Gas Natural 8-K/A Completion of Acquisition or Disposition of Assets

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

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 1, 2007

ENERGY WEST, INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

MONTANA	0-14183	81-0141785
(State or other jurisdiction of incorporation or jurisdiction)	(Commission File Number)	(IRS Employer Identification Number)

1 First Avenue South, Great Falls, Montana	59401
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number, including area code:(406) 791-7500

 

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

This Amendment No. 1 to Form 8-K (“Amendment No. 1”) amends and restates the original Current Report on Form 8-K filed April 2, 2007 (the “Original Form 8-K”) to add the pro forma financial information called for in Item 9.01(b), “Pro forma financial information.” The Original Form 8-K is amended and restated in its entirety by this Amendment No. 1. Other than Item 9.01(b), “Pro forma financial information,” no other changes are being made to the Original Form 8-K.

Item 2.01. Completion of Acquisition or Disposition of Assets.

Effective 12:01 a.m. on April 1, 2007, Energy West, Incorporated completed the sale to SemStream, L.P., a Delaware limited partnership, of all of its propane-related assets and operations in the State of Arizona. The transaction covered the assets and business operations associated with a regulated propane gas distribution system operated in the cities and outlying areas of Payson, Pine, and Strawberry, Arizona, as well as certain assets and operations associated with non-regulated propane business operations in the same geographic area. The sale price for the assets and business operations was $15,000,000 plus net working capital, subject to final post-closing working capital adjustments.

The assets involved in the sale, the nature and amount of the consideration received by the registrant for the assets and the terms of the transaction are more fully described in the Asset Purchase Agreement (the “Asset Purchase Agreement”) dated as of July 17, 2006, by and between Energy West, Incorporated and Energy West Propane, Inc., each entity being a Montana corporation, and SemStream, L.P., a Delaware limited partnership, which was filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K dated July 20, 2006. The Asset Purchase Agreement is incorporated by reference into this Item 2.01.

SemStream, L.P., a subsidiary of SemGroup, L.P., provides natural gas liquids supply, marketing, storage and terminal services through 11 privately owned propane terminals. SemStream is based in Tulsa, Oklahoma.

Item 7.01. Regulation FD Disclosure.

The registrant issued a press release announcing the completion of the sale of the registrants’ Arizona propane-related assets and operations, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Item 7.01 to this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Furthermore, the information contained in this Item 7.01 to this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

(b) Pro forma financial information.

As required by Regulation S-X section 210.11-02, the following pro-forma balance sheet as of March 31, 2007 was computed assuming the sale of propane assets was consummated at the end of the period ending March 31, 2007. As such, it includes the reduction of assets and liabilities for those net assets sold, an increase in accrued taxes for the tax expense associated with the gain on sale, an increase in cash for proceeds of sale, a decrease in long-term debt for the debt retired with proceeds from the sale as well as a reduction in the associated unamortized debt issue costs, and an increase in retained earnings for the gain on sale, net of tax.

As required by Regulation S-X section 210.11-02, The income statement does not include material nonrecurring charges for credits and related tax effects which will result directly from this transaction. These will be included in Energy West consolidated income for the period ending June 30, 2007. These costs include broker fees related to the transaction, as well as outside service fees incurred related to the sale of assets. We estimate the total of these costs to be included in our June 30, 2007 consolidated income to be approximately $775,000. The tax effect of the gain on sale of these assets is estimated to be approximately $2.2 million. The gain on sale to be recognized during our fourth quarter fiscal 2007 is estimated to be approximately $5.5 million.

ENERGY WEST INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AT MARCH 31, 2007
UNAUDITED

	Consolidated						Pro Forma
	Before		Pro Forma			footnote	Consolidated
	Adjustments		Adjustments			reference	Balance Sheet
ASSETS
Current assets:
Cash	$	1,147,704	$	13,205,745		(1)	$	14,353,449
Accounts Receivable		7,255,898		(1,481,792	)	(2)		5,774,107
Accrued Gas Receivables		1,922,043		(348,004	)	(2)		1,574,040
Derivative Assets		107,975						107,975
Gas Inventory		1,495,894		(820,844	)	(2)		675,050
Materials and Supplies		571,524		(177,415	)	(2)		394,110
Prepayments		341,754		(54,381	)	(2)		287,373
Deferred Purchased Gas Costs		2,003,449		(458,769	)	(2)		1,544,680
Total Current Assets		14,846,241		9,864,541				24,710,783
Property, Plant and Equipment, Net		39,553,772		(9,183,369	)	(2)		30,370,404
Other Assets		3,610,616		(335,684	)	(3)		3,274,932
Deferred Charges		594,221		(189,126	)	(2)		405,095
TOTAL ASSETS	$	58,604,851	$	156,363			$	58,761,214
LIABILITIES AND INVESTMENT
Current Liabilities:
Long Term Debt (Due Within One Year)	$	1,060,000					$	1,060,000
Accounts Payable		6,053,475	$	(200,762	)	(2)		5,852,713
Derivative Liabilities		63,039						63,039
Interest Accrued		382,523						382,523
Accrued Income Taxes		111,214		2,279,140		(6)		2,390,354
Deferred Income Tax Payable — Current		431,964						431,964
Accrued and Other Current Liabilities		3,106,782		(101,363	)	(2)		3,005,419
Total Current Liabilities		11,208,997		1,977,014				13,186,011
Other Obligations
Unamortized Investment Credit		276,424						276,424
Deferred Federal Income Taxes		5,529,869						5,529,869
Other Long Term Liabilities		4,703,781		(634,180	)	(2)		4,069,601
Total		10,510,074		(634,180	)			9,875,894
Long Term Debt		15,218,333		(4,833,333	)	(4)		10,385,000
Equity:
Common Stock		450,293						450,293
Capital in Excess of Par Value		8,189,733						8,189,733
Retained Earnings		13,027,420		3,646,861		(5) & (3)		16,674,282
Total Equity		21,667,447		3,646,861				25,314,308
TOTAL LIABILITIES AND INVESTMENT	$	58,604,851	$	156,363			$	58,761,214

(1)	To record cash proceeds from sale of assets less payoff of $4,833,333 long-term debt.
(2)	To record sale of propane assets and liabilities.
(3)	To record write-off of debt issue cost of $335,684 associated with payoff of long-term debt.
(4)	To record payoff of long term debt with proceeds of sale.
(5)	To record net increase in retained earnings from gain on sale.
(6)	To record income taxes accrued for gain on sale.

ENERGY WEST, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — PRO FORMA
For the Year Ended June 30, 2006
UNAUDITED

								Pro Forma
	Consolidated			Pro Forma			footnote	Consolidated
	Income			Adjustments			reference	Income
REVENUES:
Natural gas operations	$	55,744,531						$	55,744,531
Propane operations		9,582,600		$	(9,538,206	)	(1)		44,394
Gas and electric—wholesale		18,539,793							18,539,793
Pipeline operations		411,237							411,237
Total revenues		84,278,161			(9,538,206	)			74,739,955
COST OF SALES:
Gas purchased		49,379,651			(5,926,685	)	(1)		43,452,966
Gas and electric—wholesale		16,989,654							16,989,654
Total cost of sales		66,369,305			(5,926,685	)			60,442,620
GROSS MARGIN		17,908,856			(3,611,521	)			14,297,335
EXPENSES:
Distribution, general, and administrative		8,219,283			(1,294,976	)	(1)		6,924,307
Maintenance		624,085			(119,414	)	(1)		504,671
Depreciation and amortization		2,183,740			(512,093	)	(1)		1,671,647
Taxes other than income		1,614,684			(161,309	)	(1)		1,453,375
Total expenses		12,641,792			(2,087,792	)			10,554,000
OPERATING INCOME		5,267,064			(1,523,729	)			3,743,335
OTHER INCOME		504,342			(113,665	)	(1)		390,677
INTEREST (EXPENSE)		(2,080,030	)		1,126,568		(2)		(953,462	)
INCOME BEFORE INCOME TAXES		3,691,376			(510,826	)			3,180,550
INCOME TAX (EXPENSE)		(1,374,706	)		196,464		(3)		(1,178,242	)
NET INCOME	$	2,316,670		$	(314,362	)		$	2,002,308
NET INCOME PER COMMON SHARE:
Basic	$	0.79		$	(0.11	)		$	0.68
Diluted	$	0.79		$	(0.11	)		$	0.68
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		2,924,512			2,924,512				2,924,512
Diluted		2,948,046			2,948,046				2,948,046
(1) To record the revenue and expenses associated with the sale of Propane assets and liabilities.
(2) Reconciliation of change in interest:
proceeds from sale	$	18,039,078
Less:additional tax paid on sale transaction		(4,000,000	)
Less:long-term debt payoff		(4,833,333	)
cash remaining for investments	$	9,205,745
interest on investment at 5.25%		362,476
interest savings for amortizatin of debt issue costs		167,842
interest savings on line of credit, ave. $3.5m @ 8.75%		306,250
interest savings on long-term debt at 8%		290,000
change in interest	$	1,126,568
(3) To record income tax expense at 38.46% effective rate.

ENERGY WEST, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — PRO FORMA
Nine Months Ended March 31, 2007
UNAUDITED

								Pro Forma
	Consolidated			Pro Forma			footnote	Consolidated
	Income			Adjustments			reference	Income
REVENUES:
Natural gas operations	$	38,243,199						$	38,243,199
Propane operations		10,298,206			(10,266,377	)	(1)		31,829
Gas and electric—wholesale		9,476,817							9,476,817
Pipeline operations		293,277							293,277
Total revenues		58,311,499			(10,266,377	)			48,045,122
COST OF SALES:
Gas purchased		34,934,150			(6,905,881	)	(1)		28,028,269
Gas and electric—wholesale		7,675,841							7,675,841
Total cost of sales		42,609,991			(6,905,881	)			35,704,110
GROSS MARGIN		15,701,508			(3,360,496	)			12,341,012
EXPENSES:
Distribution, general, and administrative		6,117,072			(1,088,563	)	(1)		5,028,509
Maintenance		478,622			(84,644	)	(1)		393,978
Depreciation and amortization		1,634,611			(365,489	)	(1)		1,269,122
Taxes other than income		1,410,521			(119,841	)	(1)		1,290,680
Total expenses		9,640,826			(1,658,537	)			7,982,289
OPERATING INCOME		6,060,682			(1,701,959	)			4,358,723
OTHER INCOME		223,250			(51,288	)	(1)		171,962
INTEREST (EXPENSE)		(1,518,809	)		1,008,045		(2)		(510,764	)
INCOME BEFORE INCOME TAXES		4,765,123			(745,202	)			4,019,921
INCOME TAX (EXPENSE)		(1,760,573	)		286,605		(3)		(1,473,968	)
NET INCOME	$	3,004,550		$	(458,597	)		$	2,545,953
NET INCOME PER COMMON SHARE:
Basic	$	1.01		$	(0.15	)		$	0.86
Diluted	$	1.01		$	(0.15	)		$	0.86
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		2,960,297			2,960,297				2,960,297
Diluted		2,988,293			2,988,293				2,988,293
(1) To record the revenue an expense associated with the sale of Propane assets and liabilities.
(2) Reconciliation of change in interest:
proceeds from sale	$	18,039,078
Less:additional tax paid on sale transaction		(4,000,000	)
Less:long-term debt payoff		(4,833,333	)
cash remaining for investments	$	9,205,745
interest on investment at 5.25%		362,476
interest savings for amortization of debt issue costs		125,881
interest savings on line of credit, ave. $3.5m @ 8.75%		229,688
interest savings on long-term debt at 8%		290,000
change in interest	$	1,008,045
(3) To record income tax expense at 38.46% effective rate.

(d) Exhibits.

Exhibit No.		Item	Filing Status
	10.1	Asset Purchase Agreement, dated as of July 17, 2006, by and between Energy West, Incorporated and Energy West Propane, Inc., each entity being a Montana corporation, and SemStream, L.P., a Delaware limited partnership, incorporated herein by reference to Exhibit 10.1, filed with the registrant’s Current Report on Form 8-K filed July 20, 2006.	Filed
	99.1	Press Release, dated April 2, 2007	Furnished

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.

	ENERGY WEST, INCORPORATED
Dated: May 14, 2007	By:	/s/ David A. Cerotzke
		David A. Cerotzke
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Item
10.1	Asset Purchase Agreement, dated as of July 17, 2006, by and between Energy West, Incorporated and Energy West Propane, Inc., each entity being a Montana corporation, and SemStream, L.P., a Delaware limited partnership, incorporated herein by reference to Exhibit 10.1, filed with the registrant’s Current Report on Form 8-K filed July 20, 2006. (Filed)
99.1	Press Release, dated April 2, 2007 (Furnished and not filed)