-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F/xPX3H9IbacQ0A5xB2XbMcRtoJ+WtoFK6grxipizYBtx5sYZyvhwZgJdFT7uaQZ 7AhuebV1I5YWfDeOHwNzDg== 0000950134-02-001818.txt : 20020415 0000950134-02-001818.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950134-02-001818 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020305 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20020306 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST MARY LAND & EXPLORATION CO CENTRAL INDEX KEY: 0000893538 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 410518430 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20872 FILM NUMBER: 02567763 BUSINESS ADDRESS: STREET 1: 1776 LINCOLN ST STE 1100 CITY: DENVER STATE: CO ZIP: 80203 BUSINESS PHONE: 3038618140 8-K 1 d94730e8-k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) March 5, 2002 (March 5, 2002) ST. MARY LAND & EXPLORATION COMPANY (Exact name of registrant as specified in its charter) Delaware 000-20872 41-0518430 (State or other jurisdiction (Commission (I.R.S Employer of incorporation) File Number) Identification No.) 1776 Lincoln Street, Suite 1100, Denver, Colorado 80203 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 861-8140 Not applicable (Former name or former address, if changed since last report.) Item 7. Financial Statements and Exhibits. (c) Exhibits. The following exhibit is furnished as part of this report: Exhibit 99.1 Certain Information Disclosed to Prospective Private Placement Purchasers of Senior Convertible Notes Not Previously Publicly Reported. Item 9. Regulation FD Disclosure. In accordance with General Instruction B.2 of Form 8-K, the following information, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing. On March 5, 2002, the registrant announced, and filed the press release containing such announcement in a separate Current Report on Form 8-K dated March 5, 2002, that it intends to offer, subject to market and other conditions, $75 million of senior convertible notes due 2022 (plus an additional amount of up to $15 million at the option of the purchasers) in a private placement. The notes will be convertible into St. Mary common stock at the option of the holders under certain circumstances, at a price to be determined. The offering is expected to close in mid-March 2002. In connection with this private placement, the registrant anticipates disclosing to prospective purchasers certain information that has not been previously publicly reported. A copy of such information is attached hereto as Exhibit 99.1. The notes and the common stock issuable upon conversion of the notes have not been registered under the Securities Act of 1933 or any state securities laws and are being offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933. Unless so registered, the notes and common stock issued upon conversion of the notes may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. This report shall not constitute an offer to sell nor a solicitation of an offer to buy any of these securities. This report contains forward looking statements within the meaning of federal securities laws. The words "intend" and "expect" and similar expressions are intended to identify forward looking statements. These statements involve known and unknown risks, which may cause the registrant's actual results to differ materially from results expressed or implied by the forward looking statements. These risks include such factors as the uncertainty of financial market conditions, the volatility and levels of oil and natural gas prices, and other matters discussed under the "Risk Factors" section of the registrant's 2000 Annual Report on Form 10-K. As a result of these risks, the registrant cannot assure you that it will be able to complete the proposed private offering. Although the registrant may from time to time voluntarily update its forward looking statements, it disclaims any commitment to do so except as required by federal securities laws. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ST. MARY LAND & EXPLORATION COMPANY Date: March 5, 2002 By: /s/ RICHARD C. NORRIS --------------------- Richard C. Norris Vice President-Finance EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- 99.1 Certain Information Disclosed to Prospective Private Placement Purchasers of Senior Convertible Notes Not Previously Publicly Reported.
EX-99.1 3 d94730ex99-1.txt CERTAIN INFORMATION EXHIBIT 99.1 DRILLING, FINDING COSTS AND PRODUCTION REPLACEMENT From January 1, 1999 through December 31, 2001, we participated in the drilling and recompletion of 622 gross wells with an average success rate of 84%. From January 1, 1999 through December 31, 2001, we added estimated proved reserves of 347 BCFE at an average finding cost of $1.15 per MCFE. Our average annual production replacement was 251% during this three-year period. Our production has grown at an average rate of 18% per year over the same time period. OPERATION OF PROPERTIES At December 31, 2001, we operated 58% of our properties on a volume basis and 54% on a PV-10 value basis. We are the operator of properties representing approximately 73% of our 2002 drilling capital budget. RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) The following table shows our unaudited ratio of earnings to fixed charges for the periods shown. The ratio of earnings to fixed charges has been computed by dividing earnings available for fixed charges (earnings from continuing operations before income taxes) by fixed charges (interest expense plus capitalized interest). Interest expense includes the portion of operating rental expense that we believe is representative of the interest component of rental expense.
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, - ----------------- -------------------------------- 2001 2000 2000 1999 1998 1997 1996 - -------- ------ ---- ---- ---- ---- ---- 116.2 74.9 86.1 0.6 (6.7) 27.6 7.7
Earnings in 1999 and 1998 were inadequate to cover fixed charges, with a deficiency of $0.6 million and $14.3 million, respectively. Our unaudited pro forma ratio of earnings to fixed charges which gives effect to our intended use of proceeds from the intended offering to repay outstanding debt under our revolving credit facility would be 128.2 for the nine months ended September 30, 2001 and 104.9 for the year ended December 31, 2000. CAPITAL AND EXPLORATION EXPENDITURES FOR THE YEAR ENDED DECEMBER 31, 2001 (In thousands) Development.................................. $ 98,617 Exploration.................................. 24,506 Acquisitions: Proved..................................... 41,188 Unproved................................... 18,552 -------- Total........................................ $182,863 ========
St. Mary's total costs incurred for capital and exploration activities in 2001 increased $57.7 million or 46% compared to 2000. We spent $141.7 million in 2001 for unproved property acquisitions and domestic exploration and development compared to $71.7 million for the comparable period in 2000. Unproved property acquisitions increased by $12.9 million as a result of general leasing activity and our acquisition of prospective coalbed methane development leases in the Hanging Woman Basin of Montana and Wyoming. We have drilled an 18-well pilot program and are evaluating its results. ESTIMATED PROVED RESERVES, PV-10 VALUES AND RESERVE LIFE Information concerning each of our major areas of operations, based on our estimated proved reserves as of December 31, 2001, is shown below.
ESTIMATED PROVED RESERVES ------------------------------------- MMCFE PV-10 VALUE OIL GAS ----------------- ------------------------ (MBBLS) (MMCF) AMOUNT PERCENT (IN THOUSANDS) PERCENT ------- ------- ------- ------- -------------- ------- Mid-Continent Region............... 1,203 119,062 126,281 33.0% $126,219 34.7% ArkLaTex Region.................... 1,295 40,940 48,711 12.7% 37,978 10.4% Gulf Coast and Gulf of Mexico...... 1,025 44,126 50,274 13.1% 63,594 17.5% Williston Basin.................... 16,248 24,376 121,867 31.8% 101,930 28.0% Permian Basin...................... 3,898 12,727 36,114 9.4% 34,074 9.4% ------ ------- ------- ----- -------- ----- Total............................ 23,669 241,231 383,247 100.0% $363,795 100.0% ====== ======= ======= ===== ======== =====
Values of our reserves at December 31, 2001 were estimated starting with a calculated weighted average sales price of $19.84 per barrel of oil (NYMEX) and $2.65 per MMBtu of gas (Gulf Coast spot price), then adjusted for quality and basis differentials. During 2001, our realized gas prices were as high as $7.86 per Mcf and as low as $2.21 per Mcf. As of December 31, 2001, our proved reserves, if produced constantly at the 2001 rate of production, would produce for approximately 7.1 years. ACQUISITION FROM MERCHANT RESOURCES #1 L.P. In February 2002 we acquired oil and gas properties and an 89-mile gas gathering system in the Arkoma Basin from Merchant Resources #1 L.P. of Houston, Texas for $7.75 million in cash. The properties include undrilled locations and are expected to complement other St. Mary properties in the area. The properties currently produce an estimated 1,200 Mcf of gas and 65 barrels of oil per day. JUDGE DIGBY FIELD We have interests in the Judge Digby Field ranging from 11.5% to 20% in nine wells that are producing a total of 130 MMcf per day on a gross basis as of February 12, 2002. Production from the Judge Digby Field accounted for approximately 16% of our total oil and gas production volumes during 2001. DRILLING ACTIVITY The following table sets forth the wells drilled and recompleted in which St. Mary participated during the year ended December 31, 2001:
2001 ------------- GROSS NET ----- ----- Development: Oil..................................... 48 14.49 Gas..................................... 154 33.28 Non-productive.......................... 31 7.13 --- ----- 233 54.90 --- ----- Exploratory: Oil..................................... 3 1.55 Gas..................................... 9 1.84 Non-productive.......................... 7 2.56 --- ----- 19 5.95 --- ----- Farmout or non-consent.................... 9 -- --- ----- Total(1).................................. 261 60.85 === =====
- ---------- (1) Does not include 12 gross wells completed on St. Mary's fee lands during 2001. All of our drilling activities are conducted on a contract basis with independent drilling contractors. We do not own any drilling equipment. ACREAGE The following table sets forth the gross and net acres of developed and undeveloped oil and gas leases, fee properties, mineral servitudes and lease options held by St. Mary as of December 31, 2001. Undeveloped acreage includes leasehold interests that may already have been classified as containing proved undeveloped reserves.
DEVELOPED ACRES(1) UNDEVELOPED ACRES(2) TOTAL ------------------- --------------------- ------------------- GROSS NET GROSS NET GROSS NET -------- -------- --------- --------- --------- ------- Arkansas.......................... 2,255 399 167 28 2,422 427 Louisiana......................... 98,588 33,493 41,837 13,818 140,425 47,311 Montana........................... 43,135 21,869 191,747 144,870 234,882 166,739 New Mexico........................ 7,280 2,196 1,320 913 8,600 3,109 North Dakota...................... 55,464 22,080 136,511 67,592 191,975 89,672 Oklahoma.......................... 193,443 44,728 53,883 18,940 247,326 63,668 Texas............................. 136,460 48,080 119,252 38,896 255,712 86,976 Wyoming........................... 12,209 3,318 48,415 38,693 60,624 42,011 Other(3).......................... 2,501 346 8,083 4,884 10,584 5,230 ------- ------- ------- ------- --------- ------- 551,335 176,509 601,215 328,634 1,152,550 505,143 ------- ------- ------- ------- --------- ------- Louisiana Fee Properties.......... 10,357 10,357 14,557 14,557 24,914 24,914 Louisiana Mineral Servitudes...... 9,845 5,360 4,768 4,241 14,613 9,601 ------- ------- ------- ------- --------- ------- 20,202 15,717 19,325 18,798 39,527 34,515 ------- ------- ------- ------- --------- ------- Total........................... 571,537 192,226 620,540 347,432 1,192,077 539,658 ======= ======= ======= ======= ========= =======
- ---------- (1) Developed acreage is acreage assigned to producing wells for the spacing unit of the producing formation. Developed acreage in certain of St. Mary's properties that include multiple formations with different well spacing requirements may be considered undeveloped for certain formations, but have only been included as developed acreage in the presentation above. (2) Undeveloped acreage is lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and gas regardless of whether such acreage contains estimated proved reserves. (3) Includes interests in Alabama, Colorado, Kansas, Mississippi, South Dakota, Utah and Washington. St. Mary also holds an override interest in an additional 44,388 gross acres in Utah. MAJOR CUSTOMERS During 2001 sales to Transok Gas Company accounted for 12.0% and sales to BP Amoco accounted for 11.3% of our total oil and gas production revenue. EMPLOYEES AND OFFICE SPACE As of December 31, 2001, St. Mary had 176 full-time employees. None of our employees is subject to a collective bargaining agreement. We consider our relations with our employees to be good. We lease approximately 42,660 square feet of office space in Denver, Colorado for our executive and administrative offices, of which 7,600 square feet is subleased. We also lease approximately 15,000 square feet of office space in Tulsa, Oklahoma, approximately 11,700 square feet of office space in Shreveport, Louisiana, approximately 7,500 square feet in Lafayette, Louisiana and approximately 15,830 square feet in Billings, Montana. LEGAL PROCEEDINGS A lawsuit has been filed in the Federal District Court in Montana by an environmental public interest group seeking the cancellation of all federal leases related to coalbed methane development issued in the State of Montana since January 1, 1997 on the grounds of an alleged failure of the federal Bureau of Land Management to comply with federal environmental laws. The lawsuit potentially affects 74,000 acres of the 115,000 acres in our Hanging Woman Basin coalbed methane project. While we have not been made a party to the lawsuit and while we believe upon the basis of information presently available to us that the applicable environmental laws have been complied with, there is no assurance of the outcome of the lawsuit and therefore there is no assurance that it will not adversely affect our coalbed methane prospect. However, even if the Montana federal leases become unavailable, we anticipate continuing with the Hanging Woman Basin prospect in Wyoming and obtaining additional non-federal leases in Montana. BANK CREDIT FACILITY In November 2001, the lenders under our bank credit facility agreement agreed to an increase in the accepted borrowing base to $100 million and we borrowed an additional $40.5 million to finance the acquisition of oil and gas properties from Choctaw. As of February 28, 2002 $50 million was outstanding under this facility. Outstanding balances accrue interest at rates determined by our debt to total capitalization ratio. We are in the process of negotiating an amendment to the facility to obtain the banks' consent to the intended offering, which amendment will be subject to the completion of the offering. Pursuant to this amendment, during the revolving period of the loan, loan balances will accrue interest at our option of either (1) the higher of the federal funds rate plus 1/2% or the prime rate, plus an additional 1/4% when our debt to capitalization ratio is greater than 50%, or (2) the London interbank offered rate plus (a) 1% when our debt to total capitalization is less than 30%, (b) 1 1/4% when our debt to capitalization ratio is greater than or equal to 30% but less than 40%, (c) 1 3/8% when our debt to capitalization ratio is greater than or equal to 40% but less than 50%, or (d) 1 5/8% when our debt to capitalization ratio is greater than 50%. Our debt to total capitalization ratio as defined under the credit agreement was 4.8% as of September 30, 2001. Amounts repaid under the revolving loan provision of the credit facility will be available for reborrowing, subject to borrowing base limitations until June 30, 2003. Our next borrowing base redetermination is scheduled to occur on or before April 15, 2002. Our current indebtedness under the revolving bank credit facility is unsecured. We intend to repay the $50 million outstanding, as of February 28, 2002, under the facility with a portion of the net proceeds from the intended offering. The amendment to the facility in connection with the intended offering provides that we must within 30 days after the closing of the intended offering provide a pledge of collateral in favor of the banks to secure repayment of any future borrowings under the facility. Such collateral will consist primarily of security interests in the oil and gas properties of St. Mary and its subsidiaries. Accordingly, any future indebtedness to the banks under the facility will be secured and senior to the offered notes, which will be unsecured. -----END PRIVACY-ENHANCED MESSAGE-----