-----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, LhbRgUzj/YWVnmV10c5EJ4jk5NYv3q7tnS27RVVQifXsQxYzuBSXSbva+rHtALYg nSrugK11Bu2hR5rLaCrFqA== 0000928022-97-000014.txt : 19970811 0000928022-97-000014.hdr.sgml : 19970811 ACCESSION NUMBER: 0000928022-97-000014 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970626 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALLON PETROLEUM CO CENTRAL INDEX KEY: 0000928022 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 640844345 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-25192 FILM NUMBER: 97654213 BUSINESS ADDRESS: STREET 1: 200 N CANAL ST CITY: NATCHEZ STATE: MS ZIP: 39120 BUSINESS PHONE: 6014421601 MAIL ADDRESS: STREET 1: 200 N CANAL ST CITY: NATCHEZ STATE: MS ZIP: 39120 FORMER COMPANY: FORMER CONFORMED NAME: CALLON PETROLEUM HOLDING CO DATE OF NAME CHANGE: 19940805 8-K/A 1 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): JUNE 26, 1997 CALLON PETROLEUM COMPANY (Exact name of Registrant as specified in its charter) Delaware 0-16866 64-0844345 (State or other jurisdiction of Commission (I.R.S. Employer incorporation or organization) File Number Identification No.) 200 North Canal Street Natchez, Mississippi 39120 (Address of Principal Executive Offices) (Including Zip Code) (601) 442-1601 (Registrant's telephone number, including area code) Item 2. Acquisition or Disposition of Assets On June 26, 1997, Callon Petroleum Operating Company ("CPOC"), a wholly owned subsidiary of Callon Petroleum Company (the "Company"), and Elf Exploration, Inc. ("Elf") executed a purchase and sale agreement whereby CPOC purchased an 18.8% working interest in the Mobile Area Block 864 Unit. The purchase included a 17.5% working interest in Mobile Area Blocks 863 and 907 and a 35% working interest in Mobile Area Block 908. The Unit, operated by Chevron, is located approximately 12 miles south-southwest of the Company's North Dauphin Island Field which is located in shallow Alabama state waters. The net purchase price of $11.8 million was funded from the credit facility of the Company. The purchase price was based on the discounted present value of reserves attributable to the wells and the fair value of the related pro- duction platforms, facilities, equipment and acreage outside of the producing Unit. Item 7. Financial Statements and Exhibits (a) Financial Statements of Properties Acquired The following audited financial statements are filed with this report: Report of Independent Public Accountant Page F-1 Statement Revenues and Direct Operating Expenses of the Property for the Year Ended December 31, 1996 and the Three Months Ended March 31, 1997 Page F-2 Notes to Statement of Revenues and Direct Operating Expenses of the Property Page F-3 (b) Pro Forma Financial Information The following unaudited pro forma consolidated financial statements are filed with this report: Introduction Page F-5 Pro Forma Consolidated Balance Sheet as of March 31, 1997 Page F-6 Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 1996 Page F-7 Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 1997 Page F-8 Notes to Pro Forma Financial Statements Page F-9 The Pro Forma Consolidated Balance Sheet at March 31, 1997 gives effect to the purchase of the MAB 864 Acquisition as if the transaction occur- red on March 31, 1997. The Pro Forma Consolidated Statements of Operations of the Company for the year ended December 31, 1996 and the three months ended March 31, 1997 give effect to the purchase of the MAB 864 Acquisition as if the transaction occurred at the beginning of each of the periods presented. The Unaudited Pro Forma Consolidated Balance Sheet and Statements of Operations are based on the assumptions set forth in the Notes to such statements. Such pro forma information should be read in conjunction with the related financial information of the Company and is not neces- sarily indicative of the results which would actually have occurred had the transaction been in effect on the date or for the period indicated or which may occur in the future. (c) Exhibits. 1. Underwriting Agreement* 2. Plan of acquisition, reorganization, arrangement, liquidation or succession 2.1 Purchase and Sale Agreement dated June 26, 1997 between CPOC and Elf Exploration, Inc. (incorporated by reference from Form 8K filed July 10, 1997). 4. Instruments defining the rights of security holders, including indentures* 16. Letter re change in certifying accountants* 17. Letter re director resignation* 20. Other documents or statements to security holders* 23. Consents of experts and counsel 23.1 Consent of Ernst & Young LLP 24. Power of attorney* 27. Financial Data Schedule* 99. Additional exhibits* ______________________ * Inapplicable to this filing 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 thereunto duly authorized. CALLON PETROLEUM COMPANY Date August 7, 1997 By: /s/ John S. Weatherly John S. Weatherly, Senior Vice President, Chief Financial Officer and Treasurer Page F-1 Report of Independent Auditors Stockholders and Board of Directors Callon Petroleum Company We have audited the accompanying statement of revenues and direct operating expenses of the working interest in Mobile Area Block 864 Unit (the "Property") acquired by Callon Petroleum Operating Company (the "Company"), a wholly-owned subsidiary of Callon Petroleum Company, from Elf Exploration, Inc. (see Note 1 to the accompanying statement) for the year ended December 31, 1996. This statement is the responsibility of the Company's management. Our respons- ibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and direct operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and direct operating expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as eval- uating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and direct operating expenses was pre- pared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of revenues and expenses of the Property. In our opinion, the statement of revenues and direct operating expenses referred to above presents fairly, in all material respects, the revenues and direct operating expenses of the Property for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Ernst & Young LLP Houston, Texas July 24, 1997
Page F-2 Statement of Revenues and Direct Operating Expenses of the Property Three Months Ended Year Ended March 31, December 31, 1997 1996 (Unaudited) ---------------------------------- (In Thousands) Oil and gas revenues $ 4,455 $ 1,099 Direct operating expenses 245 (34) ----------- ---------- Revenues in excess of direct operating expenses $ 4,210 $ 1,133 =========== ========== See accompanying notes.
Page F-3 Notes to Statement of Revenues and Direct Operating Expenses of the Property December 31, 1996 1. Basis of Presentation Callon Petroleum Operating Company (the "Company"), a wholly owned subsidiary of Callon Petroleum Company, acquired a working interest in Mobile Area Block 864 Unit (the "Property") from Elf Exploration, Inc. (the "Seller"). The closing date of the acquisition was June 26, 1997, and the net purchase price was $11.8 million. The accompanying statement of revenues and direct operating expenses, which is prepared on the accrual basis of accounting, relates only to the working interest in the producing oil and gas property acquired and may not be representative of future operations. The statement includes revenues and direct operating expenses, including production and ad valorem taxes, for the entire period presented. The statement does not include federal and state income taxes, interest, depletion, depreciation and amortization, or general and administrative expenses because such amounts would not be indicative of those expenses which would be incurred by the Company. Presentation of com- plete historical financial statements for the year ended December 31, 1996 and the three months ended March 31, 1997 is not practicable because the Property was not accounted for as a separate entity; therefore, such state- ments are not available. Revenues in the accompanying statement of revenues and direct operating expenses are recognized on the entitlement method. The preparation of the statement of revenues and direct operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the state- ment and accompanying notes. Actual results could differ from those estimates. The unaudited statement of revenues and direct operating expenses for the three- month period ended March 31, 1997, in the opinion of management, was prepared on a basis consistent with the audited statement of revenues and direct operating expenses and includes all adjustments necessary to present fairly the results of the period. 2. Supplemental Information on Oil and Gas Reserves (Unaudited) There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting the future rates of production and timing of develop- ment expenditures. Therefore, actual production, revenues, and development and operating expenses may not occur as estimated. The reserve data are estimates only, are subject to many uncertainties, and are based on data gained from pro- duction histories and on assumptions as to geologic formations and other matters. Actual quantities may differ materially from the amounts estimated. Page F-4 Notes to Statement of Revenues and Direct Operating Expenses of the Property (continued) December 31, 1996 The following reserve data, prepared by the Company, represents estimates of proved natural gas reserves of the Property, which is located in the United States. There are no oil reserves associated with the Property. 1996 --------- Natural Gas (Mmcf) Proved reserves: Beginning of period 11,842 Production 1,795 --------- End of period 10,047 ========= Proved developed reserves: Beginning of period 11,842 ========= End of period 10,047 ========= The estimated standardized measure of discounted future net cash flows relating to proved reserves of the Property at December 31, 1996 is shown below and should not be construed as the current market value. No deductions were made for general overhead, depletion, depreciation and amortization, debt service, or any indirect costs. Since the Property is not a separate taxpaying entity, the standardized measure of discounted future net cash flows for the Property is presented before deduction of income taxes. 1996 --------- (In Thousands) Future cash inflows $ 38,680 Future production costs (3,241) ----------- Future net cash flows before income taxes 35,439 10% annual discount for estimated timing of cash flows (10,186) ----------- Standardized measure of discounted future net cash flows relating to proved reserves before income taxes $ 25,253 =========== Changes in the standardized measure of discounted future net cash flows relating to proved reserves of the Property are shown below. 1996 --------- (In Thousands) Balance at beginning of period $ 16,643 Increase (decrease) in discounted future net cash flows: Sales and transfers of natural gas produced, net of production costs (4,210) Accretion of discount 1,419 Net change in sales price and production costs 11,401 ----------- Balance at end of period $ 25,253 =========== The weighted average prices of natural gas at December 31, 1995 and 1996 used in the calculation of the standardized measure of discounted future net cash flows were $2.28 and $3.85 per Mcf, respectively. Page F-5 CALLON PETROLEUM COMPANY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Introduction The following unaudited pro forma financial statements present the combined financial position and results of operations of Callon Petroleum Company (the "Company"). Such unaudited pro forma combined information is based on the historical balance sheet and results of operations of Callon Petroleum Company after giving effect to the acquisition described below. On June 26, 1997, Callon Petroleum Operating Company, a wholly owned subsidiary of the Company, purchased an 18.8% working interest in the Mobile Area Block 864 Unit from Elf Exploration, Inc. The Company's net purchase price of $11.8 million was funded from the credit facility of the Company. See Note 1 in the Notes to Unaudited Pro Forma Consolidated Financial State- ments for the basis of presentation of the above described event.
Page F-6 CALLON PETROLEUM COMPANY PRO FORMA CONSOLIDATED BALANCE SHEET March 31, 1997 (Unaudited) Adjustments Historical MAB 864 Pro Forma Company Acquisition As Adjusted (In thousands) ASSETS Current Assets: Cash and cash equivalents $ 10,679 $ -- $ 10,679 Accounts receivable 9,836 -- 9,836 Other current assets 810 -- 810 ---------- -------- ---------- Total current assets 21,325 -- 21,325 ---------- -------- ---------- Oil and gas properties, full cost accounting method: Evaluated properties 330,708 11,800 (a) 342,508 Less accumulated depreciation, depletion and amortization (270,455) -- (270,455) ---------- --------- ---------- 60,253 11,800 72,053 Unevaluated properties excluded from amortization 26,918 -- 26,918 ---------- --------- ---------- 87,171 11,800 98,971 Pipeline facilities, net 6,541 -- 6,541 Other property and equipment, net 1,848 -- 1,848 Deferred tax asset 3,679 -- 3,679 Long-term gas balancing receivable 806 -- 806 Other assets, net 901 -- 901 ---------- --------- ---------- Total assets $ 122,271 $ 11,800 $ 134,071 ========== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 7,715 $ -- $ 7,715 Undistributed oil and gas reserves 2,705 -- 2,705 Accrued net profits interest payable 5,946 -- 5,946 ---------- --------- ---------- Total current liabilities 16,366 -- 16,366 ---------- --------- ---------- Long-term debt 24,250 11,800 (a) 36,050 Other long-term liabilities 109 -- 109 Long-term gas balancing payable 621 -- 621 ---------- --------- ---------- Total liabilities 41,346 11,800 53,146 ---------- --------- ---------- Stockholders' equity: Preferred Stock, $0.01 par value; 2,500,000 shares authorized; 1,315,500 shares of Convertible Exchangeable Preferred Stock, Series A, issued and outstanding with a liquidation preference of $32,887,500 13 -- 13 Common Stock, $0.01 par value; 20,000,000 shares authorized; 5,763,407 at March 31, 1997 and 5,758,667 shares of outstanding at December 31, 1996 58 -- 58 Capital in excess of par value 74,105 -- 74,105 Retained earnings 6,749 -- 6,749 ---------- --------- ---------- Total stockholders' equity 80,925 -- 80,925 ---------- --------- ---------- Total liabilities and stockholders' equity $ 122,271 $ 11,800 $ 134,071 ========== ========= ========== See Notes to Pro Forma Consolidated Financial Statement
Page F-7 CALLON PETROLEUM COMPANY PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 1996 (Unaudited) Adjustments Historical MAB 864 Pro Forma Company Acquisition As Adjusted (In thousands, except per share data) Revenues: Oil and gas sales $ 25,764 $ 4,455 (a) $ 30,219 Interest and other 946 -- 946 ---------- --------- ----------- Total revenues 26,710 4,455 31,165 ---------- --------- ----------- Costs and Expenses: Lease operating expenses 7,562 245 (a) 7,807 Depreciation, depletion and amortization 9,832 1,518 (d) 11,350 General and administrative 3,495 -- 3,495 Interest 313 1,138 (b) 1,451 ---------- --------- ----------- Total costs and expenses 21,202 2,901 24,103 ---------- --------- ----------- Income from operations 5,508 1,554 7,062 Income tax expense 50 544 (c) 594 ---------- --------- ----------- Net income 5,458 1,010 6,468 Preferred stock dividends 2,795 -- 2,795 ---------- --------- ----------- Net income available to common shares $ 2,663 $ 1,010 $ 3,673 ========== ========= =========== Net income per common share: Primary $ 0.45 $ 0.62 Assuming full dilution $ 0.43 $ 0.60 Shares used in computing net income per common share: Primary 5,952 5,952 Assuming full dilution 6,135 6,135 See Notes to Pro Forma Consolidated Financial Statements
Page F-8 CALLON PETROLEUM COMPANY PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended March 31, 1997 (Unaudited) Adjustments Historical MAB 864 Pro Forma Company Acquisition As Adjusted (In thousands, except per share data) Revenues: Oil and gas sales $ 12,474 $ 1,099 (a) $ 13,573 Interest and other 307 -- 307 ---------- --------- ----------- Total revenues 12,781 1,099 13,880 ---------- --------- ----------- Costs and expenses: Lease operating expenses 2,408 (34) (a) 2,374 Depreciation, depletion and amortization 3,816 586 (d) 4,402 General and administrative 1,031 -- 1,031 Interest 111 259 (b) 370 ---------- --------- ----------- Total costs and expenses 7,366 811 8,177 ---------- --------- ----------- Income from operations 5,415 288 5,703 Income tax expense 1,733 101 (c) 1,834 ---------- --------- ----------- Net income 3,682 187 3,869 Preferred stock dividend 699 -- 699 ---------- --------- ----------- Net income available to common shares $ 2,983 $ 187 $ 3,170 ========== ========= =========== Net income per common share: Primary $ 0.47 $ 0.50 Assuming full dilution $ 0.39 $ 0.41 Shares used in computing net income per common share: Primary 6,342 6,342 Assuming full dilution 9,332 9,332 See Notes to Pro Forma Consolidated Financial Statements
Page F-9 CALLON PETROLEUM COMPANY NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION On June 26, 1997, Callon Petroleum Operating Company, a wholly owned subsidiary of Callon Petroleum Company (the "Company"), purchased an 18.8% working interest in the Mobile Area Block 864 Unit from Elf Exploration, Inc. (the "MAB 864 Acquisition"). The Company's net purchase price of $11.8 million was funded from the credit facility of the Company. The accompanying Pro Forma Consolidated Balance Sheet at March 31, 1997 gives effect to the purchase of the MAB 864 Acquisition as if the trans- action occurred on March 31, 1997. The accompanying Pro Forma Consolidated Statements of Operations of the Company for the year ended December 31, 1996 and the three months ended March 31, 1997 give effect to the purchase of the MAB 864 Acquisition as if the transaction occurred at the beginning of each of the periods presented. The Pro Forma Consolidated Balance Sheet and Statements of Operations are based on the assumptions set forth in the Notes to such statements. Such pro forma information should be read in conjunction with the related financial information of the Company and is not necessarily indicative of the results which would actually have occurred had the transaction been in effect on the date or for the period indicated or which may occur in the future. 2. PRO FORMA ADJUSTMENTS Pro Forma entries necessary to adjust the historical financial statements of the Company are as follows: (a) To reflect the purchase of the MAB 864 Acquisition and the related results of operations as described in Note 1. (b) Reflects an increase of interest expense related to the purchase of the MAB 864 Acquisition as if the transaction had occurred at the beginning of the periods for the year ended December 31, 1996 and for the three months ended March 31, 1997. The interest rate used was 8.25%. A one-eighth change in this estimated rate would affect interest expense by $17,200 and $3,900 for the year ended December 31, 1996 and the three months ended March 31, 1997, respectively. (c) To record a provision for Federal income taxes at a corporate statutory rate of 35% on pro forma income as a result of the acquisi- tion. (d) To adjust depletion for the combined full cost pool based on the purchase of the MAB 864 Acquisition as described in Note 1. EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP We consent to the incorporation by reference in the Registration Statements (Forms S-8 Nos. 333-29537 and 333-29529) pertaining to the 1996 Stock Incentive Plan and the 1997 Employee Stock Purchase Plan oc Callon Petroleum Company of our report dated July 24, 1997, with respect to the Statement Revenues and Direct Operating Expenses of the Working Interests in Mobile Area Block 864 Unit acquired by Callon Petroleum Operating Company for the year ended December 31, 1996 included in Form 8-K/A filed with the Securities and Exchange Commission on August 8, 1997. Ernst & Young LLP Houston, Texas August 8, 1997 -----END PRIVACY-ENHANCED MESSAGE-----