UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
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): December 15, 1998
Commission file number 0-8609
Bargo Energy Company
(Exact name of small business issuer as specified in charter)
Texas 87-0239185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Louisiana, Suite 3700
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713)236-9792
(Issuer's telephone number, including area code)
Future Petroleum Corporation
2351 W. Northwest Hwy, Suite 2130, Dallas, Texas 75220
(Former name and former address if changed since last report)
INDEX
a) Financial Statements of Business Acquired.
The following audited financial statements are filed with this
report:
Report of Independent auditor Page F-1
Balance Sheet dated as of November 30, 1998 Page F-2
Statements of Operations, Partners'
Capital and Cash Flows for the period
from inception (March 1, 1998) to
November 30, 1998 Page F-3
Notes to financial statements Page F-5
b) Pro Forma Financial Information.
The following unaudited pro forma combined financial
statements are filed with this report:
Introduction Page F-
Pro Forma Combined Statements of
Operations for the years ended December
31, 1998 and December 31, 1997 Page F-
Notes to Pro Forma Financial Statements Page F-
c) Exhibits.
Exhibit
Number Title of Document Location
------------------------------------------------------------------
1. Underwriting Agreement (d)
2. Plan of acquisition,
reorganization, arrangement,
liquidation of succession
2.2 Asset Purchase Agreement and Plan
of Reorganization dated December
15, 1998 by and among the
Company, Bargo Energy Resources,
Ltd., Bargo Energy Company and
TJG Investments, Inc. (c)
4. Instruments defining the rights
of security holders, including
indentures
4.1 Articles of Restatement of the
Articles of Incorporation (b)
4.2 Bylaws (b)
4.3 Agreement dated August 14, 1998
by and among B. Carl Price, Bargo
Energy Resources, Ltd., Energy
Capital Investment Company PLC,
and EnCap Equity 1994 Limited
Partnership (a)
4.4 Certificate of Designation of
Convertible Preferred Stock,
Series A (c)
16. Letter on change in certifying
accountant (d)
17. Letter on director resignation (d)
20. Other documents or statements to
security holders (d)
23. Consents of experts and counsel (d)
24. Power of attorney (d)
99. Material Contracts
99.1 Registration Rights Agreement
among the Company and Bargo
Energy Resources, Ltd. dated
August 14, 1998 (a)
99.2 First Amendment to Registration
Rights Agreement among the
Company, Bargo Energy Resources,
Ltd., Bargo Energy Company, TJG
Investments, Inc. and certain
other shareholders dated December
15, 1998 (c)
99.3 Registration Rights Agreement
among the Company, Energy Capital
Investment Company PLC and EnCap
Equity 1994 Limited Partnership
dated August 14, 1998 (a)
99.4 First Amendment to Registration
Rights Agreement among the
Company, Energy Capital
Investment Company PLC and EnCap
Equity 1994 Limited Partnership
dated December 15, 1998 (c)
99.5 Registration Rights Agreement
among the Company, B. Carl Price
and certain other shareholders
dated August 14, 1998 (a)
99.6 First Amendment to Registration
Rights Agreement among the
Company, B. Carl Price and
certain other shareholders dated
December 15, 1998 (c)
99.7 Stock Purchase Warrant by the
Company to Bargo Energy
Resources, Ltd. dated August 14,
1998 (a)
99.8 Amended and Restated
Shareholders' Agreement by and
among the Company, Bargo Energy
Resources, Ltd., Energy Capital
Investment Company PLC, EnCap
Equity 1994 Limited Partnership,
B. Carl Price, Don Wm. Reynolds,
Bargo Energy Company, TJG
Investments, Inc. and certain
other shareholders dated December
15, 1998 (c)
99.9 Amended Credit Agreement between
the Company and Bank of America
National Trust and Savings
Association dated December 4,
1998 (c)
99.10 Pledge Agreement between Bank of
America and Bargo Energy Company
dated December 15, 1998] (c)
99.11 Pledge Agreement between Bank of
America and TJG Investments, Inc.
dated December 15, 1998 (c)
99.12 Pledge Agreement between Bank of
America and James Sowell dated
December 15, 1998 (c)
99.13 Pledge Agreement between Bank of
America and Thomas D. Barrow
dated December 15, 1998 (c)
99.14 Pledge Agreement between Bank of
America and Tim J. Goff dated
December 15, 1998 (c)
99.15 Pledge Agreement between Bank of
America and Bargo Operating
Company, Inc. dated December 15,
1998 (c)
________________________
(a) Incorporated by reference from the Company's
report on Form 10-QSB for the fiscal quarter ended June
30, 1998, filed with the Securities and Exchange
Commission on August 19, 1998.
(b) Incorporated by reference from the Company's
report on Form 10-K for the fiscal year ended December
31, 1993, filed with the Securities and Exchange
Commission on May 20, 1994.
(c) Previously filed.
(d) Inapplicable to this filing.
(e) Incorporated by reference from the Company's
report on Form 10-KSB for the fiscal year ended
December 31, 1998, filed with the Securities and
Exchange Commission on April 19, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
INDEPENDENT AUDITOR'S REPORT
To the Partners
Bargo Energy Resources, Ltd.
Houston, Texas
We have audited the accompanying balance sheet of Bargo Energy Resources, Ltd.
as of November 30, 1998, and the related statements of operations, partners'
capital and cash flows for the period from inception (March 1, 1998) to November
30, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements 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 financial statements are free of material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bargo Energy Resources, Ltd. as
of November 30, 1998, and the results of its operations and cash flows for the
period from inception (March 1, 1998) to November 30, 1998, in conformity with
generally accepted accounting principles.
HEIN + ASSOCIATES LLP
March 12, 1999
Dallas, Texas
F-1
BARGO ENERGY RESOURCES, LTD.
(a Texas limited partnership)
BALANCE SHEET
ASSETS
NOVEMBER 30, 1998
CURRENT ASSETS:
Cash and cash equivalents $ 114,841
Accounts receivable, no allowance considered
necessary 11,492
Receivable from related party 430,155
---------
Total current assets 556,488
OIL AND GAS PROPERTIES, at cost (successful efforts method) 95,210
INVESTMENT IN CORPORATION 735,286
INVESTMENT IN PARTNERSHIP 53,741
---------
Total assets $ 1,440,725
=========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Trade accounts payable $ 29,645
Due to general partner 127,971
--------
Total current liabilities 157,616
COMMITMENTS AND CONTINGENCIES (Notes 6 and 8)
PARTNERS' CAPITAL:
General partner 30
Limited partners 1,283,079
---------
Total partners' capital 1,283,109
---------
Total liabilities and partners' capital $ 1,440,725
=========
See accompanying notes to these financial statements.
F-2
BARGO ENERGY RESOURCES, LTD.
(a Texas limited partnership)
STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION (MARCH 1, 1998) TO NOVEMBER 30, 1998
REVENUE:
Oil and gas sales $ 599,534
Commission income 244,876
---------
Total revenue 844,410
OPERATING EXPENSES:
Lease operating expense and production taxes 406,310
Depreciation, depletion and amortization 102,705
General and administrative 1,442,942
---------
Total operating expense 1,951,957
OTHER INCOME (EXPENSE):
Gain on sale of assets 1,049,215
Other income 25,574
Loss on investments in corporation and partnership (256,259)
Interest expense, net (165,448)
---------
Total other income 653,082
=========
NET LOSS $ (454,465)
=========
See accompanying notes to these financial statements.
F-3
BARGO ENERGY RESOURCES, LTD.
(a Texas limited partnership)
STATEMENT OF PARTNERS' CAPITAL
PERIOD FROM INCEPTION (MARCH 1, 1998) TO NOVEMBER 30, 1998
GENERAL LIMITED
PARTNER PARTNERS TOTAL
- -----------------------------------------------------------------------------
Balances, March 1, 1998 $ - $ - $ -
Cash contributions 30 1,737,544 1,737,574
Net loss - (454,465) (454,465)
--------- ----------- -----------
Balances, November 30, 1998 $ 30 $ 1,283,079 $ 1,283,109
========= =========== ===========
See accompanying notes to these financial statements.
F-4
BARGO ENERGY RESOURCES, LTD.
(a Texas limited partnership)
STATEMENT OF CASH FLOWS
PERIOD FROM INCEPTION (MARCH 1, 1998) TO NOVEMBER 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (454,465)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation, depletion and amortization 102,705
Gain on sale of oil and gas properties (1,049,215)
Loss on investments in corporation and partnership 256,259
Change in receivables (441,647)
Change in accounts payable 29,645
Change in amounts due to general partner 127,971
Other (449)
----------
Net cash used by operating activities (1,429,196)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (5,828,537)
Proceeds from the sale of oil and gas properties 5,800,000
Additions to investment in partnership (165,000)
----------
Net cash used for investing activities (193,537)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable to related party 5,545,198
Repayments of notes payable to related party (5,545,198)
Contributions by partners 1,737,574
----------
Net cash provided by investing activities 1,737,574
NET INCREASE IN CASH AND CASH EQUIVALENTS 114,841
CASH AND EQUIVALENTS, beginning of period -
CASH AND EQUIVALENTS, end of period $ 114,841
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 173,716
Fair value of stock received in sale of properties $ 880,286
F-5
BARGO ENERGY RESOURCES, LTD.
(a Texas limited partnership)
1. ORGANIZATION
Bargo Energy Resources, Ltd. (the Partnership), a Texas limited partnership, was
formed on March 1, 1998 and is engaged primarily in the acquisition, development
and production of oil and gas properties. The Partnership's properties are all
located in the continental United States, primarily Texas and Oklahoma. The
general partner is Bargo Operating Company, Inc. (BOC), a Texas Corporation,
which in such capacity is responsible for, among other things, the management of
the affairs of the Partnership. A limited partner of the Partnership is the
sole stockholder of BOC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allocation to Partners
Revenues and expenses of the Partnership are generally allocated 1% to the
general partner, BOC, and 99% to the limited partners unless specifically
allocated as per the partnership agreement. Operating, organizational, prospect
costs and depletion expense on properties contributed by BOC are allocated 100%
to BOC.
Oil and Gas Properties
The Partnership follows the successful efforts method of accounting for oil and
gas acquisitions, exploration and development costs. Under this method, costs
of successful exploratory wells, development wells, lease and well-head
equipment and all costs incurred in acquiring mineral leasehold interests are
capitalized. Exploratory dry hole costs and other exploration costs, including
geological and geophysical costs, delay rentals and production costs are
expensed as incurred. Unproved properties are assessed periodically on a
property-by-property basis and any impairment in value is currently charged to
expense.
Capitalized costs relating to producing properties are depreciated and depleted
on the unit-of-production method. Proved developed reserves are used in
computing unit rates for drilling and development costs, and total proved
reserves are used for depletion of leasehold costs. Capitalized costs are
evaluated for impairment based on an analysis of future net cash flows in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of".
On sale or retirement of a complete unit of a proved property, the cost and
related accumulated depreciation, depletion, and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized. On
retirement or sale of a partial unit of proved property, the cost is charged to
accumulated depreciation, depletion and amortization with a resulting gain or
loss recognized in income.
Maintenance and repairs are expensed as incurred; major renewals and
improvements are capitalized. Gains and losses arising from sales of properties
are included in income.
Investment in Corporation
The Partnership has an investment in a corporation which is described in Note 4.
The investment is accounted for by the equity method and accordingly the
Company adjusts the carrying value of the investment by its share of the
investee corporation's earnings or losses. In addition, the Company adjusts the
carrying value of the investment for any dividends paid to the Company by the
investee corporation. The Company's share of the investee corporation's book
value at November 30, 1998 exceeds the carrying value of the investment by about
$900,000. This amount will be amortized to income over the lives of the
investee corporation's oil and gas properties.
Investment in Partnership
The Partnership has an investment in a partnership, which is described in Note
5. The investment is accounted for by the equity method and accordingly the
Company adjusts the carrying value of the investment by its share of the
investee partnership's earnings or losses. In addition, the Company adjusts the
carrying value of the investment for any contributions or distributions to or
from the investee partnership.
Organization Costs
The costs of organizing the Partnership were expensed as incurred.
Financial Instruments
The carrying amounts of the Partnership's financial instruments, which includes
cash, and trade accounts receivable and payable approximate fair value because
of the short-term nature of these instruments.
Income Taxes
No provision for federal income taxes is included in the accompanying financial
statements, because the tax effects of the Partnership's activities accrue to
the individual partners.
Use of Estimates
The preparation of the Partnership's consolidated financial statements in
conformity with generally accepted accounting principles requires the
Partnership's management to make estimates and assumptions that affect the
amounts reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Statement of Cash Flows
For purposes of the statements of cash flows, the Partnership considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
3. ACQUISITIONS AND DISPOSITIONS
In June 1998, the Partnership purchased an oil and gas property for
approximately $5,730,000. The Partnership obtained a loan from a limited
partner to finance the purchase. On August 14, 1998, the property was sold to
Future Petroleum Corporation (Future) for $5,800,000 in cash and approximately
4,700,000 shares of Future common stock (see Note 4). A gain of approximately
$1,049,000 was recognized on the sale.
In October and November 1998, the Partnership acquired oil and gas properties
and simultaneously at closing sold the properties to Future for approximately
the Partnership's cost. The Partnership loaned Future the down payment, which
was $600,000 in each of these transactions. The loaned amounts were repaid by
Future at closing.
4. INVESTMENT IN CORPORATION
The acquisition of the Future common stock described in Note 3 resulted in the
Partnership owning 34% of the outstanding common stock of Future. Future is
engaged in oil and gas exploration and development. The Company accounts for
its investment in Future by the equity method as described in Note 1. At
November 30, 1998, the Partnership's investment balance consists of the
estimated market value of the stock at the time of acquisition less the
Partnership's share of the net loss of Future since the stock was acquired.
Summarized financial information of Future as of November 30, 1998 and for the
period from August 14, 1998 to November 30, 1998 is as follows:
Total assets $ 39,705,000
Total liabilities $ 34,704,000
Net loss $ (428,000)
5. INVESTMENT IN PARTNERSHIP
On May 1, 1998, the Partnership entered into Gas Solutions, Ltd (Gas Solutions),
a Texas limited liability partnership, as the limited partner. Revenues are
generally allocated 75% to the Partnership and 25% to the general partner unless
specifically allocated as per the partnership agreement. Operating,
organizational, and prospect costs are allocated 100% to the Partnership, while
depreciation and amortization expenses are allocated to the partner contributing
the respective assets.
The Company accounts for its investment in Gas Solutions by the equity method as
described in Note 1. At November 30, 1998, the Partnership's investment balance
consists of cash contributions for operating expenses of Gas Solutions plus its
share of the net income or loss of Gas Solutions. As of November 30, 1998, the
Partnership had not contributed any properties to Gas Solutions.
6. RELATED PARTY TRANSACTIONS
Included in general and administrative expense for the period from inception to
November 30, 1998 is $112,500 paid to BOC as a management fee.
As of November 30, 1998, the Partnership owes Bargo Energy Company (BEC), an
affiliate of the Partnership, $127,971 for payroll and other expenses paid for
or incurred by BEC on behalf of the Partnership.
As of November 30, 1998, the Partnership has a receivable of $430,155 from
Future. The receivable is for advances made by the Partnership of $320,258 for
operating expenses and commissions of $109,897 related to the properties sold to
Future described in Note 3.
Interest expense of $173,000 was paid to a limited partner in connection with
the loan described in Note 3.
The Partnership received commissions of $134,979 from related parties (primarily
BEC) for assistance in the sale of oil and gas properties on behalf of those
parties. A significant portion of the properties were sold to Future.
BEC has a lease commitment for office space which extends through August 2002.
The monthly rental, which is approximately $19,400, was paid by the Partnership
from March 1998 through November 1998.
7. MAJOR CUSTOMERS
Oil and gas sales to three customers constitute a significant percentage of the
Partnership's revenues. There are adequate buyers or purchasers of the
Partnership's production such that management believes the loss of one or more
of these customers would not have a material adverse effect on the results of
operations of the Partnership.
8. COMMITMENTS AND CONTINGENCIES
In the course of its business affairs and operations, the Partnership is subject
to possible loss contingencies arising from federal, state and local
environmental, health and safety laws and regulations and third-party
litigation.
There are currently no matters which, in the opinion of management, would have
a material adverse effect on the financial position or results of operations of
the Partnership.
9. SUBSEQUENT EVENTS
In December 1998, Future acquired certain assets and liabilities of the
Partnership in exchange for $2,000,000 cash and additional shares of Future's
stock. Following this transaction, the Partnership owned approximately 54% of
the voting stock of Future.
Also in December 1998, substantially all the capital balances of the partners
were distributed.
10. SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
Financial Data for Oil and Gas Producing Activities
The following table sets forth certain information with respect to the oil and
gas producing activities of the Partnership:
Costs incurred in oil and gas producing
activities:
Acquisition of oil and gas properties $ 5,828,537
Exploration and development costs $ -
Partnership's share of equity method investee's
costs of property acquisition,
exploration and development $ 9,521,000
Net capitalized costs related to oil and gas
producing activities:
Proved properties $ 95,210
Less accumulated depletion -
Net capitalized costs $ 95,210
Partnership's share of equity method investee's
net capitalized costs $ 13,007,000
Oil and Gas Reserve Data
The Partnership's proportional interest in reserves of its investee accounted
for by the equity method at November 30, 1998, based on an independent
engineering report, was 795,000 barrels of oil and 18,462,000 mcf of gas.
The Partnership did not prepare an SEC basis reserve report for the oil and gas
property it owns directly, because the amounts are relatively immaterial.
Proved oil and gas reserves are the estimated quantities of crude oil,
condensate and natural gas which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Proved developed
oil and gas reserves are reserves that can be expected to be recovered through
existing wells with existing equipment and operating methods. The above
estimated net interests in proved reserves are based upon subjective engineering
judgments and may be affected by the limitations inherent in such estimation.
The process of estimating reserves is subject to continual revision as
additional information becomes available as a result of drilling, testing,
reservoir studies and production history. There can be no assurance that such
estimates will not be materially revised in subsequent periods.
Standardized Measure of Changes in Future Net Revenues
The Partnership's proportional interest in its equity method investee's
standardized measure of discounted net cash flows at November 30, 1998 was
$10,573,000. The assumptions used to compute the standardized measure are those
prescribed by the Financial Accounting Standard Board and as such, do not
necessarily reflect the Company's expectations of actual revenues to be derived
from those reserves nor their present worth. The limitations inherent in the
reserve quantity estimation process are equally applicable to the standardized
measure computations since these estimates are the basis for the valuation
process.
The Partnership did not determine a standardized measure of discounted net cash
flows for the property it owns directly because the amounts are relatively
immaterial.
FUTURE PETROLEUM CORPORATION AND BARGO ENERGY RESOURCES, LTD.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
The following unaudited pro forma combined statements of operations for 1998 and
1997 reflect the Asset Purchase and Plan of Reorganization (the Transaction)
between Future Petroleum Corporation (FPC) and Bargo Energy Resources, Ltd.
(BER) that occurred in December 1998 as if the Transaction occurred at the
beginning of the respective periods. The statement of operations for the year
ended December 31, 1998 includes FPC for the year and BER for the period from
inception (March 1, 1998) through November 30, 1998. BER's operations are
included with those of FPC beginning in December 1998. The Transaction involved
the acquisition by FPC of certain off balance sheet assets and commitments of
BER in exchange for $2,000,000 in cash and 100,000 shares of FPC preferred
stock, convertible into 26,000,000 shares of FPC common stock.
The pro forma statements of operations also reflect the following transactions:
(1) conversion of $4,000,000 (before discount) of subordinated debt payable to
BEC, an affiliate of BER, to stock; (2) repayment of $5,457,000 (before
discount) of subordinated debt to ENCAP (a stockholder of FPC) and other parties
via refinancing with bank debt; (3) the acquisition of the Cody properties in
November and December 1998; (4) the acquisitions of the South Coles Levee Unit
(SCLU) in August 1998 and several properties in October 1998 (the 10/15/98
acquisition); and (5) the roll up of certain ENCAP partnerships in November
1997. Items (1) and (2) were done in conjunction with the Transaction referred
to in the first paragraph above. Items (1), (2), (3) and (4) are reflected in
the pro forma statements of operations as if they had occurred at the beginning
of the respective periods. Item (5) is reflected in the 1997 pro forma
statement of operations as if it had occurred at the beginning
of that year. The pro forma statements of operations do not include an
extraordinary gain that the Company recorded as a result of the conversion to
stock of the subordinated debt due BEC.
These unaudited pro forma financial statements should be read in conjunction
with the historical financial statements of BER included in this document and
the historical financial statements of FPC as filed in its periodic reports with
the Securities and Exchange Commission. These unaudited pro forma financial
statements should not be construed to be indicative of future results or results
that actually would have occurred if the transactions had occurred at the dates
presented.
FUTURE PETROLEUM AND BARGO ENERGY RESOURCES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(amounts in thousands, except per share amounts)
PRO FORMA ADJUSTMENTS
10/15/98 CODY
FPC BER ACQUISITION ACQUISITION
-------- ------- ------------ -------------
(1) (1)
REVENUE:
Oil and gas sales $ 3,663 $ 600 $ 4,105 $ 2,271
Other income 16 245
-------- ------- ----------- -------------
Total revenue 3,679 845 4,105 2,271
COSTS AND EXPENSES:
Lease operations and
production taxes 1,826 406 1,366 1,034
General and administrative 783 1,443
Depletion and depreciation 1,316 103
Interest 1,238 174
-------- ------ ---------- -------------
Total costs and expenses 5,163 2,126 1,366 1,034
OTHER INCOME (EXPENSE):
Gain on sale of assets 1,049
Other 19 (222)
-------- ------ ---------- -------------
Total income (expense) 19 827
-------- ------ ---------- -------------
INCOME (LOSS) BEFORE TAXES (1,465) (454) 2,739 1,237
INCOME TAX PROVISION 287
-------- ------ --------- ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $ (1,178) $ (454) $ 2,739 $ 1,237
========= ====== ========= ============
BASIC AND DILUTED LOSS PER
SHARE BEFORE
EXTRAORDINARY ITEM $ (0.12)
=========
WEIGHTED AVERAGE SHARES
OUTSTANDING 9,924
=========
See notes to unaudited pro forma combined financial statements.
FUTURE PETROLEUM AND BARGO ENERGY RESOURCES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(amounts in thousands, except per share amounts)
PRO FORMA ADJUSTMENTS
SCLU PRO
ACQUISITION OTHER FORMA
----------- ------------ -------------
(1)
REVENUE:
Oil and gas sales $ 1,645 $ $ 12,284
Other income (110)(2) 151
----------- ------------ -------------
Total revenue 1,645 (110) 12,435
COSTS AND EXPENSES:
Lease operations and
production taxes 1,002 5,634
General and administrative 2,226
Depletion and depreciation 2,276 (3) 3,695
Interest 1,825 (4) 3,237
---------- ------------ -------------
Total costs and expenses 1,002 4,101 14,792
OTHER INCOME (EXPENSE):
Gain on sale of assets (1,049) (8)
Other (203)
---------- ------------ -------------
Total income (expense) (1,049) (203)
---------- ------------ -------------
INCOME (LOSS) BEFORE TAXES 643 (5,260) (2,560)
INCOME TAX PROVISION - 609 (9) 896
---------- ---------- ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $ 643 $ (4,651) $ (1,664)
========== =========== ============
BASIC AND DILUTED LOSS PER
SHARE BEFORE
EXTRAORDINARY ITEM $ 0.08 (10) $ (0.03)
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 38,258 48,142
============ =============
See notes to unaudited pro forma combined financial statements.
FUTURE PETROLEUM AND BARGO ENERGY RESOURCES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(amounts in thousands, except per share amounts)
1998 PROPERTY ACQUISITIONS
-----------------------------------------------------
10/15/98 CODY SCLU
FPC ACQUISITION ACQUISITION ACQUISITION
------- ------------ ----------- -----------
(1) (1) (1)
REVENUE:
Oil and gas sales $ 596 $ 8,513 $ 5,127 $ 5,261
Well operation fees 176
------- ------------ ----------- -----------
Total revenue 772 8,513 5,127 5,261
COSTS AND EXPENSES:
Production expenses 419 1,415 1,388 2,936
General and administrative 154
Depletion and depreciation 191
Interest 69
------- ----------- ------------ -----------
Total costs and expenses 833 1,415 1,388 2,936
OTHER INCOME 42
------- ----------- ------------ -----------
INCOME BEFORE TAXES (19) 7,098 3,739 2,325
INCOME TAX PROVISION 7
------- ----------- ------------ -----------
NET LOSS $ (12) $ 7,098 $ 3,739 $ 2,325
======= =========== ============ ===========
BASIC AND DILUTED EARNINGS
PER SHARE $ -
=======
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,280
=======
See notes to unaudited pro forma combined financial statements.
FUTURE PETROLEUM AND BARGO ENERGY RESOURCES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(amounts in thousands, except per share amounts)
OTHER PRO FORMA ADJUSTMENTS
-----------------------------------------------------
OTHER PRO
ACQUISITION OTHER FORMA
------------ ----------- -----------
REVENUE:
Oil and gas sales $ 7,581 (5) $ 27,078
Well operation fees (162)(6) 14
------------ ----------- -----------
Total revenue 7,419 27,092
COSTS AND EXPENSES:
Production expenses 3,898 (5) 9,894
(162)(6)
General and administrative 1,846 (7) 2,000
Depletion and depreciation 4,354 (3) 4,545
Interest 3,592 (4) 3,661
----------- ------------ -----------
Total costs and expenses 3,736 9,792 20,100
OTHER INCOME 42
----------- ------------ -----------
INCOME BEFORE TAXES 3,683 (9,792) 7,034
INCOME TAX PROVISION (2,469)(9) (2,462)
----------- ------------ -----------
NET LOSS $ 3,683 $ (12,261) $ 4,572
=========== ============ ===========
BASIC AND DILUTED EARNINGS
PER SHARE $ 0.10 (10) $ 0.10
============ ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING 43,646 (10) 47,296
============ ===========
See notes to unaudited pro forma combined financial statements.
(1) The pro forma adjustments reflect the oil and gas sales and production
expenses of the acquired properties prior to acquisition as if the acquisitions
had all occurred at the beginning of the respective periods.
(2) Adjustment to eliminate portion of intercompany profit earned by BER
from FPC that was not eliminated on BER's books.
(3) Adjustment to record additional depletion and depreciation as if the
transactions had all occurred at the beginning of the respective periods.
(4) Adjustment to record additional interest expense that would have been
incurred if the transactions had all occurred at the beginning of the respective
periods.
(5) Record (a) activity for ENCAP partnerships rolled up in November 1997
for ten month period before inclusion in FPC's operations ($2,318,000 of oil and
gas sales and $1,132,000 of production expense); and (b) 1997 activity for South
Cole Levee Unit (SCLU) acquired in August 1998 ($5,263,000 of oil and gas sales
and $2,928,000 of production expenses).
(6) Eliminate well operational fees included as revenue for FPC and
production expense for the ENCAP partnerships of $162,000.
(7) Adjustment to record additional general and administrative expenses as
if the transactions had all occurred at the beginning of 1997.
(8) Adjustment to eliminate gain recognized by BER on sale of properties to
FPC.
(9) Adjustment to record income tax effect as if the transactions had all
occurred at the beginning of the respective periods.
(10) Adjustment to record effect on earnings per share as if the
transactions had all occurred at the beginning of the respective periods.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed
on behalf by the undersigned hereunto duly authorized.
FUTURE PETROLEUM CORPORATION
(Registrant)
By:/s/ B. Carl Price
B. Carl Price
Vice President Corporate Development
Dated: April 30, 1999
EXHIBIT
Exhibit
Number Title of Document Location
------------------------------------------------------------------
1. Underwriting Agreement (d)
2. Plan of acquisition,
reorganization, arrangement,
liquidation of succession
2.2 Asset Purchase Agreement and Plan
of Reorganization dated December
15, 1998 by and among the
Company, Bargo Energy Resources,
Ltd., Bargo Energy Company and
TJG Investments, Inc. (c)
4. Instruments defining the rights
of security holders, including
indentures
4.1 Articles of Restatement of the
Articles of Incorporation (b)
4.2 Bylaws (b)
4.3 Agreement dated August 14, 1998
by and among B. Carl Price, Bargo
Energy Resources, Ltd., Energy
Capital Investment Company PLC,
and EnCap Equity 1994 Limited
Partnership (a)
4.4 Certificate of Designation of
Convertible Preferred Stock,
Series A (c)
16. Letter on change in certifying
accountant (d)
17. Letter on director resignation (d)
20. Other documents or statements to
security holders (d)
23. Consents of experts and counsel (d)
24. Power of attorney (d)
99. Material Contracts
99.1 Registration Rights Agreement
among the Company and Bargo
Energy Resources, Ltd. dated
August 14, 1998 (a)
99.2 First Amendment to Registration
Rights Agreement among the
Company, Bargo Energy Resources,
Ltd., Bargo Energy Company, TJG
Investments, Inc. and certain
other shareholders dated December
15, 1998 (c)
99.3 Registration Rights Agreement
among the Company, Energy Capital
Investment Company PLC and EnCap
Equity 1994 Limited Partnership
dated August 14, 1998 (a)
99.4 First Amendment to Registration
Rights Agreement among the
Company, Energy Capital
Investment Company PLC and EnCap
Equity 1994 Limited Partnership
dated December 15, 1998 (c)
99.5 Registration Rights Agreement
among the Company, B. Carl Price
and certain other shareholders
dated August 14, 1998 (a)
99.6 First Amendment to Registration
Rights Agreement among the
Company, B. Carl Price and
certain other shareholders dated
December 15, 1998 (c)
99.7 Stock Purchase Warrant by the
Company to Bargo Energy
Resources, Ltd. dated August 14,
1998 (a)
99.8 Amended and Restated
Shareholders' Agreement by and
among the Company, Bargo Energy
Resources, Ltd., Energy Capital
Investment Company PLC, EnCap
Equity 1994 Limited Partnership,
B. Carl Price, Don Wm. Reynolds,
Bargo Energy Company, TJG
Investments, Inc. and certain
other shareholders dated December
15, 1998 (c)
99.9 Amended Credit Agreement between
the Company and Bank of America
National Trust and Savings
Association dated December 4,
1998 (c)
99.10 Pledge Agreement between Bank of
America and Bargo Energy Company
dated December 15, 1998 (c)
99.11 Pledge Agreement between Bank of
America and TJG Investments, Inc.
dated December 15, 1998 (c)
99.12 Pledge Agreement between Bank of
America and James Sowell dated
December 15, 1998 (c)
99.13 Pledge Agreement between Bank of
America and Thomas D. Barrow
dated December 15, 1998 (c)
99.14 Pledge Agreement between Bank of
America and Tim J. Goff dated
December 15, 1998 (c)
99.15 Pledge Agreement between Bank of
America and Bargo Operating
Company, Inc. dated December 15,
1998 (c)
________________________
(a) Incorporated by reference from the Company's
report on Form 10-QSB for the fiscal quarter ended June
30, 1998, filed with the Securities and Exchange
Commission on August 19, 1998.
(b) Incorporated by reference from the Company's
report on Form 10-K for the fiscal year ended December
31, 1993, filed with the Securities and Exchange
Commission on May 20, 1994.
(c) Previously filed.
(d) Inapplicable to this filing.
(e) Incorporated by reference from the Company's
report on Form 10-KSB for the fiscal year ended
December 31, 1998, filed with the Securities and
Exchange Commission on April 19, 1999.