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1993 ANNUAL REPORT |
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Notes to Consolidated Financial Statements
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1993 ANNUAL REPORT |
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Notes to Consolidated Financial Statements
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3. Short-Term Bank Borrowings
The Company had available, through a two bank group, a revolving line of credit of $20,000,000 at the end of 1993 bearing interest at the bank’s base rate plus 0.5% (6.5% at December 31, 1993), and $19,180,000 at the end of 1992 bearing interest at the bank’s base rate plus 0.5% (6.5% at December 31, 1992), secured by the Company’s interests in certain oil and gas properties and general partner interests. The outstanding amount under this facility at December 31, 1993, of $2,650,000 was primarily the result of the advance purchase of producing properties on behalf of affiliated partnerships and/or joint ventures to be subsequently reimbursed. There were no outstanding amounts under this facility at December 31, 1992.
The terms of the revolving line of credit include, among other restrictions, a limitation on the level of cash dividends (not to exceed $424,000 in any fiscal year), requirements as to maintenance of certain minimum financial ratios (principally pertaining to working capital, debt, and equity ratios) and limitations on incurring other debt. Since inception, no dividends have been declared on the Company’s common stock, and the Company does not expect to declare dividends in the near future. The Company presently intends to continue a policy of using retained earnings for expansion of its business. As of December 31, 1993, the Company was in compliance with the provisions of these agreements. The revolving line of credit extends through May 1, 1995.
During 1993, the Company also had available with the same two bank group a line of credit for producing oil and gas property acquisitions, bearing interest at the bank’s base rate plus 1% (7% at both December 31, 1993 and 1992), to be secured by producing oil and gas properties acquired and held for transfer. The Company on January 18, 1994, asked the banks to terminate this facility. There were no outstanding amounts under this facility at either December 31, 1993 or 1992.
The Company’s third credit facility is an amended and restated revolving line of credit with the lead bank of $5,000,000 bearing interest at the bank’s base rate (6% at December 31, 1993) and at the bank’s base rate plus 0.5% (6.5% at December 31, 1992), secured by certain Company receivables. There were no outstanding amounts under this facility at December 31, 1993 or 1992. This credit facility extends through May 1, 1996.
In addition to interest on these credit facilities, the Company pays a commitment fee to compensate the banks for making funds available. The fee is calculated on the average daily remainder, if any, of the commitment amount less the aggregate principal amounts outstanding plus the amount of all outstanding letters of credit during the period. The aggregate amount paid by the Company was $112,000 in 1993 and $64,000 in 1992.
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