SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 4, 1998
TEXOIL, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 0-12633 88-0177083
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
110 CYPRESS STATION DRIVE
SUITE 220
HOUSTON, TEXAS 77090
(Address of principal executive offices)
(281) 537-9920
(Issuer's telephone number)
(NOT APPLICABLE)
(Former name or former address, if changed sine last report)
ITEM 2. ACQUISITION OF OIL & GAS PROPERTIES
On May 4, 1998, Texoil, Inc. (the "Company"), through its wholly-owned
subsidiary Cliffwood Oil & Gas Corp. ("Cliffwood"), acquired all of the oil and
gas assets of the affiliated Cliffwood Acquisition - 1996 Limited Partnership
(the "Partnership). Cliffwood is the General Partner of the Partnership and
owned 10% of the Partnership. The purchase price was $4,430,000 cash and 898,000
shares of the Company's common stock to be issued. The properties include
working interests in seven producing fields located in Texas. A wholly-owned
subsidiary of the Company is the operator of all the acquired properties. The
Company financed the cash portion of the acquisition with proceeds from its
pre-existing credit facility with a bank.
Proved developed reserves associated with the acquisition have been
estimated, by an independent petroleum engineering firm, to be 1,260,700 Bbls of
oil and 1,962,100 Mcf of gas, net to Cliffwood. Additional secondary recovery
operations and certain development and exploratory opportunities may result in
additional proved reserves.
Concurrent with the acquisition of properties, the Company and Cliffwood
entered into certain agreements with EnCap Equity 1996 Limited Partnership and
Energy Capital Investments Company PLC (both referred to herein as "Limited
Partners"), which amended and restated various terms of the Partnership
Agreement, including but not limited to, (1) rename the Partnership the
CLIFFWOOD ACQUISITION - 1998 LIMITED PARTNERSHIP, (2) increase available
Partnership capital to $15.0 million, (3) increase Cliffwood's initial General
Partnership ownership to 15%, (4) commit 30% of the Company's future
acquisitions to the Partnership (subject to Partnership capital limitations),
(5) allow the Partnership to participate in exploratory and/or development
drilling activities and (6) modify various terms related to operating and
development expenditures. Pursuant to the terms of the Partnership Agreement,
the General Partner's share of Partnership profits and ownership increases
significantly, predicated upon a return of capital, with a specified rate of
return to Limited Partners. The increased capital to the Partnership is expected
to have an indirect benefit to the Company because the Partnership intends to
co-invest with the Company.
In addition, Limited Partners surrendered common stock warrants for
2,022,000 shares in exchange for 1,647,225 shares of common stock to be issued.
The Partnership and its limited Partners received certain registration rights in
connection with the stock to be issued in this transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
*(a) Financial statements of business acquired.
*(b) Pro forma financial information.
(c) Exhibits
2.1 Acquisition and Distribution Agreement dated May 4, 1998, by and between
Texoil, Inc., Cliffwood Oil & Gas Corp., and Cliffwood Acquisition -
1996 Limited Partnership.
2.2 May 1998 Agreement in Respect of Agreement of Limited Partnership dated
May 4, 1998, by and among Cliffwood Oil & Gas Corp., EnCap Equity 1996
Limited Partnership and Energy Capital Investment Company PLC.
2.3 Registration Rights Agreement dated May 4, 1998, by and among Texoil,
Inc., EnCap Equity 1996 Limited Partnership and Energy Capital
Investment Company PLC.
2.4 Assignment of General Partner Interest dated May 4, 1998, by and between
Cliffwood Energy Company and Cliffwood Oil & Gas Corp.
2.5 First Amended and Restated Agreement of Limited Partnership dated May 4,
1998, by and among Cliffwood Oil & Gas Corp., EnCap Equity 1996 Limited
Partnership and Energy Capital Investment Company PLC.
2.6 Co-Sale Agreement dated May 4, 1998, by and among Cliffwood Oil & Gas
Corp., Cliffwood Acquisition 1998 Limited Partnership, EnCap Equity 1996
Limited Partnership and Energy Capital Investment Company PLC.
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*At the time of this report the required financial statements for the acquired
properties could not be provided, therefore, such required financial statements
will be filed by amendment when available.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
DATE: May 12, 1998 TEXOIL, INC.
By: /s/ FRANK A. LODZINSKI
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FRANK A. LODZINSKI
President and
Principal Financial Officer