrective action powers, the
Federal Order 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 for
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
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 and agricultural work 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 1996, Frontier has scheduled no significant turnaround work on
its major operating units.
- 6 -
Employees
At December 31, 1995, the Company had 380 full-time employees, down from
400 a year earlier. The Company's 63 full-time employees in Canadian oil
and gas operations include 5 geologists, 1 geophysicist, 2 land men in
exploration and development and 5 petroleum engineers in drilling and
production. In conjunction with the sale of United States oil and gas
properties and the relocation of certain corporate functions, the Company
currently expects to further reduce its United States staff by 12 full-time
employees during 1996. The Company employs 299 full-time people in the
refining operations, 40 at the Denver office and 259 at the refinery. The
refinery employees include 78 administrative and technical personnel and
181 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 Frontier's craft
workers. The Company considers relations with all of its employees to be
good. The current three-year contracts expire in May 1996.
- 7 -
ITEM 2. PROPERTIES
As used herein and elsewhere 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, 1995 1994 1993
- ----------------------- -------- -------- --------
Charges (bpd)
Sweet crude 8,098 6,165 6,581
Sour crude 27,174 27,025 25,909
Other feed and blend stocks 5,072 4,105 2,957
-------- -------- --------
Total 40,344 37,295 35,447
Manufactured product yields (bpd)
Gasoline 17,263 16,106 15,129
Distillate 13,744 13,094 11,777
Asphalt and other 7,951 6,575 7,128
-------- -------- --------
Total 38,958 35,775 34,034
Total product sales (bpd)
Gasoline 20,767 19,437 19,837
Distillate 13,265 12,628 11,819
Asphalt and other 6,781 6,724 7,682
-------- -------- --------
Total 40,813 38,789 39,338
Operating margin information (per sales bbl)
Average sales price $ 22.14 $ 22.06 $ 22.60
Material costs (under FIFO inventory accounting) 18.11 16.18 17.09
-------- -------- --------
Product spread 4.03 5.88 5.51
Operating expenses excluding depreciation 3.19 3.45 3.55
Depreciation .55 .53 .42
-------- -------- --------
Operating margin $ .29 $ 1.90 $ 1.54
Manufactured product margin
before depreciation (per bbl) $ .84 $ 2.46 $ 2.09
Purchased product margin
(per purchased product bbl) $ .98 $ 1.35 $ (.41)
Sweet/sour spread (per bbl) $ 2.94 $ 3.61 $ 4.48
Average sales price (per sales bbl)
Gasoline $ 24.68 $ 24.57 $ 25.24
Distillate 23.48 23.48 25.06
Asphalts and other 11.73 12.18 12.00
- 8 -
Oil and Gas Operations
Wainoco sold all of its United States oil and gas properties reflected in
the following oil and gas information prior to December 31, 1995. 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, 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 oil
and gas sales.
Years Ended December 31, 1995 1994 1993
-------- -------- --------
Net Gas Produced (mmcf)
Canada 15,359 15,325 15,938
United States 593 2,993 2,504
-------- -------- --------
Total 15,952 18,318 18,442
Average Daily Gas Production (mmcf)
Canada 42 42 44
United States 2 8 7
-------- -------- --------
44 50 51
Average Gas Sales Price (per mcf)
Canada $ .90 $ 1.31 $ 1.15
United States 1.62 2.08 2.12
Weighted Average .93 1.43 1.28
Canada (C$) 1.24 1.79 1.48
Net Oil Produced (bbls)
Canada 284,000 224,000 232,000
United States 409,000 696,000 747,000
-------- -------- --------
693,000 920,000 979,000
Average Daily Oil Production (bbls)
Canada 778 614 636
United States 1,121 1,907 2,046
-------- -------- --------
1,899 2,521 2,682
Average Oil Sales Price (per bbl)
Canada $ 14.46 $ 12.80 $ 12.85
United States 15.94 14.99 16.85
Weighted Average 15.33 14.45 15.90
Canada (C$) 19.80 17.52 16.54
Average Production Cost (per dollar of oil and gas sales)
Canada $ .35 $ .25 $ .25
United States .52 .43 .45
Weighted Average .40 .33 .34
Average Production Cost (per BTU equivalent mcf of production)
Canada $ .37 $ .34 $ .31
United States 1.29 1.01 1.16
Weighted Average .51 .54 .53
- 9 -
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, 1995, the Company did not have any wells in progress.
Exploratory Development
------------------------------ ------------------------------
Oil Gas Dry Total Oil Gas Dry Total
------ ------ ------ ------ ------ ------ ------ ------
Gross Wells
1995 - Canada 8 2 6 16 2 0 1 3
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
Net Wells
1995 - Canada 4.36 1.20 4.06 9.62 1.20 0 0.06 1.26
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
Principal oil and gas properties - The following presentation is a
summary description of the Company's most significant oil and gas
properties. During 1995, the Company's production was not curtailed other
than for mechanical problems relating to pipeline and compressor repairs
and maintenance, with the exception of 267 mmcf which was voluntarily held
from the market by the Company due to extremely low natural gas prices in
British Columbia.
The Muskrat area (British Columbia) was placed on production throughout
1995. The Company has an average working interest of 53.6% in the area.
Oil production is sold to Northridge Petroleum Marketing Inc., and all of
the natural gas is sold to Canadian industrial gas users or to export
markets in the United States under short-term contracts.
In the Monias area (British Columbia), the Company has an average
working interest of 41.5%. Two pipelines collect gas from the area,
allowing the Company flexibility in seeking gas purchasers. In 1995,
Wainoco sold 86% of its gas sales under long-term contracts 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 45.5%. During 1995, 99% 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 1% was
sold into the Alberta industrial gas market.
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. During 1995, 98% of production was
sold under long-term contracts to Pan-Alta and WGML, while 2% was sold
into the Alberta industrial gas market.
- 10 -
In the Oak field (British Columbia), the Company has an average working
interest of 44.5%. During 1995, Wainoco sold 47% of gas to CanWest under
long-term contracts with 53% sold to Canadian industrial gas users or
exported to the U.S. under short-term contracts.
In the Septimus area (British Columbia), the Company has an average
working interest of 58.8%. In 1995, Wainoco sold 20% of production under
long-term contracts to BC Gas Inc., and 80% of production was sold to
Canadian industrial gas users or to export markets in the United States
under short-term contracts. In the North Cache field (British Columbia),
the Company has an average working interest of 60.5%. During 1995, 72% of
production was sold under long-term contracts to CanWest and 28% was sold
to Canadian industrial gas users or to export markets in the United States
under short-term contracts.
The following table presents Canadian data for the year and as of
December 31, 1995.
Average Daily
Production Proved Reserves Discounted
-------------- --------------- ----------
Gross ----Gross Acreage------ Gas Oil Gas Oil Net Cash
Wells Productive Undeveloped (mcf) (bbls) (mmcf) (mbbls) Flows
------ ---------- ----------- ------ ------ ------ ------ ------------
(in thousands)
Muskrat area, British Columbia 11 3,546 7,474 191 153 6,170 1,144 $ 13,303
Monias area, British Columbia 38 20,383 14,678 10,256 31 30,227 111 10,432
Maple Glen-Leo area, Alberta 61 45,563 5,440 5,484 34 9,331 61 5,640
Wardlow area, Alberta 116 18,240 2,080 3,243 0 8,554 0 4,166
Oak area, British Columbia 16 8,033 5,881 5,273 104 3,846 156 3,409
Septimus area, British Columbia 4 1,947 13,573 2,328 12 9,207 45 3,317
North Cache field, British Columbia 5 2,760 3,758 2,257 24 7,970 104 2,662
Productive wells - The following table shows the Company's gross and net
interests in Canadian productive oil and gas wells at December 31, 1995.
Gross Net
------ ------
Oil 98 23.79
Gas 411 209.96
------ ------
Total 509 233.75
====== ======
One or more completions in the same bore hole are counted as one well. The
data in the table includes 42 gross (34.1 net) gas wells and 2 gross (1.2
net) oil wells with multiple completions.
- 11 -
Acreage - The table below summarizes the Company's interest in Canadian
productive and undeveloped acreage as of December 31, 1995.
Productive Undeveloped
------------------ ------------------
Gross Net Gross Net
-------- -------- -------- --------
Alberta 279,760 79,277 149,691 66,976
British Columbia 68,535 24,894 111,411 57,462
Northwest Territories and Beaufort Sea 0 0 12,775 262
-------- -------- -------- --------
348,295 104,171 273,877 124,700
======== ======== ======== ========
Reserves - The information 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 under the
heading "Supplemental Financial Information" in the 1995 Annual Report to
Shareholders is incorporated herein by reference.
Other Properties
The Company leases approximately 27,000 square feet of office space in
Houston for its corporate headquarters and its previous U.S. oil and gas
exploration and production headquarters under a six-year lease expiring in
1998. During the first quarter of 1996, the Company plans to move its
corporate headquarters to a 3,300 square feet location in Houston and is in
the process of marketing its previous Houston office space for sublease.
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 16,000 square feet
in Englewood, Colorado for its refining operations headquarters under a
seven-year lease expiring in 2002.
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.
- 12 -
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information in the 1995 Annual Report to Shareholders under the
heading "Common Stock" is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information in the 1995 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 1995 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 1995 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 15
Consolidated Balance Sheets 16
Consolidated Statements of Cash Flows 17
Consolidated Statements of Shareholders' Equity 18
Notes to Financial Statements 19
Report of Independent Public Accountants 28
Oil and Gas Producing Activities 29
Selected Quarterly Financial Data 13
*Reference to pages in the 1995 Annual Report to Shareholders (as
published), which portions thereof are incorporated herein by reference.
- 13 -
(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 3/4% 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 January 30, 1996
with J.P. Morgan Bank Canada and Paribas Bank of Canada.
*10.2 - 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).
*10.3 - 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).
*10.4 - 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).
*10.5 - 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).
*10.6 - 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).
*10.7 - 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).
*10.8 - 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).
*10.9 - 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).
*10.10 - Fifth Amendment dated July 1, 1995 to Loan Agreement dated
August 10, 1992 with certain banks and Union Bank (filed as
Exhibit 10.04 to Form 10-Q dated June 30, 1995).
*10.11 - First Amendment to Guaranty dated October 18, 1992, to Loan
Agreement dated August 10, 1992 with certain banks and Union
Bank (filed as Exhibit 10.05 to Form 10-Q dated June 30, 1995).
*10.12 - Second Amendment to Guaranty dated December 31, 1993, to Loan
Agreement dated August 10, 1992 with certain banks and Union
Bank (filed as Exhibit 10.06 to Form 10-Q dated June 30, 1995).
*10.13 - Third Amendment to Guaranty dated July 6, 1994 to Loan
Agreement dated August 10, 1992 with certain banks and Union
Bank (filed as Exhibit 10.07 to Form 10-Q dated June 30, 1995).
- 14 -
*10.14 - Fourth Amendment to Guaranty dated July 1, 1995, to Loan
Agreement dated August 10, 1992 with certain banks and Union
Bank (filed as Exhibit 10.08 to Form 10-Q dated June 30, 1995).
10.15 - Fifth Amendment to Guaranty dated September 8, 1995 to Loan
Agreement dated August 10, 1992 with certain banks and Union
Bank.
*10.16 - 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).
*10.17 - The 1968 Incentive Stock Option Plan as amended and restated
(filed as Exhibit 10.1 to Form 10-K dated December 31, 1987).
*10.18 - The 1977 Stock Option Plan as amended and restated (filed as
Exhibit 10.2 to Form 10-K dated December 31, 1989).
*10.19 - 1995 Stock Grant Plan for Non-employee Directors (filed as
Exhibit 10.14 to Form 10-Q dated June 30, 1995).
*10.20 - Wainoco Deferred Compensation Plan dated October 29, 1993
(filed as Exhibit 10.19 to Form 10-K dated December 31, 1994).
*10.21 - Wainoco Deferred Compensation Plan for Directors dated May 1,
1994 (filed as Exhibit 10.20 to Form 10-K dated December 31,
1994).
*10.22 - Executive Employment Agreement dated April 3, 1995 between the
Company and James R. Gibbs (filed as Exhibit 10.09 to Form 10-Q
dated June 30, 1995).
*10.23 - Executive Employment Agreement dated April 3, 1995 between the
Company and Julie H. Edwards (filed as Exhibit 10.10 to Form
10-Q dated June 30, 1995).
*10.24 - Executive Employment Agreement dated April 3, 1995 between the
Company and S. Clark Johnson (filed as Exhibit 10.11 to Form
10-Q dated June 30, 1995).
*10.25 - Executive Employment Agreement dated April 3, 1995 between the
Company and Robert D. Jones (filed as Exhibit 10.12 to Form
10-Q dated June 30, 1995).
*10.26 - Executive Employment Agreement dated April 3, 1995 between the
Company and George E. Aldrich (filed as Exhibit 10.13 to Form
10-Q dated June 30, 1995).
13.1 - Portions of the Company's 1995 Annual Report covering pages
9 through 13, 15 through 33 and the inside back cover.
21.1 - Subsidiaries of the Registrant.
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 1995.
(c) Exhibits
The Company's 1995 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:
Larry Bell
Wainoco Oil Corporation
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
- 15 -
(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 12, 1996. 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 audits 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 12, 1996
- 16 -
Wainoco Oil Corporation
Condensed Financial Information of Registrant
Balance Sheets
As of December 31, Schedule I
- ---------------------------------------------------------------------------
(in thousands)
1995 1994
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,275 $ 2,102
Receivables 3,457 4,276
Other current assets 132 326
-------- --------
Total current assets 6,864 6,704
-------- --------
Property, Plant and Equipment, at cost -
Oil and gas properties, on a full-cost basis 164,711 151,184
Furniture, fixtures and other 879 751
-------- --------
165,590 151,935
Less - Accumulated depreciation,
depletion and amortization (94,956) (83,489)
-------- --------
70,634 68,446
Investment in and notes from Subsidiaries 136,538 153,875
Other Assets 4,715 5,136
-------- --------
$218,751 $234,161
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,214 $ 4,070
Other accrued liabilities 5,428 6,146
-------- --------
Total current liabilities 9,642 10,216
-------- --------
Deferred Income Taxes 1,718 1,718
Deferred Revenues and Other 863 535
Payable to Affiliated Companies 34,591 16,446
Long-Term Debt 145,377 155,797
Shareholders' Equity 26,560 49,449
-------- --------
$218,751 $234,161
======== ========
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.
- 17 -
Wainoco Oil Corporation
Condensed Financial Information of Registrant
Statements of Operations
For the three years ended December 31, Schedule I
- ------------------------------------------------------------------------
(in thousands)
1995 1994 1993
-------- -------- --------
Revenues:
Oil and gas sales $ 17,964 $ 22,901 $ 21,250
Equity in earnings of subsidiaries (1,149) 1,122 16,599
Other income 3,011 1,232 991
-------- -------- --------
19,826 25,255 38,840
-------- -------- --------
Costs and Expenses:
Oil and gas operating costs 6,287 5,672 5,326
Selling and general expenses 4,958 4,790 4,494
Depreciation, depletion and amortization 9,641 10,407 9,347
-------- -------- --------
20,886 20,869 19,167
-------- -------- --------
Operating Income (Loss) (1,060) 4,386 19,673
Interest Expense, net 17,932 17,828 17,684
-------- -------- --------
Income (Loss) Before Income Taxes (18,992) (13,442) 1,989
Provision (Benefit) for Income Taxes 133 (835) (515)
-------- -------- --------
Net Income (Loss) $(19,125) $(12,607) $ 2,504
======== ======== ========
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.
- 18 -
Wainoco Oil Corporation
Condensed Financial Information of Registrant
Statements of Cash Flows
For the three years ended December 31, Schedule I
- -----------------------------------------------------------------------------
(in thousands)
1995 1994 1993
-------- -------- --------
Operating Activities
Net income (loss) $(19,125) $(12,607) $ 2,504
Equity in earnings of subsidiaries 1,149 (1,122) (16,599)
Dividends paid to Parent 14,450 22,750 9,860
Depreciation, depletion and amortization 9,641 10,407 9,347
Other (246) (375) 591
-------- -------- --------
Net cash provided by operating activities 5,869 19,053 5,703
Investing Activities
Additions to property, plant and equipment (11,345) (10,817) (6,480)
Proceeds from sale of property 2,692 928 945
Acquisition costs and other 486 (1,233) 343
-------- -------- --------
Net cash used by investing activities (8,167) (11,122) (5,192)
-------- -------- --------
Financing Activities
Long-term borrowings -
Bank debt 30,000 10,664 18,700
Repayments -
Bank debt (30,000) (10,664) (22,700)
12% Senior Notes (8,000) 0 0
Debentures (2,500) (2,500) (4,999)
Common stock offering & commitments 0 0 21,725
Change in intercompany balances, net 14,000 (3,829) (13,665)
Other 9 38 (20)
-------- -------- --------
Net cash provided (used) by financing activities 3,509 (6,291) (959)
Effect of exchange rate changes on cash (38) (36) (215)
-------- -------- --------
Increase (decrease) in cash and cash equivalents 1,173 1,604 (663)
Cash and cash equivalents - beginning of period 2,102 498 1,161
-------- -------- --------
Cash and cash equivalents - end of period $ 3,275 $ 2,102 $ 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.
- 19 -
Wainoco Oil Corporation
Notes to Condensed Financial Information of Registrant
December 31, 1995 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 1995 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:
1995 1994
-------- --------
12% Senior Notes $ 92,000 $100,000
7 3/4% Convertible Subordinated Debentures 46,000 46,000
10 3/4% Subordinated Debentures 7,377 9,797
-------- --------
$145,377 $155,797
======== ========
(4) Five-year maturities of long-term debt
The estimated five-year maturities of long-term debt are $2.5 million in
1997, $5.0 million in 1998 and $2.3 million in 2000.
(5) Restructuring of operations
Wainoco's subsidiary, Wainoco Oil & Gas Company, ceased oil and gas
exploration activities in the United States in 1994 and sold all of its
United States oil and gas properties in 1994 and 1995. Information
relating to the restructuring and sale are disclosed in the "Notes to
Financial Statements of Wainoco Oil Corporation and Subsidiaries."
- 20 -
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 20, 1996
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 /s/ James S. Palmer
- ----------------------------- ------------------------------
Julie H. Edwards James S. Palmer
Senior Vice President - Finance and Director
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 20, 1996