UNITED STATES
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): September 26, 1995
TESORO PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-3473 95-0862768
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
8700 Tesoro Drive
San Antonio, Texas 78217
(Address of Principal Executive Offices)
(Zip Code)
210-828-8484
(Registrant's Telephone Number, Including Area Code)
TESORO PETROLEUM CORPORATION
FORM 8-K
Item 2. Acquisition or Disposition of Assets
On September 26, 1995, Tesoro E&P Company, L.P. ("Tesoro"), by and
through its general partner, Tesoro Exploration and Production Company
(a wholly-owned subsidiary of the Registrant), sold, effective April 1,
1995, certain interests ("Specific Assets") in Tesoro's U.S. onshore
producing and non-producing oil and gas properties located in the Bob
West Field, Zapata and Starr Counties, Texas, to Coastal Oil & Gas of
Texas, L.P. ("Coastal"), an affiliate of The Coastal Corporation. The
Specific Assets include Tesoro's approximate 55% net revenue interest
and 70% working interest in Units C, D and E and a convertible override
in Unit F of the Bob West Field. These units do not include acreage
related to Tesoro Exploration and Production Company's natural gas
sales contract with Tennessee Gas Pipeline Company, which, as
previously reported, is the subject of current litigation. Also
excluded from the sale are Tesoro's interests in the State Park and
Sanchez-O'Brien leases and the Ramirez USA E-6 well within the field.
In total, the sale includes interests in 14 producing wells, which
averaged net natural gas production of 43 million cubic feet per day
during the quarter ended June 30, 1995. Under the sales agreement,
Tesoro retains a processing agreement and an affilate of Tesoro retains
a transportation agreement which provide fees to Tesoro and affiliate
for production from the units sold. Also, under the sales agreement,
Coastal agreed to accept and purchase the Specific Assets subject to
and encumbered by its share of potential liability, if any,
attributable to the Specific Assets in connection with a previously
reported lawsuit which was filed in the U.S. District Court for the
Southern District of Texas, McAllen Division, by the Heirs of H.P.
Guerra, Deceased, against the United States and Tesoro and other
working and overriding royalty interest owners to recover the oil and
gas mineral estate under 2,706.34 acres situated in Starr County,
Texas.
Consideration for the sale, determined through a competitive bidding
process, was $74 million, which was adjusted on a preliminary basis for
production, capital expenditures and certain other items between the
effective date and the closing date to approximately $68 million in
cash received at closing. The Registrant previously announced that it
expected to record an after-tax gain of approximately $40 million in
the 1995 third quarter for the sale of the Specific Assets; however,
the after-tax gain remains subject to adjustments including the final
determination of a reduction in the carrying value of reserves retained
which may significantly reduce the after-tax gain. The consideration
received by Tesoro, which is subject to final post-closing adjustments,
is expected to be used to reduce a portion of the Registrant's
long-term debt and obligations, subject to approval by the Registrant's
lenders, and improve corporate liquidity.
As a result of the sale, certain operating agreements in the Bob West
Field with an affiliate of Coastal, Coastal Oil & Gas Corporation, were
modified so as to terminate Tesoro's right to act as geological
operator thereunder. Coastal Oil & Gas Corporation continues to act as
operator for Tesoro's interests in Units A and B and the State Park
Unit of the Bob West Field. From time to time, Tesoro enters into
price swaps with Coastal Gas Marketing Company, another affiliate of
Coastal, to
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hedge risks associated with fluctuations in natural gas prices. The
disposition of the Specific Assets does not impact Tesoro's existing
price swaps.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
Under the provisions of Article 11 of Regulation S-X, the
Registrant's disposition of assets described in Item 2 above did
not meet the significance test and no pro forma financial
information is being provided with this filing.
(c) Exhibits
2 Copy of the Purchase and Sale Agreement by and between Tesoro
E&P Company, L.P., as Seller, and Coastal Oil & Gas of Texas,
L.P., as Purchaser.
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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.
TESORO PETROLEUM CORPORATION
Registrant
Date: October 11, 1995 /s/ William T. Van Kleef
William T. Van Kleef
Senior Vice President and
Chief Financial Officer
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