UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-10955
CODA ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1842480
(State of incorporation) (IRS Employer Identification No.)
5735 Pineland Dr., Suite 300, Dallas, Texas 75231
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-1800
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 Par Value 913,611 Shares
Outstanding at August 1, 1996
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
(in thousands)
Pre-Merger Post Merger
------------ -----------
June 30,
December 31, 1996
1995 (Unaudited)
------------ -----------
Current Assets:
Cash and cash equivalents $ 4,604 $ 8,113
Accounts receivable-revenue 10,598 10,425
Accounts receivable-joint interest and other 2,463 2,087
Other current assets 2,206 1,463
-------- --------
19,871 22,088
-------- --------
Amounts due from stockholders 81 ---
-------- --------
Oil and gas properties
(full cost accounting method):
Proved oil and gas properties 226,650 248,729
Unproved oil and gas properties --- 1,000
Less accumulated depletion,
depreciation and amortization 56,042 9,112
-------- --------
170,608 240,617
-------- --------
Gas plants and gathering systems 38,068 33,771
Less accumulated depreciation 4,082 987
-------- --------
33,986 32,784
-------- --------
Other properties, net 2,142 4,148
-------- --------
Other assets 2,376 3,956
-------- --------
$229,064 $303,593
======== ========
See Notes to Consolidated Financial Statements
1
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
(in thousands, except per share amounts)
Pre Merger Post Merger
------------ ------------
June 30,
December 31, 1996
1995 (Unaudited)
------------ ------------
Current liabilities:
Current maturities of long-term debt and
notes payable $ 453 $ 120
Accounts payable - trade 7,252 7,932
Accounts payable - revenue and other 3,394 3,788
Accrued interest 342 3,504
Income taxes payable 128 229
-------- --------
11,569 15,573
-------- --------
Long-term debt - less current maturities 123,907 74,536
-------- --------
10 1/2% Senior Subordinated Notes --- 110,000
-------- --------
Deferred income taxes 14,400 42,050
-------- --------
Commitments and contingent liabilities
15% cumulative redeemable preferred stock,
40 shares of $.01 par value authorized;
20 shares issued and outstanding at
June 30, 1996 --- 20,000
-------- --------
Common stockholders' equity of management,
subject to put and call rights --- 4,560
Less related notes receivable --- (937)
-------- --------
--- 3,623
-------- --------
Other common stockholders' equity:
Common stock 442 9
Additional paid-in capital 68,671 89,991
Retained earnings (deficit) 10,075 (52,189)
-------- --------
79,188 37,811
-------- --------
$229,064 $303,593
======== ========
See Notes to Consolidated Financial Statements
2
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands)
Pre Merger Post Merger
---------------------------- ------------------
Three Six 47 Days Three Pro Forma
Months Months Ended Months 132 Days Six Months
Ended Ended February Ended Ended Ended
June 30, June 30, 16, June 30, June 30, June 30,
1995 1995 1996 1996 1996 1996
-------- -------- -------- ------- --------- ----------
Revenues:
Oil and gas sales $15,596 $30,544 $ 8,079 $19,439 $ 28,403 $36,482
Gas gathering and
processing 9,109 17,013 5,322 10,539 15,338 20,660
Other income 309 496 168 467 668 836
------- ------- ------- ------- -------- -------
25,014 48,053 13,569 30,445 44,409 57,978
------- ------- ------- ------- -------- -------
Costs and expenses:
Oil and gas production 6,817 13,380 3,607 8,216 12,101 15,708
Gas gathering and
processing 7,555 14,285 4,567 8,740 12,628 17,195
Depletion, depreciation and
amortization 4,974 9,844 2,583 7,012 10,510 13,909
General and administrative 756 1,463 320 524 876 1,196
Interest 2,136 4,204 1,102 4,313 6,400 8,613
Stock option compensation --- --- 3,199 --- --- ---
Writedown of oil and gas
properties --- --- --- --- 83,305 ---
------- ------- ------- ------- -------- -------
22,238 43,176 15,378 28,805 125,820 56,621
------- ------- ------- ------- -------- -------
Income (loss) before
income taxes 2,776 4,877 (1,809) 1,640 (81,411) 1,357
Income tax expense (benefit) 962 1,758 (511) 693 (29,222) 690
------- ------- ------- ------- -------- -------
Net income (loss) 1,814 3,119 (1,298) 947 (52,189) 667
Preferred stock dividend
requirements --- --- --- 745 1,106 1,500
------- ------- ------- ------- -------- -------
Net income (loss) available
for common stockholders' $ 1,814 $ 3,119 $(1,298) $ 202 $(53,295) $ (833)
======= ======= ======= ======= ======== =======
See Notes to Consolidated Financial Statements
3
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Post
Pre Merger Merger
---------------------------- ----------
Six Months 47 Days 132 Days
Ended Ended Ended June
June 30, February 16, 30,
1995 1996 1996
---------- ------------ ----------
Cash flows from operating activities:
Net income (loss) $ 3,119 $(1,298) $ (52,189)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion, depreciation and amortization 9,844 2,583 10,510
Writedown of oil and gas properties --- --- 83,305
Deferred income tax expense (benefit) 1,546 (511) (29,443)
Stock option compensation --- 3,199 ---
Other 299 6 (107)
Effect of changes in:
Accounts receivable (1,996) 3,386 (2,837)
Other current assets 24 (63) 273
Accounts payable and other current liabilities (545) (4,166) 7,468
-------- ------- ---------
Net cash provided by operating activities 12,291 3,136 16,980
-------- ------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (14,772) (1,717) (4,525)
Proceeds from sale of assets 1,817 110 623
Purchase of Coda by JEDI, net of $740 cash acquired --- --- (179,373)
Gas plant and gathering systems and other property additions (8,005) (114) (176)
Investment in marketable equity securities (573) --- ---
Payments received on amounts due from stockholders 1,244 130 124
Other 35 --- ---
-------- ------- ---------
Net cash used by investing activities (20,254) (1,591) (183,327)
-------- ------- ---------
Cash flows from financing activities:
Proceeds from bank borrowings 14,400 --- ---
Proceeds from issuance of subordinated debt --- --- 210,000
Proceeds from issuances of common and preferred stock --- --- 110,026
Repayment of bank borrowings and subordinated debt (6,491) (5,019) (144,850)
Proceeds from exercise of options and warrants 619 --- ---
Repurchases of common stock (2,125) --- ---
Financing costs --- (390) (716)
-------- ------- ---------
Net cash provided (used) by financing activities 6,403 (5,409) 174,460
-------- ------- ---------
Increase (decrease) in cash (1,560) (3,864) 8,113
Cash at beginning of period 6,474 4,604 ---
-------- ------- ---------
Cash at end of period $ 4,914 $ 740 $ 8,113
======== ======= =========
Supplemental cash flow information:
Interest paid $ 4,855 $ 1,544 $ 2,863
======== ======= =========
Income taxes paid $ 500 $ --- $ 120
======== ======= =========
See Notes to Consolidated Financial Statements
4
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited, in thousands)
15% Cumulative Common Stockholders'
Redeemable Equity of Management, Other Common
Preferred Stock Subject to Put and Call Rights Stockholders' Equity
--------------- -------------------------------------- ----------------------------
Additional Retained
Notes Par Paid-in Earnings
Shares Amount Shares Amount Receivable Shares Value Capital (Deficit)
------ ------ ------ ------ ---------- ------ ----- ---------- ---------
Pre Merger: $ 10,075
Balances at December 31, 1995 22,089 $442 $68,671
Stock option compensation 3,199
Net loss for the period January 1, 1996
through February 16, 1996 (1,298)
------ ------- ------ ------ ----- ------ ---- ------- --------
Balances at February 16, 1996 -- -- -- -- -- 22,089 $442 $71,870 $ 8,777
====== ======= ====== ====== ===== ====== ==== ======= ========
Post Merger:
Transactions related to the merger:
Common stock issued to management
investors in exchange for common
stock, options, warrants, notes
receivable and cash 14 $4,560 ($937)
Common stock issued to JEDI for cash 900 $ 9 $89,991
Preferred stock issued to JEDI for
cash 20 $20,000
Net loss for the period from February
17, 1996 through June 30, 1996 ($52,189)
------ ------- ------ ------ ----- ------ ---- ------- --------
20 $20,000 14 $4,560 ($937) 900 $ 9 $89,991 ($52,189)
Balances at June 30, 1996 ====== ======= ====== ====== ===== ====== ==== ======= ========
See Notes to Consolidated Financial Statements
5
CODA ENERGY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. THE MERGER
On February 16, 1996, pursuant to an Agreement and Plan of Merger dated as of
October 30, 1995 (as amended, the "Merger Agreement"), by and among Coda Energy,
Inc. ("Coda" or together with its subsidiaries the "Company"), Joint Energy
Development Investments Limited Partnership ("JEDI"), which is an affiliate of
Enron Capital & Trade Resources Corp. ("ECT"), and Coda Acquisition, Inc.
("CAI"), which was a subsidiary of JEDI, JEDI acquired Coda through a merger
(the "Merger") at a price of $7.75 per share in cash (for an aggregate purchase
price of approximately $176.2 million). Concurrently with the execution of the
Merger Agreement, JEDI and CAI entered into certain agreements with members of
the Company's management (the "Management Group"), providing for a continuing
role of management in the Company after the Merger. Following consummation of
the Merger, the Management Group owns approximately 5% of Coda's common stock on
a fully-diluted basis. JEDI owns the remaining 95%.
The sources and uses of funds related to financing the Merger were as follows:
SOURCES OF FUNDS
(in millions)
Credit Agreement $ 95.0
JEDI Debt(l) 100.0
Redeemable Preferred Stock issued to JEDI 20.0
Common Stock issued to JEDI 90.0
------
Total $305.0
======
USES OF FUNDS
(in millions)
Payments to Coda stockholders, warrantholders and optionholders $176.2
Repayment of former credit facility and other indebtedness 122.7
Merger costs and other expenses 6.1
------
Total $305.0
======
(1) Represents indebtedness incurred by CAI and assumed by Coda to fund a
portion of the consideration paid in the Merger.
The Merger has been accounted for using the purchase method of accounting. As
such, JEDI's cost of acquiring Coda has been allocated to the assets and
liabilities acquired based on estimated fair values. As a result, the Company's
financial position and operating results subsequent to the date of the Merger
reflect a new basis of accounting and are not comparable to prior periods.
The allocation of JEDI's purchase price to the assets and liabilities of Coda
resulted in a significant increase in the carrying value of the Company's oil
and gas properties. Under the full cost method of accounting, the carrying
value of oil and gas properties (net of related deferred taxes) is generally not
6
permitted to exceed the sum of the present value (10% discount rate) of
estimated future net cash flows (after tax) from proved reserves, based on
current prices and costs, plus the lower of cost or estimated fair value of
unproved properties (the "cost center ceiling"). Based upon the allocation of
JEDI's purchase price and estimated proved reserves and product prices in effect
at the date of the Merger, the purchase price allocated to oil and gas
properties would be in excess of the cost center ceiling by approximately $83.3
million ($53.3 million net of related deferred taxes). The resulting writedown
is a non-cash charge and has been included in the results of operations for the
132 days ended June 30, 1996.
2. ACCOUNTING AND REPORTING POLICIES
The consolidated financial statements include the accounts of Coda Energy,
Inc., its majority-owned subsidiaries and its pro rata share of the assets,
liabilities and operations of oil and gas partnerships and joint ventures. All
significant intercompany balances and transactions have been eliminated in
consolidation. Certain reclassifications have been made to prior years' amounts
to conform to the current year presentation.
The accompanying consolidated financial statements, which should be read in
conjunction with the audited consolidated financial statements for the year
ended December 31, 1995, reflect all adjustments (consisting only of normal
recurring accruals) which are, in the opinion of management, necessary to
present fairly the financial position as of June 30, 1996, and the results of
operations and cash flows for the periods ended June 30, 1995, February 16, 1996
and June 30, 1996. The results for the periods ended June 30, 1996, are not
necessarily indicative of results for a full year.
Fees from overhead charges billed to working interest owners, including the
Company, of $2.7 million, $848,000 and $2.5 million for the periods ended June
30, 1995, February 16, 1996 and June 30, 1996, respectively, have been
classified as a reduction of general and administrative expenses in the
accompanying consolidated statements of operations.
3. PRO FORMA INFORMATION
The pro forma statement of operations information was prepared as if the
Merger and the sale of the Notes (Note 6) had occurred on January 1, 1996. The
pro forma information does not purport to represent the results of operations
which would have occurred had such transactions been consummated on January 1,
1996 or for any future period. The pro forma information was prepared by
combining the two 1996 periods and giving effect to the following adjustments:
(i) To adjust depletion, depreciation, and amortization to reflect JEDI's
purchase price allocated to property and equipment.
(ii) To adjust interest expense to give effect to the net reduction of
approximately $37.0 million under the Company's credit facility and
repayment of a note payable to an officer of the Company, partially
offset by an increase in the interest rate on borrowings under the new
credit facility of .25%.
(iii) To record interest on the Notes at an interest rate of 10 1/2%.
(iv) To record amortization of the issuance cost of the Notes over the term
such debt is expected to be outstanding (10 years) .
(v) To adjust the writedown of oil and gas properties and stock option
compensation to eliminate these non-recurring charges related to the
Merger.
7
(vi) To adjust the provision for income taxes for the change in financial
taxable income resulting from the above adjustments.
(vii) To record the cumulative dividend requirements of the redeemable
preferred stock issued to JEDI.
4. CREDIT AGREEMENT
On February 14, 1996, the Company entered into a credit agreement with
NationsBank of Texas, N.A. ("NationsBank"), as lender and as agent, and
additional lenders named therein (the "Credit Agreement"). The Credit Agreement
is guaranteed by all of the Company's subsidiaries and provides for a revolving
credit facility in an amount up to $250.0 million. The borrowing base is
subject to redetermination: (i) semiannually, (ii) upon the sale of Taurus and
(iii) upon issuance of public subordinated debt in an amount greater than $100.0
million. The lenders under the Credit Agreement agreed to waive their right to
redetermine the borrowing base with respect to the issuance of the Notes. The
borrowing base was redetermined effective July 1, 1996 and remained at $115.0
million. At June 30, 1996, $74.0 million was outstanding under the Credit
Agreement and $41.0 million was available for borrowing thereunder.
The Credit Agreement is unsecured. The Company has provided the lenders with
first lien deeds of trust on its oil and natural gas assets which will not
become effective, and the lenders have agreed not to file, unless (i) 80% of any
outstanding borrowings in excess of the borrowing base is not repaid within a 90
day period, (ii) cash collateral securing a hedge transaction exceeds 20% of the
borrowing base or (iii) an event of default or a material adverse event, as
defined in the Credit Agreement, occurs.
So long as no default (as defined in the Credit Agreement) is continuing, the
Company has the option of having all or any portion of the amount borrowed under
the Credit Agreement be the subject of one of the following interest rates: (i)
NationsBank's prime rate, (ii) the CD Rate plus 1 1/4% to 1 5/8% based upon the
ratio of outstanding debt to the available borrowing base and (iii) LIBOR plus 1
1/4% to 1 5/8% based upon the ratio of outstanding debt to the available
borrowing base. The Company must also pay a commitment fee of between 0.375% to
0.425% on the unused portion of the credit facility. The Credit Agreement
contains various restrictive covenants, including limitations on the granting of
liens, restrictions on the issuance of additional debt, restrictions on
investments, a requirement to maintain positive working capital, and
restrictions on dividends and stock repurchases. The Credit Agreement also
contains requirements that JEDI or certain affiliates of JEDI must continue to
own a majority of the outstanding equity of the Company and must have the
ability to elect the majority of the Board of Directors and that certain members
of management maintain specified levels of equity ownership in the Company and
continue their employment with the Company. The Credit Agreement matures on
February 16, 2001.
5. LONG-TERM DEBT
The Company's 12% Senior Subordinated Debentures due 2000 (the "Debentures")
bear interest at 12% per annum, payable semiannually. On March 28, 1996, the
Company gave notice of redemption, prior to maturity, to each of the record
holders of the outstanding Debentures. On May 1, 1996, the Company deposited
with the trustee of the Debentures funds sufficient to redeem the Debentures at
a redemption price of 100.0% of the principal amount of the Debentures plus
accrued and unpaid interest thereon, and thereafter interest on the Debentures
ceased to accrue.
8
6. 10 1/2% SENIOR SUBORDINATED NOTES
On March 18, 1996, the Company completed the sale of $110 million principal
amount of 10 1/2% Senior Subordinated Notes due 2006 (the "Notes"). The
proceeds of the Notes were used to fully repay the JEDI debt assumed in the
Merger and to partially repay bank debt. The Notes bear interest at an annual
rate of 10 1/2% payable semiannually in arrears on April 1 and October 1 of each
year. The Notes are general, unsecured obligations of the Company, are
subordinated in right of payment to all Senior Debt (as defined in the Indenture
governing the Notes) of Coda, and are senior in right of payment to all future
subordinated debt of the Company. The claims of the holders of the Notes are
subordinated to Senior Debt, which, as of June 30, 1996, was $74.7 million.
The Notes were issued pursuant to an Indenture, which contains certain
covenants that, among other things, limit the ability of Coda and its Restricted
Subsidiaries (as defined in the Indenture) to incur additional indebtedness and
issue Disqualified Stock (as defined in the Indenture), pay dividends, make
distributions, make investments, make certain other restricted payments, enter
into certain transactions with affiliates, dispose of certain assets, incur
liens securing pari passu or subordinated indebtedness of Coda and engage in
mergers and consolidations.
The Notes are not redeemable at Coda's option prior to April 1, 2001. After
April 1, 2001, the Notes will be subject to redemption at the option of Coda, in
whole or in part, at the redemption prices set forth in the Indenture, plus
accrued and unpaid interest thereon to the applicable redemption date. In
addition, until March 12, 1999, up to $27.5 million in aggregate principal
amount of Notes are redeemable, at the option of Coda on any one or more
occasions from the net proceeds of an offering of common equity of Coda, at a
price of 110.5% of the aggregate principal amount of the Notes, together with
accrued and unpaid interest thereon to the date of the redemption; provided,
however, that at least $82.5 million in aggregate principal amount of Notes must
remain outstanding immediately after the occurrence of such redemption;
provided, further, that any such redemption shall occur within 75 days of the
date of the closing of such offering of common equity.
In the event of a Change of Control (as defined in the Indenture), holders of
the Notes will have the right to require Coda to repurchase their Notes, in
whole or in part, at a price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon to the date of
repurchase. The Indenture requires that, prior to such a repurchase but in any
event within 90 days of such Change of Control, Coda must either repay all
Senior Debt or obtain any required consent to such repurchase.
Coda's payment obligations under the Notes are fully, unconditionally and
jointly and severally guaranteed on a senior subordinated basis by all of Coda's
current subsidiaries and future Restricted Subsidiaries. Such guarantees are
subordinated to the guarantees of Senior Debt issued by the Guarantors (as
defined in the Indenture) under the Credit Agreement and to other guarantees of
Senior Debt issued in the future. All of Coda's current subsidiaries are wholly
owned. There are currently no restrictions on distributions from the Guarantors
to Coda.
9
Separate financial statements and other disclosures concerning the Guarantors
are not presented because management has determined they are not material to
investors. The combined condensed financial information of the Company's
current subsidiaries, the Guarantors, is as follows:
June 30,
1996
--------
Current assets $ 5,783
Oil and gas properties, net 55,205
Gas plants and gathering systems, net 32,448
Other properties, net and other assets 1,427
--------
Total assets $ 94,863
========
Current liabilities
Intercompany payables $ 6,588
Deferred income taxes 43,455
Stockholder's equity 16,460
28,360
Total liabilities and stockholder's equity --------
$ 94,863
========
Pre Merger Post Merger
---------- -----------
47 Days 132 Days
Ended Ended
February 16, June 30,
1996 1996
------------ -----------
Revenues:
Oil and gas sales $2,529 $ 10,257
Gas gathering and processing 5,322 15,338
Other income 2 100
------ --------
7,853 25,695
Costs and expenses:
Oil and gas production 843 2,868
Gas gathering and processing 4,567 12,628
Depletion, depreciation and amortization 1,039 4,152
General and administrative 435 1,401
Interest 460 1,216
Writedown of oil and gas properties --- 19,159
------ --------
7,344 41,424
------ --------
Income (loss) before income taxes 509 (15,729)
Income tax expense (benefit) 277 (5,607)
------ --------
Net income (loss) $ 232 $(10,122)
====== ========
7. PREFERRED STOCK
Under Coda's Restated Certificate of Incorporation, the Board of Directors is
authorized to issue up to 40,000 shares of preferred stock, par value $0.01 per
share. All 40,000 shares of preferred stock are designated as "15% Cumulative
Preferred Stock." The holders of each share of Preferred Stock are entitled
10
to receive, when and as declared by the Board of Directors, cumulative
preferential dividends, at the rate of $150.00 per share per annum. There are
currently 20,000 shares of Preferred Stock issued and outstanding. Shares of
Preferred Stock in excess of such 20,000 shares shall be issuable only for the
purpose of paying dividends on the Preferred Stock. As of June 30, 1996, the
Preferred Stock had accumulated approximately $1.1 million in preferred
dividends which had not been declared by the Board of Directors.
As long as any shares of Preferred Stock are outstanding, no dividends
whatsoever, whether paid in cash, stock or otherwise (except for dividends paid
in shares of common stock, either in the form of a stock split or stock
dividend), may be paid or declared, nor may any distribution be made, on any
common stock to the holders of such stock, unless certain conditions are met.
Coda's Restated Certificate of Incorporation requires that Coda redeem all the
issued and outstanding shares of Preferred Stock at a redemption price of $1,000
per share, plus all accrued and unpaid dividends (including undeclared
dividends) to the date of redemption, if Coda has sufficient funds legally
available for such redemption and if such redemption would not violate or
conflict with any loan agreement, credit agreement, note agreement, indenture or
other agreement relating to indebtedness to which Coda is a party, on or before
the fifth business day after the earliest to occur of the following: (i) the
closing of the sale by Coda of Taurus Energy Corp. and (ii) a Trigger Event, as
such term is defined in the Stockholders Agreement. The Preferred Stock may be
redeemed by Coda at its option, as a whole or in part, to the extent Coda shall
have funds legally available for such redemption, at any time or from time to
time at a redemption price of $1,000 per share, plus all accrued and unpaid
dividends (including undeclared dividends) to the date of redemption. Such
redemption, whether required or optional, is restricted by the Credit Agreement
and the Indenture.
Upon the complete liquidation, dissolution, or winding up of Coda, whether
voluntarily or involuntarily, the holders of Preferred Stock shall be entitled,
after payment or provision for payment of the debts and other liabilities of
Coda but before any distribution is made to the holders of any common stock, to
be paid $1,000 per share plus all accrued and unpaid dividends (including
undeclared dividends), and shall not be entitled to any further payment.
Except as otherwise provided herein or required by law, the holders of shares
of Preferred Stock are not be entitled to vote on any matters to be voted on by
the stockholders of Coda; provided, however, that so long as any shares of the
Preferred Stock are outstanding, Coda shall not, without the written consent or
the affirmative vote of holders of at least a majority of the total number of
shares of Preferred Stock then outstanding and voting as a class, (i) amend its
Certificate of Incorporation or Bylaws or (ii) authorize the merger (whether or
not Coda is a surviving corporation in such merger) of Coda, in each case, if
such amendment or merger would alter, change or abolish the powers, preference
or rights of the Preferred Stock so as to affect the holders of the Preferred
Stock adversely.
8. COMMON STOCK
At December 31, 1995, the Company had 40.0 million shares of $.02 par value
common stock authorized with 22.1 million shares issued and outstanding. At
June 30, 1996, the Company had 1.0 million shares of $.01 par value common stock
authorized with 14,000 shares issued to management subject to put and call
rights and 900,000 issued to JEDI for a total of 914,000 shares issued and
outstanding.
11
9. RELATED PARTY TRANSACTIONS
Subscription Agreement
CAI entered into a Subscription Agreement dated as of October 30, 1995, as
amended by Amendment No. 1 to Subscription Agreement dated as of January 10,
1996, with members of the Management Group (as amended, the "Subscription
Agreement") which provided for the acquisition by such persons of CAI common
stock and the grant to them of nonqualified stock options to purchase shares of
post-Merger common stock (the "Replacement Options") of Coda. Under the
Subscription Agreement, each member of the Management Group who acquired CAI
common stock paid $100 per share for shares thereof, which is the same price per
share paid by JEDI for the remaining shares of CAI common stock. Under the
Subscription Agreement, the Management Group acquired CAI common stock
immediately prior to the effective time of the Merger in exchange for varying
combinations of (i) proceeds from limited recourse promissory notes payable to
CAI in the aggregate principal amount of $937,300 (the "Promissory Notes"), (ii)
Coda common stock, which was valued for this purpose at $7.75 per share, and
(iii) cash. The CAI common stock so acquired was not registered under the
Securities Act or any state securities laws and does not have the benefit of any
registration rights, but is subject to the Stockholders Agreement described
below. By virtue of the Merger, each share of CAI common stock was converted
into one share of Coda common stock.
The Subscription Agreement provided that the Specified Options (representing
certain options to purchase Common Stock held by certain members of the
Management Group) and Specified Warrants (representing certain warrants to
purchase Common Stock held by certain members of the Management Group) would not
be exercised prior to the effective time of the Merger and would, as of the
effective time, be canceled without exercise and without payment of
consideration. Concurrently, the Management Group entered into Nonstatutory
Stock Option Agreements governing the Replacement Options that provided for the
right for a period of 10 years from and after the effective time of the Merger
to purchase shares of post-Merger Coda common stock for $0.01 per share.
However, the Replacement Options may only be exercised while the holder remains
an employee of the Company and for a limited period of time thereafter. The
number of shares of Coda common stock underlying the Replacement Options each
member of the Management Group received is based on the amount of cash the
holder would have received if his Specified Options or Specified Warrants had
been converted into cash in the Merger on the same basis as other outstanding
options and warrants to purchase Common Stock were converted, divided by the
$100 per share purchase price paid by JEDI and the other Management Group
members for their shares of CAI common stock. Thus, if the Replacement Options
are exercised, the holders will have effectively paid the same purchase price
per share as JEDI and the Management Group paid for their shares of common stock
of Coda.
In connection with the issuance of the Replacement Options, the Company
recognized stock option compensation expense of approximately $3.2 million
representing the total amount of cash the holders of the Specified Options and
Specified Warrants would have received if such options and warrants had been
converted to cash in the Merger.
Stockholders Agreement
CAI, JEDI and the Management Group entered into a Stockholders Agreement dated
as of October 30, 1995, as amended by Amendment No. l to Stockholders Agreement
dated as of January 10, 1996 (as amended, the "Stockholders Agreement"), which
provides generally that all parties, including JEDI and
12
the Management Group, (i) have rights of first refusal to acquire additional
shares of common stock of Coda that may be issued by Coda and (ii) are
restricted from transferring their Coda common stock. Coda has a right to match
any third party offer to purchase shares of Coda common stock from any
stockholder, and, in the event that Coda does not purchase those shares, the
other stockholders may have a right to include a pro rata portion of their Coda
common stock in the transaction. The Stockholders Agreement provides that, if
the employment of a member of the Management Group terminates for any reason
(including death or disability) other than his voluntary termination (except
upon retirement at age 65 or older or the expiration of the term of any
employment agreement he has with Coda) or his termination by Coda for cause,
then Coda shall have a right to purchase such member's shares of Coda common
stock at a purchase price to be determined from time to time by Coda pursuant to
a formula that values the shares on the basis of a comparison of the
discretionary cash flow and EBITDA (as defined therein) of the Company and a
group of peer companies. The Stockholders Agreement also provides that, if the
employment of a member of the Management Group terminates for any reason other
than voluntary termination or termination of such member for cause, then such
member shall have the right to require Coda to purchase such member's shares of
Coda common stock based on the previously described formula. The purchase price
under the formula will vary depending on the financial performance of the
Company and the group of peer companies. The Stockholders Agreement provides
that each member of the Management Group shall have the right (the "Special
Management Rights") to receive from JEDI, upon the occurrence of certain events
(generally an initial public offering, a business combination with another
person or the liquidation of Coda) (each, a "Trigger Event"), an amount, which
is payable in cash or additional shares of Coda common stock depending upon the
cause of the Trigger Event, designed to result in the Management Group receiving
in connection with the Trigger Event one-third of the proceeds, attributable to
the shares of Coda common stock purchased by JEDI, above the amount of proceeds
necessary for JEDI to achieve an internal annual rate of return on that
investment of 15%. The individual member's interest in such Special Management
Rights is proportional to such member's ownership of the fully diluted common
stock of Coda. The Stockholders Agreement also provides that if the employment
of a member of the Management Group terminates, his Special Management Rights
shall terminate and, if the termination is other than a voluntary termination or
a termination for cause, he may be entitled to receive an amount based on the
discretionary cash flow and EBITDA formula discussed above. The Stockholders
Agreement further provides that, after the effective time of the Merger, Coda
will establish an employee benefit plan for the benefit of its employees who are
not members of the Management Group and will contribute to the plan 1,900 shares
of Coda common stock. Furthermore, pursuant to the Stockholders Agreement, 4%
of the Special Management Rights will be allocated thereto.
The Stockholders Agreement will terminate and no party thereto will have any
further obligations or rights thereunder upon the earliest to occur of (i) the
termination of the Merger Agreement in accordance with its terms, (ii) October
30, 2005, (iii) the date on which an initial public offering of Coda common
stock or any business transaction involving Coda whereby Coda common stock
becomes a publicly traded security is consummated, (iv) the date of the
dissolution, liquidation or winding-up of Coda and (v) the date of the delivery
to Coda of a written termination notice executed by certain parties to the
Stockholders Agreement.
13
Enron
Enron Corp. ("Enron") is the parent of ECT and accordingly may be deemed to
control indirectly both JEDI and the Company. Enron and certain of its
subsidiaries and other affiliates collectively participate in nearly all phases
of the oil and natural gas industry and are, therefore, competitors of the
Company. In addition, ECT and JEDI have provided, and may in the future
provide, and ECT Securities Corp. has assisted, and may in the future assist, in
arranging, financing to non-affiliated participants in the oil and natural gas
industry who are or may become competitors of the Company. Because of these
various conflicting interests, ECT, the Company, JEDI and the Management Group
have entered into the Business Opportunity Agreement which is intended to make
it clear that Enron and its affiliates have no duty to make business
opportunities available to the Company in most circumstances. The Business
Opportunity Agreement also provides that ECT and its affiliates may pursue
certain business opportunities to the exclusion of the Company. The Business
Opportunity Agreement may limit the business opportunities available to the
Company. In addition, pursuant to the Business Opportunity Agreement there may
be circumstances in which the Company will offer business opportunities to
certain affiliates of Enron. If an Enron affiliate is offered such an
opportunity and decides to pursue it, the Company may be unable to pursue it.
10. HEDGING TRANSACTIONS
The following table sets forth the barrels and weighted average NYMEX prices
hedged under various swap agreements entered into as of June 30, 1996.
Weighted
Barrels Average
Periods Covered Hedged Price
--------------- ------- --------
Six months ending December 31, 1996 320,000 $18.86
Year ending December 31, 1997 375,000 $19.02
As of June 30, 1996 the Company has open positions for sold call options
covering 25,000 Bbls of oil per month at an option price of $18.30 per Bbl for
July 1996 and August 1996, and at an option price of $20.00 per Bbl for the
period from September 1996 to August 1997. During the periods ended February
16, 1996 and June 30, 1996 the Company's oil revenues were decreased by $14,000
and approximately $1.1 million, respectively, as a result of hedging
transactions.
On July 16, 1996, the Company entered into two swaps beginning January 1, 1997
covering 10,000 barrels per month and 15,000 barrels per month at a strike price
of $19.41 and $19.00, respectively, which expire June 30, 1997 and December 31,
1997 respectively. In connection with these swaps, the Company granted the
counterparty a one day option at the expiration of the swap to extend the swap
for an additional twelve months. After considering these swaps, the Company has
hedged a total of 615,000 barrels at an average price of $19.05 for the year
ending December 31, 1997.
11. SUBSEQUENT EVENT
On August 13, 1996, Coda entered into a letter of intent with respect to
the possible sale of all of the issued and outstanding capital stock of its
wholly owned subsidiary, Taurus Energy Corp. ("Taurus"), to EXCO Resources, Inc.
("EXCO"), a publicly held Texas corporation. Taurus currently owns and
14
operates three gas processing and liquids extraction facilities and
approximately 700 miles of gas gathering systems, primarily located in west
central Texas. It is anticipated that at closing Coda would receive $35.0
million cash and approximately 3.3 million shares of unregistered EXCO common
stock. The transaction is subject to the negotiation of a definitive agreement
and to certain anticipated conditions to closing, including (i) satisfactory
completion of due diligence reviews by the parties, (ii) receipt by EXCO of net
proceeds of not less than $25.0 million from the sale of EXCO common stock in an
underwritten public offering, (iii) establishment by EXCO of a credit facility
having an amount available for borrowing of not less than $10.0 million, (iv)
receipt by Coda of any required waivers or approvals under its Indenture, and
(v) approval of the Boards of Directors of Coda and EXCO. If the transaction is
consummated, Coda intends to use the proceeds to redeem its outstanding 15%
cumulative preferred stock, including the payment of accumulated but unpaid
dividends, and to partially repay bank debt. There can be no assurance that the
transaction will be completed.
15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
The Company is an independent energy company principally engaged in the
acquisition and exploitation of producing oil and natural gas properties. The
Company also owns and operates natural gas processing and liquids extraction
facilities and natural gas gathering systems. Coda seeks to acquire properties
whose predominant economic value is attributable to proved producing reserves
and to enhance that value through control of operations, reduction of costs and
development of properties.
The Company's principal strategy is to increase oil and natural gas reserves
and cash flow by selectively acquiring and exploiting producing oil and natural
gas properties, especially those properties with enhanced recovery and other
lower risk development potential. Coda's exploitation efforts include, where
appropriate, the drilling of lower risk development wells, the initiation of
secondary recovery projects, the renegotiation of marketing agreements and the
reduction of drilling, completion and lifting costs. Cost savings may be
principally achieved through reductions in field staff and the more effective
utilization of field facilities and equipment by virtue of geographic
concentration.
The Company expects to continue its efforts to acquire additional oil and
natural gas properties. Future acquisitions, if any, would necessitate, in most
cases, borrowing additional funds under the Company's credit facility. The
ability to borrow such funds is dependent upon the Company's borrowing base from
time to time and the effect upon the borrowing base under the Credit Agreement.
On February 16, 1996, pursuant to an Agreement and Plan of Merger dated as of
October 30, 1995 (as amended, the "Merger Agreement"), by and among Coda, Joint
Energy Development Investments Limited Partnership ("JEDI"), which is an
affiliate of Enron Capital & Trade Resources Corp. ("ECT"), and Coda
Acquisition, Inc. ("CAI"), which was a subsidiary of JEDI, JEDI acquired Coda
through a merger (the "Merger") at a price of $7.75 per share in cash (for an
aggregate purchase price of approximately $176.2 million). The Merger has been
accounted for using the purchase method of accounting. As such, JEDI's cost of
acquiring Coda has been allocated to the assets and liabilities acquired based
on estimated fair values. As a result, the Company's financial position and
operating results subsequent to the date of the Merger will reflect a new basis
of accounting and are not comparable to prior periods.
RESULTS OF OPERATIONS
The following table sets forth certain operating data regarding the production
and sales volumes, average sales prices, and costs associated with the Company's
oil and gas operations and gas gathering and processing operations for the
periods indicated.
16
Pre Merger Post Merger
--------------------------------- -----------------------------------
Three Six Three Pro Forma
Months Months 47 Days Months 132 Days Six Months
Ended Ended Ended Ended Ended Ended
June 30, June 30, February 16, June 30, June 30, June 30,
1995 1995 1996 1996 1996 1996
--------- -------- ------------ -------- -------- ----------
OIL AND GAS OPERATING DATA:
Net production:
Oil (MBbls) 783 1,555 408 880 1,307 1,715
Gas (MMcf) 1,202 2,388 500 866 1,378 1,878
Average sales price: $ 17.63 $ 17.33 $17.57 $19.86 $19.54 $19.07
Oil (per Bbl) $ 1.50 $ 1.51 $ 1.82 $ 2.27 $ 2.08 $2.01
Gas (per Mcf)
Average production cost
per BOE $ 6.93 $ 6.85 $ 7.33 $ 8.02 $ 7.87 $ 7.75
GAS GATHERING AND PROCESSING
OPERATING DATA:
Sales:
Gas sales (MMBTU) 3,285 6,364 1,555 3,049 4,479 6,034
Gas sales average price $ 1.57 $ 1.53 $ 2.24 $ 2.26 $ 2.20 $ 2.21
Natural gas liquids sales
(Mgallons) 13,445 26,013 5,868 11,375 16,862 22,730
Natural gas liquids
average price $ .2957 $ .2804 $ .3173 $ .3216 $ .3248 $ .3228
Costs and expenses (in thousands):
Gas purchases $ 6,476 $12,388 $3,760 $ 7,994 $11,384 $15,444
Plant operating expenses $ 1,079 $ 1,897 $ 506 $ 965 $ 1,464 $ 1,970
Comparison of the six months ended June 30, 1995 and 1996
The unaudited pro forma combined information was prepared as if the
Merger and the issuance of $110.0 million of 10 1/2% Senior Subordinated Note
(the "Notes") had occurred on January 1, 1996. The unaudited pro forma
information was prepared by combining the two 1996 periods and giving effect to
adjustments affecting (i) depletion, depreciation and amortization, (ii)
interest expense, (iii) income taxes and (iv) certain other costs resulting from
the Merger as more fully outlined in the Notes to Consolidated Financial
Statements. The comparisons below compare the unaudited pro forma combined
information to historical information for 1995.
Oil and gas sales for the six months ended June 30, 1996, increased
19% to approximately $36.5 million from approximately $30.5 million in the
comparable period in 1995 primarily due to an 10% increase in oil production and
an increase of $1.74 per barrel and $.50 per Mcf in the average sales price of
oil and gas, respectively. The increase in production is a result of the
acquisition of producing oil and gas properties in the fourth quarter of 1995,
the Company's development drilling program and favorable responses from certain
of the Company's waterflood units. This increase was partially offset by a 21%
17
decrease in gas production due primarily to sales of properties and natural
production declines. During the six months ended June 30, 1996, 90% of oil and
gas sales was attributable to oil production. Oil and gas prices remain
unpredictable. See "- Changes in Prices and Hedging Activities" below.
Gas gathering and processing revenues for the six months ended June
30, 1996 increased 21% to approximately $20.7 million from approximately $17.0
million in the comparable period in 1995 primarily due to a 44% and a 15%
increase in the average sales price for natural gas and natural gas liquids,
respectively. This increase was partially offset by a 13% decrease in natural
gas liquids volumes due to reduced plant throughput volumes as a result of the
termination of a gas purchase contract in January 1996.
Oil and gas production expenses (including production taxes) for the
six months ended June 30, 1996 increased 17% to approximately $15.7 million from
approximately $13.4 million for the same period in 1995, reflecting the effects
of the increased production from the properties acquired in 1995 and from new
wells drilled. Oil and gas production expenses for the six months ended
June 30, 1996 were $7.75 per Boe and are expected to remain near this level for
the remainder of the year.
Gas gathering and processing expenses for the six months ended June
30, 1996 increased 20% to approximately $17.2 million from approximately $14.3
million in the comparable period in 1995 due primarily to an increase in the
purchase price paid to producers. Gas gathering and processing purchases
usually fluctuate in ratio with gas gathering and processing revenues.
Pro forma depletion, depreciation and amortization expense for the six
months ended June 30, 1996, increased 41% to approximately $13.9 million from
approximately $9.8 million for the historical period in 1995 reflecting the
increase in the carrying value of the Company's assets as a result of the
Merger, the increase in oil production from acquisitions in 1995 and property
development. Oil and gas depletion, depreciation and amortization expense
increased from $4.35 per Boe for the six months ended June 30, 1995, to $5.94
per Boe on a pro forma basis for the six months ended June 30, 1996. The
Company anticipates that the depletion, depreciation and amortization rate per
Boe will be approximately $5.94 for 1996 absent significant additional
acquisitions.
General and administrative expenses for the six months ended June 30,
1996 decreased 18% to approximately $1.2 million from approximately $1.5 million
in the comparable period in 1995. This is primarily due to increased overhead
charges billed to working interest owners on the properties acquired in 1995,
being partially offset by additional employees needed as a result of
acquisitions of oil and gas properties. The Company expects base general and
administrative expenses, net of overhead recoveries, to remain near this level,
absent significant additional acquisitions.
Pro forma interest expense for the six months ended June 30, 1996
increased 105% to approximately $8.6 million from approximately $4.2 million for
the historical period in 1995, primarily due to increases in outstanding debt
levels as a result of the Merger which reduced the Company's bank debt, but
added $110.0 million of senior subordinated debt bearing interest at 10 1/2% .
Also contributing to the increase were amounts borrowed during 1995 to fund
development drilling and property acquisitions.
The historical results of operations for the period ended February 16,
1996, include approximately $3.2 million of stock option compensation expense as
a result of the replacement of certain outstanding options and warrants with new
options subject to a lower exercise price. The historical results for the
period ended June 30, 1996 include a writedown of oil and gas properties of
approximately $83.3 million to the full cost pool ceiling based on product
prices at the date of the Merger.
18
Pro forma net income for the six months ended June 30, 1996, was
approximately $667,000 compared to approximately $3.2 million for the historical
period in 1995. This decrease resulted primarily from increases in depletion,
depreciation and amortization and interest expense as a result of the Merger
partially offset by an increase in oil production and higher oil and natural gas
prices.
CHANGES IN PRICES AND HEDGING ACTIVITIES
Annual average oil and natural gas prices have fluctuated
significantly over the past three years. The Company's weighted average oil
price per Bbl during 1995 and at December 31, 1995, was $17.08 and $18.31,
respectively. For the six months ended June 30, 1996, the Company averaged
$1.53 per barrel less (including an oil hedging price decrease of $.65 per
barrel) and $.40 per Mcf less for its oil and natural gas sales, respectively,
than the average NYMEX prices for the same period. On July 31, 1996, the NYMEX
closing price for the near month for oil and natural gas was $20.42 per barrel
and $2.16 per Mcf, respectively.
Pursuant to the loan agreements with Diamond Energy Operating
Company's ("Diamond", a subsidiary of Coda) former primary lender, Diamond
entered into an agreement with a refining and marketing company to sell a fixed
number of barrels attributable to its share of production of liquid hydrocarbons
from certain formerly secured properties at a price of $15.25 per barrel. The
effect of this contract was to lower the Company's 1995 and first six months of
1996 oil revenue by approximately $642,000 ($.41 per barrel) and $123,000 ($.07
per barrel), respectively. The commitment under this agreement was fulfilled
during February 1996.
In an effort to reduce the effects of the volatility of the price of
oil and natural gas on the Company's operations, management has adopted a policy
of hedging oil and natural gas prices through the use of commodity futures,
options, and swap agreements whenever market prices are in excess of the prices
anticipated in the Company's operating budget and profit plan. While the use of
these hedging arrangements limits the downside risk of adverse price movements,
it may also limit future gains from favorable movements. All hedging is
accomplished pursuant to exchange-traded contract or master swap agreements
based upon standard forms. The Company addresses market risk by selecting
instruments whose value fluctuations correlate strongly with the underlying
commodity being hedged. Credit risk related to hedging activities, which is
minimal, is managed by requiring minimum credit standards for courterparties,
periodic settlements and mark-to-market valuations. The Company has not
historically been required to provide any significant amount of collateral in
connection with its hedging activities. The following table sets forth the
barrels and weighted average NYMEX prices hedged under various swap agreements
entered into as of June 30, 1996.
Weighted
Barrels Average
Periods Covered Hedged Price
--------------- -------- --------
Six months ending December 31, 1996 320,000 $18.86
Year ending December 31, 1997 375,000 $19.02
19
As of June 30, 1996 the Company has open positions for sold call
options covering 25,000 Bbls of oil per month at an option price of $18.30 per
Bbl for July 1996 and August 1996, and at an option price of $20.00 per Bbl for
the period from September 1996 to August 1997. In the event of a significant
increase in the future NYMEX oil prices above the swap price for the periods
covered by the swap, the Company may be required to utilize cash to fund margin
accounts. During the six months ended June 30, 1995 the Company's oil revenues
were increased by $66,000 as a result of hedging transactions. During the
periods ended February 16, 1996 and June 30, 1996 the Company's oil revenues
were decreased by $14,000 and $1.1 million, respectively, as a result of hedging
transactions.
On July 16, 1996, the Company entered into two swaps beginning January
1, 1997 covering 10,000 barrels per month and 15,000 barrels per month at a
strike price of $19.41 and $19.00, respectively, which expire June 30, 1997 and
December 31, 1997 respectively. In connection with these swaps, the Company
granted the counterparty a one day option at the expiration of the swap to
extend the swap for an additional twelve months. After considering these swaps,
the Company has hedged a total of 615,000 barrels at an average price of $19.05
for the year ending December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had cash and cash equivalents
aggregating approximately $8.1 million and working capital of approximately $6.5
million. Cash provided by operating activities for the six months ended June
30, 1996 increased to approximately $20.1 million compared to $12.3 million for
the comparable period in 1995 due primarily to an increase in oil production and
an oil price increase partially offset by an increase in interest expense. An
increase in accrued interest accounts for $3.2 million of the increase.
Excluding the impact of the Merger, cash flows used in investing activities
decreased from $20.3 million for the six months ended June 30, 1995 to $5.5
million for the comparable period in 1996, as a result of a higher level of
additions to property and equipment in 1995. Investing activities in 1996 also
include the impact of the purchase of Coda by JEDI. Cash flows provided by
financing activities increased to $169.1 million for the six months ended June
30, 1996 from $6.4 million for the comparable period in 1995, primarily due to
financing transactions related to the Merger. See " --The Merger" below.
The Company has two principal operating sources of cash: (i) net oil
and gas sales from its oil and gas properties and (ii) net margins earned from
gas gathering and processing operations. The Company expects to continue its
efforts to acquire additional oil and gas properties. Future acquisitions, if
any, would necessitate, in most cases, borrowing additional funds under the
Credit Agreement. The ability to borrow such funds is dependent upon the
Company's borrowing base from time to time and the effect upon the borrowing
base of the properties to be acquired.
The Company from time to time solicits bids for selected portions of
its existing oil and natural gas properties which it believes are no longer
suitable for its business strategy. Sales of properties in the past three years
have not been material and no substantial sales of properties are currently
under consideration.
20
On August 13, 1996, Coda entered into a letter of intent with respect
to the possible sale of all of the issued and outstanding capital stock of its
wholly owned subsidiary, Taurus Energy Corp. ("Taurus"), to EXCO Resources, Inc.
("EXCO"), a publicly held Texas corporation. Taurus currently owns and operates
three gas processing and liquids extraction facilities and approximately 700
miles of gas gathering systems, primarily located in west central Texas. It is
anticipated that at closing Coda would receive $35.0 million cash and
approximately 3.3 million shares of unregistered EXCO common stock. The
transaction is subject to the negotiation of a definitive agreement and to
certain anticipated conditions to closing, including (i) satisfactory completion
of due diligence reviews by the parties, (ii) receipt by EXCO of net proceeds of
not less than $25.0 million from the sale of EXCO common stock in an
underwritten public offering, (iii) establishment by EXCO of a credit facility
having an amount available for borrowing of not less than $10.0 million, (iv)
receipt by Coda of any required waivers or approvals under its Indenture, and
(v) approval of the Boards of Directors of Coda and EXCO. If the transaction is
consummated, Coda intends to use the proceeds to redeem its outstanding 15%
cumulative preferred stock, including the payment of accumulated but unpaid
dividends, and to partially repay bank debt. There can be no assurance that the
transaction will be completed.
The Company has development drilling programs designed for all its
major operating areas. The Company has budgeted capital spending of
approximately $18 million in 1996, excluding property acquisitions, but is not
contractually committed to expend these funds. During the first six months of
1996, the Company incurred approximately $5.3 million of these costs. In
addition, the Company is continuing to evaluate oil and natural gas properties
for future acquisitions. Historically, the Company has used the public equity
market (i) to raise cash to fund acquisitions or repay indebtedness incurred for
acquisitions and (ii) as a medium of exchange for other companies' capital stock
or assets in connection with acquisitions. As a result of being 95% owned by
JEDI (on a fully diluted basis), the Company does not expect to utilize the
public equity market to finance acquisitions in the near term. Accordingly, any
material expenditures in connection with acquisitions would require borrowing
under the Company's credit facility or from other sources. There can be no
assurance that such funds will be available to the Company. Furthermore, the
Company's ability to borrow in the future is subject to restrictions imposed by
the Company's credit facility and the Indenture as more fully described below.
The Merger
On February 16, 1996, the Company completed the Merger. The Merger
has been accounted for using the purchase method of accounting. As such, JEDI's
cost of acquiring Coda was allocated to the assets and liabilities acquired
using estimated fair values. As a result, the Company's financial position and
operating results subsequent to the date of the Merger reflect a new basis of
accounting and are not comparable to prior periods. Concurrently with the
execution of the Merger Agreement, JEDI and CAI entered into certain agreements
with the Management Group providing for a continuing role of management in the
Company after the Merger. The sources and uses of funds related to financing
the Merger were as follows:
21
SOURCES OF FUNDS
(in millions)
Credit Agreement $ 95.0
JEDI Debt(l) 100.0
Redeemable Preferred Stock issued to JEDI 20.0
Common Stock issued to JEDI 90.0
------
Total $305.0
======
USES OF FUNDS
(in millions)
Payments to Coda stockholders, warrantholders and optionholders $176.2
Repayment of former credit facility and other indebtedness 122.7
Merger costs and other expenses 6.1
------
Total $305.0
======
(1) Represents indebtedness incurred by CAI and assumed by Coda to fund a
portion of the consideration paid in the Merger.
The Company incurred substantial indebtedness in connection with the Merger
and is highly leveraged. As of June 30, 1996, the Company had total indebtedness
of approximately $184.7 million and stockholders' equity (including Preferred
Stock) of approximately $61.4 million. Based upon the Company's current level of
operations and anticipated growth, management of the Company believes that
available cash, together with available borrowings under the Credit Agreement
will be adequate to meet the Company's anticipated future requirements for
working capital, capital expenditures and scheduled payments of principal of,
and interest on, its indebtedness, including the Notes. There can be no
assurance that such anticipated growth will be realized, that the Company's
business will generate sufficient cash flow from operations or that future
borrowings will be available in an amount sufficient to enable the Company to
service its indebtedness, including the Notes, or make necessary capital
expenditures. In addition, the Company anticipates that it is likely to find it
necessary to refinance a portion of the principal amount of the Notes at or
prior to their maturity. However, there can be no assurance that the Company
will be able to obtain financing to complete a refinancing of the Notes.
Credit Agreement
On February 14, 1996, the Company entered into a credit agreement with
NationsBank of Texas, N.A. ("NationsBank"), as lender and as agent, and
additional lenders named therein (the "Credit Agreement"). The Credit Agreement
is guaranteed by all of the Company's subsidiaries and provides for a revolving
credit facility in an amount up to $250.0 million. The borrowing base is
subject to redetermination: (i) semiannually, (ii) upon the sale of Taurus and
(iii) upon issuance of public subordinated debt in an amount greater than $100.0
million. The lenders under the Credit Agreement have agreed to waive their
right to redetermine the borrowing base with respect to the issuance of the
Notes. The borrowing base was redetermined effective July 1, 1996 and remained
at $115.0 million. At June 30, 1996, $74.0 million was outstanding under the
Credit Agreement and $41.0 million was available for borrowing thereunder.
22
The Credit Agreement is unsecured. The Company has provided the lenders with
first lien deeds of trust on its oil and natural gas assets which will not
become effective, and the lenders have agreed not to file, unless (i) 80% of any
outstanding borrowings in excess of the borrowing base is not repaid within a 90
day period, (ii) cash collateral securing a hedge transaction exceeds 20% of the
borrowing base or (iii) an event of default or a material adverse event, as
defined in the Credit Agreement, occurs.
So long as no default (as defined in the Credit Agreement) is continuing, the
Company has the option of having all or any portion of the amount borrowed under
the Credit Agreement be the subject of one of the following interest rates: (i)
NationsBank's prime rate, (ii) the CD Rate plus 1 1/4% to 1 5/8% based upon the
ratio of outstanding debt to the available borrowing base and (iii) LIBOR plus 1
1/4% to 1 5/8% based upon the ratio of outstanding debt to the available
borrowing base. The Company must also pay a commitment fee of between 0.375% to
0.425% on the unused portion of the credit facility. The Credit Agreement
contains various restrictive covenants, including limitations on the granting of
liens, restrictions on the issuance of additional debt, restrictions on
investments, a requirement to maintain positive working capital, and
restrictions on dividends and stock repurchases. The Credit Agreement also
contains requirements that JEDI or certain affiliates of JEDI must continue to
own a majority of the outstanding equity of the Company and must have the
ability to elect the majority of the Board of Directors and that certain members
of management maintain specified levels of equity ownership in the Company and
continue their employment with the Company. The Credit Agreement matures on
February 16, 2001.
10 1/2% Senior Subordinated Notes
On March 18, 1996, the Company completed the sale of $110 million principal
amount of 10 1/2% Senior Subordinated Notes due 2006 (the "Notes"). The
proceeds of the Notes were used to fully repay the JEDI debt assumed in the
Merger and to partially repay bank debt. The Notes bear interest at an annual
rate of 10 1/2% payable semiannually in arrears on April 1 and October 1 of each
year. The Notes are general, unsecured obligations of the Company, are
subordinated in right of payment to all Senior Debt (as defined in the Indenture
governing the Notes) of Coda, and are senior in right of payment to all future
subordinated debt of the Company. The claims of the holders of the Notes are
subordinated to Senior Debt, which, as of June 30, 1996, was $74.7 million.
Coda's payment obligations under the Notes are fully, unconditionally and
jointly and severally guaranteed on a senior subordinated basis by all of Coda's
current subsidiaries and future Restricted Subsidiaries (as defined in the
Indenture). Such guarantees are subordinated to the guarantees of Senior Debt
issued by the Guarantors under the Credit Agreement and to other guarantees of
Senior Debt issued in the future. All of Coda's current subsidiaries are wholly
owned. There are currently no restrictions on distributions from the Guarantors
to Coda.
The Notes were issued pursuant to an Indenture, which contains certain
covenants that, among other things, limit the ability of Coda and its Restricted
Subsidiaries to incur additional indebtedness and issue Disqualified Stock (as
defined in the Indenture), pay dividends, make distributions, make investments,
make certain other restricted payments, enter into certain transactions with
affiliates, dispose of certain assets, incur liens securing pari passu or
subordinated indebtedness of Coda and engage in mergers and consolidations.
The Notes are not redeemable at Coda's option prior to April 1, 2001. After
April 1, 2001, the Notes will be subject to redemption at the option of Coda, in
whole or in part, at the redemption prices set forth in the Indenture, plus
accrued and unpaid interest thereon to the applicable redemption date. In
addition,
23
until March 12, 1999, up to $27.5 million in aggregate principal amount of Notes
are redeemable, at the option of Coda on any one or more occasions from the net
proceeds of an offering of common equity of Coda, at a price of 110.5% of the
aggregate principal amount of the Notes, together with accrued and unpaid
interest thereon to the date of the redemption; provided, however, that at least
$82.5 million in aggregate principal amount of Notes must remain outstanding
immediately after the occurrence of such redemption; provided, further, that any
such redemption shall occur within 75 days of the date of the closing of such
offering of common equity.
In the event of a Change of Control (as defined in the Indenture), holders of
the Notes will have the right to require Coda to repurchase their Notes, in
whole or in part, at a price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon to the date of
repurchase. The Indenture requires that, prior to such a repurchase but in any
event within 90 days of such Change of Control, Coda must either repay all
Senior Debt or obtain any required consent to such repurchase.
Other Long-Term Debt
The Company's 12% Senior Subordinated Debentures due 2000 (the "Debentures")
bear interest at 12% per annum, payable semiannually. On March 28, 1996, the
Company gave notice of redemption, prior to maturity, to each of the record
holders of the outstanding Debentures. On May 1, 1996, the Company deposited
with the trustee of the Debentures funds sufficient to redeem the outstanding
Debentures at a redemption price of 100.0% of the principal amount of the
Debentures plus accrued and unpaid interest thereon, and thereafter interest on
the Debentures ceased to accrue.
15% Cumulative Preferred Stock
The Company's Restated Certificate of Incorporation authorizes the issuance
of up to 40,000 shares of Preferred Stock. In conjunction with the Merger, the
Company issued 20,000 shares of Preferred Stock to JEDI for $20.0 million in
cash. Shares of Preferred Stock in excess of such 20,000 shares shall be
issuable only for the purpose of paying dividends on the Preferred Stock. The
holders of each share of Preferred Stock are entitled to receive, when and as
declared by the Board of Directors, cumulative preferential dividends, at the
rate of $150.00 per share per annum. The payment of Preferred Stock dividends
in cash is restricted by the Credit Agreement and the Indenture. As of June 30,
1996, the Preferred Stock had accumulated approximately $1.1 million in
preferred dividends which had not been declared by the Board of Directors.
As long as any shares of Preferred Stock are outstanding, no dividends
whatsoever, whether paid in cash, stock or otherwise (except for dividends paid
in shares of common stock, either in the form of a stock split or stock
dividend), may be paid or declared, nor may any distribution be made, on any
common stock to the holders of such stock, unless certain conditions are met.
Coda's Restated Certificate of Incorporation requires that Coda redeem all the
issued and outstanding shares of Preferred Stock at a redemption price of $1,000
per share, plus all accrued and unpaid dividends (including undeclared
dividends) to the date of redemption, if Coda has sufficient funds legally
available for such redemption and if such redemption would not violate or
conflict with any loan agreement, credit agreement, note agreement, indenture or
other agreement relating to indebtedness to which Coda is a party, on or before
the fifth business day after the earliest to occur of the following: (i) the
closing of the sale by Coda of Taurus Energy Corp. and (ii) a Trigger Event, as
such term is defined in the Stockholders Agreement. The Preferred Stock may be
redeemed by Coda at its option, as a whole or in part, to the
24
extent Coda shall have funds legally available for such redemption, at any time
or from time to time at a redemption price of $1,000 per share, plus all accrued
and unpaid dividends (including undeclared dividends) to the date of redemption.
Such redemption, whether required or optional, is restricted by the Credit
Agreement and the Indenture.
Enron
Enron Corp. ("Enron") is the parent of ECT and accordingly may be deemed to
control indirectly both JEDI and the Company. Enron and certain of its
subsidiaries and other affiliates collectively participate in nearly all phases
of the oil and natural gas industry and are, therefore, competitors of the
Company. In addition, ECT and JEDI have provided, and may in the future
provide, and ECT Securities Corp. has assisted, and may in the future assist, in
arranging financing to non-affiliated participants in the oil and natural gas
industry who are or may become competitors of the Company. Because of these
various conflicting interests, ECT, the Company, JEDI and the Management Group
have entered into the Business Opportunity Agreement which is intended to make
it clear that Enron and its affiliates have no duty to make business
opportunities available to the Company in most circumstances. The Business
Opportunity Agreement also provides that ECT and its affiliates may pursue
certain business opportunities to the exclusion of the Company. The Business
Opportunity Agreement may limit the business opportunities available to the
Company. In addition, pursuant to the Business Opportunity Agreement there may
be circumstances in which the Company will offer business opportunities to
certain affiliates of Enron. If an Enron affiliate is offered such an
opportunity and decides to pursue it, the Company may be unable to pursue it.
25
PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION
-----------------
Effective July 16, 1996, the Company consummated the exchange of $110 million
in aggregate principal amount of its Series B Senior Subordinated Notes Due 2006
(the "Exchange Notes") for $110 million in aggregate principal amount of its
Series A Senior Subordinated Notes Due 2006 (the "Private Notes"). The form and
terms of the Exchange Notes are the same as the form and terms of the Private
Notes except that (i) the Exchange Notes bear the Series B designation, (ii) the
Exchange Notes have been registered under the Securities Act of 1933, as
amended, and, therefore, the Exchange Notes do not bear legends restricting the
transfer thereof, and (iii) holders of the Exchange Notes are not entitled to
certain rights that holders of the Private Notes had under that certain
Registration Rights Agreement. The Exchange Notes evidence the same
indebtedness as the Private Notes (which they replace) and were issued under,
and are entitled to the benefits of, the same indenture.
On August 13, 1996, Coda entered into a letter of intent with respect to the
possible sale of all of the issued and outstanding capital stock of its wholly
owned subsidiary, Taurus Energy Corp. ("Taurus"), to EXCO Resources, Inc.
("EXCO"), a publicly held Texas corporation. Taurus currently owns and operates
three gas processing and liquids extraction facilities and approximately 700
miles of gas gathering systems, primarily located in west central Texas. It is
anticipated that at closing Coda would receive $35.0 million cash and
approximately 3.3 million shares of unregistered EXCO common stock. The
transaction is subject to the negotiation of a definitive agreement and to
certain anticipated conditions to closing, including (i) satisfactory completion
of due diligence reviews by the parties, (ii) receipt by EXCO of net proceeds of
not less than $25.0 million from the sale of EXCO common stock in an
underwritten public offering, (iii) establishment by EXCO of a credit facility
having an amount available for borrowing of not less than $10.0 million, (iv)
receipt by Coda of any required waivers or approvals under its Indenture, and
(v) approval of the Boards of Directors of Coda and EXCO. If the transaction is
consummated, Coda intends to use the proceeds to redeem its outstanding 15%
cumulative preferred stock, including the payment of accumulated but unpaid
dividends, and to partially repay bank debt. There can be no assurance that the
transaction will be completed.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) Exhibits
2.1 Agreement and Plan of Merger, by and among Coda, Joint Energy
Development Investments Limited Partnership and Coda Acquisition, Inc.
dated as of October 30, 1995 filed as Exhibit 2.1 to Coda's Current
Report on Form 8-K dated October 30, 1995, and incorporated by
reference herein.
2.2 Agreement of Coda to provide schedules to the Agreement and Plan of
Merger (Exhibit 2.1) omitted pursuant to Item 6.01 (b)(2) of
Regulation S-K filed as Exhibit 2.2 to Coda's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1995, and
incorporated by reference herein.
2.3 Amendment to Agreement and Plan of Merger dated as of December 22,
1995 filed as Exhibit 2.1 to Coda's Current Report on Form 8-K dated
December 22, 1995, and incorporated by reference herein.
26
2.4 Second Amendment to Agreement and Plan of Merger dated as of January
10, 1996 filed as Exhibit 2.1 to Coda's Current Report on Form 8-K
dated January 10, 1996, and incorporated by reference herein.
2.5 Agreement of Coda to provide schedules and exhibits to Second
Amendment to Agreement and Plan of Merger (Exhibit 2.4) and to provide
schedules to Amendment No. 1 to Subscription Agreement (Exhibit 10.17)
and Amendment No. 1 to Stockholders Agreement (Exhibit 10.18) filed as
Exhibit 99.4 to Coda's Current Report on Form 8-K dated January 10,
1996, and incorporated by reference herein.
3.1 Restated Certificate of Incorporation of Coda filed as Exhibit 3.1 to
the Company's Registration Statement on Form S-4 filed April 9, 1996
(Registration No 333-2375, the "1996 Form S-4") and incorporated by
reference herein.
3.2 Amended and Restated Bylaws of Coda filed as Exhibit 3.2 to the 1996
Form S-4 and incorporated by reference herein.
3.3 Certificate of Incorporation of Diamond Energy Operating Company, as
amended, filed as Exhibit 3.3 to the 1996 Form S-4 and incorporated by
reference herein.
3.4 Bylaws of Diamond Energy Operating Company, as amended, filed as
Exhibit 3.4 to the 1996 Form S-4 and incorporated by reference herein.
3.5 Articles of Incorporation of Taurus Energy Corp., as amended, filed as
Exhibit 3.5 to the 1996 Form S-4 and incorporated by reference herein.
3.6 Bylaws of Taurus Energy Corp., as amended, filed as Exhibit 3.6 to the
1996 Form S-4 and incorporated by reference herein.
3.7 Articles of Incorporation of Electra Resources, Inc. filed as Exhibit
3.7 to the 1996 Form S-4 and incorporated by reference herein.
3.8 Bylaws of Electra Resources, Inc. filed as Exhibit 3.8 to the 1996
Form S-4 and incorporated by reference herein.
4.1 Indenture, dated as of March 18, 1996, among Coda, the Guarantors and
Texas Commerce Bank National Association, as trustee, relating to
$110,000,000 aggregate principal amount of 10 1/2% Series A and Series
B Senior Subordinated Notes due 2006 filed as Exhibit 4.1 to the 1996
Form S-4 and incorporated by reference herein.
4.2 Registration Rights Agreement, dated as of March 18, 1996, among Coda,
the Guarantors and the Initial Purchasers filed as Exhibit 4.2 to the
1996 Form S-4 and incorporated by reference herein.
4.3 Purchase Agreement, dated as of March 12, 1996, among Coda, the
Guarantors and the Initial Purchasers filed as Exhibit 4.3 to the 1996
Form S-4 and incorporated by reference herein.
27
4.4 Indenture between Coda and Texas American Bank Dallas, as Trustee,
dated June 1, 1985, as amended, governing Coda's 12% Senior
Subordinated Debentures due 2000 filed as Exhibit 4.3 to Coda's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 (the
"1994 10-K"), and incorporated by reference herein.
4.5 Credit Agreement, dated February 14, 1996, among the Company,
NationsBank of Texas, N.A., individually and as agent, and additional
lenders named therein, filed as Exhibit 4.5 to the 1996 Form S-4 and
incorporated by reference herein.
4.6 Promissory Note dated February 14, 1996, in the original principal
amount of $87,500,000.00, executed by Coda, payable to NationsBank of
Texas, N.A. filed as Exhibit 4.6 to the 1996 Form S-4 and incorporated
by reference herein.
4.7 Promissory Note dated February 14, 1996, in the original principal
amount of $37,500,000.00, executed by Coda, payable to Bank One,
Texas, N.A. filed as Exhibit 4.7 to the 1996 Form S-4 and incorporated
by reference herein.
4.8 Promissory Note dated February 14, 1996, in the original principal
amount of $75,000,000.00, executed by Coda, payable to Texas Commerce
Bank National Association filed as Exhibit 4.8 to the 1996 Form S-4
and incorporated by reference herein.
4.9 Promissory Note dated February 14, 1996, in the original principal
amount of $50,000,000.00, executed by Coda, payable to the First
National Bank of Boston filed as Exhibit 4.9 to the 1996 Form S-4 and
incorporated by reference herein.
4.10 Specimen Certificate of Series A 10 1/2% Senior Subordinated Notes due
2006 (the "Private Notes") (included in Exhibit 4.1 hereto), filed as
Exhibit 4.10 to the 1996 Form S-4 and incorporated by reference
herein.
4.11 Specimen Certificate of Series B 10 1/2% Senior Subordinated Notes due
2006 (the "Exchange Notes") (included in Exhibit 4.1 hereto), filed as
Exhibit 4.11 to the 1996 Form S-4 and incorporated by reference
herein.
4.12* First Supplement to Indenture dated as of April 25, 1996 amending the
Indenture filed as Exhibit 4.1 above.
10.1 Form of Indemnification Agreement entered into between Coda and each
of its directors and officers filed as Exhibit 10.1 to the 1994 10-K,
and incorporated by reference herein.
10.2 List of directors and officers that have entered into Indemnification
Agreements with Coda filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1995,
and incorporated by reference herein.
10.3 Agreement and Plan of Merger, entered into as of April 29, 1994 among
Coda, Alliance Natural Gas, Inc., Taurus Energy Corp., and the
shareholders of Taurus Energy Corp. more particularly identified
therein, filed as Exhibit 2.1 to Coda's Current Report on Form 8-K
dated April 29, 1994, as amended by Form 8-K/A No. 1, dated June 14,
1994 and Form 8-K/A No. 2, dated August 17, 1994, and incorporated by
reference herein.
28
10.4 Agreement and Plan of Merger, dated June 11, 1994, among Coda, DEO
Acquisition Corp., DA Acquisition Corp. and Diamond, filed as Exhibit
2.1 to Coda's Registration Statement on Form S-4, dated July 13, 1994
(No. 33-81532) (the "1994 Form S-4"), and incorporated by reference
herein.
10.5 Agreement of Coda to provide schedules to Agreement and Plan of Merger
(Exhibit 10.6) omitted pursuant to Item 6.01 (b)(2) of Regulation S-K,
and filed as Exhibit 2.4 to the 1994 Form S-4, and incorporated by
reference herein.
10.6 Form of First Amendment to the Agreement and Plan of Merger dated as
of June 11, 1994 by and among Coda, DEO Acquisition Corp., DA
Acquisition Corp. and Diamond, filed as Exhibit 2.5 to the 1994
Form S-4 and incorporated by reference herein.
10.7 Stockholders Agreement dated October 30, 1995 filed as Exhibit 99.2 to
Coda's Current Report on Form 8-K dated October 30, 1995, and
incorporated by reference herein.
10.8 Subscription Agreement among Coda Acquisition, Inc. and The Management
Investors dated October 30, 1995 filed as Exhibit 99.3 to Coda's
Current Report on Form S-K dated October 30, 1995, and incorporated by
reference herein.
10.9 Agreement of Coda to provide schedules to Stockholders Agreement
(Exhibit 10.7) and to Subscription Agreement (Exhibit 10.8) filed as
Exhibit 99.11 to Coda's Current Report on Form 8-K dated October 30,
1995, and incorporated by reference herein.
10.10 Business Opportunity Agreement dated as of October 30, 1995 filed as
Exhibit 99.4 to Coda's Current Report on Form 8-K dated October 30,
1995, and incorporated by reference herein.
10.11 Executive Employment Agreement between Coda Acquisition, Inc. and
Randell A. Bodenhamer filed as Exhibit 99.5 to Coda's Current Report
on Form 8-K dated October 30, 1995, and incorporated by reference
herein.
10.12 Executive Employment Agreement between Coda Acquisition, Inc. and J.
William Freeman filed as Exhibit 99.6 to Coda's Current Report on Form
8-K dated October 30, 1995, and incorporated by reference herein.
10.13 Executive Employment Agreement between Coda Acquisition, Inc. and
Grant W. Henderson filed as Exhibit 99.7 to Coda's Current Report on
Form 8-K dated October 30, 1995 and incorporated by reference herein.
10.14 Executive Employment Agreement between Coda Acquisition, Inc. and Jarl
P. Johnson filed as Exhibit 99.8 to Coda's Current Report on Form 8-K
dated October 30, 1995, and incorporated by reference herein.
10.15 Executive Employment Agreement between Coda Acquisition, Inc. and
Douglas H. Miller filed as Exhibit 99.9 to Coda's Current Report on
Form S-K dated October 30, 1995, and incorporated by reference herein.
29
10.16 Executive Employment Agreement between Coda Acquisition, Inc. and J.W.
Spencer, III filed as Exhibit 99.10 to Coda's Current Report on Form
8-K dated October 30, 1995, and incorporated by reference herein.
10.17 Amendment No. 1 to Subscription Agreement dated as of January 10, 1996
filed as Exhibit 99.2 to Coda's Current Report on Form S-K dated
January 10, 1996, and incorporated by reference herein.
10.18 Amendment No. 1 to Stockholders Agreement dated as of January 10, 1996
filed as Exhibit 99.3 to Coda's Current Report on Form 8-K dated
January 10, 1996, and incorporated by reference herein.
10.19 Credit Agreement, dated February 14, 1996, among the Company,
NationsBank of Texas, N.A., individually and as agent, and additional
lenders named therein filed as Exhibit 4.5 above.
10.20 Promissory Note dated February 14, 1996, in the original principal
amount of $87,500,000.00, executed by Coda, payable to NationsBank of
Texas, N.A. filed as Exhibit 4.6 above.
10.21 Promissory Note dated February 14, 1996, in the original principal
amount of $37,500,000.00, executed by Coda, payable to Bank One,
Texas, N.A. filed as Exhibit 4.7 above.
10.22 Promissory Note dated February 14, 1996, in the original principal
amount of $75,000,000.00, executed by Coda, payable to Texas Commerce
Bank National Association filed as Exhibit 4.8 above.
10.23 Promissory Note dated February 14, 1996, in the original principal
amount of $50,000,000.00, executed by Coda, payable to the First
National Bank of Boston filed as Exhibit 4.9 above.
10.24 Form of Nonstatutory Stock Option Agreement attached and filed as
Exhibit A to Exhibit 99.3 to Coda's Current Report on Form 8-K dated
October 30, 1995, and incorporated by reference herein.
10.25 Form of Limited Recourse Promissory Note attached and filed as Exhibit
B to Exhibit 99.3 to Coda's Current Report on Form 8-K dated October
30, 1995, and incorporated by reference herein.
10.26 Form of Security Agreement attached and filed as Exhibit C to Exhibit
99.3 to Coda's Current Report on Form 8-K dated October 30, 1995, and
incorporated by reference herein.
10.27 List of Management Investors who are parties to Nonstatutory Stock
Option Agreement (Exhibit 10.24), Limited Recourse Promissory Note
(Exhibit 10.25) or Security Agreement (Exhibit 10.26) filed as Exhibit
10.27 to the 1996 Form S-4 and incorporated by reference herein.
30
10.28 Non-competition Agreement between Coda and Tommie E. Lohman dated
April 29, 1994, filed as Exhibit 10.28 to the 1996 Form S-4 and
incorporated by reference herein.
27* Financial Data Schedule.
- -------------
* Filed herewith
(B) Reports on Form 8-K
Current Report on Form 8-K dated January 10, 1996.
Item 5. Other Events
- Conditions to the effectiveness of the Merger Agreement have
been satisfied.
- Board of Directors Approves Second Amendment to this Merger
Agreement.
- Special Meeting of Stockholders to be held February 16,
1996.
Item 7. Financial statement and Exhibits.
Exhibit 2.1 Second Amendment to Agreement and Plan of Merger dated as of
January 10, 1996.
Exhibit 99.1 Coda Energy, Inc. Press Release dated January 11, 1996.
Exhibit 99.2 Amendment No. 1 to Subscription Agreement dated as of
January 10, 1996.
Exhibit 99.3 Amendment No. 1 to Stockholders Agreement dated as of
January 10, 1996.
Exhibit 99.4 Agreement of Coda to provide schedules and exhibits to
Second Amendment to Agreement and Plan of Merger (Exhibit
2.1) and to provide schedules to Amendment No. 1 to
Subscription Agreement (Exhibit 99.2) and Amendment No. 1 to
Stockholders Agreement (Exhibit 99.3).
31
- --------------------------------------------------------------------------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CODA ENERGY, INC.
(Registrant)
By: \s\ Grant W. Henderson
-----------------------------------
Grant W. Henderson
President and Chief Financial Officer
Date: August 13, 1996
32
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.12* First Supplement to Indenture dated as of April 25, 1996 amending
the Indenture filed as Exhibit 4.1.
27.* Financial Data Schedule.
- -------------
* Filed herewith