UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2014 (October 29, 2014)
VENOCO, INC.
DENVER PARENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware |
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Venoco, Inc. 001-33152 |
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Venoco, Inc. 77-0323555 |
(State or other jurisdiction of |
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(Commission file number) |
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(I.R.S. Employer Identification Number) |
370 17th Street, Suite 3900 |
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80202-1370 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (303) 626-8300
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On October 29, 2014, Venoco, Inc. (the Company) completed the sale of its West Montalvo properties to an unrelated third party pursuant to a purchase and sale agreement executed on August 18, 2014. The total purchase price for the properties was $200.2 million in cash, subject to certain closing adjustments. The Company applied 100% of the net proceeds to reduce the principal balance outstanding on its revolving credit facility.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information
The Venoco, Inc. and Denver Parent Corporation unaudited pro forma condensed consolidated balance sheets as of June 30, 2014 and the unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2014 and the year ended December 31, 2013, which give effect to the transaction described herein beginning on page F-1 of this report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 4, 2014
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DENVER PARENT CORPORATION | |
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VENOCO, INC. | |
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By: |
/s/ Mark DePuy |
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Name: |
Mark DePuy |
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Title: |
Chief Executive Officer, Venoco, Inc. |
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President and Chief Operating Officer, Denver Parent Corporation |
VENOCO, INC. AND DENVER PARENT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014
(In thousands)
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Venoco |
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DPC |
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Historical |
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Pro Forma |
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Pro Forma |
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Historical |
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Pro Forma |
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ASSETS: |
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Cash and cash equivalents |
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65 |
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65 |
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4,541 |
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4,541 |
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Other current assets |
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29,166 |
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(4,348 |
)(i) |
24,818 |
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29,093 |
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24,745 |
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Total current assets |
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29,231 |
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(4,348 |
) |
24,883 |
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33,634 |
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29,286 |
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Property, plant and equipment, at cost: |
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Oil and gas properties, full cost method of accounting |
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Proved |
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2,049,899 |
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(204,006 |
)(c),(i),(j),(k) |
1,845,893 |
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2,049,899 |
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1,845,893 |
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Unproved |
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8,487 |
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8,487 |
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8,487 |
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8,487 |
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Accumulated depletion |
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(1,380,628 |
) |
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(1,380,628 |
) |
(1,380,628 |
) |
(1,380,628 |
) |
Net oil and gas properties |
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677,758 |
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(204,006 |
) |
473,752 |
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677,758 |
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473,752 |
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Other property and equipment, net of accumulated depreciation and amortization |
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15,234 |
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15,234 |
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15,234 |
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15,234 |
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Net property, plant and equipment |
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692,992 |
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(204,006 |
) |
488,986 |
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692,992 |
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488,986 |
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Other assets |
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14,533 |
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(2,706 |
)(f) |
11,827 |
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19,498 |
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16,792 |
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Total assets |
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736,756 |
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(211,060 |
) |
525,696 |
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746,124 |
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535,064 |
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LIABILITIES AND STOCKHOLDERS EQUITY: |
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Current portion of long-term debt |
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730,000 |
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(200,200 |
)(e) |
529,800 |
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988,295 |
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788,095 |
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Other current liabilities |
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76,536 |
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(862 |
)(k) |
75,674 |
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79,546 |
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78,684 |
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Total current liabilities |
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806,536 |
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(201,062 |
) |
605,474 |
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1,067,841 |
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866,779 |
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Commodity derivatives |
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14,975 |
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(g) |
14,975 |
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14,975 |
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14,975 |
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Asset retirement obligations |
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37,733 |
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(7,292 |
)(c) |
30,441 |
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37,733 |
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30,441 |
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Share-based compensation |
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17,018 |
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17,018 |
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17,018 |
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17,018 |
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Total liabilities |
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876,262 |
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(208,354 |
) |
667,908 |
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1,137,567 |
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929,213 |
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Stockholders equity |
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(139,506 |
) |
(2,706 |
)(f) |
(142,212 |
) |
(391,443 |
) |
(394,149 |
) |
Total liabilities and stockholders equity |
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736,756 |
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(211,060 |
) |
525,696 |
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746,124 |
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535,064 |
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See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
VENOCO, INC. AND DENVER PARENT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In thousands)
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Venoco |
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DPC |
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Historical |
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Pro Forma |
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Pro Forma |
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Historical |
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Pro Forma |
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REVENUES: |
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Oil and natural gas sales |
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129,101 |
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(24,275 |
)(a) |
104,826 |
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129,101 |
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104,826 |
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Other |
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935 |
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935 |
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935 |
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935 |
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Total revenues |
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130,036 |
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(24,275 |
) |
105,761 |
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130,036 |
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105,761 |
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EXPENSES: |
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Lease operating expense |
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37,653 |
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(5,446 |
)(a) |
32,207 |
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37,653 |
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32,207 |
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Property and production taxes |
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4,006 |
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(953 |
)(a) |
3,053 |
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4,006 |
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3,053 |
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Transportation expense |
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106 |
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(20 |
)(a) |
86 |
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106 |
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86 |
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Depletion, depreciation and amortization |
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22,970 |
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(8,177 |
)(b) |
14,793 |
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22,970 |
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14,793 |
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Impairment of oil and natural gas properties |
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817 |
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817 |
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817 |
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817 |
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Accretion of asset retirement obligations |
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1,223 |
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(225 |
)(c) |
998 |
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1,223 |
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998 |
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General and administrative, net of amounts capitalized |
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17,652 |
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(92 |
)(d) |
17,560 |
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17,991 |
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17,899 |
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Total expenses |
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84,427 |
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(14,913 |
) |
69,514 |
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84,766 |
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69,853 |
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Income (loss) from operations |
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45,609 |
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(9,362 |
) |
36,247 |
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45,270 |
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35,908 |
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FINANCING COSTS AND OTHER: |
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Interest expense, net |
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26,291 |
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(3,600 |
)(e) |
22,691 |
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42,889 |
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39,289 |
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Amortization of deferred loan costs |
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1,696 |
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(730 |
)(f) |
966 |
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2,187 |
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1,457 |
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Commodity derivative losses (gains), net |
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16,815 |
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(g) |
16,815 |
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16,815 |
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16,815 |
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Total financing costs and other |
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44,802 |
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(4,330 |
) |
40,472 |
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61,891 |
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57,561 |
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Income (loss) before income taxes |
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807 |
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(5,032 |
) |
(4,225 |
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(16,621 |
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(21,653 |
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Income tax provision (benefit) |
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(h) |
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Net income (loss) |
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807 |
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(5,032 |
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(4,225 |
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(16,621 |
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(21,653 |
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See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
VENOCO, INC. AND DENVER PARENT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(In thousands)
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Venoco |
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DPC |
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Historical |
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Pro Forma |
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Pro Forma |
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Historical |
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Pro Forma |
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REVENUES: |
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Oil and natural gas sales |
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313,373 |
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(55,462 |
)(a) |
257,911 |
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313,373 |
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257,911 |
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Other |
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4,129 |
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(7 |
)(a) |
4,122 |
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4,129 |
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4,122 |
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Total revenues |
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317,502 |
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(55,469 |
) |
262,033 |
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317,502 |
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262,033 |
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EXPENSES: |
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Lease operating expense |
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77,786 |
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(11,268 |
)(a) |
66,518 |
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77,786 |
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66,518 |
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Property and production taxes |
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3,521 |
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(921 |
)(a) |
2,600 |
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3,521 |
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2,600 |
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Transportation expense |
|
181 |
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(38 |
)(a) |
143 |
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181 |
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143 |
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Depletion, depreciation and amortization |
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48,840 |
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(16,596 |
)(b) |
32,244 |
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48,840 |
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32,244 |
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Accretion of asset retirement obligations |
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2,477 |
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(432 |
)(c) |
2,045 |
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2,477 |
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2,045 |
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General and administrative, net of amounts capitalized |
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50,403 |
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(235 |
)(d) |
50,168 |
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50,664 |
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50,429 |
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Total expenses |
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183,208 |
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(29,490 |
) |
153,718 |
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183,469 |
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153,979 |
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Income (loss) from operations |
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134,294 |
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(25,979 |
) |
108,315 |
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134,033 |
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108,054 |
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FINANCING COSTS AND OTHER: |
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Interest expense, net |
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65,114 |
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(5,954 |
)(e) |
59,160 |
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86,640 |
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80,686 |
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Amortization of deferred loan costs |
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3,705 |
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(1,329 |
)(f) |
2,376 |
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4,754 |
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3,425 |
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Loss on extinguishment of debt |
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38,549 |
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38,549 |
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58,472 |
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58,472 |
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Commodity derivative losses (gains), net |
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12,607 |
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(g) |
12,607 |
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12,607 |
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12,607 |
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Total financing costs and other |
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119,975 |
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(7,283 |
) |
112,692 |
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162,473 |
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155,190 |
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Income (loss) before income taxes |
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14,319 |
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(18,696 |
) |
(4,377 |
) |
(28,440 |
) |
(47,136 |
) |
Income tax provision (benefit) |
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(h) |
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Net income (loss) |
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14,319 |
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(18,696 |
) |
(4,377 |
) |
(28,440 |
) |
(47,136 |
) |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
Venoco, Inc. and Denver Parent Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
1. Basis of Presentation
The unaudited pro forma condensed consolidated financial statements are presented to give effect to the sale on October 29, 2014 by Venoco, Inc. (Venoco), a wholly-owned subsidiary of Denver Parent Corporation (DPC), of Venocos West Montalvo oil and gas properties (Asset Sale) to an unrelated third party. The total purchase price for the properties was $200.2 million in cash, subject to certain closing adjustments.
The pro forma condensed consolidated balance sheets as of June 30, 2014, and the pro forma condensed consolidated statements of operations for the six months ended June 30, 2014 were derived from and should be read in conjunction with the Quarterly Report on Form 10-Q of Venoco and DPC for the quarter ended June 30, 2014, filed on August 19, 2014. The pro forma condensed consolidated statements of operations for the year ended December 31, 2013 was derived from and should be read in conjunction with the audited financial statements included in the Annual Report on Form 10-K of Venoco and DPC for the year ended December 31, 2013, filed on April 10, 2014.
· The unaudited pro forma condensed consolidated balance sheet reflects results as though the Asset Sale closed on June 30, 2014.
· The unaudited pro forma condensed consolidated statements of operations reflect results as though the Asset Sale closed on January 1, 2013.
The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would have been had these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period.
2. Pro Forma Adjustments and Assumptions
The unaudited pro forma financial statements have been prepared by adjusting the historical financial statements of Venoco and DPC (collectively, the Company) as discussed below. The same adjustments were made to each companys financial statements.
Pro forma adjustments related to the Asset Sale:
(a) Represents the pro forma effect on oil and gas revenues, other revenues and related lease operating expenses, production and property taxes and transportation expenses directly attributable to the properties sold.
(b) Represents the pro forma effect on depletion expense, which is calculated on the units-of-production method.
(c) Represents the pro forma effect of the removal of the properties sold on the asset retirement obligation, the full cost pool and related accretion expense.
(d) Represents the pro forma effect on general and administrative expenses, net of amounts capitalized, directly related to properties sold.
(e) Represents the pro forma effect of the estimated repayment of $200.2 million of principal under the revolving credit agreement and the related pro forma effects on interest expense from that reduction in the principal amount outstanding under the revolving credit agreement.
(f) Represents the pro forma effect on deferred loan costs attributable to the reduction of debt resulting from application of the proceeds from the Asset Sale and the related pro forma effects on amortization of deferred loan costs.
(g) The Company does not designate commodity derivative contracts as hedges. Therefore, no adjustments were made to derivative gains or losses for the periods presented.
(h) The Company has provided a full valuation allowance against its net deferred tax assets at December 31, 2013 and June 30, 2014. Therefore, there are no net tax effects to the Companys income tax provision for the periods presented.
(i) Represents the pro forma effect on accounts receivable and equipment inventories related to properties sold.
(j) Represents the allocation of the net proceeds to the full cost pool, with no gain or loss recognized on the transaction.
(k) Represents the pro forma effect on accounts payable and accrued liabilities related to properties sold.