10QSB 1 h87362e10qsb.txt BARGO ENERGY COMPANY - DATED MARCH 31, 2001 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _________________ BARGO ENERGY COMPANY (Exact name of small business issuer as specified in its charter)
Texas 0-8609 87-0239185 (State or other jurisdiction of (Commission file number) (I.R.S. Employer incorporation or organization) Identification No.)
700 Louisiana, Suite 3700 Houston, Texas 77002 (Address of principal executive offices, including zip code) (713)236-9792 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: The Company had approximately 87,933,000 shares of common stock, par value $0.01 per share, issued and outstanding as of May 14, 2001. Transitional Small Business Disclosure Format (Check One): Yes No X =============================================================================== 2 PART I FINANCIAL INFORMATION ------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS ------------------------------------------------------------------------------- The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented have been made. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-KSB filing for the year ended December 31, 2000. 3 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS (Unaudited) (in thousands)
March 31, 2001 December 31, 2000 -------------- ----------------- CURRENT ASSETS Cash and cash equivalents $ 63 $ 6,737 Trade accounts receivable, no allowance for doubtful accounts considered necessary: Joint interest billings 859 525 Accrued oil and gas sales 13,157 21,495 Due from affiliates 29 0 -------- -------- TOTAL CURRENT ASSETS 14,108 28,757 -------- -------- PROPERTY AND EQUIPMENT Oil and gas properties, full cost method 131,917 178,561 Other 878 830 -------- -------- TOTAL PROPERTY AND EQUIPMENT 132,795 179,391 Less accumulated depletion, depreciation and amortization (27,924) (24,727) -------- -------- NET PROPERTY AND EQUIPMENT 104,871 154,664 DEFERRED TAX ASSET 1,108 0 -------- -------- OTHER ASSETS Goodwill, net of accumulated amortization of $458 and $408 respectively 1,542 1,592 Loan costs, net of accumulated amortization of $1,243 and $2,422 respectively 2,476 7,189 Other 640 3,295 -------- -------- TOTAL OTHER ASSETS 4,658 12,076 ------- -------- TOTAL ASSETS $124,745 $195,497 ======== ========
The accompanying notes are an integral part of these financial statements. 4 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) (in thousands)
March 31, 2001 December 31, 2000 -------------- ----------------- CURRENT LIABILITIES Trade accounts payable 7,181 7,915 Accrued oil and gas proceeds payable 2,685 5,384 Accrued interest payable 49 419 Accrued income taxes payable 11,842 10,966 Advance from related party 0 396 Due to affiliates 191 0 -------- -------- TOTAL CURRENT LIABILITIES 21,948 25,080 -------- -------- LONG TERM DEBT, less current portion 20,000 85,000 -------- -------- DEFERRED TAX LIABILITY 0 6,115 -------- -------- REDEEMABLE PREFERRED STOCK, 10% cumulative; $.01 par value; 10,000,000 shares authorized as of March 31, 2001 and December 31, 2000, respectively; 5,000,000 shares outstanding as of March 31, 2001 and December 31, 2000, net of unamortized issuance costs 59,262 57,699 -------- -------- STOCKHOLDERS' EQUITY Common stock, $.01 par value; 200,000,000 shares authorized as of March 31, 2001 and December 31, 2000, respectively, and 87,932,726 shares issued and outstanding as of March 31, 2001 and December 31, 2000. 921 921 Additional paid-in capital 6,878 6,878 Treasury stock (2,040) (2,040) Retained earnings (deficit) 17,776 15,844 -------- -------- TOTAL STOCKHOLDERS' EQUITY 23,535 21,603 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $124,745 $195,497 ======== ========
The accompanying notes are an integral part of these financial statements. 5 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (in thousands except share and per share data)
Three Months Ended March 31, -------------------------- 2001 2000 ------- ------- REVENUES Oil and gas sales $31,428 $10,805 ------- ------- TOTAL REVENUES 31,428 10,805 ------- ------- COSTS AND EXPENSES Lease operations and production taxes 10,862 3,732 General and administrative 2,548 1,013 Depletion, depreciation and amortization 3,247 2,039 ------ ------- TOTAL EXPENSES 16,657 6,784 ------ ------- OTHER INCOME (EXPENSE) Interest income 124 26 Interest expense (1,321) (925) Loss on financial instruments (1,410) 0 ------- ------- TOTAL OTHER INCOME AND (EXPENSE) (2,607) (899) ------- ------- INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 12,164 3,122 ------- ------- INCOME TAX BENEFIT (EXPENSE) Current (12,704) (1,006) Deferred 7,223 (181) ------- -------- TOTAL INCOME TAX BENEFIT (EXPENSE) (5,481) (1,187) ------- ------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 6,683 1,935 EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT (NET OF TAX) 0 (1,051) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NET OF TAX) (3,187) 0 ------- ------- NET INCOME 3,496 884 REDEEMABLE PREFERRED STOCK DIVIDENDS, INCLUDING ACCRETION (1,563) (1,416) ------- ------- NET INCOME(LOSS)ALLOCABLE TO COMMON SHAREHOLDERS $ 1,933 $ (532) ======= ======= EARNINGS (LOSS) PER COMMON SHARE -- BASIC Net income per common share before extraordinary item and cumulative effect of change in accounting principle $ 0.06 $ 0.01 Net (loss) per common share from extraordinary item 0.00 (0.02) Net (loss) per common share from cumulative effect of change in accounting principle (0.04) 0.00 ------- ------- Net income (loss) per common share $ 0.02 $ (0.01) ======= ======= EARNINGS (LOSS) PER COMMON SHARE -- DILUTED Net income per common share before extraordinary item and cumulative effect of change in accounting principle $ 0.05 $ 0.01 Net (loss) per common share from extraordinary item 0.00 (0.02) Net (loss) per common share from cumulative effect of change in accounting principle $ (0.03) $ 0.00 ------- ------- Net income (loss) per common share $ 0.02 $(0.01) ======= ======= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING Basic 87,933,000 87,933,000 Diluted 102,996,000 103,428,000
The accompanying notes are an integral part of these financial statements. 6 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, -------------------------- 2001 2000 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,496 $ 884 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, and amortization 3,247 2,039 Amortization of debt issue costs 306 209 Loss on financial instruments 1,410 0 Cumulative effect of change in accounting principle 5,140 0 Extraordinary loss on extinguishment of debt 0 1,696 Deferred income taxes (7,223) 181 -------- --------- 6,376 5,009 Change in working capital items: Decrease in accounts receivable 8,004 1,832 Decrease(increase) in due from affiliates (29) 4 Increase (decrease) in accounts payable and accrued liabilities (2,927) 1,976 Increase(decrease)in due to affiliates (205) 228 Other 510 (300) -------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 11,729 8,749 -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of oil and gas properties (1,000) (142,239) Development costs (4,646) (1,210) Proceeds from the sale of oil and gas properties 52,290 0 Additions to property and equipment (47) (80) -------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 46,597 (143,529) -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of debt 10,000 192,050 Repayment of long-term debt (75,000) (44,182) Loan costs 0 (12,135) -------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (65,000) 135,733 -------- --------- NET INCREASE (DECREASE) IN CASH (6,674) 953 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,737 2,375 -------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 63 $ 3,328 ======== ========= SUPPLEMENTAL INFORMATION: Cash paid during the period for interest $ 1,387 $ 753 ======== ========= Cash paid during the period for income taxes $ 9,875 $ -0- ======== ========= NONCASH ITEMS: Dividends on redeemable preferred stock $ 1,563 $ 1,416 ======== =========
The accompanying notes are an integral part of these financial statements. 7 BARGO ENERGY COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1: THE COMPANY AND ACCOUNTING PRINCIPLES Bargo Energy Company (the "Company" or "Bargo") is engaged primarily in the acquisition, development and production of oil and gas reserves and operation of oil and gas wells. The accompanying financial statements include the accounts of the Company and its wholly owned subsidiaries, Bargo Petroleum Corporation (BPC) and Future Cal-Tex Corporation (FCT). Intercompany accounts and transactions are eliminated in consolidation. All material adjustments, consisting only of normal recurring adjustments that, in the opinion of management are necessary for a fair statement of the results for the interim periods, have been reflected. These interim financial statements should be read in conjunction with the annual consolidated financial statements of the Company. The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Significant assumptions are required in the valuation of proved oil and gas reserves which, as described above, may affect the amounts at which oil and gas properties are recorded. Actual results could differ from these estimates. In June 1998 the Financial Accounting Standards Board issued SFAS 133 "Accounting for Derivative Instruments and Hedging Activities" (as amended by SFAS 137 and SFAS 138). This standard was effective January 1, 2001 for Bargo. SFAS 133 required that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Upon adoption on January 1, 2001, the cumulative effect of the adoption of this accounting pronouncement resulted in a non-cash charge to net income of $3.2 million which is recorded in the consolidated statement of operations for the three months ended March 31, 2001, and a non-cash charge to other comprehensive income of $5.9 million (See Note 6). The charge to other comprehensive income relates to certain oil and natural gas hedges for the Coles Levee field which were entered into during the fourth quarter of 2000 in anticipation of the sale of the field and have been designated as cash flow hedges. On January 12, 2001 the Coles Levee field was sold and these oil and natural gas derivatives were assigned to the buyer. NOTE 2: PLANNED MERGER WITH BELLWETHER EXPLORATION COMPANY On January 23, 2001, the Board of Directors of Bargo Energy Company approved the merger of the Company into Bellwether Exploration Company (Bellwether). According to the terms of the merger agreement, holders of Bargo Energy Company common stock will receive $1.26 per share (if the average closing price for the twenty trading days ending 3 days before closing, of Bellwether common stock is between $7.00 and $9.00 per share). If the average closing price of Bellwether common stock exceeds $9.00, Bargo stockholders will receive more, and if the average closing price of Bellwether common stock is less than $7.00, Bargo shareholders will receive less. Holders of Bargo common stock will receive a combination of cash and Bellwether common stock as consideration. The proportion of cash and stock will depend on the number of Bargo stock options and warrants exercised prior to closing. Closing is expected to occur on May 16, 2001. 8 Unless the outstanding preferred stock described at Note 7 is redeemed prior to the merger, Bargo preferred shareholders will receive $50 million, the redemption price of the stock, and approximately $11.1 million in accrued and unpaid dividends at May 16, 2001. No effects from the planned merger are reflected in the financial statements at March 31, 2001. NOTE 3: OIL AND GAS PROPERTY ACQUISITIONS AND DISPOSITIONS On January 12, 2001 Bargo sold all of its interests in the North and South Coles Levee fields in Kern County, California, for $39.45 million in cash. Proceeds from this sale were used to pay down existing indebtedness. In addition on February 1, 2001, Bargo sold approximately 4% of its total proved reserves at auction for $16.7 million. Proceeds from the auction sale were used to pay down existing indebtedness The following Bargo Energy Company pro forma information gives effect to the Coles Levee divestiture referred to above (as reported on Form 8-K filed on January 26, 2001) and the auction sale properties as if these had been disposed of on January 1, 2000.
Three months ended March 31, 2001 2000 --------- -------- (amounts in thousands except per share amount) Revenues $28,963 $9,925 Net income from continuing operations $ 6,763 $1,736 Net income per share from continuing operations-basic $ 0.06 $ 0.00 Net income per share from continuing operations-diluted $ 0.05 $ 0.00
NOTE 4: CREDIT AGREEMENT Effective March 31, 2000, the Company entered into a syndicated credit agreement ("Credit Agreement") with Chase Bank of Texas ("Chase") and several other energy lending banks (all banks shall be referred to collectively as the "Banks"), with Chase serving as administrative agent. Proceeds from the new Credit Agreement were used to fully refinance the Company's previous bank indebtedness and acquire properties from Texaco. Borrowings under the Credit Agreement are secured by mortgages covering substantially all of the Company's producing oil and gas properties. As required by the Credit Agreement, the Company has hedged 75% of estimated oil production generated from the Texaco Acquisition through 2001 (see Note 5). In accordance with the Credit Agreement the Banks were paid various underwriting, administrative and advisory fees totaling $4.38 million. The Credit Agreement provides for a total commitment amount of $245 million, comprised of a revolving and a term facility. The total commitment amount under the term facility was $45 million. The term facility was to mature December 31, 2000, but was paid off in October 2000. The total commitment amount under the revolving facility is $200 million with a current borrowing base of $120 million ("Borrowing Base"). The revolving facility matures March 31, 2003. Borrowings under the revolving facility as of March 31, 2001 were $20.0 million. Under the revolving facility, the Company has a choice of two different interest rates; the Base Rate or the LIBO Rate. The Company may convert any portion of the outstanding debt from one interest rate type to another in increments of $1 million. Since the term facility is terminated, the applicable margin for borrowings under the revolving credit facility are computed based on Borrowing Base utilization resulting in margins ranging from 0%-.75% for Base Rate loans and 1.5%-2.25% for LIBO Rate loans. 9 In connection with the new Credit Agreement, the Company wrote off $1,696,000 of loan costs related to the previously existing revolving credit agreement in March 2000. Such amounts are shown separately, net of tax, as an extraordinary item. NOTE 5: HEDGING AND DERIVATIVE ACTIVITIES The Company engages in certain hedging activities related to the purchase and delivery of oil and gas in the future. In 2000, such activities were accounted for in accordance with Statement of Financial Accounting Standard No. 80, "Accounting for Futures Contracts" (SFAS 80) and as such the losses on hedging contracts were included as a reduction of net revenues. In 2000, collars were in place for portions of Bargo's oil production through September 2000 at floors of $18.00 and ceilings of $20.75 and $23.08 per Bbl. Contracted volumes totaled 50,200 Bbls per month declining each month to 42,000 Bbls. Beginning in October 2000 through September 2001 Bargo arranged to have two swaps in place at $17.55 and $18.05 per Bbl. Contracted volumes totaled 41,350 Bbls per month declining to 34,300 Bbls per month. In December 2000, Bargo unwound the swaps in place for 2001 for $2.7 million. Per FAS 80, the cost to unwind was treated as an other asset at December 31, 2000 and the cost, net of tax, was reflected in income based on the original hedge maturity dates. Such amounts were written off upon adoption of SFAS 133 on January 1, 2001. In addition Bargo entered into derivative contracts in the first quarter of 2000 in relation to the Texaco acquisition. Bargo was required to place a floor on a portion of its production under the terms of its new credit agreement. The instruments cover approximately 75% (or approximately 190,000 Bbls per month) of estimated oil production related to the Texaco acquisition through calendar year 2001. Beginning in April 2000 through December 2000, Bargo had one contract in place at a floor of $22 per Bbl. From January 2001 through December 2001, Bargo has one contract in place at a floor of $21 per Bbl. Under SFAS 133, these derivatives are required to be marked to market resulting in a charge of $1.4 million for the three months ending March 31, 2001. At December 31, 2000, the fair value and the carrying amount of these derivative instruments were:
Fair Value Book Value ---------- ---------- ($000's) ($000's) $568.0 $568.0
In connection with Bargo's sale of the Coles Levee California properties in December 2000, Bargo entered into oil and natural gas hedges. These hedges were assigned to the buyer upon sale of the properties on January 12, 2001 and any gain or loss on these hedges was reimbursed to Bargo as an adjustment to the purchase price. As a result of the Coles Levee transaction, an adjustment was made to other comprehensive income. See Note 6. 10 NOTE 6: OTHER COMPREHENSIVE INCOME The following summarizes the activity in Accumulated other comprehensive income for the three months ended March 31, 2001:
($000's) Balance at December 31, 2000 $ -0- Adoption of SFAS 133 -- impact of cash flow hedges (net of tax) 5,862 Sale of cash flow hedges (See Note 3) (5,862) -------- Balance at March 31, 2001 $ -0- ========
There were no items affecting other comprehensive income for the three months ended March 31, 2000. NOTE 7: PREFERRED STOCK ISSUANCE On May 14, 1999, the Company sold 5 million shares of a newly created class of preferred stock, Cumulative Redeemable Preferred Stock, Series B (Preferred Stock), to a group of investors in exchange for an aggregate purchase price of $50 million. As additional consideration, the Company issued an aggregate of 43,815,810 shares of its common stock to the Investors equal to 40% of the outstanding common stock (on a fully diluted basis). At the time of issuance of the Preferred Stock, due to the financial condition of the Company and the absence of stock transactions in the marketplace, the Company determined that there was de minimus value to the common shares issued. If the Company redeems all of the outstanding shares of Preferred Stock prior to June 14, 2001, the Investors must sell back to the Company 6.5% of the shares of Common Stock originally issued to the Investors. Dividends on the Preferred Stock equal to 10% per annum are payable quarterly. The dividend rate is subject to increase (but in no event to more than 16%) or decrease (but in no event to less than 10%) based upon the Company's ratio of assets to liabilities which is calculated on January 1 and July 1 of each year or at such other time as requested by the Investors. The dividend rate on the preferred stock was 10% in 2001 and 2000. The Preferred Stock may be redeemed at any time by the Company and must be redeemed upon the occurrence of certain events, including upon the fifth anniversary of the issue date or upon a change of control. The Preferred Stock is redeemable for $50 million and unpaid cumulative dividends. A change of control is deemed to occur upon any merger, reorganization, purchase or sale of more than 50% of the Company's voting securities, the sale of substantially all of the assets of the Company or at any time Tim Goff ceases to serve as the Company's Chief Executive Officer. The Company is prohibited from taking certain actions, including authorizing, creating or issuing any shares of capital stock, amending the articles of incorporation of the Company and authorizing a merger or change of control, without the consent of the holders of a majority of the outstanding shares of Preferred Stock. On January 23, 2001, the Company declared a dividend on all of the Preferred Stock in the amount of all accrued and unpaid dividends through that date ($9.3 million). The Preferred Stock is expected to be redeemed in connection with the merger described in Note 2. 11 NOTE 8: EARNINGS PER SHARE Net income or loss per common share is based on the weighted average number of common shares outstanding. In accordance with SFAS 128, "Earnings Per Share", income available to common stockholders is reduced by the amount of dividends on cumulative preferred stock and accretion of related stock issuance costs. The Company's common stock equivalents consisted of stock options and warrants. The calculation of weighted average number of common shares outstanding for the three months ended March 31, 2001 is as follows:
Weighted average basic common shares outstanding 87,933,000 Options and warrants outstanding (Treasury Stock Method) 15,063,000 ----------- Weighted average fully diluted common and common equivalent shares outstanding 102,996,000 ===========
12 -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -------------------------------------------------------------------------------- This report includes "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements other than statements of historical fact included in the Report (and the exhibits hereto), including without limitation, statements regarding Bargo's financial position and estimated quantities and net present values of reserves, are forward looking statements. Bargo can give no assurances that the assumptions upon which such statements are based will prove to have been correct. Important factors that could cause actual results to differ materially from Bargo's expectations ("Cautionary Statements") are disclosed in the section "Risk Factors" included in Bargo's Forms 10-KSB and other periodic reports filed under the Exchange Act, which are herein incorporated by reference. All subsequent written and oral forward looking statements attributable to Bargo or persons acting on its behalf are expressly qualified by the Cautionary Statements. THE COMPANY Bargo is a domestic independent oil and gas developer and producer. Bargo's revenues, profitability and future growth and the carrying value of its oil and gas properties are substantially dependent on prevailing prices of oil and gas and Bargo's ability to find, develop and acquire additional oil and gas reserves that are economically recoverable. Bargo's ability to maintain or increase its borrowing capacity and to obtain additional capital on attractive terms is also influenced by oil and gas prices. Bargo's operations have been significantly impacted by acquisitions and dispositions of oil and gas properties. In March 2000, Bargo completed the acquisition of properties from various subsidiaries of Texaco for a gross purchase price of $161.1 million, before closing adjustments of approximately $20 million. The purchase price continues to be subject to potential adjustment pursuant to final accounting per the purchase and sale agreement(s). Estimated net proved reserves attributable to the Texaco properties on January 1, 2000 was 53.8 MMBOE. The effective date of the purchase was January 1, 2000. Bargo uses the full cost method of accounting for Bargo's investment in oil and gas properties. Under the full cost method of accounting, all costs of acquisition, exploration and development of oil and gas reserves are capitalized into a "full cost pool." Oil and gas properties in the pool, plus estimated future expenditures to develop proved reserves and future abandonment, site remediation and dismantlement costs, are depleted and charged to operations using the unit of production method based on the portion of current production to total estimated proved recoverable oil and gas reserves. To the extent that such capitalized cost (net of depreciation, depletion and amortization) exceed the discounted future net cash flows on an after-tax basis of estimated proved oil and gas reserves, such excess costs are charged to operations. Once incurred, the write down of oil and gas properties is not reversible at a later date even if oil or natural gas prices increase. Bargo does not have a specific acquisition budget because of the unpredictability of the timing and size of forthcoming acquisition activities. There is no assurance that Bargo will be able to identify suitable acquisition candidates in the future, or that Bargo will be successful in the acquisition of producing properties. In order to finance any possible future acquisitions, Bargo will either use borrowings available under its credit facility or Bargo may seek to obtain additional debt or equity financing in the public or private capital markets. Further, there can be no assurances that any future acquisitions made by Bargo will be integrated successfully into Bargo's operations or will achieve desired profitability objectives. 13 Bargo implements oil and gas hedges as it deems appropriate to ensure minimum levels of cash flow or as market conditions are believed to create an opportunity to increase cash flows. At December 31, 1999 collars were in place for portions of Bargo's oil production for October 1 through September 2000 at floors of $18.00 and ceilings of $20.75 and $23.08 per Bbl. Contracted volumes totaled 50,200 Bbls per month declining each month to 42,000 Bbls. Beginning in October 2000 through September 2001 Bargo arranged to have two swaps in place at $17.55 and $18.05 per Bbl. Contracted volumes totaled 41,350 Bbls per month declining to 34,300 Bbls per month. In December 2000, Bargo unwound the swaps in place for 2001 for $2.7 million. Per FAS 80, the cost to unwind is treated as an other asset at December 31, 2000 and the cost, net of tax, will be reflected in income based on the original hedge maturity dates. In addition to the hedges in place at December 31, 1999, Bargo entered into derivative contracts in the first quarter of 2000 in relation to the Texaco acquisition. Bargo was required to place a floor on a portion of its production under the terms of its new credit agreement. The instruments cover approximately 75% (or approximately 190,000 Bbls per month) of estimated oil production related to the Texaco acquisition through calendar year 2001. Beginning in April 2000 through December 2000, Bargo had one contract in place at a floor of $22 per Bbl. From January 2001 through December 2001, Bargo has one contract in place at a floor of $21 per Bbl. In connection with Bargo's sale of the Coles Levee California properties in December 2000, Bargo entered into oil and natural gas hedges. These hedges were assigned to the buyer upon sale of the properties on January 12, 2001 and any gain or loss on these hedges was reimbursed to Bargo as an adjustment to the purchase price. STRATEGIC DEVELOPMENTS On January 24, 2001, Bargo signed a merger agreement whereby Bellwether Exploration Company will acquire Bargo for cash and stock. Under the agreement, Bellwether will provide to Bargo common shareholders and option holders approximately $60 million in cash and $80 million in Bellwether stock for an implied consideration of $1.26 per fully diluted share not including the effect of a price collar on the Bellwether Common Stock to be issued that is in place. The number of shares will be determined by Bellwether's 20 day trading average 3 days prior to closing. On this basis, Bargo shareholders will receive at least 8.9 million Bellwether shares and no more than 11.4 million Bellwether shares. The transaction is structured to be tax free with respect to the Bellwether common stock issued to Bargo common shareholders. The transaction also includes the assumption of Bargo's liabilities and the redemption of Bargo's preferred stock for $50 million in cash plus accrued dividends. The new company is expected to have a total pro forma market enterprise value of approximately $500 million. Under the merger agreement, Bellwether will have to arrange new credit facilities to provide funding for the merger. The closing of the merger agreement is subject to the approval of Bargo's and Bellwether's shareholders and certain other matters. In that regard, holders of a sufficient number of shares of Bargo common and preferred stock have agreed to execute written consents in favor of the merger to approve the merger. The merger is expected to close on May 16, 2001. Bargo and Bellwether filed a joint proxy statement/prospectus dated April 24, 2001 and was being mailed to Bargo shareholders and Bellwether stockholders on or about April 26, 2001. For more information concerning the merger, please see the registration statement. 14 NEW ACCOUNTING PRONOUNCEMENTS In June 1998 the Financial Accounting Standards Board issued SFAS 133 "Accounting for Derivative Instruments and Hedging Activities" (as amended by SFAS 137 and SFAS 138). This standard is effective for fiscal years beginning after June 15, 2000 (January 1, 2001 for Bargo). SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Upon adoption on January 1, 2001, the cumulative effect of the adoption of this accounting pronouncement results in a non-cash charge to net income of $3.2 million and a non-cash charge to other comprehensive income of $5.9 million. The charge to other comprehensive income relates to certain oil and natural gas hedges for the Coles Levee field which were entered into during the fourth quarter in anticipation of the sale of the field and have been designated as cash flow hedges. On January 12, 2001 the Coles Levee field was sold and these oil and natural gas derivatives were assigned to the buyer. RESULTS OF OPERATIONS Comparison of Quarters Ended March 31, 2001 and 2000 Revenues. Total revenues increased 191% in 2001 to $31.4 million from $10.8 million in 2000, primarily due to an increase in production from Bargo's oil and gas property acquisitions. Production for the quarter ended March 31, 2001 increased by 527 MBOE, or 104%, to 1,035 MBOE versus the same period in 2000. This increased production is due to the Texaco acquisition which closed on March 31, 2000 and the Coles Levee acquisition which closed on July 31, 2000. The increase in revenues was also a result of an increase in average realized commodity prices from $24.50 per mbl in the first quarter of 2000 to $27.39 per mbl in 2001 and from $2.39 per Mcf in the first quarter of 2000 to $6.57 per Mcf in 2001. Expenses. Production costs increased from $3.7 million in the three months ended March 31, 2000 to $10.9 million in the three months ended March 31, 2001 due to increased production from the Texaco acquisition. General and administrative expenses increased to $2.5 million from $1.0 million in 2000 due to increased accounting costs associated with the Texaco acquisition as well as legal and accounting costs incurred during the quarter ended March 31, 2001 in connection with the merger with Bellwether. Depreciation, depletion and amortization for the quarter ended March 31, 2001 was $3.2 million or $3.14 per BOE. For the quarter ended March 31, 2000, total depreciation, depletion and amortization was $2.0 million or $4.01 per BOE. This decrease is primarily a result of increased production volumes resulting from the Texaco acquisition. Total interest expense for the quarter was $1.3 million compared to $925,000 in 2000. Non-cash interest expense (amortization of debt issuance costs) for the three months ended March 31, 2001 totaled $306,000 compared to $209,000 in the same period in 2000. Net Income. The Company had net income of $3,496,000 for the three months ended March 31, 2001 compared to net income of $884,000 for the same period in 2000. Income before income taxes, extraordinary item and cumulative effect of change in accounting principle increased to $12.2 million for the three months 15 ended March 31, 2001 compared to net income of $3.1 million for the comparable period in 2000. For the quarter ended March 31, 2000, Bargo recognized an extraordinary loss on extinguishment of debt of $1.0 million (net of tax) related to the write-off of loan costs associated with Bargo's previously existing credit facility. Upon adoption of SFAS 133 on January 1, 2001, Bargo wrote off $3.2 million of costs associated with unwinding its oil swaps in December 2000 which were still carried as an asset per FAS 80 as of December 31, 2000. After taking into account accrued but unpaid dividends and accretion of stock issuance costs of $1.6 million for the quarter ended March 31, 2001 versus $1.4 million in 2000, income available to common shareholders increased from a loss of $532,000 in 2000 to income of $1.9 million in 2001. LIQUIDITY AND CAPITAL RESOURCES Bargo's primary sources of capital are its cash flows from operations, borrowings and issuance of debt and equity securities. Operating activities of Bargo during the three months ended March 31, 2001 provided net cash of $11,729,000. In the same period during 2000, operations provided net cash of $8,749,000. The increase is due to the Company's acquisition activity along with higher commodity prices during 2001. Investing activities in the three months ended March 31, 2001, provided net cash of $46,597,000, due to the sale of oil and gas properties (Coles Levee and various non strategic assets). Financing activities in the three months ended March 31, 2001 used net cash of $65 million primarily due to the repayment of long term debt from property sale proceeds and operating cash flow. At March 31, 2001, the Company had a working capital deficit of $7.8 million, which was an $11.5 million decrease from the $3.7 million of working capital that the Company had as of December 31, 2000. The decrease in working capital as of March 31, 2001 is primarily due to a decrease in accrued oil and gas receivables which are offset by decreased payables, including an increase in accrued income taxes payable. Effective March 31, 2000, Bargo entered into a new credit agreement with Chase Bank of Texas and several other energy lending banks, with Chase serving as the administrative agent. Borrowings under the credit facility are secured by mortgages covering substantially all of Bargo's producing oil and gas properties. The credit agreement provides a commitment amount of $200 million with a current borrowing base of $120 million which became effective March 1, 2001 in connection with Bargo's sale of non-core properties in February 2001. In addition to the $200 million commitment, the credit facility also provided for a $45 million term loan which was scheduled to mature 9 months from the closing date. Bargo received commitments from several of its current stockholders to purchase preferred stock, and also received a commitment from one of its lenders to convert a portion of the loan into preferred stock, in an amount sufficient in the aggregate to repay this term loan in full. These commitments to purchase preferred stock at maturity of the term loan also provided for the issuance of common stock. Utilizing availability under the revolving credit facility, Bargo repaid the term loan in full on October 10, 2000. Bargo has a choice of two different interest rates under the credit facility; the Base Rate (which is the higher of the lender's "Prime Rate" or the Federal Funds Rate plus .5%)or the LIBO Rate plus an applicable margin. The applicable margin is computed based on Borrowing Base utilization ranging from 0%-.75% for Base Rate loans and 1.5%-2.25% for LIBO Rate loans. Bargo may convert any portion of the outstanding debt from one interest rate type to another in increments of $1,000,000 with a minimum transfer amount of $1,000,000. 16 As of December 31, 2000 borrowings under the credit facility were $85,000,000. As of March 31, 2001, Bargo had $20 million outstanding under the credit facility and $100 million of unused commitment immediately available. Bargo used proceeds from the sale of its California Coles Levee properties in January 2001 and proceeds from non-strategic assets sold in February 2001 along with operating cash flow to pay down existing bank indebtedness. Bargo issued 5 million shares of its Cumulative Redeemable Preferred Stock, Series B in a May 1999 private placement. In connection with this transaction, Bargo issued an aggregate of 43,815,810 shares of its common stock to the investors in the private placement, equal to 40% of Bargo's then outstanding common stock (on a fully diluted basis). Bargo has the right, however, to repurchase 2,738,488 shares of the common stock issued to the investors if Bargo redeems all of the outstanding shares of the preferred stock prior to June 14, 2001. The preferred stock accrues dividends equal to 10% per annum and are payable quarterly. The dividend rate is subject to increase (but in no event to more than 16%) or decrease (but in no event to less than 10%) based upon Bargo's ratio of assets to liabilities, which is calculated on January 1 and July 1 of each year or at such other time as requested by the investors. Bargo may redeem the preferred stock at any time and must redeem it upon the occurrence of certain events, including upon the fifth anniversary of the issue date or upon a change of control. A change of control is deemed to occur upon any merger, reorganization, purchase or sale of more than 50% of Bargo's voting securities, the sale of substantially all of the assets of Bargo or at any time Tim Goff ceases to serve as Bargo's Chief Executive Officer. Bargo is prohibited from taking certain actions, including authorizing, creating or issuing any shares of capital stock, amending the articles of incorporation of Bargo and authorizing a merger or change of control, without the consent of the holders of a majority of the outstanding shares of Preferred Stock. Bargo currently intends to redeem the preferred stock in connection with the merger. INFLATION Bargo's activities have not been, and in the near term are not expected to be, materially affected by inflation. Bargo's oil exploration and production activities are generally affected by prevailing prices for oil, however. 17 ------------------------------------------------------------------------------- PART II OTHER INFORMATION ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ------------------------------------------------------------------------------- (a) Exhibits.
EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- 2. Plan of acquisition, reorganization, arrangement, liquidation or succession 2.1 Purchase and Sale Agreement between Texaco Exploration & Production Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.2 Asset Purchase Agreement between Four Star Oil & Gas Company and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.2 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.3 Asset Purchase Agreement between McFarland Energy, Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.3 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000 and as amended by Bargo's Current Report on Form 8-KA dated March 31, 2000 filed with the Securities and Exchange Commission on May 26, 2000.) * 2.4 Purchase and Sale Agreement dated November 10, 2000 between Future Cal-Tex Corporation and Merit Partners, L.P. and Merit Energy Partners III, L.P. (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated January 12, 2001, filed with the Securities and Exchange Commission on January 26, 2001) 2.5 Agreement and Plan of Merger, dated as of January 24, 2001, by and between Bargo Energy Company and Bellwether Exploration Company (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated January 24, 2001, filed with the Securities and Exchange Commission on January 25, 2001) 3. Articles of Incorporation and By-laws 3.1 Articles of Incorporation of Bargo Energy Company (Incorporated
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EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- by reference from Exhibit 3.1 to Bargo's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.2 Agreement and Plan of Merger, dated as of April 6, 1999 between Future Petroleum Corporation and FPT Corporation (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.3 By-laws of Bargo Energy Company (Incorporated by reference from Exhibit 3.2 to Bargo's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.4 Amendment to Bargo Energy Company By-laws (Incorporated by reference from Exhibit 3.4 to Bargo's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 3.5 Articles of Amendment to the Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.5 to Bargo's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 4. Instruments defining the rights of security holders 4.1 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series B (Incorporated by reference from Exhibit 4.1 to Bargo's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 4.2 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series C (Incorporated by reference from Exhibit 3.5 to Bargo's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 10. Material Contracts 10.1 Subscription Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.1 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.2 First Amendment to Second Amended and Restated Shareholders' Agreement, dated March 31, 2000, among Bargo Energy Company, B. Carl Price, Don Wm. Reynolds, Energy
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EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, BER Partnership L.P., TJG Investments, Inc., BEC Partnership, BOC Operating Corporation, Inc., Tim J. Goff, Thomas Barrow, James E. Sowell, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.2 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.3 Third Amendment to Registration Rights Agreement dated March 31, 2000 among Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.3 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.4 First Amendment to Stock Purchase Agreement dated March 31, 2000, among Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC and Bargo Energy Company. (Incorporated by reference from Exhibit 10.4 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.5 Assignment, Acknowledgment, Consent and Waiver dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.5 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.6 Escrow Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., EnCap Equity 1994, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.6 to Bargo's Current Report on Form 8-K dated March 31, 2000,
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EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- filed with the Securities and Exchange Commission on April 17, 2000) 10.7 Acknowledgment and Consent dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Capital Partners II LLC. (Incorporated by reference from Exhibit 10.7 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.8 Indemnification Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Bankers Trust Company. (Incorporated by reference from Exhibit 10.8 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.9 Consent to Amendment to Registration Rights Agreement by TJG Investments, Inc., BEC Partnership, BER Partnership, L.P., BOC Operating Corporation, Tim J. Goff, Thomas Barrow, James E. Sowell, B. Carl Price, Don Wm. Reynolds, Christie Price, Robert Price and Charles D. Laudeman. (Incorporated by reference from Exhibit 10.9 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.10 Credit Agreement dated March 31, 2000, among Bargo Energy Company, Chase Bank of Texas National Association, as administrative agent, Bankers Trust Company, as syndication agent and the other agents and lenders signatory thereto. (Incorporated by reference from Exhibit 10.10 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 11. Statement regarding computation of per share earnings (1) 15. Letter on unaudited interim financial information (1) 18. Letter on change in accounting principles (1) 21. Subsidiaries of the Registrant (2) 22. Published report regarding matters submitted to vote (1) 23. Consents of experts and counsel (1)
21
EXHIBIT NUMBER TITLE OF DOCUMENT 24. Power of attorney (1) 27. Financial data schedule (1) 99. Additional exhibits (1)
---------------------------------- [FN] (1) Inapplicable to this filing. (2) Included herewith. * Confidential treatment has been requested. (b) REPORTS ON FORM 8-K. During the first quarter ended March 31, 2001, Bargo filed reports on Form 8-K as follows: DATE OF EVENT REPORTED ITEM REPORTED ------------------------------------ ----------------------------- January 25, 2001 Item 5. Other Event January 26, 2001 Item 2. Acquisition or Disposition of Assets ------------------------------------------------------------------------------- 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 15, 2001 By: /s/ Jonathan M. Clarkson ------------------------------------ Jonathan M. Clarkson, On behalf of the Registrant and as President 22 The following exhibits are included as part of this report: EXHIBIT INDEX
EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- 2. Plan of acquisition, reorganization, arrangement, liquidation or succession 2.1 Purchase and Sale Agreement between Texaco Exploration & Production Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.2 Asset Purchase Agreement between Four Star Oil & Gas Company and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.2 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.3 Asset Purchase Agreement between McFarland Energy, Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.3 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000 and as amended by Bargo's Current Report on Form 8-KA dated March 31, 2000 filed with the Securities and Exchange Commission on May 26, 2000.) * 2.4 Purchase and Sale Agreement dated November 10, 2000 between Future Cal-Tex Corporation and Merit Partners, L.P. and Merit Energy Partners III, L.P. (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated January 12, 2001, filed with the Securities and Exchange Commission on January 26, 2001) 2.5 Agreement and Plan of Merger, dated as of January 24, 2001, by and between Bargo Energy Company and Bellwether Exploration Company (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated January 24, 2001, filed with the Securities and Exchange Commission on January 25, 2001) 3. Articles of Incorporation and By-laws 3.1 Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.1 to Bargo's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.2 Agreement and Plan of Merger, dated as of April 6, 1999 between Future Petroleum Corporation and FPT Corporation (Incorporated by reference from Exhibit 2.1 to Bargo's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.3 By-laws of Bargo Energy Company (Incorporated by reference
23
EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- from Exhibit 3.2 to Bargo's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.4 Amendment to Bargo Energy Company By-laws (Incorporated by reference from Exhibit 3.4 to Bargo's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 3.5 Articles of Amendment to the Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.5 to Bargo's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 4. Instruments defining the rights of security holders 4.1 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series B (Incorporated by reference from Exhibit 4.1 to Bargo's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 4.2 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series C (Incorporated by reference from Exhibit 3.5 to Bargo's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 10. Material Contracts 10.1 Subscription Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.1 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.2 First Amendment to Second Amended and Restated Shareholders' Agreement, dated March 31, 2000, among Bargo Energy Company, B. Carl Price, Don Wm. Reynolds, Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, BER Partnership L.P., TJG Investments, Inc., BEC Partnership, BOC Operating Corporation, Inc., Tim J. Goff, Thomas Barrow, James E. Sowell, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.2 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the
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EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- Securities and Exchange Commission on April 17, 2000) 10.3 Third Amendment to Registration Rights Agreement dated March 31, 2000 among Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.3 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.4 First Amendment to Stock Purchase Agreement dated March 31, 2000, among Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC and Bargo Energy Company. (Incorporated by reference from Exhibit 10.4 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.5 Assignment, Acknowledgment, Consent and Waiver dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.5 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.6 Escrow Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., EnCap Equity 1994, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.6 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.7 Acknowledgment and Consent dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Capital Partners II LLC. (Incorporated by
25
EXHIBIT NUMBER TITLE OF DOCUMENT -------------- ----------------- reference from Exhibit 10.7 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.8 Indemnification Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Bankers Trust Company. (Incorporated by reference from Exhibit 10.8 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.9 Consent to Amendment to Registration Rights Agreement by TJG Investments, Inc., BEC Partnership, BER Partnership, L.P., BOC Operating Corporation, Tim J. Goff, Thomas Barrow, James E. Sowell, B. Carl Price, Don Wm. Reynolds, Christie Price, Robert Price and Charles D. Laudeman. (Incorporated by reference from Exhibit 10.9 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.10 Credit Agreement dated March 31, 2000, among Bargo Energy Company, Chase Bank of Texas National Association, as administrative agent, Bankers Trust Company, as syndication agent and the other agents and lenders signatory thereto. (Incorporated by reference from Exhibit 10.10 to Bargo's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 11. Statement regarding computation of per share earnings (1) 15. Letter on unaudited interim financial information (1) 18. Letter on change in accounting principles (1) 21. Subsidiaries of the Registrant (2) 22. Published report regarding matters submitted to vote (1) 23. Consents of experts and counsel (1) 24. Power of attorney (1) 27. Financial data schedule (1) 99. Additional exhibits (1)
[FN] (1) Inapplicable to this filing. (2) Included herewith. * Confidential treatment has been requested.