UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the
[X] Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1997
OR
Transition Report Pursuant to Section 13 or 15(d) of
[ ] the Securities Exchange Act of 1934
Commission File No. 1-10669
XCL Ltd.
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(Exact name of registrant as specified in its charter)
Delaware 51-0305643
- ------------------------ ----------------------
(State of Incorporation) (I.R.S. Employer
Identification Number)
110 Rue Jean Lafitte, 2nd Floor, Lafayette, LA 70508
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(Address of principal executive offices) (Zip Code)
318-237-0325
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(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
298,142,945 shares Common Stock, $.01 par value were
outstanding on August 14, 1997.
XCL LTD.
TABLE OF CONTENTS
Page
PART I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Index to Exhibits
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
All statements other than statements of historical facts included
in this Quarterly Report, including, without limitation, those
regarding the Company's financial position, business strategy,
budgets, reserve estimates, development and exploitation
opportunities and projects, behind-pipe zones, classification of
reserves, projected financial, operating and reserve data and
plans and objectives of management for future operations, are
forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's
expectations ("Cautionary Statements") are disclosed under
"Certain Risk Factors Relating to the Company and the Oil and Gas
Industry" in the Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and elsewhere in the Annual Report
including, without limitation, in conjunction with the forward-
looking statements included in this Quarterly Report. All
subsequent written and oral forward-looking statements
attributable to the Company or persons acting on behalf of the
Company, are expressly qualified in their entirety by the
Cautionary Statements.
XCL Ltd. and Subsidiaries
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
June 30 December 31
Assets 1997 1996
------ ---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $ 4,707 $ 113
Cash held in escrow (restricted) 75,000 --
Accounts receivable, net 40 23
Prepaid expenses 110 212
------- -------
Total current assets 79,857 348
------- -------
Property and equipment:
Oil and gas (full cost method):
Proved and unproved properties under
development not being amortized 39,376 34,305
Land, at cost -- 135
Other 1,205 2,492
------- -------
40,581 36,932
Accumulated depreciation, depletion and
amortization (954) (1,491)
------- -------
39,627 35,441
------- -------
Investments 2,908 2,383
Assets held for sale 21,058 21,058
Deferred charges and other assets 8,440 1,634
-------- --------
Total assets $ 151,890 $ 60,864
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Senior secured notes $ 75,000 $ --
Other notes payable 1,000 --
Accounts payable and accrued costs 5,649 3,901
Due to joint venture partner 2,458 4,202
Dividends payable 928 928
Current maturities of long-term debt 29,290 38,022
-------- --------
Total current liabilities 114,325 47,053
-------- --------
Long-term debt, net of current maturities -- --
Other non-current liabilities 2,741 2,770
-------- --------
Commitments and contingencies (Note 6)
Shareholders' equity:
Preferred stock-$1.00 par value; authorized
2,400,000 shares; issued shares of
1,062,286 at June 30, 1997 and 669,411 at
December 31, 1996-liquidation preference
of $90.9 million at June 30, 1997 1,062 669
Common stock-$.01 par value; authorized
500 million shares; issued shares of
298,142,945 at June 30, 1997 and
285,754,151 at December 31, 1996 2,981 2,858
Common stock held in treasury - $.01 par
value; 1,042,065 shares at June 30,
1997 and December 31, 1996 (10) (10)
Additional paid-in capital 254,494 226,956
Accumulated deficit (223,703) (219,432)
-------- --------
Total shareholders' equity 34,824 11,041
-------- --------
Total liabilities and
shareholders'equity $ 151,890 $ 60,864
======== ========
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
(Unaudited) (Unaudited)
Oil and gas revenues from properties held for sale $ 53 $ 361 $ 137 $ 937
------- ------ ------ -----
Costs and operating expenses:
Operating 47 85 113 237
Depreciation, depletion and amortization 24 151 80 483
Writedown of investments -- 1,250 -- 1,250
General and administrative 756 845 1,534 1,994
------- ------ ------ ------
827 2,331 1,727 3,964
------- ------ ------ ------
Operating loss (774) (1,970) (1,590) (3,027)
------- ------ ------ ------
Other income (expense):
Interest income 498 -- 498 --
Interest expense, net of amounts capitalized (1,012) (571) (1,646) (1,207)
Loss on sale of investments -- (661) -- (661)
Other, net 73 140 312 192
------- ------- ------ ------
(441) (1,092) (836) (1,676)
------- ------- ------ ------
Net loss (1,215) (3,062) (2,426) (4,703)
Preferred stock dividends (1,912) (416) (3,316) (447)
------- ------- ------- ------
Net loss attributable to common stock $ (3,127) $ (3,478) $ (5,742) $(5,150)
======= ======= ======= ======
Net loss per common and common equivalent share $ (.01) $ (.01) $ (.02) $ (.02)
======= ======= ======= ======
Weighted average number of common and common
equivalent shares outstanding 293,529 263,343 292,673 260,061
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
Six Months Ended June 30
---------------------
1997 1996
---- ----
(Unaudited)
Cash flows from operating activities:
Net loss $ (2,426) $ (4,703)
------- --------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation, depletion and amortization 80 483
Loss on sale of investments -- 661
Writedown of investments -- 1,250
Change in assets and liabilities:
Accounts receivable (17) 660
Prepaid expenses 102 104
Accounts payable and accrued costs 1,754 670
Due to joint venture partner (1,744) --
Other, net (4) (126)
------- -------
Total adjustments 171 3,702
------- -------
Net cash used in operating activities (2,255) (1,001)
------- -------
Cash flows from investing activities:
Capital expenditures (3,281) (2,410)
Investments (388) (164)
Proceeds from sale of assets 759 9,147
------- -------
Net cash provided by (used in)
investing activities (2,910) 6,573
------- -------
Cash flows from financing activities:
Proceeds from sales of common stock 652 960
Proceeds from loans 78,316 --
Proceeds from sales of treasury stock -- 251
Payment for treasury stock -- (141)
Proceeds from issuance of preferred stock 25,000 282
Proceeds from exercise of common stock
warrants and options 1,184 --
Payment of long-term debt (8,965) (8,239)
Payment of note payable (2,100) --
Payment of preferred stock dividends (469) --
Preferred stock and debt issuance costs (8,859) --
Other, net -- (95)
------- -------
Net cash provided by (used in)
financing activities 84,759 (6,982)
------- -------
Net increase (decrease) in cash and cash equivalents 79,594 (1,410)
Cash and cash equivalents at beginning of period 113 1,610
------- -------
Cash and cash equivalents at end of period $ 79,707 $ 200
======= =======
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(1) Basis of Presentation
The consolidated financial statements at June 30, 1997, and
for the three months and six months then ended have been prepared
by the Company, without audit, pursuant to the Rules and
Regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such Rules and Regulations. The Company believes
that the disclosures are adequate to make the information
presented herein not misleading. These consolidated financial
statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. In the
opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial
position of XCL Ltd. and subsidiaries as of June 30, 1997, and
December 31, 1996, and the results of their operations for the
three months and six months ended June 30, 1997 and 1996, have
been included. Certain reclassifications have been made to prior
period financial statements to conform to current year
presentation. These reclassifications had no effect on net loss
or shareholders equity. The results of the Company's operations
for such interim periods are not necessarily indicative of the
results for the full year.
Loss per common and common equivalent share has been
computed by dividing net loss attributable to common stock by the
weighted average number of common and common share equivalents
outstanding.
See the discussion in the section entitled "Disclosure
Regarding Forward-Looking Information" herein.
(2) Liquidity and Capital Resources
At June 30, 1997, the Company had an operating cash balance
of $4.7 million and a working capital deficit of $34.5 million,
which includes $17.3 million owed to ING (U.S.) Capital Corp.
("ING") under its Credit Facility, $7.0 million of Secured
Subordinated Debt, $5.0 million in limited recourse debt
collateralized only by the Lutcher Moore Tract, and $1.0 million
in unsecured notes of XCL-China Ltd. which were repaid in July
1997.
The Company completed a $75,000,000 debt offering (the "Note
Offering") and a $25,000,030 preferred stock offering (the
"Equity Offering") on May 20, 1997 (collectively referred to as
the "Offerings"). Under terms of the trust indenture two cash
collateral accounts were established (reflected in the balance
sheet as cash held in escrow), one for $14,625,000 (representing
the aggregate amount of interest due on the Notes through
November 1, 1998) and the other for $60,375,000. Funds held in
the latter cash collateral account will be disbursed to the
Company only if the requisite Chinese authority approves the
Overall Development Plan ("ODP") by November 1, 1997 for
development of the C-D Field of the Zhao Dong Block. Additional
funds of approximately $13 million are expected from the sale of
the Lutcher Moore Tract, although there can be no assurance as to
the timing and amounts to be obtained. During 1996, litigation
was instituted against the Company in connection with the
remaining domestic oil and gas property held by the Company,
effectively impeding the Company's ability to consummate a sale
by casting doubt as to the Company's rights to certain leases and
demanding damages. Upon resolution of the litigation the Company
will resume its efforts to dispose of these properties. These
transactions will provide funding for the Company to repay all of
its other indebtedness, and, combined with projected cash flow,
the estimated development expenditures and its contractual
exploration obligations.
The Company anticipates incurring losses in fiscal 1997 and
1998 because production from the China properties is not expected
until late in 1998. If the Company is successful in additional
exploratory drilling on the Zhao Dong Block, or if the Company is
successful in developing additional oil and gas projects, the
Company may need additional working capital. The Company believes
that in such events funds will be available to meet these needs.
The exact amounts, source and timing of such financing is not
determinable at this time and there are no assurances it will be
available if needed. In addition, the Company's efforts to
secure additional working capital could be impaired if its common
stock is delisted from the AMEX. See Note 6.
Longer term liquidity will be dependent upon the Company's
future performance, including commencement of production in
China, as well as continued access to capital markets, including
the ability to issue additional debt and equity securities.
Issuance of debt and equity securities may require consent of the
holders of the Senior Secured Notes due May 1, 2004, and, until
repaid by proceeds of the Note Offering, ING and the holders of
the Company's Secured Subordinated Debt, and in the case of
certain equity securities, of one or more classes of the
Company's equity securities.
The Company is undertaking certain actions to simplify its
capital structure which will include the amendment,
recapitalization and combination of its outstanding Series A,
Cumulative Convertible Preferred Stock and Series E, Cumulative
Convertible Preferred Stock into a single designated series of
Amended Series A, Cumulative Convertible Preferred Stock which,
together with the new series issued on May 20, 1997, will
constitute a single class of Amended Series A Preferred Stock.
The Company is also considering a reverse stock split of its
Common Stock. The reverse stock split of the Common Stock will
require approval of the holders of a majority of the outstanding
shares of capital stock entitled to vote thereon at a special
stockholders' meeting planned for the fall, 1997. Changes in the
outstanding series of Preferred Stock will require approval of
the holders of two-thirds of each series of the affected
outstanding Preferred Stock. The Company has received
indications from those series of outstanding Preferred Stock that
such approvals will be obtained.
The Company was, until April 10, 1997, in default under
terms of its Credit Facility with ING and, by virtue of certain
cross default provisions, the Secured Subordinated Debt. By
agreement dated April 10, 1997, as amended, (the "Forbearance
Agreement") ING, in consideration of the Company's commitment to
grant ING or its designee(s) warrants to acquire 7 million shares
of Common Stock, agreed to forbear taking any action pending the
completion of the Offerings and release of such funds from a cash
collateral account. The proceeds from the sale of the Senior
Secured Notes due May 1, 2004, are expected to be used to repay
such debt. Forbearance has been conditionally extended until
November 1, 1997, the anticipated date by which the requisite
Chinese authority is expected to have approved the development
plan for the C-D Field of the Zhao Dong Block.
In addition to capital commitments to fund the Company's
share of the Zhao Dong Block development, the Company has capital
requirements for its lubricating oil and coalbed methane
projects.
As a result of the substantial capital requirements
described above, and the Company's recurring net losses, the
report of the Company's independent accountants dated April 10,
1997, as of, and for the year ended December 31, 1996, contains
an explanatory paragraph regarding the ability of the Company to
continue as a going concern. The Company's independent
accountants have indicated that, assuming the release of the
escrow funds and repayment of the Credit Facility and the Secured
Subordinated Debt and no adverse conditions occur in respect of
the Company's projected operations, they will issue an
unqualified audit report that does not contain an explanatory
paragraph on such consolidated financial statements.
(3) Supplemental Cash Flow Information
There were no income taxes paid during the six month periods
ended June 30, 1997 and 1996.
Interest and associated capitalized costs for the three
month and six month periods ended June 30 totaled $2.1 million
and $2.6 million, respectively for 1997 and $0.8 million and $1.4
million, respectively for 1996. Interest paid during the three
month and six month periods ended June 30 amounted to
approximately $89,500 and $195,300 for 1997, and $200,000 and
$1.1 million, respectively for 1996.
(4) Debt
Long-term debt consists of the following (000's):
June 30 December 31
1997 1996
---- ----
Collateralized credit facility $ 17,279 $ 17,279
Secured Subordinated Debt 7,000 15,000
Office building mortgage -- 652
------- -------
24,279 32,931
Lutcher Moore Group Limited Recourse Debt 5,011 5,091
------- -------
29,290 38,022
Less current maturities:
Lutcher Moore Group Limited Recourse Debt (5,011) (5,091)
Collateralized credit facility (17,279) (17,279)
Secured Subordinated Debt (7,000) (15,000)
Office building mortgage -- (652)
-------- --------
$ -- $ --
======== ========
Substantially all of the Company's assets collateralize
these borrowings. Accounts payable and accrued expenses include
interest accrued at June 30, 1997, of approximately $3.6 million.
Credit Facility
- ---------------
The Company has been in default of interest payments since
October 1, 1996 and principal payments since January 2, 1997 to
ING, resulting in a default under the Credit Facility and, by
virtue of certain cross default provisions, the Secured
Subordinated Debt. By letter dated January 9, 1997, ING
acknowledged that failure to make such principal and interest
payments constituted an event of default and advised that such
past due payments bear interest at the Late Payment Rate in
effect on such date. On January 2, 1997, the Late Payment rate
was 12.25%. Under the terms of the Forbearance Agreement between
the Company, XCL-China and ING, ING agreed that it would not
accelerate the maturity of, or commence any foreclosure
procedures to collect, the indebtedness under the Credit Facility
until May 31, 1997. As of May 20, 1997, the closing date for the
Offerings, ING's agreement to forbear was conditionally extended
to November 1, 1997. The Forbearance Agreement does not operate
to remove any default under the Credit Facility, and ING will be
free to assert all of its legal and equitable rights at the end
of the forbearance period. The Forbearance Agreement allows
proceeds of the Equity Offering to be used to repay Secured
Subordinated Debt of the Company, to the extent that holders of
that debt subscribed to the Equity Offering. In addition, the
Forbearance Agreement requires that the proceeds of the Equity
Offering be used first to pay the costs of issuance associated
with both the Equity Offering and the Offering and to repay the
XCL-China Debt ($3.1 million borrowed on April 10, 1997 from a
group of institutional and accredited investors and evidenced by
promissory notes of XCL-China); second, to pay current
obligations of XCL-China and to reestablish a reserve for such
obligations (under terms reasonably acceptable to ING) pending
release of the proceeds of the Offering; third, to pay reasonable
and necessary general and administrative expenses through
November 1, 1997 (not to exceed $2,375,000); and fourth, to the
extent that any proceeds of the Equity Offering remain, to be
applied against the indebtedness under the Credit Facility. As
consideration for the Forbearance Agreement, the Company issued
warrants to ING, pledged the stock of certain subsidiaries, and
provided ING with a guaranty of the indebtedness under the Credit
Facility by XCL-China. In addition, the Credit Facility was
amended to provide that proceeds from any direct or indirect sale
of the Lutcher Moore Tract are to be used first to pay debt on
the Lutcher Moore Tract (up to $5.2 million plus accrued
interest), second to pay the XCL-China Debt, or if the XCL-China
Debt has been paid, to establish a reserve of up to $3.1 million
for current and future obligations of XCL-China incurred on or
before September 30, 1997, and third to pay the indebtedness
under the Credit Facility.
Secured Subordinated Debt
- -------------------------
During April 1993, the Company issued in a private
placement, $15 million of Secured Subordinated Note Units. Each
of these 40 units consisted of a $375,000 note payable, warrants
to acquire 100,000 shares of the Company's Common Stock at $0.90
per share (which were previously issued to a group of banks in a
prior credit facility), a net profits interest in certain
exploration leases and a contractual interest in the net revenues
of XCL-China, under the Contract relating to the Zhao Dong Block,
which was not material. This borrowing bears interest at 12%, if
paid with cash, or 14%, if the Company elects to use Common
Stock, with payment at 125% of the interest due if paid in
unregistered shares. It is collateralized by a second mortgage
on all the Company's producing properties and a second lien on
the stock of XCL-China. Payment on this debt cannot be made
prior to payment on the indebtedness under the Credit Facility.
The terms of the Secured Subordinated Debt provide that an event
of default under the Credit Facility which has not been waived
and permits ING to accelerate the maturity of its indebtedness is
an event of default on the Secured Subordinated Debt. In the
case of an event of default, the holders of the Secured
Subordinated Debt cannot take any enforcement action (including
acceleration of the Secured Subordinated Debt) while the Credit
Facility is outstanding until the lapse of a 180-day blocking
period. A blocking period commences with delivery of a blocking
notice by holders of 70 percent of the Secured Subordinated Debt.
No such blocking notice has been given. As noted above, an event
of default exists under the Credit Facility, therefore an event
of default exists with respect to the Secured Subordinated Debt.
In accordance with the terms of the Forbearance Agreement, on May
20, 1997, $8.0 million of the Secured Subordinated Debt was
repaid, with proceeds from the Equity Offering, to those
institutional investors who purchased Amended Series A Preferred
Stock in the Equity Offering.
Lutcher Moore Group Limited Recourse Debt
- -----------------------------------------
In connection with the Lutcher Moore Tract, the Company's
indirect ownership of such tract was subjected to a first
mortgage, with a current principal balance of approximately $2.0
million, and a number of sellers' notes, with an aggregate
current principal balance of approximately $3.0 million (the
"Lutcher Moore Tract"). During July 1997, upon payment by the
Company of principal and interest in the aggregate amount of
approximately $430,000, the repayment terms of the Mortgage Notes
were extended until January 17, 1998.
Payments of principal and interest on the Seller Notes are
past due and in July 1997, certain of the sellers have demanded
payment. The Company is negotiating an extension of the maturity
dates of the Seller Notes however, should the Company be
unsuccessful in negotiating further extension, the holders have
recourse only to the property itself, as the Company is not
liable for the debt. The book value of this property is $12.2
million, therefore, if the Company should allow the mortgagees to
repossess the property for nonpayment of the mortgage debt, the
Company would incur a substantial loss.
Office Building Mortgage
- ------------------------
On March 31, 1997, the Company's office building was sold
for $900,000, $750,000 in cash and a note for $150,000. The
mortgage debt on the building in the amount of $652,000 was
repaid in full with interest and prepayment penalties thereon.
The note bears interest at 9.25% and is of a 22 month term.
Contemporaneously with the sale, the Company leased back one
floor of the two story building for a 22 month term, with the
note payments being equal to and offsetting the lease payments.
Senior Secured Notes
- --------------------
On May 20, 1997, the Company sold through Jefferies &
Company, Inc. ("Jefferies"), in an unregistered offering to
qualified institutional buyers and accredited institutional
investors (the "Note Offering") 75,000 Note Units, each
consisting of $1,000 principal amount of 13.5% Senior Secured
Notes due May 1, 2004 (collectively, the "Notes") and one Common
Stock Purchase Warrant (collectively the "Note Warrants") to
purchase 1,280 shares of the Company's common stock, par value
$0.01 per share (the "Common Stock"). The Notes and the Note
Warrants will not be separately transferable until the date which
is the earlier of (i) August 17, 1997 or (ii) such date as
Jefferies in its discretion deems appropriate.
Jefferies was the initial purchaser ("Initial Purchaser") in
connection with the Note Offering for which it was paid usual and
customary compensation as well as reimbursement for its out-of-
pocket expenses in the Offerings.
Interest on the Notes will be payable semi-annually on May 1
and November 1, commencing November 1, 1997. The Notes will
mature on May 1, 2004. The Notes are not redeemable at the option
of the Company prior to May 1, 2002, except that the Company may
redeem, at its option prior to May 1, 2002, up to 35% of the
original aggregate principal amount of the Notes, at a redemption
price of 113.5% of the aggregate principal amount of the Notes,
plus accrued and unpaid interest, if any, to the date of
redemption, with the net proceeds of any equity offering
completed within 90 days prior to such redemption; provided that
at least $48.75 million in aggregate principal amount of the
Notes remain outstanding. On or after May 1, 2002, the Notes are
redeemable at the option of the Company, in whole or in part, at
an initial redemption price of 106.75% of the aggregate principal
amount of the Notes until May 1, 2003, and at par thereafter,
plus accrued and unpaid interest, if any, to the date of
redemption. Upon the occurrence of a change of control, the
Company will be obligated to make an offer to purchase all
outstanding Notes at a price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase.
Prior to the issuance of the Notes, the Company had
approximately $32.3 million aggregate principal amount of
existing full recourse indebtedness (the "Existing Secured
Debt"), collateralized by substantially all of the outstanding
capital stock of XCL-China Ltd., the Company's principal
operating subsidiary ("XCL-China"). Initially, the Notes will be
secured by all of the gross proceeds of the Offering. A portion
of such gross proceeds (approximately $14.6 million) will be
segregated into a separate account (the "Capitalized Interest
Account") to pay interest on the Notes through November 1, 1998.
If certain conditions are met, the collateral for the Notes
(exclusive of the amount in the Capitalized Interest Account)
will be released and used to repay the Existing Secured Debt, to
fund the Company's China operations, and for additional working
capital for general corporate purposes, the Notes will then be
secured by a pledge of all of the outstanding capital stock of
XCL-China, and XCL-China will guarantee the Notes on a senior
basis. If such conditions do not occur prior to November 1,
1997, however, the Notes will be mandatorily redeemed on November
30, 1997, at a redemption price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest to the date of
redemption. Any remaining unpaid amount in respect of the Notes
shall become a claim against the Company subordinate in right of
payment to the Existing Secured Debt.
The Note Warrants will entitle the holders thereof to
purchase in the aggregate 96,000,000 shares of the Common Stock.
The Note Warrants will be exercisable at any time after the later
of the first anniversary of the issue date or such date on which
the Company has reserved or has available a sufficient number of
shares of its Common Stock to permit exercise of all the
outstanding Note Warrants ("Initial Note Warrant Exercise Date")
and until 5:00 p.m. New York City time on the seventh anniversary
of the issue date, at an initial exercise price of $0.2063 per
share, subject to adjustment. If the Initial Note Warrant
Exercise Date does not occur by May 20, 1998, then each Note
Warrant will automatically convert into the right to purchase one
share of Amended Series A Preferred Stock at an exercise price of
$34.00 per share.
The securities issued in the Note Offering are "restricted
securities" as defined in Rule 144 under the Securities Act of
1933, as amended. The Note Units, and upon separation, the Notes
and Note Warrants are eligible for trading in the Private
Offering, Resales and Trading through Automated Linkage Market of
the National Association of Securities Dealers, Inc. Holders
will also be entitled to certain registration rights with respect
to their securities. The interest rate on the Notes is subject
to increase under certain circumstances if the Company is not in
compliance with its registration obligations to the Note holders.
The Company agreed to issue to Jefferies in connection with
the Note Offering a total of 15,006 warrants to purchase
19,207,680 shares of Common Stock at an initial exercise price of
$0.2063 per share. Of such warrants, 2,251 will be issued
directly to a finder.
(5) Preferred Stock and Common Stock
As of June 30, 1997, the Company had the following shares of
Preferred Stock issued and outstanding:
Dividends (In Thousands)
___________________________________________
1997
_____________________
In Arrears
Liquidation In Arrears or Accrued
Shares Value Declared or Accrued 1996 Total
------ ------ -------- ---------- ---- -----
Series A 641,359 $ 53,373,896 (1) $ -- $ 2,402 $ 4,450 $ 6,852
Series B 44,954 4,495,400 223 -- -- 223
Series E 48,982 4,898,200 294 -- -- 294
Series F 21,057 2,105,700 126 -- -- 126
Amended Series A 305,934 26,004,390 -- 271 -- 271
1,062,286 $ 90,877,586 $ 643 $ 2,673 $ 4,450 $ 7,766
__________
(1) 50 pounds sterling (U.K.) per share (1 U.K. pound
sterling = U.S. $1.6644 at June 30, 1997).
Series A Preferred Stock
- ------------------------
During February 1997, the Company sold 13,458 shares of
Series A Preferred Stock for $157,240. The proceeds were used to
pay the withholding taxes and fractional interests with respect
to the December 31, 1995 dividend payment. In March 1997, the
Company issued an additional 50,137 shares of Series A Preferred
Stock in payment of this dividend, therefore fulfilling its
obligation for such dividend period. The Board of Directors
elected not to declare the dividend payable June 30, 1997.
During March 1997, 39 shares of Series A Preferred Stock
were converted into 819 shares of Common Stock.
Series B Preferred Stock
- ------------------------
During the first quarter of 1997, 1,004,000 shares of Series
B Redemption Stock were sold and the proceeds applied against
accrued dividends. During the second quarter of 1997, 381,000
shares of Series B Redemption Stock were sold, and during July
1997, 1,255,100 shares of Series B Redemption Stock were sold,
with the proceeds applied against redemption of the Series B
Preferred Stock.
In July 1997, holders of the Company's Series B Preferred
Stock sued the Company and each of its directors with respect to
the alleged failure of the Company to redeem CIDC's Series B
Preferred shares, in accordance with the terms of the Purchase
Agreement and Certificate of Designation. See Note 6
"Commitments, Contingencies and Subsequent Events" regarding this
lawsuit.
Series E Preferred Stock
- ------------------------
In January 1997, the Company issued 2,328 shares of Series E
Preferred Stock in payment of the December 31, 1996 dividend. In
July 1997, the Company issued 2,933 shares of Series E Preferred
Stock in payment of the June 30, 1997 dividend.
Series F Preferred Stock
- ------------------------
In December 1996, XCL authorized the issuance of up to
50,000 shares of a new series of Preferred Stock designated the
Series F, Cumulative Convertible Preferred Stock, $1.00 par value
per share ("Series F Preferred Stock"). During February 1997, the
Company issued a total of 21,057 shares of Series F Preferred
Stock in consideration of $225,000, assignment to the Company of
1,408,125 shares of Common Stock and 2,600,000 warrants to
purchase Common Stock and the release by the purchasers of
certain claims against the Company arising from the Company's
inability to perform under the terms of existing agreements.
Each share of Series F Preferred Stock is convertible, at the
holder's option, into 400 shares of Common Stock. The Series F
Preferred Stock bears a fixed cumulative dividend at the annual
rate of $12 per share, payable semi-annually in cash, or, at the
Company's election, in additional shares of Series F Preferred
Stock, subject to an increase in the event the Company fails to
pay any regularly scheduled dividend.
In July 1997, the Company issued 1,261 shares of Series F
Preferred Stock in payment of the June 30, 1997 dividend.
Amended Series A Preferred Stock
- --------------------------------
On May 20, 1997, the Company sold, in an unregistered
offering to qualified institutional buyers and accredited
institutional investors (the "Equity Offering") 294,118 Equity
Units, each consisting of one share of Amended Series A,
Cumulative Convertible Preferred Stock, par value $1.00 per share
("Amended Series A Preferred Stock"), and one Common Stock
Purchase Warrant (collectively, the "Equity Warrants") to
purchase 327 shares of the Company's Common Stock. The Amended
Series A Preferred Stock and Equity Warrants will not be
separately transferable until the date which is the earlier of
(i) October 16, 1997 or (ii) such date as the Company in its
discretion deems appropriate.
Each share of Amended Series A Preferred Stock has a
liquidation value of $85.00, plus accrued and unpaid dividends.
Dividends on the Amended Series A Preferred Stock are cumulative
from May 20, 1997 and are payable semi-annually, commencing
November 1, 1997, at an annual rate of $8.075 per share.
Dividends are payable in additional shares of Amended Series A
Preferred Stock (valued at $85.00 per share) through November 1,
2000, and thereafter in cash, or at the election of the Company,
in additional shares of Amended Series A Preferred Stock. The
Amended Series A Preferred Stock is convertible into Common
Stock, at any time after the first anniversary of the issue date,
at the option of the holders thereof, unless previously redeemed,
at an initial conversion price of $0.50 per share of Common Stock
(equivalent to a rate of 170 shares of Common Stock for each
share of Amended Series A Preferred Stock), subject to adjustment
under certain conditions. The Company is entitled to require
conversion of all the outstanding shares of Amended Series A
Preferred Stock, at any time after November 20, 1997 if the
Common Stock shall have traded for 20 trading days during any 30
consecutive trading day period at a market value equal to or
greater than 150% of the prevailing conversion rate.
The Amended Series A Preferred Stock is redeemable at any
time on or after May 1, 2002, in whole or in part, at the option
of the Company initially at a redemption price of $90.00 per
share and thereafter at redemption prices which decrease ratably
annually to $85.00 per share on and after May 1, 2006, plus
accrued and unpaid dividends to the redemption date. The Amended
Series A Preferred Stock is mandatorily redeemable, in whole, on
May 1, 2007, at a redemption price of $85.00 per share, plus
accrued and unpaid dividends to the redemption date, payable in
cash, or at the election of the Company, in Common Stock.
Upon the occurrence of a change in control or certain other
fundamental changes, the conversion price of the Amended Series A
Preferred Stock will be reduced, for a limited period, in certain
circumstances in order to provide holders with loss protection at
a time when the market value of the Common Stock is less than the
then prevailing conversion price.
The Amended Series A Preferred Stock will entitle the holder
thereof to cast the same number of votes as the shares of Common
Stock then issuable upon conversion thereof on any matter subject
to the vote of the holders of the Common Stock. Further, the
holders of the Amended Series A Preferred Stock will be entitled
to vote as a separate class (i) to elect two directors if the
Company is in arrears in payment of three semi-annual dividends,
and (ii) the approval of two-thirds of the then outstanding
Amended Series A Preferred Stock will be required for the
issuance of any class or series of stock ranking prior to the
Amended Series A Preferred Stock, as to dividends, liquidation
rights and for certain amendments to the Company's Certificate of
Incorporation that adversely affect the rights of holders of the
Amended Series A Preferred Stock.
The Equity Warrants will entitle the holders thereof to
purchase in the aggregate 96,176,586 shares of the Common Stock.
The Equity Warrants are exercisable at any time after the later
of the first anniversary of the issue date or such date on which
the Company has reserved or has available a sufficient number of
shares of its Common Stock to permit exercise of all outstanding
Equity Warrants ("Initial Equity Warrant Exercise Date") and
until 5:00 p.m. New York City time on the seventh anniversary of
the issue date, at an initial exercise price of $0.2063 per
share, subject to adjustment. If the Initial Equity Warrant
Exercise Date does not occur by May 20, 1998, then each Equity
Warrant will automatically convert into the right to purchase one
share of Amended Series A Preferred Stock at an exercise price of
$34.00 per share. In the event the appropriate Chinese
governmental authorities fail to approve the overall development
plan for the Zhao Dong Block, on or prior to February 1, 1998,
then the holders of the Equity Warrants will have the right to
require the Company to purchase on March 2, 1998, one share of
Amended Series A Preferred Stock for each Equity Warrant such
holder owns, at a price of $85.00 per share, plus accrued and
unpaid dividends to the purchase date.
The Company paid $295,000 in cash to a finder, who, also
received from the Initial Purchaser, 5,882 of the Units being
issued in the Equity Offering.
On May 20, 1997, $8.0 million of the Secured Subordinated
Debt was repaid, with proceeds from the Equity Offering, to those
institutional investors who purchased Amended Series A Preferred
Stock in the Equity Offering. Accrued interest through May 20,
1997, totaling approximately $1.0 million, was paid to those
institutional investors by issuance of 11,816 shares of Amended
Series A Preferred Stock and 2,008,720 warrants to purchase
Common Stock.
Common Stock
- ------------
During the six months ended June 30, 1997, the Company
issued an aggregate of 11,156,819 shares of Common Stock, of
which 7,680,000 shares were issued in connection with the
exercise of stock purchase warrants with the Company receiving
approximately $1.2 million; 3,476,000 were sold to raise working
capital, generating net proceeds of approximately $0.7 million;
and 819 shares were converted to Common Stock by a holder of
Series A Preferred Stock. Also during this period, 1,408,125
shares of Common Stock were returned to the Company in partial
payment of the purchase price for shares of Series F Preferred
Stock.
(6) Commitments, Contingencies and Subsequent Events
Other commitments, contingencies and subsequent events
include:
o The Company acquired the rights to the exploration,
development and production of the Zhao Dong Block by executing a
Production Sharing Agreement with China National Oil and Gas
Exploration and Development Corporation ("CNODC") in February
1993. Under the terms of the Production Sharing Agreement, the
Company and its partner are responsible for all exploration
costs. If a commercial discovery is made, and if CNODC exercises
its option to participate in the development of the field, all
development and operating costs and related oil and gas
production will be shared up to 51 percent by CNODC and the
remainder by the Company and its partner.
The Production Sharing Agreement includes the following
additional principal terms:
The Production Sharing Agreement is basically divided
into three periods: the Exploration period, the
Development period and the Production period. Work to
be performed and expenditures to be incurred during the
Exploration period, which consists of three phases
totaling seven years from May 1, 1993, are the
exclusive responsibility of the Contractor (the Company
and its partner as a group). The Contractor's
obligations in the three exploration phases are as
follows:
1. During the first three years, the Contractor is
required to drill three wildcat wells, perform
seismic data acquisition and processing and expend
a minimum of $6 million. The Contractor has
drilled two wildcat wells, satisfied the seismic
acquisition and minimum expenditure requirements
and has received an extension allowing the
drilling of the third wildcat well during the
second exploration phase.;
2. During the next two years, the Contractor is
required to drill two wildcat wells, perform
seismic data acquisition and processing and expend
a minimum of $4 million (The Contractor has
elected to proceed with the second phase of the
Contract. The seismic data acquisition
requirement and the minimum expenditure
requirement for the second phase has been
satisfied.);
3. During the last two years, the Contractor is
required to drill two wildcat wells and expend a
minimum of $4 million. (If the Contractor elects
to proceed with the third phase of the Contract,
the minimum expenditure requirement of the third
phase has been satisfied.)
The Production Sharing Agreement may be terminated by
the Contractor at the end of each phase of the
Exploration period, without further obligation.
o By letter dated November 8, 1996, the AMEX informed the
Company that it was reviewing the Company's continued listing
eligibility because:
(1) the Company has incurred net losses for each
of the past five fiscal years and the first six
months of the current fiscal year;
(2) the Company has disclosed that it does not
have sufficient cash flow from operations to meet
its obligations;
(3) the Company is in default of payment of certain
debt;
(4) the Company's independent accountants in their
report on the Company's 1995 financial statements
noted that as a consequence of the matters
discussed above, substantial doubt has been raised
as to the Company's ability to continue as a going
concern.
On December 16, 1996, the Company met with
representatives of the AMEX to present information in
support of a continued listing. By letter dated
January 16, 1997, the AMEX notified the Company that it
has determined to defer further consideration of the
Company's continued listing eligibility until it has
reviewed the Company's 1996 Form 10-K, and the further
review of the Company's favorable progress in
satisfying guidelines for continued listing. Based on
conversations with representatives of the AMEX on
August 7, 1997, the Company believes that the review
will be favorably concluded upon release of the escrow
funds.
o On April 10, 1997, the Company, through a wholly owned
subsidiary sold $3.1 million of notes and 10.1 million warrants
to purchase a like number of shares of Common Stock of the
Company at $0.01 per share. The proceeds from these notes were
immediately paid to Apache for unpaid cash calls. These notes
have been repaid from proceeds of the Equity Offering. In August
1997, the same subsidiary reborrowed $1.5 million to pay Apache
for cash calls.
o The Company has future commitments of $1.3 million
associated with its joint venture contract to enter the
lubricating oil business in China.
o The Company is in dispute over a 1992 tax assessment by the
Louisiana Department of Revenue and Taxation for the years 1987
through 1991 in the approximate amount of $2.5 million. The
Company has also received a proposed assessment from the
Louisiana Department of Revenue and Taxation for income tax years
1991 and 1992, and franchise tax years 1992 through 1996. The
Company has filed a protest as to this proposed assessment, and
oral communications from representatives of the Department
indicate that certain of the Company's positions will be accepted
by the Department. It is the Company's intent to defend these
assessments vigorously and the Company believes adequate
provision has been made in the financial statements for any
liability.
o In July 1997, China Investment and Development Corporation
("CIDC"), holders of the Company's Series B, Cumulative Preferred
Stock, $.01 par value per share ("Series B Preferred Stock") sued
the Company and each of its directors in an action entitled China
Investment and Development Corporation vs. XCL Ltd.; Marsden W.
Miller, Jr.; John T. Chandler; David A. Melman; Fred Hofheinz;
Arthur W. Hummel, Jr.; Michael Palliser; and Francis J.
Reinhardt, Jr. (Court of Chancery of the State of Delaware in and
for New Castle County, Civil Action No. 15783-NC). The suit
alleges breach of (i) contract, (ii) corporate charter, (iii)
good faith and fair dealing and (iv) fiduciary duty with respect
to the alleged failure of the Company to redeem CIDC's Series B
Preferred shares for an aggregate claimed redemption price of
$5.0 million, in accordance with the terms of the Purchase
Agreement and Certificate of Designation. In addition, CIDC
alleged that the individual directors tortiouosly interfered with
its contractual relationship with the Company. The Company
believes it has fulfilled its obligations under the Preferred
Stock and that the Preferred Stock is not in default, and
accordingly an answer has been filed on behalf of the Company
denying liability and a motion to dismiss has been filed on
behalf of the directors. The Company has indemnification
obligations to the directors on the claims asserted against the
directors. The Company intends to vigorously defend this action.
o The Zhao Dong F-1 wildcat well was spudded on October 9,
1996, and has been drilled to a total measured depth of 4,378
meters or 3,300 meters true vertical depth. The well encountered
indications of sands, some with hydrocarbon shows, in the primary
objective Shahejie section, but downhole conditions prevented
adequate evaluation with electric logs to determine reservoir
quality and therefore commerciality. An unsuccessful attempt to
sidetrack the original F-1 hole was made. The F-1 was drilled
pursuant to a turnkey drilling contract. In accordance with the
terms of the drilling contract, the turnkey driller has elected
to demobilize the rig and has moved it off location. Apache, as
operator, is now in negotiations with the turnkey driller as to
what is due under that contract. The Company has been carried on
the drilling of this well by Apache and has, therefore, not
incurred any cost in the drilling of this well. An evaluation of
drilling procedures and a re-evaluation of the exploration merit
of redrilling the F-1 well must be made prior to any decision on
how to proceed. The Company is waiting to receive Apache's
recommendation on how to proceed.
o In connection with the Lutcher Moore Tract, payments of
principal and interest on the Seller Notes are past due and in
July 1997, certain of the sellers have demanded payment. The
Company is negotiating an extension of the maturity dates of the
Seller Notes however, should the Company be unsuccessful in
negotiating further extension, the holders have recourse only to
the property itself, as the Company is not liable for the debt.
The book value of this property is $12.2 million, therefore, if
the Company should allow the mortgagees to repossess the property
for nonpayment of the mortgage debt, the Company would incur a
substantial loss.
o On July 26, 1996, an individual filed three lawsuits against
a wholly owned subsidiary. One suit alleges actual damage of
$580,000 plus additional amounts that could result from an
accounting of a pooled interest. Another seeks legal and related
expenses of $56,473 from an allegation the plaintiff was not
adequately represented before the Texas Railroad Commission. The
third suit seeks a declaratory judgement that a pooling of a 1938
lease and another in 1985 should be declared terminated and
further plaintiffs seek damages in excess of $1 million to effect
environmental restoration. The Company believes these claims are
without merit and intends to vigorously defend itself.
o The Company is subject to other legal proceedings some of
which arise in the ordinary course of its business. In the
opinion of Management, the amount of ultimate liability with
respect to these actions will not materially affect the financial
position or results of operations of the Company.
o The Company is subject to existing federal, state and local
laws and regulations governing environmental quality and
pollution control. Although management believes that such
operations are in general compliance with applicable
environmental regulations, risks of substantial costs and
liabilities are inherent in oil and gas operations, and there can
be no assurance that significant costs and liabilities will not
be incurred.
XCL LTD. AND SUBSIDIARIES
March 31, 1997
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Cautionary Statement Pursuant to Safe Harbor Provisions of the
- -----------------------------------------------------------------
Private Securities Litigation Reform Act of 1995.
- ------------------------------------------------
See the discussion in the section entitled "Disclosure
Regarding Forward-Looking Information" herein.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1997, the Company had an operating cash balance
of $4.7 million and a working capital deficit of $34.5 million,
which includes $17.3 million owed to ING (U.S.) Capital Corp.
("ING") under its Credit Facility, $7.0 million of Secured
Subordinated Debt, $5.0 million in limited recourse debt
collateralized only by the Lutcher Moore Tract, and, $1.0 million
in unsecured notes of XCL-China Ltd. which were repaid in July
1997.
The Company completed a $75,000,000 debt offering (the "Note
Offering") and a $25,000,030 preferred stock offering (the
"Equity Offering") on May 20, 1997 (collectively referred to as
the "Offerings"). Under terms of the trust indenture two cash
collateral accounts were established (reflected in the balance
sheet as cash held in escrow), one for $14,625,000 (representing
the aggregate amount of interest due on the Notes through
November 1, 1998) and the other for $60,375,000. Funds held in
the latter cash collateral account will be disbursed to the
Company only if the requisite Chinese authority approves the
Overall Development Plan ("ODP") by November 1, 1997 for
development of the C-D Field. Additional funds of approximately
$13 million are expected from the sale of the Lutcher Moore
Tract, although there can be no assurance as to the timing and
amounts to be obtained. During 1996, litigation was instituted
against the Company in connection with the remaining domestic oil
and gas property held by the Company, effectively thwarting the
Company's ability to consummate a sale by casting doubt as to the
Company's rights to certain leases and demanding damages. Upon
resolution of the litigation the Company will resume its efforts
to dispose of these properties. These transactions will provide
funding for the Company to repay all of its other indebtedness,
and, combined with projected cash flow, the estimated development
expenditures and its contractual exploration obligations.
The Company anticipates incurring losses in fiscal 1997 and
1998 because production from the China properties is not expected
until late in 1998. If the Company is successful in additional
exploratory drilling on the Zhao Dong Block, or if the Company is
successful in developing additional oil and gas projects, the
Company may need additional working capital. The Company believes
that in such events funds will be available to meet these needs.
The exact amounts, source and timing of such financing is not
determinable at this time and there are no assurances it will be
available if needed. In addition, the Company's efforts to
secure additional working capital could be impaired if its common
stock is delisted from the AMEX. See Note 6.
Longer term liquidity will be dependent upon the Company's
future performance, including commencement of production in
China, as well as continued access to capital markets, including
the ability to issue additional debt and equity securities.
Issuance of debt and equity securities may require consent of the
holders of the Senior Secured Notes due May 1, 2004, and, until
repaid by proceeds of the Note Offering, ING and the holders of
the Company's Secured Subordinated Debt, and in the case of
certain equity securities, of one or more classes of the
Company's Preferred Stock.
The Company is undertaking certain actions to simplify its
capital structure which will include the amendment,
recapitalization and combination of its outstanding Series A,
Cumulative Convertible Preferred Stock and Series E, Cumulative
Convertible Preferred Stock into a single designated series of
Amended Series A, Cumulative Convertible Preferred Stock which,
together with the new series issued on May 20, 1997, will
constitute a single class of Amended Series A Preferred Stock.
The Company is also considering a reverse stock split of its
Common Stock. The reverse stock split of the Common Stock will
require approval of the holders of a majority of the outstanding
shares of capital stock entitled to vote thereon at a special
stockholders' meeting planned for the fall, 1997. Changes in the
outstanding series of Preferred Stock will require approval of
the holders of two-thirds of each series of the affected
outstanding Preferred Stock. The Company has received
indications from those series of outstanding Preferred Stock that
such approvals will be obtained.
The Company was, until April 10, 1997, in default under
terms of its Credit Facility with ING and, by virtue of certain
cross default provisions, the Secured Subordinated Debt. By
agreement dated April 10, 1997, as amended, (the "Forbearance
Agreement") ING, in consideration of the Company's commitment to
grant ING or its designee(s) warrants to acquire 7 million shares
of Common Stock, agreed to forbear taking any action pending the
completion of the Offerings and release of such funds from a cash
collateral account. The proceeds from the sale of the Senior
Secured Notes due May 1, 2004, are expected to be used to repay
such debt. Forbearance has been conditionally extended until
November 1, 1997, the anticipated date by which the requisite
Chinese authority is expected to have approved the development
plan for the C-D Field.
In addition to capital commitments to fund the Company's
share of the Zhao Dong Block development, the Company has capital
requirements for its lubricating oil and coalbed methane
projects.
As a result of the substantial capital requirements
described above, and the Company's recurring net losses, the
report of the Company's independent accountants dated April 10,
1997, as of, and for the year ended December 31, 1996, contains
an explanatory paragraph regarding the ability of the Company to
continue as a going concern. The Company's independent
accountants have indicated that, assuming the release of the
escrow funds and repayment of the Credit Facility and the Secured
Subordinated Debt and no adverse conditions occur in respect of
the Company's projected operations, they will issue an
unqualified audit report that does not contain an explanatory
paragraph on such consolidated financial statements.
Other General Considerations
- ----------------------------
The Company believes that inflation has had no material
impact on the Company's sales, revenues or income during the
reporting periods. Drilling costs and costs of other related
services during the relevant periods have remained stable.
The Company is subject to existing federal, state and local
U.S. and Chinese laws and regulations governing environmental
quality and pollution control. Although management believes that
such operations are in general compliance with applicable
environmental regulations, risks of substantial costs and
liabilities are inherent in oil and gas operations, and there can
be no assurance that significant costs and liabilities will not
be incurred.
New Accounting Pronouncement
- ----------------------------
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards "SFAS No. 128
Earnings Per Share" effective for financial statements issued for
periods ending after December 15, 1997. The board has also
issued Statement No. 129 "Disclosure of Information About Capital
Structure" also effective the same date. The Company does not
believe the effect of adopting these statements will have a
material impact on the Company.
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards "SFAS No. 130,
Reporting Comprehensive Income" effective for fiscal years
beginning after December 15, 1997. Management believes adoption
of this statement will have a financial statement presentation
impact only and will not have an effect on the Company's
financial position or results of operations.
In June, 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards "SFAS No. 131,
Disclosure about Segments of an Enterprise and Related
Information" effective for financial statements for periods
beginning after December 15, 1997. Management believes adoption
of this statement will have a financial statement disclosure
impact only and will not have an effect on the Company's
financial position or results of operations. This statement need
not be applied to interim financial statements in the initial
year of its application, but comparative information for interim
periods in the initial year of application is to be reported in
financial statements for interim periods in the second year of
application.
Results of Operations
- ---------------------
During the three and six month periods ended June 30, 1997,
the Company incurred net losses of $1.2 million and $2.4 million,
respectively, as compared to net losses of $3.1 million and $4.7
million, respectively, during the corresponding periods in 1996.
The loss in 1996 reflects the effect of a $1.3 million writedown
of the Company's investments.
Oil and gas revenues for the three and six month periods
ended June 30, 1997, were $53,000 and $137,000, compared to
$361,000 and $937,000 during the corresponding period in 1996.
Revenues will continue to decline as the Company completes its
announced program of selling substantially all of its U.S.
producing properties. Interest expense increased in the second
quarter of 1997, as compared to the corresponding period in 1996,
because of additional borrowings and higher interest rates.
As the Company continues to focus its resources on
exploration and development of the Zhao Dong Block future oil and
gas revenues will initially be directly related to the degree of
drilling success experienced on the Zhao Dong Block. The Company
does not anticipate significant increases in its oil and gas
production in the short-term and expects to incur operating
losses until such time as sufficient revenues from the China
projects are realized which exceed operating costs.
General and administrative expenses decreased $89,000
during the three months ended June 30, 1997 as compared to the
same period in 1996. For the six months ended June 30, 1997,
general and administrative expenses decreased $460,000 compared
to the same period in 1996. The decrease in each period was the
result of less domestic activity in that the Company is now
focused on development of the China properties.
XCL LTD. AND SUBSIDIARIES
March 31, 1997
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In July 1997, China Investment and Development Corporation
("CIDC"), holders of the Company's Series B, Cumulative Preferred
Stock, $.01 par value per share ("Series B Preferred Stock") sued
the Company and each of its directors in an action entitled China
Investment and Development Corporation vs. XCL Ltd.; Marsden W.
Miller, Jr.; John T. Chandler; David A. Melman; Fred Hofheinz;
Arthur W. Hummel, Jr.; Michael Palliser; and Francis J.
Reinhardt, Jr. (Court of Chancery of the State of Delaware in and
for New Castle County, Civil Action No. 15783-NC). The suit
alleges breach of (i) contract, (ii) corporate charter, (iii)
good faith and fair dealing and (iv) fiduciary duty with respect
to the alleged failure of the Company to redeem CIDC's Series B
Preferred shares for a claimed aggregate redemption price of $5.0
million, in accordance with the terms of the Purchase Agreement
and Certificate of Designation. In addition, CIDC alleged that
the individual directors tortiouosly interfered with its
contractual relationship with the Company. The Company believes
it has fulfilled the obligations of the Preferred Stock and that
the Preferred Stock is not in default, and accordingly an answer
has been filed on behalf of the Company denying liability and a
motion to dismiss has been filed on behalf of the directors. The
Company has indemnification obligations to the directors on the
claims asserted against the directors. The Company intends to
vigorously defend this action.
Other than as disclosed in the Company's Annual Report on
Form 10-K, there are no material pending legal proceedings to
which the Company or any of its subsidiaries is a party or to
which any of their properties are subject.
Item 2(c). Changes in Securities
o On May 20, 1997, the Company sold through Jefferies &
Company, Inc. ("Jefferies"), in an unregistered offering to
qualified institutional buyers and accredited institutional
investors (the "Note Offering") 75,000 Note Units, each
consisting of $1,000 principal amount of 13.5% Senior Secured
Notes due May 1, 2004 (collectively, the "Notes") and one Common
Stock Purchase Warrant (collectively the "Note Warrants") to
purchase 1,280 shares of the Company's common stock, par value
$0.01 per share (the "Common Stock"). The Notes and the Note
Warrants will not be separately transferable until the date which
is the earlier of (i) August 17, 1997 or (ii) such date as
Jefferies in its discretion deems appropriate.
Concurrently, the Company also offered through Jefferies, in
an unregistered offering to qualified institutional buyers and
accredited institutional investors (the "Equity Offering")
294,118 Equity Units, each consisting of one share of Amended
Series A, Cumulative Convertible Preferred Stock, par value
$1.00 per share ("Amended Series A Preferred Stock"), and one
Common Stock Purchase Warrant (collectively, the "Equity
Warrants") to purchase 327 shares of the Company's Common
Stock. The Amended Series A Preferred Stock and Equity
Warrants will not be separately transferable until the date
which is the earlier of (i) October 16, 1997 or (ii) such date
as the Company in its discretion deems appropriate.
Jefferies was the initial purchaser ("Initial Purchaser") in
connection with the Note Offering and Equity Offering
(referred to together as the "Offerings") for which it was
paid usual and customary compensation as well as reimbursement
for its out-of-pocket expenses in the Offerings.
Interest on the Notes will be payable semi-annually on May 1
and November 1, commencing November 1, 1997. The Notes will
mature on May 1, 2004. The Notes are not redeemable at the
option of the Company prior to May 1, 2002, except that the
Company may redeem, at its option prior to May 1, 2002, up to
35% of the original aggregate principal amount of the Notes,
at a redemption price of 113.5% of the aggregate principal
amount of the Notes, plus accrued and unpaid interest, if any,
to the date of redemption, with the net proceeds of any
equity offering completed within 90 days prior to such
redemption; provided that at least $48.75 million in aggregate
principal amount of the Notes remain outstanding. On or after
May 1, 2002, the Notes are redeemable at the option of the
Company, in whole or in part, at an initial redemption price
of 106.75% of the aggregate principal amount of the Notes
until May 1, 2003, and at par thereafter, plus accrued and
unpaid interest, if any, to the date of redemption. Upon the
occurrence of a change of control, the Company will be
obligated to make an offer to purchase all outstanding Notes
at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase.
Prior to the issuance of the Notes, the Company had
approximately $32.3 million aggregate principal amount of
existing full recourse indebtedness (the "Existing Secured
Debt"), collateralized by substantially all of the outstanding
capital stock of XCL-China Ltd., the Company's principal
operating subsidiary ("XCL-China"). Initially, the Notes will
be secured by all of the gross proceeds of the Offering. A
portion of such gross proceeds (approximately $14.6 million)
will be segregated into a separate account (the "Capitalized
Interest Account") to pay interest on the Notes through
November 1, 1998. If certain conditions are met, the
collateral for the Notes (exclusive of the amount in the
Capitalized Interest Account) will be released and used to
repay the Existing Secured Debt, to fund the Company's China
operations, and for additional working capital for general
corporate purposes, the Notes will then be secured by a pledge
of all of the outstanding capital stock of XCL-China, and XCL-
China will guarantee the Notes on a senior basis. If such
conditions do not occur prior to November 1, 1997, however,
the Notes will be mandatorily redeemed on November 30, 1997,
at a redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest to the date of
redemption. Any remaining unpaid amount in respect of the
Notes shall become a claim against the Company subordinate in
right of payment to the Existing Secured Debt.
The Note Warrants will entitle the holders thereof to purchase
in the aggregate 96,000,000 shares of the Common Stock. The
Note Warrants will be exercisable at any time after the later
of the first anniversary of the issue date or such date on
which the Company has reserved or has available a sufficient
number of shares of its Common Stock to permit exercise of all
the outstanding Note Warrants ("Initial Note Warrant Exercise
Date") and until 5:00 p.m. New York City time on the seventh
anniversary of the issue date, at an initial exercise price of
$0.2063 per share, subject to adjustment . If the Initial
Note Warrant Exercise Date does not occur by May 20, 1998,
then each Note Warrant will automatically convert into the
right to purchase one share of Amended Series A Preferred
Stock at an exercise price of $34.00 per share.
Each share of Amended Series A Preferred Stock has a
liquidation value of $85.00, plus accrued and unpaid
dividends. Dividends on the Amended Series A Preferred Stock
are cumulative from May 20, 1997 and are payable semi-
annually, commencing November 1, 1997, at an annual rate of
$8.075 per share. Dividends are payable in additional shares
of Amended Series A Preferred Stock (valued at $85.00 per
share) through November 1, 2000, and thereafter in cash, or at
the election of the Company, in additional shares of Amended
Series A Preferred Stock. The Amended Series A Preferred
Stock is convertible into Common Stock, at any time after the
first anniversary of the issue date, at the option of the
holders thereof, unless previously redeemed, at an initial
conversion price of $0.50 per share of Common Stock
(equivalent to a rate of 170 shares of Common Stock for each
share of Amended Series A Preferred Stock), subject to
adjustment under certain conditions. The Company is entitled
to require conversion of all the outstanding shares of Amended
Series A Preferred Stock, at any time after November 20, 1997
if the Common Stock shall have traded for 20 trading days
during any 30 consecutive trading day period at a market value
equal to or greater than 150% of the prevailing conversion
rate.
The Amended Series A Preferred Stock is redeemable at any time
on or after May 1, 2002, in whole or in part, at the option of
the Company initially at a redemption price of $90.00 per
share and thereafter at redemption prices which decrease
ratably annually to $85.00 per share on and after May 1, 2006,
plus accrued and unpaid dividends to the redemption date. The
Amended Series A Preferred Stock is mandatorily redeemable, in
whole, on May 1, 2007, at a redemption price of $85.00 per
share, plus accrued and unpaid dividends to the redemption
date, payable in cash, or at the election of the Company, in
Common Stock.
Upon the occurrence of a change in control or certain other
fundamental changes, the conversion price of the Amended
Series A Preferred Stock will be reduced, for a limited
period, in certain circumstances in order to provide holders
with loss protection at a time when the market value of the
Common Stock is less than the then prevailing conversion
price.
The Amended Series A Preferred Stock will entitle the holder
thereof to cast the same number of votes as the shares of
Common Stock then issuable upon conversion thereof on any
matter subject to the vote of the holders of the Common Stock.
Further, the holders of the Amended Series A Preferred Stock
will be entitled to vote as a separate class (i) to elect two
directors if the Company is in arrears in payment of three
semi-annual dividends, and (ii) the approval of two-thirds of
the then outstanding Amended Series A Preferred Stock will be
required for the issuance of any class or series of stock
ranking prior to the Amended Series A Preferred Stock, as to
dividends, liquidation rights and for certain amendments to
the Company's Certificate of Incorporation that adversely
affect the rights of holders of the Amended Series A Preferred
Stock.
The Equity Warrants will entitle the holders thereof to
purchase in the aggregate 96,176,586 shares of the Common
Stock. The Equity Warrants are exercisable at any time after
the later of the first anniversary of the issue date or such
date on which the Company has reserved or has available a
sufficient number of shares of its Common Stock to permit
exercise of all outstanding Equity Warrants ("Initial Equity
Warrant Exercise Date") and until 5:00 p.m. New York City time
on the seventh anniversary of the issue date, at an initial
exercise price of $0.2063 per share, subject to adjustment.
If the Initial Equity Warrant Exercise Date does not occur by
May 20, 1998, then each Equity Warrant will automatically
convert into the right to purchase one share of Amended Series
A Preferred Stock at an exercise price of $34.00 per share.
In the event the appropriate Chinese governmental authorities
fail to approve the overall development plan for the Zhao Dong
Block, on or prior to February 1, 1998, then the holders of
the Equity Warrants will have the right to require the Company
to purchase on March 2, 1998, one share of Amended Series A
Preferred Stock for each Equity Warrant such holder owns, at a
price of $85.00 per share, plus accrued and unpaid dividends
to the purchase date.
The securities issued in the Note Offering and in the Equity
Offering are "restricted securities" as defined in Rule 144
under the Securities Act of 1933, as amended. The Note Units
and Equity Units, and upon separation, the Notes, Amended
Series A Preferred Stock, Note Warrants and Equity Warrants
are eligible for trading in the Private Offering, Resales and
Trading through Automated Linkage Market of the National
Association of Securities Dealers, Inc. Holders will also be
entitled to certain registration rights with respect to their
securities. The interest rate on the Notes is subject to
increase under certain circumstances if the Company is not in
compliance with its registration obligations to the Note
holders.
The Company agreed to issue to Jefferies in connection with
the Note Offering a total of 15,006 warrants to purchase
19,207,680 shares of Common Stock at an initial exercise price
of $0.2063 per share. Of such warrants, 2,251 will be issued
directly to a finder, who, will also receive from the Company
$295,000 in cash, and from the Initial Purchaser, 5,882 of the
Units being issued in the Equity Offering.
Proceeds of the Equity Offering, net of commissions and
expenses, were used to repay certain indebtedness and the
remainder added to the working capital of the Company.
o On May 20, 1997, the Company issued 11,816 shares of Amended
Series A Preferred Stock and 2,008,720 warrants to acquire shares
of Common Stock, in respect of approximately $1.0 million of
accrued interest payable to those institutional holders of
Secured Subordinated Debt who purchased $8 million of Amended
Series A Preferred Stock in the Equity Offering. The shares of
Amended Series A Preferred Stock were valued at $85.00 per share.
The warrants issued are first exercisable on May 20, 1998, at an
exercise price of $0.2063 per share, and expire on November 1,
2000.
These securities were sold within the United States pursuant to
an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, pursuant to Rule
144A, Regulation D and Regulation S of the Securities Act, in
that the securities were offered and sold only to "accredited
investors" or outside the U.S. All of the securities bear a
restrictive legend, were issued pursuant to appropriate
subscription documentation and are subject to restriction on
resale or transfer.
Item 3. Defaults Upon Senior Securities.
(a) Debt
The Company has been in default of interest payments since
October 1, 1996 and principal payments since January 2, 1997 to
ING, resulting in a default under the Credit Facility and, by
virtue of certain cross default provisions, the Secured
Subordinated Debt. By letter dated January 9, 1997, ING
acknowledged that failure to make such principal and interest
payments constituted an event of default and advised that such
past due payments bear interest at the Late Payment Rate in
effect on such date. On January 2, 1997, the Late Payment rate
was 12.25%. Under the terms of the Forbearance Agreement between
the Company, XCL-China and ING, ING agreed that it would not
accelerate the maturity of, or commence any foreclosure
procedures to collect, the indebtedness under the Credit Facility
until May 31, 1997. As of May 20, 1997, the closing date for the
Offerings, ING's agreement to forbear was conditionally extended
to November 1, 1997. The Forbearance Agreement does not operate
to remove any default under the Credit Facility, and ING will be
free to assert all of its legal and equitable rights at the end
of the forbearance period. The Forbearance Agreement allows
proceeds of the Equity Offering to be used to repay Secured
Subordinated Debt of the Company, to the extent that holders of
that debt subscribed to the Equity Offering. In addition, the
Forbearance Agreement requires that the proceeds of the Equity
Offering be used first to pay the costs of issuance associated
with both the Equity Offering and the Offering and to repay the
XCL-China Debt ($3.1 million borrowed on April 10, 1997 from a
group of institutional and accredited investors and evidenced by
promissory notes of XCL-China); second, to pay current
obligations of XCL-China and to reestablish a reserve for such
obligations (under terms reasonably acceptable to ING) pending
release of the proceeds of the Offering; third, to pay reasonable
and necessary general and administrative expenses through
November 1, 1997 (not to exceed $2,375,000); and fourth, to the
extent that any proceeds of the Equity Offering remain, to be
applied against the indebtedness under the Credit Facility. As
consideration for the Forbearance Agreement, the Company issued
warrants to ING, pledged the stock of certain subsidiaries, and
provided ING with a guaranty of the indebtedness under the Credit
Facility by XCL-China. In addition, the Credit Facility was
amended to provide that proceeds from any direct or indirect sale
of the Lutcher Moore Tract are to be used first to pay debt on
the Lutcher Moore Tract (up to $5.2 million plus accrued
interest), second to pay the XCL-China Debt, or if the XCL-China
Debt has been paid, to establish a reserve of up to $3.1 million
for current and future obligations of XCL-China incurred on or
before September 30, 1997, and third to pay the indebtedness
under the Credit Facility.
During April 1993, the Company issued in a private
placement, $15 million of Secured Subordinated Note Units. Each
of these 40 units consisted of a $375,000 note payable, warrants
to acquire 100,000 shares of the Company's Common Stock at $0.90
per share (which were previously issued to a group of banks in a
prior credit facility), a net profits interest in certain
exploration leases and a contractual interest in the net revenues
of XCL-China, under the Contract relating the Zhao Dong Block,
which was not material. This borrowing bears interest at 12%, if
paid with cash, or 14%, if the Company elects to use Common
Stock, with payment at 125% of the interest due if paid in
unregistered shares. It is collateralized by a second mortgage
on all the Company's producing properties and a second lien on
the stock of XCL-China. Payment on this debt cannot be made
prior to payment on the indebtedness under the Credit Facility.
The terms of the Secured Subordinated Debt provide that an event
of default under the Credit Facility which has not been waived
and permits ING to accelerate the maturity of its indebtedness in
an event of default on the Secured Subordinated debt. In the
case of an event of default, the holders of the Secured
Subordinated Debt cannot take any enforcement action (including
acceleration of the Secured Subordinated Debt) while the Credit
Facility is outstanding until the lapse of a 180-day blocking
period. A blocking period commences with delivery of a blocking
notice by holders of 70 percent of the Secured Subordinated Debt.
No such blocking notice has been given. As noted above, an event
of default exists under the Credit Facility, therefore an event
of default exists with respect to the Secured Subordinated Debt.
In accordance with the terms of the Forbearance Agreement, on May
20, 1997, $8.0 million of the Secured Subordinated Debt was
repaid, with proceeds from the Equity Offering, to those
institutional investors who purchased Amended Series A Preferred
Stock in the Equity Offering.
(b) Preferred Stock
The Series A Preferred Stock dividend requirements are
approximately 2.9 million pounds sterling (U.K.) annually
(approximately $4.75 million) and currently insufficient
liquidity exists to continue to pay such amounts. Further, the
Credit Facility restricts payment of cash dividends. With the
approval of its lender, the Company declared the June 30, 1995
dividend payable in cash, with such cash to be obtained from the
sale of Common Stock. In order to reduce the cash requirement,
effective June 26, 1995, the Company entered into agreements with
three U.S. holders of Series A Preferred Stock representing
approximately 59 percent of the class, pursuant to which they
elected to receive their dividends in Common Stock of the
Company. Cash dividends remaining to be paid with respect to the
June 30, 1995 dividend declaration, aggregate approximately
$900,000. As the Company was unable to pay this dividend by June
30, 1996, the holders of the Series A Preferred Stock are
entitled to representation on the Board of Directors.
The December 31, 1995 dividend payment on the Series A
Preferred Stock has been declared payable in additional shares of
Series A Preferred Stock. During 1996, the terms of the Series A
Preferred Stock were amended to allow for payment of the December
31, 1995 and subsequent dividend payments to be made in
additional shares of Series A Preferred Stock. The Board of
Directors correspondingly approved a 250,000 share increase in
the number of shares of authorized Series A Preferred Stock
authorized. During February 1997, the Company sold 13,458 shares
of Series A Preferred Stock for $157,240. The proceeds were used
to pay the withholding taxes and fractional interests with
respect to the December 31, 1995 dividend payment. In March
1997, the Company issued an additional 50,137 shares of Series A
Preferred Stock in payment of this dividend, therefore fulfilling
its obligation for such dividend period. The Board of Directors
elected not to declare the dividends payable June 30, 1996,
December 31, 1996 and June 30, 1997.
The holders of the Series B Preferred Stock, in a legal
action brought against the Company and its directors, have
alleged that the Company is in default of the terms of the Series
B Preferred Stock. See Part II - Item 1 "Legal Proceedings."
Item 4. Submission of Matters to a Vote of Security-Holders
There were no matters submitted to a vote of the security
holders of the Company during the period covered by this report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K.
See Index to Exhibits.
(b) Reports on Form 8-K
A current report on Form 8-K was filed to report that on May
20, 1997, the Company closed the Note Offering and Equity
Offering through Jefferies & Co., Inc.
A current report on Form 8-K was filed to report that on May
22, 1997, the Company sold 870,000 shares of Common Stock
pursuant to Regulation S of the Act through the exercise of stock
purchase warrants.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
XCL Ltd.
/s/ Marsden W. Miller, Jr.
By: _________________________________
Marsden W. Miller, Jr., Chairman
and acting Chief Accounting Officer
Date: August 14, 1997
INDEX TO EXHIBITS
(a) Exhibits required by Item 601 of Regulation S-K.
2.0 Not applicable
3(i) Articles of incorporation
3.1 Certificate of Incorporation of the Company dated
December 28, 1987. (A)(i)
3.2 Certificate of Amendment to the Certificate of
Incorporation of the Company dated March 30, 1988.
(A)(ii)
3.3 Certificate of Amendment to the Certificate of
Incorporation of the Company dated June 22, 1990. (B)(i)
3.4 Certificate of Amendment to the Certificate of
Incorporation of the Company dated June 12, 1993. (C)
3.5 Certificate of Amendment to the Certificate of
Incorporation of the Company dated June 8, 1992, whereby
Article Fourth was amended to increase the number of shares
of Common Stock authorized. (D)(i)
3.6 Certificate of Amendment to the Certificate of
Incorporation of the Company dated September 29, 1993,
whereby Article Fourth was amended to increase the number of
shares of Common Stock authorized. (E)(i)
3.7 Certificate of Amendment dated July 1, 1994, whereby
Article Fourth was amended to increase the number of shares
of Common Stock and the name of the Company was changed.
(F)(i)
3.8 Certificate of Amendment dated June 19, 1995, whereby
Article Fourth was amended to increase the number of shares
of Common Stock. (N)(i)
3.9 Certificate of Amendment dated July 30, 1996, whereby
Article Fourth was amended to increase the number of shares
of Common Stock and Preferred Stock. (Q)(i)
3(ii) Amended and Restated Bylaws of the Company as currently
in effect. (A)(iii)
4.0 Instruments defining rights of security holders,
including indentures:
4.1 Form of Common Stock Certificate. (A)(iv)
4.2 Certificate of Designation of Series A, Cumulative
Convertible Preferred Stock. (G)
4.3 Form of Series A, Cumulative Convertible Preferred Stock
Certificate. (B)(ii)
4.4 Certificate of Designation of Series B, Cumulative
Preferred Stock. (H)(i)
4.5 Form of Series B, Cumulative Preferred Stock Certificate.
(H)(ii)
4.6 Form of Class B Warrants issued to China Investment &
Development Co. Ltd. to purchase 2,500,000 shares of Common
Stock at $2.00 per share payable upon redemption of the
Series B, Cumulative Preferred Stock. (H)(iii)
4.7 Form of Amendment to Certificate of Designation of Series
B Preferred Stock dated August 7, 1992. (D)(ii)
4.8 Certificate of Designation of Series C, Cumulative
Convertible Preferred Stock. (E)(ii)
4.9 Copy of Amendment to Certificate of Designation of Series
C Preferred Stock dated February 18, 1994.(I)(i)
4.10 Form of Series C, Cumulative Convertible Preferred Stock
Certificate. (I)(iii)
4.11 Certificate of Designation of Series D, Cumulative
Convertible Preferred Stock. (I)(iv)
4.12 Form of Amendment to Certificate of Designation of
Series D Preferred Stock dated January 24, 1994. (I)(ii)
4.13 Form of Series D, Cumulative Convertible Preferred Stock
Certificate. (E)(v)
4.14 Form of Warrant dated January 31, 1994 to purchase
2,500,000 shares of Common Stock at an exercise price of
$1.00 per share, subject to adjustment, issued to INCC.
(I)(iii)
4.15 Form of Registrar and Stock Transfer Agency Agreement,
effective March 18, 1991, entered into between the Company
and Manufacturers Hanover Trust Company (predecessor to
Chemical Bank), whereby Chemical Bank (now known as
ChaseMellon Shareholder Services) serves as the Company's
Registrar and U.S. Transfer Agent. (J)
4.16 Copy of Warrant Agreement and Stock Purchase Warrant
dated March 1, 1994 to purchase 500,000 shares of Common
Stock at an exercise price of $1.00 per share, subject to
adjustment, issued to EnCap Investments, L.C. (I)(iv)
4.17 Copy of Warrant Agreement and form of Stock Purchase
Warrant dated March 1, 1994 to purchase an aggregate 600,000
shares of Common Stock at an exercise price of $1.00 per
share, subject to adjustment, issued to principals of San
Jacinto Securities, Inc. in connection with its financial
consulting agreement with the Company. (I)(v)
4.18 Form of Warrant Agreement and Stock Purchase Warrant
dated April 1, 1994, to purchase an aggregate 6,440,000
shares of Common Stock at an exercise price of $1.25 per
share, subject to adjustment, issued to executives of the
Company surrendering all of their rights under their
employment contracts with the Company. (F)(ii)
4.19 Form of Warrant Agreement and Stock Purchase Warrant
dated April 1, 1994, to purchase an aggregate 878,900 shares
of Common Stock at an exercise price of $1.25 per share,
subject to adjustment, issued to executives of the Company
in consideration for salary reductions sustained under their
employment contracts with the Company. (F)(iii)
4.20 Form of Warrant Agreement and Stock Purchase Warrant
dated April 1, 1994, to purchase 200,000 shares of Common
Stock at an exercise price of $1.25 per share, subject to
adjustment, issued to Thomas H. Hudson. (F)(iv)
4.21 Form of Warrant Agreement and Stock Purchase Warrant
dated May 25, 1994, to purchase an aggregate 100,000 shares
of Common Stock at an exercise price of $1.25 per share,
subject to adjustment, issued to the holders of Purchase
Notes B, in consideration of amendment to payment terms of
such Notes. (F)(v)
4.22 Form of Warrant Agreement and Stock Purchase Warrant
dated May 25, 1994, to purchase an aggregate 100,000 shares
of Common Stock at an exercise price of $1.25 per share,
subject to adjustment, issued to the holders of Purchase
Notes B, in consideration for the granting of an option to
further extend payment terms of such Notes. (F)(vi)
4.23 Form of Amendment to Certificate of Designation of
Series B Preferred Stock dated June 30, 1994. (F)(vii)
4.24 Form of Warrant Agreement and Stock Purchase Warrant
dated January 31, 1995, to purchase 100,000 shares of Common
Stock at an exercise price of $.75 per share, subject to
adjustment, issued to Energy Advisors, Inc. (L)(i)
4.25 Copy of Amendment to Certificate of Designation of
Series A Preferred Stock dated October 31, 1995. (N)(ii)
4.26 Copy of Certificate of Designation of Series E,
Cumulative Convertible Preferred Stock dated November 2,
1995. (N)(iii)
4.27 Form of Purchase Agreement between the Company and each
of the Purchasers of Units in the Regulation S Unit Offering
conducted by Rauscher Pierce & Clark with closings as
follows:
December 22, 1995 116 Units
March 8, 1996 34 Units
April 23, 1996 30 Units (O)(i)
4.28 Form of Warrant Agreement between the Company and each
of the Purchasers of Units in the Regulation S Unit Offering
conducted by Rauscher Pierce & Clark, as follows:
Closing Date Warrants
Exercise Price
---------------- -----------
-----------------
December 22, 1995 6,960,000 $.50
March 8, 1996 2,040,000
$.35
April 23, 1996 1,800,000
$.35 (O)(ii)
4.29 Form of Warrant Agreement between the Company and
Rauscher Pierce & Clark in consideration for acting as
placement agent in the Regulation S Units Offering, as
follows:
Closing Date Warrants Exercise Price
------------ -------- --------------
December 22, 1995 696,000 $.50
March 8, 1996 204,000 $.35
April 23, 1996 180,000 $.35 (O)(iii)
4.30 Form of Amendment of Certificate of Designation of
Series A Preferred Stock dated April 11, 1996. (O)(iv)
4.31 Stock Purchase Agreement between the Company and Janz
Financial Corp. Ltd. dated August 14, 1996, whereby clients
of Janz Financial Corp. Ltd. purchased 2,800,000 units
comprised of one shares of Common Stock and one warrant to
purchase one share of Common Stock in a Regulation S
transaction. (P)(i)
4.32 Form of a series of Stock Purchase Warrants issued to
Janz Financial Corp. Ltd. dated August 14, 1996, entitling
the holders thereof to purchase up to 3,080,000 shares of
Common Stock at $0.25 per share on or before August 13,
2001. (P)(ii)
4.33 Stock Purchase Agreement between the Company and
Provincial Securities Ltd. dated August 16, 1996, whereby
Provincial purchased 1,500,000 shares of Common Stock in a
Regulation S transaction. (P)(iii)
4.34 Stock Purchase Warrant issued to Terrenex Acquisitions
Corp. dated August 16, 1996, entitling the holder thereof to
purchase up to 3,000,000 shares of Common Stock at $0.25 per
share on or before December 31, 1998. (P)(iv)
4.35 Form of a series of Stock Purchase Warrants dated
November 26, 1996, entitling the following holders thereto
to purchase up to 2,666,666 shares of Common Stock at $0.125
per share on or before December 31, 1999:
Warrant Holder Warrants
-------------- --------
Opportunity Associates, L.P. 133,333
Kayne Anderson Non-Traditional Investments, L.P. 666,666
Arbco Associates, L.P. 800,000
Offense Group Associates, L.P. 333,333
Foremost Insurance Company 266,667
Nobel Insurance Company 133,333
Evanston Insurance Company 133,333
Topa Insurance Company 200,000 (Q)(i)
4.36 Form of a series of Stock Purchase Warrants dated
December 31, 1996 (2,128,000 warrants) and January 8, 1997
(2,040,000 warrants) to purchase up to an aggregate of
4,168,000 shares of Common Stock at $0.125 per share on or
before August 13, 2001. (Q)(ii)
4.37 Form of Stock Purchase Warrants dated February 6, 1997,
entitling the following holders to purchase an aggregate of
1,874,467 shares of Common Stock at $0.25 per share on or
before December 31, 1999:
Warrant Holder Warrants
-------------- --------
Donald A. and Joanne R. Westerberg 241,660
T. Jerald Hanchey 1,632,807 (Q)(iii)
4.38 Certificate of Designation of Series F, Cumulative
Convertible Preferred Stock, par value $1.00 per share
(Q)(iv)
4.39 Form of Subscription Agreement for Series F, Cumulative
Convertible Preferred Stock with respect to the following
purchases:
Subscriber Shares
---------- ------
Mitch Leigh 18,448
Abby Leigh 1,731
Arthur Rosenbloom 878 (Q)(v)
4.40 Form of a series of Stock Purchase Warrants dated April
10, 1997, issued as a part of a unit offered with Unsecured
Notes of XCL-China Ltd., exercisable at $0.01 per share on
or before April 9, 2002, entitling the following holders to
purchase up to an aggregate of 10,092,980 shares of Common
Stock:
Warrant Holder Warrants
-------------- --------
Kayne Anderson Offshore L.P. 651,160
Offense Group Associates, L.P. 1,627,900
Kayne Anderson Non-Traditional Investments, L.P. 1,627,900
Opportunity Associates, L.P. 1,302,320
Arbco Associates, L.P. 1,627,900
J. Edgar Monroe Foundation 325,580
Estate of J. Edgar Monroe 976,740
Boland Machine & Mfg. Co., Inc. 325,580
Construction Specialists, Inc.
d/b/a Con-Spec, Inc. 1,627,900 (Q)(vi)
4.41 Form of Purchase Agreement dated May 13, 1997, between
the Company and Jefferies & Company, Inc. (the "Initial
Purchaser") with respect to 75,000 Units each consisting of
$1,000 principal amount of 13.5% Senior Secured Notes due
May 1, 2004, Series A and one warrant to purchase 1,280
shares of the Company's Common Stock with an exercise price
of $0.2063 per share ("Note Warrants"). (R)(i)
4.42 Form of Purchase Agreement dated May 13, 1997, between
the Company and Jefferies & Company, Inc. (the "Initial
Purchaser") with respect to 294,118 Units each consisting of
one share of Amended Series A, Cumulative Convertible
Preferred Stock ("Amended Series A Preferred Stock") and one
warrant to purchase 327 shares of the Company's Common Stock
with an exercise price of $0.2063 per share ("Equity
Warrants"). (R)(ii)
4.43 Form of Warrant Agreement and Warrant Certificate dated
May 20, 1997, between the Company and Jefferies & Company,
Inc., as the Initial Purchaser, with respect to the Note
Warrants. (R)(iii)
4.44 Form of Warrant Agreement and Warrant Certificate dated
May 20, 1997, between the Company and Jefferies & Company,
Inc., as the Initial Purchaser, with respect to the Equity
Warrants. (R)(iv)
4.45 Form of Designation of Amended Series A Preferred Stock
dated May 19, 1997. (R)(v)
4.46 Form of Amended Series A Preferred Stock certificate.
(R)(vi)
4.47 Form of Global Unit Certificate for 75,000 Units
consisting of 13.5% Senior Secured Notes due May 1, 2004 and
Warrants to Purchase Shares of Common Stock. (R)(vii)
4.48 Form of Global Unit Certificate for 293,765 Units
consisting of Amended Series A Preferred Stock and Warrants
to Purchase Shares of Common Stock. (R)(viii)
4.49 Form of Warrant Certificate dated May 20, 1997, issued
to Jefferies & Company, Inc., with respect to 12,755
warrants to purchase shares of Common Stock of the Company
at an exercise price of $0.2063 per share. (R)(ix)
10.0 - Material Contracts
10.1 Contract for Petroleum Exploration, Development and
Production on Zhao Dong Block in Bohai Bay Shallow Water Sea
Area of The People's Republic of China between China
National Oil and Gas Exploration and Development Corporation
and XCL - China, Ltd., dated February 10, 1993. (E)(vi)
10.2 $35,000,000 Credit Agreement dated as of January 31,
1994 between the Company and Internationale Nederlanden
(U.S.) Capital Corporation ("INCC"), as Agent. (I)(vi)
10.3 Copy of Subordination Agreement among the Company, INCC
and the holders of the Secured Notes dated. (I)(vii)
10.4 Form of First Amendment of Secured Subordinated Note
dated January 31, 1994. (I)(viii)
10.5 Form of First Amendment of Limited Recourse Secured
Lease Note dated January 31, 1994. (I)(ix)
10.6 Stock Pledge Agreement dated January 31, 1994, among the
Company and INCC. (I)(x)
10.7 Deed of Trust, Mortgage, Assignment, Security Agreement
and Financing Statement from XCL-Texas, Inc. to INCC dated
January 31, 1994. (I)(xi)
10.8 Form of Net Revenue Interest Assignment dated February
23, 1994, between the Company and the purchasers of the
Company's Series D, Cumulative Convertible Preferred Stock.
(I)(xii)
10.9 Modification Agreement for Petroleum Contract on Zhao
Dong Block in Bohai Bay Shallow Water Sea Area of The
People's Republic of China dated March 11, 1994, between the
Company, China National Oil and Gas Exploration and
Development corporation and Apache China Corporation LDC.
(I)(xiii)
10.10 Letter Agreement dated May 25, 1994 between the
Company, L.M. Holdings Associates, L.P. and vendors holding
Purchase Note B with respect to the Lutcher Moore Tract.
(E)(vii)
10.11 Letter Agreement dated June 30, 1994 between the
Company, China Investment & Development Co. Ltd. and China
Investment and Development Corporation. (F)(ix)
10.12 Letter Agreement dated July 10, 1994 between the
Company and holders of the Lease Notes. (F)(x)
10.13 Stock Purchase Agreement between the Company and
Provincial Securities Limited dated May 17, 1994. (F)(xi)
10.14 Consulting agreement between the Company and Sir
Michael Palliser dated April 1, 1994. (K)(i)
10.15 Consulting agreement between the Company and Mr. Arthur
W. Hummel, Jr. dated April 1, 1994. (K)(ii)
10.16 Letter Agreement between the Company and Mr. William
Wang dated June 2, 1992, executed effective February 10,
1993. (K)(iii)
10.17 First Amendment to Credit Agreement between the Company
and Internationale Nederlanden (U.S.) Capital Corporation
dated April 13, 1995. (L)(ii)
10.18 Letter of Intent between the Company and CNPC United
Lube Oil Corporation for a joint venture for the manufacture
and sale of lubricating oil dated January 14, 1995. (L)(iii)
10.19 Purchase and Sale Agreement dated May 10, 1995, between
XCL Land, Ltd., a wholly owned subsidiary of the Company
("Seller") and The Succession of Edward M. Carmouche,
Matilda Gray Stream, Harold H. Stream, III, The Opal Gray
Trust, Matilda Geddings Gray Trust for Harold H. Stream,
III, Matilda Geddings Gray Trust for William Gray Stream,
Matilda Geddings Gray Trust for Sandra Gray Stream, M.G.
Stream Trust for Harold H. Stream, III, M.G. Stream Trust
for William Gray Stream, and M.G. Stream Trust for Sandra
Gray Stream ("Purchasers") whereby the Purchasers will
acquire Seller's fee interest in and to a parcel of
southwestern Louisiana land known as the Phoenix Lake
Tract. (L)(iv)
10.20 Farmout Agreement dated May 10, 1995, between XCL China
Ltd., a wholly owned subsidiary of the Company and Apache
Corporation whereby Apache will acquire an additional
interest in the Zhao Dong Block, Offshore People's Republic
of China. (L)(v)
10.21 Modification Agreement of Non-Negotiable Promissory
Note and Waiver Agreement between Lutcher & Moore
Cypress Lumber Company and L.M. Holding Associates, L.P.
dated June 15, 1995. (M)(i)
10.22 Third Amendment to Credit Agreement between Lutcher-
Moore Development Corp., Lutcher & Moore Cypress Lumber
Company, The First National Bank of Lake Charles, Mary
Elizabeth Mecom, The Estate of John W. Mecom, The Mary
Elizabeth Mecom Irrevocable Trust, Matilda Gray Stream, The
Opal Gray Trust, Harold H. Stream III, The
Succession of Edward M. Carmouche, Virginia Martin
Carmouche and L.M. Holding Associates, L.P. dated June 15,
1995. (M)(ii)
10.23 Second Amendment to Appointment of Agent for
Collection and Agreement to Application of Funds between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, L.M. Holding Associates, L.P. and The
First National Bank of Lake Charles, dated June 15,
1995. (M)(iii)
10.24 Contract of Chinese Foreign Joint Venture dated July
17, 1995, between United Lube Oil Corporation and XCL
China Ltd. for the manufacturing and selling of
lubricating oil and related products. (M)(iv)
10.25 Letter of Intent dated July 17, 1995 between CNPC
United Lube Oil Corporation and XCL Ltd. for discussion of
further projects. (M)(v)
10.26 Form of Letter Agreement dated June 26, 1995
between the Company and three of its U.S. holders of
Series A Preferred Stock, whereby the following such
holders have agreed to accept Common Stock in respect of
dividends payable December 31, 1994 and June 30, 1995 in the
amounts set forth:
12/31/94 6/30/95
Holder Dividend Dividend Shares
------ -------- -------- ------
Kayne Anderson
Investment Management $627,788.12 $689,238.87 2,225,024
Cumberland Associates $429,056.51 $445,838.59 1,487,294
T. Rowe Price &
Associates, Inc. $159,975.00 $166,232.25 554,543 (M)(vi)
10.27 Copy of Letter Agreement dated March 31, 1995, between
the Company and China National Administration of Coal
Geology for the exploration and development of coal bed
methane in Liao Ling Tiefa and Shanxi Hanchang Mining
Areas. (N)(iv)
10.28 Copy of Second Amendment to Credit Agreement between
the Company and Internationale Nederlanden (U.S.) Capital
Corporation dated effective as of September 29, 1995.
(N)(v)
10.29 Copy of Fee Agreement dated October 26, 1995, between
the Company and EnCap Investments L.C. for past services and
proposed European equity offering. (N)(vi)
10.30 Copy of Engagement Letter dated November 9, 1995,
between the Company and Rauscher Pierce & Clark for a
proposed Unit offering to be conducted in Europe.
(N)(vii)
10.31 Memo of Understanding dated December 14, 1995, between
XCL Ltd. and China National Administration of Coal Geology.
(O)(v)
10.32 Copy of Purchase and Sale Agreement dated December 28,
1995, between XCL Ltd., XCL-Texas, Inc. and Cody Energy
Corporation, for the sale to Cody Energy of the Mestena
Grande Field located in Texas. (O)(vi)
10.33 Form of Fourth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles,
Mary Elizabeth Mecom, The Estate of John W. Mecom, The
Mary Elizabeth Mecom Irrevocable Trust, Matilda Gray
Stream, The Opal Gray Trust, Harold H. Stream III, The
Succession of Edward M. Carmouche, Virginia Martin
Carmouche and L.M. Holding Associates, L.P. dated January
16, 1996. (O)(vii)
10.34 Form of Third Amendment to Appointment of Agent for
Collection and Agreement to application of Funds between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, L.M. Holding Associates, L.P. and The
First National Bank of Lake Charles, dated January 16,
1996. (O)(viii)
10.35 Copy of Purchase and Sale Agreement dated March 8,
1996, between XCL-Texas, Inc. and Tesoro E&P Company, L.P.
for the sale of the Gonzales Gas Unit located in south
Texas. (O)(ix)
10.36 Copy of Limited Waiver between the Company and
Internationale Nederlanden (U.S.) Capital Corporation
dated April 3, 1996. (O)(x)
10.37 Copy of Purchase and Sale Agreement dated April 22,
1996, between XCL-Texas, Inc. and Dan A. Hughes Company
for the sale of the Lopez Gas Units located in south Texas.
(P)
10.38 Form of Sale of Mineral Servitude dated June 18, 1996,
whereby the Company sold its 75 percent mineral interest in
the Phoenix Lake Tract to the Stream Family Limited Partners
and Virginia Martin Carmouche Gayle. (Q)(ii)
10.39 Form of Fifth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles,
Mary Elizabeth Mecom, The Estate of John W. Mecom, The
Mary Elizabeth Mecom Irrevocable Trust, Matilda Gray
Stream, The Opal Gray Trust, Harold H. Stream III, The
Succession of Edward M. Carmouche, Virginia Martin
Carmouche and L.M. Holding Associates, L.P. dated August
8, 1996. (Q)(vii)
10.40 Form of Assignment and Sale between XCL Acquisitions,
Inc. and purchasers of an interest in certain promissory
notes held by XCL Acquisitions, Inc. as follows:
Principal Purchase
Date Purchaser Amount Price
November 19, 1996 Opportunity Associates, L.P. $15,627.39 $12,499.98
November 19, 1996 Kayne Anderson Non-Traditional
Investments, L.P. $78,126.36 $62,499.98
November 19, 1996 Offense Group Associates, L.P. $39,063.18 $31,249.99
November 19, 1996 Arbco Associates, L.P. $93,743.14 $75,000.04
November 19, 1996 Nobel Insurance Company $15,627.39 $12,499.98
November 19, 1996 Evanston Insurance Company $15,627.39 $12,499.98
November 19, 1996 Topa Insurance Company $23,435.79 $18,750.01
November 19, 1996 Foremost Insurance Company $31,249.48 $25,000.04
February 10, 1997 Donald A. and Joanne R.
Westerberg $25,000.00 $28,100.00
February 10, 1997 T. Jerald Hanchey $168,915.74 $189,861.29
(Q)(viii)
10.41 Form of Sixth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles, The
Estate of Mary Elizabeth Mecom, The Estate of John W.
Mecom, The Mary Elizabeth Mecom Irrevocable Trust,
Matilda Gray Stream, The Opal Gray Trust, Harold H.
Stream III, The Succession of Edward M. Carmouche,
Virginia Martin Carmouche and L.M. Holding Associates,
L.P. dated January 28, 1997. (Q)(ix)
10.42 Form of Act of Sale between the Company and The
Schumacher Group of Louisiana, Inc. dated March 31, 1997,
where in the Company sold its office building. (Q)(x)
10.43 Amendment No. 1 to the May 1, 1995 Agreement with
Apache Corp. dated April 3, 1997, effective December 13,
1996. (Q)(xi)
10.44 Form of Guaranty dated April 9, 1997 by XCL-China Ltd.
in favor of ING (U.S.) Capital Corporation executed in
connection with the sale of certain Unsecured Notes issued
by XCL-China Ltd. (Q)(xii)
10.45 Form of First Amendment to Stock Pledge Agreement dated
April 9, 1997, between the Company and ING (U.S.) Capital
Corporation adding XCL Land Ltd. to the Stock Pledge
Agreement dated as of January 31, 1994. (Q)(xiii)
10.46 Form of Agreement dated April 9, 1997, between ING
(U.S.) Capital Corporation, XCL-China and holders of the
Senior Unsecured Notes, subordinating the Guaranty granted
by XCL-China in favor of ING to the Unsecured Notes.
(Q)(xiv)
10.47 Form of Forbearance Agreement dated April 9, 1997
between the Company and ING (U.S.) Capital Corporation.
(Q)(xv)
10.48 Form of a series of Unsecured Notes dated April 10,
1997, between the Company and the following entities:
Note Holder Principal Amount
Kayne Anderson Offshore, L.P. $200,000
Offense Group Associates, L.P. $500,000
Kayne Anderson Non-Traditional Investments, L.P. $500,000
Opportunity Associates, L.P. $400,000
Arbco Associates, L.P. $500,000
J. Edgar Monroe Foundation $100,000
Estate of J. Edgar Monroe $300,000
Boland Machine & Mfg. Co., Inc. $100,000
Construction Specialists, Inc. d/b/a Con-Spec, Inc. $500,000 (Q)(xvi)
10.49 Form of Subscription Agreement dated April 10, 1997, by
and between XCL-China, Ltd., the Company and the subscribers
of Units, each unit comprised of $100,000 in Unsecured Notes
and 325,580 warrants. (Q)(xvii)
10.50 Form of Intercompany Subordination Agreement dated
April 10, 1997, between the Company, XCL-Texas, Ltd., XCL
Land Ltd., The Exploration Company of Louisiana, Inc., XCL-
Acquisitions, Inc., XCL-China Coal Methane Ltd., XCL-China
LubeOil Ltd., XCL-China Ltd., and holders of the Unsecured
Notes. (Q)(xviii)
10.51 Form of Indenture dated as of May 20, 1997, between the
Company, as Issuer and Fleet National Bank, as Trustee
("Indenture"). (R)(x)
10.52 Form of 13.5% Senior Secured Note due May 1, 2004,
Series A issued May 20, 1997 to Jefferies & Company, Inc. as
the Initial Purchaser (Exhibit A to the Indenture). (R)(xi)
10.53 Form of Pledge Agreement dated as of May 20, 1997,
between the Company and Fleet National Bank, as Trustee
(Exhibit C to the Indenture). (R)(xii)
10.54 Form of Cash Collateral and Disbursement Agreement
dated as of May 20, 1997, between the Company and Fleet
National Bank, as Trustee and Disbursement Agent, and Herman
J. Schellstede & Associates, Inc., as Representative
(Exhibit F to the Indenture). (R)(xiii)
10.55 Form of Intercreditor Agreement dated as of May 20,
1997, between the Company, ING (U.S.) Capital Corporation,
the holders of the Secured Subordinated Notes due April 5,
2000 and Fleet National Bank, as trustee for the holders of
the 13.5% Senior Secured Notes due May 1, 2004 (Exhibit G to
the Indenture). (R)(xiv)
10.56 Registration Rights Agreement dated as of May 20, 1997,
by and between the Company and Jefferies & Company, Inc.
with respect to the 13.5% Senior Secured Notes due May 1,
2004 and 75,000 Common Stock Purchase Warrants (Exhibit H to
the Indenture). (R)(xv)
10.57 Form of Security Agreement, Pledge and Financing
Statement and Perfection Certificate dated as of May 20,
1997, by the Company in favor of Fleet National Bank, as
Trustee (Exhibit I to the Indenture). (R)(xvi)
10.58 Registration Rights Agreement dated as of May 20, 1997,
by and between the Company and Jefferies & Company, Inc.
with respect to the 9.5% Amended Series A Preferred Stock
and Common Stock Purchase Warrants. (R)(xvii)
10.59 Form of Restated Forbearance Agreement dated effective
as of May 20, 1997, between the Company, XCL-Texas, Inc. and
ING (U.S.) Capital Corporation. (R)(xviii)
10.60 Form of Seventh Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles, The
Estate of Mary Elizabeth Mecom, The Estate of John W.
Mecom, The Mary Elizabeth Mecom Irrevocable Trust,
Matilda Gray Stream, The Opal Gray Trust, Harold H.
Stream III, The Succession of Edward M. Carmouche,
Virginia Martin Carmouche and L.M. Holding Associates,
L.P. dated May 8, 1997. *
10.61 Form of Eighth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles, The
Estate of Mary Elizabeth Mecom, The Estate of John W.
Mecom, The Mary Elizabeth Mecom Irrevocable Trust,
Matilda Gray Stream, The Opal Gray Trust, Harold H.
Stream III, The Succession of Edward M. Carmouche,
Virginia Martin Carmouche and L.M. Holding Associates,
L.P. dated July 29, 1997. *
11. Statement re computation of per share earnings *
15. Not applicable.
18. Not applicable.
19. Not applicable.
22. Not applicable.
23 Not applicable.
24. Not applicable.
27. Financial Data Schedule *
99 Glossary of Terms *
- ------------
* Filed herewith.
(A) Incorporated by reference to the Registration Statement
on Form 8-B filed on July 28, 1988, where it appears as: (i)
through (iii) as Exhibits 3(a) through 3(c), respectively;
and (iv) as Exhibit 4.1.
(B) Incorporated by reference to a Quarterly Report on Form
10-Q filed on August 14, 1990, where it appears as: (i)
Exhibit 3 and (ii) Exhibit 4.4.
(C) Incorporated by reference to an Annual Report on Form 10-
K filed on March 30, 1992, where it appears as Exhibit
(3)(g).
(D) Incorporated by reference to a Quarterly Report on Form
10-Q filed August 14, 1992, where it appears as: (i)
Exhibit 4.25 and (ii) Exhibit 4.28.
(E) Incorporated by reference to a Registration Statement on
Form S-3 (File No. 33-68552) where it appears as: (i)
Exhibit 4.27; (ii) Exhibit 4.14; (iii) Exhibit 4.16; (iv)
Exhibit 4.17; (v) Exhibit 4.19; (vi) Exhibit 10.1; and (vii)
Exhibit 10.6.
(F) Incorporated by reference to Post-Effective Amendment No.
2 to Registration Statement on Form S-3 (File No. 33-68552)
where it appears as: (i) through (iii) Exhibits 4.28 through
4.30, respectively; (iv) through (viii) Exhibits 4.34
through 4.38, respectively; and (ix) through (xi) Exhibits
10.8 through 10.10, respectively.
(G) Incorporated by reference to a Current Report on Form 8-K
filed on August 13, 1990, where it appears as Exhibit 4.
(H) Incorporated by reference to Quarterly Report on Form 10Q
filed May 15, 1991, where it appears as: (i) Exhibit 4.1;
(ii) Exhibit 4.2; and (iii) Exhibit 4.5.
(I) Incorporated by reference to Amendment No. 1 to Annual
Report on Form 10-K filed April 15, 1994, where it appears
as: (i) Exhibit 4.35; (ii) Exhibit 4.31; (iii) Exhibit
4.32; (iv) Exhibit 4.36; (v) Exhibit 4.37; (vi) through
(xii) Exhibit 10.41 through Exhibit 10.47, respectively; and
(xii) Exhibit 10.49.
(J) Incorporated by reference to an Annual Report on Form 10K
for the fiscal year ended December 31, 1990, filed April 1,
1991, where it appears as Exhibit 10.27.
(K) Incorporated by reference to Amendment No. 1 to an Annual
Report on Form 10-K/A No. 1 for the fiscal year ended
December 31, 1994, filed April 17, 1995, where it appears
as: (i) through (iii) Exhibits 10.22 through 10.24,
respectively.
(L) Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, filed May
15, 1995, where it appears as: (i) Exhibit 4.28; and (ii)
through (v) Exhibits 10.25 through 10.28, respectively.
(M) Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended June 30, 1995, filed August 14,
1995, where it appears as: (i) through (vi) Exhibits 10.29
through 10.34, respectively.
(N) Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, filed
November 13, 1995, where it appears as: (i) Exhibit
3.8; (ii) and (iii) Exhibits 4.29 and 4.30, respectively;
and (iv) through (vii) Exhibits 10.35 through 10.38,
respectively.
(O) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1995, filed April 15, 1996,
where it appears as: (i) through (iv) Exhibits 4.28
through 4.31, respectively; and (v) through (x)
Exhibits 10.31 through 10.36, respectively.
(P) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended March 31, 1996, filed May 15, 1996,
where it appears as Exhibit 10.37.
(Q) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended June 30, 1996, filed August 14,
1996, where it appears as (i) Exhibit 3.9 and (ii) Exhibit
10.38.
(P) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996, filed November
14, 1996, where it appears as (i) through (iv) Exhibits 4.31
through 4.34.
(Q) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1996, filed April 15, 1997,
where it appears as (i) through (vi) Exhibits 4.35 through
4.40 and (vii) through (xviii) Exhibits 10.39 through 10.50.
(R) Incorporated by reference to Current Report on Form 8-K
dated May 20, 1997, filed June 3, 1997, where it appears as
(i) through (ix) Exhibits 4.1 through 4.9 and (x) through
(xviii) Exhibits 10.51 through 10.59.