-----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, CfxwtYnkGS8cwdSfx3pPAC8SJN/2vaDGS1BCV0bnbKX0G0Yc1kGzQQlkVYyR7Ih9 aNxXi86MrdMHMOkCdtU4GA== 0000912057-97-003407.txt : 19970225 0000912057-97-003407.hdr.sgml : 19970225 ACCESSION NUMBER: 0000912057-97-003407 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970128 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970206 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREST OIL CORP CENTRAL INDEX KEY: 0000038079 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 250484900 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-04597 FILM NUMBER: 97519471 BUSINESS ADDRESS: STREET 1: 1600 BROADWAY STREET 2: STE 2200 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038121400 8-K/A 1 8K/A - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) -January 28, 1997 FOREST OIL CORPORATION (Exact name of registrant as specified in charter) New York 0-4597 25-0484900 (State or other juris- (Commission (IRS Employer diction of incorporation) file number) Identification No.) 2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 812-1400 - ------------------------------------------------------------------------------- ITEM 5. OTHER EVENTS Filed herewith are financial statements of ATCOR Resources Ltd. which was acquired by the Company on January 31, 1996 and pro forma financial statements of the Company giving effect to the ATCOR acquisition and certain other transactions as described in such statements. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Audited financial statements of ATCOR Resources Ltd. at December 31, 1995 and for each of the years in the three year period ended December 31, 1995. (b) Condensed pro forma combined financial statements of Forest Oil Corporation at September 30, 1996 and for the nine months ended September 30, 1996 and the year ended December 31, 1995. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FOREST OIL CORPORATION (Registrant) Dated: February 5, 1997 By /s/ DANIEL L. MCNAMARA -------------------------- Daniel L. McNamara Secretary FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS On December 20, 1995, Forest Oil Corporation (Forest) purchased an interest in Saxon Petroleum Inc. (Saxon) of Calgary, Alberta. In the transaction, Forest received Saxon common shares, preferred shares and warrants to purchase common shares. In exchange, Saxon received cash, Forest common stock and Forest's investment in Archean Energy Ltd. (Archean). On December 29, 1995, Forest entered into an agreement with Joint Energy Development Investments Limited Partnership (JEDI), a Delaware partnership whose general partner is an affiliate of Enron Corp., to exchange Forest common stock for debt and warrants to purchase Forest common stock (the JEDI Exchange). On January 31, 1996, Forest acquired ATCOR Resources, Ltd. (ATCOR) of Calgary, Alberta. The purchase was funded by the net proceeds of a public offering (the 1996 Public Offering) and drawdowns under the Company's bank credit facility. The exploration and production business of ATCOR was renamed Canadian Forest Oil Ltd. (Canadian Forest). On August 1, 1996, The Anschutz Corporation (Anschutz) exercised its option to purchase Forest common stock (the Anschutz Option). On November 5, 1996, Forest exchanged common stock plus cash to extinguish nonrecourse secured debt owed to JEDI (the JEDI Extinguishment). In connection with this transaction, Anschutz exercised warrants to purchase Forest common stock (the Anschutz Warrant Exercise) and converted its Forest Second Series Preferred Stock into common stock (the Anschutz Conversion). The following unaudited condensed pro forma combined balance sheet assumes that the JEDI Extinguishment, the Anschutz Warrant Exercise and the Anschutz Conversion occurred on September 30, 1996 and reflects the September 30, 1996 historical consolidated balance sheet of Forest giving pro forma effect to these transactions. The unaudited condensed pro forma combined balance sheet should be read in conjunction with the historical statements and related notes of Forest. The following unaudited condensed pro forma combined statements of operations for the nine months ended September 30, 1996 and for the year ended December 31, 1995 assume that the Saxon transaction, the JEDI Exchange, the ATCOR acquisition, the Anschutz transactions and the JEDI Extinguishment occurred as of January 1, 1995. The pro forma results of operations are not necessarily indicative of the results of operations that would actually have been attained if the transactions had occurred as of January 1, 1995. These statements should be read in conjunction with the historical statements and related notes of Forest and ATCOR. FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED BALANCE SHEET (NOTE A) SEPTEMBER 30, 1996 (UNAUDITED) ASSETS Anschutz JEDI Warrant Anschutz Pro Forma Forest Extinguishment Exercise Conversion Combined Historical (Note F) (Note G) (Note H) Forest ---------- -------------- -------- ---------- --------- Current assets: Cash and cash equivalents $ 7,676 (12,946)(1) 4,083 7,676 8,863 (2) Accounts receivable 46,768 46,768 Other current assets 4,268 4,268 ---------- ------- ----- ------ -------- Total current assets 58,712 (4,083) 4,083 58,712 Property and equipment, at cost: Oil and gas properties-full cost accounting method 1,417,102 1,417,102 Buildings, transportation and other equipment 10,756 10,756 ---------- ------- ----- ------ -------- 1,427,858 1,427,858 Less accumulated depreciation, depletion and valuation allowance 991,457 991,457 ---------- ------- ----- ------ -------- Net property and equipment 436,401 436,401 Goodwill and other intangible assets, net 30,138 30,138 Other assets 7,915 (272)(1) 7,643 ---------- ------- ----- ------ -------- $ 533,166 (4,355) 4,083 - 532,894 ---------- ------- ----- ------ -------- ---------- ------- ----- ------ -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft $ 2,186 2,186 Current portion of long-term debt 2,149 2,149 Current portion of gas balancing liability 2,240 2,240 Accounts payable 50,583 50,583 Accrued interest 1,506 1,506 Other current liabilities 4,717 4,717 ---------- ------- ----- ------ -------- Total current liabilities 63,381 63,381 Long-term debt 189,652 (42,446)(1) 156,069 8,863 (2) Gas balancing liabilities 3,340 3,340 Other liabilities 21,962 21,962 Deferred revenue 8,569 8,569 Deferred income taxes 33,463 33,463 Minority interest 8,547 8,547 Shareholders' equity: Preferred stock 24,345 (8,518) 15,827 Common stock 2,686 200(1) 39 124 3,049 Capital surplus 397,117 26,862(1) 4,044 8,394 436,417 Accumulated deficit (219,906) 2,166(1) (217,740) Foreign currency translation 10 10 ---------- ------- ----- ------ -------- Total shareholders' equity 204,252 29,228 4,083 - 237,563 ---------- ------- ----- ------ -------- $ 533,166 (4,355) 4,083 - 532,894 ---------- ------- ----- ------ -------- ---------- ------- ----- ------ --------
See accompanying notes to condensed pro forma combined financial statements. FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS (NOTE A) YEAR ENDED DECEMBER 31, 1995 (UNAUDITED) JEDI Saxon JEDI ATCOR ATCOR Extinguish- Pro Forma Forest Historical Exchange Historical Adjustments ment Combined Historical (Note B) (Note C) (Note D) (Note D) (Note F) Forest ---------- ---------- -------- ---------- ----------- ---------- --------- Revenue: Marketing and processing $ 148,424 (8,980) (1) 139,444 Oil and gas sales 81,949 9,719 37,658 129,326 Miscellaneous, net 507 (1,040) (221) (1) 132 1,268 (1) (382) (2) -------- ----- ------ ------- ------- ------ ------- Total revenue 82,456 9,719 185,042 (8,315) 268,902 Expenses: Marketing and processing 139,766 (6,574) (1) 133,192 Oil and gas production 22,463 4,280 10,769 37,512 General and administrative 9,081 871 3,468 (471) (3) 12,949 Interest 25,323 767 (1,500) 2,432 (1,647) (1) (4,018)(3) 21,357 Depreciation and depletion 43,592 3,506 25,207 (6,317) (4) 68,047 2,059 (4) Provision for impairment of oil and gas properties 16,812 4,514 (5) 21,326 -------- ----- ------ ------- ------- ------ ------- Total expenses 100,459 9,424 (1,500) 198,454 (8,436) (4,018) 294,383 Income (loss) before income taxes, minority interest and extraordinary item (18,003) 295 1,500 (13,412) 121 4,018 (25,481) Income tax expense (benefit) (7) 278 (2,158) 54 (6) (3,091) (1,258) (7) Minority interest in net earnings of subsidiary (7) (7) -------- ----- ------ ------- ------- ------ ------- Income (loss) from continuing operations $(17,996) 10 1,500 (11,254) 1,325 4,018 (22,397) -------- ----- ------ ------- ------- ------ ------- -------- ----- ------ ------- ------- ------ ------- Weighted average number of common shares outstanding (Note J) 7,360 28,119 -------- ------- -------- ------- Loss from continuing operations attributable to common stock $(20,156) (24,557) -------- ------- -------- ------- Primary and fully diluted loss per share from continuing operations $ (2.74) (.87) -------- ------- -------- -------
See accompanying notes to condensed pro forma combined financial statements. FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS (NOTE A) NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) ATCOR ATCOR JEDI Pro Forma Forest Historical Adjustments Extinguishment Combined Historical (Note D) (Note D) (Note F) Forest ---------- ---------- ----------- -------------- -------- Revenue: Marketing and processing $ 135,614 14,448 (1,107)(1) 148,955 Oil and gas sales 88,062 3,710 91,772 Miscellaneous, net 707 6 (6)(1) 707 ---------- ------- ------ ------ ------- Total revenue 224,383 18,164 (1,113) 241,434 Expenses: Marketing and processing 129,115 13,567 (885)(1) 141,797 Oil and gas production 23,224 869 24,093 General and administrative 9,526 727 (36)(2) 10,217 Interest 18,042 150 (93)(3) (3,898)(3) 14,201 Depreciation and depletion 43,862 1,973 (407)(4) 45,599 171 (4) ---------- ------- ------ ------ ------- Total expenses 223,769 17,286 (1,250) (3,898) 235,907 ---------- ------- ------ ------ ------- Income before income taxes and minority interest 614 878 137 3,898 5,527 Income tax expense 3,250 359 60 (5) 3,669 Minority interest in loss of subsidiary 228 228 ---------- ------- ------ ------ ------- Income (loss) from continuing operations $ (2,408) 519 77 3,898 2,086 ---------- ------- ------ ------ ------- ---------- ------- ------ ------ ------- Weighted average number of common shares outstanding (Note I) 23,698 31,471 ---------- ------- ---------- ------- Income (loss) from continuing operations attributable to common stock $ (4,027) 467 ---------- ------- ---------- ------- Primary and fully diluted earnings (loss) per share from continuing operations $ (.17) .01 ---------- ------- ---------- -------
See accompanying notes to condensed pro forma combined financial statements. FOREST OIL CORPORATION NOTES TO CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (UNAUDITED) A. BASIS OF PRESENTATION The following unaudited condensed pro forma combined balance sheet assumes that the JEDI Extinguishment, the Anschutz Warrant Exercise and the Anschutz Conversion occurred on September 30, 1996 and reflects the September 30, 1996 historical consolidated balance sheet of Forest giving pro forma effect to these transactions. The unaudited condensed pro forma combined balance sheet should be read in conjunction with the historical statements and related notes of Forest. The following unaudited condensed pro forma combined statements of operations for the nine months ended September 30, 1996 and for the year ended December 31, 1995 assume that the Saxon transaction, the JEDI Exchange, the ATCOR acquisition, the Anschutz transactions and the JEDI Extinguishment occurred as of January 1, 1995. The pro forma results of operations are not necessarily indicative of the results of operations that would actually have been attained if the transactions had occurred as of January 1, 1995. These statements should be read in conjunction with the historical statements and related notes of Forest and ATCOR. The historical financial statements of ATCOR for the month ended January 31, 1996 have been translated at the average historical exchange rate of approximately $1.37 CDN to $1.00. The historical financial statements of Saxon and ATCOR for the year ended December 31, 1995 have been translated at the average historical exchange rate during the period of approximately $1.37 CDN to $1.00. B. ACQUISITION OF SAXON PETROLEUM, INC. On December 20, 1995, Forest purchased a 56% economic (49% voting) interest in Saxon for approximately $22,000,000. In the transaction, Forest received from Saxon 40,800,000 voting common shares, 12,300,000 nonvoting common shares, 15,500,000 preferred shares and warrants to purchase 5,300,000 common shares. In exchange, Forest transferred to Saxon its preferred shares of Archean Energy Ltd., issued to Saxon 1,060,000 common shares of Forest and paid Saxon $1,500,000 CDN. A pro forma adjustment has been made to the accompanying historical statement of operations for the year ended December 31, 1995 to record the historical results of operations of Saxon for the period and to recognize the minority interest in the net earnings of Saxon. The effects of pro forma adjustments for the year ended December 31, 1995, including those attributable to purchase price allocations, were insignificant and have not been shown. The historical condensed balance sheet and statement of operations of Forest include the accounts of Saxon at September 30, 1996 and for the nine months then ended. C. JEDI EXCHANGE On December 29, 1995, Forest entered into an agreement with JEDI to exchange 1,680,000 shares of Forest's common stock for approximately $22,400,000 principal amount of debt and warrants to purchase 2,250,000 shares of Forest's common stock held by JEDI. The accompanying condensed pro forma combined statement of operations for the year ended December 31, 1995 includes a pro forma adjustment to reduce interest expense by $1,500,000 to give effect to the reduction of the JEDI debt. D. ACQUISITION OF ATCOR On January 31, 1996 Forest acquired ATCOR for approximately $136,000,000. The purchase was funded by the net proceeds of the 1996 Public Offering and approximately $8,300,000 drawn under the Company's bank credit facility. The exploration and production business of ATCOR was renamed Canadian Forest Oil Ltd. The accompanying condensed pro forma combined statements of operations for the nine months ended September 30, 1996 and the year ended December 31, 1995 have been adjusted to include the historical results of operations for ATCOR prior to the acquisition. In addition, the following pro forma adjustments have been made to the accompanying historical statements of operations for ATCOR for the year ended December 31, 1995 and the nine months ended September 30, 1996: 1. As part of the ATCOR acquisition, Forest agreed to sell certain assets of ATCOR to ATCOR's controlling shareholders for an aggregate consideration of approximately $21.5 million Cdn (or approximately $15.6 million). These assets include one-half of ATCOR's interests in certain frontier lands, an 18% interest in an ethane extraction plant in Edmonton, Alberta in which ATCOR will retain a 15-1/3% interest and certain marketable securities held by ATCOR. Accordingly, dividend income related to the marketable securities in the amount of $221,000 for the year ended December 31, 1995 ($6,000 for the month of January 1996) and marketing and processing income related to the 18% interest in the ethane extraction plant in the amount of $8,980,000 for the year ended December 31, 1995 ($1,107,000 for the month of January 1996) have been reversed in the accompanying condensed pro forma combined statements of operations. In addition, a writedown of the investment in marketable securities in the amount of $1,268,000 for the year ended December 31, 1995 has been reversed in the accompanying pro forma combined statement of operations for that period since the loss was reported in an earlier period under U.S. GAAP. The proceeds of the asset sale described above were used to reduce the outstanding long-term debt of ATCOR. Interest expense in the accompanying condensed pro forma combined statement of operations has been reduced by $1,647,000 for the year ended December 31, 1995 ($93,000 for the month of January 1996) in order to reflect the debt reduction. 2. Under U.S. GAAP, unrealized losses on interest rate swaps that are not considered a hedge on an existing debt obligation are charged to earnings. A pro forma adjustment has been recorded to reduce miscellaneous, net revenue for the year ended December 31, 1995 by $382,000 to reflect this U.S. GAAP difference. 3. The general and administrative expenses recorded by ATCOR included administrative, financial and management fees charged by a controlling shareholder. These fees, which totalled $471,000 for the year ended December 31, 1995 ($36,000 for the month of January 1996) have been reversed in the accompanying condensed pro forma combined statements of operations. 4. The purchase price of approximately $136,000,000 was allocated to property, plant and equipment of approximately $144,000,000; goodwill and other intangible assets related to ATCOR's natural gas marketing business of approximately $32,000,000; a net working capital deficit of approximately $1,000,000; long-term liabilities of approximately $3,000,000; and a net deferred tax liability of approximately $36,000,000. The fair value allocated to property, plant and equipment was less than the historical carrying cost of these assets less the proceeds associated with the sale of the oil and gas assets described in Note 1 above. Accordingly, the condensed pro forma combined statements of operations include adjustments to reduce depreciation and depletion expense by $6,317,000 for the year ended December 31, 1995 ($407,000 for the month of January, 1996). Goodwill and other intangibles recorded in the acquisition included approximately $15,000,000 associated with certain natural gas marketing contracts, which is being amortized over the average life of the contracts of 12 years, and approximately $17,000,000 of goodwill associated with the gas marketing business acquired which is being amortized over 20 years. Accordingly, the condensed pro forma combined statements of operations include adjustments to record amortization of goodwill and other intangible assets of $2,059,000 for the year ended December 31, 1995 ($171,000 for the month of January, 1996). 5. Under U.S. GAAP, the carrying value of petroleum and natural gas properties, net of deferred income taxes, is limited to the present value of after-tax future net revenue (based on prices and costs in effect at the balance sheet date) from proved reserves, discounted at 10%, and the unimpaired cost of unproved properties. Under Canadian GAAP, future net revenue is not discounted in computing the ceiling limit, but projected financing costs and general and administrative costs are deducted. These differences resulted in an additional ceiling test write-down at December 31, 1995 under U.S. GAAP of $4,514,000, which has been reflected as a pro forma adjustment on the accompanying condensed pro forma combined statement of operations for the year ended December 31, 1995. The provision for impairment of oil and gas properties recorded in the historical financial statements of ATCOR was also included in the pro forma combined results of operations of Forest for the year ended December 31, 1995 in accordance with rules of the Securities and Exchange Commission for preparation of pro forma financial information. Had the provision for impairment recorded in the historical financial statements of ATCOR been excluded from the pro forma combined results of operations of Forest, the pro forma combined loss from continuing operations, loss from continuing operations attributable to common stock, and primary and fully diluted loss per share from continuing operations would have been $10,454,000, $12,614,000 and $0.45, respectively. 6. Separate pro forma adjustments have been recorded to adjust income tax expense for the effects, as applicable, of the pro forma adjustments calculated at the statutory rate in effect during the periods for which condensed pro forma combined statements of operations are presented. 7. Under U.S. GAAP, income taxes are accounted for under the asset and liability method prescribed by Statement of Financial Accounting Standards No. 109. Adjustments have been recorded in the accompanying condensed pro forma combined statements of operations to reduce income tax expense by $1,258,000 for the year ended December 31, 1995. E. ANSCHUTZ OPTION On August 1, 1996, Anschutz exercised its option to purchase 2,250,000 shares of Forest's common stock for $26,200,000 or approximately $11.64 per share. The option was scheduled to expire on July 27, 1998. F. JEDI EXTINGUISHMENT On November 5, 1996 Forest exchanged 2,000,000 shares of its common stock plus approximately $13,500,000 cash to extinguish approximately $43,000,000 of nonrecourse secured debt owed to JEDI. The JEDI debt bore interest at the rate of 12-1/2% per annum. The following pro forma adjustments have been made to the accompanying historical balance sheet at September 30, 1996 and to the accompanying historical statements of operations for the nine months ended September 30, 1996 and the year ended December 31, 1995: 1. To record issuance of 2,000,000 shares of Forest common stock with an estimated fair value of $27,062,000 (determined by reference to the quoted market price of the shares, less a discount to reflect the restrictions placed upon the sale of such shares), and use of $12,946,000 of cash to repay the outstanding JEDI debt of $42,446,000. This transaction resulted in a gain of $2,166,000 after the write-off of unamortized debt costs in the amount of $272,000. 2. To record additional borrowing of $8,863,000 on the Company's line of credit to finance the JEDI Extinguishment. 3. To record a net reduction of interest expense of $3,898,000 for the nine months ended September 30, 1996 and $4,018,000 for the year ended December 31, 1995, as a result of the extinguishment of the JEDI debt. G. ANSCHUTZ WARRANT EXERCISE On November 5, 1996 Anschutz acquired 388,888 shares of Forest's common stock by exercising warrants which allowed it to purchase such shares at $10.50 per share. A pro forma adjustment has been made to the accompanying historical balance sheet at September 30, 1996 to record the proceeds of $4,083,000 and the issuance of common stock. H. ANSCHUTZ CONVERSION On November 5, 1996 Anschutz converted 620,000 shares of Forest's Second Series Preferred Stock into 1,240,000 shares of common stock. A pro forma adjustment has been made to the accompanying historical balance sheet at September 30, 1996 to record the conversion by reclassifying the historical value of the preferred stock ($8,518,000) to common stock and capital surplus. I. The weighted average number of common shares outstanding for the nine months ended September 30, 1996 has been adjusted as follows: Forest historical 23,698 Weighted average effect of shares issued in: 1996 Public Offering 1,349 JEDI Extinguishment 2,000 Anschutz Option Exercise 1,747 Anschutz Warrant Exercise 389 Anschutz Conversion 1,240 Common stock equivalents (1) 1,048 ------ Pro forma weighted average shares 31,471 ------ ------ (1) The remaining Anschutz Warrants and employee stock options were in the money during the period, and therefore were required to be included in the primary earnings per share calculation since they had a dilutive effect. J. The weighted average number of common shares outstanding for the year ended December 31, 1995 has been adjusted as follows: Forest historical 7,360 Shares issued in: Saxon acquisition 1,060 JEDI Exchange 1,680 1996 Public Offering (ATCOR acquisition) 12,140 Anschutz Option Exercise 2,250 JEDI Extinguishment 2,000 Anschutz Warrant Exercise 389 Anschutz Conversion 1,240 ------ Pro forma weighted average shares 28,119 ------ ------ -----END PRIVACY-ENHANCED MESSAGE-----