10-K/A 1 delta10ka.txt DELTA PETROLEUM CORP. FORM 10-K/A 6-30-04 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K/A AMENDMENT NO. 1 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended June 30, 2004. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _________. Commission File No. 0-16203 DELTA PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) Colorado 84-1060803 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 475 17th Street, Suite 1400 Denver, Colorado 80202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 293-9133 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under to Section 12(g) of the Exchange Act: Common Stock, $.01 par value Check whether issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. [X] Yes [ ] No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) [ ]Yes No [X] The aggregate market value as of September 7, 2004 of voting stock held by non-affiliates of the registrant was approximately $407,611,000. As of September 10, 2004, 39,314,949 shares of registrant's Common Stock $.01 par value were issued and outstanding. Documents incorporated by reference: None. Explanatory Note: Item 4A is hereby deleted in this Report on Form 10-K. PART III DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following information with respect to the Directors, a person who has been elected a Director and the Executive Officers of Delta is furnished pursuant to Item 401(a) of Regulation S-K.
Name Age Positions Period of Service ---- --- --------- ----------------- Roger A. Parker 42 President, Chief Executive May 1987 to Present Officer and a Director Aleron H. Larson, Jr 59 Chairman of the Board, May 1987 to Present Secretary, and a Director Jerrie F. Eckelberger 60 Director September 1996 to Present James B. Wallace 75 Director November 2001 to Present Joseph L. Castle II 72 Director June 2002 to Present Russell S. Lewis 49 Director June 2002 to Present John P. Keller 65 Director June 2002 to Present Jordan R. Smith 70 Director October 1, 2004 to Present Neal A. Stanley 57 Elected as a Director Effective October 31, 2004 Kevin K. Nanke 39 Chief Financial Officer December 1999 to Present and Treasurer John R. Wallace 44 Executive Vice President, December 2003 to Present Exploration and Chief Operating Officer
The following is biographical information as to the business experience of each of our current officers and directors. Roger A. Parker has operated as an independent in the oil and gas industry individually and through public and private ventures since 1982. He was at various times, from 1982 to 1989, a Director, Executive Vice President, President and shareholder of Ampet, Inc. He has also served as the President, a Director and Chief Operating Officer of Chippewa Resources Corporation from July of 1990 through March 1993 when he resigned after a change of control. Mr. Parker also serves as President, Chief Executive Officer and Director of Amber. He received a Bachelor of Science in Mineral Land Management from the University of Colorado in 1983. He is a member of the Rocky Mountain Oil and Gas Association and is a board member of the Independent Producers Association of the Mountain States (IPAMS). He also serves on other boards including Community Banks of Colorado. 2 Aleron H. Larson, Jr. has operated as an independent in the oil and gas industry individually and through public and private ventures since 1978. Mr. Larson served as the Chairman, Secretary, CEO and a Director of Chippewa Resources Corporation, a public company then listed on the American Stock Exchange from July 1990 through March 1993 when he resigned after a change of control. Mr. Larson serves as Chairman of the Board, Secretary and Director of Amber Resources Company ("Amber"), a public oil and gas company which is our majority-owned subsidiary. Mr. Larson practiced law in Breckenridge, Colorado from 1971 until 1974. During this time he was a member of a law firm, Larson & Batchellor, engaged primarily in real estate law, land use litigation, land planning and municipal law. In 1974, he formed Larson & Larson, P.C., and was engaged primarily in areas of law relating to securities, real estate, and oil and gas until 1978. Mr. Larson received a Bachelor of Arts degree in Business Administration from the University of Texas at El Paso in 1967 and a Juris Doctor degree from the University of Colorado in 1970. Jerrie F. Eckelberger is an investor, real estate developer and attorney who has practiced law in the State of Colorado since 1971. He graduated from Northwestern University with a Bachelor of Arts degree in 1966 and received his Juris Doctor degree in 1971 from the University of Colorado School of Law. From 1972 to 1975, Mr. Eckelberger was a staff attorney with the Eighteenth Judicial District Attorney's Office in Colorado. From 1975 to present, Mr. Eckelberger has been engaged in the private practice of law and is presently a member of the law firm of Eckelberger & Jackson, LLC. Mr. Eckelberger previously served as an officer, director and corporate counsel for Roxborough Development Corporation. Since March, 1996, Mr. Eckelberger has engaged in the investment and development of Colorado real estate through several private companies in which he is a principal. James B. Wallace has been involved in the oil and gas business for over 40 years and has been a partner of Brownlie, Wallace, Armstrong and Bander Exploration in Denver, Colorado since 1992. From 1980 to 1992 he was Chairman of the Board and Chief Executive Officer of BWAB Incorporated. Mr. Wallace currently serves as a member of the Board of Directors and formerly served as the Chairman of Tom Brown, Inc., an oil and gas exploration company then listed on the New York Stock Exchange. He received a B.S. Degree in Business Administration from the University of Southern California in 1951. Joseph L. Castle II has been a Director of Castle Energy Corporation ("Castle") since 1985. Mr. Castle is the Chairman of the Board of Directors and Chief Executive Officer of Castle, having served as Chairman from December 1985 through May 1992 and since December 20, 1993. Mr. Castle also served as President of Castle from December 1985 through December 20, 1993, when he reassumed his position as Chairman of the Board. Previously, Mr. Castle was Vice President of Philadelphia National Bank, a corporate finance partner at Butcher and Sherrerd, an investment banking firm, and a Trustee of The Reading Company. Mr. Castle has worked in the energy industry in various capacities since 1971. Mr. Castle is also a director of Comcast Corporation and Charming Shoppes, Inc. Since May of 2000, Mr. Castle has served as the Chairman of the Board of Trustees of the Diet Drug Products Liability ("Phen-Fen") Settlement Trust. Russell S. Lewis has been a director of Castle since April 2000. From 1994 to 1999, Mr. Lewis was the Chief Executive Officer of TransCore, Inc., a company which sells and installs electronic toll collection systems. Since 1999, Mr. Lewis has been the owner and President of Lewis Capital Group, a company investing in and providing consulting services to growth-oriented companies. Since March 2000, Mr. Lewis has also been Senior Vice President of 3 Corporate Development at VeriSign, Inc. In February of 2002, Mr. Lewis joined VeriSign full-time as Executive Vice President and General Manager of VeriSign's Global Registry Services Group, which maintains the authoritative database for all ".com," ".net" and ".org" domain names in the Internet. John P. Keller has been a director of Castle since April 1997. Since 1972, Mr. Keller has served as the President of Keller Group, Inc., a privately-held corporation with subsidiaries in Ohio, Pennsylvania and Virginia. In 1993 and 1994, Mr. Keller also served as the Chairman of American Appraisal Associates, an appraisal company. Mr. Keller is also a director of A.M. Castle & Co. Jordan R. Smith has been a director of the Company since October 1, 2004. Mr. Smith is President of Ramshorn Investments, Inc., a wholly owned subsidiary of Nabors Drilling USA LP, where he is responsible for drilling and development projects in a number of producing basins in the United States. He has served in such capacity for more than the past five years. Mr. Smith has served on the Board of the University of Wyoming Foundation and the Board of the Domestic Petroleum Council, and is also Founder and Chairman of the American Junior Golf Association. Mr. Smith received Bachelors and Masters Degrees in geology from the University of Wyoming in 1956 and 1957, respectively. Neal A. Stanley will become director of the Company on October 31, 2004. Since June 2003, Mr. Stanley has been President of Teton Oil & Gas Corporation in Denver, Colorado. From 1996 to June 2003, he was Senior Vice President Western Region for Forest Oil Corporation. Mr. Stanley has approximately forty years of experience in the oil and gas business. Since 1995, he has been a member of the Executive Committee of the Independent Petroleum Association of Mountain States, and served as its President from 1999 to 2001. Mr. Stanley received a BS Degree in Mechanical Engineering form the University of Oklahoma in 1975. Kevin K. Nanke, Treasurer and Chief Financial Officer, joined Delta in April 1995. Since 1989, he has been involved in public and private accounting with the oil and gas industry. Mr. Nanke received a Bachelor of Arts in Accounting from the University of Northern Iowa in 1989. Prior to working with us, he was employed by KPMG LLP. He is a member of the Colorado Society of CPA's and the Council of Petroleum Accounting Society. John R. Wallace, Executive Vice President, Exploration and Chief Operating Officer, joined Delta in October 2003 initially as an employee and became an executive officer in December 2003. Mr. Wallace was Vice President of Exploration and Acquisitions for United States Exploration, Inc. ("USX"), a publicly-held oil and gas exploration company, from May 1998 to December 2003, when he became employed by Delta. For more than five years prior to joining USX, Mr. Wallace was President of The Esperanza Corporation, a privately held oil and gas acquisition company, and Vice President of Dual Resources, Inc., a privately held oil and gas exploration company. Esperanza effected more than 25 acquisitions of producing properties throughout the United States. In addition, Esperanza formed and administered royalty programs for private investors, primarily in the Rocky Mountain region, and has participated in a number of international exploration projects. Dual Resources is in the business of engineering and selling exploration prospects, several of which have resulted in new field discoveries. Mr. Wallace is the son of John B. Wallace, a Director of the Company. Messrs. Castle, Lewis and Keller were proposed for appointment to the Board by Castle Energy Corporation pursuant to the Purchase and Sale Agreement 4 between Delta and Castle Energy Corporation effective October 1, 2001. Messrs. Castle, Lewis and Keller are also directors of Castle Energy Corporation. Messrs. Castle, Wallace and Eckelberger served as the Incentive Plan Committee and as the Compensation Committee until October 1, 2004. Effective on that date, these committees are composed of Messrs. Eckelberger, Lewis, Keller and Smith, all of whom are independent directors. Messrs. Lewis, Keller, Eckelberger and Wallace served as the Audit Committee and the Nominating Committee until October 1, 2004. Effective on that date, these committees are composed of Messrs. Eckelberger, Lewis, Keller and Smith, all of whom are independent directors. The Board of Directors has determined that Mr. Russell Lewis is an "audit committee financial expert" as that term is defined by SEC rules. The Nominating Committee does not currently have a charter. The Nominating Committee has not established any minimum qualifications for persons to be considered for nomination, but will be guided by the following criteria: that the individual be of the highest character and integrity; be free of any conflict of interest that would violate any applicable law or regulation or interfere with proper performance of the responsibilities of a Director; possess substantial and significant experience that would be of particular importance to Delta in the performance of the duties of a Director; have sufficient time available to devote to the affairs of Delta; and have a desire to represent the balanced best interests of the shareholders as a whole. All directors will hold office until the next annual meeting of shareholders. All of our officers will hold office until the next annual directors' meeting. There is no arrangement or understanding among or between any such officers or any persons pursuant to which such officer is to be selected as one of our officers. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and persons who beneficially own more than ten percent (10%) of a registered class of our equity securities, to file initial reports of securities ownership of Delta and reports of changes in ownership of equity securities of Delta with the Securities and Exchange Commission ("SEC"). Such persons also are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, during the fiscal year ended June 30, 2004, our officers and directors complied with all applicable Section 16(a) filing requirements, except as stated below. These statements are based solely on a review of the copies of such reports furnished to us by our officers and directors and their written representations that such reports accurately reflect all reportable transactions. Jerrie F. Eckelberger, a Director, filed two Form 4's reporting two transactions late; and Russell S. Lewis, John P. Keller and James B. Wallace, Directors, each filed one Form 4 reporting one transaction late. 5 CODE OF ETHICS The Board of Directors adopted a Code of Business Conduct and Ethics in November 2003 (and amended in October 2004), which applies to all of the Company's Executive Officers, Directors and employees. A copy of the Code of Business Conduct and Ethics is available on the Company's website (www.deltapetro.com) or by writing to our Corporate Secretary at 475 Seventeenth Street, Suite1400, Denver, Colorado 80202. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION Long-Term Compensation ------------ Awards ------------ Annual Securities Compensation Underlying Name -------------------- Options/ All Other Principal Position Period Salary(1) Bonus SARs (#) Compensation($)(7) ------------------ ------ --------- -------- ------------ ------------------ Roger A. Parker Year Ended President, Chief 6/30/04 $340,000 $340,000 500,000(2) $41,000 Executive Officer Year Ended and Director 6/30/03 240,000 272,000 - 40,000 Year Ended 6/30/02 240,000 144,000 175,000(3) 20,000 Aleron H. Larson, Jr. Year Ended Chairman, Secretary 6/30/04 $275,000 $200,000 500,000(2) $41,000 and Director Year Ended 6/30/03 240,000 192,500 - 40,000 Year Ended 6/30/02 240,000 144,000 175,000(3) 20,000 Kevin K. Nanke Year Ended Chief Financial Officer 6/30/04 $200,000 $200,000 250,000(4) $41,000 and Treasurer Year Ended 6/30/03 180,000 130,000 - 40,000 Year Ended 6/30/02 144,000 86,400 100,000(5) 20,000 John R. Wallace Year Ended Executive Vice President 6/30/04 $150,000 $200,000 100,000(6) $ - and Chief Operating Officer __________________________ (1) Includes reimbursement of certain expenses. (2) Includes options to purchase 500,000 shares of Common Stock at $5.29 per share until August 26, 2013. (3) Includes options to purchase 175,000 shares of Common Stock at $2.38 per share until October 5, 2011. (4) Includes options to purchase 250,000 shares of Common Stock at $5.29 per share until August 26, 2013. 6 (5) Includes options to purchase 100,000 shares of Common Stock at $2.38 per share until October 5, 2011. (6) Includes options to purchase 200,000 shares of Common Stock at $5.44 per share until December 8, 2013. (7) Represents amounts contributed under the Company's Simple IRA Plan and Profit Sharing Plan.
OPTION / SAR GRANTS IN LAST FISCAL YEAR Potential realizable value at assumed annual rates of stock price appreciation for option Individual Grants term(a) ----------------------------------------------------- -------------------------- Percent of Number of total options securities / SARs underlying granted to option / employees Exercise of SARs in fiscal base price Expiration 5% ($) 10% ($) Name granted(#) year ($/Sh) date $ $ ------------- ----------- ------------- ----------- ---------- ---------- ---------- Roger Parker 500,000 28.8% $5.29 8/26/2013 $1,710,593 $4,334,979 Aleron Larson 500,000 28.8% $5.29 8/26/2013 $1,710,593 $4,334,979 Kevin Nanke 250,000 14.4% $5.29 8/26/2013 $ 831,713 $2,017,724 John Wallace 200,000 11.5% $5.44 12/8/2003 $ 684,237 $1,733,992
(a) The assumed annual rates of stock price appreciation used in showing the potential realizable value of stock option grants are prescribed by rules of the SEC. The actual realized value of the options may be significantly greater or less than the amounts shown. For options granted during fiscal 2004 at exercise prices of $5.29 and $5.44, the value shown for 5% and 10%, for the $5.29 exercise price appreciation equate to common stock prices of $8.62 and $13.72, respectively, and at the values shown for 5% and 10% appreciation for the $5.44 exercise price, appreciation equate to common stock prices of $8.86 and $14.41, respectively, at the expiration date of the options, prices which have already been substantially exceeded.
7 AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/VALUES Number of Securities Value of Underlying Unexercised Unexercised in-the-Money Shares Options at Options at Acquired June 30, 2004(#) June 30, 2004($) on Realized Exercisable/ Exercisable/ Name Exercise (#) ($) Unexercisable Unexercisable ---- ------------ ---------- ---------------- ---------------- Roger A. Parker -- -- 1,425,000/0 $13,071,750/0 Aleron H. Larson, Jr. 134,590 $1,248,259 1,705,000/0 $16,635,750/0 Kevin K. Nanke -- -- 809,047/0 $ 8,139,817/0 John R. Wallace -- -- 0/200,000 $0/$1,602,000
Compensation of Directors As a result of elections made by non-employee directors under the formulas provided in our 2002 Incentive Plan, as amended, we granted options to non-employee directors after the calendar year end as follows: Number Exercise Expiration Director of Options Price Date -------- ---------- -------- ----------- Jerrie F. Eckelberger 20,000 $2.31/sh 2/4/14 James B. Wallace 20,000 2.31/sh 2/4/14 John P. Keller 20,000 2.31/sh 2/4/14 Russell S. Lewis 20,000 2.31/sh 2/4/14 In addition, outside non-employee directors are each paid $500 per month. Employment Contracts and Termination of Employment and Change-in-Control Agreement On November 1, 2001, our Compensation Committee authorized us to enter into employment agreements with our Chairman, President and Chief Financial Officer, which employment agreements replaced and superseded the prior employment agreements with these persons. The employment agreements provided for minimum salaries which could be and were raised from time to time by the Compensation Committee and Board of Directors. For fiscal 2004 our Chairman received a salary of $275,000, our President a salary of $340,000 per year and our Chief Financial Officer a salary of $200,000 per year. Their employment agreements had three-year terms and include provisions for cars, parking and health insurance. These employment agreements expire on October 31, 2004. Retirement Savings Plan During 1997 we began sponsoring a qualified tax deferred savings plan in the form of a Savings Incentive Match Plan for Employees ("Simple") IRA plan available to companies with fewer than 100 employees. On May 21, 2002, we adopted a Profit Sharing Plan to replace the Simple IRA plan, and during the year ended June 30, 2004 we contributed $262,000 under the Simple Sharing Plan. 8 Equity Compensation Plan Information The following table provides information about the Common Stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of June 30, 2004.
Number of Securities Remaining Available for Future Issuance Under Number of Securities Weighted-Average Equity Compensation To be Issued Upon Exercise Exercise Price of Plans (excluding securi- of Outstanding Options, Outstanding Options ties reflected in the Plan Category Warrants and Rights Warrants and Rights second column) ------------- -------------------------- ------------------- ------------------------ Equity Compensation 4,700,772 $4.10 0 Plans Approved by Stockholders Equity Compensation 0 -- 0 Plans Not Approved by Stockholders
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table presents information concerning persons known by us to own beneficially 5% or more of our issued and outstanding voting securities at October 1, 2004:
Name and Address Amount and Nature of Beneficial of Beneficial Percent Title of Class (1) Owner Ownership of Class(2) ------------------ ---------------- ------------------ ----------- Common stock Castle Energy Corporation 7,000,000 shares(3) 17.79% One Radnor Corporate Center, Suite 250 Radnor, PA 19087 Common stock Sprott Asset Management, 4,614,399 shares 11.73% Inc. Suite 2700 South Tower Royal Bank Plaza Toronto, Ontario M5J 2J1 Canada ___________________________ (1) We have an authorized capital of 300,000,000 shares of $.01 par value Common Stock of which 39,337,449 shares were issued and outstanding as of October 1, 2004. We also have an authorized capital of 3,000,000 shares of $.10 par value preferred stock of which no shares are outstanding. (2) The percentage set forth after the shares listed for each beneficial owner is based upon total shares of Common Stock outstanding at October 1, 2004 of 39,337,449. The percentage set forth after each beneficial owner is calculated as if any warrants and/or options owned had been exercised by such beneficial owner and as if no other warrants and/or options owned by any other beneficial owner had been exercised. Warrants and options are aggregated without regard to the class of warrant or option. 9 (3) Joseph L. Castle II is an officer, director and principal shareholder of Castle Energy Corporation and is deemed to share beneficial ownership of these shares.
Security Ownership of Management:
Name Amount and Nature of Beneficial of Beneficial Percent Title of Class (1) Owner Ownership of Class(2) ------------------ ------------- ----------------- ----------- Common Stock Aleron H. Larson, Jr. 1,689,000 (3) 4.12% Common Stock Roger A. Parker 1,808,201 (4) 4.44% Common Stock Kevin K. Nanke 834,047 (5) 2.08% Common Stock John R. Wallace 207,200 (6) .52% Common stock James B. Wallace 52,500 (7) .13% Common stock Jerrie F. Eckelberger 23,725 (8) .06% Common stock Russell S. Lewis 40,000 (9) .10% Common stock John P. Keller 40,000 (9) .10% Common Stock Joseph L. Castle, II 7,000,000(10) 17.79% Common Stock Jordan R. Smith -0- -- Common Stock Neal A. Stanley(11) -0- -- Common stock All Officers and Directors 11,694,673(12) 26.82% as a Group (11 persons) _________________________ (1) See Note (1) to preceding table; includes options. (2) See Note (2) to preceding table. (3) Includes 4,000 shares owned by his children, options to purchase 60,000 shares of Common Stock at $0.05 per share until September 1, 2008; options to purchase 100,000 shares of Common Stock at $0.05 per share until December 10, 2008; options to purchase 100,000 shares of Common Stock at $1.75 until November 5, 2009; options to purchase 300,000 shares of Common Stock at $3.75 per share until July 14, 2010; options to purchase 250,000 shares of Common Stock at $5.00 per share until October 9, 2010; options to purchase 200,000 shares of Common Stock at $3.29 per share until January 8, 2011; options to purchase 175,000 shares of Common Stock at $2.38 per share until October 5, 2011; and options to purchase 500,000 shares of Common Stock at $5.29 per share until August 26, 2013. (4) Includes 383,201 shares owned by Mr. Parker directly. Also includes options to purchase 300,000 shares of Common Stock at $3.75 per share until July 14, 2010; options to purchase 250,000 shares of Common Stock at $5.00 per share until October 9, 2010; options to purchase 200,000 shares of Common Stock at $3.29 per share until January 8, 2011; options to purchase 175,000 shares of Common Stock at $2.38 per share until October 5, 2011; and options to purchase 500,000 shares of Common Stock at $5.29 per share until August 26, 2013. (5) Consists of 25,000 shares of Common Stock owned directly by Mr. Nanke; options to purchase 34,047 shares of Common Stock at $1.125 per share until September 1, 2008; options to purchase 25,000 shares of Common Stock at $1.5625 per share until December 12, 2008; options to purchase 100,000 shares of Common Stock at $1.75 per share until May 12, 2009; options to purchase 75,000 shares of Common Stock at $1.75 per share until November 5, 2009; options to purchase 125,000 shares of Common Stock at $3.75 per share until July 14, 2010; options to purchase 100,000 shares of Common Stock at $3.29 until January 9, 2011;options to purchase; 100,000 shares of Common Stock at $2.38 per share until October 5, 2011; and options to purchase 250,000 shares of Common Stock at $5.29 per share until August 26, 2013. 10 (6) Includes 7,200 shares of Common Stock owned directly by Mr. John Wallace and options to purchase 200,000 shares at $5.44 per share until December 3, 2013. (7) Includes 10,000 shares of Common Stock owned directly by Mr. James B. Wallace; options to purchase 2,500 shares at $2.02 per share until February 5, 2002, options to purchase 20,000 shares at $1.87 per share until February 7, 2013 and options to purchase 20,000 shares at $2.38. (8) Includes 3,000 shares of Common Stock owned directly by Mr. Jerrie F. Eckelberger; options to purchase 725 shares at $2.98 per share until December 31, 2006 and options to purchase 20,000 shares of Common Stock at $2.2.31 until February 4, 2014. (9) Includes 20,000 options to purchase shares of Common Stock at $1.87 per share until February 7, 2013 and 20,000 options to purchase shares of Common Stock at $2.31 until February 4, 2014. (10) Represents the 7,000,000 shares beneficially owned by Castle Energy Corporation of which Mr. Castle is a controlling person. (11) Mr. Stanley will become a Director on October 31, 2004. (12) Includes all warrants, options and shares referenced in footnotes (3), (4), (5), (6), (7), (8), (9) and (10) above as if all warrants and options were exercised and as if all resulting shares were voted as a group.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The following is a list of certain relationships and related party transactions that occurred during our past fiscal year, as well as transactions that occurred since the beginning of our last fiscal year or are currently proposed: At June 30, 2004, we had $ 18,000 of receivables from officers and directors. These amounts include drilling costs, and lease operating expense on wells owned by the officers and directors and operated by us. The amounts were paid subsequent to the end of our fiscal year. During fiscal 2001 and 2000, Mr. Larson and Mr. Parker guaranteed certain borrowings which have subsequently been paid in full. As consideration for the guarantee of our indebtedness, each officer was assigned a 1% overriding royalty interest ("ORRI") in the properties acquired with the proceeds of the borrowings. Each officer earned approximately $66,000, $108,000 and $71,000 for their respective 1% ORRI during fiscal 2004, 2003 and 2002, respectively. On February 12, 2001, our Board of Directors permitted Aleron H. Larson, Jr., Chairman, Roger A. Parker, President, and Kevin Nanke, our Chief Financial Officer, to purchase working interests of 5% each for Messrs. Larson and Parker and 2-1/2% for Mr. Nanke in our Cedar State gas property located in Eddy County, New Mexico and in our Ponderosa Prospect consisting of approximately 52,000 gross acres in Harding and Butte Counties, South Dakota held for exploration. These officers were authorized to purchase these interests on or before March 1, 2001 at a purchase price equivalent to the amounts paid by us for each property as reflected upon our books by delivering to us shares of our common stock at the February 12, 2001 closing price of $5.125 per share, the market closing price on that date. Messrs. Larson and Parker each delivered 10,256 shares in fiscal 2002 and 31,310 shares in fiscal 2001, and Mr. Nanke delivered 5,128 shares in fiscal 2002 and 15,655 shares in fiscal 2001 in exchange for their respective interests in these properties. Also on February 12, 2001, we granted Messrs. Larson, Parker and Nanke the 11 right to participate in the drilling of the Austin State #1 well in Eddy County, New Mexico by committing on February 12, 2001 (prior to any bore hole knowledge or information relating to the objective zone or zones) to pay 5% each for Messrs. Larson and Parker and 2-1/2% for Mr. Nanke of Delta's working interest costs of drilling and completion or abandonment costs which costs were paid in Delta common stock at $5.125 per share, the market closing price on that date. All of these officers committed to participate in the well. During the fiscal year ended June 30, 2004, we used a jet aircraft owned by an entity that is 50% owned by Roger A. Parker, our President. We paid that entity a total of $121,000 for the use of that aircraft. These amounts represented the actual costs of the operation of the aircraft for which Mr. Parker was responsible. Directors and officers were issued options and warrants as disclosed in "Executive Compensation" above. All past and future and ongoing transactions with affiliates are and will be on terms which our management believes are no less favorable than could be obtained from non-affiliated parties. All future and ongoing loans to our affiliates, officials and shareholders will be approved by the majority vote of disinterested directors. PRINCIPAL ACCOUNTING FEES AND SERVICES Audit Fees. The fees billed for professional services rendered by KPMG LLP for the audit of Delta's financial statements for the fiscal years ended June 30, 2004 and 2003, and for the reviews of the financial statements included in Delta's Forms 10-Q during those fiscal years, amounted to $170,000 and $108,000, respectively. Audit Related Fees. The fees billed for professional services rendered by KPMG LLP for assurance and related services that are reasonably related to the performance of the audit or review of Delta's financial statements, that are not included in audit fees above, billed in the fiscal years ended June 30, 2004 and 2003, amounted to $24,000 and $23,000, respectively. Tax Fees. Not Applicable. All Other Fees. The fees billed by KPMG LLP during the fiscal years ended June 30, 2004 and 2003 for all other services rendered amounted to $80,000 and $-0-, respectively. These fees were related to consulting services related to compliance with the Sarbanes Oxley Act of 2002. Audit Committee Pre-Approval Policy. The Company's independent accountants may not be engaged to provide non-audit services that are prohibited by law or regulation to be provided by it, nor may the Company's principal accountant be engaged to provide any other non-audit service unless it is determined that the engagement of the principal accountant provides a business benefit resulting from its inherent knowledge of the Company while not impairing its independence. The Audit Committee must pre-approve permissible non-audit services. During the fiscal year ended June 30, 2004, the Audit Committee approved 100% of the non-audit services provided to Delta by the independent auditors. 12 SIGNATURES Pursuant to the requirements of the Section 13 or 15 (d) or the Securities Exchange of Act of 1934, we have caused this Form 10-K/A Amendment No. 1 to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Denver and State of Colorado on the 28th day of October 2004. DELTA PETROLEUM CORPORATION By: /s/ Kevin K. Nanke Kevin K. Nanke, Treasurer and Chief Financial Officer 13