425 1 h87500e425.txt BELLWETHER EXPLORATION CO.FOR BARGO ENERGY CO. 1 Filed by Bellwether Exploration Company Pursuant to Rule 425 under the Securities Act of 1933 of the Securities Exchange Act of 1934 Subject Company: Bargo Energy Company File No. 333-54798 Bellwether Exploration Company issued the following press release on May 15, 2001. [BELLWETHER LOGO] [MISSION RESOURCES LOGO] NEWS RELEASE -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE CONTACT: MAY 15, 2001 LANCE L. WEAVER - DIRECTOR, INVESTOR RELATIONS AND FINANCIAL ANALYSIS weaverl@bellwetherexp.com (713)495-3061 BELLWETHER EXPLORATION REPORTS FINANCIAL RESULTS AND OPERATIONAL HIGHLIGHTS FOR FIRST QUARTER 2001 HOUSTON - Bellwether Exploration Company (NASDAQ: BELW) today announced the following financial and operating results for the first quarter ending March 31, 2001: CASH FLOW: Cash flow from operations, before changes in working capital, for the quarter totaled $17.3 million or $1.19 per share (fully diluted), up 32% over first quarter 2000 cash flow of $13.1 million or $0.93 per share. NET INCOME: Income for the quarter, stated before the effect of a non-cash charge relating to the adoption of SFAS 133, was $6.4 million or $0.44 per share. Reported net income, stated after the effect of a non-cash charge relating to the adoption of SFAS 133, was $3.6 million or $0.25 per share for the quarter. PRODUCTION AND REVENUE: The Company's production for the first quarter of 2001 averaged 5,478 barrels of oil per day ("Bopd") and 45.0 million cubic feet of gas per day ("MMcfpd"), or 12,974 barrels of oil equivalent per day ("Boepd"). Production volumes are down 15% as compared to the first quarter 2000 daily average due to the sale of several producing properties in late 2000. Improved oil and gas prices resulted in revenues of $33.8 million, up 34% from revenue of $25.2 million for the same period in 2000. EBITDA: Earnings before interest, taxes and depreciation, less other non-cash items ("EBITDA") for the first quarter of 2001, exclusive of the adoption of SFAS 133, totaled 2 $22.0 million, an increase of 34% when compared to EBITDA of $16.4 million for the same period in 2000. COSTS: Operating costs, including lease operating costs and production taxes, for the first quarter totaled $7.9 million, or $6.79 per Boe. These costs are higher than prior periods due workovers and pump replacements in the Tiguino and Charapa fields in Ecuador. G&A was impacted by non-recurring separation costs and non-cash vesting of Bellwether employee stock options. FINANCIAL STATEMENTS: The attached pages outline in more detail the financial statements of Bellwether for the first quarters of 2001 and 2000. Also attached are the unaudited summary pro forma financial statements for Mission Resources for the first quarter of 2001, reflecting the merger of Bellwether Exploration Company and Bargo Energy Company. OPERATIONAL HIGHLIGHTS: The Texaco Fee "A" # 1, located in the Mudlake/Second Bayou Field in South Louisiana, was drilled and completed in the Planulina formation. The well logged a total of 64 net feet of productive sand, and is currently producing at a gross rate of 8.8 MMcfepd (1.6 MMcfepd net). Bellwether has an 18% net revenue interest in the well and is planning additional drilling activity in the project area later this year. At the Company's Matagorda Island 605 Field located in the Gulf of Mexico, an exploratory well was drilled to a depth of 6,500 feet and found three productive zones in the Rob-L formation. All three zones will be on production by early May at an expected rate of 10.6 MMcfepd (1.7 MMcfepd net), based on initial flow test. Bellwether has a 16% net revenue interest in the well. Finally, at Eugene Island Block 286, the D-9ST well was drilled to a total depth of 5,210 feet and completed in the Trim A formation. The well is producing at a gross rate of 10.9 MMcfepd (1.5 Mmcfepd net). Bellwether has a 14% net revenue interest in the well. Doug Manner, Chairman and CEO commented, "These new wells are representative of Mission's continued success in growing reserves and rate through the drill bit. We are looking forward to applying this same expertise to a much larger asset base which will be provided through our new merger and acquisition strategy. The value growth should be impressive." CONFERENCE CALL: A conference call to discuss the earning release will be held Wednesday, May 16th, 2001 at 3:00 p.m. Eastern Standard Time (EST). If you would like to participate, please call (212) 896-6088 just prior to the start time. A replay of the conference call will be available for 48 hours after the finish of the call. The replay can be accessed by dialing toll-free (800) 633-8284 (for U.S.) and (858) 812-6440 (for International), reservation No. 18774058. In addition, you may log on to the Bellwether Exploration website at www.bellwetherexp.com to listen to a replay of the teleconference via Webcast. NAME CHANGE & NEW TICKER SYMBOL: Bellwether Exploration Company will officially change its name to Mission Resources Corporation after the annual shareholders 3 meeting on May 16, 2001. The new NASDAQ ticker symbol for the company will be MSSN. Bellwether Exploration Company is an independent oil and gas exploration and production company headquartered in Houston, Texas with oil and gas properties located in three core areas: the Gulf of Mexico both onshore and offshore, Southeast New Mexico/West Texas and Ecuador. ### This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements are those concerning the companies' merger and strategic plans, expectations and objectives for future operations. All statements included in this press release that address activities, events or developments that the companies expect, believe or anticipate will or may occur in the future are forward-looking statements. This includes completion of the proposed merger, completion of reserve estimates, production, cash flow and EBITDA estimates, future financial performance, future equity issuance and other matters. These statements are based on certain assumptions made by the companies based on their experience and perception of historical trends, current conditions, expected future developments and other factors they believe are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the companies. Statements regarding future production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Investors and security holders are urged to read the proxy statement/prospectus that was included in the Registration Statement on Form S-4 filed with the SEC in connection with the proposed merger. Bellwether Exploration Company ("Bellwether") and Bargo Energy Company ("Bargo") have filed the proxy statement/prospectus with the SEC. Investors and security holders may obtain a free copy of the proxy statement/prospectus and other documents filed by Bellwether and Bargo with the SEC at the SEC's web site at www.sec.gov. The proxy statement/prospectus and such other documents (relating to Bellwether) may also be obtained for free from Bellwether by directing such request to: Bellwether Exploration Company, Bellwether Exploration Company, 1331 Lamar, Suite 1455, Houston, Texas 77010, Attention: Lance Weaver; telephone: (713) 495-3061; e-mail: weaverl@bellwetherexp.com. The proxy statement/prospectus and such other documents (relating to Bargo) may also be obtained for free from Bargo by directing such request to: Bargo Energy Company, 700 Louisiana, Suite 3700, Houston, Texas 77002, Attention: Jerry Sears; telephone: (713) 236-9792; e-mail: jsears@bargo.com. Bellwether, its directors, executive officers and certain members of management and employees may be considered "participants in the solicitation" of proxies from Bellwether's shareholders in connection with the merger. Information regarding such persons and a description of their interests in the merger are contained in the Registration Statement on Form S-4. Bargo, its directors, executive officers and certain members of management and employees may be considered "participants in the solicitation" in connection with the merger. Information regarding such persons and a description of their interests in the merger are contained in the Registration Statement on Form S-4. 4 BELLWETHER EXPLORATION COMPANY STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, ---------------------------- 2001 2000 ---------- ---------- REVENUES: Oil revenues $11,691 $10,884 Gas revenues 19,967 12,849 Gas plant revenues 1,609 1,205 Interest and other income 548 224 ------- ------- 33,815 25,162 ------- ------- COSTS AND EXPENSES: Production expenses 7,926 6314 Gas plant expenses 750 551 Transportation costs 40 66 Mining venture costs 779 -- Depreciation, depletion and amortization 7,938 7,290 General and administrative expenses 2,549 1,876 Interest expense 3,964 3,409 ------- ------- 23946 19,506 ------- ------- INCOME BEFORE TAXES AND CHANGE IN ACCOUNTING METHOD 9,869 5,656 ------- ------- Income taxes Current 1,151 72 Deferred 2,322 (17,806) ------- ------- 3,473 (17,734) ------- ------- INCOME BEFORE CHANGE IN ACCOUNTING METHOD $ 6,396 $23,390 ------- ------- Cumulative effect of a change in accounting method, net of tax 2,767 -- ------- ------- NET INCOME $ 3,629 $23,390 ======= ======= Earnings per share before change in accounting method $ 0.46 $ 1.69 Earnings per share before change in accounting method - diluted $ 0.44 $ 1.67 Earnings per share $ 0.26 $ 1.69 Earnings per share - diluted $ 0.25 $ 1.67 Discretionary cash flow per share $ 1.23 $ 0.95 Discretionary cash flow per share - diluted $ 1.19 $ 0.93 Common shares outstanding 14,028 13,859 Common shares outstanding - diluted 14,493 14,031 Discretionary cash flow $17,315 $13,101 EBITDA less other non cash items $21,976 $16,354
5 BELLWETHER EXPLORATION COMPANY SUMMARY OPERATING INFORMATION (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2001 2000 -------- -------- AVERAGE SALES PRICE, INCLUDING THE EFFECT OF HEDGES: Oil and condensate ($/Bbl) $ 23.71 $ 19.37 Gas ($/Mcf) $ 4.93 $ 2.57 Equivalent ($/Boe) $ 27.10 $ 16.99 AVERAGE SALES PRICE, EXCLUDING THE EFFECT OF HEDGES: Oil and condensate ($/Bbl) $ 23.71 $ 22.70 Gas ($/Mcf) $ 7.13 $ 2.42 Equivalent ($/Boe) $ 34.71 $ 17.81 AVERAGE DAILY PRODUCTION: Oil and condensate (Bbls) 5,478 6,176 Gas (Mcf) 44,978 55,033 Equivalent (Boe) 12,974 15,348 Equivalent (Mcfe) 77,846 92,089 TOTAL PRODUCTION: Oil and condensate (MBbls) 493 562 Gas (MMcf) 4,048 5,008 Equivalent (MBoe) 1,168 1,397 OPERATING COSTS PER BOE: Production expenses $ 6.79 $ 4.52 General and administrative expenses $ 2.18 $ 1.34 Depreciation, depletion, and amortization* $ 6.43 $ 4.95
* Depreciation of gas plants and other assets is excluded. 6 BELLWETHER EXPLORATION COMPANY CONDENSED BALANCE SHEETS (AMOUNTS IN THOUSANDS) (UNAUDITED)
MARCH 31, DECEMBER 31, 2001 2000 ------------- ------------ ASSETS: Current assets $ 29,531 $ 44,658 Property, plant and equipment, net 154,403 148,936 Leasehold, furniture and equipment, net 2,298 2,378 Investment 6,246 4,554 Deferred tax asset 20,577 15,141 Other assets 5,239 5,878 -------- -------- $218,294 $221,545 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 24,115 $ 37,446 Commodity derivative liability 21,275 -- Long-term debt 115,354 125,450 Interest rate swap 4,627 -- Other long-term liabilities 1,732 1,689 Other comprehensive income (loss), net of taxes (10,187) -- Stockholders' equity 61,378 56,960 -------- -------- $218,294 $221,545 ======== ========
BELLWETHER EXPLORATION COMPANY CONDENSED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, -------------------------------- 2001 2000 ----------- ---------- OPERATING ACTIVITIES: Net income $ 3,629 $ 23,390 Adjustments to reconcile net income to net cash provided by operating activities: 13,686 (10,289) -------- -------- Discretionary cash flow 17,315 13,101 Net changes in operating assets and liabilities 37 (1,281) -------- -------- Net cash provided by operating activities 17,352 11,820 INVESTING ACTIVITIES: Acquisition of oil and gas properties (948) (2,217) Capital expenditures (8,953) (19,326) Leasehold, furniture and equipment (44) (603) Long term note receivable -- (663) Property divestiture costs (2,940) 65 -------- -------- Net cash used in investing activities (12,885) (22,744) FINANCING ACTIVITIES: Net proceeds from equity activities 537 35 Net bank debt activity (10,408) 4,900 -------- -------- Net cash provided by (used in) financing activities (9,871) 4,935 -------- -------- Net decrease in cash and cash equivalents (5,404) (5,989) Cash and cash equivalents at beginning of period 14,464 6,101 -------- -------- Cash and cash equivalents at end of period $ 9,060 $ 112 ======== ========
7 MISSION RESOURCES PRO FORMA STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2001 ------------------ REVENUES: Oil revenues $ 32,079 Gas revenues 28,542 Gas plant revenues 1,609 Interest and other income 672 ----------------- 62,902 ----------------- COSTS AND EXPENSES: Production expenses 18,055 Gas plant expenses 750 Transportation costs 40 Mining venture costs 779 Commodity derivative transactions 1,410 Depreciation, depletion and amortization 13,691 General and administrative expenses 4,076 Interest expense 6,814 Amortization of goodwill and intangible assets 512 ------------------- 46,127 ------------------- INCOME FROM CONTINUING OPERATIONS BEFORE TAXES 16,775 ------------------- Income taxes Current 719 Deferred (6,227) ------------------- (5,508) ------------------- NET INCOME FROM CONTINUING OPERATIONS $ 22,283 =================== Earnings per share $0.95 Earnings per share - diluted $0.93 Discretionary cash flow per share $1.36 Discretionary cash flow per share - diluted $1.33 Common shares outstanding 23,488 Common shares outstanding - diluted 23,953 Discretionary cash flow $31,891 EBITDA less other non cash items $38,895
8 MISSION RESOURCES PRO FORMA OPERATING INFORMATION (Unaudited)
THREE MONTHS ENDED MARCH 31, 2001 ------------------ AVERAGE SALES PRICE, INCLUDING THE EFFECT OF HEDGES: Oil and condensate ($/Bbl) $ 25.93 Gas ($/Mcf) $ 5.24 Equivalent ($/Boe) $ 28.25 AVERAGE SALES PRICE, EXCLUDING THE EFFECT OF HEDGES: Oil and condensate ($/Bbl) $ 25.93 Gas ($/Mcf) $ 6.87 Equivalent ($/Boe) $ 32.39 AVERAGE DAILY PRODUCTION: Oil and condensate (Bbls) 13,744 Gas (Mcf) 60,567 Equivalent (Boe) 23,839 Equivalent (Mcfe) 143,031 TOTAL PRODUCTION: Oil and condensate (MBbls) 1,237 Gas (MMcf) 5,451 Equivalent (MBoe) 2,146 OPERATING COSTS PER BOE: Production expenses $ 8.41 General and administrative expenses $ 1.90 Depreciation, depletion, and amortization* $ 6.17
* Depreciation of gas plants and other assets is excluded. 9 MISSION RESOURCES PRO FORMA CONDENSED BALANCE SHEETS (AMOUNTS IN THOUSANDS) (UNAUDITED)
MARCH 31, 2001 ------------- ASSETS: Current assets $ 43,889 Property, plant and equipment, net 414,224 Goodwill, net of accumulated amortization 20,326 Leasehold, furniture and equipment, net 2,298 Investment 6,246 Other assets 7,608 -------- $494,591 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 45,002 Commodity derivative liability 21,275 Long-term debt 252,912 Interest rate swap 4,627 Other long-term liabilities 1,732 Deferred tax liability 38,522 Other comprehensive income (loss), net of taxes (10,187) Stockholders' equity 140,708 -------- $494,591 ========