FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Current Report Pursuant to Section 13 or 15(b)
of the Securities Exchange Act of 1934
Date of report: July 18, 2001
(Date of earliest event reported : July 9, 2001)
Continental Resources, Inc.
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(Exact name of registrant as specified in its charter)
Oklahoma 333-61547 73-0767549
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
302 N. Independence, Suite 106, Enid, Oklahoma 73701
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(Address of principal executive offices) (Zip Code)
580-233-8955
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(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Item 2. Acquisition of Assets
Continental Resources, Inc. completes acquisition of Farrar Oil Company
On July 9, 2001, Continental Resources, Inc. completed its previously
announced acquisition of the assets of Farrar Oil Company and the assets of
Har-Ken Oil Company, oil and gas operating companies in Illinois and Kentucky,
respectively. The aggregate purchase price paid for these assets was
$33,670,220. The acquired assets include 512 operated and non-operated wells
with daily production of approximately 1,760 barrels of oil and 1.76 million
cubic feet of gas and proved reserves estimated to be 4.6 million barrels of oil
and 7 billion cubic feet of gas as of December 31, 2000. The transaction will be
treated as a purchase for accounting purposes. Continental Resources, Inc. does
not expect to recognize any goodwill associated with this transaction.
The purchase was funded through the revolving credit agreement with a
consortium of banks with MidFirst Bank serving as agent. The credit agreement
provides to Continental Resources, Inc. and its subsidiaries, Continental Gas,
Inc. and Continental Resources of Illinois, Inc. (collectively, "Continental") a
term loan of $27 million and a revolving credit loan of the lessor of (1) $33.0
million and (2) the Borrowing Base less the principal amount outstanding under
the term loan. Initially, the Borrowing Base is $60.0 million. The Borrowing
Base is subject to semi-annual adjustments based on engineering reports as of
January 1 and July 1 of each year. The loan and the term loan will bear interest
at either the prime rate, as published in the Wall Street Journal from time to
time, plus a margin ranging up to .5% or at the LIBOR rate, as published in the
Wall Street Journal from time to time, plus a margin ranging up to 2.25%. The
choice of interest rate is at the option of Continental. The principal amount
outstanding under the loans must be reduced if the Borrowing Base declines below
specified levers, or Continental must pledge additional collateral to secure the
loans. In addition, beginning in September 2001, Continental must make quarterly
amortization payments of the principal amount outstanding under the term loan at
the rate of $1.35 million per quarter. The loans are secured by a lien on all of
Continental's oil and gas properties and related assets. The loan agreement
contains certain covenants which require Continental to maintain certain ratios,
including a current ratio, a ratio of debt to tangible net worth, and a debt
service coverage ratio. In addition, the covenants limit Continental's ability
to merger or consolidate, incur or guarantee debt, pledge assets, declare and
pay dividends, make loans or advances, sell or discount receivables, change the
character of its business, engage in transactions with affiliates, engage in
certain hedging activities, make certain investments, amend its certificate of
incorporation or by-laws, enter into lease agreements other than oil and gas
leases, repurchase more than $10.0 million principal amount of its outstanding
10.25% Senior Subordinated Notes due 2008, and engage in speculative trading
activities involving risks in excess of $1.0 million.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Pursuant to Item 7 (a) (4), the financial statements for the business
acquired will be filed within 60 days of July 23, 2001, the date that this
report was required to be filed.
(b) Pro Forma Financial Statements
Pursuant to Item 7 (a) (4), the unaudited pro forma financial statements of
Continental giving effect to the acquisition of assets of Farrar Oil Company and
Har-Ken Oil Company will be filed within 60 days of July 23, 2001, the date that
this report was requires to be filed.
(c) Exhibits
2.1. Purchase and Sale Agreement between Farrar Oil Company and Har-Ken Oil
Company, as Sellers, and Continental Resources, Inc., as Purchaser,
dated May 14, 2001.
10.1. Second Restated Credit Agreement among Continental Resources, Inc.,
Continental Gas, Inc. and Continental Resources of Illinois, Inc., as
Borrowers, and MidFirst Band, dated July 9, 2001.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONTINENTAL RESOURCES, INC.
(Registrant)
Date July 18, 2001 By ROGER V. CLEMENT
Roger V. Clement
Senior Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
Nos. Description Method of Filing
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2.1 Purchase and Sale Agreement between Filed herewith electronically
Farrar Oil Company and Har-Ken Oil
Company, as Sellers, and Continental
Resources, Inc., as Purchaser,
dated May 14, 2001.
10.1 Second Restated Credit Agreement Filed herewith electronically
among Continental Resources, Inc.,
Continental Gas, Inc. and
Continental Resources of Illinois,
Inc., as Borrowers, and MidFirst
Bank, dated July 9, 2001.