-----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, EGKgV37XJWfPLE1Yk3uftAHlwfFUr+inp0IRK4gGkZIpR2WC9BjMCYxLCiVEoXCj aith6WW9RzXjlTmp8KlKmQ== 0000051072-99-000014.txt : 19990624 0000051072-99-000014.hdr.sgml : 19990624 ACCESSION NUMBER: 0000051072-99-000014 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981119 ITEM INFORMATION: FILED AS OF DATE: 19990527 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARGO ENERGY CO CENTRAL INDEX KEY: 0000051072 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 870239185 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-08609 FILM NUMBER: 99636320 BUSINESS ADDRESS: STREET 1: 700 LOUISIANA, SUITE 3700 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7132369792 MAIL ADDRESS: STREET 1: 700 LOUISIANA SUITE 3700 CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: FUTURE PETROLEUM CORP/UT/ DATE OF NAME CHANGE: 19940401 FORMER COMPANY: FORMER CONFORMED NAME: INTERMOUNTAIN EXPLORATION CO DATE OF NAME CHANGE: 19920703 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 19,1998 Commission file number 0-8609 Bargo Energy Company (Exact name of small business issuer as specified in charter) Texas 87-0239185 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 Louisiana, Suite 3700 Houston, Texas 77002 (Address of principal executive offices) (Zip Code) (713)236-9792 (Issuer's telephone number, including area code) Future Petroleum Corporation 2351 West Northwest Highway, Suite 2130 Dallas, Texas 75220 (Former name and former address if changed since last report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. FUTURE PETROLEUM CORPORATION INDEX TO FINANCIAL STATEMENTS Independent Auditor's Report F-2 Historical Summaries of Revenues and Direct Operating Expenses F-3 Notes to Historical Summaries and Direct Operating Expenses F-3 UNAUDITED PRO FORMA FINANCIAL INFORMATION PF-1 INDEPENDENT AUDITOR'S REPORT Board of Directors Future Petroleum Corporation Houston, Texas We have audited the accompanying historical summaries of revenues and direct operating expenses of properties acquired in November and December 1998 ("the Cody Properties"), for the eleven month period ended November 30, 1998 and the year ended December 31, 1997. The historical summaries are the responsibility of the Company's management. Our responsibility is to express an opinion on the historical summaries based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical summaries are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the historical summaries. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall historical summary presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying historical summaries were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K/A of Future Petroleum Corporation) as described in Note 1 and are not intended to be a complete presentation of the properties' revenues and expenses. In our opinion, the historical summaries referred to above present fairly, in all material respects, the revenues and direct operating expenses of the Cody Properties, in conformity with generally accepted accounting principles. HEIN + ASSOCIATES LLP April 30, 1999 Dallas, Texas FUTURE PETROLEUM CORPORATION HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES OF THE CODY PROPERTIES FOR THE ELEVEN MONTH PERIOD FOR THE YEAR ENDED ENDED NOVEMBER 30, DECEMBER 31, 1998 1997 -------------- ------------ OIL AND GAS SALES $ 2,681,000 $ 5,127,000 DIRECT OPERATING EXPENSES 1,011,000 1,388,000 -------------- ------------ NET REVENUE $ 1,670,000 $ 3,739,000 ============== ============
See Notes to Historical Summaries. FUTURE PETROLEUM CORPORATION NOTES TO HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES OF THE CODY PROPERTIES 1. BASIS OF PREPARATION The accompanying historical summaries of revenues and direct operating expenses relate to the operations of the oil and gas properties ("the Cody Properties") acquired by Future Petroleum Corporation (the "Company") in November and December 1998. The Cody Properties were acquired from Bargo Energy Resources, Ltd., which had on the same day acquired the properties from Cody Energy, Inc., and Cody Texas, L.P. The Properties were acquired for $7,600,000. Revenues are recorded when the Properties' share of oil or natural gas and natural gas liquids are sold. Direct operating expenses are recorded when the related liability is incurred. Direct operating expenses include lease operating expenses, ad valorem taxes and production taxes. Depreciation and amortization of oil and gas properties, general and administrative expenses and income taxes have been excluded from operating expenses in the accompanying historical summaries because the amounts would not be comparable to those resulting from proposed future operations. The historical summaries presented herein were prepared for the purpose of complying with the financial statement requirements of a business acquisition to be filed on Form 8-K/A as promulgated by Regulation S-B Item 3-10 of the Securities Exchange Act of 1934. 2. SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED) Proved oil and gas reserves consist of those estimated quantities of crude oil, natural gas, and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. The following estimates of proved reserves have been made by independent engineers. The estimated net interest in proved reserves are based upon subjective engineering judgments and may be affected by the limitations inherent in such estimation. The process of estimating reserves is subject to continual revision as additional information becomes available as a result of drilling, testing, reservoir studies and production history. There can be no assurance that such estimates will not be materially revised in subsequent periods. FUTURE PETROLEUM CORPORATION NOTES TO HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES OF THE CODY PROPERTIES The changes in proved reserves of the Cody Properties for the period ended November 30, 1998 and the year ended December 31, 1997 are set forth below: Oil and Natural Gas Natural Gas Liquids (Thousand (Barrels) Cubic Feet ----------- ------------ Reserves at January 1, 1997 579,000 23,899,000 Production (102,000) (1,191,000) ----------- ------------ Reserves at December 31, 1997 477,000 22,708,000 Production (99,000) (742,000) ----------- ------------ Reserves at November 30, 1998 378,000 21,966,000 =========== ============ Proved developed reserves: January 1, 1997 531,000 18,094,000 =========== ============ December 31, 1997 429,000 16,902,000 =========== ============ November 30, 1998 352,000 16,143,000 =========== ============ The standardized measure of discounted estimated future net cash flows related to proved oil and gas reserves at November 30, 1998 and December 31, 1997 is as follows: November 30, December 31, 1998 1997 ----------- ------------ Future cash inflows $48,986,000 $61,967,000 Future production costs (14,095,000) (14,082,000) ----------- ------------ Future net cash flows, before income taxes 34,891,000 47,885,000 Future income taxes (9,552,000) (13,750,000) ----------- ------------ Future net cash flows 25,339,000 34,135,000 10% annual discount (13,430,000) (18,092,000) ----------- ------------ Standardized measure of discounted future net cash flows $11,909,000 $16,043,000 =========== ============ The primary changes in the standardized measure of discounted estimated future net cash flows for the period ended November 30, 1998 and for the year ended December 31, 1997, were as follows: Period Ended Year Ended November 30, December 31, 1998 1997 ------------ ------------ Beginning of year $ 16,043,000 $ 31,758,000 Sales of oil and gas produced, net of production costs (1,670,000) (3,739,000) Effect of change in prices (4,799,000) (22,116,000) Change in income taxes 1,973,000 3,176,000 Accretion of discount 1,604,000 8,158,000 Other (1,242,000) (1,194,000) ------------ ------------ End of year $ 11,909,000 $ 16,043,000
Estimated future cash inflows are computed by applying year-end prices of oil and gas to year-end quantities of proved reserves. Estimated future production costs are determined by estimating the expenditures to be incurred in producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. Estimated future income tax expense is calculated by applying year-end statutory tax rates to estimated future pre-tax net cash flows related to proved oil and gas reserves, less the tax basis of the properties involved. The assumptions used to compute the standardized measure are those prescribed by the Financial Accounting Standards Board and as such, do not necessarily reflect the Company's expectations of actual revenues to be derived from those reserves nor their present worth. The limitations inherent in the reserve quantity estimation process are equally applicable to the standardized measure computations since these estimates are the basis for the valuation process. FUTURE PETROLEUM CORPORATION UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS The following unaudited pro forma combined statements of operations for 1998 and 1997 reflect the acquisition of the Cody Properties by Future Petroleum Corporation (FPC) that occurred in November and December 1998 as if the acquisition occurred at the beginning of the respective periods. The pro forma statements of operations combine the operating results of FPC for 1998 and 1997 with the historical summaries of revenues and direct operating expenses of the Cody Properties for the eleven months ended November 30, 1998 and the year ended December 31, 1997. The operations of the Cody Properties are included with FPC's operations beginning in December 1998. The pro forma statements of operations also reflect the following transactions: (1) the acquisitions of the South Coles Levee Unit (SCLU) in August 1998 and several properties in October 1998 (the 10/15/98 acquisition); and (2) the roll up of certain ENCAP partnerships in November 1997. Item (1) is reflected in the pro forma statements of operations as if it had occurred at the beginning of the respective periods. Item (2) is reflected in the 1997 pro forma statement of operations as if it had occurred at the beginning of that year. These unaudited pro forma financial statements should be read in conjunction with the historical summaries of revenues and operating expenses of the Cody Properties included herein and with the historical financial statements of FPC as filed in its periodic reports with the Securities and Exchange Commission. These unaudited pro forma financial statements should not be construed to be indicative of future results or results that actually would have occurred if the transactions had occurred at the dates presented. FUTURE PETROLEUM CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (amounts in thousands, except per share amount) PRO FORMA ADJUSTMENTS 10/15/98 CODY SCLU FPC ACQUISITION ACQUISITION ACQUISITION ------- ----------- ----------- ----------- REVENUE: (1) (1) (1) Oil and gas sales $ 3,663 $ 4,105 $ 2,681 $ 1,645 Other income 16 -------- ----------- ----------- ----------- Total revenue 3,679 4,105 2,681 1,645 COSTS AND EXPENSES: Production expenses 1,826 1,366 1,011 1,002 General and administrative 783 Depletion and depreciation 1,316 Interest 1,238 -------- ----------- ----------- ----------- Total costs and expenses 5,163 1,366 1,011 1,002 OTHER INCOME 19 -------- ----------- ----------- ----------- INCOME (LOSS) BEFORE TAXES (1,465) 2,739 1,670 643 INCOME TAX PROVISION 287 -------- ----------- ----------- ----------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (1,178) 2,739 1,670 643 EXTRAORDINARY GAIN ON CONVERSION OF DEBT 2,586 -------- ----------- ----------- ----------- NET INCOME (LOSS) $ 1,408 $ 2,739 $ 1,670 $ 643 ======== =========== =========== =========== BASIC AND DILUTED EARNINGS PER SHARE $ 0.14 ======== WEIGHTED AVERAGE SHARES OUTSTANDING 9,924 ========
OTHER PRO FORMA --------- ----------- REVENUE: Oil and gas sales $ $ 12,094 Other income 16 --------- ----------- Total revenue 12,110 COSTS AND EXPENSES: Production expenses 5,205 General and administrative 100(2) 883 Depletion and depreciation 2,503(3) 3,819 Interest 2,176(4) 3,414 ---------- ----------- Total costs and expenses 4,779 13,321 OTHER INCOME 19 ----------- ----------- INCOME (LOSS) BEFORE TAXES (4,779) (1,192) INCOME TAX PROVISION 130(7) 417 ----------- ----------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (4,649) (775) EXTRAORDINARY GAIN ON CONVERSION OF DEBT 2,586 ------------ ----------- NET INCOME (LOSS) $ (4,649) $ 1,811 ============ =========== BASIC AND DILUTED EARNINGS PER SHARE $ (0.01)(8) $ 0.13 ============ =========== WEIGHTED AVERAGE SHARES OUTSTANDING 3,924(8) 13,848 ============ ===========
FUTURE PETROLEUM CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (amounts in thousands, except per share amount) 1998 PROPERTY ACQUISITIONS 8/14/98 10/15/98 CODY FPC ACQUISITION ACQUISITION ACQUISTION ----- ----------- ----------- ---------- REVENUE: (1) (1) (1) Oil and gas sales $ 596 $ 5,261 $ 8,513 $ 5,127 Well operation fees 176 ----- ----------- ----------- ---------- Total revenue 772 5,261 8,513 5,127 COSTS AND EXPENSES: Production expense 419 2,936 1,415 1,388 General and administrative 154 Depletion and depreciation 191 Interest 69 ----- ---------- ----------- ---------- Total costs and expenses 833 2,936 1,415 1,388 OTHER INCOME 42 INCOME BEFORE TAXES (19) 2,325 7,098 3,739 INCOME TAX PROVISION 7 ----- ---------- ----------- ---------- NET (INCOME) LOSS (12) 2,325 7,098 3,739 ===== ========== =========== ========== BASIC AND DILUTED EARNINGS PER SHARE $ - ===== WEIGHTED AVERAGE SHARES OUTSTANDING 4,280 =====
OTHER ACQUISITION OTHER PRO FORMA ----------- ----------- ---------- REVENUE: Oil and gas sales $ 7,581(5) $ 27,078 Well operation fees (162)(6) 14 ----------- ----------- ---------- Total revenue 7,419 27,092 COSTS AND EXPENSES: Production expense 3,898(5) 9,894 (162)(6) General and administrative 130(2) 284 Depletion and depreciation 4,570(3) 4,761 Interest 3,344(4) 3,413 ---------- ----------- ---------- Total costs and expenses 3,736 8,044 18,352 OTHER INCOME 42 ---------- ----------- ---------- INCOME BEFORE TAXES 3,683 (8,044) 8,782 INCOME TAX PROVISION (3,080)(7) (3,073) ---------- ----------- ---------- NET (INCOME) LOSS 3,683 (11,124) 5,709 ========== =========== ========== BASIC AND DILUTED EARNINGS PER SHARE $ 0.42(8) $ 0.42 =========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING 9,312 13,592 =========== ==========
FUTURE PETROLEUM CORPORATION NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS Pro Forma Statements of Operations (1) The pro forma adjustments reflect the oil and gas sales and production expenses of the acquired properties prior to acquisition as if the acquisitions had all occurred at the beginning of the respective periods. (2) Adjustment to record estimated additional general and administrative expense associated with the acquired properties as if they had all been acquired at the beginning of the respective periods. (3) Adjustment to record additional depletion and depreciation as if the properties had all been acquired at the beginning of the respective periods. (4) Adjustment to record additional interest expense that would have been incurred if the properties had all been acquired at the beginning of the respective periods. (5) Record (a) activity for original ENCAP partnerships rolled up in November 1997 for ten month period before inclusion in FPC's operations ($2,318,000 of oil and gas sales and $1,132,000 of production expense); and (b) 1997 activity for South Cole Levee Unit acquired in August 1998 ($5,263,000 of oil and gas sales and $2,928,000 of production expenses). (6) Eliminate well operational fees included as revenue for FPC and production expense for the original ENCAP partnerships of $162,000. (7) Adjustment to record income tax effect as if the transactions had all occurred at the beginning of the respective periods. (8) Adjustment to record effect on earnings per share as if the transactions had all occurred at the beginning of the respective periods. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BARGO ENERGY COMPANY (Registrant) Dated: May 27, 1999 By: /s/ B. Carl Price B. Carl Price, Vice President Corporate Development -----END PRIVACY-ENHANCED MESSAGE-----