-----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, NB5ET91FQxEX69Pyq4+77foBvevrWq3l75RyHFFzfmYYXGxACz/qAwAp5EYlB/xx 4juuNRUr5SEhI4bg9O8fDQ== 0000950144-98-012446.txt : 19981116 0000950144-98-012446.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950144-98-012446 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980416 ITEM INFORMATION: FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDDLE BAY OIL CO INC CENTRAL INDEX KEY: 0000903267 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 631081013 STATE OF INCORPORATION: AL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-21702 FILM NUMBER: 98745761 BUSINESS ADDRESS: STREET 1: 1221 LAMAR ST STREET 2: SUITE 1020 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7137596808 MAIL ADDRESS: STREET 1: PO BOX 390 CITY: MOBILE STATE: AL ZIP: 36602 8-K/A 1 MIDDLE BAY OIL COMPANY, INC. 1 United States Securities and Exchange Commission Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 16, 1998 MIDDLE BAY OIL COMPANY, INC. (Exact name of registrant as specified in charter) Alabama 0-21702 63-1081013 (State or other (Commission (IRS Employer jurisdiction File Number) Identification No.) of incorporation) 1221 Lamar Street, Suite 1020, Houston, TX 77010 (Address of principal executive offices) Registrant's telephone number, including area code: (713) 759-6808 Former name or former address, if changed since last report: N/A 2 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION, AND EXHIBITS (B) PRO FORMA FINANCIAL INFORMATION MIDDLE BAY OIL COMPANY, INC. Unaudited Condensed Pro Forma Financial Statements This is Amendment No. 2 to Form 8-K filed with the Commission on May 4, 1998 (the "Original 8-K"). As discussed in Item 2 of the Original 8-K, Middle Bay Oil Company, Inc, ("Middle Bay") closed an Asset Purchase Agreement (the "Agreement") on April 16, 1998, with Service Drilling Co., L.L.C. ("Service Drilling") and certain of its affiliates , whereby Middle Bay acquired all of the assets of Service Drilling and its affiliates in exchange for Middle Bay common stock and cash. Service Drilling and its affiliates are privately-owned domestic oil and gas development and production companies with assets located primarily in Oklahoma and the Texas Panhandle. Pursuant to the Agreement, Middle Bay issued 666,000 shares of its common stock and paid an aggregate cash consideration of $6,500,000, subject to post-closing adjustments, in exchange for the assets. The economic effective date of this transaction is March 1, 1998. Asset values were determined by estimating the discounted reserve value of the acquired properties and through negotiation. The cash portion of the consideration is being financed through Middle Bay's credit facility with Compass Bank and from cash on hand. The following pro forma data presents the results of the Company for the year ended December 31, 1997 and for the three months ended March 31, 1998, as if the Service Drilling acquisition had occurred on January 1, 1997. The pro forma financial statements are also based, in part, on the historical financial statements of Enex Resources Corporation ("Enex"), Shore Oil Company ("Shore") and Bison Energy Corp. ("Bison"). Middle Bay acquired 79.2% of Enex effective March 27, 1998, 100% of Shore effective June 30, 1997 and 100% of Bison effective February 28, 1997. Such historical financial statements for the Enex merger are included in the Form 8-K filed by Middle Bay on May 6, 1998 and such historical financial statements for the Shore merger are included in the Form 8-K/A filed by Middle Bay on September 3. 1997 and such historical financial statements for the Bison merger are included in the Form 8-K/A filed by Middle Bay on April 25, 1997. The Pro Forma Condensed Statements of Operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 have been prepared assuming the merger had been consummated on January 1, 1997. The Pro Forma Consolidated Balance Sheet has been prepared assuming the merger had been consummated on March 31, 1998. The proforma results are presented for comparative purposes only and are not necessarily indicative of the results which would have been obtained had the acquisition been consummated as presented. The following data reflects pro forma adjustments for oil and gas revenues, production costs, depreciation and depletion related to the properties and business acquired, and the related income tax effects. The unaudited condensed pro forma financial statements should be read in conjunction with the notes thereto. 3 Middle Bay Oil Company, Inc. Unaudited Pro Forma Statement of Operations For The Three Months Ended March 31, 1998 (In Thousands, Except Per Share Data) Service Enex Acquisition Drilling Middle Bay Acquisition Pro Forma of Service Pro Forma REVENUES Historical of Enex Adjustments Notes Drilling Adjustments Notes Pro Forma Oil and Gas production and plant income $ 2,632 $ 2,122 $ - $ 516 $ - $ 5,270 Other revenue 125 682 - - - 807 ----------- --------- --------- --------- ---------- --------- Total Revenue 2,757 2,804 - 516 - 6,077 ----------- --------- --------- --------- ---------- --------- COSTS AND EXPENSES Well operating 1,184 1,003 - 323 - 2,510 Geological and geophysical 746 - - - - 746 Dryhole costs 469 - - - - 469 Depreciation, depletion and amortization 1,118 548 235 (1) 169 80 (8) 2,150 Interest 255 - 210 (3) - 106 (9) 571 General and administrative 1,127 1,416 - - - 2,543 ----------- --------- -------- -------------- ------------- --------- Total Expenses 4,899 2,967 445 492 186 8,989 ----------- --------- -------- -------------- ------------- --------- INCOME (LOSS) FROM OPERATIONS (2,142) (163) (445) 24 (186) (2,912) MINORITY INTEREST - (348) 88 (7) - - (260) ----------- ---------- -------- -------------- ------------ --------- Income (loss) before income taxes and investee earnings (2,142) (511) (357) 24 (186) (3,172) Income Tax Expense (Benefit) (728) (87) (151) (4) 8 (63) (10) (1,021) ----------- ---------- ------- -------------- ------------ --------- NET INCOME (LOSS) (1,414) (424) (206) 16 (123) (2,151) DIVIDENDS TO PREFERRED STOCKHOLDERS 68 - - - - 68 ----------- ---------- ------- -------------- ------------ --------- NET LOSS AVAILABLE TO STOCKHOLDERS $ (1,482) $ (424) $ (206) $ 16 $ (123) $ (2,219) =========== ========== ======= ============== ============ ========= Weighted Average Common Shares Outstanding Basic 6,720 7,386 =========== ========= Diluted 6,720 7,386 =========== ========= NET LOSS PER COMMON SHARE Basic $ (0.22) $ (0.30) =========== ========= Diluted $ (0.22) $ (0.30) =========== ========= See Accompanying Notes.
4 Middle Bay Oil Company, Inc. Unaudited Pro Forma Statement of Operations For The Year Ended December 31, 1997 (In Thousands, Except Per Share Data) Acquisition of Bison Acquisition Middle Bay Shore Pro Forma of Service Pro Forma REVENUES Historical & Enex Adjustments Notes Drilling Adjustments Notes Pro Forma Oil and gas production and plant income $ 10,213 $ 12,615 $ - $ 3,174 $ - $ 26,002 Other revenue 1,220 2,193 (26) (5) - - 3,387 ---------- ---------- ---------- --------- --------- ----------- Total Revenue 11,433 14,808 (26) 3,174 - 29,389 ---------- ---------- ---------- --------- --------- ----------- COSTS AND EXPENSES Well operating 3,849 5,707 - 1,242 - 10,798 Geological and geophysical 223 - - - - 223 Abandonment costs 1,119 2 - - - 1,121 Impairments 21,148 - - - - 21,148 Depreciation, depletion and amortization 4,567 2,216 1,498 (1) 676 424 (8) 9,381 Interest 671 160 927 (3) - 424 (9) 2,182 General and administrative 2,880 2,664 (21) (5) - - 5,523 --------- ---------- ----------- --------- ---------- ----------- Total Expenses 34,457 10,749 2,404 1,918 848 50,376 --------- ---------- ----------- --------- ---------- ----------- INCOME (LOSS) FROM OPERATIONS (23,024) 4,059 (2,430) 1,256 (848) (20,987) MINORITY INTEREST - (1,013) (409) (7) - - (1,422) --------- ---------- ----------- --------- ---------- ----------- Income (loss) before income taxes and investee earnings (23,024) 3,046 (3,839) 1,256 (848) (22,409) Equity in net earnings of equity investees - 37 (37) (6) - - - INCOME TAX EXPENSE (BENEFIT) (7,445) 318 (766) (4) 427 (288) (10) (7,754) --------- ---------- ----------- --------- ---------- ----------- NET INCOME (LOSS) (15,579) 2,765 (2,110) 829 (560) (14,655) DIVIDENDS TO PREFERRED STOCKHOLDERS 605 - 173 (2) - - 778 --------- ---------- ----------- --------- ---------- ----------- NET LOSS AVAILABLE TO STOCKHLDERS $(16,184) $ 2,765 $ (2,283) $ 829 $ (560) $ (15,433) ========= ========== =========== ========= ========== =========== Weighted Average Common Shares Outstanding Basic 3,397 5,139 ========= =========== Diluted 3,397 5,139 ========= =========== NET LOSS PER COMMON SHARE Basic $ (4.76) $ (3.00) ========= =========== Diluted $ (4.76) $ (3.00) ========= =========== See Accompanying Notes.
5 Middle Bay Oil Company, Inc. Unaudited Pro Forma Consolidated Balance Sheet As of March 31, 1998 (In Thousands) Acquisition ASSETS Middle Bay of Service Pro Forma Historical Drilling Combined Current Assets: Cash and Cash Equivalents $ 5,947 $ (1,000) $ 4,947 Notes and Accounts Receivable - Trade 2,950 - 2,950 Other Current Assets 471 - 471 Assets Held for Resale 206 - 206 --------- ---------- --------- Total Current Assets 9,574 (1,000) 8,574 --------- ---------- --------- Notes Receivable - Stockholder 168 - 168 Property, Plant and Equipment, at cost: (Successful Efforts Method) Oil and Gas Properties 82,708 11,578 94,286 Furniture, Fixtures and Other 835 - 835 --------- ---------- --------- Total Property 83,543 11,578 95,121 --------- ---------- --------- Accumulated Depreciation and Depletion (31,754) - (31,754) --------- ---------- --------- Net Property 51,789 11,578 63,367 Other Assets 207 - 207 ======== ========== ========= TOTAL ASSETS $61,738 $ 10,578 $ 72,316 ======== ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current Maturity of Long-term Liabilities $ 2,603 $ - $ 2,603 Accounts Payable and accrued expenses 3,392 - 3,392 Oil and Gas Revenue Payable 196 - 196 Other Current Liabilities 908 - 908 -------------- -------------- ---------------- Total Current Liabilities 7,099 - 7,099 -------------- -------------- ---------------- Long-term Debt 24,500 5,500 30,000 Deferred Income Taxes 4,052 - 4,052 Minority Interest 7,668 - 7,668 -------------- -------------- ---------------- TOTAL LIABILITIES 43,319 5,500 48,819 -------------- -------------- ---------------- STOCKHOLDERS' EQUITY Preferred Stock 3,627 - 3,627 Common Stock 157 13 170 Additional Paid-in Capital 32,963 5,065 38,028 Unearned Stock Compensation (34) - (34) Accumulated Deficit (18,227) - (18,227) Less Cost of Treasury Stock; 21,773 shares (68) - (68) -------------- -------------- ---------------- TOTAL STOCKHOLDERS' EQUITY 18,418 5,078 23,496 -------------- -------------- ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 61,737 $ 10,578 $ 72,315 ============== ============== ================
See accompanying notes to unaudited pro forma consolidated financial statements. 6 MIDDLE BAY OIL COMPANY, INC. Notes to Unaudited Condensed Pro Forma Financial Statements Note A - Pro Forma Adjustments for Bison and Shore Mergers On February 10, 1997, Middle Bay and Bison entered into a Merger Agreement whereby Bison was merged into Middle Bay, effective February 28, 1997. The merger was accounted for using the purchase method of accounting. In completing the merger, Middle Bay issued 605,556 shares of Middle Bay common stock and paid $6,654,114 in cash in exchange for all of the issued and outstanding Bison common stock. On June 20, 1997, Middle Bay and Shore entered into a Merger Agreement whereby Shore was merged into Middle Bay effective June 30, 1997. The merger was accounted for using the purchase method of accounting. In completing the merger Middle Bay issued 1,883,333 shares of Middle Bay common stock, 266,667 shares of Middle Bay Series B convertible preferred stock and paid $200,000 in cash in exchange for all of the issued and outstanding Shore common stock. Middle Bay also paid Shore's indebtedness to its shareholders of $2,333,303 and assumed bank debt of Shore amounting to $2,105,000. The mergers were accounted for as purchases of Bison and Shore by Middle Bay and as a result of the purchase method of accounting, Middle Bay's cost of acquiring Bison and Shore were allocated to assets and liabilities acquired based on estimated fair values. Middle Bay incurred approximately $35,000 and $38,000 in legal and accounting expenses related to the Bison and Shore mergers, respectively, which were included as a cost of the merger. The accompanying Pro Forma Combined Condensed Statements of Operations for the year ended December 31, 1997 and for the three months ended March 31, 1998 have been prepared as if the Bison and Shore mergers had occurred on January 1, 1997 and reflect the following adjustments: (1) To adjust depletion, depreciation and amortization expense to reflect Middle Bay's purchase price allocated to property and equipment using the unit of production method utilized by Middle Bay. (2) To record the preferred stock dividends paid on the preferred stock issued for the cash portion of the Bison purchase price and issuded in the Shore purchase price. (3) To record the reduction in interest expense on the debt retired. (4) To adjust the provision for income taxes for the change in financial taxable income as a result of the mergers. (5) To reflect the impact on the weighted average common shares outstanding for the issuance of 2,488,889 shares of Middle Bay common stock in conjunction with the Bison and Shore mergers. 7 (6) To remove management income for accounting and administrative functions performed by Bison for other entities. Subsequent to the merger, Bison no longer performed such functions. (7) To remove equity in net earnings of equity investees that were not purchased. (8) To reflect the issuance of 388,884 shares of Series A Preferred Stock, 266,667 Shares of Series B Preferred Stock and, 2,488,889 shares of Middle Bay common stock in conjunction with the Bison and Shore mergers. Pro Forma basic net income (loss) per common share information is computed by dividing net income (loss), adjusted for the preferred stock dividend requirement of $93,332 for the six months ended June 30, 1997 by the Pro Forma weighted average common shares outstanding. Shares issuable upon exercise of options and upon conversion of preferred stock are included in the computations of the pro forma dilutive income per common and common equivalent shares if the effect is dilutive. Note B - Pro Forma Adjustments for Purchase of Enex Middle Bay Oil Company, Inc, acquired on March 27, 1998, 1,064,432 shares of the common stock of Enex Resources Corporation, a Delaware corporation, for $15,966,480 or $15 per share pursuant to Middle Bay's tender offer (the "tender offer") which began on February 19, 1998. The Enex shares acquired by Middle Bay represent 79.2% of the total outstanding Enex common shares. Enex is the general partner of Enex Consolidated Partners, L.P., a New Jersey Limited Partnership whose principal business is oil and gas production. Enex's general partner interest is 4.1%. Enex also owns an approximate 55% interest in the partnership as a limited partner. The cost of allocating the purchase of Enex was allocated using the purchase method of accounting based upon the fair value of the consolidating assets and liabilities of Enex with the remaining purchase price allocated to oil and gas properties. The allocation of the purchase price is summarized as follows: (in thousands) Working capital........................... $ 4,812 Oil and gas properties.................. 18,821 Minority Interest.......................... (7,667) -------- $ 15,966 The total cost of the purchase was $15.966 million. The cash portion of the cost was $1.5 million with the remaining $14.466 million derived from Middle Bay's line of credit, which has a stated interest rate of LIBOR plus 2%. The accompanying Pro Forma Combined Condensed Statements of Operations for the year ended December 31, 1997 and for the three months ended March 31, 1998 have been prepared as if the Enex purchase had occurred on January 1, 1997 and reflect the following adjustments: 8 (9) To adjust depletion, depreciation, and amortization to reflect Middle Bay's purchase price allocated to property and equipment using the production method utilized by Middle Bay. (10) To recognize the additional interest expense resulting from a $15.012 million loan against Middle Bay's line of credit at LIBOR plus 2%. (11) Middle Bay's 79.2% ownership of Enex will not permit consolidation of Enex with MIddle Bay for tax reporting purposes. (12) To recognize the portion of Enex's income/loss attributable to the minority interest shareholders in Enex. 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MIDDLE BAY OIL COMPANY, INC. (Registrant) November 12, 1998 By: /s/ Frank C. Turner II Frank C. Turner II Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----