SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
November 27, 1996
Abraxas Petroleum Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-19118 74-2584033
(Commission File Number) (I.R.S. Employer Identification Number)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(Address of principal executive offices)
Registrant's telephone number, including area code:
(210) 490-4788
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
(A) On November 14, 1996, Canadian Abraxas Petroleum Limited ("Canadian
Abraxas"), a wholly-owned subsidiary of Abraxas Petroleum Corporation,
("Abraxas"), acquired 100% of the capital stock of CGGS, Canadian Gas Gathering
Systems Inc. ("CGGS"). CGGS owns producing oil and gas properties in western
Canada (the "CGGS Properties") and interests ranging from 10% to 100% in 197
miles of natural gas gathering systems and 11 natural gas processing plants or
compression facilities, four of which are operated by CGGS (the "CGGS Plants").
The purchase price for the stock was $94.7 million which included approximately
$11.0 million for CGGS' working capital. Funding for the acquisition was
provided by proceeds from Abraxas' and Canadian Abraxas' recent senior note
offering. (See item 5). The CGGS Properties consist of 154,968 gross acres
(86,327 net acres) and 120 gross wells (68.8 net wells), 48 of which will be
operated by the Company. As of September 1, 1996, the CGGS Properties had total
proved reserves of 10,821 MBOE (91.8% natural gas) with aggregate PV-10 of $46.4
million, 86.3% of which is attributable to proved developed reserves. The CGGS
Plants had aggregate net natural gas processing capacity of 98.3 MMcf per day at
September 1, 1996.
(B) On November 14, 1996 Abraxas acquired a 75% partnership interest in
Portilla - 1996 L.P. (the "Partnership") for $27.5 million including the
repayment of certain indebtedness. The Company previously owned the other 25%
interest in the Partnership. The Partnership owned a 100% working interest in
the Portilla Field, a 100% interest in a natural gas processing plant located at
the Portilla Field, located in the Texas gulf coast region and a 12% working
interest in the Happy Field, located in the Permian Basin of west Texas. Funding
for the acquisition was provided by proceeds from Abraxas' and Canadian Abraxas'
recent senior note offering. (See item 5). Portilla and Happy consist of 1,405
gross acres (1,115 net acres) and 78 gross wells (52 net wells), 61 of which are
operated by the Company. As of June 30, 1996, Portilla and Happy had total
proved reserves of 4,314 MBOE (18.4% natural gas) with an aggregate PV-10 of
$30.2 million, 99.8% of which was attributable to proved developed reserves. The
Portilla Plant had natural gas processing capacity of approximately 20.0 MMcf
per day at June 30, 1996.
Item 5. OTHER EVENTS
A. SENIOR NOTE OFFERING
SALE OF NOTES. On November 14, 1996, Abraxas and Canadian Abraxas
consummated the offering of $215 million of 11.5% senior notes due 2004 (the
"Notes").
Interest on the Notes will accrue from their date of original issuance (the
"Issue Date") and will be payable semi-annually in arrears on May 1 and November
1 of each year, commencing on May 1, 1997, at the rate of 11.5% per annum. The
Notes will be redeemable, in whole or in part, at the option of Abraxas and
Canadian Abraxas, on or after November 1, 2000, at the redemption prices set
forth below, plus accrued and unpaid interest to the date of redemption, if
redeemed during the 12-month period commencing on November 1 of the years set
forth below:
Year Percentage
2000 105.75%
2001 102.875
2002 and thereafter 100.00%
In addition, at any time on or prior to November 1, 1999, Abraxas and Canadian
Abraxas may, at their option, redeem up to 35% of the aggregate principal amount
of the Notes originally issued with the net cash proceeds of one or more equity
offerings, at a redemption price equal to 111.5% of the aggregate principal
amount of the Notes to be redeemed, plus accrued and unpaid interest to the date
of redemption; provided, however, that, after giving effect to any such
redemption, at least $139.75 million aggregate principal amount of Notes remains
outstanding.
The Notes are general unsecured obligations of Abraxas and Canadian
Abraxas and will rank pari passu in right of payment to all existing and future
unsubordinated indebtedness of Abraxas and Canadian Abraxas. The Notes rank
senior in right of payment to all future subordinated indebtedness of Abraxas
and Canadian Abraxas. The Notes are, however, effectively subordinated to
secured indebtedness of Abraxas and Canadian Abraxas to the extent of the value
of the assets securing such indebtedness.
The Notes are unconditionally guaranteed, jointly and severally, by
certain of Abraxas' and Canadian Abraxas' future subsidiaries (the "Subsidiary
Guarantors"). The guarantees are general unsecured obligations of the Subsidiary
Guarantors and rank pari passu in right of payment to all unsubordinated
indebtedness of the Subsidiary Guarantors and senior in right of payment to all
subordinated indebtedness of the Subsidiary Guarantors. The Guarantees are
effectively subordinated to secured indebtedness of the Subsidiary Guarantors to
the extent of the value of the assets securing such indebtedness. As of the date
of this Report, Abraxas, Canadian Abraxas and the Subsidiary Guarantors have no
secured indebtedness outstanding.
Upon a Change of Control (as defined in the Indenture governing the
Notes), each holder of the Notes will have the right to require Abraxas and
Canadian Abraxas to repurchase all or a portion of such holder's Notes at a
redemption price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest to the date of repurchase. In addition, Abraxas and Canadian
Abraxas will be obligated to offer to repurchase the Notes at 100% of the
principal amount thereof plus accrued and unpaid interest to the date of
repurchase in the event of certain asset sales.
USE OF PROCEEDS. The net proceeds to Abraxas and Canadian Abraxas from the
offering of the Notes were approximately $207.0 million after deducting
underwriting discounts and estimated offering expenses payable by Abraxas and
Canadian Abraxas.
Abraxas and Canadian Abraxas used the net proceeds to (1) repay all amounts
outstanding under its credit agreement dated September 30, 1996 with Bankers
Trust Company ("BT") and other lenders in the amount of $85.0 million, (2)
acquire the outstanding capital stock of CGGS for $94.7 million, (3) acquire the
Partnership Interest in Portilla - 1996 L.P. and repay certain indebtedness for
$27.5 million and (4) provide working capital for general corporate purposes
including future acquisitions and development of producing properties.
New Credit Facility. In connection with the consummation of the offering
of the Notes, Abraxas entered into an Amended and Restated Credit Agreement with
Bankers Trust Company and ING (U.S.) Capital Corporation (the "New Credit
Facility". The New Credit Facility provides for a $40.0 million revolving
facility of which $20.0 million is initially available and is secured by
substantially all of the U.S. assets of Abraxas.
B. EQUITY ISSUES
In a November 1995 private equity placement, the Company sold 1,330,000 units,
each consisting of one share of common stock and one contingent value right
("CVR"). Under the terms of the placement, each CVR holder had the right to
acquire additional shares of common stock at November 17, 1996 under certain
circumstances related to the current trading value of the Company's stock. The
Company had the option to extend the issue date for any additional shares based
on the stock price until November 1997. On November 15, 1996 the Company
notified the CVR owners that it had exercised its option and extended any CVR
related share issue date until November 17, 1997 and correspondingly the target
value of share price had been increased from $10 to $12.50 per share.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) Financial Statements of Business Acquired.
It is impracticable to provide the required financial statements for the
acquisitions described above at the time this report is filed. The financial
statements will be filed as soon as practicable, but no later than 60 days after
this report must be filed.
(C) Exhibits.
The following exhibits are filed as part of this report:
NUMBER DOCUMENT
4.1 Indenture dated November 14, 1996 by
and among Abraxas Petroleum
Corporation ("Abraxas"), Canadian
Abraxas Petroleum Limited ("Canadian
Abraxas")and IBJ Schroeder Bank and
Trust Company.
10.1 Purchase Agreement dated November 14,
1996 by and among Abraxas, Canadian
Abraxas, BT Securities Corporation,
Jefferies & Company, Inc. and ING
Baring (U.S.) Securities Corporation
(collectively, the "Initial
Purchasers").
10.2 Registration Rights Agreement dated
November 14, 1996 by and among
Abraxas, Canadian Abraxas, and the
Initial Purchasers.
10.3 Share Sale Agreement dated October
29, 1996 by and among Abraxas,
Canadian Abraxas, CGGS Canadian Gas
Gathering Systems Inc. ("CGGS") and
the shareholders of CGGS.
10.4 Purchase and Sale Agreement dated
September 18, 1996 by and among
Abraxas, ACCO, LLC, Massachusetts Bay
Transportation Authority Retirement
Fund, Metropolitan Life Insurance
Company Separate Account No. 175, The
General Mills Inc. Master Trust:
Pooled Real Estate Fund and State
Street Research Energy, Inc.
10.5 Amended and Restated Credit Agreement
dated November 14, 1996 by and among
Abraxas, Bankers Trust Company, ING
(U.S.) Capital Corporation and the
lenders named therein.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ABRAXAS PETROLEUM CORPORATION
By: /s/ Chris Williford
Chris Williford
Executive Vice President, Chief
Financial Officer and Treasurer
Dated: November 27, 1996