SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2001
ESENJAY EXPLORATION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-80243 73-1421000
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
500 NORTH WATER STREET, SUITE 1100 S.
CORPUS CHRISTI, TEXAS 78471
(Address of Principal Executive Offices)
(361) 883-7464
(Registrant's telephone number, including area code)
(Not Applicable)
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
Esenjay Exploration has adopted the practice of periodically providing
exploration and operations information on certain factors that may materially
affect the Company's financial performance in the future. On January 25,
2001, Esenjay completed a restructuring of a significant portion of its
outstanding natural gas price hedges. The transaction results in increased
hedge prices, an extension of the hedging period and an increase in the total
volumes hedged. The restructure was accomplished at no cost to the Company,
other than consideration in the form of volumes subject to the restructured
position.
The hedge restructuring will have the following impact on Esenjay:
- An increase of valuation of the Company's oil and gas reserves for
borrowing base purposes with its bank.
- Based on market and futures prices in effect on January 25, 2001, a
pretax cash flow increase of approximately $2.75 million in 2001.
Including the benefits from 2001, the cumulative pretax cash flow
increase through the December 31, 2003 life of the restructured hedges
is approximately $400,000. By accelerating the receipt of cash into
2001, the present value benefit will be substantial.
- Increased capital available to support 2001 exploration activities.
Prior to the hedge restructuring, Esenjay had hedged certain volumes of daily
natural gas production through 2001 at a price of $2.45 per million BTU
(MMBTU). The restructured hedge position, which covers a portion of the
Company's production through 2003, is a collar with a floor price of $3.25
per MMBTU and a ceiling price of $4.00 per MMBTU. The following table
details Esenjay's hedge positions and prices affected by this agreement:
Previous Hedge at $2.45 Restructured/Collar
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Floor Cap
Price Price Price
Year 2001 Volume/Day $/MMBTU Volume/Day $/MMBTU $/MMBTU
- --------- ---------- ------- ---------- ------- -------
February 7161 $2.45 7500 $3.25 $4.00
March 7161 $2.45 7500 $3.25 $4.00
April 6880 $2.45 7900 $3.25 $4.00
May 6880 $2.45 7900 $3.25 $4.00
June 6880 $2.45 7900 $3.25 $4.00
July 6600 $2.45 8000 $3.25 $4.00
August 6600 $2.45 8000 $3.25 $4.00
September 6600 $2.45 8000 $3.25 $4.00
October 6319 $2.45 8000 $3.25 $4.00
November 6319 $2.45 8000 $3.25 $4.00
December 6319 $2.45 8000 $3.25 $4.00
Year 2002
- ---------
January 0 8500 $3.25 $4.00
February 0 8500 $3.25 $4.00
March 0 8500 $3.25 $4.00
April 0 8000 $3.25 $4.00
May 0 8000 $3.25 $4.00
June 0 8000 $3.25 $4.00
July 0 7500 $3.25 $4.00
August 0 7500 $3.25 $4.00
September 0 7500 $3.25 $4.00
October 0 7000 $3.25 $4.00
November 0 7000 $3.25 $4.00
December 0 7000 $3.25 $4.00
Year 2003
- ---------
January 0 4500 $3.25 $4.00
February 0 4500 $3.25 $4.00
March 0 4500 $3.25 $4.00
April 0 4500 $3.25 $4.00
May 0 4500 $3.25 $4.00
June 0 4500 $3.25 $4.00
July 0 4500 $3.25 $4.00
August 0 4500 $3.25 $4.00
September 0 4500 $3.25 $4.00
October 0 4500 $3.25 $4.00
November 0 4500 $3.25 $4.00
December 0 4500 $3.25 $4.00
In addition to the above volumes, Esenjay has an outstanding natural gas
hedge position totaling 5,000 MMBTU per day at $4.01 per MMBTU through
December 2001, which remains unchanged. All production in excess of the
volumes under the two agreements is available for sale at current market
prices.
Cautionary Statements: This Current Report on Form 8-K 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. While we believe that the expectations reflected in the
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to have been correct. Various factors could cause
actual results to differ materially from those projected. Such factors are
fluctuations in the prices of natural gas and crude oil, the need to replace
reserves, the substantial capital requirements of our business, available
capital, substantial uncertainties inherent in estimating quantities natural
gas and liquids reserves, projecting future rates of production and the
timing of development expenditures, operating risks, the effects of
governmental and environmental regulation, pending or future litigation.
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: February 2, 2001 ESENJAY EXPLORATION, INC.
By: /s/ David B Christofferson
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David B Christofferson, Senior
Vice President, General Counsel and
Principal Financial Officer