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
June 26, 1996
Rio Grande, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-8287 74-1973357
(Commission File Number) (I.R.S. Employer Identification Number)
10101 Reunion Place, Suite 210
San Antonio, Texas 78216-4156
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(210) 308-8000
Item 2. Acquisition or Disposition of Assets
On April 12, 1996, Rio Grande Offshore, Ltd., a wholly-owned affiliate
of Rio Grande, Inc. (the "Company") acquired 31 oil and gas leasehold interests
located in Louisiana and Mississippi from Belle Oil, Inc., Belle Exploration,
Inc., Louisiana Well Service Co., Alton J. Ogden, Jr., Alton J. Ogden, Sr. and
Jeff L. Burkhalter ("Belle Properties") for approximately $2.8 million.
This information was previously filed on Form 8-K dated April 29, 1996.
Item 7. Financial Statements and Exhibits
The following information was not included in the previously filed Form
8-K dated April 29, 1996.
(a) Financial Statements
Statements of Revenues and Direct Operating Expenses for the
Belle Properties.
(b) Pro Forma Financial Information
Pro Forma Condensed Combined Statements of Operations
(c) Exhibits - None.
2
SIGNATURES
Pursuant to the requirement 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.
RIO GRANDE, INC.
By: /s/
Guy Bob Buschman, President
Dated: June 26, 1996
3
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
OF CERTAIN OIL AND GAS PROPERTIES OF BELLE OIL, INC.
DECEMBER 31, 1995 AND 1994
4
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Rio Grande, Inc.:
We have audited the accompanying statement of revenues and direct operating
expenses of the oil and gas property interests acquired from Belle Oil, Inc.,
Belle Exploration, Inc., Louisiana Well Service Co., Alton J. Ogden, Jr., Alton
J. Ogden, Sr. and Jeff L. Burkhalter (collectively, the "Belle Properties") for
the year ended December 31, 1995. The statement of revenues and direct operating
expenses is the responsibility of the Company's management. Our responsibility
is to express an opinion on the statement of revenues and direct operating
expenses 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
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying statement was prepared as described in Note 1 for the purpose
of complying with certain rules and regulations of the Securities and Exchange
Commission ("SEC") for inclusion in certain SEC regulatory reports and filings
and are not intended to be a complete financial presentation.
In our opinion, the accompanying statement of revenues and direct operating
expenses presents fairly, the revenues and direct operating expenses of the
Belle Properties for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
San Antonio, Texas
June 26, 1996
5
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
OF CERTAIN OIL AND GAS PROPERTIES OF
BELLE OIL, INC.
Three Months Ended
Year Ended December 31, March 31,
----------------------- -----------------------
1995 1994 1996 1995
---- ---- ---- ----
(unaudited) (unaudited (unaudited)
Revenues $1,277,016 1,057,827 262,850 338,467
Direct operating expenses 560,563 638,225 143,005 112,914
---------- ---------- ---------- ----------
Excess of revenues over
direct operating expenses $ 716,453 419,602 119,845 225,553
========= ======= ======= =======
See accompanying notes to statements of revenues and direct operating expenses.
6
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
OF CERTAIN OIL AND GAS PROPERTIES OF
BELLE OIL, INC.
(1) Basis of Presentation
On April 12, 1996, Rio Grande, Inc. (the "Company") purchased interests
in certain operated and non-operated oil and gas producing properties
and proved undeveloped properties (the "Belle Properties") from Belle
Oil, Inc., Belle Exploration, Inc., Louisiana Well Service Co., Alton
J. Ogden, Jr., Alton J. Ogden, Sr. and Jeff L.Burkhalter ("Belle"). The
total purchase price of the assets acquired was approximately
$2,800,000. At closing, the Company paid for half of the acquisition
price with funds of approximately $1,100,000 from the Company's Senior
Credit Facility and approximately $300,000 from working capital. By
agreement with Belle, the remaining balance of approximately $1,450,000
was financed by a note issued by Belle which will be payable with
interest at prime rate on August 30, 1996. The oil and gas properties
are located in Mississippi and Louisiana.
The accompanying statements of revenues and direct operating expenses
were derived from the historical accounting records of Belle. Direct
operating expenses include payroll, lease and well repairs,
maintenance, and other direct operating expenses.
Full historical financial statements, including exploration expenses,
general and administrative expenses, interest expense and income tax
expense have not been presented because they have not historically been
allocated at this level. Historical depletion expense has not been
included in such statements as the Company will adjust the basis in its
purchase price allocation and the historical depletion will no longer
be relevant.
The information presented for the year ended December 31, 1994 and the
three month periods ended March 31, 1996 and 1995 is unaudited, but in
the opinion of Management includes all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the
results of operations. Results of operations for the three month
periods ended March 31, 1996 and 1995 are not necessarily indicative of
the results to be expected for the full year.
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NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
OF CERTAIN OIL AND GAS PROPERTIES OF
BELLE OIL, INC.
(2) Supplemental Oil and Gas Reserve Information (Unaudited)
Total proved and proved developed oil and gas reserves of the Belle
Properties at December 31, 1995 have been estimated based on reserve
estimates prepared as of January 1, 1996. No comparable estimates were
available for prior periods. Therefore, reserves for 1995 and 1994 have
been calculated by adjusting the January 1, 1996 amounts for prior
period producing activities and, consequently, no revisions of previous
estimates have been reflected. All reserve estimates are based on
economic and operating conditions existing at January 1, 1996. The
future net cash flows from production of these proved reserve
quantities were computed by applying current prices of oil and gas
(with consideration of price changes only to the extent provided by
contractual arrangements) as of January 1, 1996 to estimated future
production of proved oil and gas reserves less the estimated future
expenditures (based on current costs) as of January 1, 1996, to be
incurred in developing and producing the proved reserves. Income taxes
were calculated as statutory rates without consideration of any
remaining historical tax basis of the Belle Properties. The Belle
Properties are located in Louisiana and Mississippi. Exploration and
development costs incurred during 1994 and 1995 are not available.
Estimated Quantities of Oil and Gas Reserves:
Year Ended December 31,
----------------------------------------
1995 1994
----------------- ------------------
Oil Gas Oil Gas
(Mbbl) (Mmcf) (Mbbl) (Mmcf)
------ ------ ------ -------
Proved Reserves:
Beginning of year 1,138 18 1,196 20
Production (71) (1) (58) (2)
------ ------ ------ ------
End of year 1,067 17 1,138 18
====== ====== ====== ======
Proved Developed Reserves:
Beginning of year 833 18 891 20
End of year 762 17 833 18
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Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves (in $000s):
As of December 31,
1995 1994
------ ------
Future cash inflow $ 22,431 23,708
Future production costs (9,543) (10,104)
Future development costs (716) (716)
-------- --------
Future net inflows before income taxes 12,172 12,888
Income taxes (4,260) (4,511)
-------- --------
Future net cash flows 7,912 8,377
10% discount factor (3,405) (3,605)
-------- --------
Standardized measure of discounted future net
cash flows $ 4,507 4,772
======== ========
Changes in Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves (in $000s):
As of December 31,
1995 1994
------- -------
Standardized measure, beginning of year $ 4,772 4,928
Sales, net of production costs (716) (420)
Net change in income taxes 251 147
Accretion of discount 200 117
------- -------
Standardized measure, end of year $ 4,507 4,772
======= =======
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RIO GRANDE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
The following unaudited pro forma financial information for the year
ended January 31, 1996 and the three months ended April 30, 1996 give effect to
the acquisition of oil and gas leasehold interests purchased from Belle Oil,
Inc. in April 1996. The historical information for Belle Oil, Inc. is for the
year ended December 31, 1995 and the three months ended April 30, 1996. The pro
forma information for revenues and direct operating expenses is based on
historical information of the oil and gas properties acquired as if such
acquisitions had occurred at the beginning of the respective periods. The pro
forma information may not be indicative of the results that would have occurred
if the acquisition had been effective on the dates indicated or of the results
that may be obtained in the future. The pro forma information should be read in
conjunction with the financial statements and notes thereto of the Company.
Fiscal Year Ended January 31, 1996
-------------------------------------------------
Historical
-----------------------
Pro Forma
Rio Grande, Belle Oil, Adjust- Pro Forma
Inc. Inc. ments Balances
Net revenues $ 3,632,171 1,277,016 0 4,909,187
----------- --------- -------- ----------
Costs and Expenses:
Operating expense 2,278,276 560,563 0 2,838,839
Depreciation, depletion 1,171,042 0 393,749 (b) 1,564,791
and amortization
Provision for abandonment 180,000 0 0 180,000
General and administrative 1,336,309 0 56,700 (c) 1,393,009
--------- --------- -------- ----------
Total costs and expenses 4,965,627 560,563 450,449 5,976,639
--------- --------- -------- ----------
Earnings (loss) from operations (1,333,456) 716,453 (450,449) (1,067,452)
Interest expense (318,222) 0 (216,247)(d) (534,469)
Interest income 59,629 0 0 59,629
Gain on sale of assets 1,258,688 0 0 1,258,688
Minority interest of
limited partners (128,794) 0 0 (128,794)
----------- --------- -------- ----------
Earnings (loss) before
income taxes (462,155) 716,453 (666,696) (412,398)
Income taxes 2,924 0 0 2,924
----------- --------- -------- ----------
Net earnings (loss) $ (465,079) 716,453 (666,696) (415,322)
=========== ========= ======== ==========
Net loss per common and
common equivalent share $ (0.09) (0.08)
=========== ==========
Weighted average common and
common equivalent shares
outstanding 5,231,177 5,231,177
=========== ==========
See Notes to the Pro Forma Condensed Combined Statements of Operations.
10
RIO GRANDE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
Three Months Ended April 30, 1996
-----------------------------------------------
Historical
-----------------------
Pro Forma
Rio Grande Belle Oil, Adjust- Pro Forma
Inc. Inc. ments Balances
Net revenues $ 1,148,888 266,348 (96,385)(a) 1,318,851
--------- --------- -------- ---------
Costs and Expenses:
Operating expense 701,282 161,010 (60,543)(a) 801,749
Depreciation, depletion 272,577 0 (11,675)(b) 260,902
and amortization
Provision for abandonment 46,354 0 0 46,354
General and administrative 307,189 0 14,175 (c) 321,364
--------- --------- -------- ---------
Total costs and expenses 1,327,402 161,010 (58,043) 1,430,369
--------- --------- -------- ---------
Earnings (loss) from operations (178,514) 105,338 (38,342) (111,518)
Interest expense (115,416) 0 (35,380)(d) (150,796)
Interest income 24,734 0 0 24,734
Gain on sale of assets 21,859 0 0 21,859
Minority interest of
limited partners (28,658) 0 0 (28,658)
--------- --------- -------- ---------
Earnings (loss) before
income taxes (275,995) 105,338 (73,722) (244,379)
Income taxes 1,936 0 0 1,936
--------- --------- -------- ---------
Net earnings (loss) $ (277,931) 105,338 (73,722) (246,315)
========= ========= ======== =========
Net loss per common and
common equivalent share $ (0.05) (0.05)
=========== =========
Weighted average common and
common equivalent shares
outstanding 5,462,092 5,462,092
=========== =========
See Notes to the Pro Forma Condensed Combined Statements of Operations.
11
RIO GRANDE, INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(a) To eliminate the revenues and operating expenses for Belle Oil, Inc.
which occurred after their acquisition and are therefore duplicated in
the combined results.
(b) To provide for depreciation, depletion and amortization of the oil and
gas properties and other assets acquired based on their production
during the respective periods after giving effect to the purchase
price.
(c) To provide for additional personnel resulting from the acquisition.
(d) To provide for the additional interest expense for the $2,500,000 debt
incurred in the acquisition.
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