SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15 (d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): September 25, 1996
FLORES & RUCKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-25058 72-1277752
(State or Other Jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
(Address of principal
executive offices, including zip code)
(504) 927-1450
(Registrant's telephone number, including area code)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
See Item 5.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 10, 1996, Flores & Rucks, Inc. a Delaware corporation (the
"Company") entered into a Purchase and Sale Agreement with Mobil Oil Exploration
& Producing Southeast Inc. ("Mobil") to acquire (the "Central Gulf Acquisition")
interests in certain oil and gas producing fields and related production
facilities primarily situated in the shallow waters of the Central Gulf of
Mexico, offshore Louisiana. The closing of the Central Gulf Acquisition occurred
on September 26, 1996, and the Company acquired 11 properties (the "Central Gulf
Properties") for a gross purchase price of $118.8 million (subject to reduction
by $4 million if certain preferential purchase rights of third parties on
interests in two of the properties are exercised). The purchase price was
determined based upon the Company's estimates of the oil and gas reserves
underlying the Central Gulf Properties, and through negotiations between the
Company and Mobil. Subject to assignment of the applicable operating agreements,
the Company anticipates that it will become the operator of approximately 75% of
the properties. As of June 30, 1996, the Central Gulf Properties had estimated
proved reserves of approximately 13.8 MMBbls of oil and 50.8 Bcf of natural gas,
or an aggregate of approximately 22.3 MMBOE, with a Present Value of Future Net
Revenues of approximately $147.0 million and a Standardized Measure of
Discounted Future Net Cash Flows of approximately $113.4 million. For the six
months ended June 30, 1996, estimated average net daily production on the
Central Gulf Properties was approximately 4,800 Bbls of oil and 27,500 Mcf of
natural gas from approximately 125 producing wells on 87,514 gross (49,248 net)
acres. Pro forma for the Central Gulf Acquisition, the Company's average daily
production is expected to increase by approximately 30%, and its proved reserve
mix is expected to shift to approximately 76% oil and 24% gas from the current
mix of 83% oil and 17% gas.
The Company funded the Central Gulf Acquisition with a portion of the
proceeds of its sale of $160,000,000 principal amount of 9 3/4% Senior
Subordinated Notes Due 2006 (the "Notes Offering"). The closing of the Notes
Offering occurred concurrently with the closing of the Central Gulf Acquisition.
ITEM 5. OTHER EVENTS
(i) On September 25, 1996, William W. Rucks, IV, a member of the Board
of Directors of the Company, and formerly Vice Chairman of the Board of
Directors and President of the Company, sold 1,550,000 shares of the common
stock, par value $0.01 of the Company ("Common Stock") in an underwritten public
offering (the "Common Stock Offering").
In addition, pursuant to an Option Agreement dated August 11, 1996, Mr.
Rucks and the Rucks Family Limited Partnership, a Texas limited partnership of
which Mr. Rucks is a general partner (the "Rucks Partnership"), granted James C.
Flores, Chairman of the Board of Directors and Chief Executive Officer of the
Company, an option (the "Option") effective September 25, 1996 to purchase
1,600,000 shares (the "Option Shares") of Common Stock. The term of the Option
is two years, and may be extended for an additional year (the "Extension
Period") upon payment of an extension fee of $1,000,000. In connection with the
grant of the Option, Mr. Rucks and the Rucks Partnership also granted Mr. Flores
an irrevocable proxy (the "Proxy") to vote the Option Shares for the term of the
Option. Each of the Option and the Proxy is filed as an exhibit to this Form 8-K
and is incorporated herein by reference. The exercise price of the Option is
initially $30 per share, increasing to $35 per share after one year and
increasing to $37.63 per share during the Extension Period. The Option is
exercisable in minimum increments of 300,000 shares during the initial term but
must be exercised in full for any remaining Option Shares if exercised during
the Extension Period.
In connection with the Common Stock Offering and the Option, Mr. Rucks
resigned as President and Vice Chairman of the Board of Directors of the
Company, though he remains a member of the Board of Directors.
Immediately prior to the consummation of the Common Stock Offering and
the granting of the Option and the Proxy, Mr. Flores and Mr. Rucks beneficially
owned approximately 3,585,751 and 3,513,158 shares of Common Stock,
respectively, or approximately 18.3% and 17.9%, respectively, of the outstanding
Common Stock. As of September 25, 1996 and upon consummation of the Common
Stock Offering, Mr. Flores
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beneficially owned approximately 5,185,751 shares of Common Stock (incuding the
Option Shares) or approximately 26.4% of the outstanding Common Stock, and Mr.
Rucks beneficially owned approximately 363,158 shares of Common Stock (excluding
the Option Shares), or approximately 1.9% of the outstanding Common Stock. On
October 8, 1996, the underwriters for the Common Stock Offering exercised their
over-allotment option for 130,500 shares of Common Stock. Accordingly, Mr. Rucks
will beneficially own approximately 232,658 shares of Common Stock (excluding
the Option Shares), or approximtely 1.2% of the outstanding Common Stock.
(ii) After soliciting and receiving the necessary consents of the
holders of the Company's 13 1/2% Senior Notes Due 2004 (the "Senior Notes"), the
Company and the other parties to the Indenture governing the Senior Notes (the
"Senior Notes Indenture") executed a First Supplemental Indenture, dated as of
September 19, 1996, amending the terms of the Senior Notes Indenture. The
primary effect of the First Supplemental Indenture was to amend the "Permitted
Indebtedness" definition related to the Company's revolving credit facility to
allow borrowings thereunder to increase in proportion to increases in the
Company's asset base in order to enhance its ongoing financial and operating
flexibility.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The Statements of Combined Oil and Gas Revenues and Direct Operating
Expenses of the Central Gulf Properties for the years ended December
31, 1995, 1994 and 1993, and for the six months ended June 30,1996
(unaudited), together with the Notes thereto, are incorporated herein
by reference to the Company's Registration Statement on Form S-3
(Registration No. 333-10365).
(B) PRO FORMA FINANCIAL INFORMATION.
The Company's Unaudited Pro Forma Balance Sheet as of June 30, 1996,
and Unaudited Pro Forma Statements of Operations for the year ended
December 31, 1995 and for the six months ended June 30, 1996, together
with the Notes thereto, are incorporated herein by reference to the
Company's Registration Statement on Form S-3 (Registration No.
33-10365).
(C) EXHIBITS.
2.1 Purchase and Sale Agreement, dated July 10, 1996, between
the Company and Mobil Oil Exploration & Producing
Southeast Inc. (incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement on Form S-3,
Registration No. 333-10365).
*2.2 First Amendment to Purchase and Sale Agreement, dated
September 26, 1996, between the Company and Mobil Oil
Exploration & Producing Southeast Inc.
*4.1 First Supplemental Indenture, dated as of September 19,
1996, among the Company, the Subsidiary Guarantors named
therein, and Fleet National Bank, trustee.
*23.1 Consent of Independent Auditors.
*99.1 Option Agreement, dated August 11, 1996, by and among
James C. Flores, Cherie Hair Flores and William W. Rucks,
IV and Catherine May Rucks (both individually and as sole
general partners of the Rucks Family Limited Partnership).
*99.2 Irrevocable Proxy, dated September 25, 1996, in favor
of James C. Flores.
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* Filed herewith.
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SIGNATURE
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.
Date: October 10, 1996 FLORES & RUCKS, INC.
By:/s/ Robert K. Reeves
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Name: Robert K. Reeves
Title: Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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2.1 Purchase and Sale Agreement, dated July 10, 1996, between the Company and Mobil Oil
Exploration & Producing Southeast Inc. (incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-3, Registration No. 333-10365).
*2.2 First Amendment to Purchase and Sale Agreement, dated September 26, 1996, between the
Company and Mobil Oil Exploration & Producing Southeast Inc.
*4.1 First Supplemental Indenture, dated as of September 19,
1996, among the Company, the Subsidiary Guarantors named
therein, and Fleet National Bank, trustee.
*23.1 Consent of Independent Auditors.
*99.1 Option Agreement, dated August 11, 1996, by and among James
C. Flores, Cherie Hair Flores and William W. Rucks, IV and
Catherine May Rucks (both individually and as sole general
partners of the Rucks Family Limited Partnership).
*99.2 Irrevocable Proxy, dated September 25, 1996, in favor of James C. Flores.
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* Filed herewith.