SUPPLEMENT TO PROSPECTUS
DATED FEBRUARY 14, 1997
[GRAPHIC OMITTED]
The Date of this Supplement is February 27, 1997
Cover Page. The offering price per share is changed to $4.00 per share and the
Underwriting Discount has been reduced from 7% to 6.8%. Per share and offering
total changes are as follows:
Proceeds to the
Price to Underwriting Proceeds to Selling
Public Discount (1) Company(2) Shareholders
- ------------------------------- ----------------------- ---------------------- --------------------- -------------------
Per Share ......... $ 4.00 $ .272 $ 3.728 $ 3.728
- ------------------------------- ----------------------- ---------------------- --------------------- -------------------
Total Minimum ........... $ 25,209,916 $ 1,714,274 $ 16,776,000 $ 6,719,642
Total Maximum .......... $ 33,613,220 $ 2,285,699 $ 22,368,000 $ 8,959,521
- ------------------------------- ----------------------- ---------------------- --------------------- -------------------
(1) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(2) Before deducting expenses payable by the Company, estimated to be $ 349,921.
--------------------
"Prospectus Summary - The Offering" - footnote (b) on page 4. The Underwriter
has relinquished its right to receive warrants in connection with the Offering.
Footnote (b) is restated as follows:
(b) Excludes 289,365 Common Shares issuable upon the exercise of
outstanding warrants and 2,060,606 issuable upon the conversion of the
Tranche A Convertible Subordinated Notes.
"Risk Factors - Future Issuance of Shares" - page 8. The fifth sentence,
pertaining to the Underwriter's warrants, is deleted.
"Use of Proceeds" and "Capitalization" - pages 9 - 11. The net proceeds to be
received from the sale of all of the 6,000,000 Common Shares offered by the
Company will be $22,018,000. The tables in each of these
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sections are restated as follows to reflect the revised Public Offering Price, a
modest reduction in Underwriting Discount and the elimination of the
Underwriter's Warrants.
USE OF PROCEEDS
Maximum Minimum
Approximate Approximate
Dollar Approximate Dollar Approximate
Amount (a) Percentage Amount (a) Percentage
Repay Tranche B Bridge Loan (b) $ 8,500,000 38.6% $ 8,500,000 51.7%
Repay 1993 Subordinated Notes (c) 5,000,000 22.7% -0- 0.0%
Development of Properties (d) 8,518,000 38.7% 7,926,000 48.3%
General Corporate Purposes (e) -0- 0.0% - 0- 0.0%
----------------------------- -------------------------
$ 22,018,000 100.0% $ 16,426,000 100.0%
(Footnotes not changed)
CAPITALIZATION
Minimum Maximum
November 30, 1996 November 30, 1996
(amounts in thousands) (amounts in thousands)
Actual As Adjusted Actual As Adjusted
Long-term debt (less current maturities) $ 49,500 $ 41,000 $ 49,500 $ 36,000
Stockholders' Equity:
Preferred shares, $.01 par value,
5,000,000 shares authorized;
none issued or outstanding --- --- --- ---
Common Shares, $.01 par value,
40,000,000 shares authorized;
14,350,255 shares issued and
outstanding (18,850,255 and
20,350,255 as adjusted)(1) 144 189 144 204
Additional paid-in capital 31,490 47,871 31,490 53,448
Retained Earnings (deficit) (13,572) (13,572) (13,572) ( 13,572)
---------- ----------- --------- ------------
Total Stockholders' Equity 18,062 34,488 18,062 40,080
---------- ----------- ---------- ------------
Total capitalization $ 67,562 $ 75,488 $ 67,562 $ 76,080
========== ============ ========== =============
(1) Excludes 289,365 Common Shares issuable upon the exercise of outstanding warrants and 2,060,606 issuable
upon the conversion of the Tranche A. Convertible Subordinated Notes.
"Pro Forma Financial Information" - pages 12 to 18.
With respect to the Pro Forma Combined Balance Sheet as of September 30, 1996 on
page 13; and the related notes on page 16, the pro forma number of shares
outstanding has been changed from 17,576,061 to 17,971,500, along with the gross
proceeds from the Offering and the Underwriter's commission percentage.
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With respect to the Pro Forma Combined Statements of Income for the nine months
ended September 30, 1996 and year ended December 31, 1995 on pages 14 and 15 and
the related notes on pages 17 and 18, the pro forma additional weighted average
shares outstanding in connection with the prepayment of long-term debt has been
changed from 3,225,806 to 3,621,245. The pro forma combined primary loss per
share in 1996 did not change, the loss in 1995 changed from $.79 to $.77 per
share.
Properties - page 37. The last sentence of the first paragraph should be changed
to read as follows:
Such properties account for 95% of the aggregate SEC 10 Value of its properties.
West Delta Properties - page 39. The third sentence of the fourth paragraph
should be changed to read as follows:
The Company retained a 12 1/2% overriding royalty interest in that acreage
which it has elected to convert to a 15% overriding royalty interest at Payout.
This conversion election and reserve adjustments to the West Delta Properties
resulted in the Proved Reserves for the West Delta Properties, on page 37,
changing to 395,000 barrels of oil, 14.8 Bcf of gas and $41,586,000 of SEC 10
Value.
Proved Reserves and Estimated Future Net revenues from Proved Reserves - page
41. The table should be revised as follows:
Oil and liquids (Bbls):
Proved Developed Reserves...................... 1,867,000
Proved Undeveloped Reserves.................... 372,000
Total Proved Reserves.................. 2,239,000
Natural gas (Mcf):
Proved Developed Reserves...................... 38,984,000
Proved Undeveloped Reserves.................... 2,462,000
Total Proved Reserves.................. 41,446,000
(Footnotes not changed)
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The total Estimated future net revenues of Proved Developed Reserves should be
$139,115,000, with an SEC 10 Value of $106,917,000. The total Estimated future
net revenues of Total Proved Reserves should be $149,056,000, with an SEC 10
Value of $113,467,000. Corresponding changes should be made on pages 2, 5 and
27.
"Certain Relationships and Related Transactions" - page 54. The first paragraph
is restated as follows:
A. Theodore Stautberg, Jr., a director of the Company since 1993, is an
officer, director and beneficial shareholder of Triumph Securities Corporation,
which is providing certain services in connection with this Offering, and will
receive a portion of the Underwriting Discount equal to eight-tenths of one
percent (0.8%) of the Public Offering Price for each Common Share sold.
"Description of Capital Shares and Other Securities - Warrants" - pages 56 and
57. The third paragraph, regarding Underwriter's Warrants, is deleted.
"Underwriting" - pages 61 and 62. The fifth and sixth paragraphs are replaced by
the following paragraph to reflect the aforementioned reduction in Underwriting
Discount and the elimination of Underwriter's Warrants:
The Company has been advised by the Underwriter that it proposes to offer
the Common Shares directly to the public at the initial public offering price
per share set forth on the cover page of this Prospectus ( the "Public Offering
Price"). Upon the closing of the sale of any of the Common Shares, the Company
will receive the net proceeds therefrom after deducting a discount equal to six
and eight-tenths percent (6.8%) of the Public Offering Price for each Common
Share sold. The Underwriter has agreed to pay Triumph Securities Corporation
("Triumph") in connection with services provided in connection with the
Offering, an amount equal to eight tenths of one percent (0.8%) of the Public
Offering Price for each Common Share sold. A. Theodore Stautberg, Jr., a
director of the Company, is also an officer, director and beneficial shareholder
of Triumph.
"Shares Eligible for Future Sale" - page 63. The third sentence of the first
paragraph is restated as follows:
Following the consummation of the Offering, the Company will then have
17,059,444 Common Shares available for issuance at such times and upon such
terms as may be approved by the Company's Board of Directors.
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