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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2007
 or
 o
    
    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: 0-20100
 BELDEN & BLAKE CORPORATION
  Ohio
    
    34-1686642(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)First City Tower1001 Fannin Street, Suite 800Houston, Texas
    
    77002(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report.)
 þ o
  o o þ
 o þ




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PagePART I Financial InformationItem 1.
    
    Financial Statements (unaudited)Balance Sheets as of March 31, 2007 and December 31, 2006
    
    
    1Statements of Operations:
Three months ended March 31, 2007 and 2006
    
    
    2Statements of Cash Flows:
Three months ended March 31, 2007 and 2006
    
    
    3Notes to Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    7Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    12Item 4.
    
    Controls and Procedures
    
    
    15PART II Other InformationItem 1.
    
    Legal Proceedings
    
    
    15Item 1A.
    
    Risk Factors
    
    
    15Item 3.
    
    Defaults upon Senior Securities
    
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    15Item 6.
    
    Exhibits
    
    
    16EX-31.1EX-31.2EX-32.1EX-32.2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BELDEN & BLAKE CORPORATION
 
 BALANCE SHEETS
 (unaudited, in thousands, except share data)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    5,987
    
    
    $
    5,927Accounts receivable, net
    
    
    18,239
    
    
    
    19,855Inventories
    
    
    1,110
    
    
    
    885Deferred income taxes
    
    
    18,185
    
    
    
    12,607Other current assets
    
    
    611
    
    
    
    510Fair value of derivatives
    
    
    348
    
    
    
    378Total current assets
    
    
    44,480
    
    
    
    40,162Property and equipment, at costOil and gas properties (successful efforts method)
    
    
    698,526
    
    
    
    692,576Gas gathering systems
    
    
    1,305
    
    
    
    1,305Land, buildings, machinery and equipment
    
    
    2,778
    
    
    
    3,031702,609
    
    
    
    696,912Less accumulated depreciation, depletion and amortization
    
    
    61,187
    
    
    
    52,564Property and equipment, net
    
    
    641,422
    
    
    
    644,348Goodwill
    
    
    90,076
    
    
    
    90,076Fair value of derivatives
    
    
    72
    
    
    
    193Other assets
    
    
    2,194
    
    
    
    2,244$
    778,244
    
    
    $
    777,023LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    2,494
    
    
    $
    2,259Accrued expenses
    
    
    17,157
    
    
    
    21,554Current portion of long-term liabilities
    
    
    294
    
    
    
    408Fair value of derivatives
    
    
    46,328
    
    
    
    27,576Total current liabilities
    
    
    66,273
    
    
    
    51,797Long-term liabilitiesBank and other long-term debt
    
    
    99,952
    
    
    
    95,454Senior secured notes
    
    
    164,896
    
    
    
    165,106Subordinated promissory note  related party
    
    
    25,000
    
    
    
    25,000Asset retirement obligations and other long-term liabilities
    
    
    20,693
    
    
    
    20,627Fair value of derivatives
    
    
    178,611
    
    
    
    160,011Deferred income taxes
    
    
    106,467
    
    
    
    115,325Total long-term liabilities
    
    
    595,619
    
    
    
    581,523Shareholders equityCommon stock: without par value; 3,000 shares authorized and 1,534
shares issued
    
    
    
    
    
    
    Paid in capital
    
    
    125,000
    
    
    
    125,000Retained earnings
    
    
    12,713
    
    
    
    41,262Accumulated other comprehensive loss
    
    
    (21,361
    )
    
    
    (22,559
    )Total shareholders equity
    
    
    116,352
    
    
    
    143,703$
    778,244
    
    
    $
    777,023
  1




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BELDEN & BLAKE CORPORATION
 
 STATEMENTS OF OPERATIONS
 (unaudited, in thousands)
 Three months
    
    
    
    Three monthsended March 31,
    
    
    
    ended March 31,2007
    
    
    
    2006RevenuesOil and gas sales
    
    $
    26,802
    
    
    
    $
    40,938Gas gathering and marketing
    
    
    2,620
    
    
    
    
    3,750Other
    
    
    168
    
    
    
    
    10529,590
    
    
    
    
    44,793ExpensesProduction expense
    
    
    5,803
    
    
    
    
    5,791Production taxes
    
    
    551
    
    
    
    
    709Gas gathering and marketing
    
    
    2,204
    
    
    
    
    3,283Exploration expense
    
    
    725
    
    
    
    
    174General and administrative expense
    
    
    1,927
    
    
    
    
    3,238Depreciation, depletion and
amortization
    
    
    8,559
    
    
    
    
    9,312Accretion expense
    
    
    311
    
    
    
    
    292Derivative fair value (gain) loss
    
    
    42,156
    
    
    
    
    7,29062,236
    
    
    
    
    30,089Operating (loss) income
    
    
    (32,646
    )
    
    
    
    14,704Other expenseInterest expense
    
    
    5,897
    
    
    
    
    5,773(Loss) Income before
income taxes
    
    
    (38,543
    )
    
    
    
    8,931(Benefit) Provision for income taxes
    
    
    (15,244
    )
    
    
    
    3,543Net (loss) income
    
    $
    (23,299
    )
    
    
    $
    5,388
  2




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BELDEN & BLAKE CORPORATION
 
 STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Three months
    
    
    
    Three monthsended March 31,
    
    
    
    ended March 31,2007
    
    
    
    2006Cash flows from operating activities:Net (loss) income
    
    $
    (23,299
    )
    
    
    $
    5,388Adjustments to reconcile
net (loss) income
to net cash provided by operating activities:Depreciation, depletion and amortization
    
    
    8,559
    
    
    
    
    9,417Accretion expense
    
    
    311
    
    
    
    
    292Amortization of derivatives and other noncash hedging activities
    
    
    44,434
    
    
    
    
    3,106Exploration expense
    
    
    161
    
    
    
    
    174Deferred income taxes
    
    
    (15,244
    )
    
    
    
    3,543Other non-cash expense
    
    
    354
    
    
    
    
    Change in operating assets and liabilities, net of
effects of acquisition and disposition of businesses:Accounts receivable and other operating assets
    
    
    1,515
    
    
    
    
    3,023Inventories
    
    
    (155
    )
    
    
    
    238Accounts payable and accrued expenses
    
    
    (4,448
    )
    
    
    
    1,570Net cash provided by operating activities
    
    
    12,188
    
    
    
    
    26,751Cash flows from investing activities:Proceeds from property and equipment disposals
    
    
    
    
    
    
    
    3,320Exploration expense
    
    
    (161
    )
    
    
    
    (174
    )Additions to property and equipment
    
    
    (6,234
    )
    
    
    
    (8,141
    )Increase in other assets
    
    
    (57
    )
    
    
    
    (18
    )Net cash used in investing activities
    
    
    (6,452
    )
    
    
    
    (5,013
    )Cash flows from financing activities:Repayment of senior secured facility  term loan
    
    
    
    
    
    
    
    Proceeds from revolving line of credit
    
    
    4,500
    
    
    
    
    13,000Repayment of revolving line of credit
    
    
    
    
    
    
    
    (12,000
    )Repayment of long-term debt and other obligations
    
    
    (2
    )
    
    
    
    (4
    )Settlement of derivative liabilities recorded in purchase accounting
    
    
    (4,924
    )
    
    
    
    (9,947
    )Dividends
    
    
    (5,250
    )
    
    
    
    (6,500
    )Net cash used in financing activities
    
    
    (5,676
    )
    
    
    
    (15,451
    )Net increase in cash and cash equivalents
    
    
    60
    
    
    
    
    6,287Cash and cash equivalents at beginning of period
    
    
    5,927
    
    
    
    
    8,172Cash and cash equivalents at end of period
    
    $
    5,987
    
    
    
    $
    14,459
  3




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BELDEN & BLAKE CORPORATION
 
 NOTES TO FINANCIAL STATEMENTS
(unaudited)
 March 31, 2007
 (1) Basis of Presentation
   (2) Derivatives and Hedging
   4




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Natural Gas Swaps
    
    
    Crude Oil SwapsNYMEXPrice per
    
    
    
    
    
    
    NYMEXBbtu
    
    
    Mmbtu
    
    
    Mbbls
    
    
    Price per BblQuarter EndingJune 30, 2007
    
    
    2,687
    
    
    
    4.75
    
    
    
    57
    
    
    
    31.07September 30, 2007
    
    
    2,686
    
    
    
    4.71
    
    
    
    57
    
    
    
    30.73December 31, 2007
    
    
    2,686
    
    
    
    4.91
    
    
    
    56
    
    
    
    30.448,059
    
    
    $
    4.79
    
    
    
    170
    
    
    $
    30.75Year EndingDecember 31, 2008
    
    
    10,126
    
    
    
    4.64
    
    
    
    208
    
    
    
    29.96December 31, 2009
    
    
    9,529
    
    
    
    4.43
    
    
    
    191
    
    
    
    29.34December 31, 2010
    
    
    8,938
    
    
    
    4.28
    
    
    
    175
    
    
    
    28.86December 31, 2011
    
    
    8,231
    
    
    
    4.19
    
    
    
    157
    
    
    
    28.77December 31, 2012
    
    
    7,005
    
    
    
    4.09
    
    
    
    138
    
    
    
    28.70December 31, 2013
    
    
    6,528
    
    
    
    4.04
    
    
    
    127
    
    
    
    28.70
 Bbl  Barrel
    
    Mmbtu  Million British thermal unitsMbbls  Thousand barrels
    
    Bbtu  Billion British thermal units
  (3) Industry Segment Financial Information
  (4) Supplemental Disclosure of Cash Flow Information
 Three months
    
    
    Three monthsended March 31,
    
    
    ended March 31,(in thousands)
    
    2007
    
    
    2006Cash paid during the period for:Interest
    
    $
    9,628
    
    
    
    $
    9,822Income taxes
    
    
    
    
    
    
    
    Non-cash investing and financing activities:Non-cash additions to property and equipment
    
    
    (286
    )
    
    
    
    954
 (5) Contingencies
  (6) Comprehensive Income
  5




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Three months
    
    
    
    Three monthsended March
    
    
    
    ended March31, 2007
    
    
    
    31, 2006Comprehensive income (loss):Net (loss) income
    
    $
    (23,299
    )
    
    
    $
    5,388Other comprehensive income (loss), net of tax:Unrealized gain in derivative fair value
    
    
    117
    
    
    
    
    18,460Reclassification adjustment for derivative (loss) gain
reclassified into earnings
    
    
    (1,315
    )
    
    
    
    5,997Change in accumulated other comprehensive (loss) income
    
    
    (1,198
    )
    
    
    
    24,457Comprehensive (loss) income
    
    $
    (24,497
    )
    
    
    $
    29,845
 (7) Related Party Transactions
  (8) New Accounting Standards
      Fair
Value Measurements,
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 6




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 Forward-Looking Information
  Results of Operations
  7




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Three months ended March 31,2007
    
    2006ProductionGas (Mmcf)
    
    
    3,295
    
    
    
    3,537Oil (Mbbls)
    
    
    91
    
    
    
    98Total production (Mmcfe)
    
    
    3,843
    
    
    
    4,126Average price (1)Gas (per Mcf)
    
    $
    6.61
    
    
    $
    9.92Oil (per Bbl)
    
    
    55.16
    
    
    
    59.48Mcfe
    
    
    6.97
    
    
    
    9.92Average costs (per Mcfe)Production expense
    
    $
    1.51
    
    
    $
    1.40Production taxes
    
    
    0.14
    
    
    
    0.17Depletion
    
    
    2.21
    
    
    
    2.22Operating margin (per Mcfe)
    
    
    5.32
    
    
    
    8.35
 
 (1)
    
    The average prices presented above include non-cash amounts related to purchase accounting for
the Transaction. Excluding these non-cash amounts from oil and gas sales revenues
would result in the following average prices: Three months ended March 31,2007
    
    2006Gas (per Mcf)
    
    $
    7.27
    
    
    $
    6.47Oil (per Bbl)
    
    
    55.16
    
    
    
    59.48Mcfe
    
    
    7.55
    
    
    
    6.96
 Mmcf  Million cubic feet
    
    Mbbls  Thousand barrels
    
    Mmcfe  Million cubic feet of natural gas equivalentMcf  Thousand cubic feet
    
    Bbl  Barrel
    
    Mcfe  Thousand cubic feet of natural gas equivalentOperating margin (per Mcfe)  average price less production expense and production taxes
 First Quarters of 2007 and 2006 Compared
 Revenues
    8




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Costs and Expenses
        9




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Liquidity and Capital Resources
 Cash Flows
      Capital Expenditures
   Financing and Credit Facilities
  10




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New Accounting Standards
  11




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Fair
Value Measurements,
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   .
  12




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13




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Natural Gas Swaps
    
    
    Crude Oil SwapsNYMEXPrice per
    
    
    
    
    
    
    NYMEXBbtu
    
    
    Mmbtu
    
    
    Mbbls
    
    
    Price per BblQuarter EndingJune 30, 2007
    
    
    2,687
    
    
    
    4.75
    
    
    
    57
    
    
    
    31.07September 30, 2007
    
    
    2,686
    
    
    
    4.71
    
    
    
    57
    
    
    
    30.73December 31, 2007
    
    
    2,686
    
    
    
    4.91
    
    
    
    56
    
    
    
    30.448,059
    
    
    $
    4.79
    
    
    
    170
    
    
    $
    30.75Year
EndingDecember 31, 2008
    
    
    10,126
    
    
    
    4.64
    
    
    
    208
    
    
    
    29.96December 31, 2009
    
    
    9,529
    
    
    
    4.43
    
    
    
    191
    
    
    
    29.34December 31, 2010
    
    
    8,938
    
    
    
    4.28
    
    
    
    175
    
    
    
    28.86December 31, 2011
    
    
    8,231
    
    
    
    4.19
    
    
    
    157
    
    
    
    28.77December 31, 2012
    
    
    7,005
    
    
    
    4.09
    
    
    
    138
    
    
    
    28.70December 31, 2013
    
    
    6,528
    
    
    
    4.04
    
    
    
    127
    
    
    
    28.70
 Bbl  Barrel
    
    Mmbtu  Million British thermal unitsMbbls  Thousand barrels
    
    Bbtu  Billion British thermal units
   14




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Change in Internal Controls Over Financial Reporting
  
 PART
II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors
   
 Item 3. Defaults upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  15




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Item 6. Exhibits
       
 +
    
    Filed herewith. 16




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BELDEN & BLAKE CORPORATIONDate: May 14, 2007
    By:
    /s/ Mark A. HouserMark A. Houser, Chief Executive Officer, Chairman of the Board of Directors and DirectorDate: May 14, 2007
    By:
    /s/ James M. VanderhiderJames M. Vanderhider, President, ChiefFinancial Officer and Director (Principal
Financial Officer) 17