SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report December 30, 2002
(Date of earliest event reported) December 14, 2002
SEVEN SEAS PETROLEUM INC.
(Exact Name of registrant as Specified in its Charter)
Cayman Islands 0-22483 73-468669
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification Number)
5555 SAN FELIPE, SUITE 1700, HOUSTON, TEXAS 77056
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 622-8218
Item 5. Other Events
On December 14, 2002, Seven Seas Petroleum Inc. announced that its
Colombian subsidiaries entered into an Asset Purchase Agreement with Sociedad
Internacional Petrolera S.A. ("Sipetrol") for the sale of its subsidiaries'
interest in the shallow Guaduas Oil Field, inclusive of the 40-mile
Guaduas-LaDorada Pipeline effective December 13, 2002.
Sipetrol Agreement
Sipetrol has agreed to purchase the combined 57.7% participating interests
and related assets of Seven Seas Petroleum Colombia, Inc., GHK Company Colombia
and Petrolinson S.A. in the shallow Guaduas Oil Field. Sipetrol is currently a
32.9% owner of participating interest in the shallow Guaduas Oil Field and is a
party to a Joint Operating Agreement with the subsidiaries. The basic terms are:
|X| The purchase price is $20 million subject to certain adjustments and taxes
|X| The effective time is 7:00 am on December 13, 2002
|X| The Closing is contingent on obtaining governmental approvals from both
Chile and Colombia and the consent of Chesapeake Energy Corporation
pursuant to the Note Purchase and Loan Agreement between Chesapeake and the
Company, among other things
|X| The Closing is expected to occur in late January or early February
|X| GHK Company Colombia will continue to operate the shallow Guaduas Oil Field
pending Closing
Auction Process
The Company engaged CIBC World Markets ("CIBC") to provide financial advice
in late September, 2002. CIBC commenced an auction process to sell the producing
interests in the Guaduas Oil Field. This included establishing data rooms in
Houston and in Colombia and soliciting interests from fifty companies. Nine
companies went through the data rooms. Bids from several prospective buyers were
received in mid-November and this process resulted in the agreement with
Sipetrol today.
Remaining Assets and Operations
After the sale, the only material assets of the Company and its
subsidiaries will be the rights associated with the Deep Dindal association
contract and certain Colombian tax assets. Neither the Company nor its
subsidiaries will have sufficient cash to conduct any additional exploration
activities.
The Company has been actively seeking to secure additional financing or
find a partner to participate in the completion of the Escuela 2 well and test
the commercial potential of the Deep Dindal prospect. To date, the Company has
been unsuccessful in these efforts; however, the Company is continuing its
efforts to find a third party to provide the necessary financing to test the
Escuela 2 well. Even if tested, there are no assurances that the Escuela 2 well
would be productive and provide additional value.
After December 15, 2002, the Company may be in default under the 12-1/2%
$110 Million Senior Subordinated Notes. Now that the financial circumstances of
the Company are more clearly defined, the Company will accelerate its
discussions with representatives of the Senior Subordinated Noteholders.
The Company has received notice from Chesapeake that it is currently in
default under its 12% $45 Million Senior Secured Notes ("$45 Million Notes").
Chesapeake, as the collateral agent for the $45 Million Notes, holds a lien on
the stock of all of the Company's subsidiaries and its cash accounts.
AMEX Listing
As previously announced Seven Seas has been notified by the American Stock
Exchange ("AMEX") that the Company fails to meet specific listing standards. The
Company previously submitted a plan to the AMEX to remedy these deficiencies;
however, based upon the present circumstances, the Company cannot satisfy the
AMEX standards.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99 December 14, 2002 press release
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 hereunto duly authorized.
SEVEN SEAS PETROLEUM INC.
By: RONALD A. LEFAIVE
Name: Ronald A. Lefaive
Title: Vice President of Finance and Chief
Financial Officer
Date: December 30, 2002
INDEX TO EXHIBITS
Exhibit No. Description Method of Filing
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99 December 14, 2002 Press release Filed herewith electronically