U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ______ to _______
Commission File No. 001-14745
3TEC ENERGY CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 63-1081013
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
700 MILAM, SUITE 1100
HOUSTON, TX 77002
(Address of Principal Executive Offices)
(713) 821-7100
(Issuer's telephone number)
N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of Exchange Act 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 [_]
Number of shares outstanding of each of the Registrant's classes of common
stock, as of the latest practicable date:
Common stock, $0.02 par value
15,988,400 shares as of September 30, 2001
Transitional Small Business Disclosure Format (check one)
Yes [_] No [X]
3TEC ENERGY CORPORATION AND SUBSIDIARIES
INDEX
Page
No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets-
September 30, 2001 (Unaudited) and December 31, 2000 (Audited)...................... 1
Consolidated Statements of Operations (Unaudited)-
Three and nine months ended September 30, 2001 and 2000............................. 2
Consolidated Statements of Cash Flows (Unaudited)-
Nine months ended September 30, 2001 and 2000....................................... 3
Notes to Consolidated Financial Statements (Unaudited)................................ 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................................... 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................................................... 12
PART I. CONSOLIDATED FINANCIAL INFORMATION
- -------------------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
3TEC ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
ASSETS (UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash and cash equivalents......................... $ 19,541,986 $ 4,436,497
Accounts receivable............................... 23,313,494 26,137,738
Other current assets.............................. 1,906,141 5,389,848
------------ ------------
Total current assets.......................... 44,761,621 35,964,083
PROPERTY (AT COST)
Oil and gas-successful efforts method............. 382,017,317 270,277,796
Other............................................. 3,692,556 2,030,310
------------ ------------
385,709,873 272,308,106
Accumulated depreciation, depletion and amortization (60,438,442) (55,063,670)
------------ ------------
Net Properties and Equipment........................ 325,271,431 217,244,436
------------ ------------
OTHER ASSETS........................................ 1,397,646 1,555,538
------------ ------------
TOTAL ASSETS........................................ $371,430,698 $254,764,057
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.................................. $ 24,900,529 $ 10,746,140
Accrued liabilities............................... 2,033,758 2,191,826
Series C Preferred stock redemption payable....... 2,697,927 2,855,521
Income taxes payable.............................. 1,197,728 4,461,928
Other current liabilities......................... 1,018,460 467,152
------------ ------------
Total current liabilities........................... 31,848,402 20,722,567
------------ ------------
LONG-TERM DEBT...................................... 95,000,000 63,000,000
SENIOR SUBORDINATED CONVERTIBLE NOTES............... 2,373,844 13,223,844
DEFERRED INCOME TAXES............................... 47,494,508 6,770,981
OTHER LIABILITIES................................... -- 58,424
MINORITY INTEREST................................... 1,842,137 1,393,578
STOCKHOLDERS' EQUITY
Preferred stock, $0.02 par, 20,000,000 shares
authorized, 266,667 designated Series B, 2,300,000
shares designated Series C and 725,167 shares
designated Series D, none other design............ -- --
Convertible preferred stock Series B, $7.50 stated
value, 266,667 shares issued and outstanding.
$2,000,000 aggregate liquidation preference....... 3,627,000 3,627,000
Convertible preferred stock Series D, $24.00 stated
value, 615,633 and 621,930 shares issued and
outstanding at September 30, 2001 and December 31,
2000, respectively. $14,775,192 aggregate
liquidation preference............................ 7,495,485 7,571,553
Common stock, $.02 par value, 60,000,000 shares
authorized, 15,988,400 and 14,687,906 shares issued
at September 30, 2001 and December 31, 2000,
respectively...................................... 319,768 293,758
Additional paid-in capital........................ 147,959,705 136,382,775
Retained earnings................................. 34,518,689 2,768,417
Treasury stock; 69,807 shares at September 30,
2001 and December 31, 2000, respectively......... (1,048,840) (1,048,840)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY.......................... 192,871,807 149,594,663
------------ ------------
COMMITMENTS AND CONTINGENCIES....................... -- --
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......... $371,430,698 $254,764,057
============ ============
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1
3TEC ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ----------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
2001 2000 2001 2000
----------- ----------- ------------ -----------
REVENUES
Oil, natural gas and plant income............ $21,266,834 $26,740,844 $106,880,938 $66,001,245
Gain (Loss) on sale of properties............ (3,416,552) 315,175 3,419,324 341,856
Other........................................ 145,012 251,545 597,448 703,987
----------- ----------- ------------ -----------
TOTAL REVENUES................................. 17,995,294 27,307,564 110,897,710 67,047,088
----------- ----------- ------------ -----------
EXPENSES
Production
Lease Operations........................... 4,027,187 3,483,393 13,170,100 11,305,417
Production, severance and ad valorem tax... 1,363,748 1,627,371 6,883,243 4,446,304
Gathering, transportation and other........ 973,259 651,690 2,899,816 1,406,591
Geological and geophysical................... 175,806 38,482 530,331 201,898
Dry hole..................................... 1,667,389 - 1,681,961 29,261
General and administrative................... 1,809,723 1,402,038 5,158,311 4,466,659
Interest..................................... 1,544,732 1,683,960 5,619,066 5,953,385
Depreciation, depletion and amortization..... 7,199,263 4,568,645 21,746,107 13,116,023
----------- ----------- ------------ -----------
TOTAL EXPENSES................................. 18,761,107 13,455,579 57,688,935 40,925,539
----------- ----------- ------------ -----------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
MINORITY INTEREST AND DIVIDENDS
TO PREFERRED STOCKHOLDERS.................... (765,813) 13,851,985 53,208,775 26,121,550
Minority Interest.............................. 147,925 86,171 448,559 188,572
Income tax expense............................. 1,699 4,680,377 20,448,079 8,817,212
----------- ----------- ------------ -----------
NET INCOME (LOSS).............................. (915,437) 9,085,437 32,312,137 17,115,766
Dividends to preferred stockholders............ 187,327 763,326 561,865 1,345,894
----------- ----------- ------------ -----------
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON STOCKHOLDERS.......................... $(1,102,764) $ 8,322,111 $ 31,750,272 $15,769,872
=========== =========== ============ ===========
NET INCOME (LOSS) PER COMMON SHARE
BASIC........................................ $ (.07) $ .58 $ 2.15 $ 1.76
=========== =========== ============ ===========
DILUTED...................................... $ (.07) $ .50 $ 1.72 $ 1.39
=========== =========== ============ ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC........................................ 15,134,704 14,439,232 14,790,701 8,980,318
=========== =========== ============ ===========
DILUTED...................................... 15,134,704 18,749,552 19,071,953 12,696,971
=========== =========== ============ ===========
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
2
3TEC ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
SEPTEMBER 30
----------------------------
(UNAUDITED) (UNAUDITED)
2001 2000
------------ ------------
OPERATING ACTIVITIES
Net income.......................................................................... $ 32,312,137 $ 17,115,766
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization.......................................... 21,202,670 12,497,139
Amortization of debt issue costs.................................................. 543,437 618,884
Dry hole costs.................................................................... 1,681,961 29,261
Gain on sale of properties........................................................ (3,419,324) (341,856)
Deferred income taxes............................................................. 13,157,643 8,115,155
Minority interest................................................................. 448,559 188,572
Other Changes..................................................................... 155,150 498,706
------------ ------------
Cash Flow from Operations before changes in current assets and liabilities.......... 66,082,233 38,721,627
Changes in current assets and liabilities net of acquisition effects:
Accounts receivable and other current assets..................................... 7,435,236 (12,601,526)
Accounts payable, accrued liabilities and other current liabilities.............. 6,978,598 1,018,601
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................................... 80,496,067 27,138,702
INVESTING ACTIVITIES
Proceeds from sales of properties................................................. 38,080,585 5,024,612
Acquisition of Magellan Exploration LLC, net of cash acquired..................... - (269,937)
Acquisition of Classic Resources Inc., net of cash acquired....................... (58,670,104) -
Acquisition of oil and gas properties............................................. (18,510,859) (55,442,670)
Development of oil and gas properties............................................. (56,645,600) (14,106,303)
Additions to other assets......................................................... (1,978,195) (568,730)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES............................................... (97,724,173) (65,363,028)
FINANCING ACTIVITIES
Proceeds from long term debt...................................................... 104,000,000 58,100,000
Principal payments on long term debt.............................................. (72,000,000) (90,600,000)
Proceeds from issuance of common stock............................................ - 68,115,052
Proceeds from exercise of stock options and warrants.............................. 521,722 -
Preferred stock dividends......................................................... (188,127) (1,249,068)
Treasury stock purchase - Alabama dissenters...................................... - 137,878
Debt, common stock and preferred stock issue and registration costs............... - (1,409,803)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES........................................... 32,333,595 33,094,059
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................................... 15,105,489 (5,130,267)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................................... 4,436,497 6,141,153
------------ ------------
CASH AND CASH EQUIVALENTS AT ENDING OF PERIOD....................................... $ 19,541,986 $ 1,010,886
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest.......................................................................... $ 5,615,003 $ 6,153,687
============ ============
Income taxes...................................................................... $ 10,553,538 $ -
============ ============
Non-cash investing and financing activities:
Preferred dividends paid-in-kind.................................................. $ - $ 118,095
------------ ------------
Preferred dividends accrued but not paid.......................................... $ 373,738 $ 97,014
============ ============
Common stock and warrants issued in acquisition of Magellan Exploration LLC....... $ - $ 10,572,935
============ ============
Preferred stock issued in acquisition of Magellan Exploration LLC................. $ - $ 7,453,457
============ ============
Deferred taxes recorded in acquisition of Classic Resources Inc................... $ 27,565,884 $ -
============ ============
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
3
3TEC ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) INTERIM FINANCIAL STATEMENTS
In management's opinion, the accompanying consolidated financial statements
contain all adjustments (consisting primarily of normal recurring adjustments)
necessary to present fairly the consolidated financial position of the Company
as of September 30, 2001 and the consolidated results of operations and
consolidated cash flows for the periods ended September 30, 2001 and 2000.
These consolidated financial statements should be read in conjunction with the
Company's financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2000. The results
of operations for the nine months ended September 30, 2001, are not necessarily
indicative of the results which may be expected for any other interim period or
for the entire fiscal year ending December 31, 2001.
(2) RECLASSIFICATIONS
Certain reclassifications of prior period amounts have been made to conform to
the current presentation.
(3) EARNINGS PER SHARE
Basic earnings and loss per common share are based on the weighted average
shares outstanding without any dilutive effects considered. Diluted earnings
and loss per share reflect dilution from all potential common shares, including
options, warrants and convertible preferred stock and convertible notes.
Basic and diluted earnings per share for the nine month period ended September
30, 2001 and 2000 determined as follows (in thousands):
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 2001 SEPTEMBER 30, 2000
------------------- ------------------
Basic net income attributable to common stockholders................... $31,750 $15,770
Plus preferred stock dividends......................................... 562 1,346
Plus interest expense (net of tax) on subordinated convertible notes... 494 588
------- -------
Fully diluted net income attributable to common stockholders........... $32,806 $17,704
======= =======
OUTSTANDING OUTSTANDING
SHARES SHARES
------------------- ------------------
Basic shares outstanding (weighted average shares)..................... 14,791 8,980
Plus potentially dilutive securities:
Dilutive options and warrants applying treasury stock method........... 2,215 1,242
Shares from conversion of subordinated convertible notes............... 1,314 1,469
Shares from conversion of Series B preferred stock..................... 131 91
Shares from conversion of Series C preferred stock..................... - 370
Shares from conversion of Series D preferred stock..................... 621 544
------- -------
Fully diluted shares outstanding (weighted average shares)............. 19,072 12,696
======= =======
(4) ACQUISITIONS
On January 30, 2001, the Company acquired 100% of the issued and outstanding
stock of Classic Resources Inc. ("Classic") for cash consideration of
approximately $53.5 million (the "Classic Acquisition") plus other acquisition
costs. The purchase price is subject to certain post-closing adjustments
customary in transactions of this type. Classic was a privately-held
exploration and production company with properties located in East Texas. The
Company estimates these properties to have unaudited total net proved reserves
of 47 Bcfe and net daily production of approximately 11 Mmcfe, as of January 31,
2001. The Classic Acquisition was financed under the Company's existing Credit
Facility.
4
3TEC ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
On May 31, 2000, the Company completed the acquisition of the CWR Properties
(the "CWR Acquisition") located in East Texas for cash consideration of
approximately $51.9 million. The effective date of the acquisition was January
1, 2000 and the operations are included in the Company's consolidated financial
statements beginning June 1, 2000. The CWR Properties acquisition was financed
under our existing credit facility, which was amended prior to closing the CWR
Acquisition. The purchase price was allocated principally to oil and natural gas
properties.
On February 3, 2000, the Company completed the acquisition of Magellan
Exploration LLC (the "Magellan Acquisition"), from certain affiliates of EnCap
Investments L.L.C., a Delaware limited liability company and an investor in W/E
Energy Company, LLC ("EnCap Investments"), and other third parties for
consideration consisting of (a) 1,085,934 shares of common stock, (b) four year
warrants to purchase up to 333,333 shares of common stock at $30.00 per share,
(c) 617,009 shares of 5% Series D Convertible Preferred Stock with a redemption
value of $24.00 per share and (d) the assignment of a performance based "back-
in" working interest of 5% of Magellan's interest in 12 exploration prospects.
The purchase price of approximately $19 million was allocated principally to
proved undeveloped oil and natural gas properties.
The following pro forma data presents the results of the Company for the nine
months ended September 30, 2000, as if the Classic Acquisition and the CWR
Acquisition had occurred on January 1, 2000, and the results of the Company for
the nine months ended September 30, 2001 as if the Classic Acquisition had
occurred on January 1, 2001. The pro forma data assumes the acquisition of the
respective properties and the debt financing transactions related to these
acquisitions. The pro forma results are presented for comparative purposes only
and are not necessarily indicative of the results which would have been obtained
had the acquisitions been consummated as presented. The pro forma financial
data does not include the financial information for the Magellan Acquisition,
which is not significant with respect to the operations of the Company for the
period presented (in thousands, except per share amounts):
PRO FORMA PRO FORMA
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2001 SEPTEMBER 30, 2000
(UNAUDITED) (UNAUDITED)
------------------- -------------------
Total revenues................................................... $112,968 $79,470
Net income attributable to common stockholders................... 29,581 15,645
Net income per basic share attributable to common stockholders... 2.00 1.74
The results of Classic's operations have been included in the Company's
consolidated financial statements beginning on January 30, 2001 using the
purchase method of accounting. The total purchase price was allocated
principally to oil and natural gas assets as adjusted for deferred tax
liabilities of approximately $27 million.
(5) SENIOR SUBORDINATED DEBT
During the third quarter, the Company sent notice of an election to prepay to
the holder of $10.7 million of the Company's senior subordinated convertible
notes. Pursuant to the terms of the convertible note agreement, the holder
elected instead to exercise its right to convert the principal and accrued
interest outstanding into common shares of the Company. Under the terms of the
convertible note agreement, the balance of the note plus any accrued interest
was to be converted at $9.00 per share. The conversion by the holder resulted in
the retirement of approximately $10.7 million in senior subordinated debt and
the issuance of an additional 1,206,127 shares of common stock of the Company.
5
3TEC ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) STOCKHOLDERS' EQUITY
Common Stock
On June 30, 2000, the Company completed its public offering of 8.05 million
shares of the Company's common stock (priced at $9.00 per share). The net
proceeds, approximately $66.6 million, were used primarily to repay a portion of
the outstanding debt under the amended Credit Facility.
Series C Preferred Stock Redemption
On August 31, 2000, the Company sent notices to the holders of its Series C
Preferred Stock (the "Series C") advising that the Series C would be redeemed on
September 30, 2000. The Series C had a redemption price of $5.00 per share and
the holders had the right to convert their Series C shares into Company common
stock at a ratio of one share of common for three shares of Series C prior to
September 30, 2000. A total of 2,101,827 shares of the Series C were outstanding
on August 31, 2000, with 1,293,521 shares (62%) held by the Company's 80% owned
subsidiary, Enex Resources Corporation. Approximately 109,580 Series C shares
were converted into 36,527 shares of common stock and approximately 1,992,247
Series C shares were redeemed. At September 30, 2001, the Company's liability
for the Series C redemption is approximately $2.7 million.
Series D Preferred Stock
In connection with the Magellan Acquisition, the Company issued 617,009 shares
of Series D Preferred Stock, par value $0.02 per share (the "Series D"), with a
redemption value of $24.00 per share. While the per share redemption and
dividend amounts of all of the Company's different series of preferred stock
vary, the rights as to dividends and liquidation payments are equal. Shares of
Series D earn cumulative dividends at 5% per annum, payable semi-annually on
March 31 and September 30 of each year, when, as and if authorized and declared
by the board of directors. For a period of three years from the closing date of
the Magellan Acquisition, the Company may pay the dividends at its option in
cash or in additional shares of Series D. Dividends were paid on the outstanding
shares of Series D as of March 31, 2000 in the form of additional shares of
Series D Preferred Stock, and as of September 30, 2000 and March 31, 2001 in a
cash payment.
Holders of Series D have the right to convert one share of Series D into one
share of common stock. Upon thirty days written notice, the Company has the
right to redeem any or all shares of Series D for $24.00 per share plus any
accrued but unpaid dividends. Holders of the Series D have no right to require
the Company to redeem the Series D. During the nine month period ended
September 30, 2001, 6,297 shares of the Series D Preferred Stock were converted
to common stock.
In the event of liquidation, dissolution, winding-up or merger of the Company,
the holders of Series D Preferred Stock are entitled to receive distributions of
$24.00 per share of Series D plus any accrued but unpaid dividends before any
holders of common stock or junior preferred stock receive any distributions.
A majority of the holders of Series D must consent to certain actions by the
Company, that might adversely affect any holder's rights and preferences.
(7) COMMITMENTS AND CONTINGENCIES
On November 18, 1999, the Company's shareholders approved a reincorporation of
the Company from Alabama to Delaware. The Alabama Code has a shareholder dissent
provision that allows a shareholder to dissent from the reincorporation and
demand cash payment equal to the fair value of the common stock owned at the
date of the reincorporation. Before the November 18, 1999 shareholders meeting,
the Company received shareholder dissents representing ownership of 99,438
shares of common stock. Over the period December 15, 1999 to January 25, 2000,
the Company received formal demands for payment from the dissenting shareholders
(the
6
3TEC ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
"dissenters"). The Company made an offer to the dissenters on March 14, 2000 and
the dissenters made a counteroffer in late March. On May 26, 2000, the Company
agreed to a settlement with the dissenters to purchase 62,549 shares of common
stock for a total of $980,800, including interest. The settlement closed on June
30, 2000 and the shares are held by the Company as treasury stock. A shareholder
holding 36,889 shares of common stock agreed to withdraw his dissent.
(8) HEDGING ACTIVITIES
In February 2000, the Company entered into fixed price swap agreements
covering 2,000 barrels of oil per day for the period March through October 2000
at a weighted average NYMEX West Texas Intermediate price of $25.96 per barrel.
During the nine month period ending September 30, 2000, the Company's oil
revenues were reduced by the effect of our hedging activities by $1,584,289. The
fair market value of the open position at September 30, 2000 was approximately
($565,000).
As of December 31, 2000 and the period ended September 30, 2001, the Company
did not have any open derivative instruments or hedging activities. See Note 11
for discussion of derivative instruments entered into subsequent to September
30, 2001.
(9) ACCOUNTING PRONOUNCEMENTS
On October 3, 2001, the Financial Accounting Standards Board issued FASB
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. While Statement No. 144 supersedes FASB
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long Lived Assets to Be Disposed Of, it retains many of the fundamental
provisions of that Statement.
Statement No. 144 also supersedes the accounting and reporting provisions
of APB Opinion No. 30, Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the disposal of a segment of
business. However, it retains the requirement in Opinion 30 to report
separately discontinued operations and extends that reporting to a component of
an entity that either has been disposed of (by sale, abandonment, or in a
distribution to owners) or is classified as held for sale. By broadening the
presentation of discontinued operations to include more disposal transactions,
the FASB has enhanced managements ability to provide information that helps
financial statement users to assess the effects of a disposal transaction on the
ongoing operations of an entity.
Statement No. 144 is effective for fiscal years beginning after December
15, 2001 and interim periods within those fiscal years. The Company does not
anticipate the adoption of SFAS 144 to have a material adverse impact on its
financial position or results of operations.
In August, 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. The standard applies to legal obligations associated with the retirement
of long-lived assets that result from the acquisition, construction, development
and (or) normal use of the asset. SFAS 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
fair value of the liability is added to the carrying amount of the associated
asset and this additional carrying amount is depreciated over the life of the
asset. The liability is accreted at the end of each period through charges to
operating expense. If the obligation is settled for other than the carrying
amount of the liability, the Company will recognize a gain or loss on
settlement.
7
3TEC ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Implementation of SFAS 143 is required for fiscal year 2003. To accomplish
this, the Company must identify all legal obligations for asset retirement
obligations, if any, and determine the fair value of these obligations on the
date of adoption. The determination of fair value is complex and will require
the Company to gather market information and develop cash flow models.
Additionally, the Company will be required to develop processes to track and
monitor theses obligations. Due to the effort necessary to comply with the
adoption of SFAS 143, it is not practicable for management to estimate the
impact of adopting SFAS 143 at the date of this report.
In July 2001, the Financial Accounting Standards (FASB) issued SFAS No., 141,
"Business Combinations' and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that all business combinations be accounted for
under the purchase method and that certain intangible assets in a business
combination be recognized as assets apart from goodwill. The company is
required to implement SFAS No. 141 for all business combinations for which the
date of acquisition is July 1, 2001 or later. SFAS No. 142 requires that
ratable amortization of goodwill be replaced with periodic tests of the
impairment of goodwill and that intangible assets other than goodwill should be
amortized over their useful lives. Implementation of SFAS No. 142 is required
for fiscal year 2002. The Company does not anticipate the adoption of SFAS 142
to have a material adverse impact on its financial position or results of
operations.
In September 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended, standardizes the
accounting for and disclosures of derivative instruments, including certain
derivative instruments embedded in other contracts. The statement is effective
for the Company's financial statements on January 1, 2001. As of December 31,
2000 and the period ended September 30, 2001, the Company did not have any open
derivative instruments or hedging activities.
(10) PROPERTY DIVESTMENTS
During the third quarter of 2001, the Company sold non-strategic properties
for net cash proceeds of approximately $26.3 million, resulting in a loss of
$3.4 million. The Company will attempt to acquire replacement properties in
order to defer the tax gain on the sales of these properties in accordance with
the Like-Kind Exchange regulations of the Internal Revenue Service. At
September 30, 2001 the Company has $18.2 million in like-kind escrow accounts
pending the identification and acquisition of the replacement properties. If
the Company is not successful in acquiring replacement properties, the funds in
escrow will be used to reduce borrowings under the Company's credit facility and
the related tax gains on the property sales will be recognized.
(11) SUBSEQUENT EVENTS
During October 2001, the Company announced it had entered into a definitive
merger agreement to merge a wholly-owned subsidiary of the Company into Enex
Resources Corporation ("Enex"). If the merger is approved by the Enex
shareholders, each share of Enex common stock (other than shares owned by 3TEC)
will be converted into the right to receive $14.00 per share in cash, resulting
in a cash payment by the Company of approximately $3.8 million. The Company
currently owns 80% of the outstanding common stock of Enex. Closing of the
transaction is subject to the approval of Enex's stockholders and other
customary closing conditions. A special meeting of Enex stockholders is
expected to be held in December, 2001. The Company anticipates funding the
transaction with available cash on hand or from available capacity under its
Credit Facility.
During October 2001, the Company entered three natural gas option contracts
resulting in a costless collar with a floor of $2.67/Mmbtu and a ceiling of
$3.15/Mmbtu. The three contracts were for the NYMEX natural gas contract period
of November 2001 through March 2002. The structure of contracts was accomplished
through the sale of two call options and the purchase of a put option. The first
call, at $3.15/Mmbtu covering 40 Mmbtu/day, and the second call, at $3.50/Mmbtu
covering 20/Mmbtu/day, were combined with the purchase of a put covering 40
Mmbtu/day at $2.67/Mmbtu. The proceeds from the sale of the $3.50/Mmbtu call
were applied to the purchase of
8
3TEC ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
the put which enabled the Company to raise the floor of the collar. The Company
has not designated these as hedges and therefore will report the fluctuation of
the value of these contracts based upon a marked to market analysis through the
Company's income statement as a gain or loss on derivative contracts.
During October 2001, the Company received notice of conversion from the
holder of the Company's balance of the senior subordinated convertible notes
outstanding at September 30, 2001. The holder has elected to exercise its right
to convert the principal and accrued interest outstanding into common shares of
the Company. Under the terms of the convertible note agreement, the balance of
the note plus any accrued interest was to be converted at $9.00 per share. The
conversion by the holder resulted in the retirement of approximately $2.4
million in senior subordinated debt and the issuance of an additional 265,013
shares of common stock of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This quarterly report on Form 10-QSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such forward-looking statements involve
risks and uncertainties and other factors beyond the control of the Company.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and that actual results or developments may
differ materially from those projected in the forward-looking statements.
OVERVIEW
We are engaged in the acquisition, development, production and exploration of
oil and natural gas reserves. Our properties are concentrated in East and South
Texas and the Gulf Coast region. Our management and technical staff have
substantial experience in each of these areas. As of December 31, 2000, on a
pro forma basis including the subsequent acquisition of Classic, we had at that
date estimated total net proved reserves of 354 Bcfe, of which approximately
81% were natural gas and approximately 74% were proved developed, with an
estimated PV-10 value of $1.23 billion (using SEC pricing parameters at December
31, 2000.)
LIQUIDITY AND CAPITAL RESOURCES
We believe that our cash flows from operations are adequate to meet the
requirements of operating our business. However, future cash flows are subject
to a number of variables, including our level of production and prices, and we
cannot assure that operations and other capital resources will provide cash in
sufficient amounts to maintain planned levels of capital expenditures. Our
principal operating sources of cash include sales of natural gas and oil
production.
For the year 2001, we have budgeted approximately $63 million for development
and exploration capital expenditures. Through September 30, 2001, the Company
has expended approximately $56.6 million of its capital budget.
We are obligated to pay dividends of approximately $740,000 per year on the
Series D Preferred Stock, which we may pay in either cash or in additional
shares of Series D Preferred Stock during the three years ending February 1,
2003.
Our primary source of financing for acquisitions has been borrowings under our
credit facility and proceeds from property sales. Management believes that the
Company will have sufficient cash flow from operations and borrowings under our
credit facility to meet the Company's obligations and operating needs for the
current year. Management also believes that the Company has the ability to raise
additional equity or debt financing and otherwise access the capital markets
should those sources of capital prove insufficient to execute our strategic
objectives. However, future cash flows are subject to a number of variables,
including the Company's level of
9
production and prices, and Management cannot assure that operations and other
capital resources will provide cash of sufficient amounts to maintain planned
levels of capital expenditures.
On March 12, 2001, the Company entered into the Third Restated Credit Facility
among the Company, Enex Resources Corporation and 3TEC/CRI Corporation, as
borrowers, and Bank One, NA and the institutions named therein, as lenders (the
"Credit Facility"). The Credit Facility provides for a borrowing base which is
redetermined on a semi-annual basis, and as of September 30, 2001, was set at
$155 million. The borrowing base was reduced during the third quarter to $155
million in connection with the divestment of certain non-strategic assets by the
Company as described in Note 10 of the Consolidated Financial Statements.
Interest under the Credit Facility is based upon either the bank's prime rate
plus a low of zero to a high of 50 basis points or LIBOR plus basis points
increasing from a low of 150 to a high of 212.5 as amounts outstanding increase
as a percentage of the borrowing base. At September 30, 2001, we were paying an
average of approximately 4.88 % per annum interest on the entire principal
balance of the Credit Facility of $95 million. The Credit Facility matures on
May 31, 2003. The borrowings under the Credit Facility are secured by
substantially all of our properties.
In connection with this Credit Facility, we are required to adhere to certain
affirmative and negative covenants. The loan agreement contains a number of
dividend restrictions and restrictive covenants which, among other things,
require the maintenance of a minimum current ratio and interest coverage ratio.
At September 30, 2001, the Company was in compliance with the terms of the
Credit Facility.
We generally sell our oil at local field prices paid by the principal
purchasers of oil. The majority of our natural gas production is sold at spot
prices. Accordingly, we are generally subject to the commodity prices for these
resources as they vary from time to time. As of September 30, 2001, the Company
does not have any derivative instruments or hedging activities in place,
however, the Company has entered into certain derivative instruments subsequent
to September 30, 2001. See discussion in Note 11.
Due to our significant property and corporate acquisitions and divestments in
2000 and 2001, and our current capital structure, comparisons of our results of
operations for interim periods in 2001 can be difficult. You should read the
following discussion and analysis together with our audited consolidated
financial statements and the related notes for the fiscal year ended December
31, 2000, filed in our 2000 Form 10-KSB.
The following table reflects certain summary operating data for the periods
presented:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ -----------------
2001 2000 2001 2000
-------- ------ ------- -------
Net Production Data :
- ---------------------
Oil and Liquids (MBbls)................ 206 267 778 867
Natural Gas (MMcf)..................... 5,662 4,642 17,597 12,273
Equivalent Production (MMcfe).......... 6,898 6,244 22,265 17,475
Average Sales Price: (1)
- ------------------------
Oil and Liquids (per Bbl).............. $23.09 $24.22 $ 25.66 $ 24.69
Natural Gas (per Mcf).................. 2.81 4.26 $ 4.84 $ 3.56
Equivalent price (per Mcfe)............ 3.00 4.28 $ 4.73 $ 3.78
Expenses ($ per Mcfe):
- ----------------------
Lease operations....................... $ 0.58 $ 0.56 $ 0.59 $ 0.65
Production, severance and ad valorem... 0.20 0.26 $ 0.31 $ 0.25
Gathering, transportation and other.... 0.14 0.10 $ 0.13 $ 0.08
General and administrative............. 0.26 0.22 $ 0.23 $ 0.26
Depreciation and depletion............. 1.04 0.73 $ 0.98 $ 0.75
- --------------
(1) Includes effect of our hedging activities.
10
THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2000
Oil and Gas Revenues. Revenues from oil and gas operations decreased by 20%
to $21.3 million for the three months ended September 30, 2001, compared to
$26.7 million for the same period during 2000. The decrease is attributable to
the Company's property divestments during 2001 and by lower commodity prices
received by the Company during the period.
Gain (Loss) on Property Sales. Gain (loss) on sales of properties for the
three months ending September 30, 2001 amounted to ($3.4) million compared to
$0.3 million during the same period of 2000. The decrease is a result of the
Company's focused efforts towards the divestment of non-strategic oil and gas
properties.
Production Expense. Production expense for the three months ended September
30, 2001, increased by 10% to $6.4 million compared to $5.8 million during the
same period of 2000 due primarily to increased service sector costs seen
throughout the industry during 2001. Lease operating expenses on an $/MCFE basis
increased to$0.58/MCFE from $0.56/MCFE. Lower realized commodity prices during
the three months ended September 30, 2001 of $3.00/MCFE vs. $4.28/MCFE in 2000
is the principal reason for the decrease in production and severance taxes.
General and Administrative Expense. General and administrative expense for
the three months ended September 30, 2001 increased by $0.4 million compared to
the same period in 2000. The increase is attributable to increased staffing
levels as a result of the Company's significant growth from acquisitions.
Depreciation, Depletion and Amortization Expense. Depreciation, depletion and
amortization expense ("DD&A") for the three months ended September 30, 2001 was
$7.2 million compared to $4.6 million for the same period of 2000. The increased
DD&A recorded is attributed to the Company's significant production growth from
acquisitions and capital expenditures related to its developmental drilling
activity.
Income Taxes. For the three months ended September 30, 2001, the Company
recorded a tax provision of $0.02 million compared to a tax provision of $4.7
million during the same period in 2000. The provision recorded in 2001represents
the Company's net income for the three months ended at its expected effective
tax rate for 2001 of approximately 38% impacted by fiscal year 2000 return to
accrual adjustments.
Dividends to Preferred Stockholders. Dividends to preferred stockholders of
approximately $0.2 million in the three months ended September 30, 2001
decreased from $0.8 million for the three months ended September 30, 2000. The
decrease in dividends was due to the redemption of the Series C Preferred Stock
at September 30, 2000.
NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2000
Oil and Gas Revenues. Revenues from oil and gas operations increased by 62%
to $106.9 million for the nine months ended September 30, 2001, compared to
$66.0 million for the same period during 2000. The increase is attributable to
the Company's significant revenue growth via acquisitions and drilling as well
as higher commodity prices received by the Company during the period.
Gain (Loss) on Property Sales. Gain (loss) on sales of properties for the
nine months ending September 30, 2001 increased to $3.4 million compared to $0.3
million during the same period of 2000. The increase is a result of the
Company's focused efforts towards the divestment of non-strategic oil and gas
properties.
Production Expense. Production expense for the nine months ended September
30, 2001, increased by 34% to $23.0 million compared to $17.2 million during the
same period of 2000. Lease operating expenses on an $/MCFE basis decreased to
$0.59/MCFE from $0.65/MCFE, while production, severance and ad valorem taxes
increased to $0.31/MCFE from $0.25/MCFE. Lower per unit operating costs
associated with the Company's acquired properties and higher per unit operating
costs of properties sold by the Company are attributed to the current period
decrease. Higher realized commodity prices during the nine months ended
September 30, 2001 of $4.73/MCFE vs. $3.78/MCFE in 2000 is the principal reason
for the increase in production and severance taxes.
11
General and Administrative Expense. General and administrative expense for
the nine months ended September 30, 2001 increased by $0.7 million compared to
the same period in 2000. The increase is attributable to increased staffing
levels as a result of the Company's significant growth from acquisitions.
Depreciation, Depletion and Amortization Expense. Depreciation, depletion and
amortization expense ("DD&A") for the nine months ended September 30, 2001 was
$21.8 million compared to $13.1 million for the same period of 2000. The
additional DD&A recorded is attributed to the Company's significant production
growth from acquisitions and capital expenditures related to its developmental
drilling activities.
Income Taxes. For the nine months ended September 30, 2001, the Company
recorded a tax provision of $20.4 million compared to a tax provision of $8.8
million during the same period in 2000. The provision recorded in 2001represents
the Company's net income for the nine months ended at its expected effective tax
rate for 2001 of approximately 38% impacted by fiscal year 2000 return to
accrual adjustments.
Dividends to Preferred Stockholders. Dividends to preferred stockholders of
approximately $0.6 million in the nine months ended September 30, 2001 decreased
from $1.3 million for the six months ended September 30, 2000. The decrease in
dividends was due to the redemption of the Series C Preferred Stock at September
30, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following documents are filed as exhibits to this report:
2.1 Agreement and Plan of Merger, dated December 21, 1999, by and between 3TEC
Energy Corporation, 3TM Acquisition L.L.C., Magellan Exploration, LLC and ECIC
Corporation, EnCap Energy Capital Fund III, L.P.,EnCap Energy Acquisition III-
B, Inc., BOCP Energy Partners, L.P., and Pel-Tex Partners, L.L.C. (Incorporated
by reference to Exhibit C to Form DEF14A, filed January 11, 2000.)
2.2 Agreement and Plan of Merger, dated November 24, 1999, by and between 3TEC
Energy Corporation, a Delaware corporation, and Middle Bay Oil Company, Inc., an
Alabama corporation. (Incorporated by reference to Exhibit A to Form DEF14A,
filed October 25, 1999.)
2.3 First Amendment to Agreement and Plan of Merger, effective as of January
14, 2000, by and among 3TEC Energy Corporation, 3TM Acquisition L.L.C., Magellan
Exploration, LLC, ECIC Corporation, EnCap Energy Capital Fund III, L.P., EnCap
Energy Acquisition III-B, Inc., BOCP Energy Partners, L.P., and Pel-Tex
Partners, L.L.C. (Incorporated by reference to Exhibit 2.1 to Form 8-K filed
February 4, 2000.)
2.4 Second Amendment to Agreement and Plan of Merger, effective as of February
2, 2000, by and among 3TEC Energy Corporation, 3TM Acquisition L.L.C., Magellan
Exploration, LLC, ECIC Corporation, EnCap Energy Capital Fund III, L.P., EnCap
Energy Acquisition III-B, Inc., BOCP Energy Partners, L.P., and Pel-Tex
Partners, L.L.C. (Incorporated by reference to Exhibit 2.2 to Form 8-K filed
February 4, 2000.)
2.5 Form of Agreement of Sale and Purchase by and between C.W. Resources, Inc.,
Westerman Royalty, Inc., and Carl A. Westerman and 3TEC Energy Corporation.
(Incorporated by reference to Exhibit 10.32 to Form S-2 filed April 28, 2000.)
2.6 Form of Stock Purchase Agreement by and between 3TEC Energy Corporation and
Classic Resources, Inc., Natural Gas Partners IV, L.P., Natural Gas Partners V,
L.P., and certain individual signatories. (Incorporated by reference to
Exhibit 2.1 to Form 8-K filed February 13, 2001.)
3.1 Certificate of Incorporation of 3TEC Energy Corporation. (Incorporated by
reference to Exhibit 3.1 Form 8-K/A filed December 6, 1999.)
3.2 Certificate of Amendment to the Certificate of Incorporation of 3TEC Energy
Corporation. (Incorporated by reference to Exhibit 3.3 Form 10-KSB filed
March 30, 2000.)
3.3 Certificate of Amendment of the Certificate of Incorporation of 3TEC Energy
Corporation, dated June 14, 2001 (Incorporated by reference to Exhibit 3.5
Form 10-QSB filed August 8, 2001.)
12
3.4 Certificate of Merger of Middle Bay Oil Company, Inc. into 3TEC Energy
Corporation. (Incorporated by reference to Exhibit 3.3 Form 8-K/A filed
December 16, 1999.)
3.5 Bylaws of the Company. (Incorporated by reference to Exhibit C of the
Company's definitive proxy statement filed October 25, 1999.)
3.6 Amendment No. 1 to Bylaws of the Company. (Incorporated by reference to
Exhibit 4.5 Form S-8 filed October 26, 2001.)
3.7 Amendment No. 2 to Bylaws of 3TEC Energy Corporation. (Incorporated by
reference to Exhibit 3.6 to Form 10-QSB filed August 8, 2001.)
4.1 Certificate of Designation of Series B Preferred Stock of 3TEC Energy
Corporation. (Incorporated by reference to Exhibit 3.1 to Form 8-K/A filed
December 16, 1999.)
4.2 Certificate of Designation of Series D Preferred Stock of 3TEC Energy
Corporation. (Incorporated by reference to Exhibit 4.3 to Form 10-QSB filed
May 15, 2000.)
10.1 Securities Purchase Agreement, dated July 1, 1999 by and between the
Company and 3TEC Energy Corporation. (Incorporated by reference to Exhibit C to
the definitive Proxy Statement filed July 19, 1999.)
10.2 Securities Purchase Agreement, dated August 27, 1999 by and between the
Company and Shoemaker Family Partners, LP. (Incorporated by reference to
Exhibit 10.2 to Form 10-QSB filed November 15, 1999.)
10.3 Securities Purchase Agreement, dated August 27, 1999 by and between the
Company and Shoeinvest II, LP. (Incorporated by reference to Exhibit 10.3 to
Form 10-QSB filed November 15, 1999.)
10.4 Securities Purchase Agreement, dated October 19, 1999 between The
Prudential Insurance Company of America and the Company. (Incorporated by
reference to Exhibit 10.1 to Form 8-K filed November 2, 1999.)
10.5 Shareholders Agreement, dated August 27, 1999 by and among the Company,
3TEC Energy Corporation and the Major Shareholders. (Incorporated by reference
to Exhibit 10.5 to Form 10-QSB filed November 15, 1999.)
10.6 Agreement to Terminate Shareholders' Agreement, dated April 30, 2001, by
and among the Company and the Major Shareholders.*
10.7 Registration Rights Agreement, dated August 27, 1999 by and among the
Company, 3TEC Energy Corporation, the Major Shareholders, Shoemaker Family
Partners, LP and Shoeinvest II, LP. (Incorporated by reference to Exhibit 10.6
to Form 10-QSB filed November 15, 1999.)
10.8 Amendment to Registration Rights Agreement, dated October 19, 1999 by and
among the Company, W/E Energy Company, L.L.C. f/k/a 3TEC Energy Company L.L.C.,
f/k/a 3TEC Energy Corporation, Shoemaker Family Partners, LP, Shoeinvest II, LP,
and The Prudential Insurance Company of America. (Incorporated by reference to
Exhibit 10.2 to Form 8-K filed November 2, 1999.)
10.9 Participation Rights Agreement, dated October 19, 1999 by and among the
Company, The Prudential Insurance Company of America and W/E Energy Company
L.L.C. (Incorporated by reference to Exhibit 10.3 to Form 8-K filed November 2,
1999.)
10.10 Employment Agreement, dated April 15, 2000 by and between Floyd C. Wilson
and the Company. (Incorporated by reference to Exhibit 10.9 to Form S-2 filed
April 28, 2000.)
10.11 Employment Agreement, dated May 1, 2000, by and between R.A. Walker and
the Company. (Incorporated by reference to Exhibit 10.31 to Form S-2 filed
April 28, 2000.)
13
10.12 Restated Credit Agreement by and among Middle Bay Oil Company, Inc., Enex
Resources Corporation and Middle Bay Production Company, Inc. as borrowers, and
Bank One, Texas, N.A. and other institutions as lenders. (Incorporated by
reference to Exhibit 10.1 to Form 8-K/A filed December 17, 1999.)
10.13 Subordination Agreement, dated August 27, 1999 by and among Shoemaker
Family Partners, LP, Compass Bank, and Bank of Oklahoma, National Association.
(Incorporated by reference to Exhibit 10.15 to Form 10-QSB filed November 15,
1999.)
10.14 Subordination Agreement, dated August 27, 1999 by and among Shoeinvest
II, LP, Compass Bank, and Bank of Oklahoma, National Association. (Incorporated
by reference to Exhibit 10.16 to Form 10-QSB filed November 15, 1999.)
10.15 Letter Amendment No. 1 to Middle Bay Oil Company, Inc. Securities
Purchase Agreement, dated November 23, 1999, by and among Bank One Texas, NA,
Middle Bay Oil Company, Inc. (n/k/a 3TEC Energy Corporation) and The Prudential
Insurance Company of America (Incorporated by reference to Exhibit 10.21 to
Form S-2 filed April 28, 2000 and replacing the unexecuted Exhibit 10.17 of
Form 10-QSB filed November 15, 1999.)
10.16 Intercreditor Agreement, dated as of November 23, 1999, among Middle Bay
Oil Company, Inc., Bank One Texas, N.A. and 3TEC Energy Company L.L.C.
(Incorporated by reference to Exhibit 10.18 to Form S-2 filed April 28, 2000.)
10.17 Intercreditor Agreement, dated as of November 23, 1999, among Middle Bay
Oil Company, Inc., Bank One Texas, N.A. and Shoemaker Family Partners, LP.
(Incorporated by reference to Exhibit 10.18 to Form S-2 filed April 28, 2000.)
10.18 Intercreditor Agreement, dated as of November 23, 1999, among Middle Bay
Oil Company, Inc., Bank One Texas, N.A. and Shoeinvest II, LP. (Incorporated by
reference to Exhibit 10.20 to Form S-2 filed April 28, 2000.)
10.19 Amendment to Securities Purchase Agreement, dated as of November 23,
1999, among Middle Bay Oil Company, Inc. and 3TEC Energy Company L.L.C.
(Incorporated by reference to Exhibit 10.22 to Form S-2 filed April 28, 2000.)
10.20 Amendment to Securities Purchase Agreement, dated as of November 23,
1999, among Middle Bay Oil Company, Inc. and Shoemaker Family Partners, LP.
(Incorporated by reference to Exhibit 10.23 to Form S-2 filed April 28, 2000.)
10.21 Amendment to Securities Purchase Agreement, dated as of November 23,
1999, among Middle Bay Oil Company, Inc. and Shoeinvest II, LP. (Incorporated by
reference to Exhibit 10.24 to Form S-2 filed April 28, 2000.)
10.22 Amended and Restated 1995 Stock Option and Stock Appreciation Rights
Plan. (Incorporated by reference to Exhibit B to Form DEF 14A filed May 5,
1997.)
10.23 Amendment No. 1 to the Amended and Restated 1995 Stock Option and Stock
Appreciation Rights Plan. (Incorporated by reference to Exhibit B to Form DEF
14A filed May 5, 1998.)
10.24 Amendment No. 1 to Amended and Restated 1995 Stock Option and Stock
Appreciation Rights Plan. (Incorporated by reference to Exhibit 99.7 Form S-8
filed November 6, 2000.)
10.25 Amendment No. 3 to Amended and Restated 1995 Stock Option and Stock
Appreciation Rights Plan. (Incorporated by reference to Exhibit 99.8 Form S-8
filed November 6, 2000.)
10.26 1999 Stock Option Plan. (Incorporated by reference to Exhibit E to Form
DEF 14A filed October 25, 1999.)
10.27 Amendment No. 1 to 3TEC Energy Corporation 1999 Stock Option Plan.
(Incorporated by reference to Exhibit 99.4 Form S-8 field November 6, 2000.)
14
10.28 2000 Stock Option Plan (Incorporated by reference to Exhibit A to Form
DEF 14A filed on May 1, 2000.)
10.29 Amendment No. 1 to 3TEC Energy Corporation 2000 Stock Option Plan.
(Incorporated by reference to Exhibit 99.2 Form S-8 field November 6, 2000.)
10.30 3TEC Energy Corporation 2001 Stock Option Plan. (Incorporated by
reference to Exhibit 99.1 Form S-8 filed October 26, 2001.)
10.31 3TEC Energy Corporation 2000 Non-Employee Directors Stock Option Plan.
(Incorporated by reference to Exhibit 99.2 S-8 filed October 26, 2001.)
10.32 Second Restated Credit Agreement among 3TEC Energy Corporation, Enex
Resources Corporation, Middle Bay Production Company, Inc., and Magellan
Exploration, LLC, as Borrowers, and Bank One, Texas, N.A. and the Institutions
named therein, as Lenders, Bank One, Texas, N.A., as Administrative Agent, Bank
of Montreal as Syndication Agent and Banc One Capital Markets, Inc., as
Arranger, dated May 31, 2000. (Incorporated by reference to Exhibit 10.28 to
Form S-2/A filed September 6, 2000.)
10.33 First Amendment to Shareholders' Agreement by and among 3TEC Energy
Corporation, the W/E Shareholders and the Major Shareholders, dated May 30,
2000. (Incorporated by reference to Exhibit 10.29 to Form S-2/A filed
September 6, 2000.)
10.34 Third Restated Credit Agreement among 3TEC Energy Corporation, Enex
Resources Corporation and 3TEC/CRI Corporation, as Borrowers, and Bank One, N.A.
and the Institutions named therein, as Lenders, Bank One, N.A., as
Administrative Agent, Bank of Montreal as Syndication Agent and Banc One Capital
Markets, Inc., as Arranger, dated March 12, 2001. [Incorporated by reference to
Exhibit 10.27 to Form 10-QSB filed May 14, 2001.]
_______________
* Filed herewith
(b) The following reports were filed on Form 8-K during the third quarter of
2001:
On September 24, 2001, the Company filed a Form 8-K under Item 5 describing a
stock repurchase plan approved by the Company's Board of Directors on
September 20, 2001.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed by the
undersigned, thereunto duly authorized, as of November 8, 2001.
3TEC ENERGY CORPORATION
(Registrant)
By: /s/ Floyd C. Wilson
----------------------
Floyd C. Wilson
Chairman and Chief Executive Officer, Director
By: /s/ R.A. Walker
----------------------
R.A. Walker
President, Chief Financial Officer, Director
By: /s/ Shane M. Bayless
----------------------
Shane M. Bayless
Vice President-Controller, Treasurer and
Principal Accounting Officer
16