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, 1998
OR
Transition Report Pursuant to Section 13 or 15(d) of
[ ] the Securities Exchange Act of 1934
Commission File No. 1-10669
XCL Ltd.
(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, Lafayette, LA 70508
(Address of principal executive offices) (Zip Code)
318-237-0325
(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.
22,995,804 shares Common Stock, $.01 par value were
outstanding on August 14, 1998.
XCL LTD.
TABLE OF CONTENTS
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 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
XCL Ltd. and Subsidiaries
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
June 30, December 31,
A S S E T S 1998 1997
----------- ---------- -----------
Current assets:
Cash and cash equivalents $ 11,369 $ 21,952
Cash held in escrow (restricted) 5,239 10,263
Accounts receivable, net 188 101
Refundable deposits -- 1,200
Other 814 451
---------- ----------
Total current assets 17,610 33,967
---------- ----------
Property and equipment:
Oil and gas properties (full cost method):
Proved undeveloped properties,
not being amortized 26,954 21,172
Unevaluated properties 40,875 33,132
---------- ----------
67,829 54,304
Other 1,405 1,163
----------- ----------
69,234 55,467
Accumulated depreciation, depletion
and amortization (941) (1,000)
----------- ----------
68,293 54,467
----------- ----------
Investments 4,724 4,173
Investment in land 12,200 --
Oil and gas properties held for sale 9,078 21,155
Debt issue costs, less amortization 4,024 4,268
Other assets 1,275 1,059
--------- ---------
Total assets $ 117,204 $ 119,089
========= =========
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
- -------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued costs $ 925 $ 907
Accrued interest 1,949 1,820
Due to joint venture partner 5,079 4,504
Dividends payable 1,611 1,813
Current maturities of long-term debt 2,074 2,524
--------- ----------
Total current liabilities 11,638 11,568
--------- ----------
Long-term debt, net of current maturities 62,384 61,310
Other non-current liabilities 5,383 5,386
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock-$1.00 par value;
authorized 2.4 million shares; issued
shares of 1,230,019 at June 30, 1998
and 1,196,236 at December 31, 1997 -
liquidation preference of $105 million
at June 30, 1998 1,230 1,196
Common stock-$.01 par value; authorized
500 million shares; issued shares of
22,991,191 at June 30, 1998 and 21,710,257
at December 31, 1997 230 217
Common stock held in treasury - $.01 par
value; 69,470 shares (1) (1)
Additional paid-in capital 304,195 298,588
Accumulated deficit (256,153) (247,154)
Unearned compensation (11,702) (12,021)
--------- ----------
Total shareholders' equity 37,799 40,825
--------- ----------
Total liabilities and
shareholders' equity $ 117,204 $ 119,089
======== ==========
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------- ----- ----- -----
Costs and operating expenses:
General and administrative $ 1,305 $ 766 $ 2,915 $ 1,562
Other, net 29 8 72 28
------ ------ ------ ------
1,334 774 2,987 1,590
------ ------ ------ ------
Operating loss (1,334) (774) (2,987) (1,590)
------ ------ ------ ------
Other income (expense):
Interest income 309 498 718 498
Interest expense, net of amounts
capitalized (1,090) (1,012) (1,852) (1,646)
Other, net 10 73 1 312
------- ------ ------ ------
(771) (441) (1,133) (836)
------- ------ ------ ------
Net loss (2,105) (1,215) (4,120) (2,426)
Preferred stock dividends (2,452) (1,912) (4,879) (3,316)
------- ------ ------ ------
Net loss attributable to common stock $ (4,557) $(3,127) $(8,999) $(5,742)
======= ====== ====== ======
Net loss per common share (basic) $ (.20) $ (.16) $ (.40) $ (.29)
======= ====== ======= ======
Net loss per common share (diluted) $ (.20) $ (.16) $ (.40) $ (.29)
======= ====== ====== ======
Weighted average number of common shares
outstanding:
Basic 22,922 19,569 22,622 19,511
Diluted 22,922 19,569 22,622 19,511
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In Thousands)
(Unaudited)
Additional Total
Preferred Common Treasury Paid-In Accumulated Unearned Shareholders'
Stock Stock Stock Capital Deficit Compensation Equity
---------- ------- -------- ---------- ------------ ------------ -------------
Balance, December 31, 1997 $1,196 $ 217 $ (1) $298,588 $ (247,154) $ (12,021) $ 40,825
Net loss -- -- -- -- (4,120) -- (4,120)
Dividends -- -- -- -- (4,879) -- (4,879)
Preferred shares issued 57 -- -- 4,630 -- -- 4,687
Preferred shares converted
to common shares (23) 6 -- 17 -- -- --
Common shares issued -- 1 -- 222 -- -- 223
Exercise of stock purchase
warrants -- 6 -- 325 -- -- 331
Amortization of unearned
compensation -- -- -- -- -- 319 319
Earned compensation -
stock options -- -- -- 413 -- -- 413
----- ----- ----- ------- --------- --------- --------
Balance, June 30, 1998 $1,230 $ 230 $ (1) $304,195 $ (256,153) $ (11,702) $ 37,799
===== ===== ===== ======= ========= ========= ========
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
1998 1997
----- ----
Cash flows from operating activities:
Net loss $ (4,120) $ (2,426)
------ -------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, depletion and amortization 50 80
Amortization of discount on senior secured notes 1,074 --
Stock compensation programs 732 --
Stock issued for outside professional services 223 --
Changes in assets and liabilities:
Accounts receivable (87) (17)
Refundable deposits 1,200 --
Accounts payable and accrued costs 15 (451)
Accrued interest 129 2,205
Other, net (162) 98
------ ------
Total adjustments 3,174 1,915
------ ------
Net cash used in operating activities (946) (511)
------ ------
Cash flows from investing activities:
Change in cash held in escrow (restricted) 5,024 (75,000)
Note receivable (362) --
Capital expenditures (13,424) (5,025)
Investments (551) (388)
Proceeds from sale of assets -- 759
------ ------
Net cash used in investing activities (9,313) (79,654)
------ ------
Cash flows from financing activities:
Proceeds from sales of common stock -- 652
Proceeds from senior secured notes -- 75,000
Proceeds from issuance of preferred stock -- 25,000
Proceeds from exercise of warrants and options 331 1,184
Loan proceeds -- 3,316
Payment of long-term debt (450) (8,965)
Payment of note payable -- (2,100)
Stock/note issuance costs and other (205) (9,328)
------- ------
Net cash provided by (used in)
financing activities (324) 84,759
------- ------
Net increase (decrease) in cash and cash equivalents (10,583) 4,594
Cash and cash equivalents at beginning of period 21,952 113
------- ------
Cash and cash equivalents at end of period $ 11,369 $ 4,707
======== ======
The accompanying notes are an integral part of these financial statements.
XCL Ltd. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(1) Basis of Presentation
The consolidated financial statements at June 30, 1998,
and for the three 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, 1997. 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, 1998, and 1997, and the results of their operations
for the three months and six months ended June 30, 1998 and
1997, 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.
Revenues and operating expenses associated with oil and
gas properties held for sale have become insignificant and
accordingly, are recorded in other costs and operating
expenses in the accompanying consolidated statements of
operations.
(2) Liquidity and Capital Resources
The Company, since its decision in 1995 to
dispose of its domestic properties, has generated minimal
annual revenues and is now devoting all of its efforts
toward the development of its China properties. Although
the Company has cash available in the amount of
approximately $16.6 million at June 30, 1998 (including
restricted cash of approximately $5.2 million to pay
interest due November 1, 1998) and a positive working
capital position, additional funds will be needed to meet
the Company's working capital requirements and capital
expenditure obligations until sufficient cash flows are
generated from anticipated production to sustain its
operations and to fund future development obligations.
Management plans to generate the additional
funds needed through the sale or financing of its domestic
oil and gas properties held for sale and investment in land
and the completion of additional equity, debt or joint
venture transactions. There is no assurance, however, that
the Company will be able to sell or refinance its oil and gas
properties held for sale or investment in land or to
complete other transactions in the future at commercially
reasonable terms, if at all, or that it will be able to meet
its future contractual obligations. If production from the
China properties commences in late 1998 or the first half of
1999, as anticipated, the Company's proportionate share of
the cash flow will be available to partially satisfy its
cash requirements. However, there is likewise no assurance
that such development will be successful and production will
commence as anticipated, and that such cash flow will be
available or sufficient.
(3) Supplemental Cash Flow Information
There were no income taxes paid during the six months
periods ended June 30, 1998 and 1997.
Capitalized interest for the three and six months ended
June 30, 1998 was $2.8 million and $5.5 million,
respectively, as compared to $2.1 million and $2.6 million,
respectively, for the same period in 1997. Interest paid
during the three and six months ended June 30, 1998 amounted
to $5.7 million and $5.8 million, respectively, as compared
to $89,500 and $195,300, respectively, for the same periods
in 1997.
On May 1, 1998, an interest payment in the amount of
$5.3 million was made to the holders of the senior secured
notes for the interest period November 1, 1997 through May
1, 1998.
(4) Debt
Long-term debt consists of the following (000's):
June 30, December 31,
1998 1997
------- -----------
Senior secured notes, net of unamortized discount
of $12,616 and $13,690, respectively $ 62,384 $ 61,310
Lutcher Moore Group Limited Recourse Debt 2,074 2,524
------ ------
64,458 63,834
Less current maturities:
Lutcher Moore Group Limited Recourse Debt (2,074) (2,524)
------ ------
$ 62,384 $ 61,310
====== ======
Substantially all of the Company's assets collateralize
these borrowings.
(5) Investment in Land
The Lutcher Moore Tract previously included in oil and
gas properties held for sale has been reclassified to
investment in land in the accompanying consolidated balance
sheets because the Company is exploring alternative plans.
(6) Preferred Stock and Common Stock
As of June 30, 1998, the Company had the following
shares of Preferred Stock issued and outstanding:
1998 Dividends (In Thousands)
--------------------------------
Liquidation
Shares Value Declared Accrued Total
--------- ------------- --------- -------- ------
Amended Series A 1,181,614 $ 100,437,190 $ -- $ 1,611 $ 1,611
Amended Series B 48,405 4,840,500 -- -- --
--------- ------------ ------ ------- ------
1,230,019 $ 105,277,690 $ -- $ 1,611 $ 1,611
========= ============ ====== ======= ======
Amended Series A Preferred Stock
- --------------------------------
On May 1, 1998, the Company issued an aggregate of
52,161 shares of Amended Series A Preferred Stock in payment
of $4.5 million in dividends payable on that date.
Amended Series B Preferred Stock
- --------------------------------
On June 30, 1998, the Company issued an aggregate of
1,320 shares of Amended Series B Preferred Stock in payment
of $0.1 million in dividends payable on that date.
Loss Per Share
- --------------
The following table sets forth the computation of basic
and diluted loss per common share (as adjusted for a one-for-
fifteen reverse stock split effected December 17, 1997).
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
___________________ __________________
1998 1997 1998 1997
Weighted average number of common
shares outstanding (basic): 22,922 19,569 22,622 19,511
Weighted average number of common
shares outstanding (diluted): 22,922 19,569 22,622 19,511
Net loss attributable to common
stock $ (4,557) $ (3,127) $ (8,999) $ (5,742)
Basic loss per share $ (.20) $ (.16) $ (.40) $ (.29)
Diluted loss per share $ (.20) $ (.16) $ (.40) $ (.29)
The effect of 34,627,207 and 24,046,901 shares of
potential common stock were anti-dilutive in the six months
ended June 30, 1998 and 1997, respectively, due to the
losses in both periods.
(7) Commitments and Contingencies
Other commitments and contingencies include:
* The Company acquired the rights to the exploration,
development and production of the Zhao Dong Block by
executing a Production Sharing Agreement (the "Agreement")
with CNODC in February 1993. Under the terms of the
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 Agreement includes the following additional
principal terms:
The 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 Company and
its partner as a group (the "Contractor"). 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. These obligations have been met.
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
Agreement. The seismic data acquisition
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.
4. The Production Period for any oil and/or
gas field covered by the Agreement will be 15
consecutive years (each of 12 months),
commencing for each such field on the date of
commencement of commercial production (as
determined under the terms of the Agreement).
However, prior to the Production Period, and
during the Development Period, oil and/or gas
may be produced and sold during a long-term
testing period.
The Agreement may be terminated by the Contractor at the end
of each phase of the Exploration period, without further
obligation.
* 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 in the approximate amount of
$3.0 million. The Company has filed written protests as to
these proposed assessments, and will vigorously contest the
asserted deficiencies through the administrative appeals
process and, if necessary, litigation. The Company believes
that adequate provision has been made in the financial
statements for any liability.
* On July 26, 1996, an individual filed three lawsuits
against a wholly owned subsidiary with respect to oil and
gas properties held for sale. 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.
* The Company is subject to other legal proceedings 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 of the Company or results of operations
of the Company.
(8) XCL-China Ltd.
The following summary financial information of XCL-
China Ltd., a wholly owned subsidiary, reflects its
financial position and its results of operations for the
periods presented (in thousands of dollars):
June 30, December 31,
1998 1997
-------- -----------
A S S E T S
-----------
Current assets $ 188 $ 103
Oil and gas properties (full cost method):
Proved undeveloped properties,
not being amortized 26,954 21,172
Unevaluated properties 40,875 33,132
------ ------
67,829 54,304
------ ------
Other assets 597 834
------ ------
$ 68,614 $ 55,241
====== ======
L I A B I L I T I E S A N D A C C U M U L A T E D D E F I C I T
- ------------------------------------------------------------------
Total current liabilities $ 5,202 $ 4,788
Due to parent 65,960 52,383
Accumulated deficit (2,548) (1,930)
------ ------
$ 68,614 $ 55,241
====== ======
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
----- ----- ---- ----
Costs and operating expenses $ 356 $ 484 $ 618 $ 599
----- ---- ----- ----
Net loss $ (356) $ (484) $ (618) $ (599)
===== ==== ===== ====
XCL LTD. AND SUBSIDIARIES
June 30, 1998
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.
- -------------------------------------------------------
This report contains "forward-looking statements"
within the meaning of the federal securities laws. These
forward-looking statements include, among others, statements
concerning the Company's outlook for 1998 and beyond, the
Company's expectations as to funding its capital
expenditures and other statements of expectations, beliefs,
future plans and strategies, anticipated events or trends,
and similar expressions concerning matters that are not
historical facts. The forward-looking statements in this
report are subject to risks and uncertainties that could
cause actual results to differ materially from those
expressed in or implied by the statements.
Liquidity and Capital Resources
- -------------------------------
The Company has only generated minimal annual
revenues since the fourth quarter of 1995, when management
made the decision to focus its attention on operations in
China and to sell its other assets, and has had a loss for
each of the last five fiscal years. The Company's decision
to focus on operations in China is supported by the
excellent well test results on the China properties,
however, the Company has not generated any profits from its
operations in China and is in the development stage with
respect to such operations. Although drilling results and
well tests have been excellent, initial production is not
expected until the first half of 1999.
As of June 30, 1998, the Company had an operating cash
balance of $11.4 million and $5.2 million in a restricted
escrow account for payment of interest on the outstanding
senior secured notes through November 1, 1998. These cash
balances are not sufficient to cover the Company's working
capital requirements and capital expenditure obligations on
the Zhao Dong Block during the remainder of 1998 and through
1999. However, the Company believes that it will be able to
obtain the funds necessary to cover its working capital and
capital expenditure requirements.
Potential sources of funds include the sale and/or
refinancing of domestic oil and gas properties held for sale or
investment in land, project financing, increasing the amount
of senior secured notes, supplier financing, additional
equity, including the exercise of currently outstanding
warrants to buy common stock and joint ventures with other
oil companies. Additionally, the Company believes, based on
discussions with the Chinese authorities during the last
several months, that it may acquire interests in additional
oil and gas exploration and development blocks in China, on
which successful exploration wells have been drilled by the
Chinese, which could enhance the Company's ability to timely
obtain adequate funds for its obligations in China. Based
on continuing discussions with major stockholders,
investment bankers, potential purchasers and other oil
companies, the Company believes that such required funds
will be available. However, there is no assurance such
funds will be available and, if available, on commercially
reasonable terms. Any new debt could require approval of
the holders of the Company's senior secured notes and there
is no assurance that such approval could be obtained.
The Company, Apache, and CNODC are working together to
reduce capital costs and to determine whether commencement
of production from the C-4 Well area on the Zhao Dong Block
can begin by the first half of 1999. All three parties
have agreed to make every effort to achieve initial production
in this time frame.
The Company is not obligated to make additional capital
payments to its other projects. The Company has invested
$3.6 million in a lubricating oil business and $0.9 million
in a coalbed methane project. The Company believes that
both the lubricating oil business and the coalbed methane
project have the opportunity for successful growth. If
successful, the Company may make additional capital
investments in these businesses.
Other
- -----
Pursuant to the Company's December 17, 1997
shareholders' meeting, whereby several compensation plans
were approved, the Company recorded unearned compensation of
approximately $12.8 million. This amount will be amortized
ratably over future periods of up to five years and is
recorded as a non-cash expense in the consolidated
statements of operations. Because certain of these awards
are based on market capitalization, there may be additional
amounts which may become payable. Approximately $0.9
million of compensation expense was recorded in connection
with these awards during 1997. An additional $0.7 million of
compensation expense was recorded in the first six months of
1998.
Inflation has had no material impact during the
reporting periods, however, oil and gas exploration activity
has increased worldwide, and in the Bohai Bay in particular.
Increased rates for equipment and services, and limited rig
availability, may have an impact in the future.
The Company is subject to existing domestic and Chinese
federal, state and local laws and regulations governing
environmental quality and pollution control. Although
management believes, based on present conditions, 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 Pronouncements
- -----------------------------
In June 1997, the FASB Issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information", which is effective for the Company's year
ended December 31, 1998. This statement establishes
standards for reporting of information about operating
segments. The Company will be analyzing SFAS No. 131 during
1998 to determine what, if any, additional disclosures will
be required.
Results of Operations
- ----------------------
During the six months ended June 30, 1998 and June 30,
1997, the Company incurred net losses of $4.1 million and
$2.4 million, respectively.
Revenues and operating expenses associated with oil and
gas properties held for sale have become insignificant and
accordingly, are recorded in other costs and operating
expenses in the accompanying consolidated statements of
operations.
Interest expense increased during the three and six
months ended June 30, 1998, when compared with the same
periods in 1997, because of increased debt and interest
rates. Also included in interest expense was amortization
of warrant costs and debt issue costs on the senior secured
notes issued in May 1997. Interest capitalized for the
comparable periods in 1998 and 1997 increased because the
oil and gas property base was larger, thus, reducing net
interest expense for the periods.
Preferred stock dividends were $4.9 million for the six
months ended June 30, 1998, as compared to $3.3 million for
the same period in 1997. The increase is the result of the
issuance of additional shares in the equity offering
concluded in May 1997. These dividends are paid in
additional shares of preferred stock at the option of the
Company.
Interest income for the three and six months ended June
30, 1998 was $0.3 million and $0.7 million, respectively,
and resulted from the short-term investment of cash still
available from the May 1997 debt and equity offerings.
General and administrative expenses were $1.3 million
and $2.9 million for the three and six months ended June 30,
1998, as compared to $0.7 million and $1.6 million for the
same periods in 1997. The increase of $1.3 million during
the six month period ended June 30, 1998, was primarily due
to increases in non-cash compensation charges related to
stock and appreciation options of $0.7 million (approved by
shareholders in December 1997), $0.4 million in legal and
professional fees, and $0.2 million in public company
expenses. Legal and professional fees increased because of
additional services and public company expenses associated
with holding two shareholder meetings.
Year 2000 Compliance
- --------------------
The Company has conducted a review of its computer
systems to identify the systems that could be affected by
the "Year 2000" issue and has upgraded certain of its
software to software that purports to be Year 2000
compliant. The Year 2000 problem is the result of computer
programs being written using two digits (rather than four)
to define the applicable year and equipment with time-
sensitive embedded components. Any of the Company's
programs that have time-sensitive software or equipment that
has time-sensitive embedded components may recognize a date
using "00" as the year 1900 rather than the year 2000. This
could result in a major system failure or miscalculations.
Although no assurance can be given because of the potential
wide scale manifestations of this problem which may affect
the Company's business, the Company presently believes that
the Year 2000 problem will not pose significant operational
problems for its computer systems. The Company is not able
to estimate the total costs of undertaking Year 2000
remedial activities, if they will be required, but based
upon information developed to date, it believes that the
total cost of Year 2000 remediation will not be material to
the Company's cash flow, results of operation or financial
condition.
The Company also may be vulnerable to other companies'
Year 2000 issues. The Company's current estimates of the
impact of the Year 2000 problem on its operations and
financial results do not include costs and time that may be
incurred as a result of any vendors' or customers' failure
to become Year 2000 compliant on a timely basis. The
Company intends to initiate formal communications with all
of its significant vendors and customers with respect to
such persons' Year 2000 compliance programs and status. The
Company expects to complete its Year 2000 review and, if
required, remediation efforts within a time frame that will
enable its computer-based and embedded chip systems to
function without significant disruption in the Year 2000.
However, there can be no assurance that such other companies
will achieve Year 2000 compliance or that any conversions by
such companies to become Year 2000 compliant will be
compatible with the Company's computer system. The
inability of the Company or any of its principal vendors or
customers to become Year 2000 compliant in a timely manner
could have a material adverse effect on the Company's
financial condition or results of operations.
XCL LTD. AND SUBSIDIARIES
June 30, 1998
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On January 24, 1997, a subsidiary of the Company filed
an action captioned "L.M. Holding Associates, L.P. v.
LaRoche Chemicals, Inc." (23rd Judicial District Court, St.
James Parish, Louisiana, No. 24, 338, Section A). The
lawsuit claims that LaRoche failed to properly maintain its
8" brine line that runs 10 miles across the Company's
property in St. James Parish, Louisiana, discharged brine
from this line onto the Company's property and no longer has
the right to operate said line. In 1998, the court issued a
preliminary injunction enjoining LaRoche from discharging
brine onto the Company's property and enjoining LaRoche from
continued operation of the 8" brine line without a
scientific system for early detection of leaks and without
periodic monitoring of the line. The Company is seeking
damages and cancellation of LaRoche's right to operate the
brine line. No trial date has been set. The Company
intends to vigorously prosecute the lawsuit.
Other than as disclosed above and 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
* On May 1, 1998, the Company issued an aggregate of
52,161 shares of Amended Series A Preferred Stock in payment
of $4.5 million in dividends payable on that date.
* On June 30, 1998, the Company issued an aggregate of
1,320 shares of Amended Series B Preferred Stock in payment
of $0.1 million in dividends payable on that date.
Item 4. Submission of Matters to a Vote of Security-
Holders
On June 30, 1998, the Company held an Annual Meeting of
Shareholders in The Monterey Room of the Hyatt Regency
Houston at George Bush Intercontinental Airport, 15747 JFK
Boulevard, Houston. The matters put to a vote of the
meeting were:
1. Election of three Class II directors to the Company's
Board of Directors;
2. Adoption of amendments to the Company's Amended and
Restated Certificate of Incorporation (A) to eliminate the
requirement for (i) holders of Common Stock to vote on
amendments affecting outstanding Preferred Stock and (ii)
stockholders to ratify Bylaw amendments adopted by the Board
of Directors and (B) to require the approval of at least a
majority of the outstanding shares of Amended Series A
Preferred Stock for the creation of a class of Preferred
Stock equal in preference to the Amended Series A Preferred
Stock.
3. Ratification of amendments to the Company's Amended and
Restated Bylaws (i) to change the month in which the Company
holds it Annual Meeting of Shareholders from May to June and
(ii) to eliminate the requirement for stockholders
ratification of Bylaw amendments adopted by the Board.
The Company's Board of Directors is divided into three
Classes, with each Class consisting of at least one
executive director and at least one non-executive director
serving three-year terms. Messrs. Marsden W. Miller, Jr.,
R. Thomas Fetters, Jr. and Francis J. Reinhardt, Jr. were
elected as Class II directors at this meeting. A quorum was
present, and a total of not fewer than 20,605,017 votes,
constituting a plurality of all the votes cast at the
meeting by holders of shares present in person or by proxy,
were voted for each of the named persons elected as Class II
directors of the Company. Each such Class II director shall
serve until the Annual Meeting of Shareholders to be held in
2001.
Class III directors are Messrs. John T. Chandler, Fred
Hofheinz and Peter F. Ross, whose terms of office expire at
the 1999 Annual Meeting of Shareholders. Class I directors
are Messrs. Arthur W. Hummel, Jr., Michael Palliser and
Benjamin B. Blanchet.
With respect to Proposal 2 relating to the approval and
adoption of amendments to the Company's Amended and Restated
Certificate of Incorporation, an insufficient number of
votes were cast in favor of the proposal.
With respect to Proposal 3 to ratify amendments to the
Company's Amended and Restated Bylaws, an insufficient
number of votes were cast in favor of the proposal.
Item 5. Other Information.
Effective June 29, 1998, the Securities and Exchange
Commission adopted changes to Rule 14a-4(c)(1) of the Proxy
Rules which now limits a registrant's use of its
discretionary proxy voting authority at annual meetings with
respect to matters raised at the meeting (without discussion
in the proxy statement), only to those matters where a
proponent had failed to notify the registrant of the matter
at least 45 days prior to the date on which the registrant
first mailed the prior year's proxy statement (or a date
specified by an advance notice provision in the registrant's
charter or by laws). Such 45-day deadline for the Company's
annual meeting next year will be April 18, 1999.
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
There were no reports on Form 8-K filed during the
period covered by this report.
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/ Steven B. Toon
By: __________________________
Steven B. Toon
Chief Financial Officer
Date: August 14, 1998
INDEX TO EXHIBITS
(a) Exhibits required by Item 601 of Regulation S-K.
2.0 Not applicable
3(i) Articles of incorporation
3.1 Amended and Restated Certificate of Incorporation of
the Company dated December 17, 1997. (R)(i)
3(ii) Amended and Restated Bylaws of the Company as
currently in effect. (A)(i)
4.0 Instruments defining rights of security holders,
including indentures:
4.1 Forms of Common Stock Certificates. (R)(ii)
4.2 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. (D)(i)
4.3 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. (E)
4.4 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. (D)(ii)
4.5 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. (D)(iii)
4.6 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. (C)(i)
4.7 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. (C)(ii)
4.8 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.
(C)(iii)
4.9 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. (C)(iv)
4.10 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. (C)(v)
4.11 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 (J)(i)
4.12 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 (J)(ii)
4.13 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 (J)(iii)
4.14 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. (M)(i)
4.15 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. (M)(ii)
4.16 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. (M)(iii)
4.17 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 (N)(i)
4.18 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. (N)(ii)
4.19 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 (N)(iii)
4.20 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 (N)(iv)
4.21 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"). (O)(i)
4.22 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"). (O)(ii)
4.23 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. (O)(iii)
4.24 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. (O)(iv)
4.25 Form of Designation of Amended Series A Preferred
Stock dated May 19, 1997. (O)(v)
4.26 Form of Amended Series A Preferred Stock
certificate. (O)(vi)
4.27 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.
(O)(vii)
4.28 Form of Global Unit Certificate for 293,765 Units
consisting of Amended Series A Preferred Stock and
Warrants to Purchase Shares of Common Stock. (O)(viii)
4.29 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.
(O)(ix)
4.30 Form of Stock Purchase Agreement dated effective as
of October 1, 1997, between the Company and William
Wang, whereby the Company issued 800,000 shares of
Common Stock to Mr. Wang, as partial compensation
pursuant to a Consulting Agreement. (Q)(i)
4.31 Form of Stock Purchase Warrants dated effective as
of February 20, 1997, issued to Mr. Patrick B. Collins
with respect to 200,000 warrants to purchase shares of
Common Stock of the Company at an exercise price of
$0.25 per share, issued as partial compensation
pursuant to a Consulting Agreement. (Q)(ii)
4.32 Certificate of Amendment to the Certificate of
Designation of Series F, Cumulative Convertible
Preferred Stock dated January 6, 1998. (R)(iii)
4.33 Form of Stock Purchase Warrants dated January 16,
1998, issued to Arthur Rosenbloom (6,389), Abby Leigh
(12,600) and Mitch Leigh (134,343) to purchase shares
of Common Stock of the Company at an exercise price of
$0.15 per share, on or before December 31, 2001.
(R)(iv)
4.34 Certificate of Designation of Amended Series B,
Cumulative Convertible Preferred Stock dated March 4,
1998. (R)(v)
4.35 Correction to Certificate of Designation of Amended
Series B, Cumulative Convertible Preferred Stock dated
March 5, 1998. (R)(vi)
4.36 Second Correction to Certificate of Designation of
Amended Series B Preferred Stock dated March 19, 1998.
(R)(vii)
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. (B)
10.2 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. (D)(iv)
10.3 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. (D)(v)
10.4 Consulting agreement between the Company and Sir
Michael Palliser dated April 1, 1994. (F)(i)
10.5 Consulting agreement between the Company and Mr.
Arthur W. Hummel, Jr. dated April 1, 1994. (F)(ii)
10.6 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. (G)(i)
10.7 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. (G)(ii)
10.8 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. (H)(i)
10.9 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. (H)(ii)
10.10 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. (H)(iii)
10.11 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.
(H)(iv)
10.12 Letter of Intent dated July 17, 1995 between
CNPC United Lube Oil Corporation and XCL Ltd. for
discussion of further projects. (H)(v)
10.13 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. (I)(i)
10.14 Memorandum of Understanding dated December 14,
1995, between XCL Ltd. and China National
Administration of Coal Geology. (J)(iv)
10.15 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. (J)(v)
10.16 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. (J)(vi)
10.17 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. (J)(vii)
10.18 Copy of Limited Waiver between the Company
and Internationale Nederlanden (U.S.) Capital
Corporation dated April 3, 1996. (J)(viii)
10.19 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. (K)
10.20 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.
(L)(i)
10.21 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. (N)(v)
10.22 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
(N)(vi)
10.23 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. (N)(vii)
10.24 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.
(N)(viii)
10.25 Amendment No. 1 to the May 1, 1995 Agreement with
Apache Corp. dated April 3, 1997, effective December
13, 1996. (N)(ix)
10.26 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. (N)(x)
10.27 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 (N)(xi)
10.28 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.
(N)(xii)
10.29 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. (N)(xiii)
10.30 Form of Indenture dated as of May 20, 1997,
between the Company, as Issuer and Fleet National Bank,
as Trustee ("Indenture"). (O)(x)
10.31 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). (O)(xi)
10.32 Form of Pledge Agreement dated as of May 20, 1997,
between the Company and Fleet National Bank, as Trustee
(Exhibit C to the Indenture). (O)(xii)
10.33 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). (O)(xiii)
10.34 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).
(O)(xiv)
10.35 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). (O)(xv)
10.36 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). (O)(xvi)
10.37 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.
(O)(xvii)
10.38 Form of Restated Forbearance Agreement dated
effective as of May 20, 1997, between the Company, XCL-
Texas, Inc. and ING (U.S.) Capital Corporation.
(O)(xviii)
10.39 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. (P)(i)
10.40 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. (P)(ii)
10.41 Form of Consulting Agreement dated February 20,
1997, between the Company and Mr. Patrick B. Collins,
whereby Mr. Collins performs certain accounting
advisory services. (Q)(ii)
10.42 Form of Consulting Agreement dated effective as of
June 1, 1997, between the Company and Mr. R. Thomas
Fetters, Jr., a director of the Company, whereby Mr.
Fetters performs certain geological consulting
services. (Q)(iii)
10.43 Form of Agreement dated October 1, 1997, between
the Company and Mr. William Wang, whereby Mr. Wang
performs certain consulting services with respect to
its investments in China. (Q)(iv)
10.44 Form of Services Agreement dated August 1, 1997,
between the Company and Mr. Benjamin B. Blanchet, an
officer of the Company. (Q)(v)
10.45 Form of Promissory Note dated August 1, 1997, in a
principal amount of $100,000, made by Mr. Benjamin B.
Blanchet in favor of the Company. (Q)(vi)
11. Not applicable.
15 Not applicable.
18. Not applicable.
19. Not applicable.
22. Not applicable.
23. Not applicable.
24. Not applicable.
27. Financial Data Schedule *
99.1 Glossary of Terms *
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* Filed herewith.
(A) Incorporated by reference to the Registration
Statement on Form 8-B filed on July 28, 1988, where it
appears as Exhibits 3(c).
(B) Incorporated by reference to a Registration
Statement on Form S-3 (File No. 33-68552) where it
appears as Exhibit 10.1.
(C) 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) Exhibit
4.29; (ii) Exhibit 4.30; and (iii) through (v) Exhibits
4.34 through 4.36, respectively.
(D) Incorporated by reference to Amendment No. 1 to
Annual Report on Form 10-K filed April 15, 1994, where
it appears as: (i) Exhibit 4.32; (ii) Exhibit 4.36;
(iii) Exhibit 4.37; (iv) through (v) Exhibit 10.41
through Exhibit 10.47, respectively; and (v) Exhibit
10.49.
(E) 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.
(F) 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 (ii) Exhibits 10.22 through
10.23, respectively.
(G) 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
10.26; and (ii) Exhibit 10.28.
(H) 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 (v)
Exhibits 10.29 through 10.33, respectively.
(I) 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
Exhibit 10.35.
(J) 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 (iii)
Exhibits 4.28 through 4.30, respectively; and
(iv) Exhibit 10.31 and (v) through (vii) Exhibits
10.33 through 10.36, respectively.
(K) 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.
(L) 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 Exhibit 10.38.
(M) 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 (iii) Exhibits 4.32 through 4.34.
(N) 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 (iii)
Exhibits 4.35 through 4.38; (iv) Exhibit 4.40; (v)
through (x) Exhibits 10.39 through 10.43, and (xi)
through (xiii) Exhibits 10.47 through 10.49.
(O) 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.
(P) Incorporated by reference to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed
August 14, 1997, where it appears as (i) and (ii)
Exhibits 10.60 and 10.61.
(Q) Incorporated by reference to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997,
filed November 14, 1997, where it appears as (i)
Exhibit 4.52; and (ii) through (vi) Exhibits 10.61
through 10.66.
(R) Incorporated by reference to Annual Report on Form
10-K for the year ended December 31, 1997, filed April
15, 1998, where it appears as (i) Exhibit 3.1, (ii)
Exhibit 4.1, and (iii) through (vii) Exhibits 4.32
through 4.36.