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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 1O-QSB/A
(Amendment No. 1)
[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[_] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to ___________
Commission file number 1-9933
AMERAC ENERGY CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 75-2181442
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1201 LOUISIANA, SUITE 3350
HOUSTON, TEXAS 77002-5609
(Address of Principal Executive Offices)
(713) 308-5250
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
The number of shares of Common Stock, $0.05 par value, outstanding on October
31, 1997 was 3,891,981
Transitional Small Business Disclosure Format (check one):
Yes [_] No [X]
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AMERAC ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................................... $ 53,000 $ 712,000
Receivables
Trade and other, net of allowance for bad debts of $32,000.. 338,000 327,000
Gas and oil receivable...................................... 1,001,000 1,451,000
Prepaid expenses............................................ 146,000 146,000
------------- -------------
Total current assets...................................... 1,538,000 2,636,000
------------- -------------
PROPERTY AND EQUIPMENT
Oil and gas properties at cost.............................. 34,313,000 32,290,000
Less accumulated depreciation, depletion and amortization... (16,593,000) (12,949,000)
------------- -------------
Net oil and gas properties................................ 17,720,000 19,341,000
OTHER ASSETS................................................... 335,000 395,000
------------- -------------
TOTAL ASSETS................................................... $ 19,593,000 $ 22,372,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade payables............................................... $ 314,000 $ 199,000
Accrued liabilities.......................................... 288,000 527,000
Current portion of long-term debt............................ 579,000 ----
Obligation under gas contract................................ ---- 370,000
------------- -------------
Total current liabilities................................ 1,181,000 1,096,000
------------- -------------
LONG-TERM LIABILITIES
Notes payable banks (less current portion).................. 7,250,000 7,704,000
Other long-term liabilities................................. 8,000 140,000
------------- -------------
Total long-term liabilities............................... 7,258,000 7,844,000
------------- -------------
COMMITMENTS AND CONTINGENT LIABILITIES (see Note 4)
STOCKHOLDERS' EQUITY
Common stock, $0.05 par value; authorized - 20,000,000
shares; outstanding -3,891,981 shares at September 30, 1997
and 3,883,526 shares at December 31, 1996................. 195,000 194,000
Additional paid-in capital.................................. 151,181,000 151,104,000
Accumulated deficit......................................... (140,222,000) (137,866,000)
------------- -------------
Total stockholders' equity............................... 11,154,000 13,432,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $ 19,593,000 $ 22,372,000
============= =============
(The accompanying notes are an integral part of these consolidated financial
statements).
1
AMERAC ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- -----------------------
1997 1996 1997 1996
---------- --------- --------- ---------
REVENUES
Oil, gas and related product sales................... $ 1,889,000 $ 2,584,000 $ 7,206,000 $ 7,432,000
Other income......................................... 2,000 (4,000) 19,000 42,000
----------- ----------- ----------- -----------
Total revenues.................................... 1,891,000 2,580,000 7,225,000 7,474,000
----------- ----------- ----------- -----------
EXPENSES
Lease operating...................................... 658,000 597,000 2,317,000 1,577,000
Exploration expenses, including dry hole costs....... 29,000 22,000 314,000 29,000
Provision for impairment of properties (see Note 2).. 1,573,000 --- 2,269,000 ---
Depreciation, depletion and amortization............. 733,000 699,000 2,144,000 1,693,000
General and administrative........................... 761,000 627,000 1,997,000 1,749,000
(Gain) Loss on sale of oil and gas properties........ ---- ---- ---- (124,000)
Interest............................................. 183,000 245,000 510,000 662,000
----------- ----------- ----------- -----------
Total expenses.................................... 3,937,000 2,190,000 9,551,000 5,586,000
----------- ----------- ----------- -----------
Income (loss)before income taxes..................... (2,046,000) 390,000 (2,326,000) 1,888,000
Provision for federal income taxes................... --- 5,000 30,000 5,000
----------- ----------- ----------- -----------
NET INCOME (LOSS).................................... (2,046,000) 385,000 (2,356,000) 1,883,000
Preferred dividends.................................. ---- (5,023,000) ---- (5,434,000)
----------- ----------- ----------- -----------
INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS...... $(2,046,000) $(4,638,000) $(2,356,000) $(3,551,000)
=========== =========== =========== ===========
INCOME (LOSS) PER COMMON SHARE
(as adjusted, see Note 1).......................... $ (.53) $ (1.64) $ (.61) $ (1.75)
=========== =========== =========== ===========
AVERAGE COMMON SHARES AND EQUIVALENTS
outstanding (as adjusted, see Note 1).............. 3,889,000 2,828,000 3,886,000 2,031,000
=========== =========== =========== ===========
(The accompanying notes are an integral part of these consolidated
financial statements).
2
AMERAC ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
-------------- ------------
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)............................................ $ (2,356,000) $ 1,883,000
Adjustments needed to reconcile net income to net cash flow
provided by operating activities
Depreciation, depletion and amortization................... 2,144,000 1,693,000
Exploration expenses, including dry holes and impairments.. 2,071,000 29,000
Gain on sale of properties................................. ---- (124,000)
Stock issued for compensation.............................. 50,000 180,000
Recognition of deferred revenue............................ (370,000) (105,000)
Other...................................................... (44,000) ----
Changes in operating assets and liabilities:
Oil and gas receivables and other........................ 438,000 (931,000)
Trade payables........................................... 115,000 72,000
Accrued and other long-term liabilities.................. (372,000) (84,000)
---------- -----------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES................ 1,676,000 2,613,000
---------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of assets................................. ---- 1,281,000
Oil and gas acquisitions and expenditures.................... (2,486,000) (12,995,000)
Other........................................................ 19,000 (268,000)
---------- -----------
NET CASH USED FOR INVESTING ACTIVITIES........................ (2,467,000) (11,982,000)
---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Bank borrowings, net......................................... 125,000 8,951,000
Sale of common stock......................................... ---- 364,000
Other........................................................ 7,000 10,000
---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES..................... 132,000 9,325,000
---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......... (659,000) (44,000)
Cash and cash equivalents at beginning of period............. 712,000 144,000
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................... $ 53,000 $ 100,000
========== ===========
(The accompanying notes are an integral part of these consolidated financial
statements).
3
AMERAC ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
DECEMBER 31, 1996 TO SEPTEMBER 30, 1997
(UNAUDITED)
COMMON SHARES
($0.05 PAR VALUE) ADDITIONAL
-------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- -------- ------------ ------------- -----------
BALANCE - DECEMBER 31, 1996......... 3,883,526 $194,000 $151,104,000 $(137,866,000) $13,432,000
Stock issued for director's fees.. 8,295 1,000 50,000 ---- 51,000
Options exercised................. 2,667 ---- 7,000 ---- 7,000
Net income........................ ---- ---- ---- (2,356,000) (2,356,000)
Other............................. (2,507) ---- 20,000 ---- 20,000
--------- -------- ------------ ------------- -----------
BALANCE - SEPTEMBER 30, 1997........ 3,891,981 $195,000 $151,181,000 $(140,222,000) $11,154,000
========= ======== ============ ============= ===========
(The accompanying notes are an integral part of these consolidated financial
statements.)
4
AMERAC ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB of the Securities
and Exchange Commission. In the opinion of management, all normal and recurring
adjustments necessary for a fair presentation of results of operations and
financial position for the interim periods have been included. The results of
operations for the interim periods shown in this report are not necessarily
indicative of results to be expected for the year or any other interim period.
These financial statements and notes should be read in conjunction with Amerac
Energy Corporation's (the "Company") annual report for the year ended December
31, 1996.
Earnings per share and weighted average common shares outstanding for the
three and nine months ended September 30, 1996, have been retroactively restated
to reflect the one for fifteen reverse Common Stock split approved by the
Company's stockholders in November 1996.
Certain prior year amounts have been reclassified to conform with the
current year presentation.
2. IMPAIRMENTS
The Company follows the successful efforts method of accounting for its oil
and gas operations, as prescribed in Statement of Financial Accounting Standards
("SFAS") 19 issued by the Financial Accounting Standards Board. Under the
successful efforts method, costs of productive wells, development dry holes and
productive leases are capitalized and amortized on a unit-of-production basis
over the life of remaining proved reserves. Costs centers for amortization
purposes are determined on a field-by-field basis.
Prior to January 1, 1996, capitalized costs of proved properties were
reviewed for impairment on a field-by-field basis limiting capitalized costs to
estimated future net revenues from proved properties, assuming current prices
and costs. Commencing January 1, 1996, the Company adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". Pursuant to SFAS 121, the Company assesses the need for an
impairment of capitalized costs of proved oil and gas properties on a field-by-
field basis utilizing undiscounted expected future cash flows. If an impairment
is indicated, the amount of such impairment is recognized to the extent that the
net capitalized costs of the proved oil and gas properties exceeds the fair
market value so determined.
Based on such an assessment, the Company has recorded a Provision for
impairment for the nine months ended September 30, 1997 of $2,269,000. This
provision primarily was attributable to the $534,000 non-cash write off in the
second quarter of 1997 of the Company's Sacatosa project and a $1,523,000 non-
cash write-down of the Company's Blackwell/RQS field in the third quarter of
1997.
5
AMERAC ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. SUPPLEMENTAL CASH FLOW INFORMATION
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
------------ -------------
Cash payments for:
Interest.............................................. $ 510,000 $ 662,000
Income taxes.......................................... 60,000 5,000
Non-cash investing and financing activities:
Senior Preferred Stock dividends...................... ---- 5,434,000
Compensation paid in Common Stock..................... 50,000 180,000
Approximate value of Common Stock issued for Fremont
acquisition......................................... ---- 640,000
4. CONTINGENCIES
The Company has a reserve established for the estimated costs associated
with platform abandonment at its South Timbalier 198 property. At September 30,
1997, the reserve for such abandonment was $454,000, compared with $389,000 at
December 31, 1996. Such amounts are included in Accumulated Depreciation,
Depletion and Amortization.
The Company is subject to various possible contingencies which arise
primarily from interpretation of federal and state laws and regulations
affecting the oil and gas industry. Such contingencies include differing
interpretations as to the prices at which oil and gas sales may be made, the
prices at which royalty owners may be paid for production from their leases and
other matters. Although management believes it has complied with the various
laws and regulations, administrative rulings and interpretations thereof,
adjustment could be required as new interpretations and regulations are issued.
In addition, production rates, marketing and environmental matters are subject
to regulation by various federal and state agencies.
The Company is not currently a party to any litigation which would have a
material impact on its financial statements. However, due to the nature of its
business, certain legal or administrative proceedings may arise in the ordinary
course of its business.
6
AMERAC ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended September 30, 1997, Compared With Three Months Ended
September 30, 1996
The Company reported a loss of $2,046,000 for the three months ended September
30, 1997, compared with net income of $385,000 for the three months ended
September 30, 1996. This loss primarily was attributable to a $1,523,000 non-
cash impairment of the Blackwell/RQS field and, to a lesser extent, to lower
revenues for both oil and natural gas and to generally higher expenses.
Oil and gas revenues decreased from approximately $2.6 million during the
third quarter of 1996 to approximately $1.9 million during the third quarter of
1997, primarily due to lower volumes and lower realized prices. The decline in
production volumes was due primarily to lower natural gas production at the
Company's South Timbalier 198. The primary well at South Timbalier began to
produce water during December of 1996, and net production declined from
approximately 382,200 thousand cubic feet ("Mcf") of natural gas during the
third quarter of 1996 to approximately 259,300 Mcf of natural gas during the
third quarter of 1997.
During the third quarter of 1997, the Company's net production was
approximately 40,000 barrels ("Bbls") of oil and 566,600 Mcf of natural gas,
compared with approximately 48,800 Bbls of oil and 649,200 Mcf of natural gas
produced during the third quarter of 1996.
The Company's average realized prices during the third quarter of 1997 were
$17.23 per Bbl of oil and $2.12 per Mcf of natural gas. During the three months
ended September 30, 1996, the Company's realized prices for oil and natural gas
were $20.42 per Bbl and $2.37 per Mcf, respectively.
Lease operating expense increased from $597,000 in the third quarter of 1996
to $658,000 in the third quarter of 1997. This increase is attributable to
higher lease operating expense per unit of production and to workovers of
approximately $55,000 incurred in the third quarter of 1997.
Provision for impairments for the three months ended September 30, 1997 was
$1,573,000, compared with no provision for the comparable period of 1996. This
provision was essentially attributable to a $1,523,000 non-cash write-down of
the Company's Blackwell/RQS field, resulting from unsuccessful or marginal
drilling activity in the field and the subsequent downward evaluation of the
field's reserves.
Depreciation, depletion and amortization ("DD&A") expense increased from
approximately $699,000 during the third quarter of 1996 to approximately
$733,000 during the third quarter of 1997. This increase was due primarily to a
revision in the DD&A rate in the third quarter of 1997 and to additional
investments in oil and gas properties made subsequent to the third quarter of
1996.
General and administrative expenses increased from approximately $627,000 in
the third quarter of 1996 to approximately $761,000 in the third quarter of
1997, primarily as a result of increased staffing due to property acquisitions
made in 1996. This increase was partially offset by overhead billed by the
Company to other working interest owners and reimbursement of general and
administrative costs by certain of the Company's joint interest partners.
Interest expense decreased from approximately $245,000 in the third quarter of
1996 to approximately $183,000 in the third quarter of 1997, primarily as a
result of lower levels of bank debt outstanding during the third quarter of
1997.
7
AMERAC ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended September 30, 1997, Compared With Nine Months Ended September
30, 1996
The Company reported a net loss of $2,356,000 for the nine months ended
September 30, 1997, compared with net income of $1,883,000 for the nine months
ended September 30, 1996. This nine month loss was attributable primarily to an
aggregate of $2,980,000 of increases in expenses comprised of increases in:
Provision for impairments ($2,269,000); Exploration expenses ($285,000),
primarily geological and geophysical; and workovers, a component of Lease
operating expense, ($426,000).
Oil and gas revenues decreased from approximately $7.4 million for the nine
months ended September 30, 1996 to approximately $7.2 million for the nine
months ended September 30, 1997. This decrease was primarily the result of
lower production due to production declines in various of the Company's
properties, which was partially offset by production from properties acquired
during the third quarter of 1996.
During the nine months ended September 30, 1997, the Company's net production
was approximately 140,900 Bbls of oil and 1,898,900 Mcf of natural gas. During
the comparable period of 1996, the Company's net production was approximately
142,000 Bbls of oil and 2,102,400 Mcf of natural gas.
During the nine months ended September 30, 1997, the Company's average
realized price for oil was $19.76 per Bbl and for natural gas was $2.33 per Mcf,
compared with prices during the nine months ended September 30, 1996 of $19.96
per Bbl of oil and $2.37 per Mcf of natural gas.
Lease operating expense increased from approximately $1.6 million for the nine
months ended September 30, 1996 to approximately $2.3 million for the nine
months ended September 30, 1997. This increase primarily is attributable to
approximately $426,000 of workover expense incurred in the 1997 period, compared
with less than $1,000 of workover expense incurred during the comparable period
of 1996. Additionally, higher lease operating expense resulted from costs
incurred in operating oil and gas properties acquired during the third quarter
of 1996.
Exploratory costs increased from approximately $29,000 for the nine months
ended September 30, 1996 to approximately $314,000 for the nine months ended
September 30, 1997. This increase primarily was attributable to increases in
geological and geophysical costs incurred in connection with the Company's
prospect development activities in the Easter Shelf of the Permian Basin.
Provision for impairments for the nine months ended September 30, 1997 was
$2,269,000, compared with no provision during the comparable period of 1996.
This provision was attributable primarily to the $534,000 non-cash write-off in
the second quarter of 1997 of the Company's Sacatosa project and to a $1,523,000
non-cash write-down of the Company's Blackwell/RQS field in the third quarter of
1997.
DD&A expense for the nine months ended September 30, 1997 was approximately
$2.1 million, exceeding the approximate $1.7 million reported for the comparable
period in 1996. This increase was due primarily to a revision in the DD&A rate
in the third quarter of 1997 and to additional investments in oil and gas
properties made subsequent to the third quarter of 1996.
General and administrative expenses increased from approximately $1.7 million
for the nine months ended September 30, 1996 to approximately $2.0 million for
the nine months ended September 30, 1997. This increase was primarily
attributable to increased salaries and benefits expense due to the hiring of
additional employees subsequent to the third quarter of 1996; costs incurred in
connection with listing of its Common Stock on the American Stock Exchange; and
the preparation of a "shelf" registration statement, as required by agreements
with certain stockholders. These increases were partially offset by overhead
billed by the Company to other working interest owners/partners.
8
AMERAC ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest expense decreased from approximately $662,000 for the nine months
ended September 30, 1996 to approximately $510,000 for the nine months ended
September 30, 1997, primarily as a result of lower levels of bank debt
outstanding during the comparable 1997 period.
DRILLING AND DEVELOPMENT ACTIVITIES
In September 1997, the Company announced that it had revised upward its proved
undeveloped reserves in the Golden Trend Field in Garvin County, Oklahoma with
the identification of ten additional proved undeveloped drilling locations in
the field. The gross drilling and completion cost per well is approximately
$700,000, and if all ten wells are drilled and completed, the Company's
estimated share of the aggregate drilling and completion costs would be
approximately $5.8 million. The Company has not yet formalized a timetable for
drilling these proved undeveloped locations.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1997, the Company generated cash flow from
operations of approximately $1.7 million and had net borrowings of $125,000,
which were used primarily to fund its exploration and development drilling
activities. At the end of the third quarter of 1997, the Company had
outstanding debt of approximately $7.8 million under its bank credit facility.
Effective August 1, 1997, the Company's borrowing base was increased to $10.5
million, which decreases $250,000 on the first day of each month, commencing
September 1, 1997. The Company's borrowing base at September 30, 1997 was
approximately $10.2 million, providing available borrowing capacity of
approximately $2.4 million. At November 14, 1997, the Company's borrowing base
was approximately $9.8 million, which with bank debt of $8.3 million provided
the Company with borrowing capacity of approximately $1.5 million.
The Company's working capital position at September 30, 1997 was $357,000,
down from approximately $1.5 million of working capital reported at December 31,
1996. Working capital at June 30, 1997 was approximately $1.6 million. The
decline primarily was attributable to a reclassification of $579,000 in long-
term debt to current maturities during the third quarter of 1997 and to the
reduction of cash to pay for the Company's drilling and other development
activities. The Company expects to further draw on its working capital which,
together with additional bank borrowing, will be used to fund the Company's
participation in drilling and other development activities anticipated during
the fourth quarter of 1997. The Company believes it has sufficient borrowing
capacity, together with internally generated cash flow, to fund its fourth
quarter drilling and other development plans.
In early 1998, the Company anticipates it will need additional funds to
augment internally generated cash flow to fund its operations and capital
spending plans. The Company may seek to raise such additional funds through
supplemental bank borrowing, mezzanine financing, sale of production payments or
equity offerings, or some combination of the foregoing, or through a merger with
an adequately capitalized merger partner. However, there is no assurance the
Company will be successful in obtaining any such additional financing or in
consummating any such merger.
RECENT DEVELOPMENTS
In September, the Company announced that pursuant to a previously announced
plan to consider alternatives for maximizing shareholder value, its Board of
Directors authorized and had initiated discussions with a select group of
companies regarding a possible strategic merger or similar business combination.
The Company's financial advisor recommended this course of action as a result of
their analysis of the various options available to the Company.
9
AMERAC ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS
128 requires dual presentation of "basic earnings per share" and "diluted
earnings per share" on the face of the Consolidated Statement of Operations.
SFAS 128 will be effective for fiscal yearend reporting and requires restatement
of all prior period earnings per share data presented. The impact of adopting
this statement in not expected to have a material effect on the Company's
earnings per share.
FORWARD-LOOKING STATEMENTS
When included in this report, the words "expects," "intends," "plans,"
"anticipates," "estimates," and analogous expressions are intended to identify
forward-looking statements. Such statements inherently are subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties include, among others,
general economic and business conditions, changes in foreign and domestic oil
and gas exploration and production activity, information regarding oil and gas
reserves, future drilling and operations, future production of oil and gas,
future net cash flows, competition, changes in foreign, political, social and
economic conditions, regulatory initiatives and compliance with governmental
regulations, and various other matters, many of which are beyond the Company's
control. These forward-looking statements speak only as of the date of this
report. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statement
contained herein to reflect any changes in the Company's expectations with
regard thereto or any changes in events, conditions or circumstances on which
any such statement is based.
10
PART II
OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company has entered into an agreement, dated October 20, 1997 and
effective August 4, 1997, with Peak Enernomics, Inc. ("Enernomics"), a
corporation owned and controlled by Kenneth R. Peak, a director and executive
officer of the Company, which provides that the Company will pay Enernomics
$100,000 upon consummation of a possible merger or similar business combination.
In addition, the Company will (i) pay Enernomics $5,000 per month until the
consummation of such a transaction and (ii) deliver to Enernomics 6,000 shares
of Company common stock, which will vest in Enernomics on a monthly basis at a
rate of 1,000 shares per month, but no later than upon consummation of such a
transaction, for furnishing Mr. Peak's services as a member of a Special
Committee formed to evaluate possible strategic alternatives for the Company.
The Company has entered into an agreement, dated October 20, 1997 and
effective August 4, 1997, with William P. Nicoletti, Chairman of the Board of
the Company, which provides that the Company will, in lieu of Mr. Nicoletti's
compensation as Chairman of the Board of the Company, (i) pay Mr. Nicoletti
$2,500 per month until consummation of a possible merger or similar business
combination and (ii) deliver to Mr. Nicoletti 3,000 shares of Company common
stock, which will vest in Mr. Nicoletti on a monthly basis at a rate of 500
shares per month, but no later than upon consummation of such a transaction, for
furnishing his services as a member of a Special Committee formed to evaluate
possible strategic alternatives for the Company.
On August 29, 1997, the Company retained McDonald & Company Securities, Inc.
("McDonald") to act as investment advisor in connection with evaluating the
Company's strategic alternatives and to render an opinion to the Company's Board
of Directors concerning the fairness, from a financial point of view, of a
possible transaction. Pursuant to an engagement letter, the Company agreed to
pay McDonald a fee of $50,000 upon delivery of such opinion. In addition, upon
consummation of a transaction, McDonald will be entitled to additional
compensation in the amount of $300,000 from the Company. The Company has also
agreed to reimburse McDonald for its out-of-pocket expenses (not to exceed
$25,000) and to indemnify McDonald against certain liabilities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
See Exhibit Index following this page.
A report on Form 8-K was filed on September 24, 1997 reporting the Company had
issued a press release on September 22, 1997 announcing that its Board of
Directors had authorized the initiation of discussions with a select group of
companies regarding a possible strategic merger or similar business combination.
The Company also announced that it was revising upward its proved undeveloped
reserves in the Golden Trend Field in Garvin County, Oklahoma.
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
AMERAC ENERGY CORPORATION
(Registrant)
/s/ Jeffrey B. Robinson
-------------------------------------
Date: December 17, 1997 Jeffrey B. Robinson
President and Chief Executive Officer
11
EXHIBIT INDEX
3-(1) Certificate of Incorporation of Wolverine Exploration Company
(incorporated by reference to Exhibit 3-(1) to the Company's Registration
Statement No. 33-21824 filed May 13, 1988).
3-(2) Amendment to Certificate of Incorporation of Wolverine Exploration
Company dated September 12, 1988 (incorporated by reference to Exhibit 3-
(1)(a) to the Company's Registration Statement No. 33-24429 filed
September 28, 1988).
3-(3) Amendment to Certificate of Incorporation of Wolverine Exploration
Company, dated March 16, 1995.
3-(4) Amendment to Certificate of Incorporation of Wolverine Exploration
Company dated March 28, 1995 (incorporated by reference to Annex IV to
Exhibit (a)(1) to the Company's Schedule 13E-4, dated November 15, 1994).
3-(5) Amendment to Certificate of Incorporation of Amerac Energy Corporation
dated July 12, 1996 (incorporated by reference to Exhibit 4(i).4 to the
Company's Current Report on Form 8-K dated February 28, 1997).
3-(6) Amendment to Certificate of Incorporation of Amerac Energy Corporation
dated July 12, 1996 (incorporated by reference to Exhibit 4(i).5 to the
Company's Current Report on Form 8-K dated February 28, 1997).
3-(7) Amendment to Certificate of Incorporation of Amerac Energy Corporation
dated November 20, 1996 (incorporated by reference to Exhibit 4(i).6 to
the Company's Current Report on Form 8-K dated February 28, 1997).
3-(8) Corporate Bylaws (filed herewith).
4-(1) Warrant Agreement, dated November 18, 1996, between Amerac Energy
Corporation and Petroleum Financial, Inc. (incorporated by reference to
Exhibit 4(I).8 to the Company's Registration Statement No. 333-24643
filed April 4, 1997).
4-(2) Form of Warrant (incorporated by reference to Exhibit I to the Warrant
Agreement referred to in Exhibit 4-(1)).
4-(3) Registration Rights Agreement, dated November 18, 1996, between Amerac
Energy Corporation and the party identified therein. A document identical
to this document, except for the name of the Holder and the Holder's
address for notices, was entered into by the Company with each purchaser
of Common Stock in the Company's private sale of Common Stock completed
on November 18, 1996 (incorporated by reference to Exhibit 4(I).10 to the
Company's Registration Statement No. 333-24643 filed April 4, 1997).
4-(4) Form of Warrant Agreement (incorporated by reference to Exhibit VI to the
Exploitation Agreement filed as Exhibit 10-(11) to the Company's Current
Report on Form 8-K, dated February 28, 1997).
4-(5) Form of Warrant (incorporated by reference to Exhibit I to the Form of
Warrant Agreement referred to in Exhibit 4-(4)).
4-(6) Form of Registration Rights Agreement (incorporated by reference to
Exhibit VII to the Exploitation Agreement filed as Exhibit 10-(11) to the
Company's Current Report on Form 8-K, dated February 28, 1997)).
4-(7) Registration Rights Agreement, dated January 16, 1996 among Amerac Energy
Corporation, Powell Resources, Inc., The Langstroth Family Limited I,
Thomas O. Goldsworthy and James B. Tollerton. Related to acquisition of
Fremont Energy Corporation Properties (incorporated by reference to
exhibit 10-(10) to Form 10-K for the fiscal year ended December 31,
1995).
10-(1) Agreement between the Company and William P. Nicoletti, dated October 20,
1997.
10-(2) Agreement between the Company and Peak Enernomics, Inc., dated October
20, 1997.
27 Financial Data Schedule
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