-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GhA/wrYTlYG9g534eillVUvv/FsjDYhAGEXkdkzvnlyT8kswW2hxtp3mmJGu+3M0 CNE8poyvxZL6N2sPA+sKTA== 0000899243-96-000108.txt : 19960216 0000899243-96-000108.hdr.sgml : 19960216 ACCESSION NUMBER: 0000899243-96-000108 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELLWETHER EXPLORATION CO CENTRAL INDEX KEY: 0000319459 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760437769 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09498 FILM NUMBER: 96519503 BUSINESS ADDRESS: STREET 1: 1221 LAMAR ST STE 1600 CITY: HOUSTON STATE: TX ZIP: 77010-3039 BUSINESS PHONE: 7136501025 MAIL ADDRESS: STREET 1: 1221 LAMAR STREET 2: STE 1600 CITY: HOUSTON STATE: TX ZIP: 77010-3039 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 10-Q (Mark One) [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended December 31, 1995 or Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 {No Fee Required} For the Transition Period From____________to_____________ Commission file number 0-9498 BELLWETHER EXPLORATION COMPANY (Exact name of registrant as specified in its charter) Delaware 74-0437769 (State of incorporation) (I.R.S. Employer Identification No.) 1221 Lamar, Suite 1600, Houston, Texas 77010-3039 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 650-1025 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value NASDAQ/NMS Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] At February 12, 1996, 9,045,479 shares of Common Stock of Bellwether Exploration Company were outstanding. ================================================================================ BELLWETHER EXPLORATION COMPANY INDEX
PAGE NUMBER ------ PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheets: December 31, 1995 (Unaudited) and June 30, 1995...................... 3 Condensed Consolidated Statements of Operations (Unaudited): Three and six months ended December 30, 1995 and December 31, 1994... 5 Condensed Consolidated Statements of Cash Flows (Unaudited): Three and six months ended December 31, 1995 and December 31, 1994... 6 Notes to Condensed Consolidated Financial Statements (Unaudited). 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 11 PART II. OTHER INFORMATION......................................................... 15
2 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) ASSETS
December 31, 1995 June 30, 1995 ----------------- ------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents............... $ 2,410 $ 1,088 Accounts receivable and accrued revenue. 5,760 5,322 Due from affiliates..................... 1,544 --- Prepaid expenses and other.............. 450 217 -------- -------- Total current assets.................. 10,164 6,627 -------- -------- PROPERTY AND EQUIPMENT, at cost: Oil and gas properties (full cost method)................................ 72,559 71,426 Gas plant facilities.................... 12,810 13,049 Gas gathering system.................... 6,031 6,011 -------- -------- 91,400 90,486 -------- -------- Accumulated depreciation, depletion and amortization...................... (27,157) (23,291) -------- -------- 64,243 67,195 -------- -------- OTHER ASSETS............................ 782 828 -------- -------- $ 75,189 $ 74,650 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except Share Data) LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, 1995 June 30, 1995 ----------------- ------------- (Unaudited) CURRENT LIABILITIES: Accounts payable and accrued liabilities. $ 2,180 $ 1,774 Due to affiliates........................ 1,462 76 Current maturities of long-term debt..... 4,198 6,023 ------- ------- Total current liabilities................ 7,840 7,873 ------- ------- OTHER LONG-TERM LIABILITIES.............. 151 151 LONG-TERM DEBT........................... 19,350 18,525 DEFERRED INCOME TAXES.................... 2,400 2,400 MINORITY INTEREST........................ -- 254 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued or outstanding at December 31, 1995 and June 30, 1995............. -- -- Common stock, $.01 par value, 15,000,000 shares authorized, 9,045,479 shares issued and outstanding at December 31, 1995 and June 30, 1995...................... 90 90 Additional paid-in capital............. 41,472 41,472 Retained earnings...................... 3,886 3,885 ------- ------- Total stockholders' equity........... 45,448 45,447 ------- ------- $75,189 $74,650 ======= =======
See accompanying notes to condensed consolidated financial statements. 4 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in Thousands, Except per Share Data)
Three Months Ended Six Months Ended December 31, December 31, ---------------------- --------------------- 1995 1994 1995 1994 -------- -------- -------- -------- REVENUES: Oil and gas revenues................ $3,853 $1,395 $ 7,142 $2,641 Gas plant revenues.................. 1,286 1,498 2,373 2,983 Gas gathering revenues.............. 1,269 1,280 2,550 2,533 Interest and other income........... 36 13 57 26 ------ ------ ------- ------ 6,444 4,186 12,122 8,183 ------ ------ ------- ------ COST AND EXPENSES: Lease operating expenses............ 1,347 491 2,447 918 Gas plant operating expenses........ 657 780 1,277 1,565 Gas gathering expenses.............. 892 823 1,729 1,621 Depreciation, depletion and amortization...................... 1,979 1,040 3,866 1,966 General and administrative expenses........................... 859 614 1,559 1,060 Interest expense.................... 472 166 956 356 Other expense....................... 143 --- 155 --- ------ ------ ------- ------ 6,349 3,914 11,989 7,486 ------ ------ ------- ------ Income before income taxes and minority interest............... 95 272 133 697 Provision for income taxes........... 107 --- 132 --- Minority interest.................... --- 48 --- 95 ------ ------ ------- ------ NET INCOME (LOSS).................... $ (12) $ 224 $ 1 $ 602 ====== ====== ======= ====== Earnings per share................... $ --- $ 0.03 $ --- $ 0.09 ====== ====== ======= ====== Weighted average common and common equivalent shares............ 9,045 8,039 9,045 6,725 outstanding ====== ====== ======= ======
See accompanying notes to condensed consolidated financial statements. 5 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in Thousands)
Six Months Ended December 31, -------------------- 1995 1994 -------- -------- Net income (loss)............................. $ 1 $ 602 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization.... 3,897 2,018 Minority interest in gas plant ventures..... --- 50 Change in the assets and liabilities: Accounts receivable and accrued revenue...... (439) (377) Accounts payable and other liabilities....... 405 (2,699) Due (to) from affiliates..................... (158) 425 Other........................................ (210) (120) ------- -------- NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES............. 3,496 (101) ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to oil and gas properties........ (1,133) (1,933) Cash paid for acquisition of Odyssey........ --- (5,715) Investment in energy related equity securities.......................... --- (2,606) Other....................................... (41) (84) ------- -------- NET CASH FLOWS USED IN INVESTING ACTIVITIES. (1,174) (10,338) ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings.................... --- 5,035 Payments of long-term debt.................. (1,000) (12,045) Net proceeds from stock offering............ --- 17,340 ------- -------- NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES............. (1,000) 10,330 ------- -------- Net increase (decrease) in cash and cash equivalents................................ 1,322 (109) Cash and cash equivalents at beginning of period.......................... 1,088 1,453 ------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.... $ 2,410 $ 1,344 ======= ========
6 BELLWETHER EXPLORATION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) (Amounts in Thousands)
Six Months Ended December 31, -------------------- 1995 1994 -------- -------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest..................................... $ 480 $ 335 Income taxes................................. $ 127 $ ---
See accompanying notes to condensed consolidated financial statements. 7 BELLWETHER EXPLORATION COMPANY Notes to Condensed Consolidated Financial Statements (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all disclosures required by generally accepted accounting principles. However, in the opinion of management, these statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the financial position at December 31, 1995 and June 30, 1995 and the results of operations and changes in cash flows for the periods ended December 31, 1995 and 1994. These financial statements should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements in the 1995 Form 10-K of Bellwether Exploration Company ("the Company") that was filed with the Securities and Exchange Commission. 2. INDUSTRY SEGMENT INFORMATION The Company's operations are concentrated primarily in three segments; the exploration and production of oil and natural gas, gas plant operations and gas gathering operations. FOR THE SIX MONTHS ENDED DECEMBER 31, ------------------------ 1995 1994 ---------- ---------- Sales to unaffiliated customers: Oil and gas..................... $ 7,142 $ 2,641 Gas plants...................... 2,373 2,983 Gas gathering................... 2,550 2,533 Other revenues.................. 57 26 -------- -------- Total revenues............ 12,122 8,183 ======== ======== Operating profit before income tax Oil and gas..................... 1,520 440 Gas plants...................... 656 887 Gas gathering................... 570 665 -------- -------- 2,746 1,992 Unallocated corporate expenses.... 1,657 1,034 Interest expense.................. 956 356 -------- -------- Income before taxes....... 133 602 ======== ======== Depreciation, depletion and amortization: Oil and gas..................... 3,176 1,283 Gas plants...................... 440 437 Gas gathering................... 251 246 -------- -------- $ 3,866 $ 1,966 ======== ======== 8 BELLWETHER EXPLORATION COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. ACQUISITIONS, MERGERS AND PRO FORMA FINANCIAL INFORMATION During fiscal 1995, the Company completed the following mergers and acquisitions: On February 28, 1995 the Company acquired Hampton Resources Corporation ("Hampton") in exchange for $17.0 million in cash and 1,006,458 shares of the Company's common stock. Prior to the merger, the Company acquired common and preferred stock of Hampton for $2.7 million and incurred $1.4 million in expenses in connection with the merger. The total cash outlay of $21.1 million and the issuance of common stock valued at $4.8 million resulted in a total cost of $25.9 million for the acquisition of Hampton. Hampton was an energy company engaged in the exploration, acquisition and production of oil and natural gas. On August 26, 1994 the Company acquired Odyssey Partners, Ltd, ("Odyssey") in exchange for $5.6 million in cash (funded from a common stock offering which closed on the same date) and 916,665 shares of the Company's common stock for a total cost of $9.6 million. Odyssey is an exploration company which assembles, exploits and operates oil and gas properties using state- of-the-art 3-D seismic and computer-aided exploration technology. Odyssey's primary areas of operation have been the onshore Gulf Coast region and the Permian Basin area of West Texas and Southeast New Mexico. The following table presents the unaudited proforma results of operations as if the Hampton and Odyssey transactions (the "Mergers") had occurred on July 1, 1994. The Mergers were accounted for as purchases, and their results of operations are included in the Company's results of operations from the dates of acquisition. The Company's pro forma results are based on assumptions and estimates and are not necessarily indicative of the Company's results of operations had the transactions occurred as of July 1, 1994, or those in the future (in thousands, except earnings per share). SIX MONTHS ENDED DECEMBER 31, 1994 ----------------- Revenues.................................... $12,578 Expenses.................................... 12,179 ------- Earnings before minority interest and income taxes............................... 399 Provision for income taxes.................. --- Minority interest........................... 95 ------- Net income.................................. $ 304 ======= Earnings per share.......................... $ .03 ======= 9 BELLWETHER EXPLORATION COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. GAS PLANT MINORITY INTEREST The Company and its joint venture partner in the gas plant ventures have amended the joint venture agreements, effective July 1, 1995, to increase the Company's ownership in the gas plant ventures to 100% until payout. Upon payout, the Company's interest will be reduced to 80%, unchanged from the current arrangement. The provision for minority interest in gas plant ventures in the Company's financial statements has been eliminated as a result of this transaction. 5. LONG TERM DEBT During the second quarter of fiscal 1996, the borrowing base on the Company's credit facility was increased to $26.6 million and the repayment schedule modified and extended from March 1999 to June 2001. As a result of this increase, the current portion of long-term debt was reduced from $6.0 million at June 30, 1995 to $4.2 million at December 31, 1995. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity The strategy of the Company has been to acquire producing oil and gas properties through mergers, acquisitions and development, to participate in certain gas processing and gas gathering investments, and to participate selectively in exploration activities. The funding of these activities has been provided by operating cash flows, bank financing and equity placements. Net cash provided by operating activities was $3.5 million for the six months ended December 31, 1995 compared to $101,000 used in operating activities in the same period of 1994. The Company invested $1.1 million in oil and gas properties for the six months ended December 31, 1995 versus $1.9 million in 1994. Additionally, the Company spent $34,000 for the six months ended December 31, 1995 and $125,000 in the six months ended December 31, 1994 on gas plant and gas gathering facilities. During the second quarter of fiscal 1996, the borrowing base on the line of credit facility was increased to $26.6 million and the repayment schedule modified and extended from March 1999 to June 2001. As a result of this increase and modification, the current portion of long-term debt was reduced from $6.0 million at June 30, 1995 to $4.2 million at December 31, 1995. During the fourth quarter of fiscal 1995, the Company entered into an agreement with two investment banking firms to raise $30 million through a private placement of Senior Debt. During the second quarter of fiscal 1996, Bellwether terminated the agreement and $128,000 was charged to expenses for the costs incurred in connection with the agreement. Gas Balancing It is customary in the industry for various working interest partners to sell more or less than their entitled share of natural gas. The settlement or disposition of existing gas balancing positions is not anticipated to materially impact the financial condition of the Company. Fiscal 1996 Capital Expenditures The Company anticipates investing approximately $6.7 million during fiscal 1996, which is comprised of $5.8 million for development drilling activities and acquisitions, $0.6 million for exploratory drilling activities, and $0.3 million for gas plant and gas gathering facilities. Bellwether commenced a four-well recompletion program in the Cove field, offshore Matogorda County, Texas in January 1996 with estimated net capital costs of $2.1 million. The State Lease 57686 #7 well, the first well in the recompletion program, was tested at a initial rate of 1.4 Mmcfpd on February 8, 1996. The recompletion program is expected to be completed during April 1996. Management also expects to commence the drilling of a development well in the Cove field in the fourth quarter of fiscal 1996. The Company expects to commence the drilling of the first of two wells in the Fausse Pointe Field, St. Martin and Iberia Parishes, Louisiana in March 1996. Bellwether believes its cash flow provided by operating activities and the proceeds from credit facilities will be sufficient to meet these capital commitments. The Company continues to seek acquisition opportunities and the consummation of such a transaction may directly impact anticipated capital expenditures. 11 BELLWETHER EXPLORATION COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Results of Operations (Three and six months ended December 31, 1995 and 1994) The following table sets forth certain operating information of the Company for the periods presented:
Three Months Ended Six Months Ended December 31, December 31, --------------------------- ----------------------- Increase/ Increase/ 1995 1994 (Decrease) 1995 1994 (Decrease) ---- ---- ---------- ---- ---- ---------- Production: Oil and condensate (MBBLS)............ 98 36 172.2% 184 63 192.1% Natural gas (MMCF)... 1,230 498 147.0% 2,428 963 152.1% Average sales price: Oil and condensate (per BBL).......... $16.12 $15.76 2.3% $16.04 $15.90 .9% Natural gas (1) (per MCF).......... $ 1.85 $ 1.67 10.8% $ 1.72 $ 1.70 1.2% Average unit production cost per BOE (2)......... $ 4.45 $ 4.13 7.7% $ 4.16 $ 4.11 1.2% Gas plant operations: Average daily inlet volumes (MMCF)...... 61 84 (27.4%) 58 79 (26.6%) Average daily net production (MGALS).. 40 47 (14.9%) 36 49 (26.5%) Average NGL sales price (per gallon).. $ .29 $ .28 3.6% $ .28 $ .27 3.7% Gas gathering operations: Throughput (MMCF).... 372 376 (1.1%) 738 756 (2.4%)
- ------------------------------------------------------------------------------- (1) Average sales price for natural gas includes revenues received from the sale of natural gas liquids removed from the Company's gas production. (2) Costs incurred to operate and maintain wells and related equipment and facilities including ad valorem and severance taxes. 12 BELLWETHER EXPLORATION COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Revenues Oil and gas revenues for the three and six months ended December 31, 1995 were $3.9 million and $7.1 million, or 176% and 170% higher than oil and gas revenues of $1.4 million and $2.6 million for the same periods in 1994. The increase in oil revenues was attributable primarily to higher production as a result of the mergers of Odyssey in August 1994 and Hampton in March 1995 and an increase in prices. Gas revenues also increased as a result of production from the mergers and improved gas prices. Gas plant revenues of approximately $1.3 million and $2.4 million are reflected in the three and six months ended December 31, 1995 compared to $1.5 million and $3.0 million in the same periods of 1994. A decline in plant inlet volumes from the SACROC Unit, the principal source of gas supplied to the plant, partially offset by increased prices in 1995, was the primary cause of the decrease. Expenses Lease operating expenses for the three and six months ended December 31, 1995 totaled $1.3 million and $2.4 million or 174% and 167% over the $0.5 million and $0.9 million for the three and six months ended December 31, 1994. The increase is the result of the Odyssey and Hampton mergers. Lease operating expenses per barrel of oil equivalent were 8% and 1% higher in the three and six months ended December 31, 1995 when compared to the same period in 1994, due primarily to the effect of the mergers. Gas plant operating expenses approximated $0.7 million and $1.3 million in the three and six months ended December 31, 1995 as compared to $0.8 million and $1.6 million for the prior periods. The decline in plant inlet volumes from the SACROC Unit reduced the payments to producers supplying gas to the plant. Gas gathering expenses for the three and six months ended December 31, 1995 were $0.9 million and $1.7 million, or 8% and 7% more than the $0.8 million and $1.6 million reflected in the same periods in 1994. Depreciation, depletion and amortization of $2.0 million and $3.9 million for the three and six months ended December 31, 1995 reflects a 90% and 97% increase from $1.0 million and $2.0 million in the same periods in 1994, due primarily to an increase in oil and gas production and an increased depletion rate per barrel of oil equivalent as a result of the mergers. General and administrative expenses totaled $0.9 million and $1.6 million in the three and six months ended December 31, 1995 compared to $0.6 million and $1.1 million in the same periods in 1994. The increase was due primarily to increased management fees and overhead incurred as a result of the mergers. Other expense in the three and six months ended December 31, 1995 includes the $128,000 costs incurred in connection with the private placement of senior debt which was terminated. 13 BELLWETHER EXPLORATION COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Interest expense increased to $0.5 million and $1.0 million for the three and six months ended December 31, 1995 from $0.2 and $0.4 million in the same periods of 1994. The increase in interest expense is the result of increased borrowings due to the Hampton merger. Income Taxes Provision for income taxes includes federal tax of $20,000 and $112,000 in state income taxes. State income taxes primarily relate to a tax paying subsidiary whose net operating loss carryforward was fully utilized for the year ended June 30, 1995. Net Income Net income (loss) of approximately $(12,000) and $1,000 was generated for the three and six months ended December 31, 1995, as compared to net income of $224,000 and $602,000 in the same periods of 1994. 14 BELLWETHER EXPLORATION COMPANY PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERES A Proxy Statement was sent to all shareholders of record as of October 9, 1995 for the following matters which were voted on at the annual meeting of shareholders held on November 17, 1995: 1. J. P. Bryan, J. Darby Sere', A. K. McLanahan, Vincent H. Buckley and Haibib Kairouz were elected as directors with 6,559,468 shares voting in favor, 157,055 shares abstaining and no shares voting against. Dr. Jack Birks and C. Barton Groves were elected as directors with 6,574,354 shares voting in favor, 142,159 shares abstaining and no shares voting against. 2. The shareholders approved the proposal to ratify the selection of Deloitte and Touche LLP as the Company's independent auditors for the fiscal year ending June 30, 1996 with a total of 6,686,529 shares voting in favor, a total of 18,831 shares voting against and a total of 11,163 shares abstaining. No other matters were brought up at the meeting. A copy of the Proxy Statement was filed with the Securities and Exchange Commission on October 16, 1995 and is incorporated herein by reference. ITEM 5. OTHER INFORMATION None. 15 BELLWETHER EXPLORATION COMPANY ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits The following exhibits are filed with this Form 10-Q and they are identified by the number indicated. 10.1 Loan agreement with bank, dated November 15, 1995, amending previous loan agreements 10.2 Amendment, dated July 1, 1995, to Snyder Gas Plant joint venture agreement 10.3 Amendment, dated July 1, 1995, to NGL - Torch Gas Plant joint venture agreement 27 Financial Data Schedule b. Reports on Form 8-K. None. 16 SIGNATURES 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, thereunto duly authorized. BELLWETHER EXPLORATION COMPANY ------------------------------ (Registrant) Date: February 13, 1996 By: /s/ J. Darby Sere' -------------------------------------- J. Darby Sere' President and Chief Operating Officer Date: February 13, 1996 By: /s/ Michael B. Smith -------------------------------------- Michael B. Smith Vice President and Chief Financial Officer 17 EX-10.1 2 LOAN AGREEMENT 11/15/95 EXHIBIT 10.1 SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT This Second Amendment to Third Amended and Restated Credit Agreement (this "AMENDMENT") is dated as of November 15, 1995, by and between FIRST INTERSTATE BANK OF TEXAS, N. A., a national banking association ("LENDER"), and BELLWETHER EXPLORATION COMPANY, a Delaware corporation ("BORROWER"). WHEREAS, Lender and Borrower entered into that certain Third Amended and Restated Credit Agreement dated as of February 28, 1995 (the "AGREEMENT"), in order to restructure, modify, increase, extend and renew the obligations under that certain Second Amended and Restated Credit Agreement dated as of March 14, 1994; and WHEREAS, Lender, Borrower and certain pledgors of collateral securing the obligations evidenced by the Agreement entered into that certain First Amendment to Third Amended and Restated Credit Agreement dated June 1, 1995, to (i) amend the Security Documents (as defined in the Agreement) effective as of February 28, 1995 to correct certain inadvertent errors; and (ii) amend the Agreement effective as of June 30, 1995 to reflect the results of a Borrowing Base redetermination, modify the maturity dates of the credit facilities evidenced thereby and amend the covenant contained therein regarding the Borrower's consolidated tangible net worth; and WHEREAS, Hampton Resources Corporation, a Delaware corporation ("HAMPTON") entered into an Agreement and Plan of Merger dated June 30, 1995 with Spectrum 7 Energy Corporation, a Colorado corporation, Cross Bell Royalty Company, a Texas corporation ("CROSS BELL") and Hampton Operating Company, a Texas corporation, pursuant to which Spectrum 7 Energy Corporation, Cross Bell and Hampton Operating Company were merged into Hampton; and WHEREAS, Borrower entered into (i) an Agreement and Plan of Merger dated June 30, 1995 with Hampton pursuant to which Hampton was merged into Borrower, and (ii) an Agreement and Plan of Merger dated June 30, 1995 with Bellwether Colorado pursuant to which Bellwether Colorado was merged into Borrower; and WHEREAS, each of Bellwether Colorado, Cross Bell, and Hampton executed (i) a Guaranty Agreement dated February 28, 1995, in favor of Lender, pursuant to which each of said parties guaranteed the full and punctual payment and discharge of all obligations evidenced by the Agreement; and (ii) one or more Security Documents (as defined in the Agreement) pledging certain property as security for said obligations; and WHEREAS, on account of the merger transactions mentioned above, the obligations and indebtedness evidenced by said Guaranty Agreements and Security Documents are now the direct obligations and indebtedness of Borrower, and WHEREAS, Lender and Borrower desire to further amend the Agreement effective as of November 15, 1995 to (i) reflect the results of a Borrowing Base redetermination, (ii) further extend the maturity dates of the credit facilities evidenced thereby, and (iii) effectuate certain other technical amendments; NOW THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions Section 1.01 Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby. All references to the "AGREEMENT" below shall, unless the context otherwise requires, be references to the Agreement as heretofore amended and as amended hereby. ARTICLE II Amendments to the Agreement Section 2.01 Effective Date of Amendments to the Agreement. The amendments to the Agreement set forth in this Article II shall be effective as of November 15, 1995. Section 2.02 Amendment to Exhibit B. Exhibit B to the Agreement is amended and restated in its entirety as set forth in Annex 1 hereto. Section 2.03 Amendment to Exhibit C. Exhibit C to the Agreement is amended and restated in its entirety as set forth in Annex 2 hereto. Section 2.04 Amendment to Section 1.1. The definition "Guarantors" set forth in Section 1.1 of the Agreement is hereby deleted and the following definition of said term is hereby substituted in its place. "GUARANTORS" means Associated, Gas Operations, Odyssey and West Monroe, and "GUARANTOR" means any one of them. Section 2.05 Amendment to Section 2.4. Section 2.4 of the Agreement shall be amended and restated in its entirety as set forth below: Section 2.4. NOTES; PRINCIPAL REDUCTIONS. The obligation of Borrower to repay the Facility A Advances shall be evidenced by the Facility A Note, and the obligation of Borrower to repay the Facility B Advances shall be evidenced by the Facility B Note. The unpaid principal amounts of the Notes from time to time 2 outstanding shall bear interest prior to maturity at a varying rate per annum equal from day to day to the lesser of: (a) the Maximum Rate; or (b) the Applicable Rate, each such change in the rate of interest charged hereunder to become effective, without notice to Borrower, on the effective date of each change in the Applicable Rate or the Maximum Rate, as the case may be; provided, however, if at any time the rate of interest specified in clause (b) preceding shall exceed the Maximum Rate, thereby causing the interest hereunder to be limited to the Maximum Rate, then any subsequent reduction in the Applicable Rate shall not reduce the rate of interest due thereon below the Maximum Rate until the aggregate amount of interest accrued hereunder equals the aggregate amount of interest which would have accrued if the interest rate specified in clause (b) preceding had at all times been in effect. So long as no Event of Default shall have occurred, on the last day of each December, March, June, and September commencing December 31, 1995, Borrower shall make a principal payment on the Facility A Note in the amount necessary to reduce the unpaid principal balance of the Facility A Note to an amount equal the lesser of the Facility A Borrowing Base (set forth in Exhibit B, Part I) as such Facility A Borrowing Base will be reduced on the first day of the following month, or the Facility A Commitment, and Borrower shall make a principal payment on the Facility B Note in the amount necessary to reduce the unpaid principal balance of the Facility B Note to an amount equal to the lesser of the Facility B Borrowing Base (set forth in Exhibit C, Part I) as such Facility B Borrowing Base will be reduced on the first day of the following month, or the Facility B Commitment. Upon the occurrence of an Event of Default, and on the last day of each calendar month thereafter, Borrower shall, make a principal payment on the Facility A Note in the amount necessary to reduce the unpaid principal balance of the Facility A Note to an amount equal the lesser of the Facility A Borrowing Base (set forth in Exhibit B, Part II) as such Facility A Borrowing Base will be reduced on the first day of the following month or the Facility A Commitment, and Borrower shall make a principal payment on the Facility B Note in the amount necessary to reduce the unpaid principal balance of the Facility B Note to an amount equal to the lesser of the Facility B Borrowing Base (set forth in Exhibit C, Part II) as such Facility B Borrowing Base will be reduced on the first day of the following month or the Facility B Commitment. So long as no Event of Default shall have occurred, accrued and unpaid interest on the unpaid principal balance of each of the Notes shall be due and payable on the last day of each December, March, June and September commencing December 31, 1995. All accrued and unpaid interest on the principal balance of each of the Notes shall be due and payable upon the occurrence of an 3 Event of Default and on the last day of each calendar month thereafter. Final payments in the amount of all remaining principal and accrued and unpaid interest, if any, under the Notes shall be due and payable on the Applicable Maturity Date. All past due principal and interest under the Notes shall bear interest at the Default Rate. Nothing in this Section shall be deemed to alter or affect the rights of Lender: (i) to require principal reductions or additional collateral pursuant to subsections , , and as to the Facility A Note, or subsections and as to the Facility B Note, or (ii) to accelerate the payment of either or both of the Notes or exercise any of its other remedies under the Loan Documents upon the occurrence of an Event of Default. Section 2.06 Arbitration Program. Article 10 of the Agreement shall be deleted in its entirety and the following language shall be substituted therefor: "ARTICLE 10 "Section 10.1 Agreement for Binding Arbitration. The parties agree to be bound by the terms and provisions of the current Arbitration Program of First Interstate Bank of Texas, N. A., which is incorporated by reference herein and is acknowledged as received by the parties, pursuant to which any and all disputes shall be resolved by mandatory binding arbitration upon the request of either party." The definition of "ARBITRATION PROGRAM" in the Agreement shall be deleted in its entirety and the following language shall be substituted therefor: "ARBITRATION PROGRAM" means the current Arbitration Program published by First Interstate Bank of Texas, N. A. attached hereto as Exhibit "K" hereto, which is incorporated by reference herein and is acknowledged as received by the parties, pursuant to which any and all disputes shall be resolved by mandatory binding arbitration upon the request of either party as the same may be from time to time modified, amended or supplemented; provided, however, that Lender shall provide prior written notice of any such amendment, modification or supplement to Borrower. There shall be added an Exhibit K to the Agreement with such Exhibit K to read as set forth in Annex 3 hereto. Section 2.07 Maturity Dates. The definition of "APPLICABLE MATURITY DATE" in the Agreement shall be deleted in its entirety and the following language shall be substituted therefor: "APPLICABLE MATURITY DATE" means: (i) with respect to the Facility A Note or a Facility A Advance, January 31, 2001, or such earlier date on which the 4 obligation of Lender to make Facility A Advances terminates and the Facility A Obligations are due and payable as provided herein (the "FACILITY A MATURITY DATE"), and (ii) with respect to the Facility B Note or a Facility B Advance, January 31, 2001, or such earlier date on which the Facility B Obligations are due and payable as provided herein (the "FACILITY B MATURITY DATE"). Section 2.08 Restatement of Indemnification and Waiver Provisions. Sections 11.2 and 11.3 are amended and restated in their entirety as set forth below in order to make them more conspicuous. Section 11.2 INDEMNIFICATION. BORROWER HEREBY INDEMNIFIES LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO: (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS; (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS; (C) ANY BREACH BY BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS; (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS SUBSTANCE LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY RELATED PERSON; (E) THE FAILURE OF TITLE TO ALL OR PART OF THE MORTGAGED PROPERTIES OR THE FACILITY B COLLATERAL OR THE FAILURE OR INABILITY OF BORROWER, FOR ANY REASON, TO CONVEY THE RIGHTS, TITLES, AND INTERESTS WHICH ANY SECURITY DOCUMENT PURPORTS TO MORTGAGE, CONVEY, GRANT, OR ASSIGN; OR (F) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING 5 FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE PERSON TO BE INDEMNIFIED. THE OBLIGATIONS OF BORROWER UNDER THIS SECTION SHALL SURVIVE THE REPAYMENT OF THE NOTES. SECTION 11.3 LIMITATION OF LIABILITY . NEITHER LENDER NOR ANY AFFILIATE, OFFICER, DIRECTOR, EMPLOYEE, ATTORNEY, OR AGENT OF LENDER SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND BORROWER HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE ANY OF THEM UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES SUFFERED OR INCURRED BY BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (EXCLUDING CLAIMS IN CONNECTION WITH OR ARISING OUT OF THE WILLFUL MISCONDUCT OF THE RELEVANT PERSON). BORROWER HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE LENDER OR ANY OF LENDER'S AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS FOR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (EXCLUDING CLAIMS IN CONNECTION WITH OR ARISING OUT OF THE WILLFUL MISCONDUCT OF THE RELEVANT PERSON) IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. ARTICLE III Ratifications, Representations and Warranties Section 3.01 Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. Borrower and Lender agree that the Agreement and other Loan Documents as amended hereby shall continue to be legal, valid, binding, and enforceable in accordance with its terms. Section 3.02. Representations and Warranties. Borrower hereby represents and warrants to Lender that (i) the execution, delivery, and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite action on the their part of Borrower and Guarantors and will not violate the articles of incorporation or bylaws of Borrower or Guarantors, (ii) the representations and warranties 6 contained in the Agreement and Security Documents, as amended hereby, and any other Loan Document are true and correct on and as of the date hereof as though made on and as of the date hereof, (iii) no Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse or time or both would be an Event of Default, and (iv) Borrower and Guarantors are in full compliance with all covenants and agreements contained in the Loan Documents as amended hereby. ARTICLE IV Conditions Precedent 4.01 Conditions Precedent. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent: (a) Lender shall have received all of the following, each dated (unless otherwise indicated) the date of this Modification Agreement, in form and substance satisfactory to Lender: (1) Incumbency. A certificate of incumbency of all officers of Borrower and Guarantors who will be authorized to execute or attest this Modification Agreement on behalf of Borrower or Guarantors, executed by the President or any Vice President and by the Secretary or Assistant Secretary of Borrower and each of the Guarantors dated as of the date hereof; (2) Resolutions. Copy of resolutions for Borrower and Guarantors authorizing the transactions contemplated hereby, duly adopted by the Boards of Directors of each of Borrower and Guarantors, accompanied by a certificate of the Secretary or Assistant Secretary of each of Borrower and Guarantors, dated as of the date hereof, to the effect that such copy is a true and correct copy of resolutions duly adopted at a meeting of, or by the unanimous written consent of, the Boards of Directors of each of Borrower and Guarantors, and that such resolutions have not been amended, modified, or revoked in any respect and are in full force and effect on the date hereof; (b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof; (c) No Event of Default shall have occurred and be continuing and no event or condition shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default; and 7 (d) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments, and other legal matters incident thereto shall be satisfactory to Lender. (e) Lender shall have received, on or before the date this agreement is fully executed, a fee in the amount of $7,748.34 in fully transferable and available funds. ARTICLE V Modification and Reaffirmation of Guaranty Agreements and Security Documents Section 5.01. Modification and Reaffirmation of Guaranty Agreements and Security Documents. By its execution of this Agreement, Borrower hereby reaffirms its obligations under all Guaranty Agreements and Security Documents previously executed and delivered by Bellwether Colorado, Cross Bell or Hampton. In particular, Borrower acknowledges and agrees that it will be and become the primary obligor under each of said instruments. Each Guaranty Agreement and Security Document is amended to reflect that the obligations guaranteed or secured thereby are the Obligations as modified in this Amendment. Section 5.02. Further Assurances. Contemporaneously with the execution of this Amendment, Borrower will execute and deliver to Lender amendments to all financing statements executed by Bellwether Colorado, Cross Bell or Hampton in favor of Lender. Borrower will also execute and deliver any other instruments that may be requested by Lender to effectuate the purposes of this Amendment. ARTICLE VI Miscellaneous Section 6.01. Expenses of Lender. As provided in the Agreement, Borrower agrees to pay on demand all costs and expenses incurred by Lender in connection with the preparation, negotiation, and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the costs and fees of Lender's legal counsel, and all costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other Loan Document, including without limitation the costs and fees of Lender's legal counsel. Section 6.02. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the reminder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 8 Section 6.03 Applicable Law. This Amendment and all other Loan Documents executed pursuant hereto shall be deemed to have been made and to be performable in Houston, Harris County, Texas and shall be governed by and construed in accordance with the laws of the state of Texas. Section 6.04 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender, Borrower and Guarantors, their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender. Section 6.05 Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Section 6.06 Effect of Waiver. No consent or waiver, express or implied by Lender to or for any breach of or deviation from any covenant, condition or duty by Borrower or any of the Guarantors shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. Section 6.07 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment, Section 6.08 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENT EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO, THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. 9 IN WITNESS WHEREOF, Lender and Borrower have executed this Amendment as of the date first above written. BORROWER: BELLWETHER EXPLORATION COMPANY By: /s/ J. Darby Sere ----------------------------- J. Darby Sere President and Chief Executive Officer FIRST INTERSTATE BANK OF TEXAS, N.A. By: /s/ Kimberly Yates ------------------------------ Name: Kimberly Yates Title: Banking Officer 10 The undersigned Guarantors hereby consent and agree to this Amendment and the transactions contemplated hereby and agree that their Guaranty Agreements and the Security Documents signed by each of them shall remain in full force and effect and shall continue to be the legal, valid and binding obligations of each Guarantor enforceable against each Guarantor in accordance with the terms thereof. Guarantors agree to be bound by the terms and provisions of the current Arbitration Program of First Interstate Bank of Texas, N. A., which is incorporated by reference herein and is acknowledged as received by each of the Guarantors, pursuant to which any and all disputes shall be resolved by mandatory binding arbitration upon the request of any party. THIS AMENDMENT, THE GUARANTY AGREEMENTS AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. GUARANTORS: ASSOCIATED GAS RESOURCES, INC., a Texas corporation By: /s/ J. Darby Sere ------------------------------ J. Darby Sere President GAS OPERATIONS, INC., a Louisiana corporation By: /s/ J. Darby Sere ------------------------------- J. Darby Sere President 11 ODYSSEY PETROLEUM COMPANY, a Delaware corporation By: /s/ J.Darby Sere -------------------------------- J. Darby Sere Vice President WEST MONROE GAS GATHERING CORPORATION By: /s/ J. Darby Sere -------------------------------- J. Darby Sere President 12 ANNEX 1 FACILITY A BORROWING BASE EXHIBIT "B"
EXHIBIT B - PART I FACILITY A BORROWING BASE PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== $19,150,000.00 November 15, 1995 to December 31, 1995 18,322,000.00 January 1, 1996 to March 31, 1996 17,494,000.00 April 1, 1996 to June 30, 1996 16,306,000.00 July 1, 1996 to September 30, 1996 15,118,000.00 October 1, 1996 to December 31, 1996 13,930,000.00 January 1, 1997 to March 31, 1997 12,891,040.00 April 1, 1997 to June 30, 1997 11,852,080.00 July 1, 1997 to September 30, 1997 10,813,120.00 October 1, 1997 to December 31, 1997 9,774,160.00 January 1, 1998 to March 31, 1998 8,889,100.00 April 1, 1998 to June 30, 1998 8,004,040.00 July 1, 1998 to September 30, 1998 7,118,980.00 October 1, 1998 to December 31, 1998 6,233,920.00 January 1, 1999 to March 31, 1999 5,403,220.00 April 1, 1999 to June 30, 1999 4,572,520.00 July 1, 1999 to September 30, 1999 3,741,820.00 October 1, 1999 to December 31, 1999 2,911,120.00 January 1, 2000 to March 31, 2000 2,240,620.00 April 1, 2000 to June 30, 2000
Exhibit B page 1
EXHIBIT B - PART I FACILITY A BORROWING BASE PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== 1,570,120.00 July 1, 2000 to September 30, 2000 899,620.00 October 1, 2000 to December 31, 2000 229,120.00 January 1, 2001 to January 30, 2001 ========================================================
Exhibit B page 2
EXHIBIT B - PART II FACILITY A BORROWING BASE AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== $19,150,000.00 November 15, 1995 to November 30, 1995 18,736,000.00 December 1, 1995 to December 31, 1995 18,322,000.00 January 1, 1996 to January 31, 1996 18,046,000.00 February 1, 1996 to February 29, 1996 17,770,000.00 March 1, 1996 to March 31, 1996 17,494,000.00 April 1, 1996 to April 30, 1996 17,098,000.00 May 1, 1996 to May 31, 1996 16,702,000.00 June 1, 1996 to June 30, 1996 16,306,000.00 July 1, 1996 to July 31, 1996 15,910,000.00 August 1, 1996 to August 31, 1996 15,514,000.00 September 1, 1996 to September 30, 1996 15,118,000.00 October 1, 1996 to October 31, 1996 14,722,000.00 November 1, 1996 to November 30, 1996 14,326,000.00 December 1, 1996 to December 31, 1996 13,930,000.00 January 1, 1997 to January 31, 1997 13,583,680.00 February 1, 1997 to February 28, 1997 13,237,360.00 March 1, 1997 to March 31, 1997 12,891,040.00 April 1, 1997 to April 30, 1997 12,544,720.00 May 1, 1997 to May 31, 1997 12,198,400.00 June 1, 1997 to June 30, 1997 11,852,080.00 July 1, 1997 to July 31, 1997 11,505,760.00 August 1, 1997 to August 31, 1997
Exhibit B page 3
EXHIBIT B - PART II FACILITY A BORROWING BASE AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== 11,159,440.00 September 1, 1997 to September 30, 1997 10,813,120.00 October 1, 1997 to October 31, 1997 10,466,800.00 November 1, 1997 to November 30, 1997 10,120,480.00 December 1, 1997 to December 31, 1997 9,774,160.00 January 1, 1998 to January 31, 1998 9,479,140.00 February 1, 1998 to February 28, 1998 9,184,120.00 March 1, 1998 to March 31, 1998 8,889,100.00 April 1, 1998 to April 30, 1998 8,594,080.00 May 1, 1998 to May 31, 1998 8,299,060.00 June 1, 1998 to June 30, 1998 8,004,040.00 July 1, 1998 to July 31, 1998 7,709,020.00 August 1, 1998 to August 31, 1998 7,414,000.00 September 1, 1998 to September 30, 1998 7,118,980.00 October 1, 1998 to October 31, 1998 6,823,960.00 November 1, 1998 to November 30, 1998 6,528,940.00 December 1, 1998 to December 31, 1998 6,233,920.00 January 1, 1999 to January 31, 1999 5,957,020.00 February 1, 1999 to February 28, 1999 5,680,120.00 March 1, 1999 to March 31, 1999 5,403,220.00 April 1, 1999 to April 30, 1999 5,126,320.00 May 1, 1999 to May 31, 1999 4,849,420.00 June 1, 1999 to June 30, 1999
Exhibit B page 4
EXHIBIT B - PART II FACILITY A BORROWING BASE AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== 4,572,520.00 July 1, 1999 to July 31, 1999 4,295,620.00 August 1, 1999 to August 31, 1999 4,018,720.00 September 1, 1999 to September 30, 1999 3,741,820.00 October 1, 1999 to October 31, 1999 3,464,920.00 November 1, 1999 to November 30, 1999 3,188,020.00 December 1, 1999 to December 31, 1999 2,911,120.00 January 1, 2000 to January 31, 2000 2,687,620.00 February 1, 2000 to February 29, 2000 2,464,120.00 March 1, 2000 to March 31, 2000 2,240,620.00 April 1, 2000 to April 30, 2000 2,017,120.00 May 1, 2000 to May 31, 2000 1,793,620.00 June 1, 2000 to June 30, 2000 1,570,120.00 July 1, 2000 to July 31, 2000 1,346,620.00 August 1, 2000 to August 31, 2000 1,123,120.00 September 1, 2000 to September 30, 2000 899,620.00 October 1, 2000 to October 31, 2000 676,120.00 November 1, 2000 to November 30, 2000 452,620.00 December 1, 2000 to December 31, 2000 229,120.00 January 1, 2001 to January 30, 2001 ========================================================
Exhibit B page 5 ANNEX 2 EXHIBIT "C" FACILITY B BORROWING BASE
EXHIBIT C - PART I FACILITY B BORROWING BASE PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== $7,450,000.00 November 15, 1995 to December 31, 1995 7,128,000.00 January 1, 1996 to March 31, 1996 6,806,000.00 April 1, 1996 to June 30, 1996 6,344,000.00 July 1, 1996 to September 30, 1996 5,882,000.00 October 1, 1996 to December 31, 1996 5,420,000.00 January 1, 1997 to March 31, 1997 5,015,960.00 April 1, 1997 to June 30, 1997 4,611,920.00 July 1, 1997 to September 30, 1997 4,207,880.00 October 1, 1997 to December 31, 1997 3,803,840.00 January 1, 1998 to March 31, 1998 3,459,650.00 April 1, 1998 to June 30, 1998 3,115,460.00 July 1, 1998 to September 30, 1998 2,771,270.00 October 1, 1998 to December 31, 1998 2,427,080.00 January 1, 1999 to March 31, 1999 2,104,030.00 April 1, 1999 to June 30, 1999 1,780,980.00 July 1, 1999 to September 30, 1999 1,457,930.00 October 1, 1999 to December 31, 1999 1,134,880.00 January 1, 2000 to March 31, 2000
Exhibit C page 1
EXHIBIT C - PART I FACILITY B BORROWING BASE PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== 874,130.00 April 1, 2000 to June 30, 2000 613,380.00 July 1, 2000 to September 30, 2000 352,630.00 October 1, 2000 to December 31, 2000 91,880.00 January 1, 2001 to January 30, 2001 ========================================================
Exhibit C page 2
EXHIBIT C - PART II FACILITY B BORROWING BASE AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== $7,450,000.00 November 15, 1995 to November 30, 1995 7,289,000.00 December 1, 1995 to December 31, 1995 7,128,000.00 January 1, 1996 to January 31, 1996 7,020,666.67 February 1, 1996 to February 29, 1996 6,913,333.33 March 1, 1996 to March 31, 1996 6,806,000.00 April 1, 1996 to April 30, 1996 6,652,000.00 May 1, 1996 to May 31, 1996 6,498,000.00 June 1, 1996 to June 30, 1996 6,344,000.00 July 1, 1996 to July 31, 1996 6,190,000.00 August 1, 1996 to August 31, 1996 6,036,000.00 September 1, 1996 to September 30, 1996 5,882,000.00 October 1, 1996 to October 31, 1996 5,728,000.00 November 1, 1996 to November 30, 1996 5,574,000.00 December 1, 1996 to December 31, 1996 5,420,000.00 January 1, 1997 to January 31, 1997 5,285,320.00 February 1, 1997 to February 28, 1997 5,150,640.00 March 1, 1997 to March 31, 1997 5,015,960.00 April 1, 1997 to April 30, 1997 4,881,280.00 May 1, 1997 to May 31, 1997 4,746,600.00 June 1, 1997 to June 30, 1997 4,611,920.00 July 1, 1997 to July 31, 1997 4,477,240.00 August 1, 1997 to August 31, 1997
Exhibit C page 3
EXHIBIT C - PART II FACILITY B BORROWING BASE AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT - -------------------------------------------------------- Borrowing Base Period ======================================================== 4,342,560.00 September 1, 1997 to September 30, 1997 4,207,880.00 October 1, 1997 to October 31, 1997 4,073,200.00 November 1, 1997 to November 30, 1997 3,938,520.00 December 1, 1997 to December 31, 1997 3,803,840.00 January 1, 1998 to January 31, 1998 3,689,110.00 February 1, 1998 to February 28, 1998 3,574,380.00 March 1, 1998 to March 31, 1998 3,459,650.00 April 1, 1998 to April 30, 1998 3,344,920.00 May 1, 1998 to May 31, 1998 3,230,190.00 June 1, 1998 to June 30, 1998 3,115,460.00 July 1, 1998 to July 31, 1998 3,000,730.00 August 1, 1998 to August 31, 1998 2,886,000.00 September 1, 1998 to September 30, 1998 2,771,270.00 October 1, 1998 to October 31, 1998 2,656,540.00 November 1, 1998 to November 30, 1998 2,541,810.00 December 1, 1998 to December 31, 1998 2,427,080.00 January 1, 1999 to January 31, 1999 2,319,396.67 February 1, 1999 to February 28, 1999 2,211,713.33 March 1, 1999 to March 31, 1999 2,104,030.00 April 1, 1999 to April 30, 1999 1,996,346.67 May 1, 1999 to May 31, 1999 1,888,663.33 June 1, 1999 to June 30, 1999 1,780,980.00 July 1, 1999 to July 31, 1999 1,673,296.67 August 1, 1999 to August 31, 1999 1,565,613.33 September 1, 1999 to September 30, 1999 1,457,930.00 October 1, 1999 to October 31, 1999 1,350,246.67 November 1, 1999 to November 30, 1999 1,242,563.33 December 1, 1999 to December 31, 1999 1,134,880.00 January 1, 2000 to January 31, 2000 1,047,963.33 February 1, 2000 to February 29, 2000 961,046.67 March 1, 2000 to March 31, 2000 874,130.00 April 1, 2000 to April 30, 2000 787,213.33 May 1, 2000 to May 31, 2000 700,296.67 June 1, 2000 to June 30, 2000 613,380.00 July 1, 2000 to July 31, 2000 526,463.33 August 1, 2000 to August 31, 2000 439,546.67 September 1, 2000 to September 30, 2000 352,630.00 October 1, 2000 to October 31, 2000 265,713.33 November 1, 2000 to November 30, 2000 178,796.67 December 1, 2000 to December 31, 2000 91,880.00 January 1, 2001 to January 30, 2001 ========================================================
Exhibit C page 4 ANNEX 3 ARBITRATION PROGRAM EXHIBIT "K" [LOGO OF FIRST INTERSTATE BANK APPEARS HERE] ARBITRATION PROGRAM (a) Binding Arbitration. Upon the demand of any party, whether made before or after the institution of any judicial proceeding, any Dispute (as defined below) shall be resolved by binding arbitration in accordance with the terms of this Arbitration Program. A "Dispute" shall include any action, dispute, claim, or controversy of any kind, whether in contract or in tort, statutory or common law, legal or equitable, or otherwise, now existing or hereafter arising between the parties in any way arising out of, pertaining to or in connection with (1) any agreement, document or instrument to which this Arbitration Program is attached or in which it is referred to or any related agreements, documents, or instruments (the "Documents"), (2) all past, present, or future loans, notes, instruments, drafts, credits, accounts, deposit accounts, safe deposit boxes, safekeeping agreements, guarantees, letters of credit, goods or services, or other transactions, contracts or agreements of any kind whatsoever, (3) any past, present or future incidents, omissions, acts, errors, practices, or occurrences causing injury to either party whereby the other party or its agents, employees or representatives may be liable, in whole or in part, or (4) any other aspect of the past, present, or future relationships of the parties including any agency, independent contractor or employment relationship but excluding claims for workers' compensation and unemployment benefits ("Relationship"). Any party to this Arbitration Program may by summary proceedings bring any action in court to compel arbitration of any Dispute. Any party who fails or refuses to submit to binding arbitration following a lawful demand by the opposing party shall bear all costs and expenses incurred by the opposing party in compelling arbitration of any Dispute. The parties agree that by engaging in activities with or involving each other as described above, they are participating in transactions involving interstate commerce. THE PARTIES UNDERSTAND THAT PURSUANT TO THIS ARBITRATION PROGRAM, DISPUTES SUBMITTED TO ARBITRATION WILL NOT BE DECIDED THROUGH LITIGATION IN FEDERAL OR STATE COURTS BEFORE A JUDGE OR JURY. (b) Governing Rules. All Disputes between the parties submitted to arbitration shall be resolved by binding arbitration administered by the American Arbitration Association (the "AAA") in accordance with the Commercial Arbitration Rules of the AAA, the Federal Arbitration Act (Title 9 of the United States Code) and to the extent the foregoing are inapplicable, unenforceable or invalid, the laws of the State of Texas. In the event of any inconsistency between this Arbitration Program and such rules and statutes, this Arbitration Program shall control. Judgment upon any award rendered hereunder may be entered in any court having jurisdiction; provided, however, that nothing contained herein shall be deemed to be a waiver by any party that's a bank of the protections afforded to it under 12 U.S.C. (S) 91 or Texas Banking Code art. 342-609. (c) No Waiver, Preservation or Remedies, Multiple Parties. No provision of, nor the exercise of any rights under, this Arbitration Program shall limit the right of any party, during any Dispute, to seek, use, and employ ancillary or preliminary remedies, judicial or otherwise, for the purposes of realizing upon, preserving, protecting, foreclosing or proceeding under forcible entry and detainer for possession of any real or personal property, and any such action shall not be deemed an election of remedies. Such rights shall include without limitation, rights and remedies relating to (1) foreclosing against any real or personal property collateral or other security, (2) exercising self-help remedies including setoff rights or (3) obtaining provisional or ancillary remedies such as injunctive relief, sequestration, attachment, garnishment, or the appointment of a receiver from a court having jurisdiction. Such rights can be exercised at any time except to the extent such action is contrary to a final award or decision in any arbitration proceeding. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff, to submit the Dispute to arbitration, nor render inapplicable the compulsory arbitration provisions hereof. In Disputes involving indebtedness or other monetary obligations, each party agrees that the other party may proceed against all liable persons, jointly or severally, or against one or more of them, less than all, without impairing 1 rights against other liable persons. Nor shall a party be required to join the principal obligor or any other liable persons, such as sureties or guarantors, in any proceeding against a particular person. A party may release or settle with one or more liable persons without releasing or impairing rights to proceed against any persons not so released. (d) Arbitrator Powers and Qualifications; Awards. Arbitrators are empowered to resolve Disputes by summary rulings. Arbitrators shall resolve all Disputes in accordance with the applicable substantive law. Any arbitrator selected shall be required to be a practicing attorney licensed to practice law in the State of Texas and shall be required to be experienced and knowledgeable in the substantive laws applicable to the subject matter of the Dispute. All statutes of limitation applicable to any Dispute shall apply to any proceeding in accordance with this Arbitration Program. With respect to a Dispute in which the claims or amounts in controversy do not exceed $1,000,000, a single arbitrator shall be chosen and shall resolve the Dispute by rendering an award not to exceed $1,000,000, including all damages of any kind whatsoever, including costs, fees and expenses. A Dispute involving claims or amounts in controversy exceeding $1,000,000, shall be decided by a majority vote of a panel of three arbitrators (an "Arbitration Panel"), the determination of any two of the three arbitrators constituting the determination of the Arbitration Panel, provided, however, that all three Arbitrators on the Arbitration Panel must actively participate in all hearings and deliberations. Arbitrators, including any Arbitration Panel, may grant any remedy or relief deemed just and equitable and within the scope of this Arbitration Program and may also grant such ancillary relief as is necessary to make effective any award. Arbitrators shall be empowered to impose sanctions and to take such other actions as they deem necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure and applicable law. Arbitrators and Arbitration Panels shall be required to make specific, written findings of fact and conclusions of law. The determination of an Arbitrator or Arbitration Panel shall be binding on all parties and shall not be subject to further review or appeal except as otherwise allowed by applicable law. (e) Miscellaneous. To the maximum extent practicable, the AAA, the Arbitrator (or the Arbitration Panel, as appropriate) and the parties shall take any action necessary to require that an arbitration proceeding hereunder shall be concluded within 180 days of the filing of the Dispute with the AAA. Arbitration proceedings hereunder shall be conducted in the State of Texas at a location selected by the Administrator. With respect to any Dispute, each party agrees that all discovery activities shall be expressly limited to matters directly relevant to the Dispute and any Arbitrator, Arbitration Panel and the AAA shall be required to fully enforce this requirement. This Arbitration Program constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations, and other communications on dispute resolution. The provisions of this Arbitration Program shall survive any termination, amendment, or expiration of the Documents or the Relationship, unless the parties otherwise expressly agree in writing. To the extent permitted by applicable law, Arbitrators, including any Arbitration Panel shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, and arbitrators' fees) to the prevailing party. This Arbitration Program may be amended, changed, or modified only by the express provisions of a writing which specifically refers to this Arbitration Program and which is signed by all the parties hereto. If any term, covenant, condition or provision of this Arbitration Program is found to be unlawful, invalid or unenforceable, such defect shall not affect the legality, validity or enforceability of the remaining parts of this Arbitration Program, and all such remaining parts hereof shall be valid and enforceable and have full force and effect as if the illegal, invalid or unenforceable part had not been included. Each party agrees to keep all Disputes subject to arbitration proceedings strictly confidential, except for disclosures of information required in the ordinary course of business of the parties or by applicable law or regulation. Revision Date: 9/23/94 EX-10.2 3 AMD 7/1/95 SNYDER GAS PLANT EXHIBIT 10.2 SECOND AMENDMENT TO SYNDER GAS PLANT AMENDED JOINT VENTURE AGREEMENT This Amendment to Synder Gas Plant Joint Venture Agreement (the "Amendment"), is made and entered into as of July 1, 1995, to modify and amend the Amended Joint Venture Agreement dated July 29, 1993 (the "Joint Venture Agreement"), between BELLWETHER EXPLORATION COMPANY, a Colorado corporation ("Managing Venturer"), and NGL ASSOCIATES, a Texas general partnership ("NGL"), as amended by that certain Amendment dated as of March 14, 1994. W I T N E S S E T H: WHEREAS, the Managing Venturer and NGL desire to amend the Joint Venture Agreement in order to provide for a contingent venturer fee payable to NGL and to reallocate the pre-payout sharing ratio and depreciation; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Amendment to Article 2 of Joint Venture Agreement. Effective as of July 1, 1995, the definition of the terms "Pre-Payout Sharing Ratio" and "Venture Expenses" contained in Article 2 of the Joint Venture Agreement are hereby amended in their entirety to read as follows: "Pre-Payout Sharing Ratio" shall mean 100% to the Managing Venturer and 0% to NGL. "Venture Expenses" shall mean: (i) the actual verifiable cost and expenses of services from outside sources paid by the Managing Venturer for the benefit of the Venture in connection with matters of periodic tax reporting, monthly revenue, accounting and preparation of periodic financial statements that pertain to the business of the Venture, which charge to the Venture shall not exceed a maximum monthly charge of $3,675.00 per month; plus (ii) the actual verifiable cost of any additional non-recurring third party expenses (including but not limited to legal services and financial or tax audits); plus (iii) the Contingent Venturer Fee. Effective as of July 1, 1995, the definition "Contingent Venturer Fee" is hereby added to Article 2 of the Joint Venture Agreement: "Contingent Venturer Fee" shall have the meaning set forth in Section 7.4. 2. Amendment to Section 7.1.1 of the Joint Venture Agreement. A new sentence is hereby added to the end of Section 7.1.1 of the Joint Venture Agreement as follows: Provided, however, all deductions against income relating to depreciation or amortization of the Gas Plants attributable to the time period from inception to July 1, 1995 shall be allocated 90% to the Managing Venturer and 10% to NGL. 3. Amendment to Article 7 of the Joint Venture Agreement. The Joint Venture Agreement shall be amended to add a Section 7.4 thereto which shall read in its entirety as follows: Section 7.4 Contingent Venturer Fee. Effective as of July 1, 1995, on or before the 30th day of each month prior to Payout, Managing Venturer shall distribute to NGL a contingent venturer fee. Such fee shall equal 10% of the Distributable Funds for the prior month (plus or minus amounts, if any, attributable to post-period adjustments from prior months) ("Contingent Venturer Fee"). 5. Governing Law. THE TERMS AND PROVISIONS OF THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. 6. Binding Agreement; Ratification of Joint Venture Agreement. This Amendment shall be binding upon the successors and assigns of the parties hereto. Except as expressly modified hereby, the Joint Venture Agreement shall continue in full force and effect in accordance with its terms. EXECUTED as of the date first above written. NGL ASSOCIATES, a Texas general partnership By: /s/ Richard Bobigian ----------------------------------------- Name: Richard Bobigian --------------------------------------- Title: General Partner -------------------------------------- BELLWETHER EXPLORATION COMPANY, a Colorado corporation By: /s/ J. Darby Sere' ----------------------------------------- J. Darby Sere' President EX-10.3 4 AMD 7/1/95 TORCH GAS PLANT EXHIBIT 10.3 SECOND AMENDMENT TO NGL - TORCH GAS PLANT JOINT VENTURE AGREEMENT This Amendment to NGL - Torch Gas Plant Joint Venture Agreement (the "Amendment"), is made and entered into as of July 1, 1995, to modify and amend the Joint Venture Agreement dated July 15, 1993 (the "Joint Venture Agreement"), between ASSOCIATED GAS RESOURCES, INC., a Texas corporation ("Managing Venturer"), as successor-in-interest to Torch Energy Marketing, Inc., a Delaware corporation ("TEMI") and NGL ASSOCIATES, a Texas general partnership ("NGL"), as amended by that certain Amendment dated as of March 14, 1994. W I T N E S S E T H: WHEREAS, the Managing Venturer and NGL desire to amend the Joint Venture Agreement in order to provide for a contingent venturer fee payable to NGL and to reallocate the pre-payout sharing ratio and depreciation; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Amendment to Article 2 of Joint Venture Agreement. Effective as of July 1, 1995, the definition of the terms "Pre-Payout Sharing Ratio" and "Venture Expenses" contained in Article 2 of the Joint Venture Agreement are hereby amended in their entirety to read as follows: "Pre-Payout Sharing Ratio" shall mean 100% to the Managing Venturer and 0% to NGL. "Venture Expenses" shall mean: (i) the actual verifiable cost and expenses of services from outside sources paid by the Managing Venturer for the benefit of the Venture in connection with matters of periodic tax reporting, monthly revenue, accounting and preparation of periodic financial statements that pertain to the business of the Venture, which charge to the Venture shall not exceed a maximum monthly charge of $1,980.00 per month; plus (ii) the actual verifiable cost of any additional non-recurring third party expenses (including but not limited to legal services and financial or tax audits); plus (iii) the Contingent Venturer Fee. Effective as of July 1, 1995, the definition "Contingent Venturer Fee" is hereby added to Article 2 of the Joint Venture Agreement: "Contingent Venturer Fee" shall have the meaning set forth in Section 7.4. 2. Amendment to Section 7.1.1 of the Joint Venture Agreement. A new sentence is hereby added to the end of Section 7.1.1 of the Joint Venture Agreement as follows: Provided, however, all deductions against income relating to depreciation or amortization of the Gas Plants attributable to the time period from inception to July 1, 1995 shall be allocated 90% to the Managing Venturer and 10% to NGL. 3. Amendment to Article 7 of the Joint Venture Agreement. The Joint Venture Agreement shall be amended to add a Section 7.4 thereto which shall read in its entirety as follows: Section 7.4 Contingent Venturer Fee. Effective as of July 1, 1995, on or before the 30th day of each month prior to Payout, Managing Venturer shall distribute to NGL a contingent venturer fee. Such fee shall equal 10% of the Distributable Funds for the prior month (plus or minus amounts, if any, attributable to post-period adjustments from prior months) ("Contingent Venturer Fee"). 4. Governing Law. THE TERMS AND PROVISIONS OF THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. 5. Binding Agreement; Ratification of Joint Venture Agreement. This Amendment shall be binding upon the successors and assigns of the parties hereto. Except as expressly modified hereby, the Joint Venture Agreement shall continue in full force and effect in accordance with its terms. EXECUTED as of the date first above written. NGL ASSOCIATES, a Texas general partnership By: /s/ Richard Bobigian ---------------------------------- Name: Richard Bobigian -------------------------------- Title: GP ------------------------------- ASSOCIATED GAS RESOURCES, INC., a Texas corporation By: /s/ J. Darby Sere ---------------------------------- J. Darby Sere 2 EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 2,410 0 5,760 0 0 10,164 91,400 (23,157) 75,189 7,840 0 0 0 90 45,358 75,189 12,065 12,122 9,319 11,989 1,714 0 956 133 132 1 0 0 0 1 0 0
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